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Final project = EXTERNAL

Final project = EXTERNAL

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Publicado porDhaval Shah

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Published by: Dhaval Shah on Feb 23, 2011
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02/26/2011

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ACKNOWLEGEMENT

Entrance, hard work, gradual progress and an exciting year, that¶s how I have reached this level and now as I stand at the aside world, I take a look of the past year which I have spent in this college.Our performance with the devotion of the professors, have moduled me into confident and aspiring student all throughout the year. Although bringing this project to its final form was along and arduous task, there were many fine experiences on the way. A real artist never displays his work until has a feel of it ton his soul. During the perseverance of this project several people have supported this endeavor that belong to the galaxy of artist and have put their art into every part of this project wi thout their help I would have not been able to complete this project up to that mark. I would like to thank my guide for the project Prof.V.S.Kanan FOR his planned and careful guidance¶s. I do not have more words to describe the role of a friend, philosopher and guide played by him and his unfailing sincerity. I also owe sincere thanks to people who provided me with required information any and every time which includes vanitha Esaimani.I Would also like to thank all my friends who have supported me through out my project. My sincere thanks to all the above people for sharing keen interest in the project and providing me with guidance from time to time.

EXECUTIVE SUMMARY Now a days banking is extremely important in the world¶s economy. purely for the sake of good profits. The emergence of private sector banks has changed the whole scenario of the banking function in the recent years. .Banks in those days merely practiced the passive role of accepting deposits from the public for routine conversion of loan assets. The banking functions are the routine functions of one¶s life.

(3) To understand the basic banking services provided by the banks to the customers. .OBJECTIVE OF THE STUDY (1) To understand the awareness of banking among the customer. (2) The subject matter or the scope of this research project is confined to the comparison of the services provided by the different banks in the western suburbs areas.

Table of contents SR.NO. CONTENTS PAGE NO. Analysis and suggestion Conclusion . 1 2 Overview of Indian Banking Awareness of Services offered by the banks to the customers 3 Awareness of IT services provided by the bank to the customers 4 5 Findings.

CHAPTER 1: OVERVIEW .

Business was transacted by the Jews in France on beaches in the market place. If banker failed. The Italian word Banco was derived from this to mean heap of money. The origin of the word bank can be traced back to the German word Banck which translated meant the heap or mound or joint stock fund. wealth or financial resources. One was nationalization of reserve bank and the banking regulation act. his bench was broken up by the people. and then . The beaches resembled bank ing counters. A bank may mean different things to different people.Introduction: Indian banking system was not sound at the time of independence. growth and development. leading to the word bankrupt which means one who has lost all his money. Since. two major developments took place. A bank performs a multiple of functions and services which cannot be put into a single definition. In 1949. There were many small banks. for others an institution of funding for finance and yet for many others bank is a depository for their savings. It may be explained in brief as ³Banking is what a bank does. In the French bancus or banque means a beach. it has its own origin. ³But this definition is also not enough. Today in English bank is largely understood as an institution that accepts money as a deposit to further lend it out for profit. For some it is a storehouse of money. As any other subjects. The development of banking is evolutionary in nature. The meaning of the bank can be understood only by its functions just as a tree is known by its fruit s. because it considers the deposit accepting and repayment functions only.´ But it is not clear enough to understand the subject in full. The Oxford Dictionary defines a bank as ³an establish ment for the custody of money which it pays out on a customerµs order.

The banking regulation act provides extensive powers to t he reserve bank of India. The number of scheduled banks was decreased and the importance of non-scheduled commercial banks was also declined. Let us briefly trace the evolution of banking.Indian banking system developed in many respects.it created a group by nationalizing eight regional banks in 1960. Banck-German (joint stock fund) BANCO-Italian (heap of money) Bancus/Banque-French (bech/chest a place where valuables are kept) Bank-English (common meaning prevalent today. structurally and functionally. It grew geographically. Thus the origin of the word can be traced as follows. These banks opened new offices in semi -urban and rural areas and approach the rural people.e. which allowed the scope for a new experiment in the Indian banking. The state bank of India was established in 1955.. Deposits of scheduled banks registered a spectacular increase. as an institution accepting money as deposit for lending) . i.

. The above three banks were later amalgamated to from one bank called.the imperial bank carried on the business of commercial banking as well as managed the public debt office of the central and the state government. Three presidency banks nominated the banking sector i. bank of Bengal. the imperial bank of India under the imperial bank of India act. (2) Cutthroat competition. At the time there was an indiscriminate growth of smaller banks in the private sector. (5) Speculative dealings. Some of the important causes of bank failures during the period were: (1) Incompetent managers and directors.EVOLUTION: The banking system in India is based upon the British Banking System which is largely branch banking.1920. Allahabad bank. These banks were set up by merchants and traders who combined trading with banking. and Punjab national bank. These led to a series of failure of banks. These banks were setup by a special charter of the British government. The second half of the 19th cent ury saw the establishment of a number of private sector banks such as Bank of Baroda. Commercial banks in India were started during the latter half of the 19th century. (3) Unplanned investments. The government continued to handle the issuance of currency notes and coins until the reserve bank of India was set up in 1935. (4) Large proportion of deposit in industrial investment.e. bank of Bombay and bank of madras.

mergers and amalgamations in terms of the provisions of the banking companies act. the banking regulation act.The strengthening of the banking system took place after the establishment of the reserve bank of India in 19 35. 1949 under which banks are regulated by the reserve bank of India defines banking company and banking. In India.1949. inspection. .as it was empowered to regulate banking money.1949 which later came to be known as the banking regulation act. issue of directives.

(b) Private sector banks under India ownership. 2009. (a) State owned banks or public sector banks.85 billion till march. regulatory and supervisory fra meworks under which banks in India operate have undergone a major structural change since 1991. There are 27 public sector banks who dominate the commercial banking system of India.OVERVIEW OF INDIAN BANKING SYSTEM: Banking systems in India consist of commercial banks and co-operative banks of which the former account for around 98 percent of the banking system assets. The macroeconomic. the commercial banks can be grouped into three types. and deregulation has introduced significant operational freedom in the working of Indian banks. In general. all public sector banks were fully owned by the government. Based on the ownership pattern. Deregulation of interest rate structure. accounting for more than 80 percent of commercial banking assets. increased competition etc.have facilitated the lowering of interest rates on both sides of the balance sheet and interest spread in line with international standards.until 1991-92. . several relevant acts were amended to enable the state own ed bank to raise capital unto 49 percent from the public. Since the onset of reforms. and (c) Private sector banks under foreign ownership. As many as 12 state owned banks accessed the capital market and raised up to around Rs. lowering reserve ratios.

for his customers´. 1949 to define µBanking¶ and µBanking company¶ . and (iii) Collect cheques. Crowther defines a bank as.says that the bankers are ³one who in the ordinary course of business honors cheques drawn upon him by persons from and for whom he receives money on current accounts´ Sir Jhon Paget says that. Sir kinely. ³no person or body corporate otherwise can be a baker who does not. ³a bank is an establishment which makes to individuals such advances of money as may be required and to which individuals entrust money when not required by them for use. Let us see the definition of bank and banking. Although the above definitions have described the meaning of bank.L. In other words. given by various authorities. µbanking¶ incorporating its entire functions. bank is an intermediary which handles other peoples¶ money both for their advantage and to its own profit. none of them precisely defined. a bank is a factory of credit.an attempt has been made in section 5(1)(b&c)of the Banking Regulation Act. But bank is not merely a trader in money but also an important manufacturer of money. Dr. ³one that collects money from those who have it to spare or who are savings it out of their income and lends the money so collected to those who require it. .However. Thus.MEANING AND DEFINITION OF BANKING A Bank is an institution which deals in money and credit. (i) Take deposit accounts (ii) Issue and pay cheques.Hart.

order or otherwise´ Section 5(1)(c)of the banking company as.draft.of deposit of money from the public. ³Banking means accepting for the purpose of lending or investement.According to section 5(1)(b). . ³any company which transacts the business of banking in India´. repayable on demand or otherwise and withdraw able by cheques.

controlling and promoting the destiny of Indian Financial System. Foreign banks.TYPES OF BANKS: In modern times different types of banks have grown up. Reserve bank of India is the central bank of our country. They operates on no- . since its inception. The importance of different types of commerci al banks in terms of their business is in the descending order: Indian scheduled banks. It is so called because it provides money and credit for commercial and trade activities. Its main function is to issue currency known as µBank Notes¶. Central bank is an apex institution promoted by the Central government for monitoring. They are given below: (1)Central Bank: Central bank is the bank of a country ±a nation.Theire business mainly consist of receiving deposits. A bank which undertakes all kinds of ordinary banking business is called a commercial bank. The aim of the central bank is not to earn profit. the RBI was established in 1935 and this Bank has since been functioning as the central bank of the country. (2)Commercial banks: Commercial banks are the oldest and fast growing financial intermediaries in India. regulating. public sector Banks (Nationalized). Regional Rural Banks and Non Scheduled banks. Co-operative Banks work on the principle of co -operation. (3) Co-operative Banks: They are organized on co-operative principles of mutual help and assistance. private Sector Banks. In India. but to maintain price stability and to strive economic development with all -round growth of the country. giving loans and financing trade and industry in the country.

