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Chapter 2
REVIEW OF LITERATURE
Review of Literature 17
REVIEW OF LITERATURE
A number of studies have been conducted in India and abroad on various
aspects of banking especially retail banking. Some worthwhile studies relating to the
present topic are reviewed here.
Birla Institute of Scientific Research (1981)1 in its study makes a comparative
assessment of the performance of public sector banks and major private sector banks
since nationalisation. They find that the performance of public sector banks is not
satisfactory in rural development activities when compared to the private sector
banks.
Jain, Pinson and Malhotra (1987)2 in their study “Customer loyalty as a
construct in the marketing of bank services” feel that customer loyalty is a very
useful construct. Their contention is that the human aspect of banking should be
given utmost importance by the loyal segment for the marketing of bank services.
R Jayakumar (1993)3 in his study of “Performance of private sector banks in
Kerala” makes a comparative examination of performance of public sector banks
and private sector banks in Kerala. He finds that in Kerala private sector banks
perform better than their public sector counterparts.
Delvin James (1995)4 makes a case study of the retail banking services in
UK using First Direct, a subsidiary of Midland Bank. He concludes that banks can
increase their market share through proper communication and prompt delivery of
their products.
Review of Literature 18
Govindarajalu (1996)5 in his article “Satisfaction and dissatisfaction with
bank services” views that the Indian banks have lost the quality of customer service.
The dissatisfaction of customers with bank services is an important issue to be
considered by banks and policy makers for the development of banking sector.
Sarkar and Das (1997)6 make a comparison of the performance of the three
bank sectors - public, private and foreign - for the year 1995-1996. These banks are
compared in terms of profitability, productivity and financial management. They
find that the public sector banks are very poor in performance on the basis of these
variables than the other two sectors.
D Mishra (1997)7 makes a study on the performance of commercial banks in
India choosing relevant parameters like quality of service, risk management,
profitability etc. His conclusion is that the banks should try to increase quality,
balance risk management, and optimise profitability in order to survive and
succeed. He identifies four challenges for the bank namely competition, credit,
customer and control.
Gaganjot Singh (1998)8 in his study “New innovations in banking industry –
a study of new private sector banks” views that the new private sector banks in
India are using better technology and are offering better services to the customers.
The new private banks have emerged as a model to the banking industry in terms of
service levels, ambience, technology etc. As the public sector banks have already
established a huge customer base, they become complacent and are slow to become
customer friendly. They are also less innovative in the use of technology-assisted
customer service. Because of their huge customer base they feel that they can
withstand competitions from new generation banks.
Review of Literature 19
N. S. Varghese (2000)9 is of the opinion that new generation private sector
banks with their latest technology are able to implement e-banking and are highly
preferred by investors in the stock market. He also points out that prominent new
generation private sector banks like HDFC and ICICI have entered into internet
banking through which greater convenience is offered with lower transaction cost.
The study carried out by P Verma (2000)10 is in tune with the findings of
Varghese. Analysing the impact of information technology on new generation banks
Verma feels that new generation banks are far ahead of traditional public sector
banks. He finds that information technology is posing a threat to the public sector
banks. He observes that the business per employee of major public sector banks in
India is a mere fraction of the business per employee of new generation banks. So
the public sector banks have to improve their productivity and efficiency to compete
with the new generation banks which are fully computerized. But Eapen Varghese
(2001)11 finds no such difference between the services rendered by public sector and
private sector banks.
Mini Joseph’s (2001)12 view is that new generation banks have created a
spirit of competition in the banking industry by fully utilizing the facilities and
amenities available from technology and computerization, and by accepting
customer satisfaction as the core aspect. For preventing the erosion in the market
share of old private sector banks and public sector banks, they are also providing
quality service now in a competitive spirit.
Anantha Swamy (2001)13 makes an appraisal of the performance of different
bank groups in India in the backdrop of competition, deregulation and changes in the
field of banking. He classifies banks into public sector, old private sector, new
Review of Literature 20
private sector and foreign banks. His focus has been on profitability, NPA,
contingent liabilities, spread etc. for the last five years and arrives at the conclusion
that the new private sector banks are performing better than the banks in other
sectors.
