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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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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. .

(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.OBJECTIVE OF THE STUDY (1) To understand the awareness of banking among the customer. . (3) To understand the basic banking services provided by the banks to the customers.

NO. Analysis and suggestion Conclusion .Table of contents SR. 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. CONTENTS PAGE NO.


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

It grew geographically.. These banks opened new offices in semi -urban and rural areas and approach the rural people. The banking regulation act provides extensive powers to t he reserve bank of India.e. The state bank of India was established in 1955. 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. i. as an institution accepting money as deposit for lending) . structurally and functionally. Thus the origin of the word can be traced as follows. Let us briefly trace the evolution of banking. Deposits of scheduled banks registered a spectacular increase. which allowed the scope for a new experiment in the Indian banking.it created a group by nationalizing eight regional banks in 1960.Indian banking system developed in many respects. The number of scheduled banks was decreased and the importance of non-scheduled commercial banks was also declined.

. bank of Bombay and bank of madras.e. The above three banks were later amalgamated to from one bank called. (2) Cutthroat competition. (5) Speculative dealings. These led to a series of failure of banks. These banks were set up by merchants and traders who combined trading with banking. At the time there was an indiscriminate growth of smaller banks in the private sector.1920. 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. (3) Unplanned investments.EVOLUTION: The banking system in India is based upon the British Banking System which is largely branch banking. Three presidency banks nominated the banking sector i. bank of Bengal. 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. the imperial bank of India under the imperial bank of India act. Allahabad bank. Some of the important causes of bank failures during the period were: (1) Incompetent managers and directors.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. Commercial banks in India were started during the latter half of the 19th century. and Punjab national bank.

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

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

Dr. none of them precisely defined. and (iii) Collect cheques.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.L. But bank is not merely a trader in money but also an important manufacturer of money. 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. Crowther defines a bank as. Thus. 1949 to define µBanking¶ and µBanking company¶ . Let us see the definition of bank and banking. Sir kinely. In other words. given by various authorities.However. µbanking¶ incorporating its entire functions. 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. ³no person or body corporate otherwise can be a baker who does not.MEANING AND DEFINITION OF BANKING A Bank is an institution which deals in money and credit. . a bank is a factory of credit. bank is an intermediary which handles other peoples¶ money both for their advantage and to its own profit.Hart. Although the above definitions have described the meaning of bank. for his customers´. (i) Take deposit accounts (ii) Issue and pay cheques.an attempt has been made in section 5(1)(b&c)of the Banking Regulation Act.

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

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

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

in 1911 and many other bank established on the same line.In 1895.the period of . During the last part of 19th century and early phase of 20th century.. These agency houses were basically trading firms and carrying on banking as part of their main business.In 1906. 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. To understand the history of modern banking in India.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.the Indian bank ltd in 1907.the bank of Baroda L td.DEVELOPMENT OF BANKING IN INDIA: Banking in India is indeed as old as Himalayas. 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. the banking functions became an effective force only after the first decade of 20th century. one has to refer to the ³English agency houses´ established by the east India Company.the bank of India ltd. But. (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. Punjab national bank Ltd. For example. the µswadeshi movement included the establishment of a number of banks with Indian management.In 1908.

5. On the basis o f the recommendation of the Banking Enquiry committee.It was given power to hold government funds and manage the public debt. it was not authorized to issue currency.1949.Accordingly. Even though the need for a central bank was felt in the 18th century.accordingly the Reserve Bank of India was constituted in 1935 to regulate the issue of bank notes.5 crore. the ³Imperial Bank of India Act´ was passed for amalgamating the three presidency Banks. .the stronger and well managed banks like those mentioned above survived. specifically in the rural and semi-urban areas and for various other public purposes. it was constituted as a private shareholders µbank with a fully paid up capital of Rs.63 per share of Rs. In 1955. securing monetary stability in India and to operate t he currency and credit system of the country to its economic development.However. it could materialize only in the 20th century. there was a general attitude towards its nationalization. After independence.00 crore even now.the µReserve Bank of India¶(transferred to public ownership)Act was passed in 1948. the Reserve Bank Of India Act was passed in 1934.the total value of compensation paid by government amounted to Rs.54 crore or RS. In 1920.118. Accordingly the µImperial Bank¶ was nationalized and µState Bank of India¶ emerged with the objective of extension of banking facilities on a large scale.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. As such.5. the µstate bank of India Act¶ was passed. the crisis.100 paid up. It is interesting to note that the paid up capital of Reserve Bank continues to remain at Rs. the µImperial bank of India¶ was established in 1921.world War I. The branches of the bank were functioning as clearing houses (Agency for effecting settlement of funds among banks).However.Thus. Initially.

