GTUs Enrolment No: 117690592011.

A PROJECT REPORT ON STUDY ON RURAL BANKING BY DENA BANK AND CUSTOMER AWARENESS AT

DENA BANK, REGIONAL BRANCH, GANDHINAGAR. Submitted by; SUMIT KUMAR (ROLL NO: B-04)

MBA PROGRAMME 2011-2013 (SEMESTER II) In Partial fulfilment of the requirements for Summer Internship Programme for the award of the degree of MASTER OF BUSINESS ADMINISTRATION SHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER APPLICATION (NICM-MBA) INSTITUTE CODE: 769

Submitted to GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD

DECLARATION
I, SUMIT KUMAR, the student of Shri Jairambhai Patel Institute of Management (NICM), Gandhinagar, of MBA, hereby declare that I have completed Dissertation on Study of Rural Banking by Dena Bank and Customer Awareness as part of the course requirement.

The report is entirely the result of my own efforts and has not been submitted either in part or whole to any Other Organisation, Institute or university for any degree. I further declare that the information presented in this project is true and original to the best of my knowledge.

SUMIT KUMAR, Enrolment No. 117690592011 Date: Place: Gandhinagar.

PREFACE

Being a student of M.B.A each and every student has to undergo the Summer Internship program in appropriate organisation as a part of syllabus, which is prescribed by Gujarat Technological University. It is the time in which we can impart our theoretical knowledge into practice.

The object of practical training is to develop awareness among the student about industrial atmosphere and how to manage the industry or firm in general. The popularity of management education is increased because of its practical approach and field knowledge.

A few years ago, the rural market in India was an unknown territory and many companies were not interested in entering the rural markets of India, But these things are the story of the past and now Everyone is looking at the rural markets as the next growth driver in Indian market and with banking sector now even RBI has made compulsion of expanding nationalised banks in rural areas.

Above all, I was fortunate enough to get an opportunity to work with one of the growing public sector bank, Dena Bank, which has made many milestones for rural people.

ACKNOWLEDGEMENT

I am honoured to express my gratitude to several persons who helped me directly or indirectly to conduct this project work. I express my heartfelt indebtedness and owe a deep sense of gratitude to our faculty guide Dr. Narayan Baser, Faculty, National Institute of Co operative Management, Gandhinagar and to our corporate guide Mr. Sudhir Prajapati, Marketing Head, Regional Office, Gandhinagar and special thanks to Ms. Paulomi and Mr. Ajit Asthana, Personnel manager, for their sincere guidance and inspiration in completing this project. I am extremely thankful to the Director and faculties of the NICM for their coordination and cooperation and grateful to Mr. M. V. Ramchandran, D.R.M at regional branch, Gandhinagar of Dena Bank for his kind guidance and encouragement. I am also extremely thankful to all branch Managers I visited, for helping and guiding me sincerely and all those people who have positively helped me and customers who responded to the questionnaire, around whom the whole project cycle revolves. I also thank all my friends who have more or less contributed to the preparation of this project report. I shall be always indebted to them.

Thanking You

Executive Summary

In the growing global competition, the productivity of any business concerned to and depends upon the behavioural aspect of consumers. Banking sector is now facing more competition in the market, so, to compete with it is necessary to increase its product line and make aware the customers as soon as possible. To get competitive advantage, Dena bank is more focusing to its rural branches to cater more people and more effectively. This project report contains 8 different chapters. The report begins with the introduction to the banking sector in India, its area of operation, its organization structure, etc. Second Chapter narrates about the Literature review. It is having different views from different journals, which mainly states that the customers are necessary to aware to get advantage and necessity of rural banking and its benefits. The third chapter describes Scope of rural banking in India and prospective of dena bank towards rural banking. It also describes the potential market of banking in rural areas with statistics and limitations of customers with a case let provided by the bank. Its approach is to tap the rural customers and proved to be as best serving bank by introducing various product and services. The fourth chapter, Research Methodology adopted in preparing this report is mentioned. It covers the sample procedure, types of data used, the data collection method and instruments used. As we have chosen 15 branches for survey of our project and asked personally to valued customers of Dena bank and filled up the questionnaire provided by the bank. The fifth chapter is comprehensive coverage of concepts and techniques which shows the research design through tabulation, computation and graphical representation of data collected from survey. Analysis and Interpretation, which is very much important where analysis has made. This is done to clarify all the aspects related to customer awareness and rural and urban differences. The hypothesis gives true picture of variation for banking by male and female customers. The Sixth chapter is the Findings, which is true based on the analysis and interpretation after observing and cross check done by customers as well as branch managers. It is boosting that Dena bank is providing good services to rural areas and restricted to less comparative products and services and it is needed to enhance its services for better growth. As we know that only analysis and conclusion is not the end of a research, so in the seventh chapter the recommendation part is covered which are made after a depth study of the analysis part of thesis. The Eighth chapter gives the details regarding the Limitations we faced while doing the Project. The last part deals with the Conclusion of the entire project.

In each of the eight chapters as described above, every chapter has been scheduled in a manner so as to enable the reader to appreciate the contents easily. The report is supported by figures and data wherever necessary with a view to assist the reader in developing a clear cut understanding of the topic. We hope this report will be extremely useful for those it is meant. Constructive and healthy suggestions for improvements of the report will be great fully appreciated.

TABLE OF CONTENTS CHAPTER 1................................................................................................................................... 15 INTRODUCTION .......................................................................................................................... 15 1.1 HISTORY OF BANKING IN INDIA .................................................................................. 16 1.2 BACKGROUND .................................................................................................................. 17 1.3 BANKING STRUCTURE IN INDIA .................................................................................. 18 1.4 BANKING ACTIVITIES ..................................................................................................... 20 1. 5 DENA BANK ...................................................................................................................... 21 1.5.1 Mission........................................................................................................................... 21 1.5.2 Vision ............................................................................................................................. 21 1.6 DENA BANK HAS BEEN THE PIONEER IN: ................................................................. 22 1.7 MILESTONES ..................................................................................................................... 22 1.8 AWARDS (2010-12): ........................................................................................................... 22 1.9 OVERVIEW ......................................................................................................................... 23 1.10 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION ...................................... 24 1.10.1 Personal Dept. .............................................................................................................. 24 1.10.2 Corporate Dept. ............................................................................................................ 24 1.10.3 Nri Desk ....................................................................................................................... 26 1.10.4 Priority & Sme ............................................................................................................. 27 1.10.5 Dena Billpay ................................................................................................................ 27 1.10.6 Dena Atm Services ...................................................................................................... 29 1.10.7 Financial Inclusion ....................................................................................................... 29 1.10.8 Other Products And Services ....................................................................................... 30 CHAPTER 2................................................................................................................................... 31 LITERATURE REVIEW............................................................................................................... 31 CHAPTER 3................................................................................................................................... 34 RURAL BANKING BY DENA BANK ........................................................................................ 34 3.1 RURAL MARKET ............................................................................................................... 34 3.2 ACCESS ISSUES FOR RURAL CUSTOMERS ................................................................ 35 3.3 RURALBANKINGOPERATIONS ..................................................................................... 37 3.3.1 Branches pan India as on March, 2012. ......................................................................... 37 3.4 BUSINESS PERFORMANCE ............................................................................................. 38 3.5 LOAN AND ADVANCES ................................................................................................... 38 3.5.1. Advances to Priority Sector: ......................................................................................... 38 3.5.2 Lending to Agriculture ................................................................................................... 38

3.5.3 Progress under Special Agricultural Credit Plan ........................................................... 39 3.5.4 Dena Kisan Credit Cards ............................................................................................... 39 3.5.5 Progress under Micro Irrigation Systems (MIS):........................................................... 39 3.5.6 Relief to Farmers under Govt. of Indias 2% Interest .................................................... 39 3.5.7 Formation of Farmers Clubs: ........................................................................................ 39 3.5.8 Financing to Self Help Groups (SHGs): ........................................................................ 39 3.5.9 Credit Flow to Women................................................................................................... 39 3.5.10 Advances to weaker section ......................................................................................... 40 3.5.11 Advances to SC / ST Communities ............................................................................. 40 3.5.12 Coverage under CGTMSE scheme: ............................................................................. 40 3.5.13 Golden Jubilee Rural Housing Finance Scheme (GJRHFS): ...................................... 40 3.5.14 Prime Ministers 15 point Programme for the welfare of Minorities: ......................... 40 3.5.15 Government Sponsored Schemes ................................................................................ 41 3.5.16 Dena General Credit Card (DGCC) Scheme: .............................................................. 41 3.5.17 Dena Bhoomiheen Kisan Credit Card: ........................................................................ 41 3.5.18 Credit Counseling Centers/Financial Literacy: ............................................................ 41 3.5.19 Corporate Social Responsibility: ................................................................................. 42 3.5.20 State Level Bankers Committee (SLBC) Responsibilities ......................................... 42 3.5.21 Lead Bank Scheme ...................................................................................................... 42 3.5.22 Regional Rural Banks sponsored by the Bank ............................................................. 43 3.5.23 Core Banking Solution at Regional Rural Banks ........................................................ 43 3.6 MAJOR STEPS BY DENA BANK ..................................................................................... 43 3.6.1 Financial Inclusion ......................................................................................................... 43 3.6.2 Progress in coverage of villages: ................................................................................... 43 3.6.3 No Frills Accounts: ........................................................................................................ 44 3.6.4 Inbuilt OD facility in the No Frills Accounts: ............................................................... 44 3.6.5 Training to Individual BCs: ........................................................................................... 44 3.6.6 FIP for Regional Rural Banks (RRBs): ......................................................................... 44 3.6.7 FIP for the State of Gujarat: ........................................................................................... 44 3.7 RURAL RETAIL BANKING .............................................................................................. 45 3.8 DELPHI STUDY APPROACH ........................................................................................... 47 3.9 REASONS FOR UNPROFITABLE RURAL BANKING IN INDIA ................................. 48 3.9.1 High Non-performing Loans (NPL): ............................................................................. 48 3.9.2 Low Ticket Size: ............................................................................................................ 48 3.9.3 High cost to serve: ......................................................................................................... 48

3.9.4 Case let: .......................................................................................................................... 48 3.9.5 Cost per Transaction in Indian Banks ............................................................................ 49 3.9.6 Higher risk of credit: ...................................................................................................... 49 3.9.7 Information Asymmetry: ............................................................................................... 50 3.10 USAGE ISSUES FOR RURAL CUSTOMERS ................................................................ 50 3.11 PURPOSE OF BORROWING ........................................................................................... 51 3.11.1 Rural Household Borrowing ........................................................................................ 51 3.11.2 Bank Lending to Rural Households ............................................................................. 51 3.12 IMPROVING ACCESS FOR RURAL BANKING ........................................................... 53 3.12.1 Modify Existing Channels ........................................................................................... 53 3.12.2 Introduce New Channels .............................................................................................. 54 3.12.3 Determine the Combination of Channels ..................................................................... 55 3.13 FUTURE TRENDS IN RURAL RETAIL BANKING ...................................................... 56 3.13.1 Outcome Projections .................................................................................................... 58 3.13.2 Analysis of the Projections .......................................................................................... 58 3.14 CONCLUSION .................................................................................................................. 61 CHAPTER 4................................................................................................................................... 62 RESEARCH METHODOLOGY ................................................................................................... 62 4.1 OBJECTIVE OF RESEARCH ............................................................................................. 62 4.2. NEED FOR MEASURING CUSTOMER AWARENESS ................................................. 62 4.3 DATA COLLECTION TECHNIQUES: .............................................................................. 63 4.4 SAMPLE DESIGN: .............................................................................................................. 63 4.4.1. Data Source ................................................................................................................... 64 4.5 SAMPLING TECHNIQUE USED: ..................................................................................... 64 4.6 SAMPLE SIZE ..................................................................................................................... 64 4.7 DATA ANALYSIS .............................................................................................................. 65 4.8 DATA INTERPRETATION ................................................................................................ 65 4.9 CLASSIFICATION & TABULATION OF DATA:............................................................ 65 4.10 STATISTICAL TOOLS USED FOR ANALYSIS: ........................................................... 65 CHAPTER 5................................................................................................................................... 66 GRAPHICAL ANALYSIS & INTERPRETATION ..................................................................... 66 5.1DEMOGRAPHIC ANALYSIS ............................................................................................. 66 5.1.1 Age Wise........................................................................................................................ 66 5.1.2Gender Wise.................................................................................................................... 67 5.2CORE BANKING AWARENESS........................................................................................ 68

5.3PRODUCTS OFFERED AND AWARENESS .................................................................... 69 5.4SATISFACTION WITH THE PRODUCT OF THE BANK. ............................................... 77 5.5PRODUCT PROVIDED BY THE BANK ARE COMPARABLE TO OTHER BANK IN YOUR LOCALITY .................................................................................................................... 78 5.6TIMELY SERVICE EXPERIENCE ..................................................................................... 79 5.7 CUSTOMERS WITH RESPECT TO THEIR EDUCATIONAL BACKGROUND: ......... 90 5.7.1 Comparison Of Education Level Among Urban And Rural Customers With Respect To Educational Background: ........................................................................................................ 91 5.8. HYPOTHESIS ..................................................................................................................... 92 5.8.1Core Banking Solution .................................................................................................... 92 5.8.2Satisfaction Level Of Products Of Dena Bank ............................................................... 95 CHAPTER 6................................................................................................................................... 98 FINDINGS ..................................................................................................................................... 98 CHAPTER 7................................................................................................................................. 101 RECOMMENDATIONS & SUGGESTIONS ............................................................................. 101 CHAPTER 8................................................................................................................................. 103 LIMITATIONS ............................................................................................................................ 103 CONCLUSION ............................................................................................................................ 104 BIBLIOGRAPHY ........................................................................................................................ 105 APPENDIX .................................................................................................................................. 106

CHAPTER 1

INTRODUCTION
The future lies with those companies who see the poor as their customers ~C.K.Prahalad

Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focused upon the agro sector. Today, commercial banks and Regional rural banks in India are penetrating every corner of the country and extending a helping hand in the growth process of the rural sector in the country. Fifty-eight per cent of the rural households do not have a bank account and only 21 per cent have access to credit from a formal source. Over 70 per cent of marginal farmers have no deposit account and 87 per cent have no formal credit. Only a little over 1 per cent of rural households can rely on a loan from a financial intermediary to finance unforeseen expenses. Approval for such loans takes between 24 and 33 weeks. Often, consumers need to bribe officials to get loans, with the bribe varying between 10 and 20 per cent of the loan amount. In 2002, the number of rural deposits was 30.2 per cent of the total deposits in the banking system (Rs 13.30 crore out of Rs 43.99 crore). However, the amount of deposits mopped up in rural India is only 14 per cent of the total deposit liability of the system (Rs 1, 59,423 crore of Rs 11, 23, 393 crore). Similarly, there are 2.51 crore rural advance accounts, which is 44.5 per cent of the total number of advance accounts. However, the share of rural pockets in the total credit kitty is only 14 per cent (Rs 92,789 crore of Rs 6, 55,993 crore). Overall, 18 per cent of the rural population has bank accounts. The comparative figure in urban India is 103 per cent. It is clear that the supply of formal finance is biased against the rural population. The per capita deposit in rural areas stood at Rs 2,150 or around 10 per cent of the national per capita income in 2001. In contrast, in urban India, it is Rs 33,780 or around 160 per cent of per capita GDP. Credit per person in rural India is Rs 900 or around 4 per cent of national per capita GDP compared to Rs 20,600 for urban centers, which is 100 per cent of national per capita GDP. The number of credit accounts in rural areas relative to the total rural population is only 3.4 per cent against around 10 per cent in urban areas.

