ING VYSYA BANK

INTRODUCTION Banking system of a nation is the shadow of nations economy. A healthy and profitable banking system is just like the backbone of nations economy. It is necessary for a nation to achieve growth and remain stable in this global world and global economy. The Indian banking system, with one of the largest banking networks in the world, has witnessed a series of reforms over the past few years like the deregulation of interest rates, dilution of the government stake in public sector banks (PSBs) and the increased participation of private sector banks. History of INDIAN BANKING SYSTEM Banking in India originated in the last decades of the 18th century. The first banks The Bankre THE GENERAL BANK OF INDIA, which started in 1786, and BANK OF HINDUSTAN, both of which are now defunct. The oldest bank in existence in India is the STATE BANK OF INDIA, which originated in the BANK OF CALCUTTA in June 1806. The first fully Indian owned bank was the ALLAHABAD BANK, established in 1865. Until the early 1990s, the Indian financial system was strictly controlled. Interest rates were administered, formal and informal parameters governed asset allocation, and strict controls limited entry into and expansion within the financial sector. The Governments economic reform program, which began in 1991, encompassed the financial sector. The first phase of the reform process began with the implementation of the recommendations of the Committee on the Financial System, the Narasimham Committee I. The second phase of the reform process began in 1999. Reserve Bank of India RBI, established in 1935, is the central regulatory and supervisory authority for the Indian financial system. RBI manages Indias money supply and foreign exchange and also serves as a bank for the Government and for Indias commercial banks. RBI issues guidelines on various areas including exposure standards, income recognition, asset classification, provisioning for non-performing and restructured assets, investment
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valuation and capital adequacy standards for commercial banks, long-term lending institutions and non-bank finance companies. RBI requires these institutions to furnish information relating to their businesses to RBI on a regular basis. Commercial Banks Commercial banks in India have traditionally focused only on meeting the short-term financial needs of industry, trade and agriculture. Commercial banks can be classified into two categories namely Scheduled Commercial Banks and Non-Scheduled Commercial Banks (Local Area Banks). Scheduled Commercial Banks are banks that are listed in the schedule to the Reserve Bank of India Act, 1934, and may further be classified as public sector banks, private sector banks, correspondent banks, foreign banks and regional rural banks. Scheduled commercial banks have a presence throughout India, with approximately 70% of bank branches belonging to the public sector banks are located in rural or semi-urban areas of the country.

Public Sector Banks Public sector banks constitute the largest category in the Indian banking system. They include the State Bank of India and its 7 associate banks, 19 nationalised banks and 196 regional rural banks. As of June 30, 2004, apart from the regional rural banks, the other public sector banks have over 46,500 branches. Public Sector Banks collectively account for approximately 73.2% of the outstanding gross bank credit and 77.9% of the aggregate deposits of the scheduled commercial banks. The large network of public sector bank branches enables them to fund themselves out of low cost deposits. The State Bank of India is the largest public sector bank in India. Private Sector Banks After the first phase of bank nationalization was completed in 1969, public sector banks made up the largest portion of Indian banking. In July 1993, as part of the banking reform process and as a measure to induce competition in the banking sector, RBI permitted entry by the private sector into the banking system. This resulted in the introduction of nine private sector banks. These banks are collectively known as the new private sector banks. There are ten

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new private sector banks at present. In addition, 20 private sector banks existing prior to July 1993 are currently operating as on June 2004. Foreign banks As of June 30, 2004, there were 32 foreign banks with 215 branches operating in India. As part of the liberalization process, RBI has permitted foreign banks to operate more freely, subject to requirements largely similar to those imposed on domestic banks. Foreign banks operate in India through branches of their parent banks. In fiscal 2003, the Government announced that foreign banks would be permitted to incorporate subsidiaries in India. Subsidiaries of foreign banks will have to adhere to all banking regulations, including priority sector lending norms, applicable to domestic banks. The primary activity of most foreign banks in India has been in the corporate segment. However, in recent years, some of the larger foreign banks have started to make consumer financing a larger part of their portfolios based on the growth opportunities in this area in India. These banks offer products such as automobile, finance, home loans, credit cards and household consumer finance. The government has also announced that foreign banks having branch presence in India will be permitted subject to certain conditions to acquire up to 74.0% shareholding in private sector banks in India.

Cooperative Banks Cooperative banks cater to the financing needs of agriculture, small industry and selfemployed businessmen in urban and semi-urban areas of India. The state land development banks and the primary land development banks provide long-term credit for agriculture. In the light of liquidity and insolvency problems experienced by some cooperative banks in fiscal 2001, RBI undertook several interim measures, pending formal legislative changes, including measures related to lending against shares, borrowings in the call market and term deposits placed with other urban cooperative banks. Presently, RBI is responsible for supervision and regulation of urban co-operative societies, and the National Bank for Agriculture and Rural Development (NABARD) for State Co-operative Banks and District Central Co-operative Banks. Non-Bank Finance Companies
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There are over 13,671 non-bank finance companies in India as at end-June 2004, mostly in the private sector. All non-bank finance companies are required to register with RBI in terms of the Reserve Bank of India (Amendment) Act, 1997. The nonbank finance companies, on the basis of their principal activities are broadly classified into four categories namely Equipment Leasing, Hire Purchase , Loan and Investment Companies and deposits and business activities of Residuary Non-Banking Companies (RNBCs). The Reserve Bank has put in place a set of directions to regulate the activities of NBFCs under its jurisdiction. The directions are aimed at controlling the deposit acceptance activity of NBFCs. The NBFCs which accept public deposits are subject to strict supervision and capital adequacy requirements of RBI. Out of 13,671 NBFCs registered with RBI as at end-June 2004, 584 NBFCs accept Public Deposits. The scope and activities of non-bank finance companies have grown significantly over the years. The primary activities of the non-bank finance companies are consumer credit including automobile finance, home finance and consumer durable products finance, wholesale finance products such as bill discounting for small and mediumsized companies, and fee-based services such as investment banking and underwriting. In 2003, Kotak Mahindra Finance Limited, a large non-bank finance company was granted a banking license by RBI and converted itself into Kotak Mahindra Bank.

Housing Finance Companies Housing finance companies form a distinct sub-group of the non-bank finance companies and are regulated by National Housing Bank (NHB). As a result of the various incentives given by the Government for investing in the housing sector in recent years, the scope of their business has grown substantially. Until recently, Housing Development Finance Corporation Limited was the premier institution providing housing finance in India. In recent years, several other players including public and private sector banks have entered the housing finance industry. The National Housing Bank and the Housing and Urban Development Corporation Limited are the two Government-controlled financial institutions created to improve the availability of housing finance in India. The National Housing Bank Act provides for refinancing and securitization of housing loans, foreclosure of mortgages and setting up of the Mortgage Credit Guarantee Scheme.

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Specialized Financial Institutions In addition to the long-term lending institutions, there are various specialized financial institutions that cater to the specific needs of different sectors. They include the National Bank for Agricultural and Rural Development, Export Import Bank of India, Small Industries Development Bank of India, Risk Capital and Technology Finance Corporation Limited, Tourism Finance Corporation of India Limited, National Housing Bank, Power Finance Corporation Limited and the Infrastructure Development Finance Corporation Limited.

Insurance Companies Currently, there are 27 insurance companies in India, of which 13 are life insurance companies, 13 are general insurance companies and one is a reinsurance company. Of the 13 life insurance companies, 12 are in the private sector and one is in the public sector. Among the general insurance companies, eight are in the private sector and five are in the public sector. The reinsurance company, General Insurance Corporation of India, is in the public sector. Life Insurance Corporation of India, General Insurance Corporation of India and public sector general insurance companies also provide long-term financial assistance to the industrial sector. In December 1999, the Insurance Regulatory and Development Authority Act 1999 was passed. The insurance sector in India is regulated by the Insurance Regulatory and Development Authority, which was established to protect the interests of holders of insurance policies, to regulate promote and ensure orderly growth of the insurance industry and for related matters. The IRDA Act opened up the Indian insurance sector for foreign and private investors. The Act allows foreign equity participation in new insurance companies of up to 26.0%. A new insurance company is required to have a minimum paid up equity capital of Rs. 1.0 crore to carry out the business of life insurance or general insurance or Rs. 2.0 crore to carry out exclusively the business of reinsurance.

