Project Report on Punjab National Bank Aakash

A St Study udy On Vari Vario ous Serv Servic ices es Offe Offere red d By Pu Punj nja ab Nat Natio iona nall Ban Bank k

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Summer Training Report ON

A Study On Various Services Offered By Punjab National Bank Summer Training Report Submitted for Partial fulfillment for the Award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION BBA(Gen.)

UNDER THE SUPERVISION OF: Rajesh.S.Pyngavil

SUBMITTED BY: AAKASH SAXENA ENROL. NO. 0421911706

GITARATTAN INTERNATIONAL BUSINESS SCHOOL (Affiliated to GURU GOBIND SINGH INDERPRASTHA UNIVERSITY) ROHINI, NEW DELHI-110085 (2006-2009)

Gitarattan international business school

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Chapter-1 Introduction

Chapter 1


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General Introduction

Bank may be defined as a financial institution which is engaged in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc. A set of services intended for private customers and characterized by a higher quality than the services offered to retail customers. Based on the notion of tailor-made services, it aims to offer advice on investment, inheritance plans and provide active support for general transactions and the resolution of asset-related problems. The essential function of a bank is to provide services related to the storing of deposits and the extending of credit.Basic credit.Basic function may include Credit collection, collection, Issuer of banking notes, Depositor of money and lending loans.

Now a days banking is not in its traditional traditional way , with with the advancement advancement of technology technology its focusing on more comfort of customer providing services such as:

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online banking

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investment banking

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electronic banking

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internet banking

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pc banking /mobile banking e-banking

The importance of banking sector is immense in the progress and prosperity of any State or country.

A Brief History Banking in India originated in the last decades of the 18th century. The oldest bank in

existence existence in India is the State Bank of India, India, a government-owned government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking


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functions. functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, Currently, India has 88 scheduled commercial commercial banks (SCBs) (SCBs) - 27 public sector banks (that is with with the the Governm Government ent of India India holdi holding ng a stake) stake),, 31 priva private te banks banks (thes (thesee do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign bank banks. s. Th They ey have have a combi combined ned netwo network rk of over over 53,000 53,000 branch branches es and 17,000 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively Origin of the Industry

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1925 to form the Imperial Imperial Bank of India, India, which, upon India's independence, became the State Bank of India. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank , established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred transferred to the Alliance Bank of Simla. Simla. When When the the America American n Civil Civil War stoppe stopped d the the suppl supply y of cott cotton on to Lancashire from from the the Confederate Confederate States, States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently,


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banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, Calcutta, in the 1860s. The Comptoire d'Escompte d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondichery, Pondichery, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, Empire, and so became a banking center. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. Faizabad. It failed failed in 1958. 1958. The next was the Punjab National Bank, established established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint Indian joint stock banks. stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign foreign trade. trade. Indian Indian joint joint stock stock banks banks were generally generally under under capital capitalized ized and lacked lacked the experi experien ence ce and matur maturit ity y to comp compete ete with with the presid presidenc ency y and excha exchange nge banks. banks. Th This is segmentation segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank , Bank of Baroda, Baroda, Canara Bank and Bank and Central Bank of India. India. The fervor of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South


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Canara ( South Kanara ) district. Four nationalised banks started in this district and also a

leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". From World War I to Independence Independence The period during the First World War (1914-1918) through the end of the Second World

War (1939-1945 War (1939-1945), ), and two years thereafter until the independence of India were challenging challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table:

Year

Number of banks

Autho uthorrised ised

Cap Capita ital

Paid-up

that failed

(Rs. Lakhs)

(Rs. Lakhs)

1913

12

2 74

35

1914

42

7 10

10 9

1915

11

56

5

1916

13

2 31

4

1917

9

76

25

1918

7

2 09

1

Capital

Post-independence

The partition The partition of India in 1947 adversely impacted the economies of Punjab of Punjab and West Bengal, Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Governm Government ent of India initiated initiated measures to play


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an active role in the economic life of the nation, and the Industrial Policy Resolution Resolution adopted b by y the the gove govern rnme ment nt in 1948 1948 envi envisa sage ged d a mix mixed ed econ economy omy.. Th This is resul resulted ted into into greate greater r involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: •

In 1948 1948,, the the Re Rese serv rvee Ba Bank nk of In Indi diaa, India India's 's centr central al bankin banking g author authorit ity, y, was was nationalized, and it became an institution owned by the Government of India.