the µstate Bank of India¶ (subsidiary banks) Act was passed by which the public sector banking was further extended. the first two banks were amalgamated under the name of ³The State Bank of Bikaner and Jaipur´. (i) The state Bank of Bikaner (ii) The state Bank of jaipur (iii) The state Bank of Indore.In 1959. . The following banks were made the subsidiaries of State Bank of India. (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.

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

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. The goldsmiths began to lend the money knowing that all the depositors do not withdraw their savings at a time. repayable on demand or otherwise and withdrawable by cheque. He was doing the banking business as a side occupation. (d) Banking: Section 5(b) defines banking as accepting for the purpose of lending or investment of deposits of money from the public. another important valuable item. They are. He accepted for safe custody the money. The origin of modern banks is traced to three important sources. The merchant bankers were prilimarily trader and had to oblige his customers by accepting their money for safe custody. (a) The goldsmiths (b) The moneylenders and (c) The merchant bankers. 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. order. which is a very valuable item. Banker.India should use as a part of its name at lease of the following words ± Bank. The goldsmith by virtue of dealing in gold. belonging to his customers. In other words. draft. Banking or Banking Company. Modern . Section 49A of the act prohibits any institution other than a banking company to accept deposit money from the public withdrawable by cheque. had Facilities for the safe keeping of valuables. or otherwise. The moneylender lent his surplus funds to the needy and earned the income by way of interest.

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

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

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

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

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


Usually. It is intended primarily for small-savers.5% to 4% depending upon the type of a bank. This is a restriction on withdrawals from these deposits. Money can be deposited and withdrawn at any number of times.1 Types of deposits: A bank normally accepts the following types of deposits. (a) Saving Deposit: The main objective of this deposit is to promote savings of the people. 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 current account is opened because of two important privileges (i) Overdraft facilities . 1000 can be deposited to open this account.e.Withdrawls are made by cheques only. 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.(2) Products and Services offered by banks 2. 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. A cheque book facility is available only with higher minimum balance. a bank does not allow any interest on this account. (b)Current Deposits: A current account is normally opened by businessmen for their convenience. Minimum Rs. 3. Overdraft facility is not available in this account. It carries low rate of interest i.

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

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

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

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

. Cash credit system is not use in developed countries . 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. dishonoured. . The bill passes to the banker after endorsement. This helps them to carry on their business.e. Banks will not discount Accommodation Bills. 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 . 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. at discounte d values. (4) Loans and Advances: It includes both demand and term loans. 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. those drawn against sale of goods on credit.. Banks can discount only genuine commercial bil ls i.. Discounting of bills by banks provide immediate finance to sellers of goods. The loan amount paid in cash or by credit to customer account which the customer can draw at any time. values a litter lower than the face values. The bank reserves the right of debiting the accounts of the customers in case the bills are ultimately not paid. The bank may purchase inland and foreign bills before these are due for payment by the drawee debtors. The interest is charged for the full amount whether he withdraws the money from his account or not. i.e. The baker¶s discount is generally the interest on the full amount for the unexpired period of the bill.e. i.facility may be extended further. Hence this method of lending slowly phased out from banks and replaced by loan accoun ts.

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

last 6 months bank statements. Last 6 months bank statements (Self and business) Processing Fee cheque PAN Card Yes Yes Yes Yes Yes Yes . Yes Yes Proof of Business existence. Last 6 months bank statements Yes Yes Proof of Business existence. last 3 years P&L + Balance Sheet + IT Returns. last 3 years P&L + Balance Sheet + IT Returns (Self & business). from 16/ITR.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.

