INTRODUCTION

INTRODUCTION

The business of banking around the globe is changing due to integration of

global financial markets, development of new technologies, universalization of

banking operations and diversification in non-banking activities. Due to all these

movements, the boundaries that have kept various financial services separate from

each other have vanished. The coming together of different financial services has

provided synergies in operations and development of new concepts. One of these

is bancassurance.

Bancassurance simply means selling of insurance products by banks. In

this arrangement, insurance companies and banks undergo a tie-up, thereby

allowing banks to sell the insurance products to its customers. This is a system in

which a bank has a corporate agency with one insurance company to sell its

products. By selling insurance policies bank earns a revenue stream apart from

interest. It is called as fee-based income. This income is purely risk free for the

bank since the bank simply plays the role of an intermediary for sourcing business

to the insurance company.

It has its genesis decades ago in France, where this channel today is the

predominant source of insurance business. It has grown at different places and taken

shapes and forms in different countries depending upon demography, economic and

legislative prescription in that country. In some countries, bancassurance is still

largely prohibited, but it was recently legalized in countries such as the United

States, when the Glass-Steagall Act was repealed after the passage of the Gramm-

Leach-Bliley Act.

Bancassurance is a new buzzword. It originated in India in the year 2000.

Following the recommendations of First Narasimham Committee, the

contemporary financial landscape has been reshaped. Thus, present-day banks

have become far more diversified than ever before. Therefore, their entering into

insurance business is only a natural corollary and is fully justified too as

‘insurance’ is another financial product required by the bank customers.

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From the view point of insurance industry also the importance of

bancassurance was felt necessary. With the increased pressures in combating

competition, companies are forced to come up with innovative techniques to

market their products and services. At this juncture, banking sector with it's far

and wide reach, was thought of as a potential distribution channel, useful for the

insurance companies. That’s where the bancassurance came into existence. Thus,

bancassurance is poised to become a key determinator / differentiating factor in

the Insurance industry as well.

Given India’s size as a continent it has, however, a very low insurance

penetration and low insurance density. The penetration level of life insurance in

the Indian market is abysmally low at 2.3% of GDP with only 8% of the total

population currently insured. As opposed to this, India has a well-entrenched wide

branch network of banking system, which only few countries in the world could

match with. It is predicted by experts also that in future 90% of share of premium

will come from Bancassurance business only. And almost half of the population

likely to be in the 'wage earner' bracket by 2010 that there is every reason to be

optimistic that bancassurance in India will play a long inning.

Currently there are more and more exchange of wedding rings between

banks and Insurance Company for better business prospect in future. With the

enoromous benefits for banks like increase in revenue, return on asset, customer

retention, better reputation etc., the bancassurance is going to be a big revolution

in the banking industry. It is against this backdrop an attempt is made to analyse

the financial performance of the AXIS bank in bancassurance so far and to find

out the areas where they can make use of and still need to focus in order to make

AXIS bank to play a vital role in the bancassurance industry.

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INTRODUCTION

1.1 MEANING, DEFINITION AND CONCEPT

MEANING:

Bancassurance is a combination of two words ‘Banc’ and ‘assurance’

signifying that both banking and insurance products and service are provided by

one common corporate entity or by banking company with collaboration with any

particular Insurance company. In concrete terms bancassurance, which is also

known as Allfinanz - describes a package of financial services that can fulfill

both banking and insurance needs at the same time.

It is the provision of insurance (assurance) products by a bank. The

usage of the word picked up as banks and insurance companies merged and banks

sought to provide insurance, especially in markets that have been liberalized

recently. In its simplest form, Bancassurance is the distribution of insurance

products through the Bank’s distribution network.. It is a phenomenon wherein

insurance products are offered through the distribution channels of the banking

services along with a complete range of banking and investment products and

services. Bancassurance tries to exploit synergies between both the insurance

companies and banks.

DEFINITION:

The term first appeared in France in 1980, to define the sale of insurance

products through banks’distribution channels (SCOR 2003).

The Life Insurance Marketing and Research Association’s (LIMRA’s)

insurance dictionary defines bancassurance as “the provision of Life insurance

services by banks and building societies”.

According to IRDA, ‘bancassurance’ refers to banks acting as corporate

agents for insurers to distribute insurance products.” Literature on bancassurance

does not differentiate if the bancassurance refers to selling of life insurance

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INTRODUCTION

products or non-life insurance products.Accordingly, ‘bancassurance’ is defined

to mean banks dealing in insurance products of both life and non-life type in any

forms.But in this research the focus is entirely concentrated towards life

insurance. It is also important to clarify that the term bancassurance does not

just refer specifically to distribution alone. Other features, such as legal, fiscal,

cultural and/or behavioural aspects also form an integral part of the concept

of bancassurance (SCOR 2003).

There are many definitions of bancassurance and, in essence it does depend

upon the model used, and the stage of development. However, the definition of a

fully developed model that is most commonly used is: “'Manufacturing and

distributing cost effectively banking and insurance products to a common

customer base”.

CONCEPT:

This concept gained importance in the growing global insurance

industry and its search for new channels of distribution.However, the

evolution of bancassurance as a concept and its practical implementation

in various parts of the world, have thrown up a number of opportunities

and challenges.

Bancassurance is a relatively new concept in the global stage. Unlike banks

and insurers which have been around in one form or another for centuries,

bancassurance has only been around for a few decades. The concept of

bancassurance was emerged in the western world when banks began to get

involved in marketing of insurance business. From a purely historical perspective,

many regard Barclay’s Life, set up in 1965 in the UK as an insurance subsidiary

of the eponymous bank, as the pioneer of bancassurance. But the term

bancassurance came into existence in France after 1980 to define the sale of

insurance through an intermediary bank.

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INTRODUCTION

It has reared its head in France in the late 1970’s,motivated by among other

things changing customer needs due to an inadequate pension scheme that existed

at that time. As the governments can no longer maintain the funding that people

have begun to take a more active role in their future entitlements by looking at

alternatives to pensions. Bancassurance provides not only provides an alternative

to pensions but also caters to the current taste of customers, which is no longer

satisfied by the traditional products offered by the insurers. As bancassurance

allowed the banks to move away from income generated by the interest spreads it

is viewed as a solution to alleviate the problem of poor consumer savings,

squeezed margins. Thus lackluster pension schemes, poor consumer savings,

squeezed margins, the need for one stop shop delivery for all financial services

among the consumers, increasing importance of strategic alliance has all led to the

growth of bancassurance in Europe. With the success of bancassurance model in

Europe, the bancassurance, which was only a European phenomenon, is becoming

popular in other continents also

Bancassurance seems to have made the greatest impact in France. Almost

100% of the banks in France are selling insurance products. It is claimed that the

55% to 60% of the life insurance business in France had come through banks. In

Portugal and Spain it was over 70%. In U.K it is about 30%. In Argentina,

Brazil, Chile, Colombia and Mexico also the bancassurance is becoming popular.

Hardly 20 % of the United states banks are selling insurance products as only

recently the Glass steagell act was repealed which has prohibited the banks from

entering into the financial services. In Asia: Singapore, Taiwan and Hong Kong

have surged ahead in Bancassurance then that with India and China taking

tentative step forward towards it. In Middle East, only Saudi Arabia has made

some feeble attempts that even failed to really take off or make any change in the

system.

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INTRODUCTION

RELEVANCE OF BANCASSURANCE IN THE INDIAN FINANCIAL

SECTOR

i)) Integration of the financial service industry in terms of banking, securities

business and insurance is a growing worldwide phenomenon. The Universal

Banking concept is evolving on these lines in India.

ii) Banks are the key pillars of India’s financial system. Public have immense

faith in banks.

iii) Share of bank deposits in the total financial assets of households has been

steadily rising.

iv) Indian Banks have immense reach to households. Total of 65700 branches of

commercial banks, each branch serving an average of 15,000 people.

v) Banks enjoy considerable goodwill and access in the rural regions.There are

32600 branches in rural India (about 50% of total), and 14400 semi-urban

branches, where insurance growth has been most buoyant.196 exclusive Regional

Rural Banks in deep hinterland.

vi) Banks have enormous retail customer base.Share of ‘individuals’ as a category

in bank accounts is steadily increasing.Rural and semi urban bank accounts

constitiute close to 60% in terms of number of accounts,indicating the number of

potential lives that could be covered by insurance with the upfront involvement of

banks.

vii) Banks world over have realized that offering value-added services such as

insurance, helps to meet client expectations. Competition in the Personal

Financial Services area is getting `hot’ in India that Banks can retain customer

loyalty by offering them a vastly expanded and more sophisticated range of

products. Insurance distribution can also help the bank to increase the fee-based

earnings to a large extent.

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viii) Fee-based selling helps to enhance the levels of staff productivity in banks.

This is vitally important to bring higher motivation levels in banks in India.

ix) Banks can put their energies into the small-commission customers’ that

insurance agents would tend to avoid. Banks’ entry in distribution can help to

enlarge the insurance customer base rapidly. This helps to popularize insurance as

an important financial protection product.

x) Bancassurance helps to lower the distribution costs of insurers. Acquisition

cost of insurance customer through bank is low. Selling insurance to existing

mass market banking customers is far less expensive than selling to a group of

unknown customers. Experience in Europe has shown that bancassurance firms

have a lower expense ratio. This benefit could go to the insured public by way of

lower premiums.

xi) Banks have an important role to play in the pension sector when

deregulated.Low cost of collecting pension contributions is the key element in the

success of developing the pension sector. Money transfer costs in Indian banking

is low by international standards.Portability of pension accounts is a vital

requirement which banks can fulfill, in a credible framework.

REASONS FOR BANKS TO ENTER INTO BANCASSURANCE

The main reasons why banks have decided to enter the insurance industry

area are the following:

Intense competition between banks, against a background of

shrinking interest margins, has led to an increase in the

administrative and marketing costs and limited the profit

margins of the traditional banking products. New products

could substantially enhance the profitability andincrease

productivity.

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INTRODUCTION

Financial benefits to a bank performance can flow in a

number of ways, as briefly outlined below:

- Increased income generated, in the form of

commissions and/or profits from the business

(depending upon the relationship)

- Reduction of the effect of the bank fixed costs, as they

are now also spread over the life insurance relationship.

- Opportunity to increase the productivity of staff, as

they now have the chance to offer a wider range of

services to clients

Customer preferences regarding investments are changing.

For medium-term and long-term investments there is a trend

away from deposits and toward insurance products and

mutual funds where the return is usually higher than the return

on traditional deposit accounts.This shift in investment

preferences has led to a reduction in the share of personal

savings held as deposits, traditionally the core element of

profitability for a bank which manages clients money. Banks

have sought to offset some of the losses by entering life

insurance business.Life insurance is also frequently supported

by favourable tax treatment to encourage private provision for

protection or retirement planning. This preferential treatment

makes insurance products more attractive to customers and

banks see an opportunity for profitable sales of such

products.

Analysis of available information on the customer

financial and social situation can be of great help in

discovering customer needs and promoting or manufacturing

new products or services.Banks believe that the quality of

their client information gives them an advantage in

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distributing products profitably, compared with other

distributors (e.g. insurance companies).

The realization that joint bank and insurance products can be

better for the customer as they provide more complete

solutions than traditional standalone banking or insurance

products.

Banks are experiencing the increased mobility of their

customers, who to a great extent tend to have accounts with

more than one bank. Therefore there is a strong need for

customer loyalty to an organization to be enhanced.

Client relationship management has become a key strategy.

To build and maintain client relationships,banks and insurers

are forming partnerships to provide their clients with a wide

range of bank and insurance products from one source.

It is believed that as the number of products that a customer

purchases from an organization increases the chance of

losing that specific customer to a competitor decreases.

WHY IS BANCASSURANCE MORE SUITED TO LIFE INSURANCE

PRODUCTS?

Traditionally, much fewer non-life insurance products are distributed

through bancassurance than life insurance products. There are several reasons for

this:

The main reason may be the complementary nature of life insurance and✔

banking products: bank employees are already familiar with financial products

and quickly adapt to selling insurance-based savings or pension products;

On the other hand, the non-life market requires special management and✔

selling skills, which are not necessarily prevalent in bancassurance. In addition,

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such competencies require significant investment in training and motivation, and

therefore additional costs;

Life insurance products are generally long-term products, which require✔

customers to have complete confidence in the institution that invests their money.

And we now know that, in many countries, banks have a better image and are

more trusted than insurance companies;

Bank advisers can use their knowledge of their customers’ finances to target✔

their advice towards specific needs. This is a major advantage in life insurance

and less important in personal injury insurance;

Some professionals also refer to the claims management aspect of personal✔

injury insurance, which could have a negative impact on brand image. This would

seem to explain why for a long time bancassurance operators hesitated to offer

these types of product.