Mutual Funds From 1963 to 1987, Unit Trust of India was the only mutual fund operating in India. It was set up in 1963 at the initiative of the Government and RBI. From 1987 onwards; several other
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public sector mutual funds entered this sector. These mutual funds were established by public sector banks, the Life Insurance Corporation of India and General Insurance Corporation of India. The mutual funds industry was opened up to the private sector in 1993. The industry is regulated by the SEBI (Mutual Fund) Regulation 1996.

Impact Of Liberalization On The Indian Financial Sector Until 1991, the financial sector in India was heavily controlled and commercial banks and long-term lending institutions, the two dominant financial intermediaries, had mutually exclusive roles and objectives and operated in a largely stable environment, with little or no competition. Long-term lending institutions were focused on the achievement of the Governments various socio-economic objectives, including balanced industrial growth and employment creation, especially in areas requiring development. Long-term lending institutions were extended access to long-term funds at subsidized rates through loans and equity from the Government and from funds guaranteed by the Government originating from commercial banks in India and foreign currency resources originating from multilateral and bilateral agencies. The focus of the commercial banks was primarily to mobilize household savings through demand and time deposits and to use these deposits to meet the short-term financial needs of borrowers in industry, trade and agriculture. In addition, the commercial banks provided a range of banking services to individuals and business entities. Since 1991, various financial sector reforms have transformed the operating environment of the banks and long-term lending institutions. In particular, the deregulation of interest rates, emergence of a liberalized domestic capital market, and entry of new private sector banks, along with the broadening of long-term lending institutions product portfolios, have progressively intensified the competition between banks and long-term lending institutions. RBI has permitted the transformation of long term lending institutions into banks subject to compliance with the prudential norms applicable to banks.

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Banking Sector Reform Most large banks in India were nationalized in 1969 and thereafter were subject to a high degree of control until reform began in 1991. In addition to controlling interest rates and entry into the banking sector, these regulations also channelled lending into priority sectors. Banks were required to fund the public sector through the mandatory acquisition of low interest-bearing Government securities or statutory liquidity ratio bonds to fulfil statutory liquidity requirements. As a result, bank profitability was low, non-performing assets were comparatively high, capital adequacy was diminished, and operational flexibility was hindered. Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct The oldest bank in existence in India is the State Bank of India, a governmentowned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.

Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947,

the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."
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The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors Committee on the Financial System (Narasimham Committee I) The Committee on the Financial System (The Narasimham Committee I) was set up in August 1991 to recommend measures for reforming the financial sector. Many of the recommendations made by the committee, which addressed organisational issues, accounting practices and operating procedures, were implemented by the Government. The major recommendations that were implemented included the following: With fiscal stabilization and the Government increasingly resorting to market borrowing to raise resources, the statutory liquidity ratio or the proportion of a banks net demand and time liabilities that were required to be invested in Government securities was reduced from 38.5% in the pre-reform period to 25.0% in October 1997. This meant that the significance of the statutory liquidity ratio shifted from being a major instrument for financing the public sector in the pre-reform era to becoming a prudential requirement; similarly, the cash reserve ratio or the proportion of a banks net demand and time liabilities that were required to be deposited with RBI was reduced from 15.0% in the pre-reform period to 4.5% currently; special tribunals were created to resolve bad debt problems Most of the restrictions on interest rates for deposits were removed. Commercial banks were allowed to set their own level of interest rates for all deposits except savings bank deposits; Substantial capital infusion to several state-owned banks was approved in order to bring their capital adequacy closer to internationally accepted standards. By the end of fiscal 2002, aggregate recapitalisation amounted to Rs. 217.5 crore. The stronger public sector banks were given permission to issue equity to further increase capital; and
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Banks were granted the freedom to open or close branches.

Committee on Banking Sector Reform (Narasimham Committee II) The second Committee on Banking Sector Reform (Narasimham Committee II) submitted its report in April 1998. The major recommendations of the committee were in respect of capital adequacy requirements, asset classification and provisioning, risk management and merger policies. RBI accepted and began implementing many of these recommendations in October 1998. The ING Vysya Bank Ltd is one of the well known financial organizations in India. It is applicable for both short term and long term financial solutions. It is mainly an entity or a venture which has been formed with the global financial giant ING of Netherlands. The ING Vysya Bank Ltd is a trusted name in the banking and commercial sector of the country. The ING Vysya Bank Ltd was established in the month of October in the year 2002. The bank came into existence when the Vysya Bank Ltd went into a venture with global financial giant ING. Vysya Bank Ltd was one of the first private sector banks in the country and was set up in the year 1930. The main objective of setting up the bank was to provide financial support to the various sectors of the economy. In the year 1948, the Vysya Bank was listed among the Scheduled Banks. In order to increase its profit and add to its operations, the Vysya Bank Ltd merged with ING. The headquarters of the bank is located in the city of Bangalore. Among the total number of branches, there are 468 regular branches, 28 satellite offices, 13 extension counters. The number of ATMs is around 357 which are expected to increase within the next few years. The deposit of the bank amounts to around Rs. 25,865 crore while the net worth is around Rs 14260.00 millions. The profits of the bank amount to around Rs. 242.2 crore. With 74 years of experience in the Indian banking segment and with ING Groups active participation in managing the affairs of the Bank, the Bank is uniquely positioned as an Indian made Foreign Bank. Being a well known name in the domain of financial and banking services in the country, the ING Vysya Bank Ltd has come up with a number of financial solutions and services in a
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number of areas. Some of the well known segments in which the bank offers customized and specialized services are:

Accounts and deposits Short and long term loans Private banking NRI services

Personal Banking: The personal banking department of ING Vysya Bank Ltd offers high quality services and solutions to cater to the financial needs and preferences. The high end solutions make them a one stop organization to fulfill the needs and requirements of the customers. Some of the well known services offered in the segment of personal banking are:

Mutual Funds Tax Savings Bonds Savings Account NRI Services Credit & Debit Card Internet Banking Phone Banking Mobile Banking Self Banking Term deposits Demat accounting Wealth management Debit and credit card accounting

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Payment services

Wealth Management services: The wealth management services of the ING Vysya Bank Ltd offers the best services in order to take care of the needs and preferences of the consumers in various wealth management sectors. The secure services offered by the bank also minimize the risk processes and also offer the best of returns. In addition to these, ING Vysya Bank Ltd also offers business banking facilities and services of high standards. The services are meant to take care of the business needs and also provide high degree of financial stability to the various corporate organizations and business sectors. Some of the well known services that are offered include:

Long and term loans in the agro based sector SME- Power Business account and loans Financial market analysis Market trading Asset liability management services Financial market sales Cash management services Corporate and investment banking services Off shore borrowing services Trade and community finance services

PROFILE As of March 31, 2004, The Bank was the seventh largest private sector bank in India in terms of assets with total assets of Rs. 13198 crore. Our business has been organized into RETAILBANKING and WHOLESALE BANKING. Our RETAIL BANKING business comprises four business units namely 1. Consumer Banking,
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2. Small and Medium Enterprises (SME) 3. Agriculture and Social Banking Unit (ASBU) and 4. Private Banking.

Consumer Banking The Consumer Banking business consists of Consumer Lending and Consumer Liabilities, which offers to retail consumer both asset based products such as home loans, personal loans, credit cards and liability products, such as savings accounts, salary accounts and term deposits. The Bank have focused our efforts, resources and talent to ensure that The Bank capitalize fully on the opportunities available to us. Consumer Lending

Consumer lending deals with granting secured loans to individuals, partnership firms, and companies, as well as unsecured loans to individuals for various purposes. Our business is primarily driven through 19 Asset Booking Centres spread over the country, where consumer finance loans are disbursed. The Bank has following consumer lending products in our portfolio. Home Loans: In the year 2003, The Bank introduced customized home loans with built in free life insurance for the full loan term and amount and a floating rate based on market determined rate (MIBOR). The bank Believe that compared to our competitors, this is a uniquely featured product, which has already resulted in volumes of Rs. 77.74 crores covering 884 accounts, as of September 30, 2004. Additionally, the Bank is planning to add further features and flexibility to meet the demands of the customer. Credit Cards: Our credit card charges a relatively low nominal rate of 1.5% on cash withdrawals. The Bank do not charge any transaction fee on fuel purchased and also enables global access to over 30 million merchant establishments worldwide. The card is issued in partnership with Citibank, which allows the bank and its customers to benefit from the Citibanks experience in processing credit cards.
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Auto loans: The Bank introduced auto loans in 2000 to provide finance to individuals and corporates for purchase of new and used cars. The average tenor of auto loan is between three to five years. Auto loans are secured by a charge on the purchased automobile. This business is managed by our distribution system supported with Credit and Risk Management Teams, which has been instrumental in achieving targeted volumes. The Bank have strong relationships with certain automobile manufacturers and are the preferred financiers to 3 automobile manufacturers, in India.

