roshan final project
TRANSCRIPT
-
8/3/2019 Roshan Final Project
1/74
Project: Indian Banking System
IMT Enrollment No.: 0621000460 1
Project on
INDIANBANKING SYSTEM
Project Owner:
Roshan Ara
PGDBM 2006-09
Enrollment No.: 0621000460
Indian Institute of
Management Technology
-
8/3/2019 Roshan Final Project
2/74
Project: Indian Banking System
DECLARATION
I hereby, declare that my project work entitled Indian Banking
System, submitted in partial fulfillment to the Department of Business
administration, Institute of Management Technology, Ghaziabad, required for
the award of the Post Graduate Diploma in Business Administration (PGDBA),
has been carried out by my own individual effort.
I also declare that, any or all of the contents incorporated in this work,has not been submitted in any form for the award of any other degree of any
other institution or university.
Roshan Ara
Roll No. 0621000460
IMT Enrollment No.: 0621000460 2
-
8/3/2019 Roshan Final Project
3/74
Project: Indian Banking System
ACKNOWLEDGEMENT
I express my heartiest gratitude to Mr. V.K SHARMA (SENIOR MANAGER-
PNB) for giving me an opportunity to prepare a report on the project
assigned to me. I am also thankful to Mrs. S. SAROJA (DEPUTY MANAGER)
under their guidance I undertook this project, for extending the advice and
direction that is required to carry on a study of this nature, and for helping
me with the intricate details of the project at every step. Without their
support and able guidance, it would have been very difficult to finish this
work in the way I have done it.
However, I accept the sole responsibility of any possible errors of omission.
(Roshan Ara )
IMT Enrollment No.: 0621000460 3
-
8/3/2019 Roshan Final Project
4/74
Project: Indian Banking System
Table of Contents
Titles Page No.
Overview 5
Objectives of this project 6
Scope of study 7
Limitation of the study 8
Research Methodology 9
Scope of Banking Sector 10
Banking in India 11
Definition of Banks 13
Types of Banks 14
Banks, operating in India 15
Services providing by the banks 16
Reserve Bank Of India
- Guidelines Provided by the RBI 29
- Guidelines on Fair Practices Code 38
Study of Punjab National Bank 41
Study of HDFC Bank 50
IMT Enrollment No.: 0621000460 4
-
8/3/2019 Roshan Final Project
5/74
Project: Indian Banking System
Overview
Banking in India originated in the first decade of 18th century with The
General Bank of India coming into existence in 1786. This was followed by
Bank of Hindustan. Both these banks are now defunct. The oldest bank in
existence in India is the State Bank of India being established as "The Bank
of Bengal" in Calcutta in June 1806.
The Reserve Bank of India formally took on the responsibility of regulating
the Indian banking sectorfrom1935. After India's independence 1947, the
Reserve Bank was nationalized and given broader powers.
Currently (2007), banking in India is generally fairly mature in terms of
supply, product range and reach-even though reach in rural India still
remains a challenge for the private sector and foreign banks. In terms of
quality of assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets relative to other banks in
comparable economies in its region. The Reserve Bank of India is anautonomous body, with minimal pressure from the government. The
stated policy of the Bank on the Indian Rupee is to manage volatility but
without any fixed exchange rate-and this has mostly been true.
The Modern Banking Functions are Fund based and Non-Fund based
functions. These functions of a bank are those in which banks extend various
services to their customers or add their commitments to certain transactions
undertaken by their clients and charge their fees/ commissions for the
services rendered by them / their commitments added to the transactions
undertaken by the clients. The activities popularly known as Non-fund
facilities provided by Banks.
IMT Enrollment No.: 0621000460 5
-
8/3/2019 Roshan Final Project
6/74
Project: Indian Banking System
Objectives of this project
To study broad outlines of management of credit, market and
operational risks associated with banking sector.
Understanding the importance of
banking sector and it vital role in the
economy.
In depth knowledge of banking in
Indian Market by studying corporate
and commercial banks with their
challenging facing.
Overview of services being provided by the banks to corporate and
public.
Knowing all the techniques involved and method lies in banking.
IMT Enrollment No.: 0621000460 6
-
8/3/2019 Roshan Final Project
7/74
Project: Indian Banking System
Scope of this study
A healthy banking system is essential for
any economy striving to achieve good
growth and yet remain stable in an
increasingly global business environment.
The Indian banking system, with one of the
largest banking networks in the world, has
witnessed a series of reforms over the past
few years like the deregulation of interest
rates, dilution of the government stake in public sector banks (PSBs), and
the increased participation of private sector banks. The growth of the retail
financial services sector has been a key development on the market front.
Indian banks (both public and private) have not only been keen to tap the
domestic market but also to compete in the global market place.
The corporate sector has stepped up its demand for credit to fund its
expansion plans; there has also been a growth in retail banking.
The report seeks to present a comprehensive picture of the various types of
bank. The banks can be broadly classified into two categories:-
Nationalise Bank
Private Bank
Within each of these broad groups, an attempt has been made to cover as
comprehensively as possible, under the various sub-groups.
IMT Enrollment No.: 0621000460 7
-
8/3/2019 Roshan Final Project
8/74
Project: Indian Banking System
Limitation of the study
Every work has its own limitation. Limitations are extent to which the process
should not exceed. Limitations of this project are:-
1. The project was constrained by time limit of two months.
2. The major limitation of this study shall be data availability as the data
is proprietary and not readily shared for dissemination.
3. Due to the ongoing process of globalization and increasing
competition, no one model or method will suffice over a long period of
time and constant up gradation will be required. As such the project canbe considered as an overview of the various banks prevailing in Punjab
National Bank and in the Banking Industry.
4. Each bank, in conforming to the RBI guidelines, may develop its own
methods for measuring and managing risk.
5.The project study is restricted to banking sector used in India only.
6. The conclusion made is based on a sample study and does not apply toall the Individuals.
7. In India the banks are being segregated in different groups. Each
group has their own benefits and limitations in operating in India.
8.All banks are not included.
IMT Enrollment No.: 0621000460 8
-
8/3/2019 Roshan Final Project
9/74
Project: Indian Banking System
Research Methodology
The first stage included the introduction of Indian Banks and how they work
in India. I choose five criteria Growth, Credit quality, Strength, Profitability,
Efficiency / Profitability. The next stage involved determining the objectives
of the study, drafting a questionnaire will be designed keeping in mind the
target audience and objectives of the study. It will non-disguised in nature
and will include a few open-ended questions.
DATA COLLECTIONS
The data from such organization has also been collected.
Primary data
The primary data will be collected through the questionnaire designed. In the
process of data collection we went to the respective bank to get the
questionnaire filled. The preparation of the project report required me to visit
the various other companies like Punjab National Bank, ICICI bank , State
Bank of India, Central Bank, IDBI bank, HDFC bank etc. in order to collect
data.
Secondary data
The Preparation of the project report also required data from various
journals, newspapers ( like The Economic Times, Times of India etc.) books (
like Working Capital Management written by Sarbesh Mishra and Financial
Service written by M Y Khan etc.)
IMT Enrollment No.: 0621000460 9
-
8/3/2019 Roshan Final Project
10/74
Project: Indian Banking System
Scope of Banking Sector
Banking business has a history of over 200 years. From the times of the
Bank of Bengal (1806) the sector has been witnessing qualitative and
quantitative changes. Main players during the pre-independence period were
Credit Lyonnais, Allahabad Bank, Punjab National Bank and Bank of India.
With 1935 regulation the Reserve Bank of India was proclaimed the Central
Bank of India and was vested with controlling powers over the commercial
banks.
The drastic development taken place during the first 25 years since
independence was Nationalization of many private banks. With this, the
central government became major policy maker for these nationalized banks
With economic liberalization measures many private and foreign banking
companies were allowed to operate in the country. Favorable economic
climate and a variety of other factors such as demand for wide range of
financial products from various sections of the society led to mutually
beneficial growth to the banking sector and economic growth process. This
was coincided by technology development in the banking operations. Today
most of the Indian cities have networked banking facility as well as Internet
banking facility. A customer is empowered to operate his account from any
part of the country. UTI Bank, ICICI, HDFC Bank and Bank of Punjab are the
main winners of the race.