1.1 HISTORY OF BANKING IN INDIA

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades Indias banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of Indias growth process. The governments regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. In the past three decades, India's banking system has earned several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to metropolises or cities in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main aspects of India's growth story. The government's regulation policy for banks has paid rich dividends with the nationalization of 14 major private banks in 1969. Banking today has become convenient and instant, with the account holder not having to wait for hours at the bank counter for getting a draft or for withdrawing money from his account. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases: Early phase of Indian banks, from 1786 to 1969 Nationalization of banks and the banking sector reforms, from 1969 to 1991 New phase of Indian banking system, with the reforms after 1991.

1.2 BACKGROUND
Bank of Hindustan was set up in 1870; it was the earliest Indian Bank. Later, three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras were set up, which laid foundation for modern banking in India. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited number of central banking functions prior to establishment of RBI.

It engaged in all types of commercial banking business except dealing in foreign exchange. Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex body without major government ownership. Banking Regulations

Act was passed in 1949. This regulation brought RBI under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections in RBI. In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries.

It was 1960, when RBI was empowered to force compulsory merger of weak banks with the strong ones. It significantly reduced the total number of banks from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs. 50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs.200 crores. Nationalization of banks was to make them play the role of catalytic agents for economic growth.

The Narasimha Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices. The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks.

Banking industry is the back bone for growth of any economy. The journey of Indian Banking Industry has faced many waves of economic crisis. Recently, we have seen the economic crisis of US in 2008-09 and now the European crisis. The general scenario of the world economy is very critical.

It is the banking rules and regulation framework of India which has prevented it from the world economic crisis. In order to understand the challenges and opportunities of Indian Banking Industry, first of all, we need to understand the general scenario and structure of Indian Banking Industry.

1.3 BANKING STRUCTURE IN INDIA

The commercial banking structure in India consists of scheduled commercial banks and unscheduled banks. Scheduled banks constitute those banks that are included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. As on June 30, 1999, there were 300 scheduled banks in India having a total network of 64,918 branches. The scheduled commercial banks in India comprise State Bank of India and its associates (8), nationalized banks (19), foreign banks (45), private sector banks (32), co-operative banks, and regional rural banks. Before the nationalization of Indian banks, the State Bank of India (SBI) was the only nationalized bank, which was nationalized on July 1, 1955, under the SBI Act of 1955. The nationalization of seven State Bank subsidiaries took place in 1959. .

After the nationalization of banks in India, the branches of the public sector banks rose to approximately 800 percent in deposits and advances took a huge jump by 11,000 percent.
Sr. No. Nationalized Banks Old private Sector banks 1 Allahabad Bank Catholic Syrian Bank 2 Andhra Bank City Union Bank Ltd 3 State Bank of India Dhanalakshmi Bank 4 Bank of Baroda Federal Bank Development Credit Bank 5 Dena Bank ING Vysya Bank IndusInd Bank Deutsche Bank HDFC Bank ICICI Bank New private Sector banks Axis Bank Abu Dhabi Com. Bank American Express Bank Bank of America NA Bank of Ceylon Foreign Banks

AG 6 Central Bank of India Karnataka Bank Kotak Barclays Bank

Mahindra Bank PLC 7 Indian Bank Jammu and Kashmir Bank 8 9 Corporation Bank Punjab National Bank Karur Vysya Bank Lakshmi Vilas Bank 10 UCO Bank SBI Com. and International Bank 11 IDBI Bank South Indian Bank 12 Bank of India Tamilnadu Mercantile Bank 13 Syndicate Bank JPMorgan Chase Bank Krung Thai Bank 14 Union Bank of India Royal Bank of Scotland 15 16 United Bank of India Vijaya Bank Ltd. Shinhan Bank Standard Chartered Bank 17 State Bank of Hyderabad State Bank of Mauritius 18 19 20 Indian Overseas Bank State Bank of Mysore State Bank of Travancore VTB UBS Bank of Nova Scotia (Scotia Bank) HSBC Citibank N.A. DBS Bank Yes Bank BNP Paribas

1.4 BANKING ACTIVITIES

Retail banking, dealing directly with individuals and small businesses Business banking, providing services to mid-market businesses Corporate banking, directed at large business entities Private banking, providing wealth management services to high net worth individuals Investment banking, activities in the financial markets, such as "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital market activities like mergers and acquisitions

Merchant banking is the private equity activity of investment banks Financial services, global financial institutions that engage in multiple activities such as banking and insurance.

Newly launched and expanding product, Financial Inclusion as the best next alternative to micro finance.

1. 5 DENA BANK

Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the name Devkaran Nanjee Banking Company Ltd. It became a Public Ltd. Company in December 1939 and later the name was changed to Dena Bank Ltd. In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in addition to the business of banking, the Bank can undertake other business as specified in Section 6 of the Banking Regulations Act, 1949.

1.5.1 MISSION
DENA BANK provides its Customers - premier financial services of great value. Staff - positive work environment and opportunity for growth and achievement. Shareholders - superior financial returns. Community - economic growth.

1.5.2 VISION
DENA BANK will emerge as the most preferred Bank of customer choice in its area of operations, by its reputation and performance.

1.6 DENA BANK HAS BEEN THE PIONEER IN:

Minor Savings Scheme. Credit card in rural India known as "DENA KRISHI SAKH PATRA" (DKSP). Drive-in ATM counters of Juhu, Mumbai. Smart card at selected branches in Mumbai. Customer rating system for rating the Bank Services.

1.7 MILESTONES

One among six Public Sector Banks selected by the World Bank for sanctioning a loan of Rs.72.3 crores for augmentation of Tier-II Capital under Financial Sector Developmental project in the year 1995.

One among the few Banks to receive the World Bank loan for technological up gradation and training.

Launched a Bond Issue of Rs.92.13 crores in November 1996. Maiden Public Issue of Rs.180 Crores in November 1996. Introduced Tele banking facility of selected metropolitan centers.

1.8 AWARDS (2010-12):

During the year under review Bank was awarded IInd prize by Reserve Bank of India for its house journal "Dena Jyoti" in bilingual category for the year 2010-11. Bank's house journal "Dena Jyoti" was also awarded "Bronze Trophy" by the "Association of Business communicators of India" for best article in English. Bank received IInd prize in the competition organized by Maharashtra State Level Bankers Committee (Rajbhasha), Pune for excellent performance in implementation of official language Hindi in its offices and Branches situated in the Maharashtra State during 2010-11. Our Jaipur Branch in New Delhi Region was awarded IInd prize by TOLIC Jaipur for excellent work in implementation of Official Language. Bank has been awarded a "Rajbhasha Award" by a socio linguistic organization Ashirwad. Our house journal Dena Jyoti has also been awarded by the same organization.

1.9 OVERVIEW
The Bank has a large network of branches spread throughout the country that enables it to raise Funds competitively. The domestic network of the Bank stood at 1342 branches in 2011-12, which are computerized and no. of ATMs are 543. The Western Region, which is industrially developed and financially vibrant account for more than 70% of the total branches.

The Bank also has specialized branches to cater to the needs of industrial finance, trade Finance, personal banking, international banking, NRIs and small-scale industries. A Bank with robust technology infrastructure offering Any Branch Banking, m-banking, Dena billpay, telebanking, information Kiosks, ATM Network, etc. Professionally managed Bank with 75 years of existence. First Drive-in ATM in India at Juhu Mumbai in 1996. First Fully Computerised branch in Public sector at Nepean Sea Road Mumbai in 1991. 100% of the total business and branches are computerised. Bank having own net DENANET, connecting branches across the country. Pioneer in introducing Minor Saving Scheme a saving account for minors above 10 years. Pioneer in introducing Dena KrishiSakhPatra credit card for farmers in 1988. Product portfolio includes Trade Finance, Consumer Loans, Bancassuarance, Credit Cards and Kisan Cards, Retail Lending products etc. Bank has shown a substantial increase in its Net Profit (after tax) from Rs.611.63crore in the year 2010-2011 to Rs. 803.14 crores in FY 2011-12. Consistent growth in deposits and Advances at a CAGR. Total business mix of more than Rs. 134,326 crores in 2011-12. Business per employee is about Rs. 13 crores in 3011-12. Net NPA to Net Advances ratio is ideal as 1:1. Special thrust on Human Resource Development & Technology. Focus on Retail & SME segment. Earnings per share for 2012 are Rs.24.08, which has been doubled in 4 years.

1.10 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION

Dena Bank deals with the following functional departments: 1.10.1PERSONAL Dept.

In the Dena Bank Personal Banking section, the organization offer its services with a personal touch by reaching out to all in various manners, one of them is through offering a basket of our Deposit Schemes which delivers a strong return on all your personal savings and our Loan Schemes which provides the required financial assistance in your times of need. 1.10.2 CORPORATE Dept.

a. Corporate Finance Dena Bank provides financial assistance to the business entities engaged in various activities of manufacturing, trading and service. The Financial assistance is provided for setting up new projects, acquiring assets and also for meeting day to day working capital requirements of the constituents. These assistances are termed as Long Term Finance & Short Term Finance respectively. b. Term Finance Term Loan/Finance covers funds required for acquiring means of production such as land, building and plant and machinery etc. These could be for setting up new projects or expanding the present activities.

Term finance is generally given for a longer period and is repayable in installments over the period with or without Moratorium. The period and the installments are determined based on the repayment capacity of the project / borrower. c. Working Capital Finance Working Capital Finance (WCF) is extended for carrying out normal trading/ manufacturing activities. The working capital finance is provided for a relatively shorter period generally for a period of 1 year and renewed on yearly basis considering the performance of the borrower. The WCF is considered only after project nearing completion and after full tie up of term loan requirement. The Working Capital limits of the borrower are assessed by adopting various methods such as Projected Turnover Method (Nayak Committee Recommendation), Permissible Bank Finance Method, Cash Budget Method etc. depending upon the aggregate working capital limit required / enjoyed from the banking system, nature of activity, production cycle etc. Working Capital finance is in the form of pre-sale and post-sale limits. In Pre-Sale Finance the advance is granted for acquiring Inventory for production / processing or trading purpose while the Post-Sale Finance is extended against the receivables. Dena Bank encourages Post-sale finance in the form of purchase/discounting of bills etc. I. Pre Sales Finance : 1. 2. 3. 4. 5. Cash Credit Hypothecation / Pledge against Stocks Packing Credit Hypothecation / Pledge against Stocks Clean Packing Credit Limit Trust Receipts Working Capital Loan (Demand / Term)

II. Post Sales Finance : 1. 2. 3. 4. Bills discounting / purchase Inland / Foreign Cash Credit Hypothecation against Book Debts Advances against Export Incentives Purchase of Cheques/Demand Draft.

d. Export Credit Bank extends credit to Exporters at Competitive rates, at both Pre-shipment and Postshipment stages. Recently, Bank has introduced Gold Card Scheme which provides cheaper export credits to the eligible borrowers. Selected Clients engaged in exports are also suitably rewarded in the form of Export Credit Denominated in Foreign Currency viz. PCFC (Pre Shipment) / REBA (Post Shipment Credit).

e. Specific Schemes The Bank has devised specific schemes for the following Sectors: 1. 2. 3. 4. 5. Educational Institutions, Builders & Developers, Hospitals, Hotels & Restaurants & Entertainment Industry.

1.10.3 NRI DESK

With over 1100 branches spread across the country, Dena Bank is your ideal banking partner if you are a Non-Resident Indian. All transactions by NRIs in Indian Banks are governed by RBI Rules and Regulations.

1.10.4 PRIORITY & SME

These are the sectors where Dena Bank has taken special care to ensure instant sanctions and approvals for all applicants. Priority Sector Schemes: 1. 2. 3. 4. 5. Dena Rural Internet Kiosk Scheme Dena Shakti Scheme Dena LaghuUdyami Card Scheme Dena Rural Artisan Credit Card Scheme Dena Swarozgar Credit Card Scheme

1.10.5 DENA BILLPAY

a.

AutoPay

Just gives us your bill details, specify your bank account and we will pay your bill for you every month from that account. You can specify an upper limit and bills above this limit will be paid only on your specific instructions. b. PhonePay

Get a SMS alert when bill is due and issue payment instructions in accordance.

c. Internet Now a days Internet users are heavily increased and so Dena bank has customized its website according to customer huge demand with wide array of Products and Services. Denas Website has been improved and below is its Screen Shot; If you have access to the internet, you can view and pay your bills online at www.denabank.com. You will receive new bill notifications, due date reminders and payment confirmations via email.