(5)Non scheduled Bank: The commercial banks. They are mainly engaged in lending money.5. when the abovementioned conditions are not satisfied. and (b)That the affairs of the bank are not conducted to the detrimental interest of the depositors. They grant short-term loans to the agriculturist for purchase of seeds. The reserve bank also has power to deschedule a bank. not included in the second scheduled of the Reserve Bank of India Act are known as Non scheduled Banks.profit no-loss basis. .They do not get prestige as the scheduled banks. There are many urban co -operative banks operating efficiently in the big cities. They are not entitled to facilities like refinance and rediscounting of bills. (4)SCHEDULED BANKS: Scheduled banks are those banks which are listed in the second scheduled to the Reserve Bank of India Act. They render banking services to their members and customers. from RBI.1934. discounting and collecting bills and various agency services. (a) That the Bank¶s paid up capital plus free reserves are not less than Rs. harvesting and for other cultivation expenses. They insist high security for loans.00lakh. They are registered under state co-operative Societies Act.The Banks satisfying the following condition are only included in the second scheduled.

the central bank of India Ltd. The east India Company laid the foundations for modern banking in the first half of the 19th century with the establishment of the following three banks.. During the last part of 19th century and early phase of 20th century. To understand the history of modern banking in India. the µswadeshi movement included the establishment of a number of banks with Indian management.the period of . Because of this dual function and lack of their own capital (agency houses depend entirely on deposit entirely on deposits for their capital requirements) they failed and vanished from the scene during the third decade of 18th century. Punjab national bank Ltd.the bank of India ltd.DEVELOPMENT OF BANKING IN INDIA: Banking in India is indeed as old as Himalayas. For example. one has to refer to the ³English agency houses´ established by the east India Company.In 1906. (a)Bank of Bengal in 1809 (b)Bank of Bombay in 1840 (c)Bank of madras in 1843 These banks are also known as ³presidency Banks´ and they function well as independent units.the bank of Baroda L td. But.In 1908.in 1911 and many other bank established on the same line. the banking functions became an effective force only after the first decade of 20th century. These agency houses were basically trading firms and carrying on banking as part of their main business. But most of the weak banks went bankrupt due to wrong policy decision taken by the management and due to severe banking crisis during 1913 -18.In 1895.the Indian bank ltd in 1907.

It was given power to hold government funds and manage the public debt. the µstate bank of India Act¶ was passed.the total value of compensation paid by government amounted to Rs. there was a general attitude towards its nationalization. it was constituted as a private shareholders µbank with a fully paid up capital of Rs. In 1920. the Reserve Bank Of India Act was passed in 1934. the µImperial bank of India¶ was established in 1921. Initially. In 1955.the µReserve Bank of India¶(transferred to public ownership)Act was passed in 1948. Even though the need for a central bank was felt in the 18th century. It is interesting to note that the paid up capital of Reserve Bank continues to remain at Rs.100 paid up. The branches of the bank were functioning as clearing houses (Agency for effecting settlement of funds among banks). it could materialize only in the 20th century.Accordingly. On the basis o f the recommendation of the Banking Enquiry committee. Accordingly the µImperial Bank¶ was nationalized and µState Bank of India¶ emerged with the objective of extension of banking facilities on a large scale.54 crore or RS.118.world War I. .However.accordingly the Reserve Bank of India was constituted in 1935 to regulate the issue of bank notes. it was not authorized to issue currency.5 crore. the ³Imperial Bank of India Act´ was passed for amalgamating the three presidency Banks.Thus.the entire share capital of the bank was acquired by the central Government from the private shareholders against compensation and it was nationalized on J anuary 1. specifically in the rural and semi-urban areas and for various other public purposes. After independence. the crisis.00 crore even now.However.5.5.63 per share of Rs. As such.1949. securing monetary stability in India and to operate t he currency and credit system of the country to its economic development.the stronger and well managed banks like those mentioned above survived.

the first two banks were amalgamated under the name of ³The State Bank of Bikaner and Jaipur´.In 1959. (iv) The state Bank of Mysore (v) The state Bank of Patiala (vi) The state Bank of Hyderabad (vii) The state Bank Of saurashtra (Viii)The state Bank of Travancore In 1963. . the µstate Bank of India¶ (subsidiary banks) Act was passed by which the public sector banking was further extended. The following banks were made the subsidiaries of State Bank of India. (i) The state Bank of Bikaner (ii) The state Bank of jaipur (iii) The state Bank of Indore.

performs. it is clear that the underlying principle of the business of banking is that the resources mobilized through the acceptance of deposit must continue the main stream of funds which are to be utilized for lending or investment purpose.BASIC CONCEPTS: It is necessary to understand the basic concepts used in banking. issue and pay cheques and collects cheques for his customers.Any company which is engaged in the manufacturing of goods and services or carries on any trade and accepts deposits from the public for the purpose of financing its business shall not be deemed to be a banking company. The law also provides that every company carrying on business of banking in . at least a transaction of a banking activity nature. Thus. money on current accounts. The word public implies that a banker accepts deposits from anyone who offers money to the bank for such purpose.A banking company must perform both the essential function i. (b) Customer: A customer is a person who has an account with the bank. acceptance of deposits should be main business of a banker. (c) Banking company: The banking regulation act. 1949 defines a banking company as a company which transacts the business of banking in India [section 59(c)].e. These are as under. The essential feature of banking business is that the banker does not refund money on his own accord. (a) Banker: Banker is a person who accepts deposits. even if the period for which it was deposited expires. accepting deposits and lending or investing the same . Thus.

The merchant bankers were prilimarily trader and had to oblige his customers by accepting their money for safe custody. which is a very valuable item. It may be note that the essence of banking business is the function of accepting deposit from the public with the facility of withdrawal of money by cheque. belonging to his customers.India should use as a part of its name at lease of the following words ± Bank. They are. (d) Banking: Section 5(b) defines banking as accepting for the purpose of lending or investment of deposits of money from the public. The origin of modern banks is traced to three important sources. Banking or Banking Company. repayable on demand or otherwise and withdrawable by cheque. or otherwise. the combination of the function of acceptance of public dep osit and withdrawable of the money by cheques by any institution cannot be performed without the approval of Reserve Bank. Section 49A of the act prohibits any institution other than a banking company to accept deposit money from the public withdrawable by cheque. order. draft. The goldsmith by virtue of dealing in gold. He accepted for safe custody the money. Modern . The goldsmiths began to lend the money knowing that all the depositors do not withdraw their savings at a time. He was doing the banking business as a side occupation. Banker. had Facilities for the safe keeping of valuables. another important valuable item. (a) The goldsmiths (b) The moneylenders and (c) The merchant bankers. The moneylender lent his surplus funds to the needy and earned the income by way of interest. In other words.

Foundations were laid for the growth of modern commercial banking during the 19 th century.after the banking act was passed in 1833 in England. the growth of joint stock commercial banking was accelerated. .banks retain all the characteraristics of these three types of institutions/functions. Banking made its first appearance as a public en terprise in the year 1157 in Italy with the establishment of µBank of venice¶.The bank of Barcelona was started in 1401.the bank of Genoa in 1407 and the bank of Amsterdam in 1609.

