Banking Final

Project on Banking Systems
CHAPTER 1
1.1INTRODUCTION TO BANK
A bank has been described as an institution engaged in accepting deposits and
granting loans. It is the institution which deals in money and credit. It can also
be described as an institution which borrows idle resources, makes fund
available to those who need it and helps in cheap remittance of money from one
place to another. In the modern time term bank is used in wider term. Now it
does not refer only to particular place of lending and depositing money but it
also acts as an agent which looks after the various financial problems of its
customers.
1.2 HISTORY OF BANKS:
The banking system in India is based on British banking company which is
largely branch banking. Commercial banks in India were started during the
latter half of 19th century Bank of Bengal, Bank of Bombay and Bank of
Madras were later amalgamated to form one bank called as Imperial bank of
India under the Imperial bank of India Act 1920. The Imperial bank carried with
business of commercial bank manages the public debt office of central and state
government. The second half of 19th century saw establishment of Bank of
Baroda, Allahabad bank, and Punjab National Bank. These banks were set up by
merchants and traders to combined trading with banking. These led to the series
if failures of banks. The strengthening of banking system took place after the
establishment of Reserve Bank of India, 1939 as is empowers to regulate the
banking money, inspection of mergers and acquisition in terms of Banking
Companies Act 1949 which later came to be known as Banking Regulation Act
1949.

1.3 FUNCTIONS OF BANKS
Though borrowing and lending constitute the main functions of banking, yet
they are not only functions of commercial banks. Commercial banks are
involved in diversified activities and perform varieties of function. The
functions of a modern bank are classified under the following heads:
CHART: FUNCTION OF BANKS
O
T
H
E
R
A
D
V
A
N
C
E
A
G
E
N
C
Y
F U
N C
A
T I
C O
C N
E
P
T I
N
G
O
F
1.4 BANKING PRODUCTS

Banks in India have traditionally offered mass banking products. Most common
deposit products being Savings Bank, Current Account, Term deposit Account
and lending products being Cash Credit and Term Loans. Due to Reserve Bank
of India guidelines, Banks have had little to do besides accepting deposits at
rates fixed by Reserve Bank of India and lend amount arrived by the formula
stipulated by Reserve Bank of India at rates prescribed by the latter. PLR (Prime
lending rate) was the benchmark for interest on the lending products. But PLR
itself was, more often than not, dictated by RBI. Further, remittance products
2

were limited to issuance of Drafts, Telegraphic Transfers, and Bankers Cheque
and Internal transfer of funds.
In view of several developments in the 1990s, the entire banking products
structure has undergone a major change. As part of the economic reforms,
banking industry has been deregulated and made competitive. New players have
added to the competition. IT revolution has made it possible to provide ease and
flexibility in operations to customers. Rapid strides in information technology
have, in fact, redefined the role and structure of banking in India. Further, due to
exposure to global trends after Information explosion led by Internet, customers
- both Individuals and Corporate - are now demanding better services with more
products from their banks. Financial market has turned into a buyer's market.
Banks are also changing with time and are trying to become one-stop financial
supermarkets.
A few foreign & private sector banks have already introduced customized
banking products like Investment Advisory Services, SGL II accounts, Photocredit cards, Cash Management services, Investment products and Tax Advisory
services. A few banks have gone in to market mutual fund schemes. Eventually,
the Banks plan to market bonds and debentures, when allowed. Insurance
peddling by Banks will be a reality soon. The recent Credit Policy of RBI
announced on 27.4.2000 has further facilitated the entry of banks in this sector.
Banks also offer advisory services termed as 'private banking' - to "high
relationship - value" clients.
1.5 INTRODUCTION TO FINANCIAL SERVICES
The Indian financial services industry has undergone a metamorphosis since
1990. During the late seventies & eighties, the Indian financial services industry
was dominated by commercial banks and other financial institution which cater

to the requirements of the Indian industry. The economic liberalization has
brought in a complete transformation in the Indian financial services industry.
The term Financial Services in a broad sense means mobilizing and
allocating savings. Thus it includes all activities involved in the transformation
of savings into investment. The financial service can also be called financial
intermediation. Financial intermediation is a process by which funds are
mobilized from a large number of savers and make them available to all those
who are in need of it and particularly to corporate customers. Thus, financial
service sector is a key area and it is very vital for industrial developments. A
well developed financial services industry is absolutely necessary to mobilize
the savings and to allocate them to various investable channels and thereby to
promote industrial development in a country. Financial services, through
network of elements such as financial institution, financial markets and
financial instruments, serve the needs of individuals, institutions and corporate.
It is through these elements that the functioning of the financial system is
facilitated. Considering its nature and importance, financial services are
regarded as the fourth element of the financial system.
1.6 FEATURES OF FINANCIAL SERVICE
Customer-Oriented: Like any other service industry financial service
industry is also a customer-oriented one. That customer is the king and
his requirements must be satisfied in full should be the basic tenent of any
financial service industry. It calls for designing innovative financial
products suitable to varied risk-return requirements of customer.
Intangibility: Financial services are intangible and therefore, they cannot
be standardized or reproduced in the same form. Hence, there is a need to
have a track record of integrity, reputation, good corporate image and
timely delivery of services.
4

Simultaneous Performance: Yet another feature is that both production
and supply of financial services have to be performed simultaneously.
Therefore, both suppliers of services and consumers should have a good
rapport, clear-cut perception and effective communication.
Dominance of Human Element: Financial services are dominated by
human element and thus, they are people-intensive. It calls for competent
and skilled personnel to market the quality financial products. But,
quality cannot be homogenized since it varies with time, place and
customer to customer.
Perishability: Financial services are immediately consumed and hence
inventories cannot be created. There is a greater need for balancing
demand and supply properly. In other words, marketing and operations
should be closely inter-linked..
1.7 IMPORTANCE OF FINANCIAL SERVICES
Economic Growth: The financial service industry mobilizes the savings
of the people and channels them into productive investment by providing
various services to the people. In fact, the economic development of a
nation depends upon these savings and investment.
Promotion of Savings: The financial service industry promotes savings
in the country by providing transformation services. It provides liability,
asset and size transformation service by providing large loans on the basis
of numerous small deposits. It also provides maturity transformation
services by offering short-term claim to savers on their liquid deposit and
providing long-term loans to borrowers.
Capital Formation: The financial service industry facilitates capital
formation by rendering various capital market intermediary services
capital formation in the very basis for economic growth. It is the principal

mobilizer, of surplus funds to finance productive activities and thus it
promotes capital accumulation.
Provision of Liquidity: The financial service industry promotes liquidity
in the system by allocating and reallocating savings and investment into
various avenues of economic activity. It facilitates easy conversion of
financial asset into liquid cash at the discretion of the holder of such
assets.
Financial Intermediation: The financial service industry facilitates the
function of intermediation between savers and investors by providing a
means and a medium of exchange and by undertaking innumerable
services.
Contribution to GNP: The contribution of financial services to GNP has
been going on increasing year after year in almost all countries in recent
times.
Creation of Employment Opportunities: The financial service industry
creates and provides employment opportunities to millions of people all
over the world.
1.8 SOURCES OF REVENUE
Accordingly, there are two categories of sources of income for a financial
service company namely: fund based &fee- based. Fund-based income comes
mainly from interest spread, lease rentals, income from investments in capital
market and real estate. On the other hand, fee based income has its sources in
merchant banking, advisory services, custodial services, loan syndication etc.
income has its sources in merchant banking, advisory services, custodial
services, loan syndication etc. A major part of income is earned through fundbased activities. At the same time, it involves a large share of expenditure in the
form of interest & brokerage. It means that such companies should have to
compromise the quality of its investment. On the other hand fee-based income
does not involve much risk.
6