There are no tax benefits to salaried pe ople but self-employed can charge the interest amount to their profession or business. At present interest rates are between 12 to 15% pa. registration certificate of vehicle. (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.The R -C book is endorsed for hypothecation to the bank which itself is an adequate security for the financier. The interest rate is charged on mont hly basis on reducing balance or at a flat rate.The age of the borrower should be between 21 and 58 years. The borrower has to pay processing fees. Any person above 21 years of age but below 58 years whether salaried or self-employed can get personal loan from the bank. and auto rickshaw and taxi etc. motor. 80 to 90% of the cost of vehicle is financed by the banks. 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. scooter. .(3)VEHICLE LOANS: Banks provides loans to purchase car. 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. Interest rate varies from time to time. The borrower has to submit income certificate . cycle. The size of the loan amount depends upon the cost of the vehicle but normally. stamp charges.proof of residence. insurance policy of the vehicles etc. advanced EMIs. 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. There is a processing fee of 1 to 3% of the loan amount sanctioned. Registration charges and Insurance.

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

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

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

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

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

In other words. (iv) Circular Notes or Circular Letters of Credit: Under circular Letters of Credit. Otherwise it may be misused. the customer / traveller negotiates the drafts with any of the various branches to which they are addressed. When a traveler cheque is lost or stolen. The paying banker will pay the money only when the signature of the traveller tallies with the signature already available on the cheque. . The cheques are also accepted by hotels.money and in the presence of the paying banker. Thus the traveller can obtain funds from many of the branches of banks instead only from a particular branch. shops. Circular Letters of Credit are therefore a more useful method for obtaining funds while travelling to many countries. 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. A traveller should never sign the cheque except in the presence of paying banker and only when the traveller desires to encash the cheque. 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 traveller first makes payments to the issuing bank before obtaining the Circular Notes. The issuing bank levies certain commission depending upon the number and value of the travelers cheques issued. airlines companies for respectable persons. Unused travellers cheques can be surrendered to the issuing bank and balance of cash obtained. 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. It may be noted that travellers letter of credit are usually paid for in advance. restaurants.

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

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

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

No charges should be collected fir transfer of accounts. Passport and postal identification cards are deemed to be adequate identification. standing instructions. the relative papers. the account opening form. On receipt of instruction of the transfer from the transferor branch.50. . 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.(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. the account should be opened as per instructions of the transferer branch and this should be intimated to the customer.(1)Deposit Accounts: (a) Introduction of Accounts: All deposit accounts should be properly introduced.needs to furnish his/her Income -Tax permanent Account Number. such as. as per Income Tax Regulations a depositor desirous of opening a Fixed Deposit Account in excess of Rs. 000. It should be ensured that along with the balance in the account. etc. Similarly. stop payment instructions. are also simultaneously transferred. specimen signature cards.

(c) Pass Books/Statements of Accounts: Pass Books and statement of Accounts should be written accurately. Statements of accounts to current Account to Current Account Holders be sent within 5 days from the due date. electricity charges. (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. telephone bills. neatly and legibly. (i)Standing Instructions are accepted on all types of Accounts. (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. 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. (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. 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. should be intimated to the customers by post / Local delivery on the date of debit / credit or latest by the next day. the account ±holder should be intimated in time so that the least inconvenience and damage is caused to him.

but within the working hours. personal cheques for reasonable amounts presented by the drawer himself. (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. (g) Cash payment After Normal Banking Hours: To meet the urgent requirements of customer..5. in exceptional circumstances. per day. Few banks like Indian Overseas Bank have introduced this type of facility. In branches where the average payments handled by the teller is less than 100 per day. It is usually up to a maximum of Rs.000 to Rs 10. may be paid even after the normal banking hours.000 per payment in an account.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. This type of operations is usually restricted in metro Politian cities. (i) Teller System: Under this system tellers will pay against cheque drawn on savings bank as well as current accounts up to certain amount. (f) Safe Custody of Deposit Receipts: Customer may keep their Term Deposit Receipts in safe custody with the bank free of charge. 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. .