Comman people save money. They can also get loans from the bank for financing their business activities. businessman. traders. Modern banks touch almost every sphere of economic activity. They have far reaching consequences on economic development of a country. In this respect. because. which they put into the bank for safety.NEEDS FOR A BANKS: We need bank in our day to day life. it is risky and time consuming. banks help the businessm en and all other people by accepting their deposit and allowing withdrawals by cheques and transfer of money. banks are needed every section of our society. They collect . Only a bank can issue cheque books to the depositors because they are authorized by the Banking Regulation Act.They can also save and invest t he money in the Banks. fertilizers etc. Banks Cater to the needs of farmers. They collect money from the public. Businessman. Bank act as an agent as well as Banker of the government. Thus. industrialist and comman people in the society. We cannot carry out all cash transaction in these days. Farmers can borrow money from the banks for seeds. pensions. They act as an agent of their customers in performing the function such as collection of dividends. purchase and sale of securities and payment of salary and other expenses. tax payers and businessman on behalf of the government and payments are also made through the banks. Banks are an indispensable part in a modern developing society. We cannot also keep large amount of cash in hand. security and getting some return out of it. Bank act as an agent of their customers banks are also needed by the government. irrigation. traders and industrialist open their account in the bank and carry out their transaction for receipts and payments of money through cash or cheque.

savings and other funds from the people and rechannalise these funds to borrowers for financial investment. A bank performs a multitude of functions and services which cannot be reached into a single definition. They have. Thus. For some it is a storehouse of money. for others an institution of funding or finance and yet to many others. . A bank may mean different things for different people. lending money and by generating money. now come out to fulfill the responsibilities of the country. banks. by collecting saving. a bank is a depository for their savings. play an important role in the economic development of a country.

Thus. overdrafts. the bank issue and pay cheques..e. bill discounting. . there is a fixed and minimum margin of profit in banking operations. ³creation of credit´ is the unique feature of banking. term loans. creation of additional money for lending. There are again different types of advances such as cash credit. The deposits are accepted on various terms and conditions. (iii) Dealing with credit: The banks are the institution that can create credit i. They pay interest on deposits and these deposits are advanced to the needy persons at a higher rate of i nterest. fixed and recurring accounts.FEATURES OF BANKING: The following basic characteristics of banking: (i) Dealing in money: The banks deal in money. i. The deposit may be of different types like saving. draft or otherwise. (ii) Deposit must be withdrawable: The deposits (other than fixed and recurring deposits) made by the general public can be withdrawable by cheques. Besides. Thus. etc. current.e.. these banks also charge for the services rendered to the customers and add the profit. (iv) Commercial in nature: Since all the banking function is carried on with the aim of making profit. They accept deposits from the public and advancing them as loans to the needy people. Therefore. the banks are basically dealer in money. it is regarded as a commercial institution. The deposits are usually withdrawable on demand.

credit cards.(v) Nature of agent: Banks act as an agent of the customer. Fund transfer. besides the basic function of accepting deposits and lending money. . bills collection are some of the services provided by the banks as an agent. They provide variety of agency services. cheque clearing. tele banking.

CHAPTER BANKS. 2: SERVICES OR FACILITY PROVIDED BY .

Overdraft facility is not available in this account. a bank does not allow any interest on this account.(2) Products and Services offered by banks 2. Money can be deposited and withdrawn at any number of times.Withdrawls are made by cheques only.1 Types of deposits: A bank normally accepts the following types of deposits. This is a restriction on withdrawals from these deposits. 1000 can be deposited to open this account. Minimum Rs. (b)Current Deposits: A current account is normally opened by businessmen for their convenience. It carries low rate of interest i. There has been tremendous growth of saving deposits of all scheduled commercial banks during the last few decades due to the growth of banking habits and facilities. Usually. 3. It is intended primarily for small-savers. (a) Saving Deposit: The main objective of this deposit is to promote savings of the people. A cheque book facility is available only with higher minimum balance.5% to 4% depending upon the type of a bank.e. Saving deposits are meant for the households of the lower and middle income classes income to meet their future needs and earn an income from their savings. The current account is opened because of two important privileges (i) Overdraft facilities . The need of keeping cash reserves against such deposits is comparatively larger than the fixed deposits because of the restrictions on the number of withdrawals.

The primary objective of a current account is meant for the convenience of customer who are relieved of the task of handling cash themselves and to take the risk inherent therein. Interest is paid as per the terms and conditions. Income tax should be deducted from the interest paid if it is above the limit prescribed in the Act. which is repayable after the expiry of a certain period determined by the depositor.Therefor the rate of interest on fixed deposit is higher than other . An application form is filled up by the depositor for opening an account stating the Name. companies. The current account holders have to keep certain minimum balance as per rules of the bank. The period may be 30 days to 5 years or more. Period of deposit. Normally the deposit is not refunded before the expiry of maturity. the banker need not keep more cash reserves against it. chosen by the depositor to suit his purpose and to enable him to get back the money as and when he needs it. transfer of money and for other services. Current accounts are suitable for the requirements of big businessmen. which is called joint account. They are provided a statement of account instead of a Pass Book. amount of deposit. institution. As the date of repayment is determined in advance. address. The rate of interest depends upon the maturity period.(ii) Other facilities like collection of cheques. A fixed deposit is repayable on the expiry of a specific period. A current account is a running and active account that may be operated any number of times during a working day. A fixed deposit account can be opened in the names of two or more individuals. (c)Fixed Deposit: A fixed deposit is one. The banker can utilize such amount more profitably. It is also known as Time Deposit. public authorities whose banking transactions are numerous on every working day. Name of nominee and his/her signature.

No rmally. Any person can apply in the prescribed form for opening an account in his name. firms and companies.kinds of deposits. Pre-maturity withdrawals are not allowed. The banker should be very careful in opening an account in the name of the customer. It will enable the depositor to meet his target of expenses. more than one person. Bank s provides separate application form for opening saving and current accounts for individuals. It is intended to inculcate the habit of saving on a regular basis. The amount gets accumulated together with interest. It is also called as cumulative deposit account. . Depositor has to open an account with a fixed amount with a fixed maturity period and then deposit the same amount every month with the bank. 2. An inducement is offered in the form of higher rate of interest. partnerships. or by a guardian in the name of a minor. It is also called as cumulative deposit account. But the depositor can get a loan on the security of the deposit to the extent of 75% of the d eposit amount and the interest of 2% over the recurring deposit rate is charged by the bank on this loan. Fixed deposits are more popular in India and constitute more than 50% of the total bank deposit . Accumulated amount with interest is paid after a month of the payment of the last installments. jointly. higher rate of interest is paid depending upon the maturity period. (d)Recurring Deposit: It is one form of savings deposit. The depositor gets a big amount at maturity. Banks open such accounts for periods ranging from one year to 10 years. The rate of interest is normally equal to that of the fixed deposit account.2 Opening a New Account: A customer enters into relationship with a banker by opening an account with the bank. A recurring deposit ac count can be opened by any person.

(3) Advancing Loans: The commercial banks provide loans and advances in various forms to their customers. .The applicant is required to mention his/her name. Term loan may be medium term. (i) Short Term and Medium Term Loans: Commercial banks in India provide only short -term credit to the business firms. or long term loan. Short and medium term loans are advances. Medium term loans are granted for a period from one year to five years and long -term loans are granted for more than five years. The loan once repaid in full or in part can not be drawn again by the borrower unless the banker sanctions a fresh loan. They are given bellows: (a) Term Loans: The bank advances a lump sum amount for a certain period. The rate of interest charged by a bank in the case of the loan is normally lower than the interest on cash credits and overdrafts. The applicant is required t o submit passport size photograph and proof of residence. full address and specimen signature. with or without security. They have also started providing medium term finance to the businesses. The entire amount is paid to the borrower or credited to his account. The borrower can issue cheques to other parties out of the loan amount credited to his current account. The interest is charged for the full amount of loan at periodical intervals. because it involves the lower cost of maintenance on account of not frequent operation of the account and the bank gets interest on the total amount sanctioned whether the borrower withdrawals the whole amount of loan or not. The loan is repaid in installments together with interest. occupation. of an agreed rate of interest. made by b anks.

50 crores were withdrawn. This i s an arrangement with the bankers thereby the customer is allowed to draw money over and above balance in his /her account. This facility is generally available to business firms and companies. (c) Cash Credit: Cash credit is a form of working capital credit given to the business firms. It is a short -term temporary fund facility from bank and the bank will charge interest over the amount overdrawn. They may also adopt syndication route as an alternative to sole / multiple banking concept of consortium arrangement that suits the borrower and the financing banks. personal security etc. subject to observance of exposure norms or with other banks. The loan policy in respect of each broad category of nature is to be laid down by every bank with the approval of its board. Banks are now free to provide need based finance required by borrowers on their own. on the basis of operation. the customer opens an account and the sanctioned amount is credited with that account. The customer can operate that account within the sanctioned limit as and when required.The short and medium term loans are granted for meeting working capital requirements. It is made against security of goods. stipulations for borrowers with credit limits of over Rs. the period of credit . (ii) Long Term Loans: With effect from April. while granting long term loans to borrowers incorporate certain covenants in the loan agreement to protect their interest. 1997. Under this arrangement. This facility of overdrawing his account is generally pre-arranged with the bank upto a certain limit. (b) Overdraft: This facility is given to holders of current accounts only. The financial institutions and banks.