CLASSIFICATION OF FINANCIAL SERVICES
Fund-based Activities
1 .Leasing
Fee-based
1 .Issue Management
2 .Portfolio Activities
Management
2 .Hire Purchase
3 .Capital Restructuring
3 .Discounting
4 .Loan Syndication
4 .Loans
5 .Merger & Acquisition
5 .Venture Capital
6 .Corporate Councelling
6 .Housing Finance
7 .Foreign Collaborations
7 .Factoring
1.9 OBJECTIVES OF FINANCIAL SERVICES

Fund raising: Financial services help to raise the required funds from a
host of investors, individuals, institution and corporate. For this purpose,
various instruments of finance are used.
Funds deployment: An array of financial services is available in the
financial markets which help the players to ensure an effective
deployment of funds raised. Services such as bill discounting, parking of
short-term funds in the money market, credit rating &securitization of
debts are provided by financial services firms in order to ensure efficient
management of funds.
Specialized services: The financial service sector provides specialized
services such as credit rating, venture capital financing, lease financing,
mutual funds, credit cards, housing finance, etc besides banking and
insurance. Institutions and agencies such as stock exchanges, nonbanking finance companies, subsidiaries of financial institutions, banks &
insurance companies also provide these services.
7

Regulation: There are agencies that are involved in the regulation of the
financial services activities. In India, agencies such as the Securities and
Exchange Board of India (SEBI), Reserve Bank of India (RBI) and the
Department of Banking and Insurance of the Government of India,
regulate the functioning of the financial service institutions.
Economic growth: Financial services contribute, in good measure, to
speeding up the process of economic growth & development.
1.10 CAUSES OF FINANCIAL INNOVATION
Financial intermediaries have to perform the task of financial innovation to
meet the dynamically changing needs of the economy. There is a dire necessity
for the financial intermediaries to go for innovation due to following reasons:
Low profitability: The profitability of the major financial intermediary,
namely banks has been very much affected in recent times. There is a
decline in the profitability of traditional banking products. So, they have
compelled to seek out new products which may fetch high returns.
Keen competition: The entry of many financial intermediaries in the
financial sector market has led to severe competition among themselves.
This keen competition has paved the way for the entry of varied nature of
innovative financial products so as to meet the varied requirements of the
investors.
VARIOUS CHANNELS THROUGH WHICH PRODUCTS & SERVICES

ARE OFFERED BY BANKS

CHARTS: VARIOUS CHANNELS OF SERVICES
BMIT
A
RNEO
T
ABTL
M
NEIE
CLRP
HNEH
EO
SBTN
EA
NBB
AAK
INN
KKN
GII
NN
GG
R M A I T N ON E T C B L E IH E L R E P E N SH E B O T A N N B E K A B NI N A K G N I N K
GI N
BRANCHES
A branch, banking center or financial center is a retail location where a bank,
credit union, or other financial institution offers a wide array of face-to-face and
automated services to its customers.
In the period from 1100-1300 banking started to expand across Europe and
banks began opening branches in remote, foreign locations to support
international trade. Historically, branches were housed in imposing buildings,
often in a neo-classical architecture style. Today, branches may also take the
form of smaller offices within a larger complex, such as a shopping mall.
Traditionally, the branch was the only channel of access to a financial
institutions services. Services provided by a branch include cash withdrawals
and deposits from a demand account with a bank teller, financial advice through
a specialist, safe deposit box rentals, bureau de change, insurance sales, etc. As
9

of the early 21st Century, features such as Automated Teller Machine (ATM),
telephone and online banking, allow customers to bank from remote locations
and after business hours. This has caused financial institution to reduce their
branch business hours and to merge smaller branches into larger ones. They
converted some into mini-branches with only ATMs for cash withdrawal and
depositing; computer terminals for online banking and cheque depositing
machines.
Some financial institutions, to show a friendlier image, offer a boutique or
coffee house-like environment in their branches, with sit-down counters,
refreshments, interactive displays. Some branches also have drive-through teller
windows or ATMs.
MOBILE BANKING
Mobile banking also known as M-Banking, SMS Banking is a term used for
performing balance checks, account transactions, payment etc. Over the last few
years, the mobile and wireless market has been one of the fastest growing
markets in the world and it is still growing at a rapid pace. With mobile
technology, banks can offer services to their customers such as doing funds
transfer while travelling, receiving online updates of stock price or even
performing stock trading while being stuck in traffic.A specific sequence of
SMS messages will enable the system to verify if the client has sufficient funds
in his or her wallet and authorize a deposit or withdrawal transaction at the
agent.
Many believe that mobile users have just started to fully utilize the data
capabilities in their mobile phones. In Asian countries like India, China, where
mobile infrastructure is comparatively better than the fixed-line infrastructure,
and in European countries, where mobile phone penetration is very high, mobile
banking is likely to appeal even more.
10

Mobile Banking Services
Account Information
1) Mini-statement and checking of account history
2) Alerts on account activity
3) Monitoring of term deposits
4) Access to loan statements
5) Access to card statements
6) Mutual fund/ equity statements
7) Pension plan management
8) Insurance policy management
9) Status on cheque, stop payment on cheque
10) Ordering cheque books
11) Balance checking in the account
12) Recent transactions
13) Due date of payment
14) PIN provision
15) Blocking of cards
Payments, Deposits, Withdrawals and Transfers
1) Domestics and international fund transfers
2) Micro-payment handling
3) Mobile recharging
4) Commercial payment processing
5) Bill payment processing
6) Peer to Peer payments
7) Withdrawal at banking agent
8) Deposit at banking agent
2.3 TELEPHONE BANKING
Telephone banking is a service provided by a financial institution , which allows
its customers to perform transactions over the telephone. Most telephone
banking services use an automated phone answering system with phone keypad
response or voice recognition capability. To guarantee security, the customer
must first authenticate through a numeric or verbal password or through security
questions asked by a live representative.
With the obvious exception of cash withdrawals & deposits, it offers virtually
all the features of an automated teller machine: account balance information and
11

list of latest transactions, electronic bill payments, funds transfers between a
customers accounts.etc
Usually, customers can also speak to alive representative located in a call centre
or a branch, although this feature is not always guaranteed to be offered 24/7. In
addition to the self-service transactions listed earlier, telephone banking
representatives are usually trained to do what was traditionally available only at
the branch: loan applications, investments purchases and redemptions, cheque
book orders, debit card replacements, change of address, etc
Banks which operate mostly or exclusively by telephone are known as phone
banks. They also help modernize the user by using special technology.
2.4 INTERNET BANKING