Two Wheeler loans: Two-wheeler loans were introduced in 2001 primarily to facilitate purchase of two-wheelers for individual and corporate customers. Two wheeler loans are secured by a charge on the moveable asset. The average tenure of loan is between one to three years. Our business has recorded growth ever since its inception owing to our distribution system, customer oriented schemes and fast turnaround time.

Personal Loans: These are unsecured loans provided to customers for various purposes such as higher education, medical expenses, social events and holidays. Introduced in 2002, this product has witnessed growth owing to our customer programs and distribution team.

Advances against Demat securities: The Bank introduced Advance against Demat Securities in 2003, which has resulted in volumes of Rs. 1.88 crores, covering 58 accounts, as of September 30, 2004.

Loans for subscribing to IPOs : The loans for subscribing to IPOs came in 2003, which has resulted in volumes of Rs. 0.05 crores as of September 30, 2004.

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Commercial Vehicle Loans: The Commercial Vehicle Loans was introduced in 2001. The Bank extend loans for purchase of new and used Commercial Vehicles MAVs (Multi Axle Vehicles), HCVs (Heavy Commercial Vehicles), MCVs (Medium Commercial Vehicles) and LCVs (Light Commercial Vehicles), which include Buses, Trucks, Fully built vehicles & Tippers. The loan is generally granted for a maximum term of 48 months.

Consumer Liabilities

Resource mobilization in Retail Banking is a core activity of our bank. Our Bank has a customer base, of nearly one million with over Rs.10, 000 crores of deposits, with a mix of Savings, Current and Term deposits. The Bank have the following consumer liability products in our portfolio Orange Savings Account: The Orange Savings Account was introduced in August 2003. It has secured more than 125,000 new customers. The key features of Orange Savings Account are free personal accident insurance cover including medical expenses for three years, free unlimited ATM transactions in over 9,000 MasterCard networked ATMs in India and overseas, free membership to Smartserv (Personal assistance service) and other facilities like Internet Banking, Tele banking, Anywhere Banking and other privileges.

Orange Current Account: The Orange Current Account was launched in December 2003. Some of the distinct features of the account are free personal accident insurance cover, free cash in transit insurance, free ATM transactions in MasterCard network, and free DDs/PO/PAP cheques up to Rs 1.5 crore per month and many other facilities. Since December 2003, this product has secured more than 2,500 customer accounts and mobilized over Rs 150 crores

Mpower Salary Account: Introduction of the Mpower Salary Account came in November 2002, which expedites the process of salary payments, facilitating both employer and employees.

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Advantage Savings: In September 2004, the Bank launched a scheme exclusively for the customers of no networked branches with accident Insurance as the key feature. The scheme envisages coverage of savings bank account holders under personal accident insurance to a maximum of Rs.0.03 crores.

Term Deposits: The Bank offers fixed, reinvestment and recurring deposits with all the facilities for easy transferability, different modes of interest payments, advance against deposit, premature withdrawal facility, acceptance in units and nomination facility. A sizeable portion of the portfolio is skewed towards reinvestment deposits amounting to over Rs. 7,300 crores.

Debit Cards: The Bank have tied-up with Master Card Internationals to issue the International Debit Card with Maestro/Cirrus connectivity. This enables our debit card holders to access over 9000 ATMs of Maestro/Cirrus member banks and over 70,000 merchant establishments over India.

Small and Medium Enterprises (SME) Traditionally our focus has been on the Small and Medium Enterprises business, which has accounted for a sizeable proportion of our total advances. This segment focuses on the needs of all business enterprises in trading of goods/services with annual sales turnover up to Rs. 75 crores for both domestic & export credit requirements. The Bank have a large number of relationships which is a core strength enabling us to cross sell other products like Savings/Current/Term deposits, Insurance and Mutual Fund investments, Credit Card, VysyaDP etc. Agriculture & Social Banking Unit (ASBU)
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ASBU deals with all banking business in rural branches and business related to Agricultural activities and lending to government sponsored schemes in other non-rural branches. Private Banking In India, the erstwhile ING Bank was one among the firsts to offer private banking services. After ING Group invested in the Bank, the private banking arm of ING Bank was integrated into ING Vysya Bank. The client management team is supported by a product development team, and a research team headed by the Chief Investment Officer. The following key products and services are in the domain of our private banking:

Investment Solutions: The Bank has portfolio management services are nondiscretionary in nature and include construction/ restructuring of the portfolios, monitoring them and executing clients requests. Our investment products include debt, equity, mutual funds and insurance.

The Bank Structuring for Diverse Needs: The Bank structuring services embrace wills, trusts and other The Bank has established means of protecting and distributing assets. The Bank also provide real-estate advisory services that focus on broad-basing the clients The Bank has allocation and income streams, as the Bank provides tax and legal planning services through specialized partners.

The Bank offers customers a choice of DELIVERY CHANNELS including:

physical branches, Automated Teller Machine (ATMs), telephone banking, SMS and the Internet.

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In recent years, the Bank have expanded our physical delivery channels, including bank branches and ATMs, to currently cover a total of 866 outlets in 298 locations throughout India. The WHOLESALE BANKING is organized into three groups: Client Coverage, Products and Services and Financial Markets.

While the Client Coverage group is responsible for managing relationships with identified client sub-groups, the Products and Services and Financial Markets groups are responsible for product and service delivery to the entire Wholesale Banking client base. Wholesale Banking Products and Services The Bank provides a range of commercial banking products and services to Indias leading corporations and growth-oriented middle market businesses. Our key commercial banking products and services to corporate customers include (a) Credit Products and Structured Finance; (b) Cash Management; (c) Trade and Commodity Finance; (d) Investment Banking, Local Debt Syndication and Securitisations, (e) Financial Markets and (f) Corporate Deposits. (a) Credit Products and Structured Finance Credit Products of the Bank include products like Working Capital Finance, Term Finance and Structured Finance. Our corporate loan portfolio primarily consists of term loans for project and corporate finance, and working capital credit facilities. (I) Working Capital Finance: Under working capital finance, The Bank offers the following products and services to our customers.

Cash Credit / Overdraft Facilities: Cash credit facilities are the most common form of working capital financing in India. Under the cash credit facility, a line of credit is provided up to a pre-established amount based on the borrowers creditability and

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projected level of inventories, receivables and cash deficits. Up to this pre-established amount, disbursements are made based on the actual level of inventories and receivables. Cash credit / Overdraft facilities are running account facilities where the borrower may remit and draw funds freely. These are typically given to companies in the manufacturing, trading and service sectors on a floating interest rate basis. Interest is earned on this facility on a monthly basis, based on the daily outstanding amounts. The facility is generally given for a period of up to 12 months, with a review after that period. Our cash credit facility is generally fully secured with full recourse to the borrower. In most cases, the Bank has a first charge on the borrowers current assets, which normally are inventory and receivables. Additionally, in some cases, the Bank may take further security of a first or second lien on fixed assets including real estate, a pledge of financial assets like marketable securities, corporate guarantees and personal guarantees. Cash credit facilities are extended to borrower by a single bank, multiple banks or a consortium of banks with a lead bank. The nature of the arrangement is usually agreed between the bank and the borrowers and depends upon the amount of working capital financing required by the borrower, the risk profile of the borrower and the amount of loan exposure a single bank can take on the borrower. Regardless of the arrangement, the Bank undertake our own due-diligence and follow our credit risk policy to determine whether the Bank should lend money to the borrower and, if so, the amount to be lent to the borrower and the rate of interest to be charged.