Jamal and Naser (2002)14 makes a study on “The factors influencing
customer satisfaction in the retail banking sector of Abu Dhabi”. He collected the
necessary data using structured questionnaire. Customer response to questionnaire
shows that the customer expectations from the bank and service quality provided by
the banks are the major determinants of customer satisfaction. Their investigation on
factors influencing customer satisfaction in the Pakistan retail banking sector15 also
reveals that service quality is the important determinant of customer satisfaction.
P. D. Jeromi (2002)16 who studied “The trends and issues of bank credit in
Kerala” finds that the absolute rate of growth of credit is reasonably good. But in
relation to deposits, per capita credit, credit per account, disbursement by all India
Financial Institutions the level of credit is lower. He also observes that more
attention should be given to mobilization of deposits than to expansion of credit.
Pushpangadharan’s (2002)17 study on “The quality of customer service in
public sector banks” also shows that public sector banks lag behind private sector
banks in customer service. The parameters he used in the study are facilities and
amenities, speed in completing transactions and providing deposit related and credit
related services. The customers of public sector banks are not much satisfied with
branch managers’ and employees’ attitudes. The public sector banks are very poor in
respect of customer feedback system and redress of grievances.
Review of Literature 21
Bharathi Pathak (2003)18 makes a study of “The financial operations of new
generation private sector banks in India”. Five banks (Indusind bank, Centurion
bank, HDFC bank, ICICI bank and UTI bank) are taken up for financial analysis for
a period of five years from 1996-97 to 2000-01. Their financial performance is
studied under four different parameters – financial, operating, profitability and
productivity. His conclusion is that the working of all banks is satisfactory but
HDFC bank comes at the top closely followed by ICICI bank.
Bikram De (2003)19 makes a study on the effects of ownership on bank
performance. He compared old private sector banks and new generation banks in
terms of profitability, efficiency, liquidity etc.
Gilotra (2003)20, in his study on retail lending, views that the success of
retail lending of a bank depends on factors like marketing efficiency, proper
appraisal and follow-up. He also finds that HDFC has become very excellent in
housing finance solely due to the long term strategies adopted by them.
R.Kumar (2003)21 in his study “Retail banking growth drivers and analysis
of associated risks” views that banks should review the retail loan portfolio at
periodical intervals in a structured manner for identifying the risks and upgrading
the strategies for the reduction of risk.
V.S. Murthy (2003)22 in his study views that in India the banking industry
has very high competition particularly in the retail sector. In this competition only
the fittest will survive. It is expected that the banks are well equipped to succeed in
the retail journey.
Review of Literature 22
Qamar (2003)23 has done a comparative study on the “Profitability and
resource use efficiency in scheduled commercial banks in India”. He finds that
efficiency of new private banks and foreign banks is better though marginally than
the old private sector banks and public sector banks.
Velayudham (2003)24 in his article “Banking for corporate new directions”
reminds banks to ensure that for a balanced asset portfolio retail banking has
to go along with wholesale banking. Besides, for better management of customer’s
needs and consultative selling of products, commercial banks should have customer
relationship management department.
Filomina’s (2004)25 survey on expectations of customer from retail banks
shows that none of the banks are able to meet the diverse needs of customers. As a
result the customers are not so loyal to a particular bank and go for multiple
banking. Customers are aware of the variety of products and services that are
available in the banking sector and demand them from their banks. The aggressive
banking of new generation banks make customers dislike them.
Groeneveld and Wagemakers (2004)26 in their article “Retail banking
strategies in Europe” analyse retail banking strategy with special emphasis on retail
banking in the broadest sense of the word. He finds that many banks rediscovered
retail banking after the collapse of investment and corporate banking activities and
the fall in the stock prices in the last few years. The retail banking strategies in
general and the strategic positioning of Rabobank group in particular are described
in the study.
Review of Literature 23
Gurumurthy (2004)27 has made an analysis of income, expenditure, operating
profit and NPA of public sector banks, foreign banks, old private sector banks and
new private sector banks. He contends that the reforms in banking sector positively
influence the financial health of the banks. He observes that the financial
performances of the banks are improving as a result of the prudential norms of RBI
and other committees. Besides, these reforms have helped to increase competition in
the banking industry.