Banking in India
IMT Enrollment No.: 0621000460 10
-
8/3/2019 Roshan Final Project
11/74
Project: Indian Banking System
Banking in India originated in the first decade of 18th century with The
General Bank of India coming into existence in 1786. This was followed by
Bank of Hindustan. Both these banks are now defunct. The oldest bank in
existence in India is the State
Bank of India being established as
"The Bank of Bengal" in Calcutta
in June 1806. A couple of decades
later, foreign banks like Credit
Lyonnais started their Calcutta
operations in the 1850s. At that
point of time, Calcutta was the
most active trading port, mainly
due to the trade of the British
Empire, and due to which banking
activity took roots there and
prospered. The first fully Indian
owned bank was the Allahabad Bank, which was established in 1865.
By the 1900s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, inMumbai - both of which were founded under private ownership. The Reserve
Bank of India formally took on the responsibility of regulating the Indian
banking sector from 1935. After India's independence in 1947, the Reserve
Bank was nationalized and given broader powers.
IMT Enrollment No.: 0621000460 11
http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Credit_Lyonnaishttp://en.wikipedia.org/wiki/Credit_Lyonnaishttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Credit_Lyonnaishttp://en.wikipedia.org/wiki/Credit_Lyonnaishttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_India -
8/3/2019 Roshan Final Project
12/74
Project: Indian Banking System
IMT Enrollment No.: 0621000460 12
Reserve Bank of India
Central Bank and superme monetary
authority
Co-Operative BanksCommercial Banks
Foreign
Banks(40)
Regional
RuralBank
(196)
Urban Co-operatives
(52)
State Co-
operatives(16)
Public Sector Banks (27) Private Sector Bank (30)
Old (22) New (8)
State Bank ofIndia & Associate
Banks (8)
OtherNationalised
Banks (19)
-
8/3/2019 Roshan Final Project
13/74
Project: Indian Banking System
Introduction
Definition of the Bank:-Financial institution whose primary activity is to
act as a payment agent for customers and to borrow and lend money. Banks
are important players of the market and offer services as loans and funds.
Banking was originated in 18th century
First bank were General Bank of India and Bank of Hindustan, now
defunct.
Punjab National Bank and Bank of India was the only private bank in
1906.
Allahabad bank first fully India owned bank in 1865.
IMT Enrollment No.: 0621000460 13
State
Bank ofIndia
Bank ofBomba
y
Bank ofMadras
Bank of
Bengal
Imperia
l Bankof India
-
8/3/2019 Roshan Final Project
14/74
Project: Indian Banking System
Types of banking
1. Commercial banks
Commercial bank is the term used for a normal bank to distinguish it from
an investment bank. (After the great depression, the U.S. Congress required
that banks only engage in banking activities, whereas investment banks
were limited to capital markets activities. This separation is no longer
mandatory.)
Commercial bank can also refer to a bank or a division of a bank that mostly
deals with deposits and loans from corporations or large businesses, as
opposed to normal individual members of the public (retail banking). It is
the most successful department of banking.
2. Community development bank
The regulated banks who provide financial services and credit to
underserved markets or populations.
3. Private banks
Those manage the assets of high net worth individuals.
4. Offshore banks
Offshore banks locate in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
5. Savings banks
Those banks accept saving deposits and pay interest in return.
6. Postal savings banks
IMT Enrollment No.: 0621000460 14
http://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Commercial_bank -
8/3/2019 Roshan Final Project
15/74
Project: Indian Banking System
Such kind of banks is associated with national postal systems.
Banks, operating in India
Below are few names of banks operating in India:
Private sector bank
HDFC, ICICI, Axis bank, IDBI Bank, Yes bank, Kotak Mahindra bank,Bank of Rajasthan
Rural bank
United bank of India, Syndicate bank, National Bank for Agriculture andRuralDevelopment (NABARD)
Commercial bank
State Bank of India, Central Bank, Punjab National Bank, HSBC, ICICI,
HDFC, Canara Bank
Retail bank
Bank of Baroda, Punjab National Bank
Universal bank
Deutsche bank
IMT Enrollment No.: 0621000460 15
-
8/3/2019 Roshan Final Project
16/74
Project: Indian Banking System
Services provided by the bank
Banks provide two types of services:
1. Fund Based
2. Non- Based
IMT Enrollment No.: 0621000460 16
Fund BasedServices
Non-FundBased Services
Banking Services
-
8/3/2019 Roshan Final Project
17/74
Project: Indian Banking System
Fund Based and Non-Fund Based Functions
The difference between fund-based and non-fund based credit assistance
lies mainly in the cash outflow. While the former involves all immediate cash
outflow, the latter may or may not involve cash outflow from a banker. In
other words, a fund based credit facility to a borrower would result in
depletion of actual liquidity of a banker immediately whereas grant of non-
fund based credit facilities to a borrower may or may not affect the bankers
liquidity. This is, of course, not to suggest that there is more risk in fund-
based lending than non-fund based lending, on the contrary, the experience
of bankers, in general, has been that the risk exposure in, non-fund based
credit facilities has been much higher than fund-based facilities. This is
found to be due to lack of proper appraisal on the part of the banker of an
application for non-fund facilities. It is therefore, to be appreciated that
proposals for both the fund-based and non-fund based limits deserve and
call for the same standard of scrutiny and appraisal. In next chapters I shall
be elaborating those services.
IMT Enrollment No.: 0621000460 17
-
8/3/2019 Roshan Final Project
18/74
Project: Indian Banking System
FUND BASED FACILITY
Fund based functions of a bank are those in which banks make deployment
of their funds either by granting advances or by making investments formeeting gaps in funds requirements of their customers/ borrowers. Fund-
based functions of a bank may be classified into two parts:
Granting of Loans and Advances
Making Investments in shares/ debentures/ bonds.
IMT Enrollment No.: 0621000460 18
Fund Based Services
Loans & Advances Leasing & Hire Purchase Investment
Commercial Loans Personal Loans
Capital Market
Investment
Debt MarketInvestment
-
8/3/2019 Roshan Final Project
19/74
Project: Indian Banking System
LOANS AND ADVANCES
1. Commercial Loans Segment
A. Working Capital
Working Capital is Current assets minus current liabilities. Working capital
measures how much in liquid assets a company has available to build its
business. The number can be positive or negative; depending on how much
debt the company is carrying. In general, companies that have a lot of
working capital will be more successful since they can expand and improve
their operations. Companies with negative working capital may lack the
fundsnecessary for growth, also called net current assets or current capital.
This is the loan whose purpose is to finance everyday operation of a
company. A working capital loan is not used to buy long-term assets or
investments. Instead it's used to clear up accounts payable, wages, etc.
I. Cash Credit
This is the facility given by the bankers to the customer by the way of a
certain amount of credit facility. Its limit is fixed on the basis of security of
the company`s current assets.
II. Overdraft
Banks allow selected customers to write cheques in excess of the balance in
their current account, ie, to overdraw. Overdrafts are arranged up to limits
which depend on the customer's credit standing and the bank manager's
humor. The arrangements allow flexibility in the amount spent and, equally,
allow flexibility in repayments (although technically a bank can demand
repayment of an overdraft within 24 hours). In that respect overdrafts are
unlike personal loans, which are structured with regular repayments.
Interest on overdrafts is charged on the fluctuating daily balance.
IMT Enrollment No.: 0621000460 19
http://www.investorwords.com/273/asset.htmlhttp://www.investorwords.com/1254/current_liabilities.htmlhttp://www.investorwords.com/694/capital.htmlhttp://www.businessdictionary.com/definition/measure.htmlhttp://www.businessdictionary.com/definition/liquid-asset.htmlhttp://www.investorwords.com/992/company.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.investorwords.com/1313/debt.htmlhttp://www.investorwords.com/2899/lot.htmlhttp://www.investorwords.com/3467/operation.htmlhttp://www.investorwords.com/2130/funds.htmlhttp://www.businessdictionary.com/definition/necessaries.htmlhttp://www.investorwords.com/2258/growth.htmlhttp://www.investorwords.com/3242/net_current_assets.htmlhttp://www.investorwords.com/1246/current_capital.htmlhttp://www.anz.com/edna/dictionary.asp?action=content&content=bankhttp://www.anz.com/edna/dictionary.asp?action=content&content=chequehttp://www.anz.com/edna/dictionary.asp?action=content&content=current_accounthttp://www.anz.com/edna/dictionary.asp?action=content&content=credithttp://www.anz.com/edna/dictionary.asp?action=content&content=bankhttp://www.anz.com/edna/dictionary.asp?action=content&content=personal_loanhttp://www.anz.com/edna/dictionary.asp?action=content&content=interesthttp://www.investorwords.com/273/asset.htmlhttp://www.investorwords.com/1254/current_liabilities.htmlhttp://www.investorwords.com/694/capital.htmlhttp://www.businessdictionary.com/definition/measure.htmlhttp://www.businessdictionary.com/definition/liquid-asset.htmlhttp://www.investorwords.com/992/company.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.investorwords.com/1313/debt.htmlhttp://www.investorwords.com/2899/lot.htmlhttp://www.investorwords.com/3467/operation.htmlhttp://www.investorwords.com/2130/funds.htmlhttp://www.businessdictionary.com/definition/necessaries.htmlhttp://www.investorwords.com/2258/growth.htmlhttp://www.investorwords.com/3242/net_current_assets.htmlhttp://www.investorwords.com/1246/current_capital.htmlhttp://www.anz.com/edna/dictionary.asp?action=content&content=bankhttp://www.anz.com/edna/dictionary.asp?action=content&content=chequehttp://www.anz.com/edna/dictionary.asp?action=content&content=current_accounthttp://www.anz.com/edna/dictionary.asp?action=content&content=credithttp://www.anz.com/edna/dictionary.asp?action=content&content=bankhttp://www.anz.com/edna/dictionary.asp?action=content&content=personal_loanhttp://www.anz.com/edna/dictionary.asp?action=content&content=interest -
8/3/2019 Roshan Final Project
20/74
Project: Indian Banking System
III. Bills Finance There are three types of credit facilities under Bills
Finance They are.