Commercial paper: A commercial paper is an unsecured, short-term corporate paper in the nature of a usance promissory note with fixed maturities and is negotiable by endorsement and delivery. Under current guidelines, commercial paper can be issued for a minimum tenor of 15 days and a maximum tenor of 365 days. Commercial papers are generally issued by highly rated borrower and since they are tradable, they offer us a liquid investment opportunity.

Bill Discounting: Bill discounting involves the financing of short-term trade receivables through negotiable instruments. These negotiable instruments can then be

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discounted with other banks if required, providing us with liquidity. In addition to traditional bill discounting, the Bank also provides customised solutions to our corporate customers having large dealer networks. Loans are approved to dealers in the form of working capital lines of credit, based on analysis of credit risk profiles of dealers.

Short-term loan: Short-term loans are demand loans with a maturity of three to six months provided by us to corporate borrowers to meet their temporary cash flow mismatches or to avail of interest rate arbitrage. They can be denominated 43 in either rupee or foreign currency and can be disbursed as fixed rate loans or floating rate loans linked to our Banks reference rate called IVRR or money market benchmark rates. Short term loans are usually provided to highly rated corporates and may be unsecured.

Export Credit: The RBI requires banks to make loans to exporters at concessional rates of interest. The Bank provides export credit for pre-shipment and post-shipment requirements of exporter borrowers in rupees and foreign currencies. The RBI provides export credit refinancing for an eligible portion of total outstanding export loans at the bank rate prevailing from time to time. The interest income earned on export credits is supplemented through fees and commissions earned from these exporter customers from other fee-based products and services availed by them from us, such as foreign exchange products.

Letters of Credit: Letter of credit facilities are being provided to our working capital loan customers both for meeting their working capital needs as the Bank for capital equipment purchases. For working capital purposes, the Bank issue letters of credits on behalf of our borrowers for the sourcing of their raw materials and stock inputs. Lines of credit for letters of credit are approved as part of a working capital loan package provided to borrowers. These facilities, like cash credit facilities, are generally given for a period up to 12 months, with review after that period. Typically, the line is drawn down on a revolving basis over the term of the facility, resulting in a fee payable to us at the time of each drawdown, based on the amount and term of the

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drawdown. The Bank issue letters of credit on behalf of borrowers both for domestic and foreign purchases. Borrowers pay a fee to us based on the amount drawn down from the facility and the term of the facility. This facility is generally secured by the same collateral available for cash credit facilities. The Bank may also take collateral in the form of cash deposits, in the range of 5.0% to 20.0% of the drawdown amount, from our borrowers before each drawdown of the facility.

Guarantees: Guarantees are being provided, which can be drawn down any number of times up to the committed amount of the facility. The Bank issue guarantees on behalf of our borrowers in favour of corporations and government authorities. Guarantees are generally issued for the purpose of bid bonds, guaranteeing the performance of our borrowers under a contract as security for advance payments made to our borrowers by project authorities and for deferral of and exemption from the payment of import duties granted to our borrowers by the government against fulfilment of certain export obligations by our borrowers. The term of these guarantees is generally up to 36 months though in specific cases, the term could be higher. This facility is generally secured by collateral similar to that of letters of credit. In addition, as a part of our project financing activity, The Bank issue guarantees to foreign lenders, export credit agencies and domestic lenders on behalf of our clients.

The Bank has one wholly owned subsidiary, being IVFSL and two affiliate/associate companies being IIML and IVL. IIML is an Asset Management Company which manages the ING Vysya Mutual Fund and IVL is a life insurance company which provides a range of individual and group life insurance solutions, pension products, employee benefits; IVFSL distributes life insurance policies of IVL, mutual funds from ING Vysya Mutual Fund and third party investment products apart from distributing our own products.

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BUSINESS STRATEGY The objective is to build a recognizable position as a premier banking and other financial services products provider to retail and wholesale customers. The key elements of our business strategy are to: Fully leverage the synergies (including support and commitment) available from ING Focus on growth opportunities in the Retail banking business; Strengthen Wholesale Banking operations; Expand retail distribution capabilities; and Use of technology for competitive advantage

TECHNOLOGY USED IN ING Vysya Bank The Bank seeks to be at the forefront of technology usage in the financial services sector. Information technology is a strategic tool for our business operations to gain competitive advantage and to improve overall productivity and efficiency of the organization. All of our technology initiatives are aimed at enhancing value, offering customer convenience and improved service while optimizing costs. The Bank expects to continue with our strategy of leveraging technology to achieve a significant competitive advantage. This will be done by ING Vysya Bank leveraging on the systems and processes that have already been developed by ING worldwide. These cover many functions in the bank, including risk management (credit, market, operational), financial markets, MIS, etc. The key objectives behind our information technology strategy include: building a cost-efficient distribution network in India to accelerate the development of our retail distribution capability Enhancing cross selling and client segmentation. Improving credit and market risk management. Introduction of customer centric products
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providing added value services to Tier 1 corporate clients by also leveraging on the global product and service delivery capabilities of ING Capitalising on the banks legacy in the SME business.

ACHIEVEMENTS AND MILESTONES

Details of key milestones achieved by us so far are as follows: Year Key Events, Milestones and Achievements March 1930 Incorporation of The Vysya Bank Limited, Bangalore February 1948 Became a scheduled bank in terms of the RBI Act September 1985 Achieved the no. one position among private sector banks as on December 31, 1985 March 1987 Incorporation of The Vysya Bank Leasing Limited (now known as ING Vysya Financial Services Limited) for leasing and merchant banking activities along with Karur Vysya Bank Limited January 1988 introduced co-branded credit cards by way of an affiliation with Central Bank of India. November 1990 Incorporation of Vysya Bank Housing Finance Limited for housing finance activities March 1991 Total deposits in the Bank crossed Rs.1000 crores.

Financial Markets / Treasury

Treasury is the Banks interface to all Financial Markets. The Bank has a well-equipped Integrated Dealing Room at its Corporate Office in Bangalore. The latest technology, information systems and risk management systems have been deployed, manned by experienced market professionals. The Bank has an experienced team of money market dealers who ensure that our Bank is compliant with the Cash Reserve Ratio (currently at 5%) and Statutory Liquidity Ratio (currently at 25%) stipulations of the RBI. Funds inflows and outflows of the Bank are
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carefully monitored to ensure that funds are available to meet the Banks requirements at all times.

SWOT ANALYSIS

SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. The SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation. The SWOT analysis classifies the internal aspects of the company as strengths or the weaknesses and the external situational factors as opportunities or threats.

Strengths can serve as a foundation for building a competitive advantage, and the weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its The weaknesses, capitalize on golden opportunities, and deter potentially devastating threats. SWOT helps a company to set itself for better and for worse. SWOTs are a means by which a company can better understand what it does very well and where its shortcomings are. STRENGTHS 1. Instant Pre-generated Kit (includes Debit card, cheque book and Net Banking PIN) 2. ATM pin number security 3. Co- operative Staff 4. Personalized Services / Door step facilities 5. Cash access services till 5:30pm 6. Locker facility 7. ING Life Foundation (Social Responsibility) 8. ING Life Insurance

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9. Experienced Management Team 10. On-spot solution for any grievances of employees WEAKNESS 1. Branch is in residential area and hence not-so-easy access to corporate, whereas the same is turned into an opportunity by providing the door step services to the corporate like check pick up/cash pick up and dedicated relationship managers. 2. More trained sales executives 3. Less promotional Activities/Advertising 4. Parking Inconvenience OPPORTUNITIES 1. Grow our consumer base 2. Offer home loans and other consumer asset products to make it a complete product offering. 3. Acquisition of accounts of existing employees of our competitors (same as point 1) 4. To come up with any USP product. 5. Designating (Teller counter, Customer Care .) 6. The weekend Training in terms of analysis (causes of unclosed calls) and future plans. 7. Survey 8. to leverage wide network of branches, that are increasingly sales and service oriented THREAT: 1. High level of competition 2. A competitor has a new innovative product or service.

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Liberalization in Indian Banking System

In the early 1990s, the then government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy
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banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4%) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2009), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms 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 its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail

banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales.