•

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."

•

The Banking Regulation Regulation Act also provided that no new bank or branch of an existing existing bank could be opened without a license from the RBI, and no two banks could have common directors.

However, despite these provisions, control and regulations, banks in India except the State Bank of India, India, continued to be owned and operated by private persons. This changed with the nationalisation of major banks in India on 19 July, 1969.

Nationalization of Banks

By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalise the banking industry. Indira Gandhi,, the-then Prime Minister of India expressed the intention of the GOI in the annual Gandhi conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was

swif swiftt and and sudd sudden en,, and and the the GOI GOI issu issued ed an ordi ordina nanc ncee and and nationalised the the 14 large largest st commercial banks with effect from the midnight of July of July 19, 19, 1969 1969.. Jayapra Jayaprakash kash Narayan Narayan,, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential the presidential approval on 9 August, 1969.


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A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New merged New Bank of India with Punjab National Bank . It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The nationalized banks were credited by some, including Home minister P. minister P. Chidambaram, Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007- 009

Growth and Present Status of Banks In the the earl early y 1990 1990s, s, the the then then Narsi Narsimha mha Rao gove govern rnme ment nt emba embark rked ed on a poli policy cy of liberalization,, licensing a small number of private banks. These came to be known as New liberalization and incl includ uded ed Glob Global al Trus Trustt Bank Bank (the (the firs firstt of such such new new Generati Generation on tech-sa tech-savvy vvy banks banks , and generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank (earlier (earlier as UTI Bank ), ), ICICI Bank and HDFC Bank . This move, along with the rapid growth in the economy of India, India, revitalized the banking sector in India, which has seen rapi rapid d grow growth th with with stro strong ng cont contri ribu buti tion on from from all all the the thre threee sect sector orss of bank banks, s, name namely ly,, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave wave usher ushered ed in a mode modern rn outloo outlook k and techtech-sa savvy vvy metho methods ds of worki working ng for tradi traditi tiona onall banks.All this led to the retail boom in India. People not just demanded more from their banks but also received more.


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Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected expected to be strong for quite some time-especially time-especially in its services sector-the demand for banking services, especially retail banking, banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. Banks with branches in India as on date •

ABN AMRO Bank N.V.

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Abu Dhabi Commercial Bank Ltd

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American Express Bank

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Antwerp Diamond Bank

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Arab Bangladesh Bank

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Bank International Indonesia

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Bank of America

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Bank of Bahrain & Kuwait

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Bank of Ceylon


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Bank of Nova Scotia

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Bank of Tokyo Mitsubishi UFJ

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Barclays Bank

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BNP Paribas

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Calyon Bank

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ChinaTrust Commercial Bank

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Citibank

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DBS Bank

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Deutsche Bank

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HSBC (Hongkong & Shanghai Banking Corporation)

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JPMorgan Chase Bank

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Krung Thai Bank

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Mashreq Bank

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Mizuho Corporate Bank

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Oman International Bank

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Shinhan Bank

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Société Générale

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Sonali Bank

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Standard Chartered Bank

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State Bank of Mauritius

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Banks with Representative Offices in India: American Banks •

The Bank of New York

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Wachovia Bank

Australian Banks •

•

•

Commonwealth Bank National Bank Australia Westpac Banking Corporation

Austrian Banks


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•

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Raiffeisen Zentral Bank Osterreich

Belgian Banks •

Fortis Bank.

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K.B.C. Bank N.V.

Canadian Banks •

Royal bank of Canada

UAE Banks •

Emirates Bank International

French Banks •

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Credit Industriel et Commercial Natixis

German Banks •

Bayerische Hypo und Vereinsbank

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Commerzbank

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Dresdner Bank

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DZ Bank AG Deutsche Zentral – Genossenschafts Bank

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HSH Nordbank

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Landesbank Baden – Wurttemberg

Irish Banks •

DEPFA Bank

Italian Banks •

Banc Intesa Banca Commerciale Italiana


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•

Banca di Roma

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Banca Populare Di Verona E Novara

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Banca Popolare di Vicenza

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BPU Banca –Banche Popolari Unite