One advantage under this method is that bank charges interest only on the amount utilized and not on total amount sanctioned or credited to the account. Hence this method of lending slowly phased out from banks and replaced by loan accoun ts. The bank reserves the right of debiting the accounts of the customers in case the bills are ultimately not paid.. Discounting of bills by banks provide immediate finance to sellers of goods. Cash credit system is not use in developed countries .facility may be extended further. i. The loan amount paid in cash or by credit to customer account which the customer can draw at any time.. The interest is charged for the full amount whether he withdraws the money from his account or not.e. Banks can discount only genuine commercial bil ls i..e. . The bill passes to the banker after endorsement. i. Banks will not discount Accommodation Bills. The baker¶s discount is generally the interest on the full amount for the unexpired period of the bill. The bank may purchase inland and foreign bills before these are due for payment by the drawee debtors. at discounte d values. (4) Loans and Advances: It includes both demand and term loans. dishonoured. values a litter lower than the face values. direct loans and advances given to all type of customer mainly to businessmen and investor against personal security or goods of movable or immovable in nature.e. those drawn against sale of goods on credit. This helps them to carry on their business. Reserve bank discourages this type of facility to business firms as it imposes an uncertainty on money supply. (d) Discounting of Bills: Discounting of Bills may be another form of bank credit. Short term loans are granted to meet the working capital requirements where as long term loans are granted to meet the working capital requirements where as long term loans are granted to meet capital expenditure .

liabilities and saving¶s history of the borrower. The document required includes Agreement to sell. Usually no collateral security is required. approved plans and clearance cert ificate. The primary concern of a bank is to determine the loan amount that the borrower is comfortably able to repay. Home Extension or conversions Loan are the examples of home loans.most of the financiers required a down payment to be made by the borrowers. number of dependents. 500 to Rs 90. air-conditioners. The repayment capacity is determined by takin g into account the factors such as income.the loan amounts are sanctioned in the range of rs. stamp duty etc. The borrower has to pay documentation charges.000.7. The security of the loan is a first mortgage of the house property to be financed normally by way of deposit of title deeds. assets.000.Eligibility criteria for this kind of loan is 21 to 60 year s of age and gross salary of Rs 4. age.5% to 15%.500 per month or annual business of self -employed income of Rs 45. Interest rate is charged at a flat rate ranging between 7. Home Purchase Loan. colour televisions. Processing fees are charged by the banks. Home Construction Loan. spouse¶s income. (2)HOME LOANS: There are varieties of home loans provided by the banks. qualification. music system. Repayment is normally taken in Equated Monthly Installments (EMI) by way of post -dated cheques. . washing machines. Repayment period is about 12 to 36 months. Repayment period options are generally from 5 to 20 years. etc. Rate of interest is charged is fixed or floating to be decided by the borrower. title deeds. Processing fees are charged is fixed or floating to be decided by the borrower.VARIOUS TYPES OF LOANS PROVIDED BY BANKS: (1)CONSUMER DURABLE LOANS: Consumer durables loans cover purchase of durables such as refrigerators. Home Improvement Loan.

Yes Yes Proof of Business existence. last 6 months bank statements. Last 6 months bank statements (Self and business) Processing Fee cheque PAN Card Yes Yes Yes Yes Yes Yes . from 16/ITR. last 3 years P&L + Balance Sheet + IT Returns. Last 6 months bank statements Yes Yes Proof of Business existence.Documents required Salaried Self Employed professional Yes Self Employed Non professional Yes Application form with Photograph Proof of identity Proof of residence Income documents Yes Yes Yes Last 3 months salary slips. last 3 years P&L + Balance Sheet + IT Returns (Self & business).

proof of residence. . insurance policy of the vehicles etc. 80 to 90% of the cost of vehicle is financed by the banks. stamp charges.The age of the borrower should be between 21 and 58 years. The interest rate is charged on mont hly basis on reducing balance or at a flat rate. scooter. and auto rickshaw and taxi etc.The R -C book is endorsed for hypothecation to the bank which itself is an adequate security for the financier. Interest rate varies from time to time. cycle. There is a processing fee of 1 to 3% of the loan amount sanctioned. The borrower has to pay processing fees. motor. advanced EMIs. registration certificate of vehicle.(3)VEHICLE LOANS: Banks provides loans to purchase car. The size of the loan amount depends upon the cost of the vehicle but normally. (4)PERSONAL LOANS: Personal loan is an all-purpose loan for which the end-use can be to meet any personal requirements of the borrower. There are no tax benefits to salaried pe ople but self-employed can charge the interest amount to their profession or business. Self -employed persons can avail tax benefits on depreciation as well as on the interest paid on the amount borrowed for the purchase of the vehicle. At present interest rates are between 12 to 15% pa. Registration charges and Insurance. Any person above 21 years of age but below 58 years whether salaried or self-employed can get personal loan from the bank. The borrower has to submit income certificate . The amount of loan is determined on the basis of capacity to repay and the EMI should not exceed 30 to 40% of the net salary. The repayment period is 3 to 5 years and these loans are unsecured because se curity is taken by the bank except one or two sureties.

Income tax deduction is allowed in respect of repayment of loan taken for educational purpose subject to certain conditions. Some banks require collateral security or insurance policy at the time of disbursal of the loan. Proof of residence.000. 00.. Processing fees are charged by the banks for sanctioning the loan.(5)EDUCATIONAL LOANS: Indian banks have started giving education loans to the students between the age group of 16 to 26 years. The past academic track record of the student is considered for sanctioning the loan. This loan is available only for students whose annual family income does not exceed Rs. (ii) Engineering course (iii) Chemical Technology (iv) Management course like MBA . 1. Interest is also charged on a simple basis during the study period or up to commencement of repayment period. and p roof of residence. Interest rates are decided by the RBI from time to time but the rates are normally lower than other consumer loans. Repayment starts six months after completion of the course or on commencement of a job whichever is earlier.15 Lakhs for studies abroad. Usually no margin money is required for loans up to Rs. photograph. Studies in respect of the following subjects / areas are covered under the scheme. The maximum loan amount is Rs. and parents or guardians is of utmost concern to the bank. The loan has to rapid together with interest within five years from the date of completion of the course. (i) Medical and dental course. 4 Lakhs and thereafter 5 to 15% margin is to be borne by the student. photograph. The repayment capacity of the student. and proof of income of parents / guardian and academic documents are required for sanctioning the loan amount.

Presently one can obtain a loan upt o Rs. It is a process of transferring credit risk from the banker to the buyer of securitized loan s. banks will convert their business loans into a security or a document and sell it to some Investment or fund Manager for cash to enhance their liquidity position. the loan may be obtained for personal or business purposes. 20 Lakhs against dematerialized shares. securitizationss is the process of changing an illiquid asset into a liquid asset. (8) Securitizations of Loans: Banks are recently trying to securtise a part of their part of loan portfolio and sell it to another investor.(V) Law Studies (vi) Computer Science and Applications. etc. (7) Loan Against Savings Certificates: Banks are also providing loans upto certain value of saving certificates like National Saving Certificate. Loans are usually given only upto 50% value (Market Value) of the shares subject to a maximum amount permissible as per RBI directives. Fixed Deposit Receipt. Accordingly. Under this method. 10 Lakhs against the physical shares and upto Rs. (6) Loans against Shares/Securities: Commercial banks provide loans against the security of shares/ debentures of reputed companies. It involves a cost to the banker but it helps the bank to ensure proper recovery of loan. Indira Vikas patra. .

etc. It is safe to appoint a bank as a trustee than to appoint a bank as a trustee than to appoint an . (v) Act as trustee. Customers may furnish their bank details to corporate where investment is made in shares. the bank will continue to make such payments regularly by debiting the customer¶s account. on behalf of their customers.(3) Agency Services: (i) Collection of cheques. (iv) Purchase and sale of securities: Commercial banks undertake the purchase and sale of different securities such as shares. the companies directly send the warrants/ cheques to the bank for credit to customer account. Till the order is revoked. They run a separate µPortfolio Management Scheme¶ for their big customers. debentures. is due. debentures. as and when dividend. executor. interest. trustees and attorneys.. on standing instructions until further notice.. drafts. dividends.: The banks act as executors of will. insurance premiums: The bank makes the payments such as rent. (iii) Dealing in foreign exchange: As an agent the commercial banks purchase and sell foreign exchange as well for customer as per RBI Exchange control Regulations. interest. promissory notes. bonds etc. etc. (ii) Payment of rent. insurance premiums. subscription. on behalf of its customer and credit the amounts to their accounts. dividends etc. attorney. interest: As an agent the bank collects cheques.