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Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. The public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

The Origin of ING Group

ING Vysya Bank Ltd is a premier private sector bank with retail, private and wholesale banking platforms that serve over two million customers. With 80 years of history in India and leveraging INGs global financial expertise, the bank offers a broad range of innovative and established products and services, across its 527 branches. The bank, which has close to 10,000 employees, is also listed in Bombay Stock Exchange Limited and National Stock Exchange of India Limited. ING Vysya Bank was ranked among top 5 Most Trusted Brands among private sector banks in India in the Economic Times The bank was formed from the 2002 acquisition of an equity stake in Indian Vysya Bank by the Dutch ING Group. This merger marked the first between an Indian bank and a foreign bank. Prior to this transaction, Vysya Bank had a seven-year old strategic alliance with erstwhile Belgian bank Banque Bruxelles Lambert, which was also acquired by ING Group in 1998. ING group originated in 1990 from the merger between Nationale Nederlanden the largest Dutch Insurance Company and NMB Post Bank Group. Combining roots and ambitions, the newly formed company called Internationale Nederlanden Group. Market circles soon abbreviated the name to I-N-G. The company followed suit by changing the statutory name to ING Group. ING is a global financial services company providing banking, investments, life insurance and retirement services and operates in more than 50 countries.

PROFILE
ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. ING serve more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. They draw on their experience and expertise, their commitment to excellent service and their global scale
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to meet the needs of a broad customer base, comprising individuals, families, small businesses, large corporations, institutions and governments

STRATEGY
INGs overall mission is to help customers manage their financial future. Capitalizing on changing customer preferences and building on our solid business capabilities, INGs strategic focus is on banking, investments, life insurance and retirement services. They provide retail customers with the products they need during their lives to grow savings, manage investments and prepare for retirement with confidence. With wide range of products, innovative distribution models and strong footprints in both mature and developing markets, ING has the long-run economic, technological and demographic trends on their side. ING aligns its business strategy around a universal customer ideal: saving and investing for the future should be easier. While steering the business through turbulent times, ING will execute efforts across all its business lines to strengthen customer confidence and meet their needs, preserve a strong capital position, further mitigate risks and bring its costs in line with revenue expectations.

CORPERATE RESPOSIBILITY
ING wants to pursue profit on the basis of sound business ethics and respect for its stakeholders. Corporate responsibility is therefore a fundamental part of INGs strategy: ethical, social and environmental factors play an integral role in business decisions.

The ING Vysya BANK Ltd.

ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile, Vysya Bank Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse, ING of Dutch origin, during Oct 2002. The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a team of visionaries came together to form a bank that would extend a helping hand to those who weren't privileged enough to enjoy banking services.

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ING and ING Vysya Life Insurance are headquartered at Bangalore, while the corporate office of ING Investment Management is situated at Mumbai. The synergies arising out of the three distinct but complimentary businesses are bound to be an asset to the group in the changing market dynamics of the future. The first such signs are already visible on the horizon with combined products being successfully launched by the different entities of the group in conjunction with each other It's been a long journey since then and the Bank has grown in size and stature to encompass every area of present-day banking activity and has carved a distinct identity of being India's Premier Private Sector Bank. In 1980, the Bank completed fifty years of service to the nation and post 1985; the Bank made rapid strides to reach the coveted position of being the number one private sector bank. In 1990, the bank completed its Diamond Jubilee year. At the Diamond Jubilee Celebrations, the then Finance Minister Prof. Madhu Dandavate, had termed the performance of the bank stupendous. The 75th anniversary, the Platinum Jubilee of the bank was celebrated during 2005.

The long journey of seventy-five years has had several milestones

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1930 Set up in Bangalore 1948 Scheduled Bank 1985 Largest Private Sector Bank 1987 The Vysya Bank Leasing Ltd. Commenced 1988 Pioneered the concept of Co branding of Credit Cards 1990 Promoted Vysya Bank Housing Finance Ltd. 1992 Deposits cross Rs.1000 crores 1993 Number of Branches crossed 300 1996 Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem & Jewellery Export Promotion Council for excellent performance in Export Promotion Cash Management Services, & commissioning of VSAT. Golden Peacock Award - for the best HR 1998 Practices by Institute of Directors. Rated as Best Domestic Bank in India by Global Finance (International Financial Journal - June 1998) 2000 State -of the -art Date Centre at ITPL, Bangalore.

RBI clears setting up of ING Vysya Life Insurance Company

2001 ING-Vysya commenced life insurance business. The Bank launched a range of products & services like the Vys Vyapar Plus, the range of loan 2002 schemes for traders, ATM services, Smartserv, personal assistant service, Save & Secure, an account that provides accident hospitalization and insurance cover, Sambandh, the International Debit Card and the mi-b@nk net banking service. 2002 ING takes over the Management of the Bank from October 7th , 2002 2002 RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 17.12.02 2003 Introduced customer friendly products like Orange Savings, Orange Current and Protected Home Loans

2004 Introduced Protected Home Loans - a housing loan product 2005 Introduced Solo - My Own Account for youth and Customer Service Line Phone Banking Service 2006 Bank has networked all the branches to facilitate AAA transactions i.e. Anywhere, Anytime & Anyhow Banking
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CORPORATE STATEMENT

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AWARDS AND RECOGNISATION

THE NEW IDENTITY

The immediate benefit to the bank, ING Vysya Bank, has been the pride of having become a Member of the global financial giant ING. As at the end of the year December 2008, ING's total assets exceeded 13.31 billion euros, employed over 125000 people, served over 85 million customers, across 50 countries. This global identity coupled with the back up of a financial power house and the status of being the first Indian International Bank, would also

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help to enhance productivity, profitability, to result in improved performance of the bank, for the benefit of all the stake holders. Some facts about ING-Vysya bank ING-Vysya bank branches works on profit centre Around 500 branches in India and 13 in UttarPradesh.

MAJOR PLAYERS
State Bank of India o HDFC Bank o ICICI Bank o HSBC Bank o IDBI Bank o Citi Bank o Axis Bank o Punjab national Bank o ING Vysya Bank o Union Bank of India

FINANCIAL INCLUSION
Rural India accounts for roughly 70% of the population located in 6, 37,000 villages across the country. Out of the 89.30 million farmer households 45.9 million do not have access to credit either from the institutional or non institutional sources (NSSO 2008). Though the banking industry has shown tremendous growth during the last few decades in all areas relating to financial viability, profitability and competiveness, there are concerns that banks have not been able to include certain segments of the population, especially the underprivileged sections of society, into the fold of basic banking services. The financially excluded sections of society also include the urban slum dwellers and migrant workers in urban areas. This has been an area of concern and focus of the Government . Several initiatives have been underway to empower the marginalized sections through
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awareness and education and access to basic banking services such as savings, credit and insurance. However data collated through various surveys indicate that for every 100 adult persons there are only 17 credit accounts and 54 savings accounts with all the financial institutions put together (June 2007), thereby highlighting the need for more concerted efforts The term 'Financial inclusion' (FI) is defined as including the excluded sections of disadvantaged and low income groups into the formal financial sectors by delivery of banking services at an affordable cost. The services offered under FI constitute 'no frills' accounts, access to savings products, providing easy and right quantum of credit at affordable Our bank has drawn a three year plan to achieve Financial Inclusion objectives and has taken up several steps in this regard. The highlights of these are

1)As on September 2010, the Bank has opened 84000 No Frill accounts. 2)Covered 6.27 lac persons under Financial inclusion 3)Bank provides banking facilities to 12000 SHGs with credit facilities of Rs.100 crores. 4)Our bank has been associated with Basaveswara Vidya Vardhaka Sangha, a registered 5)Society with over 100 years of existence. Sangha has a chain of institutes numbering over 120 covering all fields of education and established RUDSETI at Bagalkot with objective to identify, orient, train, counsel, assist young people and to motivate and empower them to take up self-employment venture by providing all the needed assistance. Since inception 13000 candidates have been trained, out of which 8000 were women and 10,000 candidates were settled / linked with finance by various banks in the district 6)Bank has also devised various products for financial inclusion, namely:

REVIEW OF LITERATURE
Attitudes are a predisposed response to an object and are a crucial concept in studying consumer behavior. Customers may have various attitudes towards objects which are mportant for marketers. Attitudes can be used as a theoretical summary of a customers evaluation of an object. It can also give indication of positive and negative feelings and behavioral tendencies. However the attitude-behavior link may not always be accurate as there are other variables which may affect behavior. In accordance to the expectancy-value model within psychological conceptualization, an individuals attitude toward an object
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represents a summary conception or evaluation based on their perception or beliefs. Each belief associates the object with a particular attribute, thus a persons general attitude is determined by the subjective values of each attribute, merged with the strength of their belief that links the attribute with the object. According to psychology, we are told that attitudes can change and that such changes have implications for behavior. The canonical tri-component model of attitudes suggests that changes in beliefs about an object may cause a person to attribute new feelings towards it. Subsequently this causes changes in choice and preferences. For example, if a person obtains information about a product that causes her to have more positive beliefs about it, such as that a car gets better gas mileage than she had previously thought, she will feel more positively disposed toward it and will be more likely to buy it. Therefore when we consider agents inclinations with regards to economic actions, we must keep in mind that we stand on shifting ground which is constantly changing. A customer attitude toward a product or service is influenced by a match of the product or service user image with the customer self-concept (Ekinci and Riley, 2003; Sirgy et al., 1992; Wang and Heitmeyer, 2005). Since, usually attitude develops over time through a learning process which is affected by reference group influences, past experience, and personality (Assael, 1981), or it is a general assessment about something, liking or disliking, and the strength of the feelings. Traditionally used to describe fidelity and enthusiastic devotion to a country, a cause, or individual. More recently, it has been used in a business context, to describe a customers willingness to continue patronizing a firm over the long term, preferably on an exclusive basis, and recommending the firms products to friends and associates. Customer loyalty extends beyond behavior and includes preference, liking, and future intentions. Loyal customer can be a consistent source of revenue over a period n therefore active management of the customer base and customer loyalty is required which often refersto Customer Asset Management.Today, in a marketing context,the term defection is used to describe customers who drop off a companys radarscreen and transfer their brand loyalty to another supplier. Reichheld and Sasser popularized the term zero defections, which they describe as keeping every customer the companycan serve profitably. Not only does a rising defection rate indicate that something is wrong with quality (or that competitors offer better value), it may
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also be a leading indicator signaling a fall in profits. Big customers dont necessarily disappear overnight; they often may signal their mounting dissatisfaction by steadily reducing their purchases and shifting part of their business elsewhere. Service quality is an array of factors or determinants comprising of five dimensions of service i.e., quality, namely, tangibles, reliability, responsiveness, assurance and empathy and use these as the basis for their service quality measurement instrument, result was development of the SERVQUAL instrument, based on the gap model. The central idea in this model is that service quality is a function of the difference scores or gaps between expectations and perceptions. An important advantage of the SERVQUAL instrument is that it has been proven valid and reliable across a large range of service contexts. However, while the SERVQUAL instrument has been widely used, it has been subjected to certain criticisms as well.The contention that service quality consists of five basic dimensions (Parasuramanet al., 1988) is according to some researchers questionable and they have suggestedthat SERVQUAL's dimensions are contextual and not universally applicable ( Ekinci and Riley, 1999; Brown et al., 1993; Cronin and Taylor, 1992; Teas, 1993; Bouman and Van der Wiele, 1992; Gagliano and Hathcote, 1994). Instead, the number and composition of the service quality dimensions are probably dependant on the service setting (Brown et al., 1993; Carman, 1990). It has been suggested that for some services the SERVQUAL instrument needs considerable adaptation (Dabholkaret al.,1996) and that items used to measure service quality should reflect the specific service setting under investigation, and that it is necessary in this regard to modify some of the items and add or delete items as required (Carman, 1990). Moreover, research suggests that culture may play a fundamental role in determining how consumers perceive what constitutes service quality. Szymanski et al. (2001)explored that satisfaction influences repeat purchase(both volume and frequency) behavior and price sensitivity. The biggest advantages that a loyal customer gives arerepeat business and promotion of thecompany through word of mouth. But customer loyalty is much more thanrepeat purchases or increased volume of purchases. While it has been argued that loyalty does not mean anyone who buys repeatedly from the same company,Reichheld (2003) contradicted that not purchasing frequently can be due to changed circumstances or customer may have reduced his or her requirements for the companys products and services. Going by this logic, repeat purchases or increased numbers of purchases may not be true indications of customer loyalty. Reinartz and Kumar (2002) opined that positive word of mouth publicity generated by loyal customers can be one of the ways of advocating a companys offerings to
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friends, colleagues and family. A customer puts his own reputation at stake when he recommends a company; this act of recommendation should be considered the best indicator of customer loyalty. They further suggested that loyal customers are considered as the key to survival and success in many service businesses, especially in the hospitality, insurance and financial sectors. According to Pullman and Gross (2003), a slight change in the percentage of loyal customers can bring about a huge change in profits and the overall value of the firm.Heskettet al., (1990) narrated that companys path to profit and growth may lie in its ability to make its loyal customers market it. Many researchers feel that competitive differentiation can no longer be achieved along the traditional dimensions of corporate performance. Ascommoditisation of many service offerings continues, a new source of competitive differentiation/advantage will come from focusing on the management of customer experiences. Loyalty is so very important to the survival and profitable growth of a company, thus measuring customer loyalty is the prime concern (Pine and Gilmore, 1998)

RATIONALE
Research on service quality has been in the developed countries (Herbig and Genestre, 1996), even though services are among the fastest growing sectors in emerging countries (Malhotraet al, 1993).In fact, the bulk of the research on service quality in banks has been in the context of US and European banking institutions. Today, Madhya Pradesh in general and Indore in particular has become the face of central India and the long stopped development has triggered. The importance of the study at this juncture, it is important to also study branches of banking institutions based in developing cities. As branches in such cities in India provide mature, lessons may be learned from their experiences in developing cities. Banking has becomes more and more globally integrated. Thus, there exists a service gap on how consumers evaluate service quality in contexts and cultures very different from the developed countries, and no prior research has attempted to explore this area.

Evaluation of Salient Beliefs:

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Evaluations are affective responses, usually at relatively low levels of intensity and arousal. This evaluation can be created by both the affective and cognitive systems. The affective system automatically produces affective responses - which includes feelings, emotions, moods and attitudes or evaluations - as instant and direct responses to certain stimuli. These favorable or unfavorable affective responses are generated without conscious, cognitive processing of information about the product or service. Then, through classical conditioning process, these evaluations may become associated with a product or brand, thus creating an attitude.

RESEARCH METHODOLOGY
The service quality model developed by Zeithamal, Parsuraman and Berry (1988) has been used in the present study. The main assumption of the model is that service quality is multidimensional concept. These dimensions contribute to the assessment of the service quality in any setting. A construct SERVPERF based upon the model has been used to ascertain the service quality in different banks under study. The statements in the construct are one-dimensional and performance based, which incorporate the statements of SERVQUAL model that can be used as measurement (Cronin Jr. & Taylor, 1992). The statements have been grouped under five dimensions mentioned earlier. In order to ascertain the perceptions of service quality, Likerts 5-point scale has been used for its suitability to estimate the range and variations in the perceptions. The scale 1 5 represents 5 as mostly agree and 1 as mostly disagree.

Factors Affecting Attitude:

Attitudes can be influenced by various factors beyond product attributes. These include social and cultural environment, as well as psychographic, demographic and geographic conditions. All or any of these factors can shape and impact upon consumer behavior. Unlike personality; attitudes are expected to change as a function of experience. The term attitude is commonly used in popular culture. For example, when asked, What is your attitude toward abortion? a parent might retort, Young man, I dont like your attitude. Some bars even refer to Happy Hour as an attitude adjustment period. For our convenience however, attitude is an enduring, general evaluation of people, object, advertisements or issues. Anything towards
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which one has an attitude is termed as an attitude object. An attitude is lasting because it tends to endure over a certain period of time. It is general because it extends to more than a momentary event such as hearing a loud noise, though one might over time to develop a negative attitude toward all loud noises. Consumers have attitudes toward a wide range of attitude objects, from very product specific behaviors (e.g. drinking Evian rather than Volvic mineral water) to more general consumption related behavior (e.g. how many glasses of water should one drink daily). Attitudes help to determine whom a person chooses to be friends with, what films he or she watches, whether he or she will recycle or discard aluminum cans, or what he or she chooses to do for a living.