1. Bills purchase
2. Bill discount
3. Advance against Bills for collection.
1. Bills Purchase: - When the bank negotiates bill payable on demand
when clean or documentary, the facility is known as Bills purchase. The
face value of the bill is immediately paid to the holder of the bill. After
purchasing the bill the bank becomes the holder in due course and value
and acquires all rights of ownership over the instrument.
2. Bills discounting: - When the bank credits value of the bill (less
discount) which is payable on a future date after acceptance by the
drawee it is said to be bill discount. It should be remembered that
demand bill is purchased and time bill is discounted.
3. Advance against Bills for collection: - When the bank advancesagainst the bill send for collection the facility is known as ABC Under this
type of facility, a prescribed margin is kept by the bank.
B. Tem LoansA bank loan to a company, with a fixed maturity and often featuring
amortization ofprincipal. If this loan is in the form of a line of credit, the
funds are drawn down shortly after the agreement is signed. Otherwise, theborrower usually uses the funds from the loan soon after they become
available. Bank term loans are very a common kind oflending.
I. Capital Expenditure
IMT Enrollment No.: 0621000460 20
http://www.investorwords.com/401/bank.htmlhttp://www.investorwords.com/2858/loan.htmlhttp://www.investorwords.com/992/company.htmlhttp://www.investorwords.com/1986/fixed.htmlhttp://www.investorwords.com/3017/maturity.htmlhttp://www.investorwords.com/200/amortization.htmlhttp://www.investorwords.com/3839/principal.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.investorwords.com/2830/line_of_credit.htmlhttp://www.investorwords.com/2130/funds.htmlhttp://www.businessdictionary.com/definition/agreement.htmlhttp://www.investorwords.com/7518/borrower.htmlhttp://www.businessdictionary.com/definition/use.htmlhttp://www.investorwords.com/4948/term_loan.htmlhttp://www.investorwords.com/5909/lending.htmlhttp://www.investorwords.com/401/bank.htmlhttp://www.investorwords.com/2858/loan.htmlhttp://www.investorwords.com/992/company.htmlhttp://www.investorwords.com/1986/fixed.htmlhttp://www.investorwords.com/3017/maturity.htmlhttp://www.investorwords.com/200/amortization.htmlhttp://www.investorwords.com/3839/principal.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.investorwords.com/2830/line_of_credit.htmlhttp://www.investorwords.com/2130/funds.htmlhttp://www.businessdictionary.com/definition/agreement.htmlhttp://www.investorwords.com/7518/borrower.htmlhttp://www.businessdictionary.com/definition/use.htmlhttp://www.investorwords.com/4948/term_loan.htmlhttp://www.investorwords.com/5909/lending.html -
8/3/2019 Roshan Final Project
21/74
Project: Indian Banking System
Money spent to acquire or upgrade physical assets such as buildings and
machinery. Also called capital spending or capitalexpense.
II. Equipment Finance
Equipment finance gives business the equipment, software, and furniture it
needs in order to operate successfully and make a profit. One excellent way
to obtain equipment finance is through a lease. A lease is great for
businesses because it does not tie up cash, receivables, credit cards, or bank
lines. Equipment finance through a lease is appealing to businesses because
they do not need large amounts of collateral in order to get approved. The
other major positive is that with a lease the taxes can be expensed.
III. Project Finance
Financing arrangements where the funds are made available for a specific
purpose (the project), with the loan repayments geared to the project's cash
flow. Project finance is used in connection with raising large amounts of
money for big-ticket, energy-related facilities. The term has come to be
loosely applied to various forms of financing. 'A financing of a particular
economic unit in which a lender is satisfied to look initially to the cash flows
and earnings of that economic unit as the source of funds from which a loan
will be repaid and to the assets of the economic unit as collateral for the
loan.
IMT Enrollment No.: 0621000460 21
http://www.businessdictionary.com/definition/money.htmlhttp://www.investorwords.com/5185/upgrade.htmlhttp://www.investorwords.com/273/asset.htmlhttp://www.businessdictionary.com/definition/building.htmlhttp://www.businessdictionary.com/definition/capital-spending.htmlhttp://www.investorwords.com/694/capital.htmlhttp://www.investorwords.com/1842/expense.htmlhttp://www.anz.com/edna/dictionary.asp?action=content&content=fundshttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=moneyhttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=willhttp://www.anz.com/edna/dictionary.asp?action=content&content=collateralhttp://www.businessdictionary.com/definition/money.htmlhttp://www.investorwords.com/5185/upgrade.htmlhttp://www.investorwords.com/273/asset.htmlhttp://www.businessdictionary.com/definition/building.htmlhttp://www.businessdictionary.com/definition/capital-spending.htmlhttp://www.investorwords.com/694/capital.htmlhttp://www.investorwords.com/1842/expense.htmlhttp://www.anz.com/edna/dictionary.asp?action=content&content=fundshttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=moneyhttp://www.anz.com/edna/dictionary.asp?action=content&content=cashflowhttp://www.anz.com/edna/dictionary.asp?action=content&content=willhttp://www.anz.com/edna/dictionary.asp?action=content&content=collateral -
8/3/2019 Roshan Final Project
22/74
Project: Indian Banking System
2. Personal Loans Segment
Loan granted for personal, family, or household use, as distinguished from a
loan financing a business. Though in some situations the lender may require
a co-signer or guarantor. If unsecured, the loan is made on the basis of the
borrower's integrity and ability to Pay. Generally, these loans are used for
debt consolidation, or to pay for vacations, education expenses, or medical
bills, and are amortized over a fixed term with regular payments of principal
and interest.
I. Consumer Loans Advance against Shares
II. Housing Loans
III. Education Loans.
Non-Fund based services
It is generally perceived that the non-fund based business is very
IMT Enrollment No.: 0621000460 22
http://www.answers.com/topic/ability-to-payhttp://www.answers.com/topic/ability-to-pay -
8/3/2019 Roshan Final Project
23/74
Project: Indian Banking System
remunerative to bank and the borrowers. The banks, besides getting
handsome commission or fee and some other service charges, also get the
low cost deposits in the shape of margin and ancillary business. The funds of
the borrower are not blocked in the advances to be given to the suppliers or
beneficiaries and this keeps his liquidity position comfortable, production
smooth and costs low.
Purpose For Non-Fund Based Facilities
The borrowers need such facilities not only for purchases of current assets
or financing there of or take benefit of certain services with the help of non-
fund based facilities. They also need the facilities for acquisition of fixed
assets including their financing.
FUNDS REMITTANCE/ TRANSFER FACILITIES
Issue of demand draft
IMT Enrollment No.: 0621000460 23
Non-Fund Based
Services
Letter of Credit/Bank Guarantee
Merchant BankingFunctions
Agency FunctionsFunds
remittance/TransferFacilities
-
8/3/2019 Roshan Final Project
24/74
Project: Indian Banking System
Collection of bills and cheques
Letter of credit
Bank guarantee
AGENCY FUNCTIONS
Collecting of B/E, P-notes, cheques & securities
Selling of products of insurance co./ MF
Granting & issuing LC, traveler's cheque
Agent for any govt., local authority, etc
MERCHANT BANKING
Syndication of loans
Venture capital finance
Public issue management
Corporate counseling
Mergers & acquisitions
Portfolio management services
Investment counseling
E-BANKING
Electronic payment system
ATM
Tele-banking
Credit card and debit card
Online banking
MOBILE BANKING
Account services
IMT Enrollment No.: 0621000460 24
-
8/3/2019 Roshan Final Project
25/74
Project: Indian Banking System
Credit card services
DEMAT account
Loan account services
Bill services
Other services
DEPOSIT SCHEMES FOR NRI's
Foreign Currency Nonresident (FCNR-B) Deposits :
Tax Exemption
Choice of Currency Remit in any Currency
Minimum & Maximum Amount
Joint account
Power of Attorney (P/A)
Nomination
Resident Foreign Currency (RFC)
Deposits Returning Indians for permanent settlement, after staying
abroad for not less than one year, can-
Retain their savings in foreign currency in a RFC account.