ADVANTAGES OF BANCASSURANCE:

Everybody is a winner in bancassurance. For banks it mainly acts as a

means of product diversification and additional fee income; for insurance

company it acts as a tool for increasing their market penetration and premium

turnover and for customer it acts as a bonanza in terms of reduced price, high

quality products and delivery to doorsteps. Hence it is a win-win solution for

everyone who involved.

To the bankers:

In a situation of constant asset base the bank can increases Return on

Assets (ROA)by increasing their income, by selling insurance products

through their own channel. It can cover operating expenses and make

operating expenses profitable by leveraging their distribution and

processing capabilities

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Can leverage on face-to-face contacts and awareness about the financial

conditions of customers to sell insurance products.

By acting as a one stop shop for all financial services, they can

improve overall customer satisfaction resulting in higher

customer retention levels

Banks enjoy significant brand awareness within their geographical

region providing for a lower per lead cost when advertising through

print, radio and television. The advantage of a bank over traditional

distributors is the lower cost per sales lead made possible by their

sizeable loyal customer base.

Can establish sales oriented culture among the employees

To the customers:

Comprehensive financial advisory services under one roof. i.e.,

insurance services along with other financial services such as banking,

mutual funds, personal loans etc.

Enhanced convenience on the part of the insured

Easy access for claims, as banks is a regular go.

Innovative and better product ranges

To the insurers:

Insurers can exploit the banks' wide network of branches for

distribution of products. The penetration of banks' branches into the

rural areas can be utilized to sell products in those areas.

Customer database like customers' financial standing, spending habits,

investment and purchase capability can be used to customize products

and sell accordingly.

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Since banks have already established relationship with customers,

conversion ratio of leads to sales is likely to be high. Further service

aspect can also be tackled easily.

Factors that appear to be critical for the success of bancassurance

are

Strategies consistent with the bank's vision, knowledge of target

customers' needs, defined sales process for introducing

insurance services, simple yet complete product offerings,

strong service delivery mechanism, quality administration,

synchronized planning across all business lines and subsidiaries,

complete integration of insurance with other bank products and

services

Another point is the handling of customers. With customer awareness

levels increasing, they are demanding greater convenience in financial

services.

The emergence of remote distribution channels, such as PC-banking

and Internet-banking, would hamper the distribution of insurance

products through banks.

The emergence of newer distribution channels seeking a market share

in the network.

Bancassurance training for bank employees:

The bank employees will need to be trained in the following aspects of the

insurance business:

Features of the insurance products sold

How to identify and approach a potential customer

Basic insurance needs

Handling basic objections

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Other distribution channels and products

Expected roles

Procedures

Remuneration and incentive schemes

Cultures

Customer service

Continuous training and supervision:

Apart from initial training, there should be further training to

support the development of the agent or employee. Some ways in which this can

be done are:

Agency meetings

Bank branch meetings

Area banking meetings

In-house magazine

Training circulars

Area sales seminars

Company library

Video tapes

Certified courses

Lectures

Training material booklets

Remuneration of bank employees:

Any commission payable by the insurance company is, as a principle, to

be credited to the bank profit center for the bancassurance operation. The bank

management sets the commission level for each manager and employee engaged

in the bancassurance operation.

Selling in the bank branches (by employees or by financial

advisers): For simple packaged products: employees could be

rewarded with gifts and/or salary increments based on their selling

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performance in promoting both banking and insurance products.

Such performance could be quantified via the use of a points

system where by the various products are allocated as a number of

points.

Warm leads: In return for providing warm leads, the bank will get

a share, say 50%, of the normal first year commissions.

A basis is needed for allocating this amount between branch staff (who

provide the warm leads) and the bank owners. A possible basis would be:

25% 25% 50%.

The structure shown above generates benefits as follows:

Financial rewards for employees who generate warm leads

Financial rewards for managers and other staff of the bank branch

who have supported bank activities while the assurance business

was being generated.

Group awards or bonuses are more desirable when the contribution of

the individual employee is either difficult to distinguish or depends on group

cooperation.

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1.2 A) NEED FOR THE STUDY

Today’s banking business is not the one we have seen in the past. It has

become much more diversified. With the shift in the customer preferences from

deposits to investments, intense competition etc., the banks saw their profit

margin declining. Thus it has become imperative for the banks to retain the

customer by providing more value added services under one roof as well as to

find alternative ways to generate more income. As bancassurance provides the

best possible solution to all these, most of the banks nowadays have started selling

insurance products to its customers. AXIS bank is also having a tie up with Bajaj

Allianz Life Insurance for selling Life insurance products to its retail customers.

Hence there is a need for the study to know whether AXIS bank has been

benefited out of bancassurance by way of financial analysis and to suggest the

areas where they can make use of and converge the attention of the bank if any, is

required.

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INTRODUCTION

1.2 B) STATEMENT OF THE PROBLEM

To understand the financial impact of bancassurance in AXIS bank

and to suggest the ways and means to improve the existing performance by way

of collecting responses from the customers.

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1.2 C) BENEFITS TO THE ORGANIZATION

Through the study the bank can know its financial performance in

bancassurance and whether it is contributing to the overall progress

of the bank or not.

The study would enable AXIS bank to know the general opinion of

customers about insurance and bancassurance so as to know

whether any awareness need to be created about the same.

The study would enable AXIS bank to know how far their

initiatives in promoting Bajaj Allianz life Insurance products have

reached its customers.

It would also enable the bank to know whether they have

established a strong relationship with the customers, as it is

important for bancassurance.

It would also enable the bank to know the number of persons who

are planning to take a life insurance policy in their near future so

that it can take the advantage of the same.

The bank can also know the willingness of the customers in

accepting AXIS bank as their distribution channel in case of

obtaining Bajaj Allianz Life Insurance policy in future.

Finally, it provides the opportunity for the bank to know the areas

where they need to give much emphasis and uplift themselves in

order to occupy a key role in the area of bancassurance.

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1.2 D) SCOPE OF THE STUDY

The study focuses on the financial performance of AXIS bank in

bancassurance and its contribution to the overall progress of the bank with

respect to life insurance alone.

The study analyses the awareness of the customer and the viewpoints of the

customer about insurance as well as bancassurance.

The study also measures the initiatives taken by AXIS bank in endorsing Bajaj

Allianz Life insurance products.

The study also throws light on the relationship building by AXIS bank with its

customers, as it is the deciding factor for considering the bank as a one-stop

shop for all their financial solutions.

It also indicates the persons who are willing to take life insurance policy in the

immediate future and the reasons for taking the same.

It also pinpoints the willingness of the customer in accepting AXIS Bank, as

their distribution channel, in case of their choice is Bajaj Allianz Life

Insurance for obtaining a policy

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1.3 OBJECTIVES OF THE STUDY

Primary objective: It is to make an analysis on the financial performance of

AXIS bank in bancassurance with specific reference to life insurance and to

suggest the ways and means to improve the existing performance by way of

collecting responses from the customers.

Secondary Objectives:

.

To analyze the financial performance of AXIS bank in bancassurance and

its contribution to the overall progress of the bank using ratio analysis.

To analyze the initiatives taken by the AXIS bank in endorsing the Bajaj

Allianz Life Insurance products.

To assess the relationship building factors of AXIS bank, which is

significant for bancassurance.

To know the customer preferences in selecting AXIS bank as a

distribution channel in case of their willingness to obtain Bajaj Allianz

Life Insurance policy in future.

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1 .4 LIMITATIONS OF THE STUDY

Time has played a biggest constraint that the research could not be carried

out comprehensively as the duration of the study was only 3 months.

As the research contains the Secondary data for making a financial

analysis the accuracy and reliability of the analysis depends on reliability

of figures derived from financial statements.

The sample size for collecting the primary data was meager as it includes

only 100 respondents, hence the conclusion would not be a universal one.

Personal biases and prejudices of the customers may also affect the study.

Inspite of the limitations, the study was effective in analyzing the

performance of AXIS bank in bancassurance with specific reference to life

insurance.

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1.5 A) INDUSTRY PROFILE

Banks are among the main participants of the financial system in India.

Banks in India can be categorized into non-scheduled banks and scheduled

banks. Scheduled banks constitute of commercial banks and co-operative banks.

In terms of ownership, commercial banks can be further grouped into nationalized

banks, the State Bank of India and its group banks, regional rural banks and

private sector banks (the old/ new domestic and foreign).

During the first phase of financial reforms, there was a nationalization of

14 major banks in 1969. This crucial step led to a shift from Class banking to

Mass banking. Since then the growth of the banking industry in India has been

a continuous process. It has become an important tool to facilitate the

development of the Indian economy.

During the second phase of reforms, in the early 1990s, the then

Narasimha Rao government embarked on a policy of liberalisation and gave

licences to a small number of private banks, which came to be known as New

Generation tech-savvy banks, which included banks such as UTI Bank(now re-

named as Axis Bank) (the first of such new generation banks to be set up), AXIS

Bank andICICI Bank. This move, along with the rapid growth in the economy of

India, kickstarted the banking sector in India, which has seen rapid growth with

strong contribution from private banks and foreign banks.

Currently, India has 88 scheduled commercial banks (SCBs) - 28 public

sector banks (that is with the Government of India holding a stake), 29 private

banks (these do not have government stake; they may be publicly listed and

traded on stock exchanges) and 31 foreign banks. They have a combined network

of over 53,000 branches and 17,000 ATMs. According to a report by ICRA

Limited, a rating agency, the public sector banks hold over 75 percent of total

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assets of the banking industry, with the private and foreign banks holding 18.2%

and 6.5% respectively. There are 70324 bank offices in India and each bank

office serves around 16000 people. It’s a huge banking infrastructure and

among best banking network in world.

Current scenario:

As far as the present scenario is concerned the banking industry is in a

transition phase. The Public Sector Banks, which are the mainstay of the Indian

Banking system account, are unfortunately burdened with excessive Non

Performing assets massive manpower and lack of modern technology. while on

the other hand the private sector banks are consolidating themselves through

mergers and acquisitions.

On the other hand the Private Sector Banks in India are witnessing

immense progress They have pioneered Internet banking, mobile banking, phone

banking, ATMs. etc., They are forging ahead and rewriting the traditional banking

business model by way of their sheer innovation and service.

The banks today are more market driven and market responsive. The

top concern in the mind of every bank's CEO is increasing or at least

maintaining the market share in every line of business against the backdrop of

heightened competition. With the entry of new players and multiple channels,

customers have become more discerning and less "loyal" to banks. This makes

it imperative that banks provide best possible products and services to ensure

customer satisfaction. To address the challenge of retention of customers, there

have been active efforts in the banking circles to switch over to customer-

centric business model. The success of such a model depends upon the approach

adopted by banks with respect to customer data management and customer

relationship management.

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There has been an increase in the bank focus on retail segment with the

economic slow down. Retail banking has become the new mantra for banking

industry. Banks are now realizing that one of their best assets for building

profitable customer relationships especially in a developing country like India is

the branch. Branches are in fact a key channel for customer retention and profit

growth in rural and semi-urban set up.. Branches could also be used to inform and

educate customers about other, more efficient channels, to advise on and sell new

financial instruments like consumer loans, insurance products, mutual fund

products, etc.

Thus, all the above led to the practice of bancassurance. The Reserve

Bank of India being the regulatory authority of the banking system, with the

reorganization of the need for banks to diversify their activities at the right time,

permitted them to enter into insurance sector as well. It has issued a set of

detailed guidelines setting out various ways for a bank in India to enter into

insurance sector.

IRDA has also felt the necessity of introducing an additional channel of

distribution, which is the Bancassurance to reach out more people. It started

picking up after Insurance Regulatory and Development Authority (IRDA) passed

a notification in October 2002 on 'Corporate Agency' regulations.

Legal Requirements: In India, the banking and insurance sectors are regulated

by two different entities (banking by RBI and insurance by IRDA) and

bancassurance being the combinations of two sectors comes under the purview of

both the regulators. Each of the regulators has given out detailed guidelines for

banks getting into insurance sector. Highlights of the guidelines are reproduced

below:

RBI guideline for banks entering into insurance sector provides three options for

banks. They are:

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INTRODUCTION

Joint ventures will be allowed for financially strong banks wishing to

undertake insurance business with risk participation;

For banks which are not eligible for this joint-venture option, an

investment option of up to 10% of the net worth of the bank or Rs.50

crores, whichever is lower, is available;

Finally, any commercial bank will be allowed to undertake insurance

business as agent of insurance companies. This will be on a fee basis with

no-risk participation.

