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the United States, when the Glass-Steagall Act was repealed after the passage of the Gramm-Leach-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

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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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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 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

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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.

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

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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.

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

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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.

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.

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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.
 Financial benefits to a bank performance can flow in a number of ways, as briefly outlined
below:
a) Increased income generated, in the form of commissions and/or profits from the business
(depending upon the relationship)
b) Reduction of the effect of the bank fixed costs, as they are now also spread over the life
insurance relationship.
c) 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 distributing products profitably, compared with other distributors (e.g.
insurance companies).

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  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, 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;

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✔ 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
 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

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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.
 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.

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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
 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

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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 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.

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.

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.

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  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.

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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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.

LIMITATIONS OF THE STUDY

 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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 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 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.

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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.

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.

17
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:

 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.

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 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.,
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
Bank of Rajasthan, Andhra Bank, Bank of Muscat, Development Credit
Birla Sun Life Insurance Co. Ltd.
Bank, Deutsche Bank and Catholic Syrian Bank

Canara Bank, Lakshmi Vilas Bank, American Express Bank and ABN
Dabur CGU Life Insurance Company Pvt. Ltd
AMRO Bank

HDFC Standard Life Insurance Co. Ltd.

HDFC bank, Union Bank of India, saraswat bank.

Lord Krishna Bank, ICICI Bank, Bank of India, Citibank, Allahabad

ICICI Prudential Life Insurance Co Ltd.
Bank, Federal Bank, South Indian Bank, and Punjab and Maharashtra
Co-operative Bank.

Corporation Bank, Indian Overseas Bank, Centurion Bank, Satara

District Central Co-operative Bank, Janata Urban Co-operative Bank,
Life Insurance Corporation of India
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

Standard Chartered Bank, ABN AMRO Bank, Citibank, Amex and

Royal Sundaram General Insurance Company
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 India are brighter that banks in
India can make use of the situation to gain profitable business venture.

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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

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.

20
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 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

21
The above business groups are supported by the following groups:

 Audit & Compliance

 Credit & Market Risk
 Finance, Administration & Legal
 Human Resources
 Information Technology
 Operations

22
 REVIEW OF LITERATURE

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)).

23
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 industry
(the financial Services Authority). This leads to more streamlined regulations than in other
countries that employ functional form regulatory systems.

41
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.
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

42
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

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

43
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 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

44
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 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

45
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.
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 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

46
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
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

48
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.

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.

49
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.,

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

50
DATA ANALYSIS AND INTERPRETATION

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 16,99 lacs 88,14 lacs 112,09 lacs
for the sale of insurance policies

CHART 4.1.1

Revenue earned for the sale of insurance policies

120 112.09
100 88.14
80
60 Revenue (in lacs)

40
16.99
20
0
2004-05 2005-06 2006-07

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.

51
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:

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

52
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

CHART 4.1.4:

53
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:

54
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:

55
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 1.44% 1.79% 1.76%
working funds

Chart 4.1.7:

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.

56
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:

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:

57
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:

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:

58
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:

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%

59
 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:

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:

60
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 0.20% 0.36% 0.38%
customer assets
Chart 4.1.12:

61
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 to0.24% 0.44% 0.43%
net advances

Chart 4.1.13:

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:

62
 Year 2005-06 2006-07 2007-08

Percentage of gross non performing

1.69% 1.32% 1.32%
assets to gross advances

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.

63
 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:

AGE LIMIT NO. OF RESPONDENTS PERCENTAGE

20-25 12 12
25-30 20 20
30-35 24 24
35-40 26 26
Above 40 18 18
TOTAL 100 100

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:
GENDER NO. OF RESPONDENTS
PERCENTAGE
Male 76 76
Female 24 24
TOTAL 100 100

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.

65
 DATA ANALYSIS AND INTERPRETATION

TABLE 4.2.3

OCCUPATION:

OCCUPATION NO. OF RESPONDENTS PERCENTAGE

Salaried 49 49
Businessman 34 34
Retired 15 15
Others 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:

NO. OF RESPONDENTS PERCENTAGE

MARITAL STATUS

Single 28 28
Married 72 72
TOTAL 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.