1.10.6 DENA ATM SERVICES

Dena Bank always stands in forefront in understanding it customers need. Dena Bank Debit cum ATM Card offers you an easy and convenient way to do all your transactions and that too within a fraction of seconds. Presently we have more than 380 ATMs all across India. Dena Debit cum ATM Card is your Bank Account in your pocket. Get your Dena Bank Debit cum ATM Card today and avail round the clock uninterrupted service. Below is the simple procedure to use this facility: 1. Contact your Branch. 2. If you dont have Saving or Current Account, first open your account. 3. Get the Debit/ATM Card Application form from the Branch, fill it up and submit it to your Branch. 4. Within 10 days, you will receive your Debit cum ATM Card along with PIN (Personal Identification Number) and Debit cum ATM Card Booklet. 5. Activate your card immediately by withdrawing cash from Dena Bank ATM. After that you can use your card on POS Terminal (Merchant Establishments).

1.10.7 FINANCIAL INCLUSION It is the revolutionary service given by Dena bank to rural people, who are daily wage earners or poor people with very small income. FI is spreading gradually and targeted to provide this service to all over India.

1.10.8 OTHER PRODUCTS AND SERVICES:-

Dena Bank, your trusted family bank, now is proud to offer a range of sophisticated banking services by way of Any-branch banking, Multi City cheque, Dena ATM's, Dena Cards, online remittance, Internet Banking, Mobile banking, Tele banking, Online utility Bill Payment, Value added Service through ATM, Kiosks, loans, Dena Doctor+, Bancassuarance, Distribution of Mutual Funds, Demat Services, ASBA, Visa Bill Pay , Dena Consumer Durable Loan, Dena Trade Finance Scheme, Dena Senior Citizen, Pensioners Loan Scheme, Dena Gold Loan Scheme, GoRecharge and many more. With over 1342 branches across the country, Dena bank always ready to serve customers, and to offer them the best of the technology-enabled banking products and services.

CHAPTER 2

LITERATURE REVIEW
In India, the opportunity to increase business and revenue is available more by expanding the base, as banking is yet to reach quite a large number of customers and also places. Further, it has necessary to develop a suitable marketing model together with product and services that would help banks to finance the poor-both rural and urban. It has also been observed by banks in India through their experience over the years that direct financing of farmers and artisans through their own branches would not be sustainable. This is due to both due to high cost and inadequate ability to develop rapport and provide useful support to them. In fact, it has been rightly pointed out in a recent study that priority sector lending by public sector banks in India has created a culture of mechanical lending with little effort toward proper credit appraisal(1). Banks in India have less business appetite for rural lending as they do not see business value through a long term lens. An estimate of the rural credit potential is placed at Rs. 50,000 crores extrapolated at INR 50,000 as average credit requirement per farm. The existing average spread of rural credit per farm is abysmally poor at INR 3636 demonstrating per capita credit gap in terms of individual farms. Agriculture sector presents one of the highest risks for the banks as it is exposed to vagaries of monsoon all the time. It also presents a situation of low return, high risk, and long payback and harboring clients having poor capacity to demonstrate title to property assets. The staff sensitization towards farm sector is so poor that many staff does not see business value for the banks even in the long run (2). The Knowledge and understanding of a purchase regarding

products/services/institution/company/etc. is called customer awareness. It is the awareness of the customer regarding products or services. Their characteristics, substitution, quality, price, producer/service provider, etc. It helps the customer to get the most from what he buys, get more choices, more understanding and safety. Customer awareness, which refers to buyers knowledge of a particular product or company, allows the buyer to get the most from what he buys.

Customer awareness is a market function that influences how individuals make choices between comparable goods and services. Therefore, customer awareness helps the customer to buy from the available choices which can satisfy his needs (3). Arora (2005) analyzed the extent and source of customer awareness regarding banking services in public, private and foreign banks. 100 customers were taken from banks of each sector and customer awareness was measured on a list of 32 banking services. It has also seen that the main sources of wariness in the case of public sector bank. Customers were newspapers, friends, relative and business colleagues, as banks did not advertise the services. In the case of private and foreign bank. The main sources of awareness other than newspapers.TV, radio. Etc., were bank brochures/publications and bank staff. As that as the banking services are concerned. Banks provide internal service to the customer. They have a greater responsible to safeguard the person or corporate tends on one hand, and to perform the service in the interest of society and nation on the other. Due to liberalization, deregulation and increasing competition. The Indian banking industry has become the buyers market. And hence .Banks has started to extend their customer base to areas which were left an unattended earlier. Therefore, irrespective of urban or rural areas, banks are trying to diversify their products and services to the masses. Customer awareness is essential to enable them to avail these services without any fear and hesitation. Todays customer is presumed to be aware of all kind of financial services offered by the various financial institutions (Arora, 2005). But due to lower literacy level and scarce sources of information in rural areas, the customers do not possess sufficient knowledge about the services offered by the banks. A large chunk of the Indian population does not even know that bank account is a necessity in day-to-day activities involving monetary transactions, and for many people, a bank account does not play any role other than safe-keeping of money (Dhrupad Buch, 2010). Therefore, in urban areas too, customers lack awareness regarding banking services available to them (4). As the majority of the Indian population lives in rural areas, there is an urgent need to deliver citizen services to them in a cost effective way with assured quality. This involves mainly the following: Enabling the ready access at the place of the villagers .

There is increasing recognition that, the spread of literacy and generation of growth impulses in the rural sector would be very significant factors in enhancing effective supply and reducing true cost of rural credit. More specifically, the desired spread of technology and trickledown of urban financial products to rural areas would require concerted action in four areas:

First and foremost, insurance, especially of crops, should penetrate the rural areas to mitigate the risks to both farmer and lender. The lack of penetration of insurance is perhaps an important reason for lenders seeking tied and other risk-mitigation arrangements through informal markets.

Second, there should be assured supply of electric power so that functioning of systems is not disrupted.

Third, telecommunication network needs to be dependable and financial sector needs to ensure a network. We, in the RBI, have already launched INFINET.

Fourth, the institutional and regulatory framework should enable rural financial institutions to operate in diverse financial products and services. We, in the RBI are currently engaged in a number of initiatives and studies. We hope to continue the process, and focus on rural credit, as mandated by the RBI Act. We would seek advice and guidance in this endeavor (6). Research View As by conducting the survey we find that to make aware the customers about product and services as well as its advantage is the key point for increasing and maintaining the business in rural areas and their satisfaction level, which is also implied to Dena Bank.

CHAPTER 3

RURAL BANKING BY DENA BANK

3.1 RURAL MARKET
Banking in India is generally fairly mature in terms of supply, product range and reach, eventhough reach in rural India still remains a challenge for the private sector and foreign banks. Interms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in itsregion. Consequently, we have seen some examples of inorganic growth strategy adopted by some Nationalized and private sector banks to face upcoming challenges in banking industry of India.

For example recently, ICICI Bank Ltd. merged the Bank of Rajasthan Ltd. in order to increase its reach in rural market and market share significantly. State Bank of India (SBI), the largest public sector bank in India has also adopted the same strategy to retain its position. It is in the process of acquiring its associates. Recently, SBI has merged State Bank of Indore in 2010.

At present, a rapidly growing urban India is the focus of the banking sector; however, as the deposit penetration numbers suggest (Figure 3 & 4), the market is highly competitive and over banked. Despite this, most banks are still not shifting their focus to the rural opportunity, as they are apprehensive about the total market potential of the rural market and the profitability of rural banking channels. Contrary to the widely held notion, however, the rural market is attractive from both a credit and deposit perspective. The credit demand in rural areas is approximately Rs 1,330 billion (based on an estimate by World Bank). There are other studies by the Planning Commission and ICICI Bank which put the figure even higher at Rs 1,440 billion and Rs 1,500 billion respectively. Similarly, on the deposit side, a large segment of the rural population does not save with formal banking channels because banks are not accessible and do not provide the appropriate products and service, leaving a significant opportunity to grow the deposit base.

At present, the penetration of banking in rural areas is sub-optimal with a large market remaining untapped in both the liability (~ Rs 215 billion) and asset (~ Rs 1,204 billion) sides of the business. These estimates clearly suggest that there is sufficient demand in the rural market to encourage banks to think seriously about rural areas as an alternative growth opportunity. According to Diamond estimates, approximately 245 million adults in rural India do not have a bank account today. As depicted in Following Table, this reflects 24% of the total population. While 60 million out of 245 million may not need banking services because they are below the poverty line, Diamond believes that approximately 185 million potentially bankable people do not use formal banking services because of reasons like poor access or usage.

120 100 80 60 40 20 0

100 47 53 37 16 13 24 6 18

Series1

Source: Census India; BSR 2008Reserve Bank of India; World Bank & NCAER (2008).

3.2 ACCESS ISSUES FOR RURAL CUSTOMERS

Access is explained in terms of infrastructure, physical distance, limited delivery capabilities, regulatory constraints and the economics of rural banking. The banking infrastructure in rural India is not encouraging, with just 7% of villages housing a bank branch. Whats more, the poor physical and social infrastructure also impacts the access to financial services, with 23% of villages going without electricity,

To ta lP op ul No at n ion Ad ult Po pu la tio Ad n ul tP op Ur ula ba ti o n Ad n ult Po pu Ru lat ra ion lA du lt Po pu la Ba tio nk n ed Po pu Un la ba tio nk n ed Po Fi pu na la nc tio ia n ll y Co ns Po tra nt int en s tia lly Ba nk ab le

67% without a Post Office, and an average rural literacy rate of 59% and secondary school penetration of 12%. This lack of physical and social infrastructure in rural India is a key issue impacting access to formal financial services. The average distance to a branch in India is approximately 3.8 Kms. While this compares favorably to the average distance to a branch in a developed market like the U.S. (which is 6 Kms6), there are significant additional challenges in India in the form of unpaved roads and limited access to modern transportation. Most rural customers are likely to sacrifice an entire days wage to travel to a bank branch which is open between 10:00am and 5:00pm. While some banking transactions could be done over phone, this is rarely an option in a country with such low rural tele-density. Limited delivery capability is a significant challenge. Much of rural India is serviced through branches because ATM penetration is low and other channels such as Phone and Internet Banking are non-existent. Intermediaries like Non-Governmental Organizations (NGOs), Self-Help Groups, and Micro Finance Institutions (MFIs) are being used by banks to improve access to credit and savings. However, these channels, in their current form, offer limited services. There are some regulatory constraints imposed by the Reserve Bank of India (RBI) which may inadvertently contribute further to the lack of formal banking services in rural areas. For example, the RBI does not allow banks to post any person other than a security guard at ATMs. Hence, banks cannot deploy many ATMs in rural areas as many rural customers require in-person support. A second regulatory inhibitor is that new banks planning to establish a branch in a rural area have to receive approval from the Lead Bank and District Collector ofthat district. Hence, banks choose not toopen new branches in certain areas even when it is profitable to do so because there is no certainty of getting approvals. Many banks view the rural market as a regulatory requirement rather than an economic opportunity. Banks have from time to time borne the social cost of lending to the rural economy at rates below their costs. They have also faced capital erosion because of the write-off of loans, particularly agriculture loans. Banks are required via regulatory requirements to open branches in rural areas to provide loans to agriculture and other priority sectors.

3.3 RURALBANKINGOPERATIONS
3.3.1 Branches pan India as on March, 2012.
Sector Rural Semi Urban Urban Metro Total No. Of Branches 493 264 260 325 1342 % to Total 37 20 19 24 100

Total Branches
Urban 19% Semi Urban 20% Rural 37% Metro 24%

As data shows that major chunks of branches are serving to rural areas and less concentration has given to urban areas, while metro branches are next to rural branches. Dena bank as started from paddy banks, it is even now concentrating more to rural market of India, where as RBI has made guidelines about giving more concentration towards rural areas.

3.4 BUSINESS PERFORMANCE

In Crores (INR)
Parameters Current A/C Saving A/C Term Deposit Aggregate Deposit Inter Bank Deposits Total Deposits (%)CASA to Total Deposit March11 5419 17325 39241 61985 2225 64210 35.42% March12 7273 19317 47250 73840 3327 77167 34.46%

The above table shows upright growth of Dena bank from the last year.

3.5 LOAN AND ADVANCES

3.5.1. Advances to Priority Sector: The Bank has been consistently fulfilling its social obligations in respect of priority sector lending. The Bank has adopted multipronged strategies during the year, to augment credit flow to this sector. Priority Sector Advances of the Bank have thus increased from the level of `15150 Crores as of March, 2011 to ` 17153 Crores as of March, 2012, registering a growth of 13.22 %. The ratio of priority sector advances to Adjusted Net Bank Credit stood at38.54% as of March, 2012 against the regulatory guidelines of 40%. 3.5.2 Lending to Agriculture In line with the Governments Farm Credit Package, the Bank hasbeen continuously taking necessary measures to step up the flow of credit to agriculture. During the year, the outstanding under agriculture credit increased from the level of ` 6389 Crore as of March, 2011 to ` 6989 Crores as of March 2012, registering a growth of 9.39 %. The outstanding exposure under agriculture credit represented 15.71% of the Adjusted Net Bank Credit.

3.5.3 Progress under Special Agricultural Credit Plan The Bank has disbursed ` 2768 crores during the year 2011-12under Special Agriculture Credit Plan as against the target of` 2200 Crore thus registering 125.82% achievement of the target set for the Bank.

3.5.4 Dena Kisan Credit Cards The Bank has issued 56853 fresh Kisan Credit Cards (KCCs)involving credit assistance of ` 492.77 Crore during the year, taking the total number of KCCs to 196817 lakhs involving an outstanding credit of ` 2078.37 Crore, as at the end of the year.

3.5.5 Progress under Micro Irrigation Systems (MIS): In order to promote Micro irrigation system, the Bank has financed3736 farmers aggregating to ` 48.34 Crore for installation of Micro Irrigation System in collaboration with M/s Gujarat Green Revolution Company Ltd.

3.5.6 Relief to Farmers under Govt. of Indias 2% Interest Subvention Scheme: Under the Interest Subvention Scheme of GOI, the Bank has provided ` 5.11 Crore under 1.5% interest subvention and ` 8.83Crore under 2 % additional interest subvention for the crop loans disbursed during 2011-12.Similarly, Bank has credited ` 20.93 Crore under 2% interest subvention and ` 6.59 Crore under 3% additional interest subvention for the crop loans disbursed during 2011-12.