Get the proceeds of FCNR (B)/NRE Deposits credited to this account.
Non Resident external (NRE)
Deposits can be placed in
Savings Bank A/c
Fixed Deposit A/c
IMT Enrollment No.: 0621000460 25
-
8/3/2019 Roshan Final Project
26/74
Project: Indian Banking System
Non Resident Ordinary (NRO) Deposits
Where an Indian citizen having a resident account leaves India and
becomes non-resident, his resident account should be designated as
NRO account.
Where non-resident Indian receives income in India, he can open a
NRO a/c with such funds.
RBI Norms
Prudential exposure norms as per extant guidelines of Reserve Bank of India
IMT Enrollment No.: 0621000460 26
-
8/3/2019 Roshan Final Project
27/74
Project: Indian Banking System
provides that the maximum exposure of a bank for all its Fund based and
Non-fund based credit facilities, investments, underwriting, investments in
Bonds and commercial paper and any other commitment should not exceed
25 percent of its (bank's) net worth to an individual borrower and 50 percent
of its, net worth to a 'group'. It may however, be rioted that while calculating
exposure, the Non-fund based facilities are to be taken at 50 percent of
the sanctioned limit. To illustrate the point let us consider the following
example:-
Example1.
Particulars Rs. Rs. In
crores
Net worth of the bank
Maximum exposure permitted for an individualborrower (25% of net worth of the bank)Working Capital Control and Banking Policy
Maximum exposure permitted for all borrowers
under the same group (50% of net worth of thebank)
175
350
700
657
Example1.
IMT Enrollment No.: 0621000460 27
-
8/3/2019 Roshan Final Project
28/74
Project: Indian Banking System
Particulars Rs.
Limits sanctioned to borrower
Fund Based
Non-Fund Based 100
Total 200
Total Exposure
For Fund Based limits@ 50% of limits
For Non-Fund based limits 50@ 50% of limits
100
100
200
100
50
Total 150
Total credit limits to the above borrower are Rs.200 crores which are in
excess of the maximum exposure norm of Rs. 175 crores. but for the
purpose of determining exposure we have taken non-fund based limits at 50
percent of its value and total exposure is taken at 150 crores which is well
within the norm.
Reserve Banks of India
The Reserve Bank of India was established on April
IMT Enrollment No.: 0621000460 28
-
8/3/2019 Roshan Final Project
29/74
Project: Indian Banking System
1, 1935 in accordance with the provisions of the Reserve Bank of India
Act, 1934.
The Central Office of the Reserve Bank was initially established in Calcutta
but was permanently moved to Mumbai in 1937. The Central Office is where
the Governor sits and where policies are formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve
Bank is fully owned by the Government of India.
Guidelines on Ownership and Governance in Private Sector
Banks
Banks are "special" as they not only accept and deploy large amount of
uncollateralized public funds in fiduciary capacity, but they also leverage such
funds through credit creation. The banks are also important for smooth
functioning of the payment system. In view of the above, legal prescriptions
for ownership and governance of banks laid down in Banking Regulation Act,
1949 have been supplemented by regulatory prescriptions issued by RBIfrom time to time.
1. The existing legal framework and significant current practices in
particular cover the following aspects:
I. The composition of Board of Directors comprising members with
demonstrable professional and other experience in specific sectors like
agriculture, rural economy, co-operation, SSI, law, etc., approval of Reserve
Bank of India for appointment of CEO as well as terms and conditions
thereof, and powers for removal of managerial personnel, CEO and directors,
etc. in the interest of depositors are governed by various sections of the B.R.
Act, 1949.
IMT Enrollment No.: 0621000460 29
http://www.rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Acthttp://www.rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Acthttp://www.rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Acthttp://www.rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act -
8/3/2019 Roshan Final Project
30/74
Project: Indian Banking System
II. Guidelines on corporate governance covering criteria for appointment of
directors, role and responsibilities of directors and the Board, signing of
declaration and undertaking by directors, etc., were issued by RBI on June
20, 2002 and June 25, 2004, based on the recommendations of Ganguly
Committee and a review by the BFS.
III. Guidelines for acknowledgement of transfer/allotment of shares in
private sector banks were issued in the interest of transparency by RBI on
February 3, 2004.
IV. Foreign investment in the banking sector is governed by Press Note
dated March 5, 2004 issued by the Government of India, Ministry of
Commerce and Industries.
V. The earlier practice of RBI nominating directors on the Boards of all
private sector banks has yielded place to such nomination in select private
sector banks.
2. Against this background, it is considered necessary to lay down a
comprehensive framework of policy of ownership and governance in
the Indian private sector banks with a transparency.
3. The broad principles underlying the framework of policy relating to
ownership and governance of private sector banks would have to
ensure that
(i) The ultimate ownership and control of private sector banks is well
diversified. While diversified ownership minimises the risk of misuse or
imprudent use of leveraged funds, it is no substitute for effective regulation.
Further, the fit and proper criteria, on a continuing basis, has to be the over-
riding consideration in the path of ensuring adequate investments,
appropriate restructuring and consolidation in the banking sector. The pursuit
of the goal of diversified ownership will take account of these basic
IMT Enrollment No.: 0621000460 30
-
8/3/2019 Roshan Final Project
31/74
Project: Indian Banking System
objectives, in a systematic manner and the process will be spread over time
as appropriate.
(ii) Important Shareholders (i.e., shareholding of 5 per cent and above) are
fit and proper, as laid down in the guidelines dated February 3, 2004 on
acknowledgement for allotment and transfer of shares.
(iii) The directors and the CEO who manage the affairs of the bank are fit
and proper as indicated in circular dated June 25, 2004 and observe sound
corporate governance principles.
(iv) Private sector banks have minimum capital/net worth for optimal
operations and systemic stability.
(v) The policy and the processes are transparent and fair.
4. Minimum capital
The capital requirement of existing private sector banks should be on par
with the entry capital requirement for new private sector banks prescribed in
RBI guidelines of January 3, 2001, which is initially Rs.200 crore, with a
commitment to increase to Rs.300 crore within three years. In order to meet
with this requirement, all banks in private sector should have a net worth of
Rs.300 crore at all times. The banks which are yet to achieve the required
level of net worth will have to submit a time-bound programme for capital
augmentation to RBI. Where the net worth declines to a level below Rs.300
crore, it should be restored to Rs. 300 crore within a reasonable time.
5. Shareholding
I. The RBI guidelines on acknowledgement for acquisition or transfer of
shares issued on February 3, 2004 will be applicable for any acquisition of
IMT Enrollment No.: 0621000460 31
-
8/3/2019 Roshan Final Project
32/74
Project: Indian Banking System
shares of 5 per cent and above of the paid up capital of the private sector
bank.
II. In the interest of diversified ownership of banks, the objective will be to
ensure that no single entity or group of related entities has shareholding or
control, directly or indirectly, in any bank in excess of 10 per cent of the paid
up capital of the private sector bank. Any higher level of acquisition will be
with the prior approval of RBI and in accordance with the guidelines of
February 3, 2004 for grant of acknowledgement for acquisition of shares.
III. Where ownership is that of a corporate entity, the objective will be to
ensure that no single individual/entity has ownership and control in excess of
10 per cent of that entity. Where the ownership is that of a financial entity
the objective will be to ensure that it is a well established regulated entity,
widely held, publicly listed and enjoys good standing in the financial
community.
IV. Banks (including foreign banks having branch presence in India)/FIs
should not acquire any fresh stake in a banks equity shares, if by such
acquisition, the investing banks/FIs holding exceeds 5 per cent of the
investee banks equity capital as indicated in RBI circular dated July 6, 2004.
V. As per existing policy, large industrial houses will be allowed to acquire,
by way of strategic investment, shares not exceeding 10 per cent of the paid
up capital of the bank subject to RBIs prior approval. Furthermore, such a
limitation will also be considered if appropriate, in regard to important
shareholders with other commercial affiliations.