TABLE 4.2.5

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 DATA ANALYSIS AND INTERPRETATION

NO. OF CHILDREN:

NO. OF CHILDREN NO. OF RESPONDENTS PERCENTAGE

Yes 68 68
No 4 4
N/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 22
2-4 LAKHS 43 43
4-6 LAKHS 27 27
Above 6 LAKHS 8 8
TOTAL 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

67
 DATA ANALYSIS AND INTERPRETATION

ACCOUNT HOLDER OF AXIS BANK:

ACCOUNT HOLDER NO. OF RESPONDENTS PERCENTAGE

OF AXIS BANK
Yes 86 86
No 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 57
Current A/C 11 11
Both 18 18
N/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:

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 DATA ANALYSIS AND INTERPRETATION

NO. OF YEARS ASSOCIATIED WITH AXIS BANK:

NO. OF YEARS NO. OF RESPONDENTS PERCENTAGE

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

Strongly Agree Neutral Disagree Strongly Total
INSURANCE Agree Disagree

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

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 DATA ANALYSIS AND INTERPRETATION

PERSONAL VIEWS
No.of respondents(in %)

100
Strongly Agree
80
Agree
60
Neutral
40
Disagree
20 Strongly Disagree
0
A B C
PERSONAL VIEWS ABOUT INSURANCE

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

POLICY HOLDER
Yes 47 47

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 DATA ANALYSIS AND INTERPRETATION

No 53 53
TOTAL 100 100

CHART 4.2.2:

LIFE INSURANCE POLICY HOLDER

YES
47%
53%
NO

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

NO. OF RESPONDENTS PERCENTAGE
INSURANCE
Yes 72 72
No 28 28
TOTAL 100 100
CHART 4.2.3

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 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:

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 %)

72
 DATA ANALYSIS AND INTERPRETATION

AWARE OF BANKS NO. OF RESPONDENTS PERCENTAGE

CROSS-SELL
INSURANCE PRODUCTS
Yes 48 48
No 52 52
TOTAL 100 100

CHART 4.2.5

AWARE OF BANKS CROSS SELLING INSURANCE PRODUCTS

YES
48% NO
52%

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

ADVANTAGES IN BUYING THE INSURANCE POLICIES THROUGH BANKS

ADVANTAGES Strongly Agree Neutral DisagreeStronglyTotal

Disagree
Agree
A) Expert 17 28 26 22 7 100
advice
B) Convenience 20 44 24 12 0 100

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 DATA ANALYSIS AND INTERPRETATION

C) Easy 12 41 35 8 4 100
accessibility

CHART 4.2.6:

ADVANTAGE IN BUYING INSURANCE POLICIES THROUGH

BANKS
No. of Respondents (in

Strongly Agree
100
80 Agree
%)

60
40 Neutral
20
0 Disagree
A B C
Strongly
Disagree

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.
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 NO. OF RESPONDENTS PERCENTAGE

FROM AXIS BANK

74
 DATA ANALYSIS AND INTERPRETATION

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.
TABLE 4.2.17

FAMILIARITY WITH THE POLICIES OFFERED BY BAJAJ ALLIANZ LIFE

INSURANCE
FAMILIAR WIH THE TYPES OF POLICIES
No. of respondents Percentage
OFFERED BY BAJAJ ALLIANZ LIFE
INSURANCE

Strongly Agree 11 11
Agree 26 26
Neutral 14 14
Disagree 37 37
Strongly Disagree 12 12
Total 100 100

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 DATA ANALYSIS AND INTERPRETATION

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

INITIATIVES TAKEN BY Strongly

AXIS Agree
Agree Neutral Disagree Strongly Disagree
Total
BANK

You have often noticed the displays 12 22 18 33 15 100

regarding
Bajaj Allianz Life Insurance in AXIS
Bank

You have come across 10 22 13 34 21 100

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

76
 DATA ANALYSIS AND INTERPRETATION

AXIS Bank Employees have explained 14 27 12 35 12 100

you about the policies of Bajaj Allianz
life insurance (through phone calls/direct
contact)

CHART 4.2.9:

INFERENCE: From the above, it can be observed that

(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.