3.5.7 Formation of Farmers Clubs: The Bank has formed 1652 farmers' club as on March, 2012.

3.5.8 Financing to Self Help Groups (SHGs): The cumulative number of SHGs credit linked by the bank increased to 23341 involving ` 97.11 Crore as of March 2012 against 22364SHGs involving ` 89.05 Crore as of March, 2011. During the year977 new SHGs have been credit linked by the Bank.

3.5.9 Credit Flow to Women The aggregate credit flow to women has increased from a levelof ` 2043 Crore as of March 2011 to a level of ` 2261 Crore as of March, 2012, registering a growth of 10.67%.

The outstanding credit flow to women constituted 5.08% of the Adjusted Net BankCredit as against a target of 5% set by the Govt. of India. With a view to create awareness on women empowerment, the Bank organized a number of events on the International Womens Day.

3.5.10 Advances to weaker section Consistent with the growth in priority sector advances, the advances to the weaker section increased from a level of ` 2689 Crore as of March 2011 to ` 3619.52 Crore as of March 2012, registering a growth of 34.56 %. The Bank advances to Weaker Section stood at8.13% of the Adjusted Net Bank Credit.

3.5.11 Advances to SC / ST Communities The aggregate level of advances to SC/ST Communities, within the priority sector increased from a level of ` 753 Crore as of March,2011 to ` 798 Crore as of March, 2012, registering a growth of 6%.The share of advances to SC/ST is 4.65 % of the priority sector credit.

3.5.12 Coverage under CGTMSE scheme: The Bank has been participating under the guarantee scheme ofthe Credit Guarantee Fund Trust for Small and Micro Enterprises (CGTMSE) to provide collateral free loans to small and microenterprises. In order to mitigate the burden on entrepreneurs, the Bank is also bearing 50% of the Guarantee fees. The total number of cases covered under the scheme stood at 6875 with a guarantee cover of ` 367.62 Crore, as at the end of the year registering a growth of 56%.

3.5.13 Golden Jubilee Rural Housing Finance Scheme (GJRHFS): In order to promote financing of dwelling units in rural areas, theBank has been implementing GJRHFS. Bank has granted loan to3110 beneficiaries during the year and achieved the target to the extent of 88.85 % under the scheme.

3.5.14 Prime Ministers 15 point Programme for the welfare ofMinorities: The credit flow to minority communities has increased from thelevel of ` 1400 crores as of March 2011 to ` 1723 crores as of March 2012, registering a growth of 23.07 % which constitutes 10.05% of Priority Sector Advances.

3.5.15 Government Sponsored Schemes The Govt. of India has introduced Prime Minister's Employment Generation Programme (PMEGP) by merging Rural Employment Generation Programme (REGP) and Prime Minister's Rozgar Yojana (PMRY) for generation of employment opportunities through establishment of micro enterprises in rural as well as in urban are as effective from 01.04.2008.

The Bank is actively implementing government sponsored schemes aimed at eradication of poverty and for generating self-employment. The Bank has sanctioned loans to 18092 beneficiaries under PMEGP amounting to ` 106.45 Crore and 31769 beneficiaries under Swarnajayanti Gram Swarojgar Yojana amounting to ` 72.53Crore and also granted loans to 11445 beneficiaries under SwarnaJayanti Shahari Rozgar Yojana (SJSRY) to the tune of ` 28.53 Crore.

3.5.16 Dena General Credit Card (DGCC) Scheme: The Bank is providing overdraft facility upto ` 25,000/- under this scheme to borrowers of small means under rural and semi-urban areas. The Bank has issued 17608 DGCC Cards as of March 2012.

3.5.17 Dena Bhoomiheen Kisan Credit Card: The Bank has introduced a special scheme for tenant farmers, oral lessees, share croppers, landless labourers etc. wherein credit facility up to ` 25,000/- is granted for various agricultural and allied purposes with a provision of consumption also. Under the scheme, 2720 Bhoomiheen Kisan Credit Cards have been issued during the year.

3.5.18 Credit Counseling Centers/Financial Literacy: RBI has directed the Banks to open Credit Counseling centers in the respective Lead districts to ensure 100% financial inclusion. Accordingly, in pursuance with the guidelines of RBI to set up credit counseling centers, Bank rolled out its 1st Credit Counseling center at Himatnagar (Dist. Sabarkantha) in Gandhinagar Region on 08.08.2007. Bank has opened Credit counselingcenters at Palanpur, Mehsana, Bhuj, Himmatnagar and Gandhinagar in the state of Gujarat and Silvassa in the UT of Dadra & Nagar Haveli.The said centers are christened as Dena Mitras.

3.5.19. Corporate Social Responsibility:

3.5.19.1. Rural Self Employment Training Institutes (RSETIs): Dena Bank has set up a Society known as Dena Rural Development Foundation (DRDF) with a corpus of ` 150.00 lacs. DRDF in turn has set up 12 Rural Self Employment Training Institutes (RSETIs)in its lead districts viz. (i) Ahmedabad, (ii) Kutch, (iii) Mehsana, (iv)Banaskantana,(v) Sabarkanta (vi) Patan in the state of Gujarat, (vii)Durg, (viii) Dhamtari (ix) Mahasamund (x) Raipur (xi) Rajnandgaon in the state of Chhattisgarh and (xii) Silvassa in the U. T. of Dadra &Nagar Haveli where bank is shouldering the responsibility of lead bank.

3.5.19.2 Sponsoring Education of Girl Child: As a part of Corporate Social Responsibility, the Bank had introduced a Nobel scheme viz. Dena Laxmi Shiksha ProtsahanYojana to sponsor education of Girl students in the villages served by the Bank. The scheme aims at providing a scholarship of` 2000/- and ` 1500/- per annum to girl student belonging to Below Poverty Line (BPL) family, selected from each of the schools basedon first and second rank respectively secured in 7th Standard, from the villages under the command area of the Bank. The Bank has so far provided scholarships to 2213 girl students under the scheme.

3.5.20 State Level Bankers Committee (SLBC) Responsibilities The Bank has been discharging its responsibilities as a Convener of SLBC for the State of Gujarat and also as Convener of UTLBC for the Union Territory of Dadra & Nagar Haveli and Daman. Bank has been given Lead Bank responsibility of Union Territory of Diu. The SLBC has played catalytic role for the development of banking in the State of Gujarat and Dadra & Nagar Haveli through constant monitoring of various Priority Sector and developmental schemes. The Bank has also been monitoring the credit flow to MSME,auto, housing sectors under the stimulus package announced by Government of India.

3.5.21 Lead Bank Scheme The Bank is successfully discharging its lead bank responsibilityin 13 districts; of which 7 districts are located in Gujarat, 5 districtsin Chhattisgarh and two in Union Territory of Dadra & Nagar Haveliand Daman & Diu.

3.5.22 Regional Rural Banks sponsored by the Bank The Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State of Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh. Both the RRBs sponsored by Dena Bank have a network of 277 branches spread over 10 districts of Gujarat and Chhattisgarh. The total business mix of these RRBs stood at ` 4920.20 Crores as of March 2012.During the financial year ended 31st March, 2012, both the RRBs are profit making.

3.5.23 Core Banking Solution at Regional Rural Banks In terms of the RBI / Government of India directives, Bank has initiated the process of implementation of CBS in Banks both Regional Rural Banks (RRBs) i.e. Dena Gujarat Gramin Bank (DGGB) and Durg Rajnandgaon Gramin Bank (DRGB). As on31st March, 2012, 277 branches of both the RRBs have been successfully brought under CBS platform.

3.6 MAJOR STEPS BY DENA BANK

3.6.1 Financial Inclusion The Bank has a Financial Inclusion Plan which envisages roadmap for provision of banking services through banking outlet in770 villages allocated to it by various SLBCs under Lead Bank Scheme. The number of villages allotted to Dena Bank has now been reduced from 770 to 728 after re-allocation of the villages to other Banks keeping in view the geographical areas. As per FIP, all these villages are covered by end of March 2012.

The plan includes extension of facilities like Opening of No Frills Accounts, Inbuilt Overdraft facility in the No Frills Accounts, Entrepreneurship Credit, Remittance facilities and Micro-Insurance products. The Bank has engaged M/s Tata Consultancy Services (M/s TCS) as the Application Service Provider (ASP) for implementation of FI Plan for a period of 3 years. Bank has engaged individual Business Correspondents (BCs) in FI villages.

3.6.2 Progress in coverage of villages: Bank has covered all 728 villages by March 2012. Brick & Mortar Branch Model: Bank has covered 41 villages by opening Brick & Mortar Branches.

Ultra Small Branch Model: Bank has covered 34 villages by setting up of Ultra Small Branches. BC Model: Bank has Covered 653 villages by engaging individual Business Correspondents.

3.6.3 No Frills Accounts: Total 2.74 lakhs No Frills accounts have been opened in the FI Villages by March 2012 against the target of2.62 lakhs accounts. However, the Bank as a whole, the number of No Frills accounts is 12.60 lakhs as of March 2012.

3.6.4 Inbuilt OD facility in the No Frills Accounts: All No Frills Accounts in FI villages i.e. 2.74 lakhs No Frills Accounts have been extended OD facility by March 2012, against the target of 2.62 lakhs accounts. However, the Bank as a whole, the number of inbuilt OD facility extended in the No Frills Accounts is 5.53 lakhs. Dena Kisan Credit Cards and Dena General Credit Cards are also issued under Financial Inclusion Plan.

3.6.5 Training to Individual BCs: Training has been provided to all individual BCs. However, Bank shall provide training to BCs on continuous basis through pool of officers identified for training.

3.6.6 FIP for Regional Rural Banks (RRBs): Dena Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State of Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh. DGGB has been allocated 245 villages and DRGB has been allocated 26 villages. In all, both the RRBs have been allocated 271villages having population above 2000.Both the RRBs have covered all the villages allotted to it by March2012.

3.6.7 FIP for the State of Gujarat: A total of 3502 villages having population above 2000 were allotted to Banks and all have been covered by Banks by March 2012.Banks have covered 101 villages through Brick & Mortar Branch Model, 673 villages through Ultra Small Branch Model, 16 villages through Mobile Van model and 2712 villages through BC model. Dena Bank has covered all 493 villages allotted to it in the State of Gujarat. All Banks have opened 9.99 lakhs accounts under Financial Inclusion. (Dena Bank has opened 1.67 lakhs accounts).

3.7 RURAL RETAIL BANKING

The Reserve Bank of India (RBI) had a mandate to promote rural credit and banking by virtue of the provisions of Section 54 of the RBI Act. Through the State Bank of India (SBI) Act in 1955, the SBI was made an important organization for extending rural credit to supplement the efforts of cooperative institutions. These cooperative institutions, better known as primary agricultural credit societies (PACS) 1 also provide other agricultural inputs to the farmers. The next step to supplement the efforts of cooperatives and commercial banks was the establishment of regional rural banks in 1975 in different states with equity participation from commercial banks, central and state governments. In 1982, to consolidate the various arrangements made by the RBI to promote/supervise institutions and channel credit to rural areas, the National Bank for Agricultural and Rural Development (NABARD) was established.2 Currently, according to a series of estimates and market studies the number of rural bank branches is 31,727. This is 39.7% of the total number of bank branches in the country. The number of no-frill accounts is 28.23 million. There are only 54 savings accounts for every 100 persons in rural areas and only 26% of rural citizens with an annual income of less than Rs. 50000 have a bank account. In the same income bracket, only 13% farmers have ever availed of bank loans while 54% have used non-institutional and other forms of lending3. Thus, there is sufficient need for extending financial services to the rural areas. Exhibit 1 details the supply and demand side factors that challenge the growth of rural retail banking.

Exhibit 1 Factors influencing demand and supply in the rural retail banking industry. A number of innovations and experiments have been initiated to bridge the gap between the rural population and the formal retail banking system.

Local area banks (LABs) an initiative that attempted to mobilize rural savings by local institutions and make them available for investment locally. As of 2005, only four LABs were functioning in the country.4 The major handicap in their business model was the lack of a re-financing facility that hindered their ability to lend at better rates.

Self-help groups (SHGs) with bank linkages were another indigenously developed banking model. Being a savings - first model, credit discipline is a norm of the group; besides joint liability and social collateral make such groups bankable in the eyes of bankers. The linkages are achieved through non-governmental organizations (NGOs) and other intermediaries, and this has formed the basis of the micro-finance movement in India. However, the absence of NGOs in states like Bihar, Uttar Pradesh and those in the north-east has been a stumbling block in spreading this model in these states.

The alternative to the above model has been the NGO/MFI bulk-lending model where funds were placed at the disposal of NGOs or MFIs for lending to SHGs or other groups and even to individuals. However, this model was not able to scale-up due to the low capitalization of the NGO/MFIs and their inability to undertake financial intermediation. Also, this meant that the formal banks had a two-level exposure and this further reduced the potential for scaling-up.

In the partnership model, the MFI evaluates, recommends, originates the loans, helps in disbursal and subsequently tracks and collects the loans. However, the loans sit on the books of the bank and not of the MFI. This model has overcome the constraints of capitalization of the MFI and the double exposure that the banks were subjected to.

Other recent innovations include the Kisan Credit Card (KCC)that enables the farmer to get loans over a three to five year period as a revolving credit entitlement, thus, providing them control over their cash flows and reduced transaction costs for both the banks and the farmers. However, the biggest roadblock has been the creation of point of sale (POS) kiosks and acceptance of the cards.

The business facilitator and the business correspondent models (Exhibit 2) have been other innovations in this field. Institutions or persons, who interface between the rural poor and banks, are leveraged to provide support services under well-defined terms and conditions by way of contractual arrangements. In the case of the business facilitator model, as per the law, these agencies provide basic support services such as customer identification, collection of information/applications, credit appraisal, marketing etc.

Under the business correspondent model, specific agencies e.g. MFIs, NBFCs etc. also provide disbursal of small value credit as pass through agents for the parent bank.

