SYNOPSIS

On

A study on customer perception towards services rendered by public

sector banks with special reference to Indore city

Submitted for the Major Research Project in Master of Business

Administration

To

DAVI AHILYA VISHWAVIDYALAYA, INDORE (M.P)

GUIDED BY SUBMITTED BY
Mr. Yogesh Mehta Ms. Anjila Jain
Associate Professor MBA 2nd Year

VENKTESHWAR INSTITUTE OF TECHNOLOGY

INDORE (M.P.)
 TABLE OF CONTENT

S.No Chapter Name Page No.

1 Introduction 3

2 Review of Literature 4

3 Rationale of the study 8

4 Objectives 9

5 Hypothesis 9

6 Research Methodology 10

7 Bibliography 11
INTRODUCTION
The banking system in India is significantly different from that of other Asian nations
because of the country’s unique geographic, social, and economic characteristics. India has
a large population and land size, a diverse culture, and extreme disparities in income,
which are marked among its regions. There are high levels of illiteracy among a large
percentage of its population but, at the same time, the country has a large reservoir of
managerial and technologically advanced talents. Between about 30 and 35 percent of the
population resides in metro and urban cities and the rest is spread in several semi-urban
and rural centers. The country’s economic policy framework combines socialistic and
capitalistic features with a heavy bias towards public sector investment. India has followed
the path of growth-led exports rather than the “export led growth” of other Asian
economies, with emphasis on self-reliance through import substitution. These features are
reflected in the structure, size, and diversity of the country’s banking and financial sector.
The banking system has had to serve the goals of economic policies enunciated in
successive five year development plans, particularly concerning equitable income
distribution, balanced regional economic growth, and the reduction and elimination of
private sector monopolies in trade and industry.
Many of these new private sector banks have brought with them state-of-the-art
technology, have built up on modern infrastructure, a wide network of branches, shown
superior standards in productivity, encouraged several global practices. The most
significant achievements have been in the field of recruiting, training the right set of
individuals who possess the suitable skills for the jobs at bank and have created a place for
them along with attaining a large share in the financial market within a short span of time.
The success of most of the private sector banks can be attributed to their proactive
measures with respect to their relationship with the customer. This has compelled the
public sector banks to do some introspection and work towards understanding the changing
demands of the customer and equip themselves in order to cater to the growing
expectations of the customer. Some of the public sector banks having understood the
urgency to mend their ways have either changed or perished from the market. They have
tried to incorporate superior standards in productivity and are making constant efforts to
adapt to the changing environment with key focus on customer relationship management.
This research mainly focuses on studying about both customer perception and expectation
of services provided by public and private sector banks to draw a comparison between the
two using the SERVQUEL model.
Public sector banks were ruling the roost during the pre-liberalization era. Then mass
banking was the order of the day. But ever since our country embraced market economy,
there has been a paradigm shift in the functioning of banks. Profit banking concept has
pushed the mass banking concept to the backyard. The institutions are acting locally with a
global thinking. Thus marketing concept permeates the banking arena. In a competition
driven economy, customer is the sovereign. Only such of those entities that satisfy
customers are surviving and the rest of others die a natural death. Parasuraman et al.
(1985) opines that service quality is the function of expectation of customers and service
provider’s performance. Further service provider’s superior performance facilitates
achieving market excellence. Hectic competition, high degree of customer awareness and
consequent higher expectation, explosive growth of communication technology and
astounding growth of information technology are some of the factors contributing to a sea
change in banking scenario. The information and communication technology has
empowered customers with market knowledge and wider choices. Therefore banks in
general are under pressure not only to attract new customers but also to retain existing
customers. Public sectors banks are losing their customers to new generation private sector
banks and foreign banks who are wooing the customers by virtue of their sophisticated
technology absorption. It is ultimately the customers who would decide which bank to
continue and which one to exit. Thus our Indian banking industry is fast inching towards
customer orientation.
REVIEW OF LITERATURE
Gronroos (2000, p.46) defined service as, “A service is a process consisting of a series of
more or less intangible activities that normally, but not necessarily always, take place in
interactions between the customer and service employees and/or physical resources or
goods and/or systems of the service provider, which are provided as solutions to customer
problems”. Fogli (2006, p.4) define service quality as “a global judgement or attitude
relating to a particular service; the customer’s overall impression of the relative inferiority
or superiority of the organization and its services. Service quality is a cognitive
judgement”. Bahia and Nantel (2000) conducted a research to develop a valid
measurement of perceived service quality in the Retail Banking sector in Canada. They
argued that the SERVQUAL approach has not except from critics; therefore, they
developed a new measurement for perceived service quality in Retail Banking. They
proposed a scale that was called Bank Service Quality (BSQ). It comprises 31 items
classified across six dimensions as: effectiveness and assurance, access, price, tangibles,
range of services offered and accuracy and reliability. They proved that the dimensions of
BSQ are more reliable than the dimensions of SERVQUAL. Glaveli et al. (2006) stated
that BSQ is more reliable than SERVQUAL. Stafford (1996) conducted research to
identify the core elements of BSQ and identified seven attributes in assessing BSQ. They
are as follows:
1. Bank atmosphere - environment of the bank including the attitude of the staffs.
2. Relationship - it indicates the personal relationship with the bank employees.
3. Rates and charges - an individual’s perception of BSQ is affected by the low cost
and high interest rates.
4. Available and convenient services - it indicates the full range of available services,
convenient and easily accessible.
5. ATMs - it indicates the availability of the automatic teller machines.
6. Reliability/honesty - it emphasizes on the solid bank ratings and reliable, honest
staff.
7. Tellers - enough and accessible tellers.
Angur et al (1999) examined the applicability of alternative service quality measure in the
Retail Banking industry in India. They conducted their research on the consumers of two
major banks in India. They use SERVQUAL model to measure the overall service quality.
They found that all the dimensions are not equally important in explaining variance in
overall service quality. The result indicated that responsiveness and reliability seem to be
the most important dimensions followed by the empathy and tangible dimensions;
whereas, assurance appears to be the least important dimension. Finally, they concluded
that SERVQUAL is the best measure of service quality in banking industry.
The applicability of the SERVQUAL measure is well established in the retail banking
industry. As mentioned earlier, Angur et al (1999) stated that SERVQUAL is the best
measure of service quality in the retail banking industry in the developing country. Most of
the researchers use the SERVQUAL measure or the modified SERVQUAL measure in the
retail banking industry.
From the above discussion it can be concluded that SERVQUAL is still suitable as an
assessment tool to measure the service quality perceptions in the retail banking industry,
whether it is based on difference score, gap score or performance only.
Factors related to service delivery are also related to customer satisfaction (Levesque and
McDougall 1996). According to Levesque and McDougall (1996), the convenience and
competitiveness of the bank are two important factors that are likely to influence the
overall satisfaction levels of customers. A number of researchers have looked into the bank
selection criteria adopted by customers (Anderson et al. 1976; Denton and Chan 1991; Erol
and El-Bdour 1989; Erol et al. 1990).
RATIONALE OF THE STUDY