Subrat Mohapatra (2004)28 in his article states that the non-food credit of the
banks has increased several times. Banks have to increase the lending even though
the interest rates are decreasing due to the of bulk deposits received by them. Retail
credit and SME advances are the growth areas of banks.
Velouston and Cleopatra (2004)29 in their study have analysed the relative
role of certain drivers of bank loyalty. Their study shows the links between image,
perceived quality satisfaction, commitment and loyalty in Greek retail banking. The
result of the study is that the image has a positive impact on perceived quality and
satisfaction. The key factor that leads to loyalty is the personalisation in providing
services to customers which help to increase customer satisfaction.
Yeole (2004)30 in her article “Problems of NPA” deals with the NPA
problems of commercial banks. She feels that the public sector banks are facing the
NPA problem more often than the private and foreign banks. The NPA of public
sector banks is growing due to external and internal factors and affects the
profitability and liquidity of the banks adversely.
Review of Literature 24
Zhou’s (2004)31 study is on “The dimensions of customer satisfaction in the
Chinese retail banking”. The factors contributing to customer satisfaction are
determined using the model of SERVPERF. Her study points that empathy or
responsiveness of the employees, reliability or assurance from the bank and
tangibility of services are the important factors affecting customer satisfaction.
Bhayani (2005)32 conducted a study among 200 customers on the retail
banking awareness of private banks, nationalized and co-operative banks in the
Rajkot city of Gujarat. The conclusion she arrives at is because of the low literacy
among the customers, they are not aware of technology assisted banking services. So
the banks should try to create awareness among customers on technology and
technology driven products for better retail banking operations.
Chakraborty (2005)33 in the article, “Customer relationship management, a
new mantra in Indian banking” views that CRM has an important role for banks in
the marketing of products and services in an era of technology. By practicing CRM,
the customer base and customer loyalty in banks can be increased.
Gopalakrishnan (2005)34 in his study identifies four main causes of NPA. In
his opinion the main causes are wilful default, funds diversion, deficiency in credit
appraisal standards and lack of follow-up and supervision. Besides these, absence of
market intelligence, lack of staff to supervise the advances and shortage of credit
information among banks also cause NPA.
S. Joy (2005)35 in his study “Performance evaluation of private sector
scheduled banks in Kerala” suggests that private sector banks in Kerala are far
below the other banks in performance but above other banks in growth proportions.
Review of Literature 25
Ramola (2005)36 in his article states that Indian banking industry can reach
international level only through the growth of retail banking. For the growth of retail
banking, innovative products which satisfy the needs of the individuals are required.
Such products can be developed through market research. Besides, new regulations
are required to reduce NPA in retail sector.
Rudra Sen Sarma (2005)37 makes a study on “The cost and profit efficiency
of Indian banks during 1986-2003”. During this period the cost efficiency of the
banks improved but the profit efficiency decreased. Compared to foreign banks,
domestic banks are found to be more efficient in terms of cost and profit.
Sudhir (2005)38 in his study “Retail banking – a paradigm shift” points out
that the potentials of retail banking in rural and semi urban areas remain untapped.
The potential customers in the rural and semi urban areas provide opportunities for
the growth of retail banking in future.
Ndubisi and Wah (2005)39 studied on the “Factors affecting customer
satisfaction in the Malaysian retail banking”. They made a field survey using structured
questionnaire among the bank customers in Malaysia. Using the method of factor
analysis they identified five important factors of customer satisfaction. are They are
communication, competence, trust, conflict handling and relationship quality.
Amit and Anwarin (2006)40 view that most of the Indian banks are providing
retail banking services like phone banking, internet banking, multi-city cheque
facility, any branch banking and bill pay services. Along with this technology based
services, banks are concentrating on business intelligence for providing better
customer services.
Review of Literature 26
Arun Kumar (2006)41 in his study entitled “Retail banking-its socio-
economic impact” argues that retail banking has failed to improve the socio-
economic conditions of retail loan customers.
Deepal Singh (2006)42 who made a study on “Consumer behavior and
banking of retail products” argues that borrower’s attitude is the most important
factor which determines the success of housing loan scheme.
