INDIAN BANKING SYSTEM 0621000460 Project Report ON INDIAN BANKING SYSTEM POST GARDUATE DIPLOMA IN BUSINESS ADMNISTRATION (PGDBM) (2006-09) UNDER THE SUPERVISION OF Sr. Manager Mr. V.K Sharma & Dy. Manager Mrs. S. Saroaja SUBMITTED BY Roshan Ara 0621000460 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY INDIAN BANKING SYSTEM 0621000460 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY CENTRE FOR DISTANCE LEARNING Ghaziabad EXECUTIVE SUMMARY Banking in India originated in the first decade of 18 century with The General B ank of India coming into existence in1786. 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 t he private sector and foreign banks. In terms of quality of assets and capital adequacy, In dian 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 an autonomous 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 rateand this has mostly been true. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY INDIAN BANKING SYSTEM 0621000460 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 cu stomers or add their commitments to certain transactions undertaken by their clients and charge their fees/ commissions for the services rendered by them / their commitments ad ded to the transactions undertaken by the clients. The activities popularly known as Non -fund facilities provided by Banks. Thus, we conclude INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY INDIAN BANKING SYSTEM 0621000460 TABLE OF CONTENTS 1. RESERVE BANK OF INDIA Guidelines Provided by the RBI 21 Guidelines on Fair Practices Code 28 4 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . INDIAN BANKS Scope of Indian Bank 8 Banking in India 9 Definition of Banks 11 Types of Bank 12 Services Provided by Banks 13 3. INTRODUCTION · Objectives of the study 5 · Scope of study 6 · Limitations of study 7 2. SAROJA (DEPUTY MANAGER) under their guidance I undertook this project.K SHARMA (SENIOR MANAGERPNB) for giving me an opportunity to prepare a report on the project assigned to me. I am also thankful to Mrs. V.INDIAN BANKING SYSTEM 0621000460 33 4. S. and for helping me with the intrica te INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . STUDY OF HDFC BANK 5. STUDY OF PNB BANK 46 ACKNOWLEDGEMENT I express my heartiest gratitude to Mr. for extending the advice and direction that i s required to carry on a study of this nature. Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me. i t would have been very difficult to finish this work in the way I have done it. ( Ros han Ara ) INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Without their support and able guidance.INDIAN BANKING SYSTEM 0621000460 details of the project at every step. However. I accept the sole responsibility of any possible errors of omission. Different types of services provided by the banks. Though the Indian Banking System is very wide and elaborated. . To understand the importance of banking sector. . . . To study broad outline of management of credit. To study the Indian bank scenario and its problem. . Corporate and Commercial. To offer suggestions based upon the findings. The study aims at learning the techniques involved to manage the various types of Banks. To study the Indian bank scenario and its problem. To study the role of bank in Indian Market. Long Term and Short Term Finances. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . . . . To study various bank. . various methodologies undertaken. .INDIAN BANKING SYSTEM 0621000460 OBJECTIVES OF THE STUDY . still the project covers whole subject in concise manner. market and operational risks associated with banking sector. INDIAN BANKING SYSTEM 0621000460 SCOPE OF THE STUDY . . INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . 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 Indian banking system. dilution of the government stake in public sector banks (PSBs). has witnessed a series of reforms over the past few years like the deregulation of interest rates. A healthy banking system is essential for any economy striving to achieve good growth and yet remain stable in an increasingly global business environment. Studying the increasing business scope of the bank. and the increased participation of private sector banks. with one of the largest banking networks in the world. INDIAN BANKING SYSTEM 0621000460 . Limitations are extent to which the process should not exceed. no on e model or method will suffice over a long period of time and constant up gradatio n will be required. Customers perception on the various products of the bank. may develop its own methods for measuring and managing risk. The major limitation of this study shall be data availability as the data is proprietary and not readily shared for dissemination. The project was constrained by time limit of two months. under the various sub-groups. an attempt has been made to cover as comprehensively as possible. Limitations of this project a re: 1. . INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Market segmentation to find the potential customers for the bank. 3. The banks can be broadly classified into two categories: Nationalise Bank Private Bank . Due to the ongoing process of globalization and increasing competition. in conforming to the RBI guidelines. 2. . LIMITATION OF THE STUDY: Every work has its own limitation. The corporate sector has stepped up its demand for credit to fund its expansion plans. The report seeks to present a comprehensive picture of the various types of bank. . there has also been a growth in retail banking. Within each of these broad groups. Each bank. 4. As such the project can be considered as an overview of the various banks prevailing in Punjab National Bank and in the Banking Industry. 7.INDIAN BANKING SYSTEM 0621000460 5. The project study is restricted to banking sector used in India only. The conclusion made is based on a sample study and does not apply to all the Individuals. there are some issues and challenges that Indian banks w ill have to contend with if they are to emerge successful in the medium to long term. there has also been a growth in retail banking. However. even a s the opportunities increase. 6. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . In India the banks are being segregated in different groups. 8. Each group has t heir own benefits and limitations in operating in India. PROBLEMS: --The corporate sector has stepped up its demand for credit to fund it s expansion plans. All banks are not included. I choose five criteria Growth. Times of India etc. The preparation of the project report required me to visit the various other compani es like Punjab National Bank. Efficiency / Profitability. The next stage involved determining the objectives of the study.) INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . State Bank of India.) books ( like Working Capital Management written by Sarbesh Mishra and Financial Service written by M Y Khan etc. Strength. drafting a questionnaire will be designed keeping in mind the target audience and objective s of the study. ICICI bank . Secondary data The Preparation of the project report also required data from various journals. It will non-disguised in nature and will include a few open-ended questio ns. Profitability. Credit quality. DATA COLLECTIONS The data from such organization has also been collected. newspapers ( like The Economic Times. Central Bank.INDIAN BANKING SYSTEM 0621000460 RESEARCH METHODOLOGY: The first stage included the introduction of Indian Banks and how they work in I ndia. Primary data The primary data will be collected through the questionnaire designed. IDBI bank etc. In the pr ocess of data collection we went to the respective bank to get the questionnaire filled. in order to collect data. Main players during the pre-independence period were Credit Lyonnais. This was coincided by technology development in the banking operations. From the times of the Bank of Bengal (1806) the sector has been witnessing qualitative and quantitativ e changes. The oldest bank in existence in Ind ia is INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . This was followed by Bank o f Hindustan. With this. Both these banks are now defunct. Allahabad Bank. UTI Bank. ICICI. Punjab National Bank and Bank of India. BANKING IN INDIA Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. 