Internet banking or E-banking means any user with a personal computer and a
browser can get connected to his bank -s website to perform any of the virtual
banking functions. In internet banking system the bank has a centralized
database that is web-enabled. All the services that the bank has permitted on the
internet are displayed in menu. Any service can be selected and further
interaction is dictated by the nature of service. The traditional branch model of
bank is now giving place to an alternative delivery channels with ATM network.
Once the branch offices of bank are interconnected through terrestrial or
satellite links, there would be no physical identity for any branch. It would a
borderless entity permitting anytime, anywhere and any how banking
INTERNET BANKING SERVICES
12

1) Bill Payment Service: You can facilitate payment of electricity and
telephone bills, mobile phone, credit card and insurance premium bills as
each bank has tie-ups with various utility companies, service providers
and insurance companies, across the country. To pay your bills, all you
need to do is complete a simple one-time registration for each biller. You
can also set up standing instructions online to pay your recurring bills,
automatically. Generally, the bank does not charge customer for online
bill payment.
2) Fund Transfer: You can transfer any amount from one account to
another of the same or any another bank. Customers can send money
anywhere in India. Once you login to your account, you need to mention
the payees account number, his bank and the branch. The transfer will
take place in a day or so, whereas in a traditional method, it takes about
three working days.
3) Credit Card Customers:
With Internet banking, customers can not
only pay their credit card bills online but also get a loan on their cards. If
you lose your credit card, you can report lost card online.
4) Investment: You can now open an FD online through funds transfer.
Now investors with interlinked demat account and bank account can
easily trade in the stock market and the amount will be automatically
debited from their respective bank accounts and the shares will be
credited in their demat account. Moreover, some banks even give you the
facility to purchase mutual funds directly from the online banking system.
5) Recharging your Prepaid Phone: Now just top-up your prepaid mobile
cards by logging in to Internet banking. By just selecting your operator's
name, entering your mobile number and the amount for recharge, your
phone is in action within no time.
6) Shopping: With a range of all kind of products, you can shop online and
the payment is also made conveniently through your account. You can
also buy railway and air tickets through Internet banking.
13

2.5 AUTOMATED TELLER MACHINE (ATM)
Automated Teller Machine is a mechanism which enables the customer to
withdraw money from his account without visiting the bank branch. An ATM
card is issued to the customer by the bank in order to make cash withdrawals at
cash machine. This service helps the ATM customer to withdraw money even
when the banks are closed. This can be done by inserting the card in the ATM
and entering the Personal Identification Number & secret password.
ATMs act as off-site branches of banks and provide almost all services that are
available from a manually operated branch. The customer can, not only
withdraw cash, but also deposit money, get account statements, enable transfer
of funds etc. The customer who wants to deposit cash should put the notes in the
pouch available at the ATM counter close it, seal it by signing & put it in the
slot provided for this purpose. The bank staff will collect the packet when they
come for loading cash in the machine & credit the amount to the account.
However, the customer has to sign an undertaking with the bank that he would
not dispute on the amount credited. ATM has gained prominence as a delivery
channel for banking transactions in India. Now customers will not be levied any
fee on cash withdrawals using ATM & debit cards issued by other banks. This
will in turn increase usage of ATMs in India. ATM allows customers:
To view account information
To deposit cheques or cash
To order cheques and receive cash.
14

VARIOUS PRODUCTS & SERVICES OF BANKS
Deposits
Banks provide various deposit schemes for keeping the savings of people. Some
of these schemes are common in nature. Banks have to comply with the Know
Your Customer (KYC) norms introduced by the Reserve Bank of India while
opening & allowing operations in the accounts. A few deposit schemes offered
by banks are as follows:
CHART: TYPES OF DEPOSITS
Current
Account
Safe-Deposits
Lockers
Fixed
D eposit
Dem at
Account
Savings
A ccount
R eccuring
D eposit
1) Current Account:
Current account is primarily meant for businessmen, firms, companies and
public enterprises etc. that have numerous daily banking transactions.
Individuals generally do not open this account. Current accounts are meant
neither for the purpose of earning interest nor for the purpose of savings but
only for convenience of business hence they are non-interest bearing accounts.
In a current account, a customer can deposit & withdraw any amount of money
15

any number of times, as long as he has funds to his credit.As per RBI directive,
banks are not allowed to pay any interest on the balances maintained in Current
Accounts. However, in case of death of the account holder his legal heirs are
paid interest at the rates applicable to Savings bank deposit from the date of
death till the date of settlement. Because of the large number of transactions in
the account and volatile nature of balances maintained, banks usually levy
certain service charges for opening a Current Account.
2) Fixed Deposits:
Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit
Account, a certain sum of money is deposited in the bank for a specified time
period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits
depends on the maturity period. It is higher in case of longer maturity period.
There is great flexibility in maturity period & it ranges from 15 days to 5 years.
The interest can be compounded quarterly, half-yearly or annually and varies
from bank to bank. Loan facility is available against bank fixed deposits upto
75-90 % Premature withdrawal is permissible but it involves loss of
interest.Fixed deposits with banks are nearly 100% safe as all the banks
operating in the country, irrespective of whether they are nationalized, private or
foreign are governed by the RBIs rules & regulations and give due weightage
to the interest of the investors.
3) Savings Bank Account:
Savings Bank accounts are meant to promote the habit of saving among the
citizens while allowing them to use their funds when required. The main
advantage of Savings Bank Account is its high liquidity and safety. Savings
Bank Account earn moderate interest. The rate of interest is decided and
periodically reviewed by the government of India. Savings Bank Account can
be opened in the name of an individual or in joint name of the depositors.
16

The minimum balance to be maintained in an ordinary savings bank account
varies from bank to bank. It is less in case of public sector banks and
comparatively higher in case of private banks. Savings Bank Account can now
be accessed through ATMs & internet.
4) Recurring Deposit Account:
Under recurring deposit account, a specific amount is invested in bank on
monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the
end of which the principal sum as well as the interest earned during that period
is returned to the investor. Recurring Bank Account provides the element of
compulsion to save at high rates of interest applicable to Term Deposits along
with liquidity to access those savings any time. Loan/ Overdraft facility is also
available against Recurring Bank Deposits.The deposit for RD account is paid
in monthly installments and each subsequent monthly installment has to be
made before the end of the month and is equal to the first deposit. In case of
default in payment, penalty is levied for the delayed deposit.
5) Demat account:
Some banks are depository participants. These banks offer demat accounts to
their corporate clients. Demat account is just like a bank account where actual
money is replaced by shares. Just as a bank account is required if we want to
save money or make cheque payments, we need to open a demat account in
order to buy or sell shares. A Demat Account holds portfolio of shares in
electronic form and obviates the need to hold shares in physical form. The
account offers a secure and convenient way to keep track of shares and
investment without the hassle of handling physical documents that get mutilated
or lost in transit. The Securities and Exchange Board of India (SEBI) mandates
a demat account for share trading involving more than 500 countries.
17