VI. In case of restructuring of problem/weak banks or in the interest ofconsolidation in the banking sector, RBI may permit a higher level of
shareholding, including by a bank.
6. Directors and Corporate Governance
IMT Enrollment No.: 0621000460 32
-
8/3/2019 Roshan Final Project
33/74
Project: Indian Banking System
I. The recommendations of the Ganguly Committee on corporate governance
in banks have highlighted the role envisaged for the Board of Directors. The
Board of Directors should ensure that the responsibilities of directors are well
defined and the banks should arrange need-based training for the directors in
this regard. While the respective entities should perform the roles envisaged
for them, private sector banks will be required to ensure that the directors on
their Boards representing specific sectors as provided under the B.R. Act, are
indeed representatives of those sectors in a demonstrable fashion, they fulfil
the criteria under corporate governance norms provided by the Ganguly
Committee and they also fulfil the criteria applicable for determining fit and
proper status of Important Shareholders (i.e., shareholding of 5 per cent and
above) as laid down in RBI Circular dated June 25, 2004.
II. As a matter of desirable practice, not more than one member of a family
or a close relative (as defined under Section 6 of the Companies Act, 1956)
or an associate (partner, employee, director, etc.) should be on the Board of
a bank.
III. Guidelines have been provided in respect of 'Fit and Proper' criteria for
directors of banks by RBI circular dated June 25, 2004 in accordance with the
recommendations of the Ganguly Committee on Corporate Governance. For
this purpose a declaration and undertaking is required to be obtained from
the proposed / existing directors
IV. Being a Director, the CEO should satisfy the requirements of the fit and
proper criteria applicable for directors. In addition, RBI may apply any
additional requirements for the Chairman and CEO. The banks will be
required to provide all information that may be required while making an
application to RBI for approval of appointment of Chairman/CEO.
7. Foreign investment in private sector banks
In terms of the Government of India press note the aggregate foreign
IMT Enrollment No.: 0621000460 33
-
8/3/2019 Roshan Final Project
34/74
Project: Indian Banking System
investment in private banks from all sources (FDI, FII, NRI) cannot exceed
74 per cent. At all times, at least 26 per cent of the paid up capital of the
private sector banks will have to be held by resident Indians.
7.1 Foreign Direct Investment (FDI) (other than by foreign banks or
foreign bank group)
i. The policy already articulated in guidelines for determining fit and proper
status of shareholding of 5 per cent and above will be equally applicable for
FDI. Hence any FDI in private banks where shareholding reaches and
exceeds 5 per cent either individually or as a group will have to comply with
the criteria indicated in the aforesaid guidelines and get RBI
acknowledgement for transfer of shares.
ii. To enable assessment of fit and proper the information on
ownership/beneficial ownership as well as other relevant aspects will be
extensive.
7.2 Foreign Institutional Investors (FIIs)
i. Currently there is a limit of 10 per cent for individual FII investment with
the aggregate limit for all FIIs restricted to 24 per cent which can be raised
to 49 per cent with the approval of Board/General Body. This dispensation
will continue.
ii. The present policy requires RBIs acknowledgement for
acquisition/transfer of shares of 5 per cent and more of a private sector bank
by FIIs based upon the policy guidelines on acknowledgement of
acquisition/transfer of shares issued. For this purpose RBI may seek
certification from the concerned FII of all beneficial interest.
7.3 Non-Resident Indians (NRIs)
Currently there is a limit of 5 per cent for individual NRI portfolio investment
IMT Enrollment No.: 0621000460 34
-
8/3/2019 Roshan Final Project
35/74
Project: Indian Banking System
with the aggregate limit for all NRIs restricted to 10 per cent which can be
raised to 24 per cent with the approval of Board/General Body. Further, the
policy guidelines on acknowledgement for acquisition/transfer will be applied.
8. Due diligence process
The process of due diligence in all cases of shareholders and directors as
above, will involve reference to the relevant regulator, revenue authorities,
investigation agencies and independent credit reference agencies as
considered appropriate.
9. Transition arrangements
I. The current minimum capital requirements for entry of new banks is
Rs.200 crore to be increased to Rs.300 crore within three years of
commencement of business. A few private sector banks which have been in
existence before these capital requirements were prescribed have less than
Rs.200 crore net worth. In the interest of having sufficient minimum size for
financial stability, all the existing private banks should also be able to fulfil
the minimum net worth requirement of Rs.300 crore required for a new
entry. Hence any bank with net worth below this level will be required tosubmit a time bound programme for capital augmentation to RBI for
approval.
II. Where any existing shareholding of any individual entity/group of entities
is 5 per cent and above, due diligence outlined in the guidelines will be
undertaken to ensure fulfillment of fit and proper criteria.
III. Where any existing shareholding by any individual entity/group of
related entities is in excess of 10 per cent, the bank will be required to
indicate a time table for reduction of holding to the permissible level. While
considering such cases, RBI will also take into account the terms and
conditions of the banking licenses.
IMT Enrollment No.: 0621000460 35
-
8/3/2019 Roshan Final Project
36/74
Project: Indian Banking System
IV. Any bank having shareholding in excess of 5 per cent in any other bank
in India will be required to indicate a time bound plan for reduction in such
investments to the permissible limit. The parent of any foreign bank having
presence in India, having shareholding directly or indirectly through any
other entity in the banking group in excess of 5 per cent in any other bank in
India will be similarly required to indicate a time bound plan for reduction of
such holding to 5 per cent.
V. Banks will be required to undertake due diligence before appointment of
directors and Chairman/CEO on the basis of criteria that will be separately
indicated and provide all the necessary certifications/information to RBI.
VI. Banks having more than one member of a family, or close relatives or
associates on the Board will be required to ensure compliance with these
requirements at the time of considering any induction or renewal of terms of
such directors.
VII. Action plans submitted by private sector banks outlining the milestones
for compliance with the various requirements for ownership and governance
will be examined by RBI for consideration and approval.
10. Continuous monitoring arrangements
i. Where RBI acknowledgement has already been obtained for transfer of
shares of 5 per cent and above, it will be the banks responsibility to ensure
continuing compliance of the fit and proper criteria and provide an annual
IMT Enrollment No.: 0621000460 36
-
8/3/2019 Roshan Final Project
37/74
Project: Indian Banking System
certificate to the RBI of having undertaken such continuing due diligence.
ii. Similar continuing due diligence on compliance with the fit and proper
criteria for directors/CEO of the bank will have to be undertaken by the bank
and certified to RBI annually.
iii. RBI may, when considered necessary, undertake independent verification
of fit and proper test conducted by banks through a process of due diligence
as described in paragraph 8
11. On the basis of such continuous monitoring, RBI will consider
appropriate measures to enforce compliance.
Guidelines on Fair Practices Code
Loan application forms shall be comprehensive to include information
about rate of interest (fixed/floating) and manner of charging
(monthly/quarterly/half yearly/ rest), process fees and other charges,
IMT Enrollment No.: 0621000460 37
-
8/3/2019 Roshan Final Project
38/74
Project: Indian Banking System
penal interest rates, pre-payment options and any other matter which
affects the interest of the borrower, so that a meaningful comparison with
that of other banks can be made and informed decision can be taken by
the borrower.
Banks and Financial Institution should devise a system of giving
acknowledgement for receipt of all loans application. Banks/ Financial
Institutions should verify the loan application within a reasonable period
of time. If additional details / documents are required, they should
intimate the borrowers immediately. If all the requirements are complied
with the borrowers, banks/ Financial Institution should acknowledge for
the same and state the specific time period from the date of
acknowledgement within which a decision on the specific loan request will
be conveyed to the borrowers.
Acknowledgement should also state the amount of process fees paid or to
be paid and the extent to which such fees shall be refunded in the event
of rejection of any application for loan.
In the case of rejection of any loan application, lenders should convey in
writing the specific reasons thereof.
Terms and conditions and other caveats governing credit facilities given
by banks / Financial Institution arrived at after negotiation by the lending
institution and the borrower should be reduced in writing duly witnessed
and certified by the authorised sanctioning authority; in respect of
IMT Enrollment No.: 0621000460 38
-
8/3/2019 Roshan Final Project
39/74
Project: Indian Banking System
advances sanctioned by the Board of Directors or its committee the
documents of understanding should be certified by the authorised
signatory preferably at company secretary level. A copy of such
agreement should be made available to the borrowers for their record.
Lenders should ensure that there is proper assessment of credit
requirement of borrowers. The credit limit, which may be sanctioned,
should be mutually settled.