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. A customer is empowered to operate his account from any part of the country. Favorable economic climate and a variety of other factors such as demand for wide range of financial products f rom various sections of the society led to mutually beneficial growth to the banking sector and economic growth process. 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.INDIAN BANKING SYSTEM 0621000460 SCOPE OF BANKING SECTOR Banking business has a history of over 200 years. The drastic development taken place during the first 25 years since independence was Nationalization of many private banks. Today most of the Indian cities have networked banking facility as well as Internet banking facility. HDFC Bank and Bank of Punjab are the main winners of the race. in 1895 in Lahore and Bank of India. Calcutta was the most a ctive trading port. which was established in 1865. At that point of time. foreign banks like Credit Lyonnais started thei r Calcutta operations in the 1850s. By the 1900s. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. the market expanded with the establishment of banks such as Punjab National Bank. in 1906. and due to which ba nking activity took roots there and prospered. the Reserve Bank was nationalized and given broader powers. The first fully Indian owned bank was t he Allahabad Bank. Reserve Bank of India Scheduled Banks Commercial Banks Co-Operative Banks State Cooperatives (16) Foreign Banks (40) Regional Rural Bank (196) Urban Cooperatives (52) INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . mainly due to the trade of the British Empire. After India's independence in 1947.INDIAN BANKING SYSTEM 0621000460 the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later. in Mumbai bo th of which were founded under private ownership. INDIAN BANKING SYSTEM 0621000460 Private Sector Bank (30) Public Sector Banks (27) Old (22) New (8) State Bank of India & Other Nationalised Banks Associate Banks (8) (19) INTRODUCTION INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . . . now defunct. Punjab National Bank and Bank of India was the only private bank in 1906. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Banking was originated in 18th century . First bank were General Bank of India and Bank of Hindustan. Allahabad bank first fully India owned bank in 1865.INDIAN BANKING SYSTEM 0621000460 Definition of the Bank:-Financial institution whose primary activity is to act a s 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. (After the great depression.INDIAN BANKING SYSTEM 0621000460 Types of banking Commercial bank has two meanings: . This separation is no longer mandatory. Private sector bank HDFC. as opposed to normal individual members of the public (retail banking). Private banks manage the assets of high net worth individuals. Postal savings banks are savings banks associated with national postal systems. Congress required that banks only engage in banking activities. 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. Kotak Mahindra bank. Commercial bank is the term used for a normal bank to distinguish it from an investment bank. the U. Axis bank. Many offshore banks are essentially private banks.S. Bank of Rajasthan INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . It is the most successful department of banking. whereas investment banks were limited to capital markets activities. Offshore banks are banks located in jurisdictions with low taxation and regulation. ICICI. Savings banks accept savings deposits. Yes bank. Community development bank are regulated banks that provide financial services and credit to underserved markets or populations.) . There are some examples of banks in India: . Commercial bank State Bank. PNB . ICICI. Universal bank Deutsche bank Services provided by the bank Banks provide two types of services 1. HSBC. HDFC etc. Syndicate bank. Rural bank United bank of India. Retail bank BOB. . Central Bank. National bank for agriculture and rural development (NABARD) . Punjab National Bank.INDIAN BANKING SYSTEM 0621000460 . Non-Fund Based Banking Services Fund Based Services Non-Fund Based Services INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Fund Based 2. 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 banker s liquidity. the l atter may or may not involve cash outflow from a banker. Fund Based Services INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . While the former involves all immediate cash outflow. In other words.INDIAN BANKING SYSTEM 0621000460 FUND BASED AND NON-FUND BASED FUNCTIONS The difference between fund-based and non-fund based credit assistance lies main ly in the cash outflow. Companies with negative working capital may lack the funds necessary for growth. also called net current assets or current capita l.INDIAN BANKING SYSTEM 0621000460 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 for meeting 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 . Working Capital:-Working Capital is Current assets minus current liabilities. The number can be positive or negative. LOANS AND ADVANCES 1. In general. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Making Investments in shares/ debentures/ bonds. Commercial Loans Segment A. FUND BASED SREVICES I. depending on how much debt the company is carrying. Working capital measures how much in liquid assets a company has available to build its business. companies that have a lot of working capital will be more successful since they can expand and improve their operations. II. to overdraw. Bills Finance:IV. I. Bills Purchase:V. etc. Cash Credit:-This facility is given by the banker to the customer by way of a certain amount of credit facility. Overdrafts are arranged up to limits which depend on the customer's credit standing and the bank manager's humour. ie. The arrangements allow flexibility in the amount spent and. The seller draws bills of exchange on the buyer of INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .INDIAN BANKING SYSTEM 0621000460 A loan whose purpose is to finance everyday operation of a company. equally. In that respect overdrafts are unlike personal loans . wages. which are structured with regular repayments. III. A working capital loan is not used to buy long term assets or investments. Its limit is fixed on the basis of security o f the company`s current assets. Bills Discounting:-This is the most important form in which a bank lends without any collateral security. Overdraft:-Banks allow selected customers to write cheques in excess of the balance in their current account. Interest on overdrafts is charged on the fluctuating daily balance. Instead it's us ed to clear up accounts payable. all ow flexibility in repayments (although technically a bank can demand repayment of a n overdraft within 24 hours). Bank term loans are ve ry a common kind of lending. the bank can recovers the full amount from the customer along with the expense in that connection. If this loan is in the form of a line of credit.viz railway receipts. II.INDIAN BANKING SYSTEM 0621000460 goods on credit. the bank present th em to its acceptor for payment. with a fixed maturity and often featurin g amortization of principal. The bank purchase bills payable on demand and credit the customer`s account with the amount of bills less the discount. also called capital spending or capital expense. Tem Loans:-A bank loan to a company. In case the discounted bill is dishonored by the nonpa yment. B. the borrower usuall y uses the funds from the loan soon after they become available. I. Capital Expenditure:-Money spent to acquire or upgrade physical assets such a s buildings and machinery. energy-related facilities. The term has come to be loosely applied to various fo rms of financing. Project finance is used in connection with raising large amounts of money for bi g-ticket. Fixed Assets Finance:III. On maturity of the bills. Otherwise. 