Dharmendra Singh and Garima Kohli (2006)43 are of the opinion that the
new generation banks in India are different from the traditional banks. They are the
pioneers in the use of technology, utilization of manpower with professional
management and implementing corporate governance. The traditional banks follow
the technology adoption of these banks to retain customers.
Laxman (2006)44 in his article “Retail banking, small and beautiful
dimensions” identifies the convenience of the customers, excellence in processing
and cost effectiveness as prime factors determining the success of retail banking.
Nair (2006)45 opines that Indian banks should innovate and grow for facing
the new situations of technological developments in the banking sector. Modern
customers are not satisfied with traditional banking and traditional banking products
and services.
Focus of Neetu Prakash’s (2006)46 comprehensive study on “Growth of retail
banking in India” is growth pattern of retail banking in India. Her argument is that
even though the growth of Retail banking in India is very small compared to world
standards, the growth and development of retail banking is an important milestone in
the Indian banking sector development. She also finds that the performance of
Review of Literature 27
private sector banks is better than that of their public sector counterparts in the
growth of retail banking.
Pikkarainen, Pikkarainen, Karjaluoto, and Pahnila (2006)47 studied the
“Factors affecting online banking customer satisfaction in the Finnish retail
banking”. Convenience sampling was adopted and data was collected with a
structured questionnaire. The outcome of their research is that website content, ease
of use of the websites and accuracy are the important factors of customer
satisfaction.
Rajesh Chakrabarti (2006)48 observes that the over emphasis on competition
and profitability has driven away the socialistic approach of public sector banks
followed for decades. Yet he concludes that the emergence of new generation banks
and foreign banks has promoted the use of technology and professionalism in
banking sector.
Shyamala (2006)49 in her study “Retail banking –opportunities and
challenges” has identified certain opportunities and challenges of retail banking in
India. In her opinion, the growing youth population, technological developments
like ATM, credit card, internet banking etc are the major opportunities and
challenges in Indian retail banking.
Uppal (2006)50 in his study the “Survival of public sector banks in the post
LPG era” studied the profitability of SBI and its associates, nationalised banks, new
private sector banks and foreign banks in the post-reforms era. He finds that there is
a significant difference in the profitability of major bank groups. Foreign banks have
Review of Literature 28
the highest profitability. It is also found that the lower profitability of public sector
banks is due to the negative effects of burden.
The focus of Dhandapani Alagiri’s (2007)51 article “Retail banking:
challenges” is on the retail banking in India with increased consumer spending and
increased challenges in the form of competition and technology up-gradation. He
concludes that the most important issues for the new generation customers are
product innovation and competitive packaging services. Retail banking increased the
uses of the mobile phones and e-banking facilities for quick service. As a result the
security and confidentiality have become very difficult to maintain. This has become
a major problem for the banks in India. Another result of the study is that credit
delivery mechanism has been improved considerably with the advent of
technological advances.
Molina, Martin-Consuegra, and Esteban (2007)52 have made a study on
“The impact of relational benefits on customer satisfaction in Spanish retail
banking”. It is an empirical study using a sample of customers regarding the
relationship between relational benefits and customer satisfaction. Their study shows
that confidence benefits have a direct, positive effect on the satisfaction level of
customers with their bank.
Praveeth (2007)53 in his study the “Perceptions of customers on retail
banking” points out that the customers of both public and private sector banks are
satisfied on many factors but are dissatisfied on areas like holiday period granted by
banks and insurance coverage.
Review of Literature 29
Santi Gopal and Soma Dey (2007)54 in their study on “Retail banking in
Indian scheduled commercial banks” bring to light that there is very high
competition in Indian retail banking. Innovation in products, technological
developments and strategies to capture the market share decide the success in retail
banking. Quality of customer service is equally important. Thus retention of
customers and attracting potential customers are the major challenges before banks.
Venkata Seshaiah and Vunyale Narender (2007)55 identify various factors
affecting customer’s choice in their study “Factors affecting customer’s choice of
retail banking”. They probe into the psychology of the customer’s loyalty. They
identify different factors affecting the choice of banks through a survey. These
factors are safety of deposits, size and strength, accuracy, general survey quality,
speed of delivery, proximity, security of environment, cordiality of staff, price &
services charges, product packaging, general public impression, peer group
impression, face lift, friendship with staff and advertising and publicity. They
conclude that in order to achieve their corporate mission through customer
orientation, retail banks must reorganize their activities.
