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Best banks in India
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November 21, 2007
Not so long ago, accessing our own money was about setting aside a couple of hours, getting to the bank before closing time, standing in one queue to get a token and then in another to collect the cash. Those were the pre-economic reforms days, when the banking sector primarily consisted of public sector banks. 

Cut to the present day and the nature of banking has changed beyond recognition. With ATM cards, simple banking transactions like withdrawing and depositing money are easier than ever before. For the tech-savvy, there is the option of banking online. The next medium may just be your mobile. 

Even when it comes to products, the changes have been many. Graduating from simple savings accounts and fixed and recurring deposits, banks now offer a host of products like special savings account and sweep-in-account, no frills accounts and easy receive account. Private sector banks may have taken the lead, but public sector banks, with their vast client base and unparalleled treasury of trust, are evolving their own brand of customer-friendliness. 

All these initiatives, however, come at a cost. How do you choose one bank over another? The Outlook Best Bank Award shortlists the players which are a cut above the rest, based on specific parameters. Since PSU banks have had to deal with a legacy from less professional times, this category is divided into two: The Best Public Sector Banks and the Best Private Sector Banks. 

Top push: simple, hassle-free, cheap

There can't be a better introduction to them than saying, "The government banks with them." The State Bank of India [Get Quote] (SBI) is the oldest and largest bank in the country. Its origins go back to the first decade of the 19th century, when the Bank of Calcutta was established on 2 June 1806. The bank got its present name after an Act of Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. 

Today, SBI has a phenomenal 9,559 branches and its ATM network is spread across 5,172 of its own locations, plus 2,328 of those of its associate banks. Its immediately recognisable acronym may not be associated with fancy products, but it is synonymous with simple, no-hassle banking in the remotest parts of the country. The bank also provides demat and trading accounts.

SBI has successfully kept pace with changing technology. Although, at present, it does not offer facilities like phone and mobile banking, the process of offering these services is in the advanced stages. Its ATMs allow you to do a lot more than accessing cash: you can pay the fees for more than 100 education institutions, deposit application fees for competitive exams, give donations to trusts and temples and also transfer funds. To widen its ATM network further, SBI has entered into a partnership with 13 banks for bilateral sharing of ATMs. However, this will call for a small fee. 

SBI has also been actively involved in non-profit activity called Community Services Banking since 1973. All bank branches and administrative offices sponsor and participate in a large number of welfare activities and social causes. 

The internal evaluation of customer satisfaction is done by the bank's inspection & audit department at the time of their periodic inspection and audit of branches. All branches are audited at a frequency ranging from one year (large and medium branches) to two years (smaller branches). Simple banking solutions at a cheaper cost and its wide reach pushed SBI to the top.

Meeting challenges

The figures of the runner-up may not look as impressive as that of the winner, but the Bank of Baroda [Get Quote] (BoB) should also be saluted for the speed at which it has realigned itself to meet new challenges. The mission statement of the bank says: "To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence." It has certainly lived up to this statement. 

BoB is one of the few public sector banks to offer 24-hour banking at select branches. The reach of the bank, too, is impressive. It has over 2,700 branches and 1,040 ATMs across the country. BoB customers can use ATMs of 16 other banks. 

Leaders in the private space, they changed the face of banking in india

It is an indication of the keen competition in this sector that our jury felt unable to pick one winner. Both HDFC Bank [Get Quote] and ICICI Bank [Get Quote] have come to be acknowledged as the best in their fields, with complementing strengths and far-sighted game plans.

The Housing Development Finance Corporation [Get Quote] (HDFC) was among the first to receive an 'in principle' approval from the RBI to set up a bank in the private sector as part of the liberalisation of the Indian banking industry in 1994. The bank was incorporated in August 1994. As on 30 June 2007, the bank has 753 branches and an ATM network spread across 1,716 locations. HDFC Bank is one of the first banks in India to offer its customers the bill pay facility. HDFC Bank is also a leader in online purchase (using the HDFC Bank DirectPay product). The bank also offers its customers a free personalised payable-at-par cheque book and services like real time gross settlement and national electronic fund transfer.

The bank offers microfinance directly to self-help groups - mainly those involving economically backward women - and indirectly to other poor groups through microfinance institutions. The bank has assisted 1.3 million poor families in this manner, and has disbursed close to Rs 650 crore (Rs 6.5 billion)  to these weaker sections, and has enjoyed a 100 per cent repayment. 

ICICI Bank was originally promoted in 1994 by ICICI, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46 per cent through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000. ICICI Bank is India's second-largest bank with total assets of Rs 3,44,658 crore ($79 billion) on 31 March 2007 and profit after tax of Rs 3,110 crore for fiscal 2007. The bank has a network of about 950 branches and 3,300 ATMs in India. ICICI Bank offers a host of services that can be operated out of the ATM. These include FD renewal and balance enquiry on credit and debit card. 

It also offers e-payment services like utility payments using bill pay facility. ICICI Bank has developed in-house payment gateway known as Payseal. It makes electronic commerce more convenient and offers ease and security of accepting payments on the Internet. It is the only bank in India to accept multi-currency transactions. The bank also offers loans for special categories like microcredit for women.

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