6) Safe-Deposit Lockers:
Safe deposit locker is a facility provided by banks to their customers to keep
their valuables like jewellery, title deeds etc. Safe deposit locker is a steel
cabinet having multiple cubicles. The safe deposit locker is kept inside the safe
room and can be accessed only with the permission of the bank officials. A
customer who is in need of a locker has to approach the bank. Customer has to
mention a password in the application form for identification purpose when he
comes for operating the locker. The customer has to remit annual rent for using
the locker facility. The customer has full privacy in operating the locker.
As per RBI guidelines, the place where the locker is kept should be segregated
from the place where cash and valuables are stored using iron grill. When the
customer wants to open the locker, he has to identify himself by telling the
password and sign in a register noting the date and time of opening the locker
which will be countersigned by the bank officials. The agreement of locker is a
contract of bailment and the bank can terminate the agreement and demand the
customer to vacate locker if any of the terms and conditions in the agreement
are violated or the annual rent is not remitted for a long period. At present all
the banks are having safe deposit locker facility.
3.2 CREDIT CARDS:
Credit cards are innovative ones in the line of financial services offered by
commercial banks. Credit card culture is a old hat in the western countries. In
India, it is relatively a new concept that is fast catching on. Since the plastic
money has today become as good as legal tender more people are using them in
their day-to-day activities. A credit card is a card or mechanism which enables
cardholders to purchase goods, travel and dine in a hotel without making
immediate payments. It is a convenience of extended credit without formality.
Credit cards can be classified as follows:
18

CHART: TYPES OF CREDIT CARDS
OLD CREDIT CARDS
a S
NEW CREDIT CARDS
sn
ad
ea
e a
rr
ia
Old types of Credit Cards:

1) Credit Card:
It is a normal card whereby a holder is able to purchase without having to pay
cash immediately. Generally, a limit is set to the amount of money a cardholder
can spend a month using the card. At the end of every month, the holder has to
pay a percentage of outstanding. Interest is charged for the outstanding amount
which varies from 30 to 36 per cent per annum. An average consumer prefers
this type of card for his personal purchase.
2) Charge Card:
A charge card is intended to serve as a convenient means of payment for goods
purchased at Member Establishments rather than a credit facility. Instead of
paying cash or cheque every time the credit card holder makes a purchase, this
19

facility gives a consolidated bill for a specified period, usually one month.
There are no interest charges and no spending limits either. The charge card is
useful during business trips and for entertainment expenses which are usually
borne by the company. Andhra Bank card, BOB cards, Can card, Diners Club
card etc. belong to this category.
3) In-Store Card:
The in-store cards are issued by retailers or companies. These cards have
currency only at the issuers outlets for purchasing products of the issuer
company. Payment can be on monthly or extended credit basis. For extended
credit facility interest is charged. In India, such cards are normally issued by
Five Star Hotels, resorts and big hotels.
NEW TYPES OF CREDIT CARDS
1) Corporate Credit Cards:
Corporate cards are issued to private and public limited companies and public
sector units. Depending upon the requirements of each company, operative Addon cards will be issued to the persons authorized by the company. The name of
the company will be embossed on Add-on cardholder. The transactions made by
Add-on cardholders are billed to the main card and debits are made to the
Companys Account.
2) Business Card:
A business card is similar to a corporate card.it is meant for the use of
proprietary concerns, firms, firms of Chartered Accountants etc. This card helps
to avail of certain facilities for reimbursement and makes their business trip
convenient.
20

3) Smart Card:
It is a new generation card. When a transaction is made using the card, the value
is debited and the balance comes down automatically. Once the monetary value
comes down to nil, the balance is to be restored all over again for the card to
become operational. The primary feature of smart card is security. It prevents
card related frauds & crimes.
4) Debit Cards:
Debit card is popularly known as ATM card on the move. The debit card gives
the freedom to access savings or current account through ATMs at merchant
locations. Debit cards are also issued independent of ATM in which case the
card is presented to the merchant establishment at the time of purchase as in a
case of credit card. However, the account of the card holder will be debited
instantly when the charge slip is presented by the merchant establishment
instead of the card holder remitting the money as is being done in the case of
credit card. Therefore, the card holder has to keep sufficient balance in his
account before he uses the card. The debit card does have a daily limit which
could be somewhere around Rs 15000 at ATMs and Rs 10000 at merchant
locations. This again is subject to the balance available in the account.
5) ATM Card:
An ATM (Automated Teller Machine) card is useful to a card holder as it helps
him to withdraw cash from banks even when they are closed. This can be done
by inserting the card in the ATM installed at various bank location.
LOANS
It is an arrangement by which a bank advance loans against any security like
jewels, shares or debentures or insurance policy or personal security of the
21

borrower. The interest is payable on the entire loan amount as decided by the
bank. Loans can be classified as follows:
CHART: VARIOUS TYPES OF LOANS
HMA
oEoPu
udret
sutro
icgsm
naaoo t
gignb
Loeai l
onLle
aoLL l
nLaoo
sonaa
asnn
nss
s
H M A P o o eu E u r r s t d t s io g onu m a ngc
a l L
g a o Le t b i o o L i
l a n eoo n a aa L s l nn o L ss a o n a s n s
1) Personal loans:
The personal loans are granted to any customer or the non-custome if the bank
is satisfied with the repayment capacity of the borrower. The borrower should
have a steady income. Installment can be paid by depositing post dated cheques,
authorization to debit the amount to the borrowers savings or current account,
authorization to transfer interest on term deposit to the loan account,
authorization to deduct the installment from the salary by the employer and
remit to the bank etc. The interest varies from bank to bank. Normally banks
22

allow 12 months to 60 months for repayment.Banks also charge time processing
fee ranging from 1 to 3 percent per annum. Personal loans are generally
unsecured because in most cases there is no primary security. Therefore, many
banks demand collateral security in the form of landed property, gold
ornaments, third party guarantee etc. Some banks instead of third party
guarantee insist that another person should join as co-obligant. Many banks
prefer co-obligant as a guarantor because a co-obligant signs the original loan
documents along with the borrower & therefore has a joint liability. The
documentation is quite simple because there will be only a promissory note.
2) Housing Loans:
Housing loans are given as direct loans and indirect loans. Direct loans are those
loans given to the individuals or group of individuals including co-operative
societies. The indirect loans are the term loans granted to housing finance
institution, housing boards etc primarily engaged in the business of supplying
serviced land and constructed house units. Banks are permitted to extend term
loans to private builders. Banks are also granting loans under priority sector for
housing purpose.
3) Educational Loans:
Educational loans are extended with the aim to provide financial support from
the banking system to deserving students for pursuing higher education in India
& abroad. The main emphasis is that every student should get an opportunity to
pursue education with financial support from the banking system on affordable
terms and conditions. All banks are offering educational loans, but the schemes
differs from bank to bank. The scheme aims at providing financial assistance on
reasonable terms to the poor and needy to undertake basic education.
23