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 cashflow. Such a bill may either be a clean bill or documentary bill whic h is accompanied by documents of title to goods. the funds are drawn down shortly after the agreement is signed. 'A financing of a particular economic unit in which a lender is satis fied to INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Education Loans:3. and are amortized over a fixed term with regular payments of principal and interest. If unsecured. Non-Fund based services INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Housing Loans:VI. family. Generally.INDIAN BANKING SYSTEM 0621000460 look initially to the cashflows 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 colla teral for the loan.' IV. these loans are used for debt consolidation. Consumer Loans Advance against Shares:V. or to pay for vacations. Personal Loans Segment:-Loan granted for personal. the loan is made on t he basis of the borrower's integrity and ability to Pay. education expenses. as distinguished from a loan financing a business. Though in some situations the lender may require a co-signer or guarantor. or medical bills. or household use. They also need the facilities for acquisition of fixed assets includ ing their financing. The funds of the borrower are not blocked in the advances to be given to the suppliers or beneficiaries and this keeps his liquid ity position comfortable. The banks. 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.INDIAN BANKING SYSTEM 0621000460 It is generally perceived that the non-fund based business is very remunerative to bank and the borrowers. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . also get the low cost deposits in the shape of margin and ancillary business. besides getting handsome commission or fee and some other service charges. production smooth and costs low. INDIAN BANKING SYSTEM 0621000460 RBI NORMS: Prudential exposure norms as per extant guidelines of Reserve Bank of India prov ides that the maximum exposure of a bank for all its Fund based and Non-fund based cr edit facilities. Particulars Rs. the Non-fund based facilities are to be taken at 50 percent of the sanctioned limit. It may howeve r. In crores Net worth of the bank Maximum exposure permitted for an individual borrower (25% of net worth of the bank) Working Capital Control and Banking Policy 175 700 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . investments in Bonds and commercial paper and any other commitment should not exceed 25 percent of its (bank's) net worth to a n individual borrower and 50 percent of its. underwriting. be rioted that while calculating exposure. net worth to a 'group'. To illustrate the point let us consider the following example: Example1. investments. Rs. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .INDIAN BANKING SYSTEM 0621000460 Maximum exposure permitted for all borrowers under the same group (50% of net worth of the bank) 350 657 Example1. Particulars Rs. INDIAN BANKING SYSTEM 0621000460 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 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . The bank charges commission for this INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . The commercial transactions. 1872. FUNDS REMITTANCE/ TRANSFER FACILITIES Issue of demand draft Collection of bills and cheques ESTABLISHMENT OF LC/ BG Letter of credit:-A Letter of Credit (L/C) is a written document issued by the B uyers' Banker (BBK).200 crores which are in excess of the maximum exposure norm of Rs. The third party who seeks the guarantee. which very well understands the financial standing of the customer. not being aware of the customer s financial standing prefers a bank guarantee. Bank guarantee: -It is customary for the Bank. in turn. This is mostly as an alternate to keep cash as a security deposi t. but for the purpose of determining expo sure we have taken non-fund based limits at 50 percent of itsvalue and total exposure is taken at 150 crores which is well within the norm. undertaken by the buyer to his own Banker(BBK). to issue and execute guarantees in favor of third parties on behalf of the customers.INDIAN BANKING SYSTEM 0621000460 Total credit limits to the above borrower are Rs. in strict compliance of all the terms and conditions stipula ted in the L/C. 175 crores. at a request of the Buyer (B). along with a ll the required documents. undertakes the guarantee of the customer s fin ancial commitments or performance of contracts by him. on behalf of the Buyer's Banker (BBK) immediately. The Bank guarantees are governed by various provisions as contained in the Indian Contrac t Act. in the event of the Seller tendering the Bill of Exchange to the Seller's Banker (SBK). bank s customers are sometimes required to give a Bank Guarantee. in normal course of business. whereby the Buyer's Banker (BBK) gives an undertaking to the Seller(S) that. the entire amount of the bill will be paid to the Seller (S) by the Seller' s Banker (SBK). In turn the Bank. as has been. in favour of the Seller(S). which depends on the security available and the financial stability of the customer. local authority. traveler's cheque Agent for any govt. cheques & securities Selling of products of insurance co.INDIAN BANKING SYSTEM 0621000460 service. P-notes.. 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 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY ./ MF Granting & issuing LC. AGENCY FUNCTIONS Collecting of B/E. Non Resident external (NRE):-Deposits can be placed in . Retain their savings in foreign currency in a RFC account.Deposits Returning Indians for permanent settlement. Get the proceeds of FCNR (B)/NRE Deposits credited to this account. Savings Bank A/c . Fixed Deposit A/c INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . can .INDIAN BANKING SYSTEM 0621000460 Account services 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):. . after staying abroad for not less than one year. since nationalisation in 1949. The Central Office is where the Governor sits and where policies are formulated. Where non-resident Indian receives income in India. the Reserve Ba nk is fully owned by the Government of India. his resident account should be designated as NRO account. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. Though originally privately owned. legal prescriptions for ownership a nd governance of banks laid down in Banking Regulation Act. The banks are also important for smooth functioni ng of the payment system. Reserve Banks of India: Establishment The Reserve Bank of India was established on April 1. 