The Insurance Regulatory and Development Authority (IRDA) guidelines for the

bancassurance are:

Each bank that sells insurance must have a chief insurance executive to

handle all the insurance activities.

All the people involved in selling should under-go mandatory training at

an institute accredited by IRDA and pass the examination conducted by

the authority.

Commercial banks, including cooperative banks and regional rural banks,

may become corporate agents for one insurance company.

Banks cannot become insurance brokers.

Currently there has been an increase in the number of tie-ups with banks and

insurance companies. Some of the models practiced by the banks in India are I)

Referral model ii) Corporate agency model iii) Insurance as a fully integrated

model etc.,

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Some of the Bancassurance tie-ups in India are as follows:

TABLE 1.1: SOME OF THE BANCASSURANCE TIE-UPS IN INDIA

Insurance Company Bank

Birla Sun Life Insurance Co. Ltd.

Bank of Rajasthan, Andhra Bank, Bank of Muscat,

Development Credit Bank, Deutsche Bank and Catholic

Syrian Bank

Dabur CGU Life Insurance

Company Pvt. Ltd

Canara Bank, Lakshmi Vilas Bank, American Express

Bank and ABN AMRO Bank

HDFC Standard Life Insurance Co.

Ltd. HDFC bank, Union Bank of India, saraswat bank.

ICICI Prudential Life Insurance Co

Ltd.

Lord Krishna Bank, ICICI Bank, Bank of India,

Citibank, Allahabad Bank, Federal Bank, South Indian

Bank, and Punjab and Maharashtra Co-operative Bank.

Life Insurance Corporation of India

Corporation Bank, Indian Overseas Bank, Centurion

Bank, Satara District Central Co-operative Bank, Janata

Urban Co-operative Bank, Yeotmal Mahila Sahkari

Bank, Vijaya Bank, Oriental Bank of commerce.

Met Life India Insurance Co. Ltd. Karnataka Bank, Dhanalakshmi Bank and J&K Bank

SBI Life Insurance Company Ltd. State Bank of India

Bajaj Allianz General Insurance Co.

Ltd. Karur Vysya Bank and Lord Krishna Bank

Royal Sundaram General Insurance

Company

Standard Chartered Bank, ABN AMRO Bank, Citibank,

Amex and Repco Bank.

United India Insurance Co. Ltd. South Indian Bank

Thus, the present day banks are more diversified than ever before. They

cannot restrict themselves to traditional banking. As bancassurance prospects in

25

INTRODUCTION

India are brighter that banks in India can make use of the situation to gain

profitable business venture.

1.5 (B) COMPANY PROFILE

About AXIS BANK:

Axis Bank was established in 1993 and was the first private sector

bank to start operations after the Government of India allowed entry of private

banks. Previously called UTI Bank, Axis Bank was promoted by Unit Trust of

India (UTI-I), Life Insurance corporation of India (LIC), General Insurance

Corporation (GIC) and its four subsidiaries, New India Assurance Company,

Oriental Insurance Corporation, National Insurance Company and United

Insurance Company. The name of the Bank was changed in 2007 as there was

brand confusion because many unrelated shareholder entities such as UTI

Securities, UTI Technological Service and UTI Investor Services were also

sharing the UTI brand. Moreover, the name was changed to connote stability and

solidarity as well as was in line with the bank’s expanding operations across

geographical boundaries. Staring with one branch in Ahmedabad in 1994, the

bank now has 835 branches including extension networks (31st March 2009)

across 30 States and 4 Union Territories. The bank also has overseas offices in

Singapore, China, Hongkong and Dubai.

The bank's broad products and services include consumer banking, NRI business,

retail loans, corporate banking, treasury, capital markets and financial advisory

services. It divides its business into five segments viz. large corporates, SMEs,

agri-business, channel financing and structured products. The bank's retail assets

constituted 23 per cent of total advances at the end of March 2008. Housing loans

accounted for 57 per cent of total retail assets. Auto loans constituted 7 per cent of

its retail loans

26

INTRODUCTION

The bank divides its advances into three focus areas i.e. agricultural, mid--

corporate and SMEs. During 2007--08, the bank's agricultural advances grew by

35 per cent to Rs.5,507 crore. Its advances to SMEs reported a whopping 74 per

cent growth to Rs.11,536 crore.

The bank maintains a healthy asset quality with 81 per cent of its corporate

advances having a rating of at least `A' as at the end of March 2008. The bank

pruned its net stressed assets consistently from 1.92 per cent in 2002--03 to 0.36

per cent by end of 2007--08.

Axis Bank Ltd.

 Subsidiaries Axis Private Equity Ltd.

Axis Sales Ltd.

  Axis Trustee Services Ltd.

Consistent growth: The bank’s net profit has grown by over 30% YoY in 36 out

of the last 38 quarters. Also the two quarters in which the profit did not grow was

on account of write-off of extraordinary items (G-Sec valued on mark to market

basis). The net profit has grown by over 60% YoY in each of the last eight

quarters. The important performance indicators such as ROA, CAR, NPA and

NIM have remained strong over the last five years. Axis Bank comes very near to

HDFC Bank in terms of important efficiency parameters. As can be from the table

above, the share of current account saving account deposits in the total deposits

(CASA) is higher in case of HDFC Bank. Also HDFC Bank scores higher in

terms of margins (NIM). However, looking at the returns generated on networth

(ROE) and the growth in advances and deposits, Axis Bank appears to be gearing

up well to reduce the gap existing in the margins as well as the total balance sheet

size.

Expanding footprint, expanding balance sheet: The bank has continued to

expand its geographical coverage across the country. Over the last five years, the

27

INTRODUCTION

total number of branches including extension centers of the bank has increased

from 339 in FY05 to 835 in FY09 whereas ATMs have increased from 1,599 to

3,595. Also during Q1FY10, the bank added 26 new branches including extension

centers and 128 ATMs. This has helped the bank particularly in the acquisition of

low cost retail deposits, retail assets, lending to agriculture, SME and mid-

corporates as also the sale of third-party products. The bank’s balance sheet has

increased at a CAGR of 43.65% over the last five years

Key Positives 

Market leadership position in the travel card segment

Market leader in the prepaid cards segment

Second largest merchant acquirer in the country

Leadership position in private placement of bonds and debentures till 31st

December 2008

High quality of its assets

The Bank’s Non-Performing Assets (NPAs) are among the lowest in the

industry.

Post its rebranding exercise in 2007 the bank has continued to do well and the

change in name has not affected the bank’s business. In fact in FY2008 it saw its

customer acquisition grow at a robust rate of 67% over the last year to over 9.9

million customer accounts

The above business groups are supported by the following groups:

Audit & Compliance

Credit & Market Risk

Finance, Administration & Legal

28

INTRODUCTION

Human Resources

Information Technology

Operations

29

2.0 REVIEW OF LITERATURE

2.1 Bancassurance - A Global Breakdown:

It is important to outline the impact that bancassurance has had on

differing regions around the world, as well as looking at the major regulations that

impact the further growth of bancassurance. Below, is provided with a brief

synopsis of bancassurance markets in certain key areas.

EUROPE :

Bancassurance is a construct of Europe (France in particular) and this

perhaps helps explain why it is such a phenomenal success within certain

European markets. Largely the 1989 Second Banking Coordination Directive

motivated the large influx of banks into insurance within Europe in recent years.

Currently, the penetration levels are fairly stable in Europe, since bancassurance

in the majority of Western European countries (France, Netherlands, Portugal and

Spain) has reached what studies such as Swiss Re. (2002) argue to be maturity.

These penetration levels will only pick up once bancassurance manages to fully

infiltrate Central and Eastern European countries such as Hungary and Poland,

and the Baltic nations. Currently, the final major hurdle for bancassurance in

Western Europe seems to lie in the U.K. where a predominantly strong insurance

board still attempts to resist the bancassurance trend even in the face of

widespread deregulations.

FRANCE :

In France, the success of bancassurance is mitigated by a favorable tax

treatment on life insurance products, lack of competition within the insurance

industry, and an inadequate pension scheme (Bonnet and Arnal (2000). The

pioneer of bancassurance in France is argued to be Credit Mutual, which created

its own life and non-life subsidiaries in the early 1970’s (Sakr (2001)).

30

Bancassurance has seen the most success in the life insurance market, something

that is true for every nation, increasing from 52% in 1995 to account for 69% of

life insurance business n 2000 (Durand (2003), and Turner (1998)). However, as

of late, the banking networks market share of the life insurance market has

remained fairly stagnant, actually dropping over the years to 66% market share in

2001 and 61% in 2003 (Falautona and Marsiglia (2003), Datamonitor (2003)).

This resulted from a combination of falling stock market prices and the banking

network bearing the brunt of lower transfer prices according to Benoist (2002).

This means that banking and insurance companies are overseen separately

within the country. For a conglomerate, the regulator will depend on who is the

parent of the two.

UNITED KINGDOM:

Bancassurers have faced a tougher time in trying to penetrate the U.K.

market, thanks in large to a combination of restrictive regulations and a powerful

insurance governing body. The first move for bancassurers came in 1985 when

Standard Life purchased a stake in the Bank of Scotland. Changes in legislation

soon followed in 1986 and 1988, which made it legal for banks to market

insurance products and set up their own insurance subsidiaries (Sakr (2001)).

Even then, the main type of union between the two was a joint venture, since the

banks placed an emphasis on maintaining the knowledge of the insurer. Twenty

years later, researchers argue that bancassurance is still in its infancy within the

U.K., currently accounting for 15% of new insurance premiums issued (Benoist

(2002),

It is argued that restrictive regulations were detrimental to the growth of

bancassurance within the country and that due to the lack of experience the

correct model for the U.K. is still to be found (Hubbard (spring 2001)). Two

benefits of the regulatory system in the U.K. are firstly, that it is based on one

almighty regulator that overseas the different factors of the financial services

40

industry (the financial Services Authority). This leads to more streamlined

regulations than in other countries that employ functional form regulatory

systems.

SPAIN:

Spain has one of the most developed markets in bancassurance

(Datamonitor (2003)). Current penetration of bancassurers is over 75% of life

insurance business and an ever-increasing proportion of the non-life business. In

Spain, the evolution of the bancassurance market is fostered by the phenomenal

growth within the insurance services industry (life insurance alone has seen 30%

growth per annum over the past 15 years (Durand (2003)). The development of

bancassurance in the Spanish market was facilitated by the well-established

network of regional building societies, and also the cultural mentality that it is

correct to take on risks (Goddard (1999)).

BRAZIL:

In Brazil the laws are in the bancassurers favor, and the banks within the

country control more than 65% of the insurance market (Nigh and Saunders

(2003)), a size that rivals the leading bancassurers in Europe. Furthermore, in

Brazil, bancassurers are assisted by regulations that ban the development of agent

networks (Benoist (2002)).

NORTH AMERICA :

The North American financial services market is the largest in the world

and bancassurance has developed in a differing manner in this region depending

on the country in question. In Canada, there has been consolidated regulation for

more than 15 years and banks are legally allowed to own insurance companies,

but limitations are placed on the products that can be provided (Dorval (2002)).

While in Mexico, bancassurance has been a flourishing industry due largely to the

role played by banks in the creation of pension funds since the 1997 pension

reforms.

41

Bancassurance in the U.S. has, in contrast, faced a very tight regulatory

and legislative environment for many decades. The formation of financial

conglomerates was greatly hindered by the Banking Act of 1933 (Glass-Stegall

Act) and the Bank Holding Company Act of 1956. Only in 1999 did laws become

more favorable to banks offering insurance products, with the passing of the

Gramm-Leach Bliely Act. However, due to the divergence between the state and

federal laws regarding banks offering insurance products, bancassurers still face a

hard time ahead in relation to regulations and attempting to overcome powerful

lobbies that aim to maintain existing hierarchies (Boot (2003)). Currently, only

around 7% of Americans purchase their insurance products through bank

branches (Thomson (summer 2002b)). However, with the ever-continuing

regulatory changes such as the demutualization of insurance companies coupled

with an ageing population, it is widely believed that there will be strong growth

potentials for bancassurers in a mature market such as the U.S.