4) Mortgage Loans:
Mortgage loan is a financing arrangement in which a lender extends
finance for acquisition of real estate against the security of the real estate
purchased out of the loan. The borrower executes a mortgage deed which
registers a lien on the property in favour of the lender. The title will be retransferred when the borrower repays the loan in full with interest. Banks
provide loan/overdraft facility against mortgage of property at low rate of
interest to people engaged in trade, commerce and business and also to
professionals and self employed, partnership firms, companies, NRIs and
individuals with high net worth including salaried people. The product
provides an opportunity to customers to borrow against a fixed asset at
short notice.
INVESTMENT
Investment is the employment of funds with the aim of getting return on it. It is
the commitment of funds which have been saved from current consumption
with the hope that some benefits will receive in future. Thus, it is a reward for
waiting for money. Savings of the people are invested in assets depending on
their risk and return. Investment avenues are the outlets of funds. In India,
investment
alternatives
are
continuously
increasing
along
with
new
developments in the financial market. An investor can himself select the best
avenue after studying the merits and demerits of different avenues. Even
financial advertising, newspapers supplements on financial matters and
investment journals offer guidance to investors in the selection of suitable
investment avenues.
24

CHART: ALTERNATIVES AVENUES FOR INVESTMENT
G o
ld
&B o n
Sd is l
v& e r
D e b
e n tu
re s
P u b li
c
P ro v
id e n t
RF eu n d
a l
E s
ta t
e s
G O
I
In v e
S a v
s tm
in g
e n t
s
A v e
B o
n u e s
n d
1) Public Provident Fund (PPF):

Public Provident Fund is one attractive tax sheltered investment scheme
for middle class and salaried persons. It is even useful to businessmen
and higher income earning people. The PPF scheme is very popular
among the marginal income tax payers.
2) Government of India Savings Bond:
The GOI has recently started issuing 6.50% bonds which are reasonably
attractive and secured investment for individuals and institutions.
3) Real Estate Properties:
Investment in the real estate is popular due to high saleable value after
some years. Such properties include buildings, commercial premises,
industrial land, plantations, farmhouses, agricultural land etc. They
purchase such properties at low prices and do not sale them unless there
is substantial increase in the market price. The resale price will be
25

attractive in due course when they can recover 4 times the price paid.
This is one attractive as well as profitable avenue for investment.
4) Investment in Gold, Silver:
In India, there is attraction for gold and silver since the early historical
period. These two precious metals are used for making ornaments and
also for investment of surplus funds over a long period. The prices of
both the metals are continuously increasing. These metals are highly
liquid, also provides a sense of security to the investors. The benefit of
capital appreciation is also available. As a result, investment in gold and
silver is one avenue for investment.
5) Bonds & Debentures:
It is possible to purchase bonds and debentures of joint stock companies
for investment purpose. Debenture indicates loan given to the company at
a specific rate of interest. Debentures are more popular than shares due to
the safety and security available. Easy transferability by endorsement and
delivery. Investment exempted from wealth-tax. Maturity period from 525 years.
26

INNOVATIVE FINANCIAL PRODUCTS AND SERVICES
1) Merchant Banking:
A merchant banker is a financial intermediary who helps to transfer capital from
those who possess it to those who need it. Merchant banking includes a wide
range of activities such as management of customer securities, portfolio
management, project counseling and appraisal, underwriting of shares and
debentures, loan syndication, acting as banker for the refund orders, handling
interest and dividend warrants etc. Thus, a merchant banker renders a host of
services to corporate and thus promotes industrial development in the country.
2) Loan Syndication:
This is more or less similar to consortium financing. But, this work is taken up
by the merchant banker as a lead manager. It refers to a loan arranged by a bank
called lead manager for a borrower who is usually a large corporate customer or
a Government Department. The other banks who are willing to lend can
participate in the loan by contributing an amount suitable to their own lending
policies. Since a single bank cannot provide such a huge sum of loan, a number
of banks join together and form a syndicate.
3) Leasing:
A lease is an agreement which a company or a firm acquires a right to make use
of capital asset like machinery, on payment of a prescribed fee called rental
charges. The lessee cannot acquire any ownership to the asset, but he can use it
and have full control over it. He is expected to pay for all maintenance charges
and repairing and operating cost. In countries like the U.S.A., the U.K. and
Japan equipment leasing is very popular and nearly 25% of plant and equipment
is being financed by leasing companies. In India also, many financial companies
have started equipment leasing business by forming subsidiary companies.
27

4) Mutual Funds:
A mutual fund refers to a fund raised by a financial service company by pooling
the savings of the public. It is invested in a diversified portfolio with a view to
spreading and minimizing risk. The fund provides Investment Avenue for all
small investors who cannot participate in the equities of big companies. It
ensures low risk, steady returns, high liquidity and better capital appreciation in
the long run.
5) Factoring:
Factoring refers to the process of managing the sales ledger of a client by a
financial service company. In other words, it is an arrangement under which a
financial intermediary assumes the credit risk in the collection of book debts for
its clients. The entire responsibility of collecting the book debts passes on to the
factor. His services can be compared to del credre agent who undertakes to
collect debts. But, a factor provides credit information, collects debts, monitors
the sales ledger and provides finance against debts. Thus, he provides a number
of services apart from financing.
6) Forfeiting:
Forfeiting is a technique by which a forfeitor (financing agency) discounts an
export bill and pay ready cash to the exporter who can concentrate on the
export front without bothering about collection of export bills. The forfeitor
does so without any recourse to the exporter and the exporter is protected
against the risk of non-payment of debts by the importers.
7) Venture Capital:
A venture capital is another method of financing in the form of equity
participation. A venture capitalist finances a project based on the potentialities
of a new innovative project. It is in contrast to the conventional security based
28

financing. Much thrust is given to new ideas or technological innovations.
Finance is being provided not only for start-up capital but also for
development capital by the financial intermediary.
8) Reverse Mortgage:
In 2007-08, the National Housing Bank and commercial banks have introduced
an innovative product viz., reverse mortgage to enable the senior citizens to
fetch value out of their property without selling it. In normal mortgage, a home
buyer borrows money to finance his home. In a Reverse Mortgage (RM) the
owner of a house property surrenders the title of his property to a lender and
raises money. Again, in normal mortgage the borrower gets 60-70% of the
money upfront. But, in a RM generally the lender does not pay the entire
amount. On the other hand, he pays out a regular sum each month for the agreed
time. The owner, normally a senior citizen, can use the property and stay with
his spouse for the rest of their lives. Thus, the owner can ensure a regular cash
flow in times of need and enjoy the benefit of using the property. Usually, after
the death of the owner, the spouse can continue to use the property. In case, both
die during the period of the RM scheme the lender will sell the property, take
his share and distribute the rest among the heirs. It is called reverse mortgage
because the payment steam is reversed. Instead of making monthly payments
to the lender, as in the case of a regular mortgage, a lender makes regular
payments to the senior citizen. A RM facilitates to convert an immovable asset
into an income generating one
29