receive letters etc. . they employ tax experts and make their services available to their customers. For this purpose. Any customer cannot have access to vault. µLockers¶ are small receptacles which are fitted in steel racks and kept inside strong rooms known as vaults. Acting as attorneys of their customers. they receive payments and sign transfer deeds of the properties of their customers. These lockers are available on half -yearly or annual rental basis. valuables like jewels are one of the oldest services provided by commercial banks. (vii) Preparations of Income-Tax Returns: They prepare income-tax returns and provide advices on tax matters for their customers. on behalf of the customers. small banks even get travel tickets . The bank merely provides lockers and the key but the valuables are always under the control of its users. Because the vault is holding important valuables of customers in lockers. (vi) Act as correspondent: The commercial banks act as a correspondent of their customers. it is also known as µStrong Room¶. (4) General Utility Services: The General utility services include the following: (i) Safety Locker Facility: Safekeeping of important documents.individual. book vehicles. account number and time can enter into the vault. Only customers of safety lockers after entering into a register his name.

Correspondent banking is another method of transferring funds over long distance. and fifty. Thus travellers cheques are not drawn on specific bank abroad. The purchaser of travellers cheques can encash the cheques from all the overseas banks with whom the issuing bank has such an arrangement. Cheques and credit cards are two important payment mechanisms through banks. Telegraphic Transfer (TT) facility also. A bank issuing travelers cheques usually have banking arrangement with many of the foreign banks abroad. etc.(ii) Payment Mechanism or Money Transfer: Transfer of funds is one of the important functions performed by Commercial banks. (iii) Traveller¶s cheques: Travellers cheques are used by domestic travellers as well as by international travelers. They offer Mail Transfer. A traveller has to sign in the blank space at t he time of drawing . One hundred dollar. Despite an increase in financial transactions. Electronic Transfer of funds is also known as µchequeless banking¶ where funds are transferred through computers and sophisticated electronic system by using code words. Cheques are also cleared through the banking system. The signature of the buy er / traveller is written on the face of the cheques at any time of their purchase. Banks. These can be also termed as a modified form of travellers le tter of credit. known as correspondent banks. these days employ computers to speed up money transfer and to reduce cost of transferring funds. usually from one country to another. The cheques also provide bank space for the signature of the traveler to be signed at the time of encashment of each cheque. The cheques are issued in foreign currency and in convenient denominations of ten. twenty. However the use of travellers cheques is more comman by international travellers because of their safety and convenience. banks are managing the transfer of fund process very efficiently.

The paying banker will pay the money only when the signature of the traveller tallies with the signature already available on the cheque. A traveller should never sign the cheque except in the presence of paying banker and only when the traveller desires to encash the cheque. shops. Circular Letters of Credit are therefore a more useful method for obtaining funds while travelling to many countries. Otherwise it may be misused. restaurants. The cheques are also accepted by hotels. The issuing bank levies certain commission depending upon the number and value of the travelers cheques issued. It may be noted that travellers letter of credit are usually paid for in advance. It is also difficult to the finder of the cheque to draw cash against it since the encasher has to sign the cheque in the presence of the payin g banker. In other words. . Unused travellers cheques can be surrendered to the issuing bank and balance of cash obtained. When a traveler cheque is lost or stolen. (iv) Circular Notes or Circular Letters of Credit: Under circular Letters of Credit. Encashment of a traveller c heque abroad is tantamount to foreign exchange transactions as it involves conversion of domestic currency in to a foreign currency. airlines companies for respectable persons.money and in the presence of the paying banker. the customer / traveller negotiates the drafts with any of the various branches to which they are addressed. Thus the traveller can obtain funds from many of the branches of banks instead only from a particular branch. the traveller first makes payments to the issuing bank before obtaining the Circular Notes. the buyer of the cheques has to give a notice to the issuing bank so that stop order can be issued against such lost / stolen cheques to the banks where they are permitted to be encashed.

The Letter of Credit is an important method of payment in international trade. This is done on the acceptance of the customer and helps to increase the business activity in general. the bank which issues the letter of credit. The Letter of Credit is an assurance of payment upon fulfilling conditions mentioned in the Letter of Credit. the person in whose favour the letter of credit is issued or opened (The seller or exporter. Thus. The buyer or importer. known as opening bank. This document guarantees payment to the seller upon production of document mentioned in the Letter of Credit evidencing dispatch of goods to the buyer. It is mostly used in international trade. have to be verified by the Nego tiating Bank. (vi)Letters of Credit: Letter of Credit is a payment document provided by the buyer¶s banker in favour of seller. known as Negotiating or advising bank. known as µBeneficiary of Letter of Credit¶). (vii) Acting as Referees: The banks act as referees and supply information about the business transactions and financial standing of their customers on enquiries made by third parties. There are primarily 4 parties to a letter of credit. in the first instance. the customers can travel without fear. The Letter of Credit is generally advised / sent through the seller¶s bank. and the credit receiving / adv ising bank. . This is done because the conditions mentioned in the Letter of Credit are. theft or loss of money.(v) Issue of travellers cheques: Banks issues travellers cheques to help carry money safely while travelling with India or abroad.

(xi) Accepting Bills: On behalf of their customers. This is also known as µAny Time Money¶. This is the .e. payment rules and buyers financial status in other countries.(viii) Provide Trade Information: The commercial banks collect information on business and financial conditions etc. Trade information service is very useful for those customers going for cross-border business. Birthday. and make it available to their customer to help plan their strategy. It will help traders to know the exact business conditions. Under this system the customers can withdraw their money easily and quickly and 24 hours a day. (xii) Merchant Banking: The commercial bank provides valuable services through their merchant banking divisions or through their subsidiaries to the traders. (ix) ATM Facility: The banks today have ATM facilities.. Under this syst em by paying equivalent amount one can buy gift cheque for presentation on occasions like wedding. the bank accepts bills drawn by third parties on its customers. These cheques received a wider acceptance in India.. This resembles the letter of credit. While banks accept bills. currency notes with a help of certain magnetic card issued by the bank and similarly deposit cash / cheque for credit to account. (x) Gift Cheques: The commercial banks offer Gift cheque facilities to general public. Customers under this system can withdraw funds i. they provide a better security for payment to seller of goods or drawer of bills.

(many of the points are already under implementation by banks). Currently. this type of services can be provided only by separate subsidiaries. (xiv) Factoring Service: Today the commercial banks provide factoring service to thei r customers. They underwrite a portion of the public issue of shares. raising of funds etc. diversification. BASIC ITEMS TO BE CONSIDERED: To enhance the customer service the following aspects may be considered. Remittances. new ventures.function of underwriting of securities. Its is very much helpful in the development of trade and industry as immediate cash flow and administration of debtors¶ accounts are taken care of by factors. known as Merchant Bankers as per SEBI regulations. debentures and bonds of joint Stock Companies.they can be classified under the following categories: (1) (2) (3) Deposit accounts. Other services Let us discuss these items by one by one in detail . (xiii) Advice on Financial Matters: The commercial banks also give advice to their customers on financial matters particularly on investment decision such as expansion. Such underwriting ensures the expected minimum subscription and also convey to the investing public about the quality of the company issuing the securities. This service is again provided only by a separate subsidiary as per RBI regulations.