ASIA AND THE PACIFIC:

Bancassurance in the Asian region has been relatively slow to take off,

with the exception of countries such as Australia, Hong Kong and Singapore

where regulations have been considerable lenient (Swiss Re. (2002)). The trend in

the majority of mainland Asian countries has been for a bank to form ties with a

foreign insurer in order to begin bancassurance operations with around 80% of

these being life insurers, and the financial structure of the operation tends to be in

the form of a distributional agreement. Since bancassurance is still in its infancy

in most Asian countries, it is very susceptible to global changes

Most countries within Asia have only recently begun allowing the

formation of bancassurance operations with the main players listed below. Certain

countries within the region are still holding out against the onslaught of the

bancassurance trend. Vietnam still restricts banks from offering life insurance

products, while South Korea has made certain rules that make it difficult to begin

a bancassurance operation within the country

42

2.2 Quantitative works of major Researchers related to

bancassurance

Compared to the vast amount of descriptive work that has been published

in the field of bancassurance, there is only a limited amount of empirical

studies conducted on the effects that bancassurance actually has on the

company once implemented. This was largely due to the lack of information that

resulted from poor company disclosure statements and inadequate collections of

national statistics. As these problems are being rectified, researchers into the

bancassurance practice are making more and more empirical research;

nevertheless, it is still in its early stages. The following aims at highlighting the

major quantitative findings of certain researchers that have performed

research into the union of banks and insurers.

The majority of past studies have focused mainly on the risk and

profitability effects resulting from the union of a banking and non-banking

firm. One of the earliest studies in this area was performed by Boyd and Graham

(1986). They conducted a risk-of-failure analysis and looked at two periods

around a new Federal Reserve policy (1974s go-slow policy). they found that

bank holding companies (BHCs) involvement in non-banking activities is

significantly positively correlated with the risk of failure over the period 1971-

1977, while the period 1978-1983 showed no significance, thus indicating that

the new policy had a considerable impact on bank holding company (BHC)

expansion into non-banking activities. Boyd and Graham (1988) followed their

1986 study with a paper that used a simulation approach, whereby they simulated

possible mergers between banking and non-banking companies which were then

compared to existing BHCs in order to determine whether the risk of bankruptcy

will increase of decrease should expansion be allowed in to the non-banking

industry, and also to determine the concurrent effect on company profitability.

Their main finding was that the risk of bankruptcy only declined should the BHC

expand into the life insurance practice. Brewers (1989) study finds similar risk

reduction benefits existing however cannot specify whether they originate as a

43

result of diversification, regulation or efficiency gains. Boyd, Graham and

Hewitt (1993) build on Boyd et al. (1988) by conducting a simulation study.

They once again conclude that mergers of BHCs with insurance companies

may reduce risk, whereas those with securities or real-estate firms will not.

Saunders and Walter (1994) and Lown, Osler, Strahan and Sufi (2000) use a

similar method to Boyd and Graham (1988) and obtain similar results with more

current data. Estrella (2001) examines diversification benefits for banks by

using proforma mergers. In contrast to previous studies that incorporate

accounting data, Estrella uses market data and a measure of the likelihood of

failure that is derived through the application of option pricing theory to the

valuation of the firm. the findings indicate that banking and insurance

companies are likely to experience gains on both sides in the majority of the

cases.

The other major series of studies on banks expansion into non-banking

activities focus on the wealth effects of such a move. Cybo-Ottone and Murgia

(2000) analyzed the stock market valuations of mergers and acquisitions in the

European banking industry over the period 1988-1997, and found the existence

of significant positive abnormal returns associated with the announcement of

product diversification of banks into insurance. Furthermore, they found that

country effects do not significantly affect their overall results, suggesting a

homogeneous stock market valuation and institutional framework across Europe.

Carow (2001) looked at the abnormal returns of bank and insurance companies

following the changing legislation brought about as a result of the Citicorp-

Travelers Group merger, and discovered that investors expect large banks and

insurance companies to gain significantly from the legislation removing

barriers to bancassurance. In an event study released later in the same year,

Carow (Mar 2001) found in support the contestable market theory that insurance

companies became worse off and banks had no long-term gains following

legislations further supporting bancassurance within the U.S.Cowan, Howell and

Power (2002) conducted a similar event study surrounding four separate court

44

rulings and discovered that on average only larger, riskier BHCs with fee-based

income gain the most, while smaller, riskier insurers sustain the highest wealth

losses. Fields, Fraser and Kolari (2005) find that bancassurance mergers are

positive wealth creating events by examining abnormal return data. They

further deduced that scale and scope economies were a contributing factor in

these results.

As always, the opponents are there. Amel, Barnes, Panetta and Salleo

(2004) and Strioh (2004) found that consolidation in the financial sector is

beneficial up to a relatively small size in order to reap economies of sale, and that

there is no clear evidence supporting cost reductions stemming from

improvements in managerial efficiencies. Strioh (2004) finds non-banking income

volatile and that there is little evidence of diversification benefits existing. But,

the majority of the past studies have found risk reduction and wealth creating

benefits associated with the expansion of banks into the insurance industry.

Article 2.3

Title : INSURERS UPBEAT ON BANCASSURANCE CHANNEL

Bancassurance is likely to generate approximately 35% of private

insurers’ premium income by 2008, according to an analysis of India’s

bancassurance sector by Watson Wyatt Worldwide, a leading global

insurance consulting firm.

  ‘India Bancassurance Benchmarking Study- 2006/7’ is the first of its kind

survey in the Indian market, and part of an Asia-wide analysis focused on

bancassurance distribution. It sets out to define bancassurance performance

standards and benchmarks against a cross section of industry practices, processes

and productivity indicators. Watson Wyatt has analyzed the bancassurance

channel from the perspective of banks, life insurers and non-life insurers

separately in the report.

45

  Mr. Graham Morris, Director, Watson Wyatt Worldwide said: “the

purpose of the survey was to focus and understand how banks and insurers

develop strategies for selling life and non-life insurance products through the

vast network of bank branches in India and the practical issues they face in

implementing the sales process”. Watson Wyatt had chosen India as the first

country in Asia to do the Benchmarking Survey considering the vibrant growth

of this alternative channel in the country compared to the other Asian markets.

  A total of 25 banks covering PSU, Private, and Foreign banks had

participated in the Survey, along with almost all private life and general insurers

licensed in the country.

  Nearly 90% of interviewed life insurers are expecting an increase of

over 75% in new business premium income for the current financial year from

the bancassurance channel, despite the fact that they consider lack of sales

culture on the part of bank’s branch staff as a key issue in the success of

bancassurance. The lack of a clear bancassurance vision on the part of the bank

partner is the most visible reason for the slow progress in cross selling of

insurance, despite the bank partners having impressive branch networks or large

customer bases.

  The quality of bank customer data is frequently poor and the absence of

simple CRM tools in most banks makes it difficult to launch specific initiatives

to cross sell insurance products. Public sector banks in the country, which control

more than 90% of the total customers, are seem to be inefficient in recording

basic data about customers and managing available information.

  “Growth in bancassurance in India will fall short of its potential unless

the perceived lack of sales culture and vision begin to get addressed by the

banks. An understanding of theses differences will facilitate the mutual goal of

increasing bancassurance as the leading channel in insurance distribution in

India,” said Mr. R.Krishnamurthy, Managing Director, Distribution Practice,

Watson Wyatt Insurance Consulting of the India office.

  Banks’ have overwhelmingly expressed a leaning towards insurers with

bancassurance expertise and showing evidence of their commitment. On product

46

design and development, they seem to demand more attention from insurers to

involve the bank management team.

  The brand image of the bank partner, its willingness to bring about a

cultural change and involving the entire branch network are the vital factors that

life insurers consider when entering into a bancassurance tie-up. While

developing their bancassurance strategy, general insurers consider increasing

new business and tapping new markets as the key factors. 100% of respondents

ranked gaining support and commitment from the bank’s management as the

critical factor in building successful bancassurance operations.

Both bankers and insurers are bullish about the future outlook of

bancassurance with nearly a quarter of respondents predicting that the overall

share of bancassurance would be about 50% or more in the life segment in the

year 2010. 

About 30% of the life insurers have indicated that by the year 2010,

rural insurance business would constitute between 16-20% of their total

bancassurance new business premium.

  Life insurers have also expressed overwhelming support to innovative

changes in the bancassurance channel, such as banks having multiple insurer

relationships, exclusive bancassurance products for deepening insurance

penetration and simpler training requirements for the bank staff to qualify as

insurance salespersons.

There is no doubt that bancassurance in India will play a major role as

the insurance sector develops. India has the unique experience of drawing strong

regulatory support for this channel. Coupled with the growing awareness of

banks to leverage on their branch network and customer strengths, the insurance

selling opportunities would get widely tapped at bank branches in the years

ahead.

Source: “Business line” dated Wednesday, 19 December 2008,

47

3.0 RESEARCH METHODOLOGY

INTRODUCTION:

Research is an academic activity and as such the term should be used

in technical sense. According to Clifford Woody research comprises defining and

redefining problems, formulating hypothesis or suggested solutions, collecting,

organizing and evaluating data; making deduction and reaching conclusion; and at

last care fully testing the conclusions to determine whether they fit the

formulating hypothesis.

The main aim of the research is to find out the truth which is hidden

and which has not been discovered as yet.

OBJECTIVES OF RESEARCH:

1. To gain familiarity with a phenomenon or to achieve new insights into it.

2. To portray accurately the characteristics of a particular individual,

situation or group

3. To determine the frequency with which something occurs or with which it

is associated with something else

4. To test a hypothesis of a casual relationship between variables

RESEARCH DESIGN:

Research design is the arrangement of conditions for collection and

analysis of data in manner that aims to combine relevance to the research purpose

with economy in procedure of data. It is a blue print specifying every stage of

action in the course of research.

The research design adopted in this study for secondary data, is

exploratory and analytical in nature. Exploratory research aims to gain familiarity

and new insights into any phenomenon while analytical research aims at

analyzing the current scenario and thereby using that to project the future

48

RESEARCH METHODLOGY

performance. This research aims at studying the historical performance of the

company in bancassurance and it also evaluates the future prospects of the

company

Descriptive research design is used for collecting primary data.

It is concerned with the research studies with a focus on the portrayal of the

characteristics of a group or individual or a situation. The main objective of such

studies is to acquire knowledge. The major purpose of Descriptive research is

description of the state of affairs, as it exists at present.

SAMPLING:

Sampling may be defined as a selection of some part of an aggregate

or totality on the basis of which a judgment or inference about the aggregate or

totality is made.

SAMPLING DESIGN:

A sampling design is a definite plan for obtaining a sample given

population. There are different methods of sampling. Here Convenience

sampling technique has been used.

CONVENIENCE SAMPLING:

This method of sampling involves selecting the sample elements using

some convenient method without going through the rigor of sampling method.

The researcher may make use of any convenient base to select the required

number of samples.Accordingly, the area selected for the study was kilpauk,

chennai.

49

RESEARCH METHODLOGY

SAMPLE SIZE:

Sample size refers to the number of items to be selected for the universe

to constitute a sample. The total sample size was taken to be 100.

METHODS OF DATA COLLECTION:

NATURE OF DATA: There are two types of data namely primary and secondary

data.

PRIMARY DATA: Primary data is the data collected for the first time through

field survey. This has been used to collect the data for the purpose of this study.

METHOD OF PRIMARY DATA COLLECTION

The method followed in obtaining the primary data was through the

structured questionnaire.

The researcher had used a Questionnaire for obtaining the primary

data for analysis. A questionnaire is a form prepared and distributed to secure

responses to certain questions. Here a well-structured questionnaire has been

prepared with all the important details regarding bancassurance. It has both open

ended and close-ended questions.

PILOT STUDY:

Before a questionnaire is finalized it should be field-tested. As such, pilot

study has been done. That is after the questionnaire was drafted, to decide

whether it is comprehensive or not, it is used with a few (10) respondents Their

responses are studied and it has been helpful in changing the questionnaire like

giving more instructions to the respondents for filling up, re-sequencing the

questions, addition and deletion of questions etc.,

50

RESEARCH METHODLOGY

SECONDARY DATA: It refers to the information or facts already collected.

Such data are collected with the objective of understanding the past status of any

variable. Here, secondary data has been used for making a financial analysis.

METHOD OF SECONDARY DATA COLLECTION:

Annual reports

Journals and Magazines

Internet

Annual reports of AXIS bank have been used for making an analysis

on the financial performance of AXIS bank in bancassurance. And the data

pertinent to bancassurance like articles, previous researches, etc., has been

collected from journals & magazines as well as Internet.

RATING SCALES:

Summated rating scale: In this method, the attitude of people is classified into

specific points with approximately equal attitude value. The respondents to

questions indicate the degree of agreement or disagreement through their

response. Based on the response of all the questions, the attitude of the

respondents is determined. This scale has been used for the following question no:

10,15,17,18,21.