CHAPTER II
Profile of Bank
BANKF OF BARODA
Bank Of Baroda, is a Body Corporate (Nationalised Bank) constituted under The Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970, with its Head Office at
Mandvi, Baroda and Corporate Office at Mumbai. Bank of Baroda, a leading global Bank of
Indian origin has been expanding its international presence with footprints in 25 countries
and a Pan India network of 2853 branches is a fifth largest bank in India. Bank of Baroda is
one of the oldest banking institutions in India, having been established in 1908 from a small
building in Baroda, Gujarat State. B.O.B has a core set of values and culture that it adhere to
& at all times seeks to be trustworthy, international, courageous, determined and responsive.
Today the bank employs 39,529 people. It also has four subsidiaries, BOB Housing Finance
Ltd., BOB Asset Management Co. Ltd., BOBCARDS Ltd. and BOB Capital Markets Ltd.For
financial year ending 31 March 2008, the bank reported a net profit of Rs.1436 crore. The
bank had a total business of Rs.2,59,000 crore, as on March 31, 2008, and is eyeing 22 per
cent growth to Rs.3,10,000 crore by the end of this financial year. It is looking at a growth of
20 per cent in deposits and 23 per cent in advances. Bank of Baroda sanctions loans/credit
assistance to Small Scale Industries for acquisition of fixed assets (factory land/buildings &
machinery) and working capital requirements at very competitive interest rates and against
soft margins Rate of interests effective from 01.06.2003
History
Bank of Baroda was founded on July 20, 1908 with a paid up capital of Rs.10 lakhs by
Maharaja Sayajirao Gaekwad III of Baroda, one man who made a difference, rooted in Indian
values. Yet Global in vision, rock solid in fundamentals. Nurture a culture where success does
not come in the way of the need to keep learning a fresh, to keep innovating, to keep
experimenting. It has now come a long way to becoming the strong trustworthy financial
institution. It is growing day by day. The emblem of Bank of Baroda represents wealth,
safety, industrial development and an inclination to better and promote the companys
agrarian economy. It is a coin with an unpraised arm indicating wealth that indicated that the
depositors money is in the safe hands. Since then bank has traversed an eventful and
successful journey of almost 100 years. Today, Bank of Baroda has a network of 2853
branches. In mid-eighties, the Bank of Baroda diversified into areas of merchant banking,
30

housing finance, credit cards and mutual funds. In 1995 the Bank raised Rs.300 crores
through a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs.850
crores. Bank of Baroda took the lead in shifting from manual operating systems to a
computerized work environment. Today, the Bank has 1918 computerized branches, covering
70% of its network and 91.64% of its business. Bank of Baroda gives high priority to quality
service. In its quest for quality, the Bank has secured the ISO 9001:2000 certifications for 15
branches by end of the 2005-06.
Nature
The nature of the business that decide the company belongs to which industry and it helps the
many stakeholders and parties like government, NGO, etc, to decide the parameter and other
concerned issue binding to the organization, for e.g. environmental protection, tax rate,
incentives, and rules and regulations. The Bank of baroda belongs to the service sector, which
provides various types of financial solution related to banking industry. As Indian economy is
emerging as a major services provider in the world, which can be seen by its contribution in
GDP of India which is closed to 55%.
Mission
To be a top ranking National Bank of International Standards committed to augmenting
stake holders' value through concern, care and competence Banks new logo is a unique
representation of a universal symbol. It comprises dual B letterforms that hold the rays of
the rising sun. Bank of baroda calls this the Baroda SunThe sun is an excellent
representation of what bank stands for. It is the single most powerful source of light and
energy its far reaching rays dispel darkness to illuminate everything they touch. At Bank of
Baroda, it seeks to be the source that will help all its stakeholders realise their goals. To
banks customers, it seeks to be a one-stop, reliable partner who will help them address
different financial needs. To its employees, it offers rewarding careers and to its investors and
business partners, maximum return on their investment. The single-colour, compelling
vermillion palette has been carefully chosen, for its distinctivenes as it stands for hope and
energy. It also recognize that bank is characterised by diversity. Its network of branches
spans geographical and cultural boundaries and rural-urban divides. Its customers come from
a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face for its brand
because it is a universal symbol of dynamism and optimism it is meaningful for its many
audiences and easily decoded by all.
31

Organizational Structure
Organizational structure is one of the most important decision mode by top management
before starting the business, as it generally depend on the nature and size of the company, it
has lot to do with the job description and job specification. The organizational structure is
nothing but hierarchical and departmental process. Every organization differ in structure.
There is a well defined system in the Bank regarding decision making process. Lending and
administrative decisions are taken at various levels from JMGS I to Top Executive grade
Scale VII and also by Executive Director and Chairman & Managing Director depending
upon their positions as per the discretionary lending powers delegated to them by the Board.
Branches receive applications for credit facilities and recommend to the appropriate
sanctioning authority. In the case of major retail loan products applications are processed at
branches and Centralised Credit Processing Cells at select centers. There is a well defined
organizational structure and clear system of accountability based on RBI / CVC guidelines.
All credit decisions approved by any sanctioning authority are reported to the next higher
authority for control purpose. The system of exercising proper delegation of power and
submission of control reports is in place and they are monitored by control officers and
through internal inspection. By observing the following is a common structure as per
company guidance.
Product Profile
Followings are the main products of The Bank of baroda.
Deposits
Gen-next
Loans
Credit Cards
Debit Cards
Services
Lockers
32

Introduction of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century
with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later
the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A
unique institution, it was the first joint-stock bank of British India sponsored by the
Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1
July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern
banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a
result of the compulsions of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernise India's
economy. Their evolution was, however, shaped by ideas culled from similar developments in
Europe and England, and was influenced by changes occurring in the structure of both the
local trading environment and those in the relations of the Indian economy to the economy of
Europe and the global economic framework.The State Bank of India, the countrys oldest
Bank and a premier in terms of balance sheet size, number of branches, market capitalization
and profits is today going through a momentous phase of Change and Transformation the
two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy
and moving with an agility to give the Private and Foreign Banks a run for their money. The
bank is entering into many new businesses with strategic tie ups Pension Funds, General
Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant
Acquisition, Advisory Services, structured products etc each one of these initiatives having
a huge potential for growth. The Bank is forging ahead with cutting edge technology and
innovative new banking models, to expand its Rural Banking base, looking at the vast
untapped potential in the hinterland and proposes to cover 100,000 villages in the next two
years. It is also focusing at the top end of the market, on whole sale banking capabilities to
provide Indias growing mid / large Corporate with a complete array of products and services.
It is consolidating its global treasury operations and entering into structured products and
derivative instruments. Today, the Bank is the largest provider of infrastructure debt and the
largest arranger of external commercial borrowings in the country. It is the only Indian bank
to feature in the Fortune 500 list. The Bank is changing outdated front and back end processes
to modern customer friendly processes to help improve the total customer experience. With
33