(PAN) (b) Transfer of Accounts: The instruction of a customer for transfer of his deposit account from one branch to another should be carried out immediately on receipt of and in accordance with his instructions. No charges should be collected fir transfer of accounts. . the account should be opened as per instructions of the transferer branch and this should be intimated to the customer.needs to furnish his/her Income -Tax permanent Account Number. In terms of RBI instruction every account holder is required to produce two passport size recent photographs to the bank for opening any type of account with a bank. After effecting the transfer the customer should be informed of such transfer at his last and new address.50. Similarly. On receipt of instruction of the transfer from the transferor branch. specimen signature cards. etc. Passport and postal identification cards are deemed to be adequate identification. as per Income Tax Regulations a depositor desirous of opening a Fixed Deposit Account in excess of Rs. are also simultaneously transferred.(1)Deposit Accounts: (a) Introduction of Accounts: All deposit accounts should be properly introduced. the account opening form. standing instructions. 000. such as. the relative papers. It should be ensured that along with the balance in the account. stop payment instructions.

should be intimated to the customers by post / Local delivery on the date of debit / credit or latest by the next day. (i)Standing Instructions are accepted on all types of Accounts. . Entries in pass Books should be done then and there and pass Books shou ld be returned to the customers without making them wait long. etc. Statements of accounts to current Account to Current Account Holders be sent within 5 days from the due date. (ii)Standing Instructions should be carried out on the due dates without Fail Whenever the standing Instruction could not be ca rried out for any reason.(c) Pass Books/Statements of Accounts: Pass Books and statement of Accounts should be written accurately. telephone bills. These due dates should be marked in the relative ledger folios and statements of accounts should be prepared sufficiently early to be sent to the customer on due dates. the account ±holder should be intimated in time so that the least inconvenience and damage is caused to him. (d) Standing Instruction: Standing instructions refer to an authority given by the customer to the bank to debit his accounts periodically for certain specified purposes like payment of rent. neatly and legibly. (e) Advises of Credits and Debit made to Accounts: Credit and debits made to the accounts of customers includi ng those on account of outstation cheques/bills realized. electricity charges.

may be paid even after the normal banking hours.000 to Rs 10. per day. .. (g) Cash payment After Normal Banking Hours: To meet the urgent requirements of customer. (f) Safe Custody of Deposit Receipts: Customer may keep their Term Deposit Receipts in safe custody with the bank free of charge. In branches where the average payments handled by the teller is less than 100 per day. (h) Any Branch Transactions: Many banks are now providing deposits and withdrawals facility through any of the branches although the account is maintained in a particular branch. (i) Teller System: Under this system tellers will pay against cheque drawn on savings bank as well as current accounts up to certain amount. This type of operations is usually restricted in metro Politian cities. Few banks like Indian Overseas Bank have introduced this type of facility.Cheques and bills returned unpaid should be dispatched along with the debi t advices by the local delivery or by registered post on the day on which the debit is made or latest by the next day.5. in exceptional circumstances. personal cheques for reasonable amounts presented by the drawer himself. but within the working hours. tellers will also accept cash receipts up to certain limit and hand over the relative counter folios to the customers after signin g the chllans. It is usually up to a maximum of Rs.000 per payment in an account.

particulars of remitter and purpose of remittance et c. banks help the savers and borrowers to transfer funds from one place to another in secured way without phy sically moving the funds. This information will relate to the value of funds to be transferred. Drafts are basically bill of exchange.(2) Remittances: Banks are financial intermediaries. under this system it is necessary that both the parties to the remittance maintain bank accounts with the same bank. As in the case of Bill of Exchange. Apart from mobilizing deposits from savers and lending them to needy borrowers. irrespective of whether he has an account with the bank or not.20000 in cash for issue of drafts as per income tax regulation. the bank account number and address of the receiver of funds. albeit with different branches / places. the remitter of funds is required to deposit the amount required to be remitted together with a challan detailing the particulars of remittance. a draft is drawn by one party on another party and made payable to the drawer himself or someone else. Banks will not accept more than Rs. The bank levies a charge for issue of every demand draft. Demand drafts are drafts drawn by a bank on its own branches at different at different places and made payable to third parties or purchaser of the draft. (a) Issue of demand drafts: Demand drafts should be issued to any person who applies for it. On . This method of transfer of fund is called Mail Transfer since the advice of remittance is sent by mail / post by the remitting bank to the branch where the beneficiary has his accounts. The drafts can be crossed ³Account Payee´ to restrict its transfer. (b) Mail Transfer: Under Mail Transfer system.

20.receipt of remittance information. (c) Pay Order: Pay Orders are drafts issued by an office / branch of a bank on itself. The banks do not accept large cash (usually restricted to Rs. In case both the candidate and the education authority happen to maintain accounts with the same branch. In both the cases the bank will issues the instruments only after receipt of funds first. This facility of fund transfer is usually provided to their own customers. bank will ask the remitter to draw a cheque on his accounts for the purpose of remitting funds. Thus it is an intra bank fund transfer. The paying branch will credit the account of the beneficiary only on receipt of the advice received from the remitting bank. Funds can be transfer only between branches of the same bank and not between one bank to another bank. Suppose. If the required remittance is large. Banks also charges fees for these types of services. the receiving branch will credit the account of the beneficiary. a pay order is issued on itself. It is however a slow method for transfer of funds as advice regarding remittance is forwarded only through post. In other words the issuing branch / office and paying branch / office are one and the same. Thus. . It is also necessary that both the parties to the transfer maintain account with the same bank. then the candidate may remit the fees by obtaining a Pay Order instead of a demand draft can be obtained. the main difference between pay order and a demand draft is that whereas a demand draft is issued by a bank on any of its branches. a candidate desires to remit certain examination / admission fees to a particular education authority. Pay orders are issued by banks only against receipt of funds first.000/-) for remittances.

The bank will charge separately fees on their customers for availing of this facility. fees charged by banks for transfer of funds under EFT systems will be smaller as compared to remittance facilities under Money Transfer and demand drafts. . Under this system a customer desiring to remit certain amount to another place fills in the prescribed EFT application form together with the details like . and hands over the form and a c heque drawn on his account. However. it acts as an intermediary between the remitting bank and receiving bank and effects the transfer. The remitting bank through one of its designated branches for this purpose transmits the details of transfer to the Reserve Bank of India. location of the branch. the remitter has to fill up necessary challan and give it to the bank along with a cheque or cash for transfer of funds.00 per transaction to banks. 2. under Mail Transfer. beneficiary¶s name. the Reserve Bank Of India has introduced Electronic Funds Transfer (EFT) Scheme to assist banks in providing their customers fund transfer facility from one account to another either with the same bank or with different banks. For example. The reserve bank allows up to Rs. etc. Under Electronic Funds Transfer the transaction of funds transfer is initiated through electronic equipment and system or telephone or computer devices. Fund transfer under EFT is possible from any branch to branch with the same bank or with other banks. etc. In India.00 crore per transactions to be transferred in this way. The Reserve Banks at the transaction originating centers consolidates all such transfer advice and transmit information of transfer to its various centers for advising the concerned banks for providing the requisite credit to the beneficiaries.(d) Electronic Funds Transfer: Normally remittance or transfers of funds between banks get originated by a paper instruments. Thus. 5. Further it charges only Rs. name of the bank and branch. bank account number .

These notes can also be given along with good notes while depositing money into the accounts. The nomination facility is also available for deposits made with registered NBFCs. the bank will be obliged to pay the outstanding balance in the account by the nominee of the account holder. This facility should be extended even without asking for by the customer. These facilities should be incorporated in the opening form itself. This quickens the pace of settlement of funds after the death of the account holder without involving any hassles. (c) Mutilated Currency Notes: Supposing we happened to have mutilated currency notes with more than two pieces or the note is cut through a number panel on the currency notes. In the unfortunate event of death of the customer. (b)Exchange of soiled notes: Many times we come across badly soiled currency notes or torn notes. As per RBI instructions all branches of public sector banks must accept soiled notes and torn notes (not exceeding two pieces and subject to certain other conditions) for exchange against good currency notes without any charges. Public sector and private sector bank branches having currency chests have been directed to accept the mutilated notes and give good notes in exchange subject to fulfillment of certain conditions . . The RBI has prepared a guideline known as ³RBI Note Refund Rules´ for paying value against mutilated notes.(3) Other Services: (a) Nomination facility: All banks have been directed by RBI to provide nomination facilities in respect of personal accounts like saving bank accounts. The RBI from time to time issues advertisement in this regard for the knowledge of public.

important legal deeds and document of customers against payment of periodic fees. . It should be remembered that under Locker Facility the banks make available Lockers on rental basis for safe keeping of valuables at customer risk. banks also provides custodial services for holding valuable financial instruments.(d) Custodial Services: Apart from offering safety Locker Facility.

3 Tele Banking 3.CHAPTER 3: IT SERVICES PROVIDED BY THE BANKS 3.2 Automated Teller Machine 3.4 Credit Cards .1 Electronic banking 3.