Exhibit 2 Business correspondent model

3.8 DELPHI STUDY APPROACH

The Delphi study approach has been used to identify and understand the different scenarios that will emerge for rural retail banking in 2020. It is a method for the systematic solicitation and collation of judgments on a particular topic through a set of carefully designed sequential questionnaires interspersed with summarized information and feedback of opinions derived from earlier responses Opinions about a certain problem or task are solicited through mail or electronic means in a geographically dispersed network. The main features of this approach are anonymity to prevent influence of any group members, controlled feedback due to multiple rounds of survey summaries and a statistical output as a final response. It being an iterative and expert based system, the Delphi study approach is regarded as a research technique especially suitable for complex issues. For our study this was particularly relevant since we wished to understand how the rural retail banking industry will evolve over the next decade. Several experts in the field of retail banking, rural banking, rural finance and microfinance were approached through a web-tool and the final opinions of the various experts were studied and analyzed to reach our conclusion and recommendations.

3.9 REASONS FOR UNPROFITABLE RURAL BANKING IN INDIA

3.9.1 High Non-performing Loans (NPL): Banks have higher non-performing loans in rural areas because rural households have irregular income and expenditure patterns. The issue is compounded by the dependence of the rural economy on monsoons, and loan waivers driven by political agendas. NPLs from the agriculture sector are 7.7%, compared to 3.5% across non-agriculture sectors8. In order for banks to view rural India as a growth opportunity, rather than a regulatory requirement, a combination of these issues must be addressed. Increasing financial access to rural areas is contingent upon basic conditions such as proper infrastructure and an enabling regulatory framework, as well as innovative thinking on the part of commercial banks. Access issues, however, explain only one part of the problem. Usage is an equally important issue for rural customers. 3.9.2 Low Ticket Size: The average ticket size of both a deposit transaction and a credit transaction in rural areas is small. This means that banks need more customers per branch or channel to break even. Considering the small catchments area of a branch in rural areas, generating a customer base with critical mass is challenging. 3.9.3 High cost to serve: Branches are the most used channel in rural areas. This is because many rural people are not literate and are not comfortable using technology-driven channels such as ATMs, phone banking or internet banking. On the other hand, a branch is an expensive channel for banks (Following Table). In addition, rural people, whenever they have access to banks, have frequent low ticket and cash-based transactions, which increase the overall transaction cost for their bank.

3.9.4. Case let:

As the pioneer in rural banking in Gujarat and Chhattisgarh, Dena Bank has also faced many problems in expansion and maintaining its service quality. It is the core and important duty of every branch managers to provide and maintain all services available with, to maximum customers. But in rural branches it becomes difficult in the situation of sanctions and recovery of loans or financial services.

We found one case related to this issue and restricted by bank to hide name and some sensitive data. Mr. A is working in one of the Dena bank branch in Gandhinagar region since 1994. He had joined there as a clerk and after working hard promoted as a branch manager in 2003. As being a branch manager, he contributed greatly to the bank by increasing business as well as to the customers by providing many financial loans and aids. In 5 years of his job he doubled the loan and advances of the branch and recognized as a good performer and promoted again. But he couldnt go with the same scenario. Due to 3 fraud cases in sanctioning of loan, he has been demoted even he was not cent percent responsible. His mistake was only that before sanctioning he had not inquired well about the background of the customer. He believed on the customer and the peons information. It is the prime responsibility of managers to check and recheck all the required information about the customer before sanctioning the loan, but in rural areas it is very difficult task to do it personally by the manager, because of heavy load of work and work load is high in rural areas because of less staff and abundance of small transactions as well as unawareness and illiteracy. 3.9.5Cost per Transaction in Indian Banks
60 50 40 30 20 10 0 Branch Phone (Call Centre) ATM Phone (IVR) Internet 25 18 8 4 Series1 48

Source: Reserve Bank of India; CGAP, World Bank. 3.9.6Higher risk of credit: Rural households may have highly irregular and volatile income streams. Irregular wage labor and the sale of agricultural products are the two main sources of income for rural households. The poor rural households (landless and marginal farmers) are particularly dependent on irregular wage employment. Rural households also have irregular expenditure patterns.

The typical expenditure profile of rural households is small, with daily or irregular expenses incurred through the month. Furthermore, a majority of households incur at least one unscheduled expenditure per year, with the most frequent reasons being medical or social emergency7. In short, the rural customer is generally considered to be a risky one. 3.9.7Information Asymmetry: Since many rural people do not have bank accounts, there is a lack of information on customer behavior in rural India. Absence of a Credit Information Bureau also complicates the problem as banks have to rely on informal sources to learn the credit history of rural customers. A lack of reliable information can result in either missed opportunities in not approving otherwise eligible loan candidates, or nonperforming loans.

3.10 USAGE ISSUES FOR RURAL CUSTOMERS

Even if access to formal banking is provided to rural customers, there is no guarantee that these services will be used. According to a study conducted by the World Bank, many households, even in developed countries, choose not to have a bank account as they do not engage in many financial transactionsthey collect wages in cash, spend in cash and do not wish to be burdened by a bank account9. To compound the situation many customers in rural India, who have access to and would otherwise choose to use formal financial services, do not do so because the product and service mixes do not meet their needs. The financial service needs of rural customers are not confined to just savings and credit, as is usually assumed. Their financial needs are linked to their life cycle needs, ranging from savings to credit to insurance to remittances. In fact, even the savings and credit products currently offered to rural customers do not entirely meet their needs. Access to savings and investment facilities is critical for the poor. The two critical needs for the rural poor are micro-savings and frequent withdrawals. These needs facilitate a customer in building capital over the long term, as well as coping with income shocks in the near term. However, banks do not offer adequate services to address these needs. The lack of services, therefore, leaves the rural poor with little option than to transact with the informal banking market. A study conducted by Micro Save also concludes that the poor transact with the informal sector because it will accept small amounts, provide doorstep service, and ensure ease of enrolment. Rural customers need loans not only for productive purposes but also for consumption needs (Following Table). A part from agricultural support, rural customers need micro credit for consumption, education and emergencies. Though banks offer purpose free loans

(personal loans and credit cards) in urban areas quite liberally, in rural areas sanction of such loans is significantly restricted. Therefore, the poor raise these loans through the informal financial system (it is worth noting that these loans taken from the informal system are almost always repaid or renewed12). In addition, larger households need occasional high value micro-enterprise loans for small capital investment. Though banks offer these loans, they require excessive documentation and time-consuming processes which discourage customer applications.

3.11 PURPOSE OF BORROWING

3.11.1 Rural Household Borrowing

Other business expenditure, 14% Agriculture expenditure, 38%

Other business expenditure Household expenditure Agriculture expenditure

Household expenditure, 48%

3.11.2 Bank Lending to Rural Households

Personel Loans, 12% Personel Loans Other Business Loan, 52% Agriculture Loan Agriculture Loan, 36% Other Business Loan

A significant percentage of borrowing is toward consumption and other household expenditure, whereas formal financial institutions in rural India provide loans primarily for productive purposes. Source: AIDIS2008, National Sample Survey Organization (NSSO); Diamond analysis.

Insurance reduces the vulnerability of poor households by replacing the uncertain prospect of large losses with the certainty of payout against small, regular premium payments. It is integral to a comprehensive risk management strategy for poor households. This includes life, health, accident and asset (dwelling, crop, and livestock) insurance. Banks and insurance firms do not offer these services in many rural areas, leading the poor to rely on the informal financial system. There are many rural households which depend on weekly or monthly remittances from their family members who have moved to urban areas. At present, they depend on informal channels to remit the money and consequently either risk the loss of money or pay high transaction fees. Banks do not offer seamless remittance facilities between urban and rural branches as many of the rural branches are not computerized and connected to the main banks computer systems. This often results in the beneficiary receiving the amount two weeks after it has being transferred. This represents yet another key service which is not provided. The transaction cost for a rural customer to receive credit primarily constitutes four attributes: the interest rate, loan amount received as a percentage of amount applied, bribes paid, and the lead time to process the loan. Though the formal banking system offers loans at interest rates lower than informal banking systems, the time taken for a loan to be sanctioned is high which increases uncertainty and opportunity cost. In addition, the customer needs to pay almost 10% of the loan amount in bribes and eventually receives an amount that is less than what was applied for. Therefore, while the interest rates are usurious in the informal financing system, rural customers still resort to this channel because the waiting time to receive the loan is negligible and there are no indirect costs or commission. Banks also insist on collateral security which many rural poor cannot afford. As far as savings are concerned, though the formal banking system provides financial security, the cost of opening and operating an account is high. The overall cost of transacting with the formal financial system increases for a rural person because of additional costs such as expenses incurred to reach a branch and the opportunity cost of lost wages. Since rural banks are generally not within an accessible area and do not operate at convenient times, the rural customer must forgo a days wage to reach a branch. Informal systems, on the other hand, involve a lower transaction cost, but they are risky and in some cases result in the loss of ones entire capital. In short, this leaves the rural customer to choose between two unfavorable options.

In summary, the services being offered by the formal banking system do not seem to meet the needs of the rural poor. A World Bank study suggests that the poor apply a set of criteria to judge the services being offered by any financial service provider, including: ProductsAre financial services available and tailored to my needs? CostWhat is the total cost of the service (including opportunity cost)? ConvenienceHow easy is it to access and use? EligibilityAm I eligible for financial services and can they be accessed repeatedly? As explained earlier, the savings products offered in the current format do not qualify as a flexible, convenient and cost-efficient service. Similarly, loan products do not meet product and eligibility criteria. In addition, insurance and remittance services are not even available. The cost of services, despite lower interest rates, is high because of other indirect costs which make the banking services cost-inefficient.

3.12 IMPROVING ACCESS FOR RURAL BANKING

Today, branches are the primary delivery channel in rural areas. Though there are 32,000 commercial bank branches in India, they cover less than 7% of total villages. Opening more branches is not necessarily profitable as many pockets of rural areas do not have business enough to justify an expensive branch channel. Therefore, to improve access in rural areas, banks need to modify existing channels, introduce new channels and identify innovative ways to integrate the two. 3.12.1 Modify Existing Channels Fortunately there are a variety of options available for banks looking to modify their existing channels. To reduce the costs imposed by branches, banks should consider the option of sharing their branch infrastructure. This would not be too dissimilar to the example of the telecom industry sharing network infrastructure or the fast food industry sharing food courts in urban areas. Though infrastructure sharing may raise concerns over client confidentiality and data leakage, in the long run banks will only benefit from such collaboration. ATMs are an effective channel which can deliver many of the services frequently used by a branch customer. However, ATMs, in their current form, are not suitable for rural areas as the literacy level and transaction ticket amount is too low.

ATMs can, however, be designed to meet the needs of rural customers. For example, ICICI Bank is working with IIT Chennai to develop an ATM that has a biometric fingerprint login, accepts soiled notes, and lower value denominations. In addition to modifying the design of the machines, banks should also hold discussions with the RBI to allow an attendant to be posted at ATMs. This will enhance the usability of ATMs. Though phone banking and internet banking are cost-effective channels, given very low tele-density and low internet penetration in rural areas, the ability to channels to reach the rural customer is low. However, phone and internet banking should be considered once infrastructure and literacy levels improve in rural India. A business correspondent could then run an e-kiosk to assist customers to transact over these channels. For example,Centenary Bank in Uganda uses internet and phone banking to provide bill payments,money transfers and loan repayments. Business correspondents can be provided with point-of-sale (POS) functionality to allow customers to deposit and withdraw cash from their accounts. Combining POS with a smart card is one way to improve access. Brazil has successfully used banking correspondents who use POS and card readers to provide current accounts,loans, and insurance, accept bill payments,and perform other transactions. 3.12.2 Introduce New Channels The RBI allows banks to appoint business correspondents and facilitators tobe used as intermediaries in providing banking services. NGOs, MFIs, Societies,Section 25 companies, registered NBFCs not accepting public deposits, and Post Offices can be appointed as Business Correspondents. Business Correspondents can provide several services which are not currently offered by SHGs and MFIs, including: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Identification of borrowers and fitment of activities; collection and preliminary processing of loan applications including verification of primary information/data; creating awareness about savings and other products and education andadvice on managing money and debt counseling; processing and submission of applications to banks; promotion and nurturing Self Help Groups/Joint Liability Groups; post-sanction monitoring; monitoring and handholding of Self Help Groups/Joint Liability Groups/Credit Groups/others; and follow-up for recovery; disbursal of small value credit, recovery of principal/collection of interest

(xi) collection of small value deposits (xii) sale of micro-insurance/mutual fund products/ pension products/ other third-party products and (xiii) Receipt and delivery of small value remittances/ other payment instruments. The introduction of Business Correspondents may face some challenges from labor unions. However, Diamond believes that there may be some options to address the concerns of the current workforce while using Business Correspondents to capture more value from rural customers. Caixa Economica, a state-owned bank in Brazil, manages the countrys lottery network and distributes government benefits. To increase the access of its services, Caixa extensively utilizes the Banking Correspondent channel, with 14,000 banking correspondents covering all of Brazils 5,500 municipalities. In less than 2 years, Caixa opened about 2.8 million new accounts and estimates that 40% of its banking transactions are handled through the banking correspondent channel. Satellite offices are a cost-effective alternative to branches. These offices can be established at fixed premises in villages and are controlled and operated from a base branch located at a block headquarters. All types of banking transactions may be conducted at these offices. Banks have, however, not used this channel actively, despite the argument that this channel is relatively less expensive, as it can draw personnel from the main branch and can remain open for just two days a week. This channel, therefore, is appropriate in blocks and districts which are densely populated. In the urban areas, most Indian banks opt for an extension counter where the business does not justify a full-fledged branch. Similarly, satellite branches can cater to rural areas which do not justify a large branch. Where banks do not find it economical to open full-fledged branches of satellite offices, mobile offices may be more appropriate. Mobile offices extend banking facilities through a well-protected truck or van. The mobile unit visits villages on specified days/ hours. The mobile office would be affiliated with a branch of the bank, and serve areas which have a large concentration of villages. This will not be dissimilar to the mobile ATMs implemented by some of the Indian banks in the urban areas. 3.12.3 Determine the Combination of Channels There is no one right channel or solution to improve access in rural areas. Banks have to evaluate the trade-offs between those channels that are most convenient to customers and those that are the most profitable. Banks are not comfortable opening new rural branches because many of those that already exist are unprofitable. Therefore, determining the right

combination of channels is critical to improving access in profitable ways. An innovative approach to improving access will consider a combination of these channels. For example: Branches and Satellite Branches In addition to providing regular banking operations, providing backend support to manage and audit the operations of business correspondents. A low-cost, custom-made ATM managed by a business correspondent to bring down the operating cost and scales the channel. An e-kioskmanaged by a business correspondent with internet banking, ATM and POS terminal in relatively large rural areas. A business correspondentUsing manual ledgers or POS/Palmtop to act as deposit collector and remitting agent in smaller rural areas. While this list is not exhaustive, it highlights the need for creative solutions that apply the right channel to the right market and transaction. In South Africa, Capitec has combined convenient branches along transportation routes (for example, train and bus stations, and taxi stops). In addition, it has rolled-out debit cards and automatic teller machines across 200 of these branches to stimulate savings among low-income earners. Between February and August 2007, the number of customers jumped from around 30,000 to more than 90,000.