Forming Attitudes:
We all have many different of attitudes and we dont usually question how we got them. For example, a person isnt born with the opinion that Coke is better than Pepsi, or that editation calms the soul. Where do these attitudes come from? An attitude can be created in several different ways, depending on the particular hierarchy of effects in operation and the method by which the attitude is learned. It can occur because of classical conditioning, in which an attitude object such as the Pepsi name is repeatedly paired with a catchy jingle (you are in Pepsi generation). It can also be formed through instrumental conditioning, where the ttitude is reinforced by consumption of the object (e.g. Pepsi quenches ones thirst). The learning of an attitude can also be the result of a complex cognitive process. For instance, a teenager may come to model the behavior of friends and media endorsers like Beyonc Knowles who drink Pepsi because they believe that this will allow them to fit in which the desirable lifestyle portrayed in Pepsi commercials. It is thus important to distinguish among types of attitudes, because not all are formed the same way. For example, a brand-loyal consumer like Rafael, the tennis fan, has a long-standing and strongly held positive attitude toward an attitude object, and this involvement will be difficult to weaken. However, another consumer like Andy may be a more fickle consumer: he may have a mildly positive attitude toward a product but quite willing to abandon it when something better comes along.

Importance of Attitude in Service Marketing:

In the area of service marketing customers attitude plays an important role for the marketers. It is one of the important determinants in buying behavior. Marketers should always be
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concerned about the service related issues which directly affects the customers attitude. A savvy marketer can build a model for prospecting new consumers from the attributes of a satisfied customer. Direct marketing companies create higher response rates by using lookalike modeling based on existing customersindividuals with a positive attitude. Marketing spans many disciplines including mathematics, and psychology. Math plays an important role is predicting consumer behavior. Understanding the reasons behind consumer behavior requires knowledge of several theories of psychology. These two disciplines combine to aid in the complete rationalization of consumer behavior. Attitudes are easily formed, but difficult to change. Consumer behavior is the study of how a consumer thinks, feels, and selects between competing products. Moreover, the study of attitudes is critical to understanding the motivation and decision strategies employed by consumers. The combination of beliefs, attitudes, and behaviors influence how a consumer reacts to a product or service. Marketers develop relative, compelling marketing messages using the same combination of information, and ultimately influence consumer behavior.

Factors Affecting Customers Attitudes in Banking Industry:

Banking industry is one of the industries where consumers attitudes play an important role. People deposit their money into the banks and banks on the other hand lend it to different organizations. In a country there exists many financial organizations and different people choose different banks based on their attitudes and preferences. Some people may look for high interestrate and other may look for smooth services. Consumers attitude towards the banking services depends on several factors. First of all the location of a bank can have different attitudes on peoples mind. People may choose a bank which is very near to their home. Some people may choose their financial institutions based on its internal environment. The behavior of the employees plays an important attitude in developing customers attitude. Here employees should be very much friendly giving much emphasis on customers preference. Degree of complexity in terms of transactions is another important factor in developing customers attitude. Some banks have introduced with modern technology which helps to develop positive customers attitude.

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Some banks are providing unique services e.g. night banking, online banking which is also helpful to develop positive customers attitude. Some customers prefer to be given individual care and attention from their financial institution and if they do not receive this, it may have a negative impact on the customers attitude. Another important factor is customers always want to feel relax about the safety of their deposits. Deposits are the main asset of a bank. Therefore banks should keep customers informed that their deposits are safe which will help to develop a positive attitude to their banks. If a well reputed bank fails to meet customers expectation, this might negatively affect the brand image of that bank. In addition to this there are some other factors e.g. reliability and credibility, services charge, Objection handling, hospitality (inviting decoration, waiting time hospitality), delivering services as promised, variety of products, internal environment, employees skill etc. which are responsible for developing positive or negative attitude of customer to the banking sectors. Therefore marketer should always be careful in delivering services so that customers can have a positive attitude toward their services.

Relevant Researches:
Attitude is determined indirectly. Scientists, examining consumer behavior, frequently evaluate attitude asking certain questions and drawing particular conclusions about consumer behavior.The interpretation of words and actions of a consumer can be used to give an indirect definition of attitude. In an article The Determination of the Application of the Fishbein Model of Attitudes in Ascertaining the Attitudes toward Science Held by High School Students, by Hartman and Dean Devere (1972), University Microfilms, 300 North Zeeb Road, Ann Arbor, Michigan, explained that they undertook the study to determine the applicability of the Fishbein model of attitudes in ascertaining the attitudes toward science held by high school students. The model proposed that attitudes involve both cognitive and affective components. In this study, the acceptability of the psychometric properties of an instrument was the criterion for judging applicability. This was mainly based on the guidelines currently available for achievement tests.The psychometric properties of the final instrument were calculated by data collected from a selected group of 505 selected high school students. The outcome of this study indicated that the Fishbein model of attitudes was applicable to the measurement of attitudes toward science held by high school students. However, the validity of the instrument for predicting the choice of a student to enroll or not to enroll in an elective science course could not be established. In an article Attitudes
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Toward Imported and domestic Apparel Among College Students: The Fishbein Model and External Variables by Soyeon Shim and et al. Department of Apparel, Interior design and Merchandising, Colorado State University, Fort Collins, explained that the purpose of this study was to test the role of external variables on attitudes toward imported and domestic apparel among college students by utilizing Fishbein's Attitude Model. External variables included demographics, clothing attitudes, students' self-perceptions, and level of fashion involvement. Data were obtained from a questionnaire that was completed by 741 students enrolled in randomly selected classes at a major Western university. The attitude toward imported clothing was influenced by the level of fashion involvement, the prestige clothingattitude, the social activities clothing attitude, and social acceptance, in that order of importance. The attitude toward domestic clothing was influenced by the level of fashion involvement, social acceptance, the social activities clothing attitude, and the garment styling clothing attitude, in that order of importance. Overall, students indicated a more favorable attitude toward domestic apparel than imported apparel. Those who preferred imported apparel and those who preferred domestic apparel were identified. The prestige clothing attitude, age, race, and major appeared as discriminate variables between attitude toward imported clothing and attitude toward domestic clothing. They successfully applied the Fishbein Model in explaining the attitudes and the reasons behind it. In a research article Nature and operation of attitudes by Icek Azen, Department of Psychology, University of Massachusetts, 2001, he covered the conceptualization of attitude, attitude formation and activation, attitude structure and function, and the attitude behaviour relation. He considered research regarding the expectancy-value model of attitude, as are the roles of accessible beliefs and affective versus cognitive processes in the formation of attitudes. His survey looked at research on attitude strength and its precursors and consequences. It also reviewed the progress made on the assessment and effects of attitudinal ambivalence. In addition, he considered research on automatic attitude activation, attitude functions and the relation of attitudes to broader values. In his research paper he also discussed attitude objects, explaining that attitudes are dispositions to evaluate psychological objects. This appears to imply that we hold a singular attitude toward any given object or issue, and when attitudes change, the new attitude overrides but does not necessarily replace the old attitude. In his report he explained that attitude can be formed automatically and can be moderated through familiarization with the attitude object. Evaluation of attitude is influenced by both cognition
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and affect. Strong attitudes are thought to have a number of interesting qualities; such as being relatively stable over time,being resistant to persuasion, and to predict manifest behavior. He also put forward the view that if attitudes contribute a variety of functions for the individual, they are likely to create bias in judgments and memory. In research paper The Extended Fishbein Model: Additional Insights and Problems, by Micheal J. Ryan and E. H. Bonfield, the University of Alabama, the explained that the model was derived from Dulany's theory of propositional control as a means of studying relationships among attitude, behavior, and other variables. Behavioral intention is seen as a mediator between behavior and attitude and social influence. Theoretical development and research testing the model were reviewed in the article. The article shows support for the model, as well as highlighting methodological shortcomings. Particularly mentioned were selection of attitude and social influence measures and use of single item measures. According to them the measures which appeared to furnish the best statistical fit might not provide the greatest diagnostic power. A re-conceptualization of the model indicating causal links was proposed providing a possibility for both best fit and high diagnostic power by the researchers. According to the researchers validation of attitude and social influence measures are needed. The body of research based on the extended Fishbein model was considerable and the results of tests suggested that the model had value for the understanding of a wide range of purchase behavior and behavioral intentions. Besides the feasible avenues of research pointed out, replications are necessary and the range of purchase behavior and subject and respondent groups needs to be expanded.