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

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

However. For example. and hands over the form and a c heque drawn on his account. Thus. In India. etc. The bank will charge separately fees on their customers for availing of this facility. name of the bank and branch. 5. etc. Under Electronic Funds Transfer the transaction of funds transfer is initiated through electronic equipment and system or telephone or computer devices. The remitting bank through one of its designated branches for this purpose transmits the details of transfer to the Reserve Bank of India. 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. . The reserve bank allows up to Rs. Fund transfer under EFT is possible from any branch to branch with the same bank or with other banks. 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. beneficiary¶s name.00 per transaction to banks. Further it charges only Rs.00 crore per transactions to be transferred in this way. under Mail Transfer. it acts as an intermediary between the remitting bank and receiving bank and effects the transfer. bank account number . the remitter has to fill up necessary challan and give it to the bank along with a cheque or cash for transfer of funds. 2. location of the branch. 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. 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 .

(b)Exchange of soiled notes: Many times we come across badly soiled currency notes or torn notes. 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. This quickens the pace of settlement of funds after the death of the account holder without involving any hassles. . The nomination facility is also available for deposits made with registered NBFCs.(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. These facilities should be incorporated in the opening form itself. The RBI from time to time issues advertisement in this regard for the knowledge of public. The RBI has prepared a guideline known as ³RBI Note Refund Rules´ for paying value against mutilated notes. 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 . These notes can also be given along with good notes while depositing money into the accounts. 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. (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.

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

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.

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

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

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. (3) Cash and cheques can be deposited and statement of accounts requirement. Current and saving account holders of a bank who hold a certain minimum balance in the account are issued an ATM card.3. . One of the channels of banking service delivery is the ATM or the automated teller machine. The advantages of an ATM over personal teller are as follows: (1) ATM¶s can be accessed round-the-clock. 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. (2) No employee interface is necessary. When the card is inserted into ATM.can be effected. (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. transfer of funds etc. as the PIN and is issued by the bank¶s computers. The card is a plastic card with a magnetic strip with the account number of the individual. (5) Automatic and instantaneous accounting is possibl e. Usually this is referred to.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.

We can say that credit card is a passport to safety. The customer can call the exclusive tele banking numbers and provide the details to identify himself or herself to the automated voice. ATM Offers cash availability when necessary.(6) To depositors who do not have a credit card.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. 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. if the ATMs are conveniently located and networked. A person who earns a salary of Rs 60. prestige.000 per annum is eligible for card.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. 3. robberies and misappropriations is reduced considerably if the PIN is maintained. . Typically. (8) ATM eliminates the need for customers to travel to the branch where his or her account is maintained. Though cash withdrawal and deposit are not enabled through this service. The credit card realses the customer from botheration of carrying cash and ensures safety. many banks offer cash delivery or collection service to ascertain classes of customers. and credit. convenience. (7) Scope for frauds. the bank account number and the T PIN are asked for.similer to the ATM pin (T-Pin) is provided to each account holder. 3.

whereas credit card guarantees against a sales voucher signed by the credit card holder. . the holder gives his card to the supplier who has agreed to join the scheme.Operation of the credit card: Credit cards operate quite differently from cheque cards. which records the holder¶s name and number on a sales voucher. A cheque card guarantees payment of a cheque. 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). When goods and services are supplied. some cardholders may prefer to pay off their dues before the free credit period. Such cardholders are called convenience users.At the end of the month. Beyond this period. The particulars of the transactions are added on the voucher. The supplier places the card in a special imprinter machine. However. 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 bank charges interest on outstanding bills. 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 credit card customers are typically extended an unsecured credit for a t least 30 days.

(5)Credit can be availed with minimum formality.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. in addition to an initial credit and interest -free period. (4) The cardholder has a period of free credit usually between 30 to 50 days of purchase. . The card is useful in emergency and can save embarrassment. (2) The risk factor of carrying cash and storing cash is avoided. thus. (7) The cardholder has the option of taking extended credit up to a prearranged limit without reference to anyone. Further revolving credit becomes automatically available as the outstanding balance is reduced. 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. (8) It gives them exposure to banking operations since systematic accounting for spending and payment is routed through banking channels. (6) The credit card saves trouble and paperwork to travelling businessmen.