They are also cost effective to the banks. a nd ATM.and other banking information can be made available with easy access to customers on internet. mobile banking.(3) IT.Therfore. etc.E-banking facilities banking transactions round the clock globally. Bank provides additional delivery channels to their customers which are more convenient to customers. Electronic banking is basically Internet based. extra -net and intra-net. Customer can use . The customer can access the banks web site for viewing their account details and perform the transaction on ac counts as per their requirements. 3. These delivery channels are ±tele-banking internet banking. It calls for elimination of paper-based transaction and radical change in the banking operations. Banking services such as remittances. The transactions are carried out through internet.Electronic banking: Electronic banking means using electronic devices for carrying out banking transaction.1. SERVICES PROVIDED BY THE BENKS. it is banking on the information super high -ways on the frontier of internet. Electronic banking enables the customers to perform the basic banking transaction by sitting at their office or at homes through PC or LAPTOP. credit cards. deposit. It is conduct of banking electronically.

etc. Thus.howeve r. Today most of the basic banking transaction can be performed conveniently through internet banking. . no queues. (7) Access to rates of interest. electronic banking has the following a dvantage. (8) Access to other service charges. (2) Convenient banking. (5) Statement of accounts.these services with no restricted office hours. (2) Fund transfer. Electronic data interchange. Several network innovation for E-banking can be visualized such as Smart card. The following are some of the basic functions: (1) Account enquiry. (6) Access to latest schemes.banking operation have to be guarded against unauthorized access by intruders. (5) Speed banking. (3) Low cost banking. (4) Request for issue of cheque book and draft. (1) Round the clock banking. (6) Service banking. (4) Quality banking. and no tellers and without waiting. (3) Payment of bills.

(2) No employee interface is necessary.2 AUTOMATED TELLER MACHINE: The trend in banking has evolved from a cash economy to cheque economy and there on to the plastic card economy. Usually this is referred to. (5) Automatic and instantaneous accounting is possibl e. One of the channels of banking service delivery is the ATM or the automated teller machine. (3) Cash and cheques can be deposited and statement of accounts requirement. The card is a plastic card with a magnetic strip with the account number of the individual. . The advantages of an ATM over personal teller are as follows: (1) ATM¶s can be accessed round-the-clock.3. Current and saving account holders of a bank who hold a certain minimum balance in the account are issued an ATM card. transfer of funds etc. whose traditional and primary use is to dispense cash upon insertion of a plastic card and its PIN or personal identification number. Bank offer this card as a free service to its deposit holders.ATM cards are used to withdraw cash from bank accounts when bank customers are closed or even when counters are open-to save on time. as the PIN and is issued by the bank¶s computers.can be effected. When the card is inserted into ATM. (4) It offers a cost-effective solution alternative to labour costs. the machines sensing equipment identifies the account holder an d asks for his or her identification code number.

convenience. The customer can call the exclusive tele banking numbers and provide the details to identify himself or herself to the automated voice. We can say that credit card is a passport to safety. prestige. . 3. ATM Offers cash availability when necessary. (8) ATM eliminates the need for customers to travel to the branch where his or her account is maintained. Typically. many banks offer cash delivery or collection service to ascertain classes of customers. the bank account number and the T PIN are asked for.4 Credit Cards: The credit card can be defined as a small plastic card that allows the holder to buy goods and services on credit and to pay at fixed intervals through the card issuing agency.(6) To depositors who do not have a credit card. and credit.similer to the ATM pin (T-Pin) is provided to each account holder.000 per annum is eligible for card. 3. (7) Scope for frauds.3 TELE BANKING: Phone Banking or tele banking is a banking service offered by banks to enable customer to access their account for information or trans actions. A person who earns a salary of Rs 60. The customer is given access to his account or transacts on his account or transact on his account when the respective number matches the computerized system. The credit card realses the customer from botheration of carrying cash and ensures safety. if the ATMs are conveniently located and networked. robberies and misappropriations is reduced considerably if the PIN is maintained. Though cash withdrawal and deposit are not enabled through this service.

At the end of the month. Beyond this period. When goods and services are supplied. some cardholders may prefer to pay off their dues before the free credit period. However. whereas credit card guarantees against a sales voucher signed by the credit card holder. He then sends the voucher to the issuing bank which pays the amount claimed less a service charge(normally between three per cent to seven per cent). . Each credit card bears a specimen signature of its holder and it¶s embossed by the issuing bank with the holder¶s name and number. The supplier places the card in a special imprinter machine.Operation of the credit card: Credit cards operate quite differently from cheque cards. the bank sends a fully itemized statement to its card holder who must remit his cheque for the total amount. The holder signs the voucher and the supplier compares the signature with that of the card. the bank charges interest on outstanding bills. A cheque card guarantees payment of a cheque. the holder gives his card to the supplier who has agreed to join the scheme. which records the holder¶s name and number on a sales voucher. The particulars of the transactions are added on the voucher. Such cardholders are called convenience users. The credit card customers are typically extended an unsecured credit for a t least 30 days.

(2) The risk factor of carrying cash and storing cash is avoided. . thus. (6) The credit card saves trouble and paperwork to travelling businessmen. (4) The cardholder has a period of free credit usually between 30 to 50 days of purchase. (7) The cardholder has the option of taking extended credit up to a prearranged limit without reference to anyone.Benefits to the cardholders: The credit card provides following advantages to the cardholders: (1) The card holder can purchase goods and services at a large number of outlets without cash or cheque. The card is useful in emergency and can save embarrassment. tending to reduce bank and handling charges. It is convenient for him to carry a credit card and he has trouble free travel and makes purchases without carrying cash or cheque (3) A month¶s purchase can be settled with a single remittance. in addition to an initial credit and interest -free period. (5)Credit can be availed with minimum formality. (8) It gives them exposure to banking operations since systematic accounting for spending and payment is routed through banking channels. Further revolving credit becomes automatically available as the outstanding balance is reduced.

It is a special plastic card conne cted with electromagnetic identification that one can use to pay for things purchased directly from its bank account. cardholder¶s accounts are immediately debited against purchase or services to the computer network. The customer does not get free credit. Under cheque card system. (10) It also extends additional facilities like free insurance coverage. (11) Credit card is considered as a status symbol. he has to keep sufficient balance in his account or the bank will provide overdraft upto a specified limit. the card holder is given a card and a cheque book. . Under the system. He has to use the cheque while purchases are made and the trader gets guaranteed payment. Cheque Cards: It is a card given to the customer by the bank that he must show when he writes a cheque which promises that the bank w ill pay out the money written on the cheque. The spending limit is determined by the user¶s bank depending upon available balance in the account of the user. The system is intended to replace cheque system of payment. the card holder is given a card and a cheque book. Other Types of cards: Debit Cards: Debit cards will offer direct withdrawal of funds from a customer¶s bank account.(9) The cardholder has the convenience for making a single systematic accounting for spending and payment for th e purchases made during the month rather than many payments by various means. Hence. Under cheque card system. under debit card the card holder must have adequate balance in his account. on interest payment basis. free travel booking. discount on purchases.

A fee is also payable by the cardholder to the card issuing institution. In a charge card such credit facilities are not available. with. the cardholder gets credit or loan for payment of periodical bill when sufficient balance is not available i n their accounts.Charge Cards: A small. seek information to our accounts. Smart Cards: A smartcard enables the customer to perform various other banking functions apart from the credit purchases. For an example.The full amount owed must then be paid on demand. etc. we can verify entries in our accounts. and etc. In credit cards. The card can also perform calculations and maintained records . smart cards.This is possible bec ause the card has an integrated circuit with microprocessor chip embedded in the card for identification purposes. The periodical bill amount is paid off by charging it to customer account. usually plastic card provided by an organization with which one may buy goods from various shops. we can draw cash from ATM¶s. .