1935 in accordance with th e provisions of the Reserve Bank of India Act. The INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . 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. 1934. but they also leverage such funds through credit creation. he can open a NRO a/c with s uch funds.INDIAN BANKING SYSTEM 0621000460 Non Resident Ordinary (NRO) Deposits:-Where an Indian citizen having a resident account leaves India and becomes non-resident. In view of the above. 1949 have been supplemented by regulatory prescriptions issued by RBI from time to time. were issued by RBI on June 20. rural ec onomy. Guidelines for acknowledgement of transfer/allotment of shares in private s ector banks were issued in the interest of transparency by RBI on February 3.R. 2004 issued by the Government of India. it is considered necessary to lay down a comprehensi ve framework of policy in a transparent manner relating to ownership and governance in the Indian private sector banks as described below. 2. The composition of Board of Directors comprising members with demonstrable professional and other experience in specific sectors like agriculture.INDIAN BANKING SYSTEM 0621000460 existing legal framework and significant current practices in particular cover t he following aspects: i. Against this background. Guidelines on corporate governance covering criteria for appointment of directors. 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 diversifi ed. in the interest of depositors are governed by various sections of the B. signing of decl aration and undertaking by directors. 2002 and June 25. approval of Reserve Bank of India for appointment of CEO as well as terms and conditions thereof. it is no substitute for effective regulation. etc. etc. and powers for removal of manageria l personnel. iv. based on the recommendations of Ganguly Committee and a review by the BFS. iii. on a continuing basis. ii. CEO and directors. The pursuit of the goal of diversified ownership will tak e INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . co-operation. 1949. etc. Ministry of Commerce and Industries. appropriate restructuring and consolidati on in the banking sector. Foreign investment in the banking sector is governed by Press Note dated Mar ch 5.. While diversified ownership minimises the risk of misuse or imprudent use of leveraged funds. 3. v. Further. Act. role and responsibilities of directors and the Board. 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 . has to be the over-riding consideration in the path of ensuring adequate investments. the fit and proper criterion.. 2004. SSI. 2004. law. 300 crore at all times. In order to meet with this requirement. ii. Shareholding i. as laid down in the guidelines dated February 3.300 crore.300 crore within three years. Any higher level of acquisition will be with the prior appr oval INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . (iv) Private sector banks have minimum capital/net worth for optimal operations and systemic stability. in any bank in excess of 10 per cent of the paid up capital of th e private sector bank. all banks in private sector should have a net worth of Rs. in a systematic manner and the process will b e spread over time as appropriate. The bank s which are yet to achieve the required level of net worth will have to submit a t imebound programme for capital augmentation to RBI. 4. shareholding of 5 per cent and above) are fit and proper .. 5. Minimum capital The capital requirement of existing private sector banks should be on par with t he entry capital requirement for new private sector banks prescribed in RBI guideli nes of January 3. it should be restored to Rs. The RBI guidelines on acknowledgement for acquisition or transfer of shares issued on February 3.e. (v) The policy and the processes are transparent and fair. 2004 will be applicable for any acquisition of shares of 5 per cent and above of the paid up capital of the private sector bank. (ii) Important Shareholders (i. which is initially Rs.200 crore.INDIAN BANKING SYSTEM 0621000460 account of these basic objectives. 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. with a commitment to increa se to Rs. 300 crore within a reasonable time. 2001. 2004 and observe sound corporate governance principles. (iii) The directors and the CEO who manage the affairs of the bank are fit and proper as indicated in circular dated June 25. directly or indirectly. Where the net worth declines to a level below Rs. 2004 on acknowledgement for allotment and transfer of shares. Furthermore. iii. b y way of strategic investment. 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. in regard to important shareholders with other commercial affiliations. shares not exceeding 10 per cent of the paid up capital of the bank subject to RBI s prior approval. As per existing policy. publicly lis ted and enjoys good standing in the financial community.INDIAN BANKING SYSTEM 0621000460 of RBI and in accordance with the guidelines of February 3. vi. Act. Directors and Corporate Governance i. if by such acquisition. In case of restructuring of problem/weak banks or in the interest of consoli dation in the banking sector. Where the ownership is that of a financial entity the objective will be to ensure that it is a well established regulated entity. the objective will be to ens ure that no single individual/entity has ownership and control in excess of 10 per cent o f that entity. including by a bank. Where ownership is that of a corporate entity. they fulfil the criteria under corporate governance norm s provided by the Ganguly Committee and they also fulfil the criteria applicable f or INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Banks (including foreign banks having branch presence in India)/FIs should n ot acquire any fresh stake in a bank s equity shares. The recommendations of the Ganguly Committee on corporate governance in banks have highlighted the role envisaged for the Board of Directors. are indeed representatives of those sect ors in a demonstrable fashion. iv. large industrial houses will be allowed to acquire. 2004. RBI may permit a higher level of shareholding. such a limitation will also be considered if appropriate. widely held. 2004 for grant of acknowledgement for acquisition of shares.R. 6. v. 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 speci fic sectors as provided under the B. the investing bank s/FI s holding exceeds 5 per cent of the investee bank s equity capital as indicated in RBI circular dated July 6. ii. shareholding of 5 per cent and above) as laid down in RBI Circular dated June 25. RBI may apply any additional requirements for the Chairman and CEO.1 Foreign Direct Investment (FDI) (other than by foreign banks or foreign bank group) i.2 Foreign Institutional Investors (FIIs) INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . 7. NRI) cannot exceed 74 per cent. director. etc. 1956) or an associate (partner. 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. FII. In addition. For this purpose a declaration and undertaking is required to be obtained from the propos ed / existing directors iv.INDIAN BANKING SYSTEM 0621000460 determining fit and proper status of Important Shareholders (i. 7. As a matter of desirable practice.. At all times. 