Vyas and Dhade (2007)56 who conducted a study on “The impact of new
private sector banks on State Bank of India” observe that the new private sector
banks are not a threat to the SBI at present but the situation may change in future.
The SBI with a vast net work of branches and presence is able to compete with these
banks at present.
Manoj Kamar Joshi (2008)57 in his article entitled “Customer service in retail
banking in India” discusses the various service aspects of Indian banks in retail
banking. He finds that through the use of modern technology, they provide high
Review of Literature 30
standard and quality customer service and this helps them to succeed in the
competitive world of retail banking. While processing the loans, banks should
provide comprehensive information with regard to the fees / charges levied from the
borrowers. By standardising the procedures banks can prompt the customers to visit
them hazzle free and by directing them to the right officials they can save their time
and acquire their goodwill.
Uppal (2008)58 in his study finds that the banks are not following the
cardinal principles of lending in distributing the retail credit. Banks can succeed
only through aggravating and emphasizing various retail credit activities.
Al-Eisa and Alhemoud (2009)59 studied the most important attributes that
influence customer satisfaction with retail banks in Kuwait. They also measured the
level of overall satisfaction of the customers of the sample banks. The multiple-
attribute approach was applied in the analysis of data. A convenient sample was
selected from customers of retail banks in Kuwait. They observe that the most
important factors for predicting customer satisfaction with retail banks in Kuwait are
fast service, availability of self-banking services and courtesy and helpfulness of
employees.
Arti (2009)60 in her comparative study of ICICI bank and SBI found that
ICICI bank perform better in staff behaviour and services than SBI. She also found
that the competitive rate and commitment make satisfied customers while hidden
charges is the reason for dissatisfaction with ICICI bank.
Review of Literature 31
Herington and Weaven (2009)61 analysed the factors affecting customer
satisfaction for e-retail banking in Australia. A survey was conducted among the
regular users of online banking by selecting a convenience sample. The factors for
customer satisfaction were ascertained by factor analysis and regression analysis. He
identifies that personal need of the customer, website organization, user-friendliness
of the websites and efficiency as important factors contributing to the satisfaction of
customers.
Kanning and Bergmann (2009)62 studied the “Factors affecting customer
satisfaction in the German retail banking sector”. By applying the field study
method they identified the factors affecting customer satisfaction. They identify
Performance of banks and fulfilment of customer expectations as the major factors
which affect customer satisfaction.
Mohammed Hossain and Shirley Leo (2009)63 in their study find that the
perception of customers changes in accordance with the nature of service. They
view that in this competitive environment, all banks are offering the same or similar
products and the only factor to differentiate them is the service quality. Thus retail
banks must ensure better service to their customers to become successful
Pankaj Kumar (2009)64 in his article “Customer relationship management in
retail banking” highlights that Customer relationship management is especially
useful for large banks like SBI which are spread across different locations. For CRM
to be truly effective, it requires a well thought out initiative involving strategy,
people, technology and process.
Review of Literature 32
Uppal (2009)65 in his article “Retail banking strategies in the liberalized
globalised era” views that Indian banks must give more attention to the retail
banking activities. Banks have to expand the product line, identify new delivery
channels, develop better marketing systems and strategies and service quality so that
satisfaction of the customers can be enhanced.
Bhaskaran (2010)66 in the article “Impact of financial crisis on banks in
India” views that the impact of financial crisis is more on private sector banks.
Nonperforming assets have increased in all banking sectors. The increase in NPA
preceded the financial crisis and coincided with the retail boom.
Aparna Mishra and Kamini Tandon (2011)67 who studied “Customer centric
approach towards retail banking services” find that the important factor affecting
customer satisfaction in retail banking is service quality. The customer retention can
be ensured only through the quality of service provided by the banks.
Dhara Kothari (2011)68 views that retail banking offers vast opportunities for
growth and at the same time has challenges which are discouraging. The success of
retail banking depends on the ability of banks to make use of these challenges and
opportunities profitably. The efficiency of operations and use of technology would
provide the competitive strength for success in retail banking.