2 Methodology of the Study 5.CHAPTER =5 Findings.4 Findings 5.5 Suggestions .3 Analysis and Interpretation of Data 5.1 Introduction 5. 5. Analysis. and suggestion.

now all the banks have realized that technol ogy is at the foundation of all its functions and operations and to have end -to-end integrated paperless systems and process. Even the productivity gains have increased to major an extent. banking was considered as a chore you would like to finish off as quickly as possible. The banking functions are the routine functions of one¶s life. anywhere banking. at all places and is willing to pay extra for this service. but also to control the risk and fraud better. New breed of financial services brand viz. Banks now a day play to greater stress on consumer banking in the coming years. Also. it gives improved tools for decision making p lanning. In the pre-liberalization days. convenience banking. The busy business executive needs cash at any time. Thus. managing expenses and increasing business. Today. . with a view to achieve higher market penet ration and profitability. tele -banking and on-line banking have appeared on the banking landscape.Banking Awareness: Now a days banking is extremely important in the world¶s economy. It also helps to give new and better innovative products to the consumer. The main objective of this topic is to find out the services provided by all the banks. the scenario is totally different. The emergence of private sector banks has changed the whole scenario of the banking function in the recent years. It is not only for convenience. which provide the customer the best services.

properly structured questionnaire was used. marketers go for intelligent sampling. The questionnaire comprises different questions. They have different services charged and different types of account to cater to the need of their customer. In this research stratified and conveniences sampling method has been used for sampling procedure. .In this research.30 respondents who were having their current account with private banks and nationalized banks in western area of Mumbai. The study also attempts to know the customer¶s awareness about the services provided how often they utilize these services. OBJECTIVE OF THE STUDY The subject matter or the scope of this research project is confined to the comparison of the services provided by the different banks in the western suburb area.primary data has been collected from person having their account in different bank in western suburb area by filling up well-structured questionnaire. Sampling Process: It is not feasible to go for a population surveys due to this numerous consumers and their scattered location. RESEARCH INSTRUMENT: For the collection of primary data. SOURCES OF DATA The study is based on primary data . Hence.METHODOLOGY OF THE STUDY Statement of problem All the banks in the city are providing different services to their account holders. The reason for selecting this topic is thus to compare all the different services provided by different banks to give the suggestion to improve the product in order to make it more competitive and customer friendly.

7% 10% National Banks 50% Centurion Banks HDFC Banks Any Othe 33% . of respondent Percentage National Banks Centurion Banks HDFC Banks Any Other Total 15 10 3 2 30 50 33 10 7 100 From the above table it is inferred that out of 30 respondent 15 (30%) having an account with National Bank. 3 (10%) have an account with HDFC Bank and 2 (7%) have an account with other banks. 10 (33%) have an account with centurion Banks.Analysis and Interpretation of Data Table 1: Account Holders in Different Banks Particulars No.

Table 2: Services offered by the Banks Services Net Banking ATM Bill Paid Inter Branch Any Other Total No. of Respondent 5 13 3 7 2 30 Percentage 17 43 10 23 7 100 It is clear from the table-2 that the major banks provide facility of the net banking. ATM bill paid and Inter Branch services to the customers. 7% 17% 23% Net Banking ATM bill paid inter branch Any other 10% 43% .

ATM. 8%. 23%.Table 3: Service Availed by Customer Services Net Banking ATM Bill Paid Inter Branch Any Other Total No. Bill Paid. of Respondent 04 11 02 06 1 24 Percentage 17 46 8 25 4 100 From the above table it can be observed that out of various services offered 17%. 46%. and 2% respondent are using the facility of Net Banking. Inter Branch. 2% 20% 22% net anking atm 43% ¥ 13% any ot er ¤ inter ranc £ ¢ ¡ i ll a i ¡   . and other services respectively.

23% respondents prefer HDFC Bank while only 7% respondents prefer any other bank. 2 = Average. 3 = Unsatisfied The Level of customer satisfaction in the different banks is as follows: It is clear from the data that the choice for opening account 57% and 21% respondents give preference to National and Centurion Bank respectively.Table 4: Customer Satisfaction of Different Services Services Fully Satisfied 1 % Average 2 % Unsatisfied 3 % Net Banking ATM Bill Paid Inter Branch Any Other Total 5 13 3 6 1 28 18 46 11 21 4 100 2 8 4 5 1 20 10 40 20 25 5 100 1 1 2 50 50 100 Where 1 = Fully Satisfied. .

14% 35% 1 % 18% 2 % 3 % 1% 13% 19% .

Table 5: Choice of Customer for Opening Account Bank No. 23 HDF Bank 57 Any Other 13 © ¨ ¨ ¦ § National Banks 7 ¦ ¦ ent rion Banks . 23% respondents prefer HDFC Bank while only 7% respondents prefer any other bank. of respondent percentage National bank Centurion bank HDFC bank Any other Total 17 4 7 2 30 57 13 23 7 100 It is clear from the data that the choice for opening account 57% and 21% respondents give preference to National and Centurion Bank respectively.

33% 30% convenience status services interest rate safety 7% 13% 17% . It also shows that people want banks at their beck and call and provide them convenient services at their door step. 33% respondents have faith in the banking services of their solid safety measures. of respondent Convenience status Services Interest rate Safety Any other Total Percentage 30 13 17 7 33 100 9 4 5 2 10 30 Table 6 provided the details of trust of people towards different banks.Table 6: Trust Towards Different Banks No.

FINDINGS

(1) Still majority of people preferred to open an account in nationalized banks of their long-standing trust in the above said banks. (2) Amongst the services offered by banks in Western area, ATM takes the lead So far as the concept of modern days services is concerned. (3) People find the operation of ATM preferable to the other services provided by the banks. (4) A large majority of respondents found the modern day banking services quite Satisfactory. There was only a small no. of respondents who still feel that more in yet to come. (5) Earlier national banks were considered time tested ones, so people had deep-rooted faith in services offered by them but now they are tilting towards the private sector banks and this is of the healthy competition given by the latter. (6) People of this Western area belt specially people belonging to Mumbai district feel increase of its being a border town so they prefer to but their hard earn money in a bank as a safety measures and secondly they feel that making action in the banks of this area is quite convenient of the cooperative nature of the staff.

SUGGESTIONS
(1)The use of e-banking services is still not up to the mark as ex pected by the
banks. This requires awareness among the customer about benefits of these services. The customers should be educated about the benefit of these services. This would help the bank in a long run. (2) The machine, which was earlier used, as a tool for adding customer service is now considered as a revenue earner. The maximum use of ATM is usually done only for the purpose of cash withdrawal and balance inquiry, but in Rajkot, it is just a mini bank where one can access most of its functions, which would help the bank to reduce its burden at the branches. Moreover, there is an need to increase the number of ATMs. (3) The debit card is used only as a substitute for ATM. The customers do not have faith in this facility. This requires awarenes s among the customers so that they can make efficient use of the card and the facility. This in turn, will Increase the flow of funds in the bank. (4) The bank should also take necessary actions to promote their products through proper media. Extensive and aggressive advertising is a must to survive in the global scenario. (5) Moreover, private banks should start the facility of cash credit and overdraft to some of the preferred customers. This helps them to convert a substantial Customer base of nationalized banks. They should also provide loans for Purchase of premises, machinery etc. (6) The fundamental thing that banks need to do is to built up an IT savy customer base. In India due to various factors like illiteracy, the IT awareness of the people is still very low. It is clear that the disposable income of the people is growing, but many still have a mental block towards using IT related services,

due to various reasons like security apprehensions. Thus, the banks need to put in major efforts towards educating the customer on this aspect.

Chapter = 5 Conclusion .

They results suggest that over all IBS customers are mostly satisfied with the Indian banking Services been provided to them and the banking efficiency in their transactions. its working hours etc. majority of the customer are in the age of 21 to 40 years and most Of the customers are of the middle income level. Mutual Funds sch eme etc. their Confidentiality to its customers. But most of the Customers are unaware of the different Indian Financial products such as Merchant Banking. Even if one does not subscribe to the Indian injunction against the institution of interest.Regarding the Indian banking selection criteria. time deposit account. . This shows that IBS is lacking many of the feature and the requirement that their customer wants. Our findings suggest that most of the Indian banking customers have adopted both banking System. Secondly the trend of the customer in the sense of age. The preceding discussion makes it clear that Indian banking is not a negligible or merely temporary phenomenon. bank efficiency in the transaction. as about 57% of the customers have account in National Banks and others Banks. This study is conducted in order to get information about the western suburbs area customers and their usage and awareness of the different products and services of the Indian banking system and to know about the customer satisfaction level towards the Indian banking system. Most of the customers have adopted Indian banking due to the religious reasons.5 Conclusion. but there are some other factors that motivate the customers for the adoption of the Indian banking system such as. Our study indicates that the customer¶s awareness level towards Indian banking products is good in some of the general products such as current accounts. Study shows that most of the customers of the western area are highly educated.. Indian banks are here to stay and there are signs that they will continue to grow and expand. one may find in Indian banking some innovative ideas which could add more variety to the existing financial network.

03 Indian Journal of Marketing IBA Bulleting Aug 2004 Money Banking and International trade -R.yahoo.wikipedia.Gupta WIBLIOGRAPHY. March.R.Paul Monetary Economics -Suraj.com .com www.google.p.BIBLIOGRAPHY Source: IBA Bulletin special Issue.com www. www.

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