TOOLS USED: As the research contains both primary and secondary data it

includes both financial statement analysis and statistical analysis.

1. FINANCIAL STATEMENT ANALYSIS : Financial statements refer to

the formal and original statements prepared by a business concern to

disclose its financial information. They are useful only when they are

analyzed and interpreted. The basis for financial planning, analysis and

51

RESEARCH METHODLOGY

decision-making is the financial information. Financial information is

needed to predict, compare and evaluate the firm’s earnings ability. In this

research, financial statements like annual reports of AXIS bank from the

year 2003-2006 has been used for making an analysis on the financial

performance of AXIS bank in bancassurance and its contribution to the

overall progress of the bank.

Ratio analysis , one of the most important techniques of financial

statement analysis has been used in this research.

RATIO ANALYSIS: An analysis of financial statements based

on ratios is known as ratio analysis. Ratio analysis is the process

of computing, determining and presenting the relationship of

items. Some of the ratios used in this research are:

Business ratios: They are used for comparing changes in the business from

period to period. With the help of this, one can pinpoint improvements in

performance or developing business areas. Some of the ratios used in this study

are:

Non-interest income as a percentage of total revenue: Non

interest income is the revenue earned by the bank apart from the

interest income. Hence, calculation of this ratio would reveal the

contribution of non-interest income to the total revenue of the

bank. It can be find out by using the formula:

Non-interest income

Total revenue

Non-interest income as a percentage of operating profit: This

would reveal the percentage of non-interest income contribution

to the operating profit.It can be find out by using the formula:

Non-interest income

Operating profit

52

RESEARCH METHODLOGY

Non-interest income as a percentage of working funds: This

would indicate the percentage of non-interest income

contribution to the working funds. It can be calculated by using

the formula:

Non-interest income

Working funds

Return On Assets (Average): This ratio is calculated to

measure the productivity of assets. A comparison of net income

and average total assets, the ROA ratio reveals how much

income management has been able to squeeze from each rupee’s

worth of a company's assets

Return On Assets (Average) = Net Income

Average total assets

Business per employee: This is used to find out the productivity

of the employees. This is calculated based on the average

employee numbers. And business is the total of net advances and

deposits. (Net of inter bank deposits)

Business per employee = Total of net advances and deposits

Average employee numbers

Profit per employee: This is also used to find out the

productivity of the employees in terms of profit. This is also

calculated based on the average employee numbers.

Percentage of net non-performing assets to customer assets:

This is used to find out the percentage of net non-performing

assets to customer assets. This can be obtained by using the

formula:

Net Non Performing Assets

Customer Assets

53

RESEARCH METHODLOGY

Percentage of net non-performing assets to gross advances:

This is used to find out the percentage of net NPA’s to gross

advances. This can be obtained by using the formula:

Net Non Performing Assets

Gross advances

Capital Adequacy Ratio: Capital adequacy ratios are a measure of the amount of

a bank's capital expressed as a percentage of its risk weighted credit exposures. It

is also called as Capital to Risk Weighted Assets Ratio (CRAR) .It determines the

capacity of the bank in terms of meeting the time liabilities and other risk such as

credit risk, operational risk, etc. In the most simple formulation, a bank's capital is

the "cushion" for potential losses, which protect the bank's depositors or other

lenders..

Capital Adequacy Ratio = Total capital funds

Risk weighted assets and contingents

STATISTICAL TOOLS USED:

This constitutes an integral part of research analysis. Hence any analysis of

data compiled should be subjected to relevant analysis so that meaningful

conclusions could be arrived at.

The statistical tools applied in this research are:

Correlation co-efficient

Chi-square test

Percentage analysis.

CORRELATION COEFFICIENT In a bivariate study distribution we may be

interested to find out if there is any correlation or co-variance between the two

variables under study. If the change in one variable affects a change in the other

variable, the variables are said to be correlated. If the two variables deviate in the

same direction i.e. if the increase (or decrease) in one results in a corresponding

increase (or decrease) in the other, correlation is said to be direct or positive. But

54

RESEARCH METHODLOGY

if they constantly deviate in opposite directions i.e., if increase (or decrease in one

results in corresponding decrease (or increase) in the other, correlation is said to

be negative.

∑xy/n - (∑x/n) (∑y/n)Correlation coefficient = ……………………………………..

√∑x²/n-(∑x/n)² √∑y²/n-(∑y/n)²

CHI-SQUARE TEST:

When certain observed values of a variable are to be compared with the expected

value the test static,

Ψ² = (O - E) 2

E

Where Oi = observed frequency

Ei = Expected frequency

For more accuracy, Yates correction is used and the formula used is given below:

Ψ² = (O - E) 2

E

Power of association test: When the calculated value in the test is greater than

the tabulated value, we accept the alternative hypothesis Hi. In this case, power of

association test is applied in order to show the strength of association, where N =

sample size. Based on the power of Association Test, the value indicates the fair

relationship between the variable.

PERCENTAGE ANALYSIS: These are the measures of central tendency. It is

used to describe relationships. It can be used to compare the relative terms, the

distribution of 2 or more series of data, since the percentage reduces everything to

a common base and thereby to allow meaningful comparison to be made.

Percentage Analysis = No. Of respondents * 100

Total No. Of respondents

55

DATA ANALYSIS AND INTERPRETATION

4.0 DATAANALYSIS AND INTERPRETATION

4.1 Secondary data analysis:

Secondary data analysis, the imperative part of this study has been

undertaken to analyse the performance of AXIS bank in bancassurance so far and

the contribution of bancassurance to the progress of the bank in the form of

increase in ROA, revenue etc., using ratio analysis. Since AXIS bank has started

earning revenue for the sale of insurance policies from 2005 that the analysis

includes from the year 2005-2008.

TABLE 4.1.1

AXIS BANK’S EARNINGS FOR THE SALE OF BAJAJ ALLIANZ LIFE

INSURANCE POLICIES FROM 2005-2008

Year 2005 –06 2006 -07 2007- 08

Revenue earned

for the sale of

insurance policies

16,99 lacs 88,14 lacs 112,09 lacs

CHART 4.1.1

INFERENCE: From the above, it can be seen that there has been an impressive

growth in the revenue over the years for the sale of Bajaj Allianz life insurance

policies by AXIS bank.

56

DATA ANALYSIS AND INTERPRETATION

TABLE 4.1.2

RETAIL SEGMENT PROFIT FROM THE YEAR 2007 TO 2008:

Retail banking segment is undertaking bancassurance. And it is the fastest

growing banking business segment. One of the reasons being the bank’s dealing

with the sale of insurance policies to its retail customers. It has been mentioned

even in the director report of AXIS bank. Thus a glimpse at its profit would be

imperative.

Year 2005-06 2006-07 2007-08

Profit earned by

the retail segment

of AXIS bank

520,64 lacs 701,67 lacs 875,71 lacs

CHART 4.1.2:

INFERENCE: From the above, it can be observed that there has been a

phenomenal increase in the profit of retail segment from 2005-2008, which

symbolizes the bancassurance contribution.

TABLE 4.1.3

RETAIL SEGMENT ASSETS FROM THE YEAR 2005 TO 2008:

57

DATA ANALYSIS AND INTERPRETATION

Retail segment asset can also be increased by way of bancassurance

operation. Let us take a look at its asset position from the year 2005-06 to 2007-08.

Year 2005 –06 2006 -07 2007- 08

Retail assets 24,469,93 38,571,09 50,100,34

CHART 4.1.3

INFERENCE: From the above, we can infer that there has been a phenomenal

increase in the growth of retail assets over the years that it indicates the

contribution of bancassurance to it.

TABLE 4.1.4:

OPERATING EXPENSES FROM THE YEAR 2005 TO 2008:

Bancassurance will lead to a reduction in the operating

expenses of the bank as it can have the opportunity of economies of

scale. Thus let us took a look at the operating expenses of AXIS

bank from the year 2005-06 to 2007-08.

Year 2005 –06 2006 -07 2007- 08

Operating expenses 1,085,40 1,691,09 2,420,80

58

DATA ANALYSIS AND INTERPRETATION

CHART 4.1.4:

INFERENCE: From the chart, we can observe that there has been an increase in

the operating expenses of the bank. Since, AXIS bank is only in its infant stage in

bancassurance, it can perform more to reduce the same in the long run.

TABLE 4.1.5:

NON-INTEREST INCOME AS A PERCENTAGE OF TOTAL REVENUE:

As bancassurance revenue leads to an increase in the non-interest income, the non-

interest income as a % of total revenue from the year 2005-2007 is as follows:

Year 2005-06 2006-07 2007-08

Non interest

income

651,34 1,123,98 1,516,23

Total revenue 3,744,83 5,599,32 8,405,25

Ratio 17.39 20.07 18.03

Chart 4.1.5:

59

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that non-interest income as a

% of total revenue though increased in the year 2005,it has been decreased in the

year 2006.

TABLE 4.1.6 :

NON-INTEREST INCOME AS A % OF OPERATING PROFIT:

Non-interest income as a contribution to the % of operating

profit from the year 2005-2008 is shown as below:

Year 2005-06 2006-07 2007-08

Non-interest income

651,34 1,123,98 1,516,23

Operating profit

1,156,02 1,733,84 2,562,86

Ratio 56.34% 64.82% 59.16%

Chart 4.1.6:

60

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that non-interest income as a

% percentage of operating profit has been increasing from 2005 to 2006.But it has

been decreased in the year 2007-08.

Note: Operating profit = (interest income + other income – interest expense –

operating expense –amortization of premia on investments - profit/(loss) on sale

of fixed assets).

Business ratios (As per the director’s report of AXIS bank) TABLE 4.1.7 :

NON – INTEREST INCOME AS A % OF WORKING FUNDS:

Non-interest income as a % of working funds is shown as below:

Year 2005-06 2006-07 2007-08

Non interest income

as a % of working

funds

1.44% 1.79% 1.76%

Chart 4.1.7:

61

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the chart it can be observed that non-interest income as a%

percentage of working funds though increased in the year 2006,it has been

decreased in the year 2008.

TABLE 4.1.8 :

RETURN ON ASSETS (AVERAGE):

The best opportunity for the banks, which undertakes bancassurance

operation is that, it can increase its return on assets. Hence, the return on assets of

the bank from 2005-2008 is as follows:

Year 2005-06 2006-07 2007-08

Return on Assets

(Average)

1.47% 1.38% 1.33%

Chart 4.1.8 :

62

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that the return on assets of the

bank has been decreased from the year 2005 – 2008.

TABLE 4.1.9 ;

BUSINESS PER EMPLOYEE:

The business per employee from 2005-2008 is as follows:

Year 2005-06 2006-07 2007-08

Business Per Employee 806 758 607

Chart 4.1.9:

63

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it is clear that the business per employee of the

bank over the years has been on the decreasing trend.

TABLE 4.1.10

PROFIT PER EMPLOYEE:

Profit per employee from 2005-2008 is as follows:

Year 2005-06 2006-07 2007-08

Profit per employee 8.80 7.39 6.13

Chart 4.1.10 :

INFERENCE : From the above, it can be observed that profit per employee of the

bank over the years has been on the decreasing trend.

RBI guidelines: As per the RBI guidelines for the banks to enter into the

insurance sector, The CRAR of the bank should not be less than 10 per cent,

and the level of Non Performing Assets (NPAs) should be reasonable. Hence,

analysis of such ratios is also important.

Capital adequacy ratio:

64

DATA ANALYSIS AND INTERPRETATION

Capital adequacy ratio from the year 2005-2008 can be shown as follows:

(As the total capital includes tier-1 and tier-2, it can be viewed separately.)

TABLE 4.1.11 Tier 1 capital:

Year 2005-06 2006-07 2007-08

Tier 1 capital 3,96,216 5,149,91 6,352,71

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92

Ratio 9.60% 8.55% 8.57%

TABLE 4.1.12 Tier 2 capital:

Year 2005-06 2006-07 2007-08

Tier 2 capital 1,054,73 1,720,71 3,339,99

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92

Ratio 2.56% 2.86% 4.51%

Where,

Tier –1 capital includes paid up capital, statutory reserve, general reserve,

balance in profit and loss account and amalgamation reserve. From this,

outstanding deferred tax asset, if any, is deducted.

Tier– 2 capital includes general loan loss reserves, investment fluctuation

reserve and subordinated debt.

TABLE 4.1.13 Total Capital:

65

DATA ANALYSIS AND INTERPRETATION

Year 2005-06 2006-07 2007-08

Total capital 5,016,89 6,870,62 9,692,70

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92

Ratio 12.16% 11.41% 13.08%

Chart 4.1.11 :

INFERENCE: From the above, it can be seen that the capital adequacy ratio

though decreased in the year 2006,it has been increased in the year 2007-08.