Dilip Kumar and Durga Sankar (2011)69 compare the performances of new
generation banks in India. During the periods of slow- down in the growth of credit,
the private sector banks have been able to perform better on account of the retail
lending. The competition in the field is very high and the customers are benefitted
Review of Literature 33
by it in the form of better service quality, product innovations and better bargains.
The retail segment has tremendous growth.
Ganguli and Roy (2011)70 also studied the “Factors affecting customer
satisfaction in the Indian retail banking sector”. The factors affecting customer
satisfaction were identified through factor analysis. Their study also shows that the
important factors affecting customer satisfaction are customer service and
technology usage, easiness and reliability.
Gupta and Meera (2011)71 in their study on “Indian banks and Basel II
norms” find that the capital adequacy and risk structure of the banks have improved
as a result of Basel II regulations. The NPA of all banks have declined. The capital
adequacy ratio of banks has increased as a result of capital regulations which in turn
lead to decrease in NPA.
Kajal Chaudhary and Monika Sharma (2011)72 in their article “Performance
of Indian public sector banks and private sector banks: a comparative study”
suggests that banks should take adequate measures to escape from NPA problem.
Proper training should be given in documentation and creation of charge of
securities to the staff involved in loan sanctioning. Care should be exercised in the
selection of borrowers and projects
Kalpesh (2011)73 in his comparative study of financial performance of Indian
banks points out that efficiency and stability of the banking system in India is
impacted by the reform measures. The profitability and liquidity of both public and
private sector banks have also improved a lot.
Review of Literature 34
Mukhopadhy (2011)74 opines that retail banking in India has been fast
emerging as one of the major drivers of the overall banking industry. Retail banking
has shown much growth in the recent past. The strategies adopted by banks in retail
banking are changing fast as the banks are following a combination of organic
growth, acquisition and alliance.
Nishith, Enid and Devaraj (2011)75 in their article “Retail banking the new
buzzword of today’s banking” subscribe to the view that the retail banking has
challenges along with the vast opportunities. The ability of banks to effectively meet
the challenges of retail banking and use the opportunities profitably will determine
the growth of banking. The efficiency of operations and adoption of technologies
help banks to compete with other players in retail banking business.
Siddeshwar and Pradeep (2011)76 make an interesting observation regarding
home loans. They point out that home loans are beneficial to the banks due to
various reasons. Banks earn huge amount of interest income through home loans.
House loans are sanctioned against most secured asset compared to most other
loans. Since the dream home of the individual is mortgaged for the home loan, the
borrower pays the instalments timely, and hence there is little or no chance of such a
loan becoming bad and non-performing asset for the bank.
The study of Singh and Kaur (2011)77 has its focus on the factors that affect
customer satisfaction in selected Indian universal banks. Survey method was used
for the study. A well-structured questionnaire was used for collecting data from
sample respondents. He identifies seven factors that influence customer satisfaction
– employee responsiveness, appearance of tangibles, social responsibility, service
innovation, positive word-of-mouth, competence, and reliability. The variable social
Review of Literature 35
responsibility, positive word-of-mouth, and reliability have major influences on the
overall satisfaction of the customers.
Syed Ibrahim (2011)78 in his study states that Indian scheduled commercial
banks have improved their operational performance since 2000. There is constant
increase in aggregate deposits. The C-D ratio also shows an increasing trend. The
investment deposit ratio and priority sector advances have also gone up.
Uppal (2011)79 in his study states that as e-channels provide time and cost
utility, customers prefer them. His stance is that public sector banks have least
growth in terms of number of customers. The financial productivity index has
decreased in new private sector banks. The productivity index of employees, branch
and bank is increased in all bank groups.
Aashish Shashikant Jani (2012)80 in his comparative study on the use of
technology in retail banking among public and private sector banks argues that e-
channels are preferred by customers because of cost and time utility. Her suggestion
is that in this era of information technology, the public sector banks have to
introduce more technology based products and services to compete with other bank
groups especially new generation banks.