The system is intended to replace cheque system of payment. (11) Credit card is considered as a status symbol. (10) It also extends additional facilities like free insurance coverage. 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. Other Types of cards: Debit Cards: Debit cards will offer direct withdrawal of funds from a customer¶s bank account. . The spending limit is determined by the user¶s bank depending upon available balance in the account of the user. He has to use the cheque while purchases are made and the trader gets guaranteed payment. Under cheque card system. Under the system. Under cheque card system. the card holder is given a card and a cheque book. the card holder is given a card and a cheque book. he has to keep sufficient balance in his account or the bank will provide overdraft upto a specified limit. Hence. cardholder¶s accounts are immediately debited against purchase or services to the computer network. on interest payment basis. discount on purchases. The customer does not get free credit. 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. free travel booking. under debit card the card holder must have adequate balance in his 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.

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

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

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

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. RESEARCH INSTRUMENT: For the collection of primary data. The questionnaire comprises different questions. SOURCES OF DATA The study is based on primary data . In this research stratified and conveniences sampling method has been used for sampling procedure.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. They have different services charged and different types of account to cater to the need of their customer. marketers go for intelligent sampling. 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. properly structured questionnaire was used.METHODOLOGY OF THE STUDY Statement of problem All the banks in the city are providing different services to their account holders. Sampling Process: It is not feasible to go for a population surveys due to this numerous consumers and their scattered location.primary data has been collected from person having their account in different bank in western suburb area by filling up well-structured questionnaire. Hence.In this research. .

Analysis and Interpretation of Data Table 1: Account Holders in Different Banks Particulars No. 3 (10%) have an account with HDFC Bank and 2 (7%) have an account with other banks. 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. 7% 10% National Banks 50% Centurion Banks HDFC Banks Any Othe 33% . 10 (33%) have an account with centurion Banks.

Table 2: Services offered by the Banks Services Net Banking ATM Bill Paid Inter Branch Any Other Total No. ATM bill paid and Inter Branch services to the customers. 7% 17% 23% Net Banking ATM bill paid inter branch Any other 10% 43% . 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.

2% 20% 22% net anking atm 43% ¥ 13% any ot er ¤ inter ranc £ ¢ ¡ i ll a i ¡   . ATM.Table 3: Service Availed by Customer Services Net Banking ATM Bill Paid Inter Branch Any Other Total No. 46%. Inter Branch. and 2% respondent are using the facility of Net Banking. 8%. and other services respectively. 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%. 23%.

23% respondents prefer HDFC Bank while only 7% respondents prefer any other bank. 2 = Average.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. . 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.

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

Table 5: Choice of Customer for Opening Account Bank No. 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. 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.

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. 33% 30% convenience status services interest rate safety 7% 13% 17% . 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.


(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.

(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 .

. Secondly the trend of the customer in the sense of age.Regarding the Indian banking selection criteria. their Confidentiality to its customers. bank efficiency in the transaction. one may find in Indian banking some innovative ideas which could add more variety to the existing financial network. 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. Most of the customers have adopted Indian banking due to the religious reasons. Even if one does not subscribe to the Indian injunction against the institution of interest. Indian banks are here to stay and there are signs that they will continue to grow and expand. Our findings suggest that most of the Indian banking customers have adopted both banking System. its working hours etc.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. The preceding discussion makes it clear that Indian banking is not a negligible or merely temporary phenomenon.5 Conclusion. Mutual Funds sch eme etc. . But most of the Customers are unaware of the different Indian Financial products such as Merchant Banking. majority of the customer are in the age of 21 to 40 years and most Of the customers are of the middle income level. This shows that IBS is lacking many of the feature and the requirement that their customer wants. as about 57% of the customers have account in National Banks and others Banks. Study shows that most of the customers of the western area are highly educated. time deposit account. 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.

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

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