Lenders should ensure timely disbursement of loans sanctioned.
Stipulation of margin and security should be based on due diligence and
credit worthiness of borrowers.
Lenders should keep the borrowers apprised of the state of their accounts
from time to time and shall give notice of any change in the terms and
conditions including interest rates and charges are effected only
prospectively. To ensure the above, Banks / Financial Institution should
create appropriate information dissemination mechanism.
The loan agreement should clearly specify the liability of lenders to
borrowers in regard to allowing drawings beyond the sanctioned limits,
honouring the cheques issued for the purpose other than agreed,
disallowing large cash withdrawals and obligation to meet further
IMT Enrollment No.: 0621000460 39
-
8/3/2019 Roshan Final Project
40/74
Project: Indian Banking System
requirements of the borrowers on account of growth in business etc.
without proper revision and sanction in credit limits, and disallowing
drawings on a borrower account on its classification as a non-performing
assets or on account of non-compliance with the terms of sanction.
Lenders should give reasonable notice to borrowers before taking decision
to recall / accelerate payment or performance under the agreement or
seeking additional securities.
Lenders should release all securities on receiving payment of loan or
realisation of loan subject to any legitimate right of lien for any other
claim lenders may have against borrowers. If such right of set off is to be
exercised, borrowers shall be given notice about the same with full
particulars about the remaining claims and the documents under which
lenders are entitled to retain the securities till the relevant claims are
settled / paid.
PUNJAB NATIONAL BANK
IMT Enrollment No.: 0621000460 40
-
8/3/2019 Roshan Final Project
41/74
Project: Indian Banking System
Registered Office: - 7, Bhikhaiji Cama Place, New Delhi-110 066
Website: - www.pnbindia.com
ORIGIN
Punjab national bank was established in 1895 at Lahore, undivided India,
Punjab National Bank (PNB) has the distinction of being the first Indian bank
to have been started solely with Indian capital. The bank was nationalized in
July 1969 along with 13 other banks. From its modest beginning, the bank
has grown in size and stature to become a front-line banking institution in
India at present.
PROFILE
With its presence virtually in all the important centers of the country, Punjab
National Bank offers a wide variety of banking services which include
corporate and personal banking, industrial finance, agricultural finance,
financing of trade and international banking. Among the clients of the Bank
are Indian conglomerates, medium and small industrial units, exporters, non-
resident Indians and multinational companies. The large presence and vast
resource base have helped the Bank to build strong links with trade and
industry.
Punjab National Bank is serving over 3.5 crore customers through 4540
Offices including 421 extension counters - largest amongst Nationalized
Banks.
Punjab National Bank with 112 year tradition of sound and prudent
banking is one among 300 global companies and seven Indian companies
which are expected to emerge as challengers to Worlds leading blue chip
companies. While among top 1000 world banks, The Banker, the leading
magazine in London, has placed PNB at the 248th position, the bank features
at 1308th position among Forbes Global 2000 list of global giants and fast
growing companies.
IMT Enrollment No.: 0621000460 41
http://www.pnbindia.com/http://www.pnbindia.com/ -
8/3/2019 Roshan Final Project
42/74
Project: Indian Banking System
At the same time, the bank has been conscious of its social
responsibilities by financing agriculture and allied activities and small scale
industries (SSI). Considering the importance of small scale industries bank
has established 31 specialised branches to finance exclusively such
industries.
Strong correspondent banking relationship which Punjab National Bank
maintains with over 200 leading international banks all over the world
enhances its capabilities to handle transactions world-wide. Besides, bank
has Rupee Drawing Arrangements with 15 exchange companies in the Gulf
and one in Singapore. Bank is a member of the SWIFT and over 150
branches of the bank are connected through its computer-based terminal at
Mumbai. With its state-of-art dealing rooms and well-trained dealers, the
bank offers efficient forex dealing operations in India.
The bank has been focusing on expanding its operations outside India
and has identified some of the emerging economies which offer large
business potential. Bank has set up representative offices at Almaty:
Kazakhistan, Shanghai: China and in London. Besides, Bank has opened a
fully fledged Branch in Kabul, Afghanistan.
Keeping in tune with changing times and to provide its customers more
efficient and speedy service, the Bank has taken major initiative in the field
of computerization. All the Branches of the Bank have been computerized.
The Bank has also launched aggressively the concept of "Any Time, Any
Where Banking" through the introduction of Centralized Banking Solution
(CBS) and over 2409 offices have already been brought under its ambit.
PNB also offers Internet Banking services in the country for Corporates
as well as individuals. Internet Banking services are available through all
Branches of the Bank networked under CBS. Providing 24 hours, 365 days
banking right from the PC of the user, Internet Banking offers world class
banking facilities like anytime, anywhere access to account, complete details
IMT Enrollment No.: 0621000460 42
-
8/3/2019 Roshan Final Project
43/74
Project: Indian Banking System
of transactions, and statement of account, online information of deposits,
loans overdraft account etc. PNB has recently introduced Online Payment
Facility for railway reservation through IRCTC Payment Gateway Project and
Online Utility Bill Payment Services which allows Internet Banking account
holders to pay their telephone, mobile, electricity, insurance and other bills
anytime from anywhere from their desktop.
Another step taken by PNB in meeting the changing aspirations of its
clientele is the launch of its Debit card, which is also an ATM card. It enables
the card holder to buy goods and services at over 99270 merchant
establishments across the country. Besides, the card can be used to
withdraw cash at more than 25000 ATMs, where the 'Maestro' logo is
displayed, apart from the PNB's over 1094 ATMs and tie up arrangements
with other Banks.
VISION AND MISSION
VISION
To evolve and position the Bank as a world class progressive cost effective
and customer friendly institution providing comprehensive financial and
related services; integrating frontiers of technology and serving various
segments of society especially the weaker section; committed to excellence
in serving the public and also excellence in serving the public and also
excelling in corporate values.
MISSION
To provide excellent professional services and improve its position as a
IMT Enrollment No.: 0621000460 43
-
8/3/2019 Roshan Final Project
44/74
Project: Indian Banking System
leader in the field of financial and related services; build and maintain a team
of motivated and committed workforce with high work ethos; use latest
technology aimed at customer satisfaction and act as an effective catalyst for
socio-economic development
AWARDS & ACHIEVEMENTS OF PUNJAB NATIONAL
BANK
"Best IT Team of the Year Award" One of India's "Most Innovative
Companies".
Best IT User in Banking & Financial
Services Industry - 2004
by NASSCOM in partnership with Economic
Times
Golden Peacock Award for Excellence in Corporate Governance - 2005
by Institute of Directors
National Award for Excellence in SSI
Lending
Ranked 2nd for 4 consecutive years - 2002,
2003, 2004 & 2005
Money Outlook Award 2004 Runner up in 'Best Bank (public Sector) of the
year Award' -2005
THE DIRECORS OF PUNJAB NATIONAL BANK
BOARD FO DIRECTORS
Dr K.C. Chakrabarthy Chairman & Managing Director
Shri K.Raghuraman Executive Director
Shri .J.M.Gerg Exective Director
DIRECTOR
Shri .Ravneet Kaur Govt. of India Nominee Director
Shri .L.M.Fonseca Reserve bank of India Nominee Director
Shri .S.R.Khurana Director Rep.C.A.catagory
Shri P.K.Nayar Officer Employee Director
Shri.Mohan Lal Workmen Employee director Dr.Harsh Mahajan Share holder Director
Shri.Prakash Agrawal Shareholder Director
Shri Gautam P.Khandelwal Part-time non-official Director
Shri Mushtaq A Antulay Part-time non-official Director
IMT Enrollment No.: 0621000460 44
-
8/3/2019 Roshan Final Project
45/74
Project: Indian Banking System
PNB`S KEY COMMITMENTS
We promise to:
1) Act fairly and reasonably in all our dealings with you by:
meeting the commitments and standards in this Code, for the products and
services we offer, and in the procedures and practices our staff follow
making sure our products and services meet relevant laws and regulations
our dealings with you will rest on ethical principles of integrity and
transparency.
2) Help you to understand how our financial products and services work by:
giving you information about them in plain Hindi and/or English and/or the
local language
explaining their financial implications and
helping you chooses the one that meets your needs.
3) Dealquickly and sympathetically with things that go wrong by:
correcting mistakes quickly
handling your complaints quickly
telling you how to take your complaint forward if you are still not satisfiedand
reversing any bank charges that we apply due to our mistake.
4) Publicise this Code, put it on our website and have copies available
for you on request.