TABLE 4.1.14:

PERCENTAGE OF NET NON PERFORMING ASSETS TO CUSTOMER

ASSETS:

The percentage of net non-performing assets to customer assets is shown

as below from the year 2005-2008:

Year 2005-06 2006-07 2007-08

Percentage of net non performing

assets to customer assets

0.20% 0.36% 0.38%

Chart 4.1.12 :

66

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it is clear that the percentage of net non-

performing assets to customer assets has been increasing from the year 2005-2008

TABLE 4.1.15

PERCENTAGE OF NET NON-PERFORMING ASSETS TO NET

ADVANCES: The percentage of net non-performing assets to net advances from

the year 2005-2008 are shown as follows:

Year 2005-06 2006-07 2007-08

Percentage of net non

performing assets to net

advances

0.24% 0.44% 0.43%

Chart 4.1.13 :

67

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that the percentage of net

non-performing assets to net advances has been increased from the year 2005 to

2006 and it has been decreased in the year 2008.

TABLE 4.1.16

PERCENTAGE OF GROSS NON-PERFORMING ASSETS TO GROSS

ADVANCES: The percentage of gross non-performing assets to gross advances

from the year 2004- 2006 are shown as follows:

Year 2005-06 2006-07 2007-08

Percentage of

gross non

performing assets

to gross advances

1.69% 1.32% 1.32%

Chart 4.1.14:

INFERENCE: From the above, it can be observed that the percentage of gross

non-performing assets to gross advances has been decreasing from the year 2005

–2008.

68

DATA ANALYSIS AND INTERPRETATION

4.2 PRIMARY DATA ANALYSIS:

Based on the objective, a well-structured questionnaire was framed and

the following clearly represents all the related data and their interpretations in a

detailed form with statistically proven inferences.

TABLE 4.2.1

AGE FACTOR :

INFERENCE:

From the above table it can be inferred that 12% of the respondents belongs to 20-

25 Age limit, 20% of the respondents belongs to 25-30 Age limit, 24% of the

respondents belongs to 30-35 Age limit, 26% of the respondents belong to 35-40

Age limit and the remaining 18% of the respondents belongs to above age 40.

Hence the majority of the respondents fall in to the category of 35-40 Age limit.

TABLE 4.2.2

GENDER :

INFERENCE: From the above table it can be observed that 76% of the

respondents are Male and 24% of the respondents are female. Hence the majority

of the respondents are Male.

AGE LIMIT NO. OF RESPONDENTS

PERCENTAGE

20-25 12 1225-30 20 2030-35 24 2435-40 26 26

Above 40 18 18TOTAL 100 100

GENDER NO. OF RESPONDENTS

PERCENTAGE

Male 76 76Female 24 24

TOTAL 100 100

70

DATA ANALYSIS AND INTERPRETATION

TABLE 4.2.3

OCCUPATION :

OCCUPATION NO. OF RESPONDENTS

PERCENTAGE

Salaried 49 49Businessman 34 34

Retired 15 15Others 2 2

TOTAL 100 100

INFERENCE:

From the above table it is observed that 49% of the respondents are

salaried, 34% of the respondents are involved in business, and 14% of the

respondents retired and a less percentage of 2 have fallen into the category of

others includes professionals. Thus, majority of the respondents are Salaried.

TABLE 4.2.4

MARITAL STATUS :

MARITAL

STATUS

NO. OF RESPONDENTS

PERCENTAGE

Single 28 28Married 72 72TOTAL 100 100

INFERENCE:

From the above table, it can be seen that 28% of the respondents are single

and 72% of the respondents are married. Hence the majority of the respondents

are married.

71

DATA ANALYSIS AND INTERPRETATION

TABLE 4.2.5

NO. OF CHILDREN : NO. OF CHILDREN NO. OF RESPONDENTS PERCENTAGE

Yes 68 68No 4 4N/A 28 28

TOTAL 100 100

INFERENCE: From the above table it can be seen that 68% of the respondents

who have got married are having children and 4% of the respondents are not

having so far .

TABLE 4.2.6

ANNUAL INCOME :

ANNUAL INCOME NO. OF RESPONDENTS PERCENTAGE

<2 LAKHS 22 222-4 LAKHS 43 434-6 LAKHS 27 27

Above 6 LAKHS 8 8TOTAL 100 100

INFERENCE: From the above table it can be seen that 22% of the respondents

are earning less than 2 lakhs p.a., 43% of the respondents are earning 2-4 lakhs

p.a., which is the major percentage, 27% of the respondents are earning 4-6 lakhs

and the remaining respondents are earning above 6 lakhs p.a.,

TABLE 4.2.7

72

DATA ANALYSIS AND INTERPRETATION

ACCOUNT HOLDER OF AXIS BANK : ACCOUNT HOLDER

OF AXIS BANK

NO. OF RESPONDENTS PERCENTAGE

Yes 86 86No 14 14

TOTAL 100 100

INFERENCE : From the above table it is found that 86% of the respondents,

which is a majority, are holding Account in AXIS Bank and 14% of the

respondents are Non-Account Holders of AXIS bank. Non-a/c holders include

borrowers, credit card holders and the persons dealing with investments.

TABLE 4.2.8

TYPE OF ACCOUNT : TYPE OF ACCOUNT NO. OF RESPONDENTS PERCENTAGE

Savings A/C 57 57Current A/C 11 11

Both 18 18N/A 14 14

TOTAL 100 100

INFERENCE: From the above table it can be seen that 57% of the respondents

are Saving A/C holders and 11 % of the respondents are Current A/C holders.

And 18% people own both the type of accounts. And for 14% of the people this

question is not applicable as they are not the account holders of AXIS bank.

TABLE 4.2.9:

73

DATA ANALYSIS AND INTERPRETATION

NO. OF YEARS ASSOCIATIED WITH AXIS BANK : NO. OF YEARS NO. OF RESPONDENTS PERCENTAGE

<1 Yr. 24 241-3 Yrs 39 393-5 Yrs 33 335-7 Yrs 4 4> 7 Yrs 0 0TOTAL 100 100

INFERENCE: From the above, it is found that 24% of the respondents are

having less than 1 year associability with AXIS Bank where as a major 39% of

the customers have 1-3 years of relationship. 33% of the respondents are having

3-5 years relationship 4% of the respondents are having greater than 5 but less

than 7 years of relationship. No customer among the respondents is having greater

than 7 years relationship with AXIS Bank.

TABLE 4.2.10

PERSONAL VIEWS ABOUT INSURANCE :

PERSONAL VIEWS ABOUT

INSURANCE

StronglyAgree

Agree Neutral Disagree StronglyDisagree

Total

A) Insurance provides protection to you and your family

32 37 19 12 0 100

B) Insurance is an absolute necessity for an individual/family

10 30 38 19 3 100

C) Insurance is one of the best Investment options

9 20 42 21 8 100

CHART 4.2.1

74

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that

(A) 32% of the respondents Strongly agree that Insurance provides protection

to their family and 37%, which is a majority, agree to the same. But 19%

of the respondents remained Neutral and 12% disagree the same. No one

Strongly disagreed the view.

(B) 10% of the respondents Strongly agree that Insurance is an absolute

necessity for an Individual/family and 30% agree to this. 38% stayed

Neutral and 19% of the respondents disagreed the view. A less percentage

of 3 strongly disagreed the view.

(C) 9% of the respondents Strongly agree that Insurance is one of the best

investment options and 20% agree to this. 42%, that is a majority,

remained neutral whereas 21% disagreed the point. Also 8% of the

respondents Strongly disagreed.

TABLE 4.2.11

LIFE INSURANCE POLICY HOLDER

LIFE INSURANCE NO. OF RESPONDENTS PERCENTAGE

75

DATA ANALYSIS AND INTERPRETATION

POLICY HOLDER

Yes 47 47No 53 53

TOTAL 100 100

CHART 4.2.2:

INFERENCE: From the above, it can be noticed that 47% of the respondents are

holding a Life Insurance policy currently and the big rest 53% are not holding any

Life Insurance policy.

TABLE 4.2.12

AWARENESS ABOUT BAJAJ ALLIANZ LIFE INSURANCE

AWARE OF BAJAJ ALLIANZ LIFE

INSURANCE

NO. OF RESPONDENTS PERCENTAGE

Yes 72 72

No 28 28

TOTAL 100 100

CHART 4.2.3

76

DATA ANALYSIS AND INTERPRETATION

INFERENCE:

From the above table, it can be observed that a vital part of the

respondents, which is 72% are aware about AXIS Life insurance and 28% do not

have the same.

TABLE 4.2.13

SOURCE TO KNOW ABOUT AXIS LIFE INSURANCE

SOURCE No. of respondents Percentage

AXIS Bank 28 39

Advertisement 44 61

Friends & Relatives 0 Nil

Others 0 Nil

N/A 28 28

Total 100 100

CHART 4.2.4:

INFERENCE:

77

DATA ANALYSIS AND INTERPRETATION

From the above we can understand that the major Source to Know

about AXIS Life Insurance is Advertisement, which is conveyed by 61% of the

respondents. Whereas AXIS Bank owns 39%.

TABLE 4.2.14

AWARE OF BANKS CROSS-SELL INSURANCE PRODUCTS (in %)

AWARE OF BANKSCROSS-SELL

INSURANCE PRODUCTS

NO. OF RESPONDENTS PERCENTAGE

Yes 48 48

No 52 52

TOTAL 100 100

CHART 4.2.5

INFERENCE:

From the above, it can be noticed that 48% of the respondents are

aware of Banks cross-selling Insurance products but 52% of the respondents

which is a majority are not aware of the same.

TABLE 4.2.15

78

DATA ANALYSIS AND INTERPRETATION

ADVANTAGES IN BUYING THE INSURANCE POLICIES THROUGH BANKS

ADVANTAGES StronglyAgree

Agree Neutral Disagree Strongly Disagree

Total

A) Expert advice

17 28 26 22 7 100

B) Convenience 20 44 24 12 0 100

C) Easy accessibility

12 41 35 8 4 100

CHART 4.2.6:

INFERENCE: From the above, it can be observed that,

A) 17% of the respondents strongly agree with the advantage of

expert advice in buying through banks and the same is agreed

by 28 %. 26% of the respondents remained neutral and 22%,

7% of the respondents strongly disagree and disagree

respectively.

B) 20% of the respondents felt convenience in buying insurance

policies through banks and they strongly agree to that. Also

44% agree the same. But 24% stayed neutral whereas 12%

disagreed this point. No one strongly disagreed the same.

79

DATA ANALYSIS AND INTERPRETATION

C) 12% of the respondents strongly agree and 41% agree with the

advantage of easy accessibility.35% remains neutral. Only 8%

disagree and 4% strongly disagree to this view.

Thus, majority of the respondents agree with the advantages in

buying the insurance policies through banks.

TABLE 4.2.16

AWARE OF OBTAINING BAJAJ ALLIANZ LIFE POLICY FROM

AXIS BANK

AWARE OF OBTAINING POLICY

FROM AXIS BANK

NO. OF RESPONDENTS PERCENTAGE

Yes 46 46

No 54 54

TOTAL 100 100

CHART 4.2.7

INFERENCE:

From the above, it can be noticed that 46% of the respondents

know well that Bajaj Allianz life insurance policy can be bought from AXIS bank

branches. But 54% of the respondents, which is a majority, don’t know the same.

T ABLE 4.2.17

80

DATA ANALYSIS AND INTERPRETATION

FAMILIARITY WITH THE POLICIES OFFERED BY BAJAJ ALLIANZ

LIFE INSURANCE

FAMILIAR WIH THE TYPES OF POLICIES OFFERED BY

BAJAJ ALLIANZ LIFE INSURANCE

No. of respondents Percentage

Strongly Agree 11 11

Agree 26 26

Neutral 14 14

Disagree 37 37

Strongly Disagree 12 12

Total 100 100

CHART 4.2.8

INFERENCE: From the above, it can be seen that 11% of the respondents are

familiar with the different types of policies offered by Bajaj Allianz Life

insurance which they have strongly agree and 26% agree to it. Whereas 14%

remained neutral. 37% disagreed and 12% of the respondents strongly disagreed

the view. Thus, majority of the respondents are not familiar with the different

types of policies offered by Bajaj Allianz Life Insurance.