3.13 FUTURE TRENDS IN RURAL RETAIL BANKING

Based on our secondary research and interviews with experts in the industry 20 projections were formulated for the possible scenario in the industry in the year 2020. These projections can largely be classified into outcome and enabler projections. Exhibit 3 lists out the 20 projections.

Exhibit 3 Projections for 2020

3.13.1 Outcome Projections These projections concern the actual state of affairs in the industry in 2020. They are a description of a specific situation in 2020 rather than an activity by a specific player in the society. These projections are further categorized under the following four fronts: Political scenario A strict regulatory regime is expected for the industry in the future, accompanied with increasing changes in norms and frameworks, primarily, the removal of the cap on interest rates as imposed by the RBI at present. Economic scenario The greater share of the market will be serviced by the MFIs and NBFCs. A collaborative alliance with internationally banks will be the primary source of funds and other resources for the MFIs and NBFCs. Social scenario Urbanization and migration from the rural areas would substantially decrease the size of the market for the FIs. Even the consumers would become more aware and knowledgeable about the various financial services and products and hence, would expect one-stop shop solutions from the FIs. Technological scenario Consumer databases providing information about the credit history and financial dealings of the consumers and thus enabling the FIs to design customized products and better manage their credit portfolio will be put in place. In addition, mobile phones would become the means of the primary delivery mechanism in the rural areas owing to their high penetration and reach and low costs. The other kinds of projections for the industry in 2020 were the enabler projections. These projections pertain to the stakeholders in the industry customers, suppliers, competitors, government and society. These projections reflect the actions that are needed to be taken by these shareholders to enable the outcome projections. 3.13.2 Analysis of the Projections The projections formulated for the year 2020 were analyzed using the Delphi approach. The various experts who took part in the study were asked to rate the projections on the following counts:

The probability of occurrence of the respective projection in 2020. The impact on the industry if the projection is true. The scale used was a 5-point scale

from 1 to 5 where 1 signifies very low impact and 5 signifies very high impact.

The desirability of the occurrence of the projection. The scale used for was a 5-point scale

from 1 to 5 where 1 signifies very low desirability and 5 signifies very high desirability.

Based on the responses of the participants in the study two metrics were calculated for each projection consensus and convergence. 3.13.2.1 Consensus Consensus signifies the consensus among the experts as to the probability of occurrence of the projections. The variance among the responses of all the experts is taken as a measure of the consensus among the experts. A variance of up to 25 is taken as a sign of strong consensus, from 26 to 40 is taken as a sign of moderate dissent and greater than 40 is taken as sign of high dissent.

3.13.2.2 Convergence Convergence refers to the changes in the responses of the participants over the period of the study as they studied the responses of the other participants and altered their responses accordingly. It is calculated as the change in absolute deviation of the final responses from the absolute deviation of the initial responses as a percentage of the absolute deviation of the initial responses. An absolute value of convergence up to 10% is taken as moderate convergence, from 11% to 20% is taken as strong convergence and greater than 20% is taken as very strong convergence. Exhibit 4 gives the mean value of probability, impact and desirability and the degree of consensus and convergence for each of the 20 projections.

Exhibit 4 Metrics for each projection

3.14 CONCLUSION
Based on our study we have concluded that the following scenarios are the most probable in the year 2020 for the Indian rural retail banking industry: Consumer awareness with increased education among the consumers and greater availability of information, the consumer awareness will increase regarding the financial services and products that are present in the market and they will demand one-stop shop solutions for all their financial needs. Consumer databases the introduction of the UID project has led to the hope and an increasing probability of presence of extensive consumer databases in 2020. These databases will provide information about consumer credit history and financial transactions to enable the FIs to customize products suited to the consumers needs. Capitalization of MFIs - there is a low probability that international banks would be the chosen medium of capitalization for the MFIs in 2020. They will be largely capitalized by the local Indian financial markets. This could be owing to the FDI regulations in the country as well as sufficient liquidity in the Indian financial markets. Localized institutions the FIs would work towards designing localized financial services that would serve to provide one-stop shop solutions and remove information asymmetry because of their local presence. Mobile-based delivery model the high penetration of mobile services in the country and advances in secure transfer mechanisms will see the rise of mobile phones as delivery platforms by 2020. This will be further augmented by the low costs associated with this delivery mechanism.

CHAPTER 4

RESEARCH METHODOLOGY
4.1 OBJECTIVE OF RESEARCH
The ability of banks to offer clients access to several markets for different classes of financial instruments has become a valuable competitive edge. With the phenomenal increase in the country's population and the increased demand for banking services; speed, service quality and customer satisfaction are going to be key differentiators for each bank's future success. Thus it is imperative for banks to get useful feedback on their actual response time and customer service quality aspects of retail banking, which in turn will help them take positive steps to maintain a competitive edge.

The project is targeted to measure awareness among customers and their perception towards Dena bank. On the basis of review of literature and research gap, the present study has been planned with the following research objectives: To study the customer awareness with respect to banking services. To identify the gaps in the level of awareness of rural and urban bank customers. To check whether the awareness level of customers differs on account of their education background. To analyze, comparatively, the sources of awareness regarding banking services used by rural customers. To study customer perception about DENA BANK.

4.2. NEED FOR MEASURING CUSTOMER AWARENESS

Satisfied customers are central to optimal performance and financial returns. Customers are viewed as a group whose satisfaction with the enterprise must be incorporated in strategic planning efforts, and customers would be satisfied only when they are totally aware about the product and services offered and knowing the advantages. If the customers are aware they will fully utilize this and then only they would be satisfied.

This project work is an attempt to review the necessary requirements, and discuss the steps that need to be taken in order to measure and track customer awareness about the product and services provided by the bank.

One of the most important developments in banking sector has been the growth of the financial industry over the past two decades.

Thus delivering high quality service to clients is just as important as delivering performance that meets or exceeds their expectations. It is in this context that a study is necessary to know about awareness levels on the services provided by Dena Bank.

4.3 DATA COLLECTION TECHNIQUES:

This project consists of two parts. The first part is a study of the banking industry, DENA Bank focusing on Rural Banking using SECONDARY DATA sources. This secondary information has been sourced from the internet and from business related magazines and newspapers. The second part of the study has been done using an exploratory research process and a structured questionnaire was developed for this purpose. For the collection of PRIMARY DATA this was the only method used. The reason we used this method is because a need was felt for the free influx of information about the products. Also this method allowed the use of skills gained in class.

4.4 SAMPLE DESIGN:

The population considered for the purpose of the survey was people having an account in Dena Bank in the Branches of Gandhinagar District. The extensive list of the 15 Branches, we visited are as mentioned below:

4.4.1. Data Source We are provided to visit following 15 branches of Dena Bank in Gandhinagar region. Sir No. Branch Name URBAN 1. 2. 3. 4. 5. SECTOR 16 SECTOR 22 INFOCITY DEGHAM KALOL RURAL 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. POR CHHATRAL ITADARA BALVA BHAT PANSAR KOBA SAIJ SHERTHA KOLVADA

4.5 SAMPLING TECHNIQUE USED:

Since the information required was not of a very technical nature and also looking at the scope of the project and the extent of the target segment, the sampling technique employed was Convenience Sampling. We administered the questionnaires.

4.6 SAMPLE SIZE:

We restricted the sample size to 20 respondents per branch, who are valued customers of the bank from each branch of different age groups. This was done keeping in mind the time constraints and the fact that we felt that this number would be enough to serve the information needs required to show the trends. Total Sample- 300 Customers

4.7 DATA ANALYSIS

After data collection, we were able to analyze customers views, ideas and opinions related to Products & Services of the Bank, which will enable the Bank to get a clear picture about the Customers perception and requirements.

4.8 DATA INTERPRETATION

Interpretation of data is done by using statistical tools like Pie diagrams, Bar graphs, and also using quantitative techniques (by using these techniques) accurate information is obtained.

4.9 CLASSIFICATION & TABULATION OF DATA:

The data thus collected were classified according to the categories, counting sheets & the summary tables were prepared. The resultant tables were one dimensional, two dimensional.

4.10 STATISTICAL TOOLS USED FOR ANALYSIS:

Out of the total respondents, the respondents who responded logically were taken into account while going into statistical details & analysis of data. The tools that have been used for analyzing data & inference drawing are mainly statistical tools like percentage, ranking, averages, etc. As per questionnaire and market surveys we have find out different responses from different people. According to their responses we have analyzed the findings and draw certain remarks.

CHAPTER 5 GRAPHICAL ANALYSIS & INTERPRETATION

5.1 DEMOGRAPHIC ANALYSIS
5.1.1 AGE WISE

Age wise
no. of respondents(Percentage) 50 40 30 20 10 0 18 - 30 31-45 46-60 above 60

Series1 16.81818182 45.68181818 27.27272727 10.22727273

FINDINGS: 1. Most of the people above 30 years and below 60 years are operating banking transactions and related works. Its but obvious because these age group customers are involved in regular earnings. Less than 30 years and above 60 years customers are having less work related to banking. 2. Another reason of very few, less than 30 years, customers are lacking of satisfaction of its services to them as these age groups believe in instant services, in spite of high charges, and sometimes Dena bank lacks in providing these type of services but its charges are very less. Above than 60 years of customers are less because their needs are very less towards banking works, as well as such works are handled by their other younger family members. RECOMMENDATIONS 1. Dena bank may improve its service facilities to get advantage of all age groups. It can make FD related services more lucrative and approachable to old age group customers. 2. To create awareness among all age groups about the benefits they can get in monetary terms with Dena bank.

5.1.2 GENDER WISE

Gender wise
no. of respondents(Percentage) 100 80 60 40 20 0 Series1 Male 88.40909091 Female 11.59090909

FINDINGS: a. The reasons of very less female customers compare to male customers are; a. Most of the female have joint accounts with male member of the family. b. In rural areas females are only operating saving accounts or else if any subsidies available for them, they open an account. c. Banking needs are very less because of small income. d. Unawareness and illiteracy.

RECOMMENDATIONS 1. Providing good information and awareness about Dena's AlpaBachat yojna and Special scholarship yojna for girls. 2. To make them aware about subsidies and other schemes for them to start Selfemployment and KutirUdyog.

5.2 CORE BANKING AWARENESS

no. of respondents(Percentage)

CBS Awareness
80 70 60 50 40 30 20 10 0 Series1

Yes 75.90909091

No 24.09090909

FINDINGS: 1. Rural customers are totally unaware with the word CBS even if they use this facility. Because of literacy urban customers are well aware with many banking terms including CBS. 2. Rural customers are limited to outstation transactions as well as cheque payment, they mostly prefer cash transaction. So remittance is very few. 3. Some are unaware as well as some think they will have to pay charges for using CBS.

RECOMMENDATIONS

1. They should be made aware about CBS and dictate them that bank transactions are safer than direct cash transactions. For this the staff should give them required information.

5.3 PRODUCTS OFFERED AND AWARENESS

5.3.1 DEBIT/ATM CARD

no. of respondents(Percentage)

40 35 30 25 20 15 10 5 0 Excellent

Debit/ATM Card

Good 37.5

Average

Poor

Don't Know

Series1 19.09090909

3.8636363642.27272727337.27272727

FINDINGS: 1. Debit/ATM card is very less in rural areas, because: a. ATM is not available in most of the rural branches. b. Rural customers are not techno savvy and their transactions are very small. c. Old age as well as some other age groups also does not feel comfortable doing ATM transaction. d. Because of unawareness ATM cards are most of the times misplaced, locked in machine and wrong transaction occurs. As well as ATM machines are misused.

RECOMMENDATIONS 1. Atleast one ATM could be installed between two to three common area branches. 2. ATM repair and maintenance service can be improved.

5.3.2 PREMIUM SAVING A/C

no. of respondents(Percentage)

120 100 80 60 40 20 0 Excellent

Pr Saving A/C

Good

Average 0

Poor 0

Don't Know 95.90909091

Series1 1.818181818 2.272727273

FINDINGS: 1. Customers are totally unaware with this type of facility. 2. Only high income group can afford these types of facility, which is less in rural areas. 3. Some customers are using this facility but they just know it as a flat Saving A/C.

RECOMMENDATIONS

1.

Customers can be made aware about this facility and its advantages when they

come for transaction.

5.3.3 PREMIUM CURRENT A/C

Pr Current A/C
no. of respondents(Percentage) 120 100 80 60 40 20 0 Excellent Series1 0.9090909 Good 2.5 Average 0 Poor 0 Don't Know 96.590909

FINDINGS: 1. Pr. Current account is mostly operated by business persons and in rural areas even customers are potential they operate it in city area branches not in rural branch. 2. Alike Pr. Saving A/C, Pr. Current A/C facility is also unknown by customers. Some people are under this criterion but they think it as flat current A/C.

RECOMMENDATIONS 1. Customers can be made aware about this facility and its advantages when they come for transactions, as they are unaware of the advantages they could get by getting a Pr. Current A/C. 2. Current account users can be easily convertible or induced to get Pr. Current A/C.