SWOT ANALYSIS
STRENGTHS:
Strong growth in business
Good branch network
Highest CASA among PSU
IMT Enrollment No.: 0621000460 45
-
8/3/2019 Roshan Final Project
46/74
Project: Indian Banking System
Highest NIMs compared to peers
Fine growth in fee income last year
De-risked investment portfolio
Adequate Capital
Proactive on technology front.
WEAKNESS:
Higher Delinquencies
Higher provisions deterring growth in net profits
No development on insurance venture
Slower growth on international front
Slow-down in treasury profits
Its subsidiaries PNB Housing Finance & PNB Gilts are not impressive
OPPORTUNITIES:
Expansion on international front
Ample opportunity to expand business, as the economy is doing well.
Growth in Insurance and Mutual Fund business
THREATS:
Entry of foreign banks
Sharp rise in interest rates can hamper economic growth
Regulatory amendments
Implementation of Basel II requires higher capital
Downturn in Agriculture growth
PRODUCTS AND SERVICES:
PRODUCTS:
Personal banking
Corporate banking
Home loans
About loan
ATM/DEBIT cards
IMT Enrollment No.: 0621000460 46
-
8/3/2019 Roshan Final Project
47/74
Project: Indian Banking System
Deposit interest rates
SERVICES
Locker facilities
Depository services
Senior citizen scheme
RTGS/NEFT/SFMS:PNB
Merchant banking
Online tax accounting system
Electronic fund transfer
Electronic clearing service
Offshore banking
12 hours banking
Financial Results of Punjab National Bank
BALANCE SHEET
(Rs. in 000)
As on 31.03.2008 As on 31.03.2007Capital & Liabilities
Capital 3153025 3153025Reserves & Surplus 120030439 101201574Deposits 1664572260 1398596711Borrowings 54465596 19488566Other Liabilities and
Provisions
147982286 101785089
IMT Enrollment No.: 0621000460 47
-
8/3/2019 Roshan Final Project
48/74
Project: Indian Banking System
Total 1990203606 1624224965
Assets
Cash & Balances with
Reserve Bank of India
152581517 123720292
Balances with Banks &
Money at call & short
notice
35725721 32734896
Investments 539917050 451898360Advances 1195015662 965965186Fixed Assets 23155219 10098255Other Assets 43808437 39807976Total 1990203606 1624224965
Profit & Loss Account
(Rs. in 000)
Year ended 31.03.2008 Year ended 31.03.2007
Income
Interest earned 142650176 112361434
Other Income 19975606 17303995
Total 162625782 129665429
Expenditure
Interest expended 87308619 60229067
Operating expenses 35254771 33262310
Provisions & Contingencies 19574761 20773210
Total 142138151 114264587
PROFIT - Net Profit for
the period
20487631 15400842
Add: Balance in Profit &
Loss A/c
155173 1834883
Profit Available for 20642804 17235725
IMT Enrollment No.: 0621000460 48
-
8/3/2019 Roshan Final Project
49/74
Project: Indian Banking System
Appropriation
HDFC BANK
Registered office: - HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400
013, Maharashtra
Website: www.hdfcbank.com
ORGANIZATION PROFILE
FORMATION OF THE COMPANY
The Housing Development Finance Corporation Limited (HDFC) was amongst
the first to receive an 'in principle' approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of the RBI's
liberalization of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a
IMT Enrollment No.: 0621000460 49
http://www.hdfcbank.com/http://www.hdfcbank.com/ -
8/3/2019 Roshan Final Project
50/74
Project: Indian Banking System
Scheduled Commercial Bank in January 1995.
PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable
track record in India as well as in international markets. Since its inception
in 1977, the Corporation has maintained a consistent and healthy growth in
its operations to remain the market leader in mortgages. Its outstanding
loan portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments
and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong market
reputation, large shareholder base and unique consumer franchise, HDFC
was ideally positioned to promote a bank in the Indian environment.
BUSINESS FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale
customer segments, and to achieve healthy growth in profitability,
consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance. HDFC Bank's business philosophy is
based on four core values Operational Excellence, Customer Focus,
Product Leadership and People.
CAPITAL STRUCTURE
The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The
paid-up capital is Rs424.6 crore (Rs.4.2 billion). The HDFC Group holds
19.4% of the bank's equity and about 17.6% of the equity is held by the
ADS Depository (in respect of the bank's American Depository Shares (ADS)
Issue). Roughly 28% of the equity is held by Foreign Institutional Investors
IMT Enrollment No.: 0621000460 50
-
8/3/2019 Roshan Final Project
51/74
Project: Indian Banking System
(FIIs) and the bank has about 570,000 shareholders. The shares are listed
on the Stock Exchange, Mumbai and the National Stock Exchange. The
bank's American Depository Shares are listed on the New York Stock
Exchange (NYSE) under the symbol 'HDB'.
TIMES BANK AMALGAMATION
In a milestone transaction in the Indian banking industry, Times Bank
Limited (another new private sector bank promoted by Bennett, Coleman &
Co./Times Group) was merged with HDFC Bank Ltd., effective February 26,
2000. As per the scheme of amalgamation approved by the shareholders of
both banks and the Reserve Bank of India, shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The
acquisition added significant value to HDFC Bank in terms of increased
branch network, expanded geographic reach, enhanced customer base,
skilled manpower and the opportunity to cross-sell and leverage alternative
delivery channels.
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an
enviable network of over 1229 branches spread over 444 cities across India.
All branches are linked on an online real-time basis. Customers in over 120
locations are also serviced through Telephone Banking. The Bank's
expansion plans take into account the need to have a presence in all major
industrial and commercial centers where its corporate customers are located
as well as the need to build a strong retail customer base for both deposits
and loan products. Being a clearing/settlement bank to various leading stock
exchanges, the Bank has branches in the centers where the NSE/BSE has a
strong and active member base. The Bank also has a network of about over
2526 networked ATMs across these cities. Moreover, HDFC Bank's ATM
network can be accessed by all domestic and international Visa/MasterCard,
Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge
IMT Enrollment No.: 0621000460 51
-
8/3/2019 Roshan Final Project
52/74
Project: Indian Banking System
cardholders.
TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of
information technology and communication systems. All the bank's branches
have online connectivity, which enables the bank to offer speedy funds
transfer facilities to its customers. Multi-branch access is also provided to
retail customers through the branch network and Automated Teller Machines
(ATMs). The Bank has made substantial efforts and investments in acquiring
the best technology available internationally, to build the infrastructure for a
world class bank. The Bank's business is supported by scalable and robust
systems which ensure that our clients always get the finest services we offer.
The Bank has prioritized its engagement in technology and the internet as
one of its key goals and has already made significant progress in web-
enabling its core businesses. In each of its businesses, the Bank has
succeeded in leveraging its market position, expertise and technology to
create a competitive advantage and build market share.
BUSINESS FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale
customer segments, and to achieve healthy growth in profitability,
consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance. HDFC Bank's business philosophy is
based on four core values- Operational Excellence, Customer Focus, Product
Leadership and People.
PRODUCT SCOPE
IMT Enrollment No.: 0621000460 52
-
8/3/2019 Roshan Final Project
53/74
Project: Indian Banking System
HDFC Bank offers a bunch of products and services to meet the every need
of the people. The company cares for both, individuals as well as corporate
and small and medium enterprises. For individuals, the company has a
range accounts, investment, and pension scheme, different types of loans
and cards that assist the customers. The customers can choose the suitable
one from a range of products which will suit their life-stage and needs. For
organizations the company has a host of customized solutions that range
from Funded services, Non-funded services, and value addition services,
Mutual fund etc. These affordable plans apart from providing long term
value to the employees help in enhancing goodwill of the company. The
products of the company are categorized into various sections which are as
follows:
Accounts and deposits.
Loans.
Investments and Insurance.
Forex and payment services.
Cards.
Customer center.
BUSINESS STRETEGY
HDFC BANK mission is to be "a World Class Indian Bank",
benchmarking themselves against international standards and best
practices in terms of product offerings, technology, service levels,
risk management and audit & compliance. The objective is to build
sound customer franchises across distinct businesses so as to be a
preferred provider of banking services for target retail and wholesale
customer segments, and to achieve a healthy growth in profitability,
IMT Enrollment No.: 0621000460 53
-
8/3/2019 Roshan Final Project
54/74
Project: Indian Banking System
consistent with the Bank's risk appetite. Bank is committed to do this
while ensuring the highest levels of ethical standards, professional
integrity, corporate governance and regulatory compliance. Continue
to develop new product and technology is the main business strategy
of the bank. Maintain good relation with the customers is the main
and prime objective of the bank
HDFC BANK business strategy emphasizes the following :
Increase market share in Indias expanding banking and
financial services industry by following a disciplined growth
strategy focusing on quality and not on quantity and delivering
high quality customer service.