TABLE 4.2.18

81

DATA ANALYSIS AND INTERPRETATION

INITIATIVES TAKEN BY AXIS BANK TO PROMOTE BAJAJ ALLAINZ LIFE INSURANCE PRODUCTS

INITIATIVES TAKEN

BY AXIS BANKStrongly

Agree Agree Neutral Disagree Strongly

Disagree Total

You have often noticed the displays regardingBajaj Allianz Life Insurance in AXIS Bank

12 22 18 33 15 100

You have come across advertisements/links etc., regarding Bajaj Allianz Life Insurance in AXIS Bank Web Site

10 22 13 34 21 100

AXIS Bank Employees have explained you about the policies of Bajaj Allianz life insurance (through phone calls/direct contact)

14 27 12 35 12 100

CHART 4.2.9:

INFERENCE: From the above, it can be observed that

82

DATA ANALYSIS AND INTERPRETATION

(a) 12% of the respondents strongly agree that they have noticed the

displays of Bajaj Allianz life Insurance in AXIS Bank. Also 22%

support them by agreeing to it. 18% remain unbiased and 33%

disagree the statement. And 15% of the respondents have strongly

disagreed the same.

(b) 10% of the respondents strongly agree that they have come across

the links/ads concerning Bajaj Allianz life insurance in the web

site of AXIS Bank. 22% agree to this point and 13% replied

neutral. But 34% disagree to this and 21% strongly disagree the

same.

(c) 14% of the respondents strongly agree that the Employees of

AXIS bank has explained them about Bajaj Allianz life insurance

products. And the same has been agreed by 27% of the

respondents. 12% of the respondents didn’t take either side.

Whereas 35% disagree the statement and 12% of the respondent’s

have strongly disagreed.

TABLE 4.2.19

SATISFACTION OF CUSTOMER SERVICES

CUSTOMER SERIVICE No. of respondents Percentage

Highly Satisfied 13 13

Satisfied 43 43

Moderately satisfied 28 28

Dissatisfied 13 13

Highly dissatisfied 3 3

Total 100 100

CHART 4.2.10:

83

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that 13% of the respondents

replied that they are highly satisfied with the customer service provided by AXIS

bank. And good percentage of 43 answered that they are satisfied with the

customer service. Also, 28% of the respondents say that they are moderately

satisfied but 18% declared that they are dissatisfied with the customer service. A

less number of 3% also claim that they are highly dissatisfied with the same.

Overall, most of the respondents are satisfied with the customer services.

TABLE 4.2.20

FACTORS THAT BUILD A STRONG RELATIONSHIP WITH CUSTOMERS

RELATIONSHIP BUILDINGFACTORS

Strongly Agree

Agree Neutral Disagree Strongly Disagree

Total

Reliability 37 42 12 7 2 100

Easy and advantageousbanking over other banks

15 21 24 36 4 100

Wide range ofProducts and Schemes

13 24 32 28 3 100

Better understandingof customer needsand provide expert advice

15 23 33 26 3 100

CHART 4.2.11:

84

DATA ANALYSIS AND INTERPRETATION

INFERENCE: From the above, it can be observed that

(a) 37% of the respondents strongly agree with the Reliability factor. Also

42% of the respondents agree to it. 12% stayed neutral.7% of the

respondents have disagreed and 2% strongly disagreed to it.

(b) 15% of the respondents strongly agree to the fact that there exists an

easy and advantageous banking over other banks. Also 21% of the

respondents agreed the same. 24% stayed neutral. A typical 36% of the

respondents disagree the view and 4% strongly disagree the same.

(c) 13% of the respondents strongly agree to the factor of wide range of

products and schemes. The same is also agreed by 24%. 32% of the

respondents remained neutral.28% of the respondents disagreed this

view and a less percentage of 3 also strongly disagree to this.

(d) 15% of the respondents strongly agree to the factor of better

understanding of customer needs and Expert advice and 22% agree to

the view.33% stayed neutral. Whereas 26% of the respondents have

disagreed and 34% have strongly disagreed.

TABLE 4.2.21

AXIS BANK AS A ONE-SHOP STOP FOR ALL FINANCIAL NEEDS

85

DATA ANALYSIS AND INTERPRETATION

AXIS Bank as a one stopShop

No. of respondents Percentage

Strongly Agree 12 12

Agree 22 22

Neutral 36 36

Disagree 22 22

Strongly Disagree 8 8

Total 100 100

CHART 4.2.12

INFERENCE: From the above, it can be seen that 12% of the respondents

strongly agree that they will prefer AXIS Bank as a one-stop shop for all their

financial needs. 22% of the respondents replied that they agreed and 36% of the

respondents, which is a majority, remain neutral about this. But 22%have denied

the same. And 8% have strongly disagreed to it.

TABLE: 4.2.22PLAN TO TAKE ANY LIFE INSURANCE POLICY IN THE NEAR

FUTURE

PLANNING TO TAKE ANY LIFE INSURANCE POLICY

NO. OF RESPONDENTS

PERCENTAGE

Yes 42 42No 58 58

TOTAL 100 100

CHART 4.2.13

86

DATA ANALYSIS AND INTERPRETATION

INFERENCE :

From the above table it can be observed that 42% of the respondents

have a plan to take a life insurance policy in the near future but 58% of the

respondents, which is a majority, have no such idea.

TABLE: 4.2.23

REASONS FOR TAKING A LIFE INSURANCE POLICY IN THE NEAR FUTURE

REASONS FOR TAKING A LIFE

INSURANCE POLICY

Highly Essential

Essential LeastEssential

Not Essential

Not Essential

At All

N/A Total

Post retirement income

4 4 10 13 11 58 100

Invest in child’s dreams

5 8 12 8 9 58 100

Give Protection and safety to the family in case of

unfortunate occurrences

3 3 11 12 13 58 100

Tax Benefits 19 11 3 6 3 58 100

Better returns in terms of

investment

11 16 6 3 6 58 100

CHART 4.2.14

87

DATA ANALYSIS AND INTERPRETATION

INFERENCE : From the above, it can be observed that, out of 42 respondents, 19 respondents i.e., 45% ranked Tax Benefits as a Highly Essential one for taking a policy in the near future. And 16 respondents i.e., 38% ranked Better returns as an essential one. 12 respondents i.e., 28% ranked Invest in Child dreams as Least Essential.13 respondents i.e., 31% ranked Post retirement income as Not Essential. The reason for taking the policy to protect the family in case of unexpected occurrences has been ranked as Not Essential at all by 13 respondents,i.e., 31%.

TABLE: 4.2.24

CHOOSING BAJAJ ALLIANZ LIFE INSURANCE TO TAKE A POLICY IN FUTURE

CHOOSING BAJAJ ALLIANZ LIFE

INSURANCE

No. of respondents Percentage

Yes 47 47

No 53 53

Total 100 100

CHART 4.2.15

INFERENCE :

88

DATA ANALYSIS AND INTERPRETATION

From the above table it can be seen that 47% of the respondents replied

that their choice will be Bajaj Allianz Life Insurance and 53% denied the same.

Note that 58 respondents who are not having the idea of taking any life insurance

policy in the near future have been told to assume if they take a life insurance

policy in distant future to respond to this question.

TABLE: 4.2.25CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE POLICY

CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE

NO. OF RESPONDENTS

PERCENTAGE

AXIS Bank 40 40

Financial Consultants /Agents 7 7

Others 0 0

N/A 53 53

Total 100 100

CHART 4.2.16

INFERENCE :

From the above, it can be inferred that a majority of the respondents i.e.,

40 are willing to obtain Bajaj Allianz Life Insurance policy from AXIS bank

itself. And 7 respondents want to buy from financial consultants/Agents. And for

the remaining 53% of the respondents this question is not applicable.

STATISTICAL ANALYSIS

89

DATA ANALYSIS AND INTERPRETATION

In this section the researcher has used statistical tools in order to

analytically prove the study that has been undertaken. The tests had been used on

selected question as they prove in-depth significance of the research brought out.

Co-efficient of correlation:

Correlation is used to find out if there is any correlation or co-variance

between the two variables under the study.

It has been used here to analyze the relationship between familiarity

among the customers about different types of Bajaj Allianz life insurance policies

and the various initiatives taken by AXIS bank to promote Bajaj Allianz life

products.

Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)

Q.18 a) Frequent Notice of displays regarding Bajaj Allianz life products

inside AXIS bank(Y)

Q.17 Strongly Agree =11, Agree = 26,Neutral =14,Disagree =37,Strongly

Disagree=12.

Q.18 a) Strongly Agree =12, Agree = 22,Neutral =18,Disagree =33,Strongly

Disagree=15.

X = 313 x2 = 1133 y = 317 y2 = 1165 xy = 1142 n(Sample Size) =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)√∑y²/n-(∑y/n)²

r = 11.42 – (3.13) (3.17) 11.33-9.7969 11.65– 10.0489 = 11.42 – 9.9221

1.2381*1.2653

90

DATA ANALYSIS AND INTERPRETATION

= 1.4979

1.5554 = 0.963

INFERENCE: Hence it can be inferred from the above that there is a very strong

relationship (96.3%) between the familiarity of different types of Bajaj Allianz

Life policies and the frequent notice of displays regarding the Bajaj Allianz Life

policies inside AXIS bank.

Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)

Q.18 b) Come across Bajaj Allianz life insurance most of the times in AXIS

bank website.(Y)

Q.17 Strongly Agree =11, Agree = 26, Neutral =14, Disagree =37, Strongly

Disagree=12.

Q.18 b) Strongly Agree =10, Agree = 22,Neutral =13, Disagree =34,Strongly Disagree=21

X = 313 x2= 1133 y = 334 y2= 1284 xy = 1178 n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 11.78 – (3.13) (3.34) 11.33-9.7969 12.34 – 11.1556

= 11.78 - 10.4542 1.2381*1.2978 = 1.3258

r : 96.3%

91

DATA ANALYSIS AND INTERPRETATION

1.6068 = 0.825

INFERENCE: Thus it can be observed that there is a strong (82.5%) of

correlation between the familiarity of different types of Bajaj Allianz life policies

among customers and come across Bajaj Allianz life products in AXIS bank

website.

Q.17 Familiarity of the different types of Bajaj Allianz life policies (X)

Q.18 c)Explanation of Bajaj Allianz life policies by AXIS bank employees

through phone calls/direct contact (Y)

Q.17 Strongly Agree =11, Agree = 26,Neutral =14,Disagree =37,Strongly

Disagree=12.

Q.18 c)Strongly Agree =14, Agree = 27,Neutral =12,Disagree =35,Strongly

Disagree=12

X = 313 x2= 1133 y = 304 y2= 1090 xy = 1090 n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 10.9 – (3.13) (3.04) 11.33-9.7969 10.9- 9.2416

= 10.9 – 9.5152 1.238 * 1.2877

r : 82.5%

92

DATA ANALYSIS AND INTERPRETATION

= 1.3848 1.5942

= 0.868

INFERENCE: Thus there is a strong

(87 %) correlation between the familiarity among the customers about different

types of Bajaj Allianz life policies and the explanation of AXIS bank employees

about Bajaj Allianz life insurance through phone calls or direct contact.

2.Co-efficient of correlation: It has been used here to analyze the relationship

between considering AXIS Bank as a one-stop shop for all the financial needs of a

customer and the factors that builds a strong relationship with customers.

Q.21 Prefer AXIS bank as a one shop for all the financial needs (X)

Q.20 a) Reliability factor in AXIS bank (Y)

Q.21 Strongly Agree =12, Agree = 22, Neutral =36, Disagree =22, Strongly Disagree=8

Q.20 a) Strongly Agree =37, Agree = 42,Neutral =12,Disagree =7,Strongly Disagree=2

X = 308 x2= 1072 y = 405 y2= 1735 xy = 1323 n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 13.23 – (3.08) (4.05) 10.72-9.4864 17.35 -16.40

= 13.23 – 12.474

r : 86.8%

93

DATA ANALYSIS AND INTERPRETATION

1.11067 * 0.9745 = 0.756 1.082 = 0.699%

INFERENCE: Thus there is a 70% of

correlation between the existence of the factor reliability in AXIS bank and

acceptance of AXIS bank as a one-stop for all the financial needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)

Q.20 b) Easy and advantageous banking over other banks in AXIS bank (Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly Disagree=8

Q.20 b) Strongly Agree =15, Agree = 21,Neutral =24,Disagree =36,Strongly

Disagree=4

X = 308 x2= 1072 y = 307 y2= 1075 xy = 1060 n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 10.60 – (3.08) (3.07) 10.72-9.486 10.75- 9.424

= 10.60 – 9.4556 1.11067 * 1.15113 = 1.1444 1.278532

r : 69.9%

94

DATA ANALYSIS AND INTERPRETATION

= 0.895%

INFERENCE: Thus there is a strong

(90%) correlation between existence of the factor easy and advantageous banking

over other banks and acceptance of AXIS bank as a one-stop for all the financial

needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)

Q.20 c) Wide range of products and schemes (Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly Disagree=8

Q.20 c) Strongly Agree =13, Agree = 24,Neutral =32,Disagree =28,Strongly

Disagree=3

X = 308 x2= 1072 y = 316 y2= 1112 xy = 1055 n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ ____________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 10.55 – (3.08) (3.16) 10.72-9.486 11.12- 9.985

= 10.60 – 9.7328 1.11067 * 1.0650 = 0.8172 1.182961

= 0.691%

r : 89.5%

r : 69.1%

95

DATA ANALYSIS AND INTERPRETATION

INFERENCE: Thus there is a 69% of correlation between existence of the factor

wide range of products & schemes and acceptance of AXIS bank as a one-stop for

all the financial needs.