5.3.4 NET BANKING

no. of respondents(Percentage)

Net Banking
100 80 60 40 20 0 Excellent Good Average Poor Don't Know

Series1 1.81818182 4.54545455 2.04545455 0.45454545 91.1363636

FINDINGS: 1. Internet Banking Facility is not available in many branches and with rural Customers. 2. Some Urban Customers were not satisfied with earlier Net banking facility, but now improved version has vanished all the queries. 3. This facility is comfortable only to the literate customers.

5.3.5 SMS ALERT

no. of respondents(Percentage)

SMS & Alert

70 60 50 40 30 20 10 0 Excellent Good Average Poor

Don't Know

Series1 9.0909091 27.954545 1.5909091 1.8181818 59.545455

FINDINGS: 1. As most of our surveyed branches are Rural and Rural people are not techno savvy and even they are limited to use mobiles for receiving and making calls only. 2. Some people did not find instant messaging lucrative. Some said it takes time to get SMS for the transactions they made. They dont get it in even few minutes. 3. Most of the customers in rural or even in urban areas do not register their mobile number with the bank, so they don't get SMS.

RECOMMENDATIONS

1. Customers should be made aware with this type of facility and its advantages. 2. Staff can help customers in registering their mobile numbers, as customers are not comfortable in registering their forms and so they avoid it.

5.3.6 PHONE BANKING FACILITY

no. of respondents(Percentage)

Phone Banking
120 100 80 60 40 20 0 Excellent Good Average Poor 0

Don't Know 96.363636

Series1 1.5909091 1.3636364 0.6818182

FINDINGS: Customers at Dena Bank are not aware of PHONE BANKING service as it is not introduced at Gandhinagar region yet. RECOMMENDATIONS: Bank should introduce PHONE BANKING at pivotal basis at some branches, at least in the Urban branches. 5.3.7 REMITTANCE

no. of respondents(Percentage)

Remittance
120 100 80 60 40 20 0 Excellent Series1 0 Good Average Poor

Don't Know

0.6818182 0.2272727 0.4545455 98.636364

FINDINGS: Customers are either not aware or don't know of Remittance service. Customers in rural area are majority dealing with saving A/c (deposit & withdrawal) service

RECOMMENDATIONS: Bank should organize awareness programmes in villages so that educated customer can use Remittance service. 5.3.8DIRECT/ INDIRECT TAX COLLECTION

no. of respondents(Percentage)

Direct / Indirect TC
120 100 80 60 40 20 0 Excellent Good Average 0 Poor 0

Don't Know 99.318182

Series1 0.4545455 0.2272727

FINDINGS: As customers in Rural area are engaged with Agri business and related to Agriculture, so they are not liable to pay tax. RECOMMENDATIONS: Bank should create awareness among customers who are paying tax and not related to Agriculture activities that bank provide direct tax and indirect tax pay service.

5.3.9 DENA E-TAX PAY

no. of respondents(Percentage)

E - Tax Pay
120 100 80 60 40 20 0 Excellent Series1 0 Good 0.6818182 Average 0 Poor 0

Don't Know 99.318182

FINDINGS: As customers in Rural area are engaged with Agri business and related to Agriculture,so they are not liable to pay tax RECOMMENDATIONS: Bank should spread awareness among those customers who are paying tax and not related to Agriculture activities that bank also provide e-tax pay service.

5.3.10 RTGS/NEFT

no. of respondents(Percentage)

RTGS /NEFT
100 80 60 40 20 0 Excellent Good Average Poor Don't Know

Series1 2.2727273 5.6818182 0.2272727 0.4545455 91.363636

FINDINGS: As per our survey at rural branches of Dena Bank, customers are not much aware about the RTGS/NEFT fund transfer services. RECOMMENDATIONS: First of all Banks should create awareness among the customers about RTGS /NEFT services and in addition to that Bank should also convince the customers that Dena Bank charges less compared to other Banks. 5.3.11 BILL PAY SERVICES

Bill Pay
120 100 80 60 40 20 0 Excellent Good Average 0 Poor 0

Don't Know 98.4090909

Series1 0.22727273 1.36363636

FINDINGS: In Rural area customers are not habituated to pay any kind of bill at bank so they are not aware about Billpay services RECOMMENDATIONS: Bank should spread awareness of banks product and services through various customer awareness programmes in rural areas

5.3.12 DEMAT SERVICES

no. of respondents(Percentage)

Demat
120 100 80 60 40 20 0 Excellent Good Average 0 Poor 0 Don't Know 99.09090909

Series1 0.454545455 0.454545455

FINDINGS Dena bank has not yet introduced Demat services in Rural branches. RECOMMENDATIONS Bank should introduce Demat service on pivotal basis so that bank is able to know that whether customer really wants Demat service at Rural branches.

5.4 SATISFACTION WITH THE PRODUCT OF THE BANK.

Satisfaction
no. of respondents(Percentage) 90 80 70 60 50 40 30 20 10 0 Series1

yes 83.18182

no 16.81818

FINDINGS: Customers of Dena bank are using one or two product or services and most of them are satisfied with availed services or product.

Customers who are not satisfied with Dena bank services due to slow services or less intimacy with staff. RECOMMENDATIONS: Bank should employ those employees who are good to deal with village people. The staff employed in the rural branches should be very much comfortable with the local language. The Rural customers find problems in communicating otherwise.

5.5 PRODUCT PROVIDED BY THE BANK ARE COMPARABLE TO OTHER BANK IN YOUR LOCALITY

Competitive Comparison
100 80 Axis Title 60 40 20 0 Percentage yes 90.45454545 no 9.545454545 0 0

FINDINGS: Customers of Dena bank responded positively in competitive comparison. Those customers who are not satisfiedare due to other competitive Banks products and services. RECOMMENDATIONS: Dena bank should focus on their products and services. Dena bank should introduce new product and improve on services. Especially service should be faster, because each customer values time.

5.6 TIMELY SERVICE EXPERIENCE

5.6.1 A/C OPENING PROCESS

no. of respondents(Percentage)

A/C Opening
60 50 40 30 20 10 0 Excellent Good Average Poor Don't Know

Series1 44.31818182 51.13636364 3.636363636 0.681818182 0.227272727

FINDINGS: There is no issue in opening A/c in majority of the Branches But in some branches stationary is not provided, and the staff doesnt help the customers who are illiterate in filling up the forms. RECOMMENDATIONS More help should be provided to the customers majorly for filling the forms, as the new forms require more documentation and majority of the rural people being illiterate, they face problems.

5.6.2 PASSBOOK UPDATION

Passbook Updation
no. of respondents(Percentage) 60 50 40 30 20 10 0 Excellent Good 51.81818182 Average 4.318181818 Poor 1.590909091 Don't Know 1.590909091

Series1 40.68181818

FINDINGS: 1. In majority of the Branches updating the passbook is quick. 2. But in Bigger branches like Sec 16 & Sec 22 it takes longer time in the updating of passbook. RECOMMENDATIONS 1. In the Rural Branches, there was a problem that many times the machine was not in proper condition; so on the technology front things could be resolved. 2. Rural Customers dont know the importance of getting the Passbook updated, which could be explained to them by the staff.

5.6.3.CASH WITHDRAWAL FACILITY

no. of respondents(Percentage)

Withdrawing Cash
60 50 40 30 20 10 0 Excellent Good Average Poor Don't Know

Series1 42.27272727 50.68181818 5.681818182 0.454545455 0.681818182

FINDINGS: 1. Customers did not face any problems in withdrawing cash. 2. And to add to that, the Rural Customers do not need a large amount of money for their regular use. 3. And in case they are in need of large sum of money, they give prior intimation to the Bank which lessens the problems. RECOMMENDATIONS 1. Bank should maintain enough money to fulfill the Customers demand even if they dont give prior intimation. 5.6.4 CASH DEPOSIT SERVICE

Depositing Cash
no. of respondents(Percentage) 60 50 40 30 20 10 0 Excellent Good Average Poor 0 Don't Know 0.90909091

Series1 42.9545455 51.8181818 4.31818182

FINDINGS: 1. Customers do not face any problem in depositing Cash in Rural Branches, while in the other Urban Branches the Customers at times need to wait for long. RECOMMENDATIONS 1. In Rural branches, proper basic facilities for Sitting, is not available in Rush hours. 5.6.5 SINGLE WINDOW FACILITY

Single Window Facility

no. of respondents(Percentage) 80 70 60 50 40 30 20 10 0 Excellent Good Average Poor Don't Know 70

Series1 2.954545455 11.59090909 1.136363636 1.818181818

FINDINGS: 1. In Rural branches there is no single window facility. RECOMMENDATIONS 1. The number of Single Windows should be increased in the Urban & Semi - Urban Branches.

5.6.6 GETTING A CHEQUEBOOK

Getting a Cheque
no. of respondents(Percentage) 50 40 30 20 10 0 Excellent Good Average 2.5 Poor 0 Don't Know 40.22727273

Series1 34.54545455 29.09090909

FINDINGS: 1. In Rural branches customers are not willing to do transactions through Cheque, and the ones who are doing such transactions are satisfied with the service. RECOMMENDATIONS 1. The Bank should encourage customers to do more of Cheque transactions, as itssafer than Cash transactions.

5.6.7

OBTAINING A DEMAND DRAFT

Obtaining a DD
no. of respondents(Percentage) 80 70 60 50 40 30 20 10 0 Excellent Good Average Poor 0 Don't Know 72.5

Series1 12.72727273 6.818181818 2.954545455

FINDINGS: 1. In Rural Branches customers do not need the Demand Draft facility. So there is a large unawareness about it. 5.6.8CARRYING OUT OF STANDING INSTRUCTIONS

no. of respondents(Percentage)

Carrying out of Standing Instruction

80 70 60 50 40 30 20 10 0 Excellent Good Average Poor

Don't Know

Series1 16.1363636 8.86363636 1.36363636 0.22727273 72.9545455

FINDINGS: 1. In Rural Branches customers are less who has taken Retail Loans and thus there is a large unawareness about it. 2. And in Rural areas there are no fixed income group as majority people are engaged in Agriculture activities. 5.6.9 CREDIT OF LOCAL CHEQUES

no. of respondents(Percentage)

Credit of Local Cheques

50 40 30 20 10 0 Excellent Series1 25 Good Average Poor Don't Know

27.72727273 4.318181818 0.227272727 46.36363636

FINDINGS: 1. Credit of Local Cheques was not a major problem for people who use cheque transactions. Rural customers are not used to so much of cheque transactions. Thus, we have a mixed response. RECOMMENDATIONS: 1. Awareness and willingness for cheque transactions is less in Rural branches. Hence that should be changed & people should be encouraged to take the advantage of the same. 5.6.10 CREDIT FOR OUTSTATION CHEQUES

no. of respondents(Percentage)

Credit for Outstation Cheques

60 50 40 30 20 10 0 Excellent Series1 16.5909091 Good 20 Average 7.5 Poor 2.5

Don't Know 50.6818182

FINDINGS: 1. Crediting of Outstation Cheques was a problem at some places. Especially at branches of Koba, Bhat. The other branches did not face a major problem in this regard. 2. Rural customers are not used to so much of cheque transactions. Thus, we have a mixed response. RECOMMENDATIONS: 1. Majority of the Rural customers are connected to the cities through their families, who send them money. So Credit of Outstation cheques should be done in minimum time.

5.6.11 GETTING A NEW F.D RECEIPT

New F.D Receipt

no. of respondents(Percentage) 40 30 20 10 0 Excellent Good Average 2.5 Poor 0 Don't Know 37.9545455

Series1 31.1363636 29.7727273

FINDINGS: 1. The response for FD was good. Customers were satisfied with FD. But awareness was equally less. RECOMMENDATIONS: 1. Awareness should be increased, encouraging people to get more FDs and the benefits it will to them. There were people who had lots of money in the Account but they were reluctant to get an FD done. Such potential customers should be contacted.

5.6.12 GETTING F.D PAYMENT RECEIPT

no. of respondents(Percentage)

F.D payment receipt

40 35 30 25 20 15 10 5 0

Excellent

Good 33.18181818

Average 2.272727273

Poor 0

Don't Know 32.95454545

Series1 33.40909091

FINDINGS: 1. Response for Payment of FD Receipt was very good. 2. At some of the branches, the employees would even intimate the customers regarding the maturity of their FD well in advance. RECOMMENDATIONS: 1. Awareness should be increased, encouraging people to get more FDs and the benefits it will give them.

2. If the staff at all places keep the track of the FD payments then that will create a one- one bond with the Customers.

5.6.13 TIMELY ISSUANCE OF TDS CERTIFICATE

Timely issuance of TDS certificate

no. of respondents(Percentage) 90 80 70 60 50 40 30 20 10 0

Excellent

Good 1.590909091

Average 0

Poor 0.454545455

Don't Know 83.86363636

Series1 9.090909091

FINDING: 1. For TDS, we have come to know that the majority people dont need it in villages and those who know & need it in the Urban Branches (Sec 16, Sec 22, and Infocity) have rated the service good. RECOMMENDATIONS 1. There will be people especially in the Rural Branches, who can take the benefit of this service, but are not able to do so because of knowledge regarding the same.

2. In such a case the staff of the respective Branch should make them aware of the Service & encourage them to use it. 5.6.14 EXCHANGE OF MUTILATED/SOILED NOTES

Exchange of mutilated/soiled notes

50 40 30 % 20 10 0 Series1 Always 28.18181818 Often 17.95454545 Rarely 12.04545455 Don't Know 43.86363636

FINDING: 1. The exchange of mutilated/soiled notes process is overall good. Majority have no problem regarding this issue. 2. Some branches has problem due to currency chest. 5.6.15 ACCEPTANCE OF SMALL DENOMINATION

Acceptance of small denomination

60 50 40 30 20 10 0 Series1 always 22.5 Often 17.04545455 Rarely 10.22727273 Don't Know 52.04545455 %

FINDING: 1. Due to lack of stock for fresh notes like Rs. 5, Rs 10 and Rs. 50, thus customer faces problems at times.

RECOMMENDATIONS: Bank should increase small denomination according to the requirement and solve the problem of the customers.