2004 in accordance with the recommendations of the Ganguly Committee on Corporate Governance. Guidelines have been provided in respect of 'Fit and Proper' criteria for d irectors of banks by RBI circular dated June 25. iii. To enable assessment of fit and proper the information on ownership/beneficial ownership as well as other relevant aspects will be extensive.) should be on the Board of a bank. 2004. not more than one member of a family or a close relative (as defined under Section 6 of the Companies Act. ii. employee. Foreign investment in private sector banks In terms of the Government of India press note the aggregate foreign investment in private banks from all sources (FDI. 7. Henc e any FDI in private banks where shareholding reaches and exceeds 5 per cent eithe r individually or as a group will have to comply with the criteria indicated in th e aforesaid guidelines and get RBI acknowledgement for transfer of shares. the CEO should satisfy the requirements of the fit and prop er criteria applicable for directors. The policy already articulated in guidelines for determining fit and proper sta tus of shareholding of 5 per cent and above will be equally applicable for FDI. Being a Director.e. at least 26 per cent of the paid up capital of the private sector banks w ill have to be held by resident Indians. For this purpose RBI may seek certification from the concerned FII of all beneficial inte rest. the policy guidelines on acknowledgement for acquisition/transfer will be applied.300 crore within three years of commencement of business. The present policy requires RBI s acknowledgement for acquisition/transfer of shares of 5 per cent and more of a private sector bank by FIIs based upon the po licy guidelines on acknowledgement of acquisition/transfer of shares issued.300 crore required for a new entry. ii. 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. Transition arrangements i. A few private sector banks which have been in existence before these capital requirements were prescribed have less than Rs.200 crore net worth. 8. will involve reference to the relevant regulator. In the inter est of having sufficient minimum size for financial stability.3 Non-Resident Indians (NRIs) Currently there is a limit of 5 per cent for individual NRI portfolio investment with the aggregate limit for all NRIs restricted to 10 per cent which can be raised t o 24 per cent with the approval of Board/General Body. ii. Further. Hence any bank with net worth below this level w ill be required to submit a time bound programme for capital augmentation to RBI for approval. Where any existing shareholding of any individual entity/group of entities i s 5 per cent and above. Due diligence process The process of due diligence in all cases of shareholders and directors as above . 7.INDIAN BANKING SYSTEM 0621000460 i. 9. due diligence outlined in the guidelines will be undertaken to ensure fulfillment of fit and proper criteria.200 cro re to be increased to Rs. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . all the existing priv ate banks should also be able to fulfil the minimum net worth requirement of Rs. The current minimum capital requirements for entry of new banks is Rs. investigation agencies and independent credit reference agencies as considered appropriate. revenue authorities. undertake independent verification of fi t and proper test conducted by banks through a process of due diligence as describe d in paragraph 8 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . when considered necessary. vi. Similar continuing due diligence on compliance with the fit and proper criteri a for directors/CEO of the bank will have to be undertaken by the bank and certifi ed to RBI annually. ii. The parent of any foreign bank having presence in India. While considering such cases. iv. Continuous monitoring arrangements i. Where RBI acknowledgement has already been obtained for transfer of shares of 5 per cent and above. the bank will be required to indicate a ti me table for reduction of holding to the permissible level. 10. Banks will be required to undertake due diligence before appointment of direc tors and Chairman/CEO on the basis of criteria that will be separately indicated and provide all the necessary certifications/information to RBI. 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. Where any existing shareholding by any individual entity/group of related entities is in excess of 10 per cent. or close relatives or associa tes on the Board will be required to ensure compliance with these requirements at th e time of considering any induction or renewal of terms of such directors. v. RBI will also take into account the terms and conditions of the banking licences. iii. vii. having shareholding directly or indirectly through any other entity in the banki ng group in excess of 5 per cent in any other bank in India will be similarly requi red to indicate a time bound plan for reduction of such holding to 5 per cent. Any bank having shareholding in excess of 5 per cent in any other bank in In dia will be required to indicate a time bound plan for reduction in such investments to the permissible limit. Banks having more than one member of a family.INDIAN BANKING SYSTEM 0621000460 iii. it will be the bank s responsibility to ensure continuing compliance of the fit and proper criteria and provide an annual certificate to the RBI of having undertaken such continuing due diligence. RBI may. so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower. process fees and other charges. Loan application forms shall be comprehensive to include information about rate of interest (fixed/floating) and manner of charging (monthly/quarterly/half yearly/ rest). Banks/ Financial Institutions should verify the loan application within a reasonable period of ti me. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .INDIAN BANKING SYSTEM 0621000460 11. penal interest rates. . If additional details / documents are required. RBI will consider appropriate measures to enforce compliance. banks/ Financial Institution should acknowledge for the same and state the specific tim e period from the date of acknowledgement within which a decision on the specific loan request will be conveyed to the borrowers. . Banks and Financial Institution should devise a system of giving acknowledgement for receipt of all loans application. they should intimate the borrowe rs immediately. On the basis of such continuous monitoring. pre-payment options and any other matter which affects the interest of the borrower. Guidelines on Fair Practices Code . 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 rejecti on of any application for loan. If all the requirements are complied with the 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. The loan agreement should clearly specify the liability of lenders to borrowers in regard to allowing drawings beyond the sanctioned limits. in respect of 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. Stipulation of margin and security should be based on due diligence and credit worthiness of borrowers. . . Lenders should ensure that there is proper assessment of credit requirement of borrowers. disallowing large cash withdrawals and obligation to meet further requirements of the borrowers on account of growth in business etc. . . Terms and conditions and other caveats governing credit facilities given by banks / Financial Institution arrived at after negotiation by the lending instit ution and the borrower should be reduced in writing duly witnessed and certified by the authorised sanctioning authority. without proper revision and sanction in credit limits. should be mutually settled. and disallowing drawings on a borrower account on its classification as a nonperforming assets or on account of non-compliance with the terms of sanction. honouring the cheques issued for the purpose other than agreed. Banks / Financial Institution should create appropriate information dissemination mechanism. The credit limit. . In the case of rejection of any loan application.INDIAN BANKING SYSTEM 0621000460 . To ensure the above. A copy of such agreement should be made available to the borrowers for their record. lenders should convey in writi ng the specific reasons thereof. . which may be sanctioned. Lenders should ensure timely disbursement of loans sanctioned. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Lenders should release all securities on receiving payment of loan or realisatio n 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. HDFC Bank commenced operations as a 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. with its registered office in Mumbai. Its outstanding loan portfolio covers well over a million 39 INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .INDIAN BANKING SYSTEM 0621000460 . as part of the RBI's liberalization of the Indian Ba nking Industry in 1994. borrowers s hall 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. . 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 se t up a bank in the private sector. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'. Since its inception in 1977 . the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Lenders should give reasonable notice to borrowers before taking decision to recall / accelerate payment or performance under the agreement or seeking additional securities. India. · TIMES BANK AMALGAMATION In a milestone transaction in the Indian banking industry. Customer Focus. · CAPITAL STRUCTURE The authorized capital of HDFC Bank is Rs550 crore (Rs5. a stron g market reputation.INDIAN BANKING SYSTEM 0621000460 dwelling units. Mumbai and the National Stock Exchange. consistent with the bank's risk appetite.6 crore (Rs. large shareholder base and unique consumer franchise. Coleman & Co. corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values Operational Excellence. Product Leadership and People. HDFC was ideal ly positioned to promote a bank in the Indian environment. Roughly 28% of the equity is hel d by Foreign Institutional Investors (FIIs) and the bank has about 570. The shares are listed on the Stock Exchange.5 billion).6% of the equity is held by the ADS Depository (in respect o f the bank's American Depository Shares (ADS) Issue). The paid-up capital is Rs424.4. · BUSINESS FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to buil d sound customer franchises across distinct businesses so as to be the preferred p rovider of banking services for target retail and wholesale customer segments.2 billion).4% of the ban k's equity and about 17. and to achie ve healthy growth in profitability. With its experience in the financial markets.000 shareholde rs. HDFC has developed significant expertise in retail mortgage loan s to different market segments and also has a large corporate client base for its hou sing related credit facilities./Times Group) was INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . The HDFC Group holds 19. Times Bank Limited (a nother new private sector bank promoted by Bennett. The bank's American Depository Shares are listed on the New York Stock Exchange (NYS E) under the symbol 'HDB'. professional integ rity. The b ank is committed to maintain the highest level of ethical standards. the Bank has branches in the centers where the NSE/BSE has a strong and active member base. 2000. The Bank at present has an enviable networ k of over 1229 branches spread over 444 cities across India.. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India. HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard. effective February 26. · TECHNOLOGY HDFC Bank operates in a highly automated environment in terms of information technology and communication systems.INDIAN BANKING SYSTEM 0621000460 merged with HDFC Bank Ltd. Customers in over 120 locations are also serviced throug h Telephone Banking. shareholders of Times Bank received 1 share of HDFC Bank for every 5. The acquisition added significant value to HDFC Bank in terms of increased branch network. ski lled manpower and the opportunity to cross-sell and leverage alternative delivery channels. expanded geographic reach. All branches are link ed on an online real-time basis. which enables the bank to offer speedy funds transfer facilities t o its INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .75 s hares of Times Bank. enhanced customer base. Being a clearing/settlement bank to various leading stock exc hanges. Visa Electron/Maestro. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate cust omers are located as well as the need to build a strong retail customer base for both deposits and loan products. Plus/Cirrus and American Express Credit/Charge cardholders. · DISTRIBUTION NETWORK HDFC Bank is headquartered in Mumbai. The Bank also has a network of about over 2526 networked ATMs acros s these cities. Moreover. All the bank's branches have online connectivity. consistent with the bank's risk appetite. professional integ rity. · BUSINESS FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to buil d sound customer franchises across distinct businesses so as to be the preferred p rovider of banking services for target retail and wholesale customer segments. and to achie ve healthy growth in profitability. In each of its businesses. 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 busines ses.Operational Excellence.INDIAN BANKING SYSTEM 0621000460 customers. · PRODUCT SCOPE: 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 a nd INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Customer Focus. corporate governance and regulatory compliance. expertise and technology to create a competitive advantage and build market shar e. the Bank has succeeded in leveraging its market position . The b ank is committed to maintain the highest level of ethical standards. The Bank has made substantial effo rts and investments in acquiring the best technology available internationally. The Bank's business is supported by scala ble and robust systems which ensure that our clients always get the finest services we o ffer. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). Product Leade rship and People. to b uild the infrastructure for a world class bank. HDFC Bank's business philosophy is based on four core values. For individuals. Value addition services.No Frills Account . · Investments and Insurance.INDIAN BANKING SYSTEM 0621000460 medium enterprises. Mutual fund etc. PRODUCTS AND SERVICES AT A GLANCE 1. PERSONAL BANKING A.Regular Savings Account . investmen t. the company has a range accounts. Non-funded services.Institutional Savings Account INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . · Loans.Savings Plus Account . · Forex and payment services. · Cards. These affordable plans apart from providing long term value to the employees help in enhancing goodwill of the company. and pension scheme. · Customer center. Accounts & Deposits .Senior Citizens Account . different types of loans and cards that assist the customers. For organizations the company has a host of customized solution s that range from Funded services. Th e customers can choose the suitable one from a range of products which will suit t heir lifestage and needs.SavingsMax Account . The products of the company are categorized into variou s sections which are as follows: · Accounts and deposits. Private Banking B.INDIAN BANKING SYSTEM 0621000460 .Plus Current Account -Trade Current Account .Regular Fixed Deposit .Super Saver Account .HDFC Bank Preferred .RFC .Regular Current Account -Apex Current Account .Premium Salary Account .Max Current Account .Home Loans INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .Premium Current Account . Loans .Classic Salary Account .Personal Loans .Kisan Club Savings Account .Kid's Advantage Account .Sweep-in Account .Regular Salary Account .Reimbursement Current Account .Pension Saving Bank Account .Kisan No Frills Savings Account .Defence Salary Account .Payroll Salary Account .Family Savings Account .Domestic Account . INDIAN BANKING SYSTEM 0621000460 -Two Wheeler Loans -New Car Loans -Used Car Loans .Loan against Securities .Equities & Derivatives -Mudra Gold Bar D.Foreign Currency Cash .Overdraft against Car -Express Loans .Foreign Currency Cheque Deposits INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .Offers & Deals .Loan against Property .Knowledge Centre . Forex Services -Trade Finance -Travelers Cheques .Construction Equipment Finance .Financial Planning .Foreign Currency Drafts .Mutual Funds -Insurance -Bonds .Commercial Vehicle Finance -Working Capital Finance .Customer Center C. Investments & Insurance . One View .Silver Credit Card .Foreign Currency Remittances . Cards .Platinum plus Credit Card -Titanium Credit Card -Value plus Credit Card .Gold Credit Card -Woman's Gold Credit Card .Mobile Banking -ATM -Phone Banking .E-Monies Electronic Funds Transfer .Health plus Credit Card INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .Prepaid Refill .Cash To Master -ForexPlus Card E.Bill Pay .Branch Network G.Excise & Service Tax Payment F.Direct Pay -Visa Money Transfer .INDIAN BANKING SYSTEM 0621000460 . Access Your Bank .Insta Alerts .Net Safe . Payment Services . Prepaid Cards -Forex Plus Card -Kisan Card I.Compare Cards -Transfer & Safe -Track your Credit Card H.Insta Wonderz -Add-On Cards .Debit Cards .My Rewards .HDFC Bank Idea Silver Card .HDFC Bank Idea Gold Card .Easy ShopInternational Debit Card . Customer Centre .Offers & Deals INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .My City Benefit Card .Secure Plus .Easy ShopWoman's Advantage Debit Card . Get More from Your Card .Credit Card Usage Guide .Easy ShopInternational Business Debit Card .Easy Shop Gold Debit Card .Easy EMI .INDIAN BANKING SYSTEM 0621000460 .Smart Pay .Net safe .Offers & Savings . INDIAN BANKING SYSTEM 0621000460 -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 MILESTONES IN THE HISTORY HDFC Bank began its operations in 1995 with a simple mission: to be a "World-cla ss Indian Bank". They realized that only a single-minded focus on product quality a nd service excellence would help us get there. Today, they are proud to say that th ey are well on our way towards that goal. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY INDIAN BANKING SYSTEM 0621000460 It is extremely gratifying that their efforts towards providing customer conveni ence have been appreciated both nationally and internationally. AWARDS & ACHIEVEMENTS of HDFC BANK 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 Retail Financial Services Awards Best Retail Bank in India. Asian Banker Managing Director Aditya Puri won the Leadership achievement Award for India Outlook Money & NDTV Profit Best Bank Award in the Private sector category MERGER HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29.The Boards of HDFC Bank and Centurion Bank of Punjab met on 25 February, 2008 and approved, subject to due diligence, the share swap ratio for the proposed merger of Centurion Bank of Punjab with HDFC Bank. The Scheme of Amalgamation envisages a share exchange ratio of one share of HDFC Bank for twenty nine shares of Centuri on Bank of Punjab. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY INDIAN BANKING SYSTEM 0621000460 The combined entity would have a nationwide network of 1,148 branches (the large st amongst private sector Banks) a strong deposit base of around Rs. 1,200 billion and net advances of around Rs. 850billion. The balance sheet size of the combined entity would be over Rs. 1,500 billion. Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank of Punjab said, We are extremely pleased to receive the go ahead from our board to pursue t his opportunity. A merger between the banks provides significant synergies to the co mbined entity. The proposed merger would further improve the franchise and customer proposition offered by the individual banks. SUGGESTIONS: Finally some recommendations for the company are as follows: · To make people aware about the benefit of becoming HDFC Bank s Sales Executive, following activities of advertisement should be done through 1. Print Media. 2. Hoarding & Banners. 3. Stalls in Trade Fares 4. Distribution of leaflets containing details information. · The bank should provide life time valid ATM card to all its customers. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . The with 13 other banks. Punjab of being the first Indian bank to have b bank was nationalized in July 1969 along the bank has grown in size and stature t in India at present. The company should provide a pass book to all its customers Make people understand about the various benefits of its products.INDIAN BANKING SYSTEM 0621000460 Minimum balance for savings account should be reduced from Rs 5000 to Rs 1000. PUNJAB NATIONAL BANK ORIGIN Punjab national bank was established in National Bank (PNB) has the distinction een started solely with Indian capital. Punjab National Bank offers a wide variety of banking services which include corporate and INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY 1895 at Lahore. so that people who are not financially strong enough can maintain their account properly. Company should organize the program in the society. undivided India. From its modest beginning. so that people will be aware about the company and different products of the bank Company should open more branches in different cities. o become a front-line banking institution PROFILE With its presence virtually in all the important centers of the country. the Bank has taken major initiative in the field of computer ization. At the same time. the bank features at 1308th position among Forbe s Global 2000 list of g lobal giants and fast growing companies. financing of trade a nd international banking. bank has Rupee Drawing Arrangements wit h 15 exchange companies in the Gulf and one in Singapore.largest amongst Nationalized Banks. The bank has been focusing on expanding its operations outside India and has identified some of the emerging economies which offer large business potential. exporters. industrial finance. agricultural finance. the bank offers efficient forex dealing operations in India. Besides.INDIAN BANKING SYSTEM 0621000460 personal banking. Besides. With its state-of-art dealing rooms and well-trained dealers . Bank has opened a fully fledged Branch in Kabul. Punjab National Bank is serving over 3. 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 emer ge as challengers to World s leading blue chip companies. Bank has set up representative offices at Almaty: Kazakhistan. Shanghai: China and in London. the bank has been conscious of its social responsibilities by financing agriculture and allied activities and small scale industries (SSI). Bank is a member of the SWIFT and over 150 branches of the bank are connected through its computer-based terminal at Mumbai. Afghanistan. Keeping in tune with changing times and to provide its customers more efficient and speedy service. Among the clients of the Bank are Indian conglomerates. The large presence and vast resource base have helped the Bank to build strong l inks with trade and industry.5 crore customers through 4540 Offices including 421 extension counters . non-resident Indians and multinational co mpanies. has placed PNB at the 248th position. While among top 1000 world banks. Co nsidering the importance of small scale industries bank has established 31 specialised bra nches to finance exclusively such industries. the leading magazine in London. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . The Banker . m edium and small industrial units. Strong correspondent banking relationship which Punjab National Bank maintains with over 200 leading international banks all over the world enhances its capabi lities to handle transactions world-wide. INDIAN BANKING SYSTEM 0621000460 All the Branches of the Bank have been computerized. Internet Banking offers world class banking facilities like anytime. where the 'Maestr o' logo is displayed. Another step taken by PNB in meeting the changing aspirations of its clientele i s the launch of its Debit card. apart from the PNB's over 1094 ATMs and tie up arrangements w ith other Banks. which is also an ATM card. integrating frontiers of technology and serving various segments of society espe cially the weaker section. 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 serv ices. MISSION INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . It enables the card hol der to buy goods and services at over 99270 merchant establishments across the country. anywh ere access to account. The Bank has also launched aggressively the concept of "Any Time. Internet Banking services are available through all Branches of the Bank networked under CBS. Providing 24 hours. o nline information of deposits. PNB also offers Internet Banking services in the country for Corporates as well as individuals. 365 days banking right from the PC of t he user. complete details of transactions. the card can be used to withdraw cash at more than 25000 ATMs. electricity. Bes ides. committed to excellence in serving the public and also excel lence in serving the public and also excelling in corporate values. loans overdraft account etc. PNB has recently introduce d Online Payment Facility for railway reservation through IRCTC Payment Gateway Project and Online Utility Bill Payment Services which allows Internet Banking a ccount holders to pay their telephone. Any Where Banking" through the introducti on of Centralized Banking Solution (CBS) and over 2409 offices have already been br ought under its ambit. insurance and other bills a nytime from anywhere from their desktop. mobile. and statement of account. R.Fonseca Reserve bank of India Nominee Director Shri .Khandelwal Part-time non-official Director INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . use latest technology aimed at custome r 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". Lending 2003.K. Best IT User in Banking & Financial by NASSCOM in partnership with Services Industry .L.C.Gerg Exective Director DIRECTOR Shri .Harsh Mahajan Share holder Director Shri. 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.Mohan Lal Workmen Employee director Dr.Raghuraman Executive Director Shri .2004 Economic Times Golden Peacock Award for Excellence in Corporate Governance 2005 by Institute of Directors National Award for Excellence in SSI Ranked 2nd for 4 consecutive years -2002.M.M.Khurana Director Rep.A.Prakash Agrawal Shareholder Director Shri Gautam P.Ravneet Kaur Govt.S. build and maintain a team of motivated and committed workforce with high work ethos.INDIAN BANKING SYSTEM 0621000460 To provide excellent professional services and improve its position as a leader i n the field of financial and related services. Chakrabarthy Chairman & Managing Director Shri K.catagory Shri P.C.Nayar Officer Employee Director Shri.J. of India Nominee Director Shri . 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. INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . put it on our website and have copies available for you on request.INDIAN BANKING SYSTEM 0621000460 Shri Mushtaq A Antulay Part-time non-official Director 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. 3) Deal quickly 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 satisfied an d reversing any bank charges that we apply due to our mistake. 4) Publicise this Code. for the products and service s 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 transpare ncy. Slow-down in treasury profits . Highest NIMs compared to peers . Proactive on technology front. Adequate Capital .INDIAN BANKING SYSTEM 0621000460 SWOT ANALYSIS STRENGTHS: . . No development on insurance venture . De-risked investment portfolio . . . . Higher Delinquencies . . Strong growth in business . . . Slower growth on international front . . . Fine growth in fee income last year . WEAKNESS: . . Higher provisions deterring growth in net profits . . Good branch network . . . Highest CASA among PSU . Regulatory amendments INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . . Growth in Insurance and Mutual Fund business THREATS: . .. . Ample opportunity to expand business. Entry of foreign banks . Expansion on international front . as the economy is doing well. . . . . . Sharp rise in interest rates can hamper economic growth . Its subsidiaries PNB Housing Finance & PNB Gilts are not impressive OPPORTUNITIES: . . Corporate banking . Home loans . Senior citizen scheme . Locker facilities .INDIAN BANKING SYSTEM 0621000460 . Electronic clearing service . About loan . Implementation of Basel II requires higher capital . Electronic fund transfer . RTGS/NEFT/SFMS:PNB . 12 hours banking INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Downturn in Agriculture growth PRODUCTS AND SERVICES: PRODUCTS: . . Deposit interest rates SERVICES . Offshore banking . ATM/DEBIT cards . Online tax accounting system . Personal banking . Merchant banking . Depository services . 3. . . 1. Your Age: ____________________ 2. I am a student of Indian Institute of Management. of Children: __________ 4. Undergraduate . Kindly spend a few minutes of your valuable time and fill in this questionnaire. Ghaziabad. No. Single . INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Occupation. Business . .INDIAN BANKING SYSTEM 0621000460 QUESTIONNAIRE Dear Sir/Madam. Married . Graduate . Marital Status. Education Qualification . . As part of the requirements for my Post Graduation Diploma in Business Management I am required to do a research based project. . Post graduate . . Service . . 6. No . 2 to 5 lack . Between . Do you have Credit Card? . <than 2 . >than 8 annual household income. 5 to 8 lack . Your . .INDIAN BANKING SYSTEM 0621000460 . No . Yes . Kind of services Banks you are enjoying INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . Yes . (Please mention below the type of business/profession you are in incase of service please mention your organization name and designation) 5. lack . lack . If yes. 7. Between . which Bank? 8. Profession . Faced saving problems? . what is your priority? 13. Which Banks facility you like more? . 11. Private bank . No . 10. . . From where do you like to save money? . Private bank . Do you have loans requirement? . Nationalise banks . While saving in a Bank. .INDIAN BANKING SYSTEM 0621000460 9. Nationalise banks . Is Central Banking System beneficial for you? . Yes . And why? 12. Yes . INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY . . And how it will help you? Date: Signature Place: Thank You INDIAN INSTITUTE OF MANAGEMENT TECHNOLOGY .INDIAN BANKING SYSTEM 0621000460 . No . 14. Does you use Internet Banking? . Yes . No .