SOURCES OF INFORMATION:
Primary sources: This study focuses on primary data. A primary survey has been conducted to discover the factors which are instrumental to the customer in forming attitudes. Therefore several important attributes have been found and customers are surveyed based on those attributes. Secondary Sources: As secondary source, a lot of journals, books and reports related to attitude measurement were used.
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Hypothesis:
H1. There is significant and positive relation between premises of bank and customer attitude. H2. There is significant and positive relation between technology used and customer attitude. H3. There is significant and positive relation between information provided and customer attitude. H4. There is significant and positive relation between bank statement and customer attitude. H5. There is significant and positive relation between services provided and customer attitude. H6. There is significant and positive relation between service handling and customer attitude. H7. There is significant and positive relation between record maintaining and customer attitude. H8. There is significant and positive relation between helping customer and customer attitude. H9. There is significant and positive relation between employee behaviour and customer attitude. H10. There is significant and positive relation between courteousness and customer attitude.

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H11. There is significant and positive relation between Customer best interest and customer attitude. H12. There is significant and positive relation between overall service quality and customer attitude.

TEST FOR NORMALITY An assessment of the normality of data is a prerequisite for many statistical tests as normal data is an underlying assumption in parametric testing. There are two main methods of assessing normality - graphically and numerically. Kolmogorov-Smirnov and Shapiro-Wilk test Normality for the data can be determined by Kolmogorov-Smirnov and Shapiro-Wilk tools available in SPSS. Kolmogorov-Smirnov D test is a test of normality for large samples. This test is similar to a chi-square test for goodness-of-fit, testing to see if the observed data fit a normal distribution. If the results are significant, then the null hypothesis of no difference between the observed data distribution and a normal distribution is rejected. Simply put, a value less than 0.05 indicates that the data are not normal. Shapiro-Wilks W test is considered by some authors to be the best test of normality (Zar 1999). Shapiro-Wilks W is limited to "small" data sets up to n =2000. Like the KolmogorovSmirnov test, a significant result indicates non-normal data. Both of these test indicate that both categories of results (ones for which the predicted of eruption time was accurate and those not) the sample data are not normally distributed. On this basis alone, it may be more appropriate to choose non-parametric tests of the hypotheses. Recalling that the null hypothesis is that the population is normally distributed, if the pvalue is less than the chosen alpha level, then the null hypothesis is rejected (i.e. one concludes the data are not from a normally distributed population). If the p-value is greater

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than the chosen alpha level, then one does not reject the null hypothesis that the data came from a normally distributed population. TABLE 7shows the results for the Kolmogorov-Smirnov and Shapiro-Wilk test ( For this research the results of the Shapiro Wilk test are considered.) Tests of Normality Kolmogorov-Smirnova Statistic Df Sig. premises of bank technology used information provided bank statement services provided service handling Record maintaining Helping customer Employee behaviour Courteousness Customer best interest Overall Service quality Attitude Loyalty .313 .395 .305 .263 .302 .322 .341 .357 .364 .432 .309 .332 .432 .302 44 44 44 44 44 44 44 44 44 44 44 44 44 44 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 Shapiro-Wilk Statistic df .779 .725 .766 .796 .803 .818 .756 .723 .703 .587 .775 .790 .587 .784 44 44 44 44 44 44 44 44 44 44 44 44 44 44 Sig. .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000 .000

a. Lilliefors Significance Correction

INTERPRETATION: The p-values Shapiro-Wilk test are shown in table above. This implies that the data set is not normal because the p-value is smaller than alpha=.05.

The curve pattern is shown in the corresponding qq-plots

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TESTING OF HYPOTHESIS SPEARMAN CORRELATION COEFFICIENT The Spearman Rank Order Correlation coefficient, rs, is a non-parametric measure of the strength and direction of association that exists between two variables measured on at least an ordinal scale. It is denoted by the symbol rs (or the greek letter for conducting the Spearman's product-moment correlation. Assumptions

,pronounced rho). The test is

used for either ordinal variables or for interval data that has failed the assumptions necessary

Variables are measured on an ordinal, interval or ratio scale. Variables need NOT be normally distributed. There is a monotonic relationship between the two variables, i.e. either the variables increase in value together or as one variable value increases the other variable value.

This type of correlation is NOT very sensitive to outliers.

INTERPRETATION OF TABLE :

The correlation coefficient is a number between +1 and -1. This number tells us about the magnitude and direction of the association between two variables. The MAGNITUDE is the strength of the correlation. The closer the correlation is to either +1 or -1, the stronger the correlation. If the correlation is 0 or very close to 0, there is no association between the two variables.

The DIRECTION of the correlation tells us how the two variables are related. If the correlation is positive, the two variables have a positive relationship (as one increases, the other also increases). If the correlation is negative, the two variables have a negative relationship (as one increases, the other decreases).

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STUDY OF HYPOTHESIS WITH REFERENCE TO TABLE : H1. As the Sig. 2 tailed value is .085, greater than .005, statistically there is a no significant and positive relationship between premises of bank and customer attitude. The value for Spearman Coefficient is .263.

H2. As the Sig. 2 tailed value is .098, greater than .005, statistically there is a no significant and positive relationship between technology used and customer attitude. The value for Spearman Coefficient is .528 H3. As the Sig. 2 tailed value is -.046, less than .005, statistically there is a negative relationship between information provided and attitude. The value for Spearman Coefficient is .767.

H4. As the Sig. 2 tailed value is .051, greater than .005, statistically there is a no significant and positive relationship between bank statement and customer attitude. The value for Spearman Coefficient is .742.
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H5. As the Sig. 2 tailed value is .004, less than .005, statistically there is a significant and positive relationship between service provided and customer attitude. The value for Spearman Coefficient is .977. H6. As the Sig. 2 tailed value is .130, greater than .005, statistically there is a no significant and positive relationship between service handling and attitude. The value for Spearman Coefficient is .232.

H7. As the Sig. 2 tailed value is -.187, greater than .005, statistically there is a no significant and positive relationship between record maintaining and customer attitude. The value for Spearman Coefficient is .225. H8. As the Sig. 2 tailed value is 1, greater than .005, statistically there is a no significant and positive relationship between helping customer and customer attitude. The value for Spearman Coefficient is not defined. H9. As the Sig. 2 tailed value is .104, less than .005, statistically there is a no significant and positive relationship between employee behaviour and customer attitude. The value for Spearman Coefficient is .601.

H10. As the Sig. 2 tailed value is .166, greater than .005, statistically there is a no significant and positive relationship between courteousness and customer attitude. The value for Spearman Coefficient is .281

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H11. As the Sig. 2 tailed value is 1, greater than .005, statistically there is negative relationship between customer best interest and customer attitude. The value for Spearman Coefficient is not defined.

H12. As the Sig. 2 tailed value is .050, greater than .005, statistically there is a no significant and positive relationship between overall service quality and customer attitude. The value for Spearman Coefficient is .748.

Conclusion
Service quality should be used as a strategic tool to get a competitive advantage over the competitors. With the increasing levels of globalization of the Indian banking industry, and adoption of universal banks, the competition in the banking industry has intensified. Any where and any time banking now become a reality .Recognition of service quality now acts as a competitive weapon. There is an urgent need for the banking services to reaffirm themselves in view of the cutthroat competition, which is close on the anvil. The banks shall have to reorient themselves in terms of the customer service parameters to in still the concept of quality service in the mind of the customer and therefore the growth. Strategically speaking, the banks in the private sector should focus more on improving the infrastructure. The infrastructure not only involves the information technology input in the branches but also the physical evidence, internal environment and layout. This is due to the fact that recently like in other services, in banking also the internal ambience of the organization has a positive impact on the customers. The customers trust the public sector banks. These banks have existed in the market for a longer period than the private sector banks. The reliability factor is a positive factor for these banks. They should position themselves in the market on the basis of this dimension and promote themselves aggressively. This will not only help them survive the present onslaught from private sector banks, but also be competitive in the market. The Private sector Banks should be improved in such point of view
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BIBLIOGRAPHY

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