5.6.16 PERCEPTION TOWARDS BANK

Perception
80 70 60 50 40 30 20 10 0 Techno Savvy Series1 10.45454545 Traditional Conservative 4.090909091 Trusted Family 73.40909091 Liberal 18.63636364 Not differentiated 1.818181818 Ageing 0.909090909 %

FINDING: 1. Perception about the Bank resulted to a large extent as - TRUSTED FAMILY BANK at all places. RECOMMENDATIONS: 1. In Rural branches the Bank and the Premises are not well equipped Technologically as compared to the Urban / Semi - Urban Branches So in case the Branches are given more facilities that will benefit the Bank. 2. Better facilities will help the customers and the employees too. And in this fierce Competition, from different Banks, such facilities will be an added advantage. 3. Branches can be made identical to remove infrastructure perception as well as customer and employee's perception towards bank.

5.7 CUSTOMERS WITH RESPECT TO THEIR EDUCATIONAL BACKGROUND:

Education Background
No Degree 35% SSC 23% HSC 13% Graduate 24% Post Graduate 5%

INTERPRETATION Here the graph projected depicts that major chunks of customers are illiterate and it is because of more rural population.

5.7.1COMPARISON OF EDUCATION LEVEL AMONG URBAN AND RURAL CUSTOMERS WITH RESPECT TO EDUCATIONAL BACKGROUND:

Comparison of Education level

60

50

40 Percentage

30

Urban Rural

20

10

0 SSC HSC Graduate Post Graduate No Degree

INTERPRETATION The above chart shows that in urban areas customer are more educated than rural customers and due to this they are more aware about the products and Services of the bank. This has direct impact on satisfaction level of customers.

5.8. HYPOTHESIS
5.8.1 CORE BANKING SOLUTION URBAN Ho:There is an association between the CBS awareness in gender Respondents. H1:There is no association between the CBS awareness level in gender Respondents.

URBAN BRANCHES: 1. INFOCITY 2. SECTOR 16 3. DEGHAM 4. SECTOR 22 5. KALOL ACTUAL RANGE: Total Respondents GENDER FEMALE MALE Grand Total NO 5 10 15 YES Grand Total 8 77 85 13 87 100 CBS

EXPECTED RANGE: Total Respondents GENDER FEMALE MALE Grand Total CBS NO 1.95 13.1 15 YES Grand Total 11.1 74 85 13 87 100

CHI SQUARE TEST By comparing the Actual Range and Expected Range we get the probability value of Chi Square.

2 = 0.011089005
This value falls in the rejection range of 0.05. Thus we reject the null hypothesis. Hence, we can say that there is no relation between the CBS Awareness in the gender Respondents in Urban Branches. RURAL Ho:There is an association between the CBS awareness level in gender Respondents. H1:There is no association between the CBS awareness level in gender Respondents.

RURAL BRANCHES 1. 2. 3. 4. 5. POR KOBA SAIJ SHERTHA KOLAVADA 6. PANSAR 7. CHHATRAL 8. ITADARA 9. BALWA 10. BHAT

ACTUAL RANGE Total Respondents GENDER FEMALE MALE Grand Total NO 17 52 69 YES 11 120 131 Grand Total 28 172 200 CBS

EXPECTED RANGE: Total Respondents GENDER FEMALE MALE Grand Total CBS Grand Total 28 172 200

NO 9.66 59.34 69

YES 18.34 112.7 131

CHI SQUARE TEST By comparing the Actual Range and Expected Range we get the probability value of Chi Square.

2 = 0.001651968
This value falls in the rejection range of 0.05. Thus we reject the null hypothesis. Hence, we can say that there is no relation between the CBS Awareness in the Male & Female Respondents in Rural Branches.

5.8.2 SATISFACTION LEVEL OF PRODUCTS OF DENA BANK URBAN H0:The Satisfaction level of Products is independent to Gender Respondents in Urban Branches. H1: The Satisfaction level of Products is not independent to Gender Respondents in Urban Branches. ACTUAL RANGE: Count Respondents Satisfaction NO YES Grand Total 13 13 FEMALE MALE 4 83 87 Grand Total 4 96 100 of Gender

EXPECTED RANGE: Count Respondents Satisfaction NO YES Grand Total FEMALE 0.52 12.48 13 MALE Grand Total 3.48 83.5 87 4 96 100 of GENDER

CHI SQUARE TEST By comparing the Actual Range and Expected Range we get the probability value of Chi Square.

2 = 0.748725217
This value is greater than that of rejection value of 0.05. Thus we do not reject the null hypothesis. Hence we can say that there is a relation between the Satisfaction of Products in the Male & Female Respondents in Urban Branches. RURAL H0:The Satisfaction level of Products is independent to Gender Respondents in Rural Branches. H1: The Satisfaction level of Products is not independent to Gender Respondents in Rural Branches. ACTUAL RANGE: Count of Gender

Respondents Satisfaction NO YES Grand Total FEMALE 1 27 28 MALE 7 165 172 Grand Total 8 192 200

EXPECTED RANGE: Count of Gender

Respondents Satisfaction NO YES Grand Total FEMALE 1.12 26.88 28 MALE 6.88 165 172 Grand Total 8 192 200

CHI SQUARE TEST By comparing the Actual Range and Expected Range we get the probability value of Chi Square.

2 = 0.900688074
This value is greater than that of rejection value of 0.05. Thus we do not reject the null hypothesis. Hence we can say that there is a relation between the Satisfaction of Products in the Male & Female Respondents in Rural Branches.

CHAPTER 6 FINDINGS
As Promising to be the trusted family bank, Dena Bank has proved and proving itself towards its mission and vision by performing excellent service to its customer, especially to its rural customers, and by expanding its services inter and intracountry. Our probing, about customer awareness and rural banking by Dena bank (Gandhinagar branches, Gujarat) after visiting its customers, has some findings mentioned below: Dena bank has made its pivotal contribution in rural banking. As it has spread over most of the villages of Gujarat. Dena bank is providing its services to even remote RURAL AREAS of Gandhinagar, working as a single service provider to most of the areas. Now after the interpretation of the entire questioners from that there are many points found which needs to be focused more and therefore they are mentioned as below: In competitive regions Customers are demanding more products, ATM services and extra facilities. Bank can enhance the technological aspects and reduce time to serving customers, which is more in many branches. Overall if we look at the performance of the Bank in various aspects then it is found to be satisfactory but as mentioned above their remains some defects which needs to be rectified so that the bank can grow at a much faster rate. Customers do not visit the bank regularly in Rural areas. Response is one of the key elements for the customers, which is found to be good as far Dena Bank is concerned. Most of them are having Savings a/c with the bank. Overall the customers of the bank are satisfied with the services provided. In urban areas it lacks in providing comparable services sometimes as customers expectations are same as it is with other existing private banks. There are many things which are found to be negative for the bank such as less awareness about the products and in depth services of Dena bank as well as technological advancements.

 Dena bank is a safe House to put the money in safe hand in Rural areas. People in Rural areas are not much aware about new technology which introduce by Dena bank. The Dena bank is doing good business in Rural areas. Customers of Dena bank in Rural area are mostly engaged in Agricultural activities so majority Customers has taken agriloans for their agricultural activities.

CHAPTER 7

RECOMMENDATIONS & SUGGESTIONS

As there are many important which we found from the survey, there are some points, which Dena bank has to look after and some of them need to be changed in order to get the good business; Customer of Dena bank expects more advisory services, which the bank must provide so that they can fetch more business. Pinch the products like DKCC, DGCC,DIC, TDR, FI,etc. as there is less number of people aware of it. Apart from the regular services, which the bank is providing, customers expect that the bank should perform activities like personnel concentration on each individual (although not possible to the full extent). Charges levied on the various aspects like if the balance is not maintained should be reduced. As customers in rural areas are not aware about terms and conditions. In competitive regions Customers are demanding more products, ATM services and extra facilities. Bank can enhance the technological aspects and reduce time to serving customers, which is more in many branches. Overall if we look at the performance of the Bank in various aspects then it is found to be satisfactory but as mentioned above their remains some defects which needs to be rectified so that the bank can grow at a much faster rate. As the awareness among the customers is less, mostly in rural areas, the opportunity of growth seems less volatile. The main causes of unawareness among customers are:i. ii. iii. iv. v. Illiteracy is high. People cant through to all terminologies of banking products and services. Customers are limited to using different products and Services. People cannot understand each and every scheme. People cant grasp scheme instructions in one time instruction.

vi. vii.

Customers are sometimes face communication gap. To make aware the customers, Dena bank has organized Gram Sabah on Tuesday in a month. But it mainly focuses on solving complaints, loan recovery, and some instructions. It is not giving importance to awareness related work.

We have analyzed and suggested the bank, one awareness program and some improvement for Gram Sabah as under; i. ii. iii. In Gram Sabha the instructor must know local language to convey information. There should be clarity of instructions and schemes. One to one communication should be provided to the potential customer or beneficiary. iv. There should convey information more than two times to rural customers for their understanding. v. Information about New schemes should be highlighted and displayed in the premise of the bank. vi. There should be one more assistant to Agriculture officer, who organizes the Gram Sabha. vii. It may be possible that awareness should be communicated through Business Correspondents (BC), who is appointed for Financial Inclusion to the rural customers.

Awareness program
Gram Sabha is catering to rural people, but it is not proving fruitful at some extent. So, it is possible that it should be extended to once in a week and particular schedule or time should be allocated for making people aware about its products & services and competitive advantage. Before conducting the sabha, manager can get information related to potential customer for the particular scheme newly launched or old one, which helps them converting potential customer to the actual beneficiary.

CHAPTER 8 LIMITATIONS
There are certain limitations of this study; Sample size is small (300 customers), so there may be possible that the desired level of accuracy not exist. This study is conducted only in small area so there may be chance of Inaccuracy of the result. In selecting the Sample, there are chances of sampling errors. Sometimes some respondent do not give right answers, thats why variations may be possible. This study is applicable in Gandhinagar region only, not in whole India.

CONCLUSION
In terms of services like convenience banking, the bank is already providing the same with almost all services are provided by Bank, and it is a great advantage for the customer.

Dena Bank has enough number of branches in Gandhinagar region and bank also go to the uncovered region where bank can generate good business.

The Bank also has the advantage of the existing customers where their level of faith and their view about the company to the outside world will be a helping hand for the company to expand its business.

Dena Bank has various products and services in its portfolio, so for the people they have variety of options to choose from, therefore it should market its product in such a manner that more and more people come to Dena bank and deal with.

From the research conducted, that the customers are satisfied with Dena banks products & services, but awareness is less in rural region.

Dena bank should regularly check its various branches and make applicable changes required.

BIBLIOGRAPHY
References: (1) April 2011, pg. 26,Marketing mastermind. (2)The Indian Banker, Downscaling Rural Finance, page 50, October 2011 Levesque, and MC Dougall (1996) Determinants of customer Satisfaction in Banking International Journal of Bank Marketing, 14(7), (3)http://www.ehow.com/about_6137961,meaningconsumerawarness,htm#ixzz1NudvZXxj (4) shri N D S V Nageswara Rao, Chief manager(Research), state bank institute of rural development, Hyderabad. (5)Kamat CC, (1978), Report of the Working Group on Multi Agency Approach on Rural Lending, ReserveBank of India.

(6) Prof. G. Ram Reddy Third Endowment Lecture by Dr. Y.V.Reddy, DeputyGovernor, Reserve Bank of India, at Potti Sreeramulu Telugu University Auditorium Public Gardens, Hyderabad, on December 4, 1999. And other Various sites such as;

www.denabank.com www.sebi.gov.in www.moneycontrol.com www.scribd.com www.rbi.org.in

APPENDIX Survey of Customers We shall be glad if you could spare your valuable few minutes to give your feedback about Dena Bank. Name of the respondent 1. Are you aware that Bank is under Core banking solution i.e, you can bank at

any of our branches for your banking facility.

Yes

No

2.

Are you aware that the following Product are offered by the bank and give

your rating by putting tick mark ( )

Sr no Excellent Good Average Poor Dont know

Issuance of Debit/ATM Card

Premium Saving Account

Premium Current Account

Internet BAnking Facility

5 6

SMS Banking Alert Phone Banking Service

7 8

Remittance Direct/ Indirct Tax Collection

9 10

Dena E- Tax Pay RTGS /NEFT remittance

11 12

Bill Pay Service DematService

3.

Please tell us the Product availed by you? .. b. .. c. ...

a.

4.

Are you satisfied with the Product of the bank?

Yes

No

5.

Do you feel the Product provided by the bank are comparable to other bank

in your city?

Yes

No

If No, kindly guide the bank about the Products/Services to be improved in the product line ? a. b.

c. ... d. . 6. Can you tell us your overall experience in respect of time taken in availing the

following services? Please tick mark

Sr 1 A/C Opening process 2 Getting the Passbook Updated Excellent Good Average Poor Dont know

3 4 5

Withdrawing Cash Depositing Cash Single Window Facility

Getting a Cheque book

Obtaining a Demand Draft

Carrying out of Standing Instructions

Credit of a local Cheque

10

Credit of outstation cheque

11

Getting a new Fixed deposit Receipt

12

Getting payment of Fixed deposit Receipt

13

Timely Issuance of TDS Certificate

7.Can you tell us the Administrative and Supervisory effectiveness of the branch functioning where you have your account? Please put tick mark ( )
SR NO. 1 Punctuality in Starting a business Always Mostly Rarely Dont know

Availability of Uninterrupted Service at the Counter

Attending to you just before close of business hours

4 5

Getting attended Promptly at the Counter Receiving Notice before maturity of term Deposit

Acceptance of clearing/ collection cheques at the counter

Immediate Credit of outstation Cheque up to RS 15, .

Getting Interest in case of delay in Collection of cheques/drafts

Whether standing instructions are followed

10 11 12 13

Returning in time your bounced cheque Exchange of mutilated/soiled notes Maintenance and cleanliness of Branch Accepting small Denomination Notes and Coins

8.What is your opinion about Dena Bank? a. Techno Savvy Bank c. Trusted Family Bank e. Just a Bank not differentiated b. Traditional Conservative Bank d. Liberal Bank f. Ageing Bank

9. Can you tell us the weakness of the Bank? a. b. .. c. .... 10. Please select the highest Degree you have obtained among the following:

SSC HSC Graduate Post Graduate Not having any degree