about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks
already networked, today it offers the largest banking network to the Indian customer. The
Bank is also in the process of providing complete payment solution to its clientele with its
over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile
banking, etc. With four national level Apex Training Colleges and 54 learning Centres spread
all over the country the Bank is continuously engaged in skill enhancement of its employees.
Some of the training programes are attended by bankers from banks in other countries. The
bank is also looking at opportunities to grow in size in India as well as Internationally. It
presently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in
India SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and
SBI Cards - forming a formidable group in the Indian Banking scenario. It is in the process
of raising capital for its growth and also consolidating its various holdings.
Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and
take all employees together on this exciting road to Transformation. In a recently concluded
mass internal communication programme termed Parivartan the Bank rolled out over 3300
two day workshops across the country and covered over 130,000 employees in a period of
100 days using about 400 Trainers, to drive home the message of Change and inclusiveness.
The workshops fired the imagination of the employees with some other banks in India as well
as other Public Sector Organizations seeking to emulate the Program. An important turning
point in the history of State Bank of India is the launch of the first Five Year Plan of
independent India, in 1951. The Plan aimed at serving the Indian economy in general and the
rural sector of the country, in particular. Until the Plan, the commercial banks of the country,
including the Imperial Bank of India, confined their services to the urban sector. Moreover,
they were not equipped to respond to the growing needs of the economic revival taking shape
in the rural areas of the country. Therefore, in order to serve the economy as a whole and
rural sector in particular, the All India Rural Credit Survey Committee recommended the
formation of a state-partnered and state-sponsored bank. The All India Rural Credit Survey
Committee proposed the take over of the Imperial Bank of India, and integrating with it, the
former state-owned or state-associate banks. Subsequently, an Act was passed in the
Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established
on 1 July 1955. This resulted in making the State Bank of India more powerful, because as
much as a quarter of the resources of the Indian banking system were controlled directly by
the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The
34

Act enabled the State Bank of India to make the eight former State-associated banks as its
subsidiaries. The State Bank of India emerged as a pacesetter, with its operations carried out
by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited
from the Imperial Bank. Instead of serving as mere repositories of the community's savings
and lending to creditworthy parties, the State Bank of India catered to the needs of the
customers, by banking purposefully. The bank served the heterogeneous financial needs of
the planned economic development.
Branches
The corporate center of SBI is located in Mumbai. In order to cater to different functions,
there are several other establishments in and outside Mumbai, apart from the corporate center.
The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at
major cities throughout India. It is recorded that SBI has about 10000 branches, well
networked to cater to its customers throughout India.
ATM Services
SBI provides easy access to money to its customers through more than 8500 ATMs in India.
The Bank also facilitates the free transaction of money at the ATMs of State Bank Group,
which includes the ATMs of State Bank of India as well as the Associate Banks State Bank
of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also
transact money through SBI Commercial and International Bank Ltd by using the State Bank
ATM-cum-Debit (Cash Plus) card.
Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries and several nonbanking subsidiaries. Through the establishments, it offers various services including
merchant banking services, fund management, factoring services, primary dealership in
government securities, credit cards and insurance.
The eight banking subsidiaries are:

35
State Bank of Bikaner and Jaipur (SBBJ)
State Bank of Hyderabad (SBH)
State Bank of India (SBI)
State Bank of Indore (SBIR)
State Bank of Mysore (SBM)
State Bank of Patiala (SBP)
State Bank of Saurashtra (SBS)
State Bank of Travancore (SBT)
Products And Services

Personal Banking
SBI Term Deposits SBI Loan For Pensioners
SBI Recurring Deposits Loan Against Mortgage Of Property
SBI Housing Loan Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme
Other Services
Agriculture/Rural Banking
NRI Services
ATM Services
36
Demat Services
Corporate Banking
Internet Banking
Mobile Banking
International Banking
Safe Deposit Locker
RBIEFT
E-Pay
E-Rail
SBI Vishwa Yatra Foreign Travel Card
Broking Services
Gift Cheques
The CNN IBN, Network 18 recognized this momentous transformation journey, the State
Bank of India is undertaking, and has awarded the prestigious Indian of the Year Business,
to its Chairman, Mr. O. P. Bhatt in January 2008
INVESTMENT
MUTUAL FUND
EQUITY SCHEMES
DABT SCHEMES
BALANCED SCHEMES
EXCHANGE TREADED SCHEMES
LIFE INSURENCE
Unit Linked Products: Pension Products:Pure Protection

Products:Protection cum Savings Products:Money Back Scheme
Products:SBI Life - SARAL ULIP Protection Plans: Specialized
Term Insurance:Retirement Solutions: SBI Life - Swadhan
37

(Group): SBI Life - Dhanaraksha Plus: SBI Life - Grameen
Shakti, Health Products:
ALL TYPES
EQUITY
SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable track
record in judicious investments and consistent wealth creation.
The fund traces its lineage to SBI - Indias largest banking enterprise. The institution has
grown immensely since its inception and today it is India's largest bank, patronised by over
80% of the top corporate houses of the country.
RANK
COMPANY NAME
COUNTRY
2008
SBI Mutual Fund is a joint venture between
MEMBERS
the State Bank of India and Socit Gnrale

Asset Management, one of the worlds
Samsung Life Ins
Korea
2,486
leading fund management companies that

manages over US$ 500 Billion worldwide.
New York Life
USA
2,167
SBI Life Insurance
India
1,662
Mumbai,
August 26, 2008
SBI
Life
Insurance has achieved a unique distinction

of ranking third globally in terms of number
of Million Dollar Round Table (MDRT)
members. Of the 40,000 SBI Life Insurance
Advisors, 1,662 have qualified for the
4
Northwestern Mutual
USA
1,411
prestigious
MDRT membership. Among
these, 124 qualified for Court of Table

5
AIA-Hong Kong
Hong Kong
1,159
11
LIC of India
India
595
14
BOB Standard Life
India
536
22
Max New York Life
India
343
68
BOB Pru
India
125
69
Birla Sunlife
India
124
38
(COTs) and 20 for Top of Table (TOTs).
Management
The bank has 14 directors on the Board and is responsible for the management of the
Banks business. The board in addition to monitoring corporate performance also carries out
functions such as approving the business plan, reviewing and approving the annual budgets and
borrowing limits and fixing exposure limits. Mr. O. P. Bhatt is the Chairman of the bank. The
five-year term of Mr. Bhatt will expire in March 2011. Prior to this appointment, Mr. Bhatt was
Managing Director at State Bank of Travancore. Mr. Bhatt has more than 30 years of experience
in the Indian banking industry and is seen as futuristic leader in his approach towards technology
and customer service. Mr. Bhatt has had the best of foreign exposure in SBI. We believe that the
appointment of Mr. Bhatt would be a key to SBIs future growth momentum. Mr. T S
Bhattacharya is the Managing Director of the bank and known for his vast experience in the
banking industry. Recently, the senior management of the bank has been broadened considerably.
The positions of CFO and the head of treasury have been segregated, and new heads for rural
banking and for corporate development and new business banking have been appointed. The
managements thrust on growth of the bank in terms of network and size would also ensure
encouraging prospects in time to come.
39

CHAPTER III
Finding & Analysis
Q1) Does your banks have listed its share in stock exchange?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q2) Does your banks have core banking Facilities for the customer?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q3) Does your bank conduct any recreation facilities for the customers?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q4) Does your organization organize any counseling program for the employees?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q5) Does the employees share experience to help each other?