Q.21.Prefer AXIS bank as a one shop for all the financial needs (X)

Q.20 d) Better understanding of customer needs and provide expert advice.(Y)

Q.21 Strongly Agree =12, Agree = 22,Neutral =36,Disagree =22,Strongly Disagree=8

Q.20 d) Strongly Agree =15, Agree = 23,Neutral =33,Disagree =26,Strongly

Disagree=3

X = 308 ; x2= 1072 ; y = 321 ; y2= 1147 ; xy = 1093 ; n =100

Where Correlation Co-efficient (r) = ∑xy/n - (∑x/n) (∑y/n) ___________ _________ √∑x²/n- (∑x/n)² √∑y²/n-(∑y/n)² r = 10.93 – (3.08) (3.21) 10.72-9.486 11.47- 10.30 = 10.93 – 9.8868 1.11067 * 1.0797 = 1.0432 1.199272

= 0.869%

INFERENCE: Thus there is an 87%

of correlation, which is very strong, between acceptance of AXIS bank as a one-

stop for all the financial needs and existence of the factor better understanding of

customer needs and provide expert advice in AXIS bank

r : 86.9%

96

DATA ANALYSIS AND INTERPRETATION

3.Chi-square test: When certain observed values of a variable are to be

compared with the expected value, the test static

Ψ² = (O - E) 2

E

Where Oi = observed frequency

Ei = Expected frequency

For more accuracy, Yates correction is used and the formula used is given below:

Ψ² = (O - E) 2

E

Here, Chi-square test has been applied as a goodness of fit, in order

to know the association between the persons who are planning to take insurance

policy in the future and the persons who prefer Bajaj Allianz life for obtaining a

policy in the future.

Null hypothesis:

There is no association between the persons who are planning to take

an insurance policy in future and the persons who prefer Bajaj Allianz life

insurance to buy an insurance policy in the future.

Alternative hypothesis:

There is an association between the persons who are planning to take

an insurance policy in future and the persons who prefer Bajaj Allianz life

insurance to buy an insurance policy in the future.

Calculation:

Planning to take any life insurance policy in future.

Will Bajaj Allianz

Life insurance be

your choice for

obtaining the policy

in future.

Yes No Row Total

Yes 30 17 47

No 12 41 53

Column

Total

42

42%

58

58%

100

100%97

DATA ANALYSIS AND INTERPRETATION

Expected frequencies are given in the table:

42 *47 /100 = 19.74 58* 47/100 = 27.26 47

42 * 53/100= 22.26 58 * 53/100 = 30.74 53

42 58 100

Calculation of Ψ²:

Observed Frequency (O)

Expected Frequency (E)

(O – E) ² (O – E) ² E

30 19.74 105.26 5.33

17 27.26 105.26 3.86

12 22.26 105.26 4.72

41 30.74 105.26 3.42

17.33

Ψ² calculated value = ∑ (O – E) ² = 17.33

E

Calculated chi-square value is 17.33

Tabulated value:

Degrees of freedom: d.f. = (r - 1) (c – 1) = (2 – 1) (2 – 1) = 1

Where r= No. of rows and c= No.of columns.

Tabulated Ψ² value for 1 degrees of freedom at 5% level of

significance is = 3.841

Since calculated Ψ² > tabulated Ψ² null hypothesis (Ho) is rejected.

And alternative hypothesis has been accepted.

98

DATA ANALYSIS AND INTERPRETATION

INFERENCE: Thus, there is an association between the persons who are

planning to take an insurance policy in future and the persons who prefer

Bajaj Allianz Life Insurance to buy an insurance policy in the future.

4.PERCENTAGE ANALYSIS: This has been used here to calculate the number

of persons who wants AXIS bank to be their distribution channel in case of their

willingness to buy Bajaj Allianz Life Insurance.

Percentage Analysis: No. of respondents

Total no. of respondents

Out of 100 respondents, 47 respondents choice would be Bajaj

Allianz Life Insurance. Out of which, 40 respondents are preferring to buy from

AXIS bank itself. The percentage can be thus calculated as follows:

Percentage Analysis: 40 * 100 = 85%

47

INFERENCE: Thus it can be observed that 85% of the respondents are willing

to buy from AXIS bank in case of their choice will be Bajaj Allianz life insurance.

for obtaining a policy in the future.

99

FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.1 FINDINGS

The increase in the revenue for the sale of insurance policies by AXIS bank

and the increase in the retail segment’s profit and assets indicates that the

financial performance of the AXIS bank in bancassurance has been good and

the bancassurance has also contributed well to the retail segment.

Though non-interest income as a % to operating profit,total revenue and

working funds were increased from 2004 to 2005,i.e., after the year they

started earning revenue from bancassurance,it has been decreased in the year

2006-07.With the increase in performance in bancassurance,the same can be

overcome.

It is desirable also that the bank can improve its existing performance to

increase its return on assets and to reduce the operating expenses of the bank.

Business per employee and profit per employee of the bank are decreasing

over the years that it can affect the sale of insurance policies that the bank’s

immediate attention is required.

Capital adequacy ratio has been found satisfactory, as it has been above the

prescribed norms of RBI that it reveals the potentiality of AXIS Bank to

perform bancassurance operations. The other prescribed norm, which is NPA,

also looks reasonable. But, steps can be taken to reduce the same, as its % to

customer assets has been increasing over the years.

Thus, it is quite clear that AXIS Bank is expected to take still more initiatives

to improve its existing performance in bancassurance. To analyse the ways

and means for it, responses are collected from the customers. It also indicates

the necessity of further initiatives and the areas where they need to focus and

FINDINGS, RECOMMENDATIONS AND CONCLUSION

can cash in on the situation for better prospects. Following are the

justifications from the primary data:

Though general opinion about insurance is pretty good among the people,

most of the respondents are uncertain about insurance as an investment option.

Though most of the respondents are aware of Bajaj Allianz life, awareness

needs to be created about the fact that AXIS bank is cross-selling Bajaj

Allianz Life Policies.

Most of the respondents are not cognizant enough with the Bajaj Allianz Life

Insurance policies as the initiatives taken by AXIS Bank have been

inadequate. This is also proved statistically through correlation analysis.

Though the other relationship building factors are found satisfactory among

most of the customers, emphasis is needed in the area of Easy and

advantageous banking over other banks since it is denied by majority of the

respondents. As these factors, especially the easy and advantageous banking

determines the mindset of the customer in considering the bank as an

integrated financial solutions, this requires immense attention by AXIS bank.

The same is also proved statistically through correlation analysis.

Majority of the respondents are satisfied with the customer services provided

by AXIS bank that it is a positive sign for bancassurance.

53% of the respondents are not holding any life insurance policy so far that it

is clear that there are still lot of untapped source which the bank can explore

and reap the harvest.

47% of the respondents choice would be Bajaj Allianz life insurance for

obtaining a policy. Out of which, 30 respondents are planning to take an

101

FINDINGS, RECOMMENDATIONS AND CONCLUSION

insurance policy in the immediate future .The association between this two is

also proved through Chi-square test. Tax benefits, better returns, invest in

child dreams, post retirement income, protecting the family in case of

unfortunate occurrences are the increasing order of preference in terms of

essentiality among most of the respondents in the near future for taking a

policy

And out of 47 respondents who are in favour of Bajaj Allianz Life 40

respondents i.e., 85% of the respondents prefer AXIS bank to be their

distribution channel. This clearly indicates the advantage the bank can make

use of and if taken more initiatives it can even make more customers to buy

Bajaj Allianz life insurance policies from AXIS bank

.

102

FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.2 RECOMMENDATIONS

To strengthen the initiatives that are much needed to reach out more public

and to improve its existing performance, the following can be done;

The display case can be located on the place where the customers can have a

100% chance of looking into it like cash counters, entrance etc., The number

of display cases can also be increased and catchy slogans can be given.

To reach out more customers via website, AXIS bank can educate the

customer by sending frequent e-mails with attractive synopsis to the e-mail ids

of the customer about Bajaj Allianz life insurance policies with the link

carrying them to the AXIS bank website. More pop-ups window, frequent

playing of graphical displays, can also attract more customers who are visiting

AXIS bank website.

Employees of the AXIS bank can also be given more training about Bajaj

Allianz Life policies, as this will help them to explain and guide the customers

better. Motivation, immediate rewards and better incentive packages can also

help them to do better. This type of enabling sales oriented culture among the

employees is the best possible way to increase the productivity among the

employees that it assumes greater significance. Consequently the business per

employee and profit per employee can also be increased which is currently

decreasing over the years.

Emphasis can also be given to promote insurance as an investment option as

most of the respondents are uncertain about it. This will also help them to

reach more customers.

Most of the respondents are satisfied with the customer services that it is a

positive sign. But, since customer satisfaction is no customer loyalty, they will

103

FINDINGS, RECOMMENDATIONS AND CONCLUSION

prefer to accept more products with the same bank only if they find it

advantageous. As most of the customers denied the easy and advantageous

banking in AXIS over other banks, it is important for the bank to find out

more ways to promote the same. This will definitely help the bank to convince

more customers to prefer AXIS bank as their one stop shop for all their

financial solutions.

Most of the customers prefer to buy insurance policy for tax benefits and

better returns that the target customers can be identified.

As many of the respondents who wish to buy Bajaj Allianz Life Insurance

Policy also have opted AXIS bank as their channel, the bank can make use of

it and retain its customers.

Thus by doing all this, the bank can increase its fee-based income, Return on

assets as well as the non-interest income, which leads to much progress of the

bank.

.

104

FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.3 CONCLUSION

The study thus points out that the financial performance of AXIS

bank in bancassurance has been good and it also provides a helping hand to the

overall progress of the bank. The prospect for bancassurance is also bright as

AXIS bank is found to be a preferable distribution channel among the customers

who wish to buy Bajaj Allianz life policy. With more initiatives and focus in the

specified areas the bank can even have the potentially of making more customers

to buy Bajaj Allianz Life policy from AXIS bank. With the merger of centurion

bank, it can also take the advantage of more customer base and can become more

competitive. Thus with its increase in the existing performance, in the upcoming

years, AXIS bank will definitely play a predominant role in the bancassurance

industry and there by can contribute more to the upliftment of the bank.

105

SCOPE FOR FURTHER RESEARCH

As this study focuses only on the limited areas of chennai, it can be extended

to other areas for an in-depth analysis.

This study concentrates only on the life insurance segment that it can be

broaden by including non life insurance.

Comparative analysis can also be done among the performance of banks,

which undertakes bancassurance as this study focuses on the performance of

AXIS bank alone

.

.

BIBLIOGRAPHY & WEBLIOGRAPHY

BIBLIOGRAPHY:

BOOKS:

Reddy, T.S. & Hariprasad Reddy.Y,“Management Accounting”

Margham Publications, Chennai, 2005.

Lochanan Ravi .P “ Research Methodology” Margham Publications,

Chennai, Second Edition, 2003.

JOURNALS:

Amel Dean Barnes colleen, Panetta Fabio & Sallen Carmelo

“Consolidation and Efficiency in the financial sector: A review of the

international evidence”, Journal of banking and Finance Volume No:

28, March 2000,Page numbers: 2493-2519

Browne M.J & Kim.K- “An international analysis of Life insurance

Demand”, Journal of Risk and Insurance Volume No:60,January

1993,Page numbers: 616-634

Carow Kenneth. A “Challenging Barriers between banking and

Insurance”, Journal of Banking and Finance Volume No: 25,April

2001.Page numbers: 1553-1571

WEBLIOGRAPHY:

www.google.co.in

www.Axisbank.com

www.Axisinsurance.com

www.insureegypt.com

www.insuremagic.com

www.watsonwyatt.com