77
 DATA ANALYSIS AND INTERPRETATION

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:

S ATIS FACTION OF CUS TOMER S ERVICES

3% 13%
13%
Highly S atisfied
S atisfied
Moderately satisfied
28% Dissatisfied
43%
Highly dissatisfied

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

78
 DATA ANALYSIS AND INTERPRETATION

RELATIONSHIP BUILDINGStrongly AgreeAgree Neutral Disagree

Strongly Disagree
Total
FACTORS

Reliability 37 42 12 7 2 100
Easy and advantageous 15 21 24 36 4 100
banking over other banks

Wide range of 13 24 32 28 3 100

Products and Schemes
Better understanding 15 23 33 26 3 100
of customer needs
and provide expert advice

CHART 4.2.11:

RELATIONSHIP BUILDING FACTORS

100 Strongly Agree

80
No of Agree
respondents 60
(in %) 40 Neutral
20
Disagree
0
A B C D
Strongly
Factors Disagree

INFERENCE: From the above, it can be observed that

 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.
 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

79
 DATA ANALYSIS AND INTERPRETATION

neutral. A typical 36% of the respondents disagree the view and 4% strongly disagree the
same.
 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.
 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
AXIS Bank as a one stop No. of respondents Percentage
Shop
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.

80
 DATA ANALYSIS AND INTERPRETATION

TABLE: 4.2.22
PLAN TO TAKE ANY LIFE INSURANCE POLICY IN THE NEAR FUTURE

PLANNING TO TAKE ANY LIFE

NO. OF RESPONDENTS PERCENTAGE
INSURANCE POLICY
Yes 42 42
No 58 58
TOTAL 100 100
CHART 4.2.13

FUTURE PLAN TO TAKE ANY LIFE INSURANCE POLICY

YES NO
42%

58%

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

Highly Essential
Essential Least Not Essential N/A AtTotal
Not Essential All
INSURANCE POLICY
Essential
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 the3 3 11 12 13 58 100
family in case of unfortunate
occurrences
Tax Benefits 19 11 3 6 3 58 100

81
 DATA ANALYSIS AND INTERPRETATION

Better returns in terms of 11 16 6 3 6 58 100

investment

CHART 4.2.14

REASONS FOR TAKING A LIFE INSURANCE POLICY

No.of respondents(in %)

100 HIGHLY ESSENTIAL

80
ESSENTIAL
60

40 LEAST ESSENTIAL
20
NOT ESSENTIAL
0
A B C D E
REASONS
NOT ESSENTIAL AT
ALL
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

No. of respondents Percentage
INSURANCE
Yes 47 47
No 53 53
Total 100 100
CHART 4.2.15

82
 DATA ANALYSIS AND INTERPRETATION

INFERENCE:
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: 4.2.25
CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE INSURANCE POLICY

CHANNEL TO OBTAIN BAJAJ ALLIANZ LIFE

NO. OF RESPONDENTS PERCENTAGE
INSURANCE
AXIS Bank 40 40
Financial Consultants /Agents 7 7
Others 0 0
N/A 53 53
Total 100 100

CHART 4.2.16

INFERENCE:

83
 DATA ANALYSIS AND INTERPRETATION

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.

84
 FINDINGS, RECOMMENDATIONS AND CONCLUSION

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 can cash in on the situation for better prospects.
Following are the justifications from the primary data:
 FINDINGS, RECOMMENDATIONS AND CONCLUSION

 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 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

86
 FINDINGS, RECOMMENDATIONS AND CONCLUSION

 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

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.

87
 FINDINGS, RECOMMENDATIONS AND CONCLUSION

 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 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.

88
 FINDINGS, RECOMMENDATIONS AND CONCLUSION

 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.

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.

89
 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