Expected Answer
Bank of Baroda
State Bank of India
Total
40
Yes
No
0

Q6) Do you have necessary authority to perform your duties effectively?
Expected Answer
Yes
No
Bank of Baroda
State Bank of India
Total
2
0
Q7) Does the top Management involve employees in Management decision?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q8) Does the organization provide medical facilities for employees?

Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q9) Do you think your bank caters all your banking need?
Expected Answer
Bank of Baroda
State Bank of India
Total
Yes
No
0
Q10) Does your branch have sufficient staff customer representation?

Expected Answer
Bank of Baroda
State Bank of India
Total
41
Yes
No
0

CHAPTER IV
FINDING
So both the bank satate bank and bank of baroda have listed its share in stock
exchange They also provide core banking facilities to the customer this bank
takes counselling programme for their employees and sharing experience with
each other high grade officer have necessary authority to perform duties
effectively, top management takes decisions for snooth cinduct of activity they
provide mesical facilities to their employees both the bank have sufficient staff
customers representation The world has become a global market. The impact of
globalization, privatization and liberalization has totally changed the style of
banking sector in India. Banks are essential instruments of accelerated growth in
a developing economy. Banking system plays a very important role in the
economic life of the nation. The goal of every bank in this modern era should
be the customers satisfactions. It is necessary to examine the extent to which
the banks have moved towards their goal. The present study analyses in detail
the productivity and profitability of Public Sector Banks and Private Sector
Banks comparatively for the period of 5 years (2005-06 to 2009-10).Banking
sector reforms have increased the productivity profitability, and efficiency of
banks. The challenges for banks is how to manage with training margins
while at the same time working to improve productivity which remains low in
relation to global standards. The Indian banking system faces several difficult
challenges. There is a competition between Public Sector Banks and Private
Sector Banks regarding the productivity. Computerization of banking has
received high importance in recent years due to technological advancement that
are taking place in the financial systems world over. Due to market competition
in Indian banking industry, the pattern of banking business is changing
phenomenally. Moreover banks have to provide a world class services to the
42

customer to their door. Due to this type of quality services and facilities, income
is increasing day to day. The global banking industry, one of the most important
and profitable industries of the world economy, has witnessed innumerable
trends. The global banking industry has been undergoing deep transformation.
The changes staring at the face of bankers all relate to the fundamental way of
banking--which is undergoing a rapid transformation in the world of today.
Banks are essential instruments of accelerated growth in a developing economy.
Banking system plays a very important role in the economic life of the nation.
The health of the economy is closely related to the soundness of its banking is
now an essential part of our economic system. Banks have control over a major
part of the supply of money in circulation. It is a fact that in order to judge the
financial maturity, the size of bank assets of the economy plays an active role.
Banking system occupies an important position in an economy. Indian banking
industry, the backbone of the country economy, has always played a key role in
prevention the economic catastrophe from reaching terrible volume in the
country. Banking is really the mirror of economic growth of the country.
The opportunity areas for the Indian banks, if pursued with caution and
confidence, can take us a step ahead in global competitiveness. The
globalization has exposed the global competition. This is a great challenges as
well as an opportunity. Information Technology innovations in the last few years
have changed the landscape of banks in India. Today, IT seems to be the prime
mover of all banking transactions.
43

SUGGESTIONS:
After studying the Productivity and Profitability Analysis concept, undertaking
a preliminary investigation and careful observations as well as on the basis of
the analysis and interpretations of the collected data, the researcher has found
some suggestions emerge for consideration. On the basis of the study the
following suggestions are given to the Public Sector Banks and Private Sector
Banks to improve the profitability and raise their productivity: A comparative
study of public sector banks regard to productivity per employee, in public
sector banks three banks viz, Central Bank of India, Punjab National Bank and
State Bank of India have recorded worst performance. A critical review of the
year-to-year performance of these three banks reveals that they have shown
some improvement in successive
years under study. This in itself indicates
that the banks have certain untapped potential which if properly oriented can
result in a better performance. On the whole the entire group of public sector
banks under review presents a dismal picture in terms of employee
productivity. Similarly when the group of private sector banks is taken for
comparison all the banks have fared well with the sole exception of
Development credit Bank
44

Conclusion
In my report I have tried to show the basic different between the Personal
Loan of BOB & SBI Banks. Both the Banks are good in terms of
customer satisfactions has an edge because it is the leading Government
regulated bank in India. BOB is new to this segment (when compared to
SBI) .SBI is preferred because its a government bank. Procedure of loan
financing is easy in BOB Bank. Family members & increasing standard
of living plays an important role in influencing the decision of taking
home loan.
1. SBI Bank is Leading Bank in the country, it provides a variety of products
and services to different segments of customers.
2. The Bank aims to serve customers from teenagers to senior citizens, hence
different products designed to suit specific requirements of the above.
3. Aims to serve all classes of the society from the salaried middle class to the
high income business class. Customers are categorized and segmented
according to their requirements and needs. For Example , the Saving Regular
and Plus Account aims to serve middle class customers so minimum balance
required to be maintained is RS.5,000/- or RS. 10000. While the Saving Max
Account is targeted at high income customers, the minimum balance
requirement is RS.25,000.
4. SBI Bank provides personal loan at low interest rate which good for
customers.
5. The Bank prides itself with the ability to provide differentiate products in the
crowed market of saving accounts. Bank offers free insurance, special cobranded debit cards which makes its product unique.
45

Bibliography
1. Website of Reserve Bank of India
2. Website of Bank of Baroda

3. BSE/NSE websites
4. Indian institute of Banking and Finance
5. Website of SBI, BOI, CANARA bank.
6. Companies Act.
7. Indian Banks Association website
8. Ministry of Finance website
46

Annexure
Q1) Does your banks have listed its share in stock exchange?
A) Yes B) No
Q2) Does your banks have core banking Facilities for the customer?
A) Yes B) No
Q3) Does your bank conduct any recreation facilities for the customers?
A) Yes B) No
Q4) Does your organization organize any counseling program for the
employees?
A) Yes B) No
Q5) Does the employees share experience to help each other?
A) Yes B) No
Q6) Do you have necessary authority to perform your duties effectively?
A) Yes B) No
Q7) Does the top Management involve employees in Management decision?
A) Yes B) No
Q8) Does the organization provide medical facilities for employees?
A) Yes B) No
Q9) Do you think your bank caters all your banking need?
A) Yes B) No
Q10) Does your branch have sufficient staff customer representation?
A) Yes B) No
47

Banking Final

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Banking Final

Uploaded by

Copyright:

Available Formats

Project on Banking Systems

Project on Banking Systems

1.4 BANKING PRODUCTS

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

5 .Merger & Acquisition

1.9 OBJECTIVES OF FINANCIAL SERVICES

Project on Banking Systems

VARIOUS CHANNELS THROUGH WHICH PRODUCTS & SERVICES

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

2.4 INTERNET BANKING

Project on Banking Systems

With Internet banking, customers can not

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

OLD CREDIT CARDS

NEW CREDIT CARDS

Old types of Credit Cards:

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

1) Public Provident Fund (PPF):

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

Project on Banking Systems

The eight banking subsidiaries are:

Project on Banking Systems

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

Products And Services

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Project on Banking Systems

Safe Deposit Locker