Nishit (2012)81 in her comparative study on private sector banks in India
analysed the performance of six major private sector banks during the period 2008-
09 to 2009-10. She found that profit maximisation and wealth maximisation are the
main concern for banks. The private sector banks play an important role in the
economic development of the country. The study also contains the profitability
Review of Literature 36
analysis of the sample banks which can be used as a basis for investment decision by
the investors.
Examining the macro trends of retail credit in India, Dinabandhu Bag
(2012)82 observes that the personal credit has increased many times in India since
1996. But this increase is not significant when compared to the increase in per capita
income and per household income in India. The demand for retail credit has
increased as a result of the increased employment generation in the organised sector.
He further views that a large portion of households remain unserved with retail
credit and that the gap between retail credit and income is increasing. Through better
credit management tools the banks can improve the credit eligibility and build a
culture of credit.
Paritosh and Kavita (2012)83 in their research paper on “The impact of
customer satisfaction on retail banking” conclude that the ATM, internet and branch
office are the popular channels used by retail banking customers. The financial crisis
has not affected the trust and relationship of customers with their retail banks.
Raghuwanshi (2012)84 in his article states that the Indian retail banking has
wide opportunities and challenges. The retail portfolio of banks is subject to
frequent change. Banks should constantly innovate in retail banking through product
diversification, technology up-gradation, cross selling etc.
Revathy (2012)85 in her article views that retail banking has greater scope of
generating profit than the traditional banking. Banks have identified this and are
adopting a different approach in designing the retail banking products and services
to hold the market share.
Review of Literature 37
Ashok Kumar (2013)86 in his study “Opportunities and challenges in the
Indian retail banking industry” concludes that for the development of retail banking in
India, a paradigm shift is required in bank financing through innovative products and
mechanisms involving constant up-gradation of the banks internal systems and
processes. Banks require product development and differentiation, innovation and
business process reengineering, micro-planning, marketing, prudent pricing,
customisation, technology up-gradation, electronic or mobile banking, cost reduction
and cross-selling for their development through retail lending. He says that retail
banking has more scope for generating profit than any other traditional methods.
Madhvi (2013)87 is of the opinion that retail banking is the most tremendous
area to be looked after by the banks. The rising population of higher income earning
middle class, who are ready to take risk, has increased the scope of retail banking.
So banks should concentrate on this elite group of customers through product
innovation and offer them quality service in time.
Mittal and Pachauri (2013)88 in their study on promotional tools and
techniques adopted for retail banking compared the public sector banks and private
sector banks. Their finding is that the perception of customers with regard to the
type of promotional tools and the techniques adopted significantly vary between
public sector and private sector banks.
Phanindra and Parashuramulu (2013)89 in their article view that the Indian
banks have wide scope for operations but the important obstacle before them is the
hard regulations made by the apex body. The LPG measures have affected the banking
sector. Thus the participants in retail banking in India have to adopt a different approach
in designing products and services in order to retain the market share.
Review of Literature 38
Sujatha S. And Arumugam N. (2013)90 in their study “Customer satisfaction
in Indian banking sector” view that before introducing various services to customers,
banks should take care of their needs. To serve customers with different occupations
and educational backgrounds banks should adopt strategies. There is a correlation
between the satisfaction of the customer and the performance of the banks. So it is
important for banks to consider satisfaction of the customer as a relationship-
marketing strategy.
Gokilamani, and Natarajan (2014)91 in their study opine that customers of
Indian commercial banks are positively responding to retail banking. It is important
for banks to focus on service quality for strengthening their competitive edge and to
allocate the limited resources to serve the personal banking division. They further
views that the success of a retail bank will depend on product innovation,
technological developments and strategies to retain the retail customers.
Research gap
The foregoing analysis of the available literature of the researches carried out by
various scholars clearly shows that there is a research gap for the present study. The
earlier studies differed one another in the selection of variables, selection of reference
period, selection of banks and the use of tools and techniques. None of the studies had
made an effort to understand and compare the retail finance practices of old commercial
banks and new generation banks in Kerala. The present study brings within its purview
the areas of the retail finance practices and the satisfaction level of retail borrowers of
old commercial banks and new generation banks in Kerala. Thus the present study is an
important venture for studying and comparing the retail finance practices of the two
types of banks and offer suggestions on the basis of the findings.
Review of Literature 39
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