Customer Satisfaction is a business term which is used to capture the idea of measuring
how satisfied an enterprise's customers are with the organization's efforts in a marketplace.
Every organization has customers of some kind. The organization provides products
(goods and/or services) of some kind to its customers through the mechanism of a
marketplace. The products the organization provides are subject to competition whether by
similar products or by substitution products.
Hectic competition, high degree of customer awareness and consequent higher expectation,
explosive growth of communication technology and astounding growth of information
technology are some of the factors contributing to a sea change in banking scenario. The
information and communication technology has empowered customers with market
knowledge and wider choices. Therefore banks in general are under pressure not only to
attract new customers but also to retain existing customers. Public sectors banks are losing
their customers to new generation private sector banks and foreign banks who are wooing
the customers by virtue of their sophisticated technology absorption. It is ultimately the
customers who would decide which bank to continue and which one to exit. As we know
more satisfied customer leads to more profit or more market share, so it is the
responsibility of every bank to know what the current perception of their customer to their
services and it will help them to design alternative strategies to attract and retain their
customer. This research will supplement the same.
OBJECTIVES
1. To study the conceptual frame work of Indian banking sector.
2. To study the influencing factors for the selection of a particular bank by the customer.
3. To know the most preferred services availed by a customer.
4. To identify the preferred source of information helps in selection of a particular bank.
5. To develop a profile of customer towards the services rendered by public sector banks.

HYPOTHESIS
To Study the Customer Perception towards the services rendered by Indian public sector
banks in Indore city, need to develop some hypothesis objective wise.
We do not require designing of hypothesis for the objective number- 1, 2, 3, and 4 because
these objectives are based on exploration. And for objective number- 5 hypothesis are
mentioned below.
H01: There is no significant difference among the perceptions of different age group of
customers in Indore city.
H02: There is no significant difference between the perceptions of male and female
customers in Indore city.
H03: There is no significant difference among the perceptions of customers of different
income group in Indore city.
RESEARCH METHODOLOGY
The methodologies adopted for studying the objectives are surveying the banking
customers of Indore city. And in view of the nature of requirements of the study to collect
all the relevant information regarding the services provided by public sector banks in
Indore city a self structured questionnaire will be adopted for the collection of primary
data.
Sampling: - The sampling method used for the research will be “Non Probability
sampling”.
Sample Area: - The sample population for the research will be taken from the Indore city.
Sample Unit: - Public sector banks customer of Indore city.
Sample Size: - 100-150 people will be made a part of the survey.
Primary Data: - To collect the primary data for this study a self structure questionnaire
will be developed based on Likert scale and administered after pilot study.
Secondary Data: - Secondary data will be collected through published records, journals,
magazines and web-portals of and like other available sources, if required.
Data analysis: - Suitable statistical test like z-test, Chi-square test will be applied for the
hypothesis mentioned for objective number-5 using SPSS software.
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