Leverage our technology platform and open scaleable systems
to deliver more products to more customers and to control
operating costs.
Maintain current high standards for asset quality through
disciplined credit risk management.
Develop innovative products and services that attract the
targeted customers and address inefficiencies in the Indian
financial sector.
Continue to develop products and services that reduce banks
cost of funds.
IMT Enrollment No.: 0621000460 54
-
8/3/2019 Roshan Final Project
55/74
Project: Indian Banking System
Focus on high earnings growth with low volatility.
Rupee Earned- Rupee Spent
It is more important for every organization to know about from where
and where to spent money. And balanced between these two things
rupee earned and rupee spent are required for smooth running of
business and financial soundness. This type of watch can control
and eliminate the unnecessary spending of business. In this diagram
it include both things from where Bank earned Rupee and where to spent.
IMT Enrollment No.: 0621000460 55
-
8/3/2019 Roshan Final Project
56/74
Project: Indian Banking System
HDFC BANK earned from the Interest from Advances 51.14 % ,
Interest from Investment 27.12 %, bank earned commission
exchange and brokerage of 15.25 %. These are the major earning
sources of the bank. Bank also earned from the Forex and
Derivatives and some other Interest Income.
Bank spent 39.75 % on Interest Expense, 30.27 % on Operating
Expense and 14.58 % on Provision. Bank also spent Dividend and
Tax on dividend, Loss on Investment , Tax.
As we discuss above that balancing is must between these two for
every organization especially in the era of globalization where there
are stiff competition among various market players.
IMT Enrollment No.: 0621000460 56
-
8/3/2019 Roshan Final Project
57/74
Project: Indian Banking System
The Reserve Bank of India has approved the scheme of
amalgamation ofCenturion Bank of Punjab Ltd. with HDFC Bank
Ltd. with effect from May 23, 2008.
All the branches of Centurion Bank of Punjab will function as
branches of HDFC Bank with effect from May 23, 2008. With RBIs
approval, all requisite statutory and regulatory approvals for the
merger have been obtained.
The combined entity would have a nationwide network of 1167
branches; a strong deposit base of around Rs.1,22,000 crores and
net advances of around Rs.89,000 crores. The balance sheet size of
the combined entity would be over Rs.1,63,000 crores.
STRENGTH
Right strategy for the right
products.
WEAKNESSES
Some gaps in range for certain
IMT Enrollment No.: 0621000460 57
-
8/3/2019 Roshan Final Project
58/74
Project: Indian Banking System
Superior customer service
vs. competitors.
Great Brand Image
Products have required
accreditations.
High degree of customer
satisfaction.
Good place to work
Lower response time with
efficient and effective
service.
Dedicated workforce aimingat making a long-term career inthe field.
sectors.
Customer service staff need
training.
Processes and systems, etc
Management cover insufficient.
Sectoral growth isconstrained by lowunemployment levels andcompetition for staff
IMT Enrollment No.: 0621000460 58
-
8/3/2019 Roshan Final Project
59/74
Project: Indian Banking System
Opportunities
Profit margins will be good.
Could extend to overseas
broadly.
New specialist applications.
Could seek better customer
deals.
Fast-track career development
opportunities on an industry-
wide basis.
An applied research centre tocreate opportunities fordeveloping techniques toprovide added-value services.
Threats
Legislation could impact.
Great risk involved
Very high competition
prevailing in the industry.
Vulnerable to reactive
attack by major competitors
Lack of infrastructure in rural
areas could constrain
investment.
High volume/low cost marketis intensely competitive.
IMT Enrollment No.: 0621000460 59
-
8/3/2019 Roshan Final Project
60/74
Project: Indian Banking System
PRODUCTS AND SERVICES AT A GLANCE
1. PERSONAL BANKING
A. Accounts & Deposits
Regular Savings Account
Savings Plus Account
Savings Max Account
Senior Citizens Account
No Frills Account
Institutional Savings Account
Payroll Salary Account
Classic Salary Account
Regular Salary Account
Premium Salary Account
Defense Salary Account
Kid's Advantage Account
Pension Saving Bank Account
Family Savings Account
Kisan No Frills Savings Account
Kisan Club Savings Account
Plus Current Account
Trade Current Account
Premium Current Account
Regular Current Account
Apex Current Account Max Current Account
Reimbursement Current Account
RFC - Domestic Account
Regular Fixed Deposit
IMT Enrollment No.: 0621000460 60
-
8/3/2019 Roshan Final Project
61/74
Project: Indian Banking System
Super Saver Account
Sweep-in Account
HDFC Bank Preferred
Private Banking
B. Loans
- Personal Loans
- Home Loans
- Two Wheeler Loans
- New Car Loans
- Used Car Loans
- Overdraft against Car - Express Loans
- Loan against Securities
- Loan against Property
- Commercial Vehicle Finance
- Working Capital Finance
- Construction Equipment Finance
- Offers & Deals
- Customer Center
C. Investments & Insurance
- Mutual Funds
- Insurance
- Bonds
- Financial Planning
- Knowledge Centre - Equities & Derivatives
- Mudra Gold Bar
IMT Enrollment No.: 0621000460 61
-
8/3/2019 Roshan Final Project
62/74
Project: Indian Banking System
D. Forex Services
- Trade Finance
- Travelers Cheques
- Foreign Currency Cash
- Foreign Currency Drafts
- Foreign Currency Cheque Deposits
- Foreign Currency Remittances
- Cash To Master
- Forex Plus Card
E. Payment Services
- Net Safe
- Prepaid Refill
- Bill Pay
- Direct Pay
- Visa Money Transfer
- E-Monies Electronic Funds Transfer
- Excise & Service Tax Payment
F. Access Your Bank
- One View
- Insta Alerts
- Mobile Banking
- ATM
- Phone Banking - Branch Network
IMT Enrollment No.: 0621000460 62
-
8/3/2019 Roshan Final Project
63/74
Project: Indian Banking System
G. Cards
- Silver Credit Card
- Gold Credit Card
- Woman's Gold Credit Card
- Platinum plus Credit Card
- Titanium Credit Card
- Value plus Credit Card
- Health plus Credit Card
- HDFC Bank Idea Silver Card
- HDFC Bank Idea Gold Card
- Compare Cards - Transfer & Safe
- Track your Credit Card
H. Get More from Your Card
- Offers & Savings
- My Rewards
- Insta Wonderz
- Add-On Cards
- Credit Card Usage Guide
- Easy EMI
- Net safe
- Smart Pay
- Secure Plus
- My City Benefit Card
- Debit Cards - Easy ShopInternational Debit Card
- Easy Shop Gold Debit Card
- Easy ShopInternational Business Debit Card
- Easy ShopWoman's Advantage Debit Card
IMT Enrollment No.: 0621000460 63
-
8/3/2019 Roshan Final Project
64/74
Project: Indian Banking System
- Prepaid Cards
- Forex Plus Card
- Kisan Card
I. Customer Centre
- Offers & Deals
- Winners of Contests & Promotions
2. Wholesale Banking
A. Corporate
Funded Services
Non Funded Services
Value Added Services
Internet Banking
B. Small & Medium Enterprises
Funded Services
Non-Funded Services
Specialized Services
Internet Banking
C. Financial Institutions & Trusts
Banks
Financial Institutions
Mutual Funds Stock Brokers
AWARDS & ACHIEVEMENTS of HDFC BANK
IMT Enrollment No.: 0621000460 64
-
8/3/2019 Roshan Final Project
65/74
Project: Indian Banking System
Business Today-Monitor Group survey One of India's "Most Innovative
Companies".
Financial Express-Ernst & Young Award Best Bank Award in the Private Sector
Category
The Asian Banker Excellence in RetailFinancial Services Awards
Best Retail Bank in India.
Asian Banker Managing Director Aditya Puri won theLeadership achievement Award for
India
Outlook Money & NDTV Profit Best Bank Award in the Private sector
Category
Board of Directors
Name Designation
Mr. Jagdish Capoor Chairman
Mr. Keki Mistry Director
Mr. Vineet Jain Director Mrs. Renu Karnad Director
Mr. Arvind Pande Director
Mr. Ashim Samanta Director
Mr. C. M. Vasudev Director
Mr. Gautam Divan Director
Dr. Pandit Palande Director
Mr. Aditya Puri Managing Director
Mr. Harish Engineer Executive Director
Mr. Paresh S