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Monte Dei Paschi Di Sienna

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Sanpaolo IMI Bank

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Uni Credito Italiano

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Nepalese Banks •

Everest Bank

Portuguese Banks •

Caixa Geral de Depositos

Russian Banks •

Vnesheconombank

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VTB India

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Promsvyazbank

South African Banks •

First Rand Bank

South Korean Banks •

Wori Bank

Spanish Banks •

Banco de Sabadell

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Banco Bilbao Vizcaya Argentaria

SriLankan Banks •

Hatton National Bank


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Swiss Banks •

UBS

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Zurcher Kantonalbank

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Saqib Saeed Qureshi

Future of Banking Sector and Initiated Reforms Financial Financial sector reforms were initiated as part of overall economic reforms in the country and wide ranging reforms covering industry, industry, trade, taxation, external sector, banking and financial markets have been carried out since mid 1991. A decade of economic and financial sector reforms has strengthened the fundamentals of the Indian economy and transformed transformed the operating environment environment for banks and financial financial institutions in the country. The sustained and gradual pace of reforms has helped avoid any crisis and has actually fuelled growth. As pointed out in the RBI Annual Report 2001-02, GDP growth in the 10 years after reforms i.e. 1992-93 to 2001-02 averaged 6.0% against 5.8% recorded during 1980-81 to 1989-90 in the pre-reform period. The most significant achievement of the financial sector reforms has been the marked improvement in the financial health of commercial banks in terms of capital adequacy, profitability and asset quality as also grea greate terr atte attent ntio ion n to risk risk mana manage geme ment nt.. Furt Furthe her, r, dere deregu gula lati tion on has has open opened ed up new new opportunities for banks to increase revenues by diversifying into investment banking, insurance, credit cards, depository services, mortgage financing, securitisation, etc. At the same time, liberalisation has brought greater competition among banks,both domestic and foreign, as well as competition from mutual funds, NBFCs, post office, etc. Post-WTO, compe competit tition ion will will only only get inten intensif sifie ied, d, as large large global global playe players rs emer emerge ge on the scene. scene. Increasing Increasing competition is squeezing profitability profitability and forcing banks to work efficiently on shrinking spreads. A positive fallout of competition is the greater choice available to consumers,and the increased level of sophistication and technology in banks. As banks benchmark themselves against global standards, there has been a marked increase in disclosures and transparency in bank balance sheets as also greater focus on corporate governance.

Major Reforms In Banking Sector


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Some of the major reform initiatives in the last decade that have changed the face of the Indian banking and financial sector are:

• Interest rate deregulation. Interest rates on deposits and lending have been deregulated with banks enjoying greater freedom to determine their rates.

• Adoption of prudential prudential norms in terms of capital adequacy, adequacy, asset classification, income recognition, provisioning, exposure limits, investment fluctuation reserve, etc.

• Reduction in pre-exemptions – lowering of reserve requirements (SLR and CRR), thus releasing more lendable resources which banks can deploy profitably. Government equity in banks has been reduced and strong banks have been allowed to access the capital market for raising additional capital.• Banks now enjoy greater operational freedom in terms of opening and swapping of branches, and banks with a good track record of profitability have greater flexibility in recruitment.

• New private sector banks have been set up and foreign banks permitted to expand their operations in India including through subsidiaries. Banks have also been allowed to set up Offshore Banking Units in Special Economic Zones.

• New New area areass have have been been open opened ed up for for bank bank fina financ ncin ing: g: insu insura ranc nce, e, cred credit it card cards, s, infrastructure financing, leasing, gold banking, besides of course investment banking, asset management, factoring, etc.

• New New inst instru rume ment ntss have have been been intr introd oduc uced ed for for grea greate terr flex flexib ibil ilit ity y and and bett better er risk risk management: e.g. interest rate swaps, forward rate agreements, cross currency forward contrac contracts, ts, forward forward cover cover to hedge hedge inflows inflows under under foreign foreign direct direct investm investment, ent, liquidi liquidity ty adjustment facility for meeting day-to-day liquidity mismatch.

• Several new institutions institutions have been set up including the National National Securities Securities Depositories Ltd., Ltd., Central Central Deposito Depositories ries Service Servicess Ltd., Ltd., Clearin Clearing g Corpora Corporatio tion n of India India Ltd., Ltd., Credit Credit Information Bureau India Ltd. • Limits for investment in overseas markets by banks, mutualfunds and corporates have been liberalised. The overseas investment limit for Gitarattan international business school

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corporates has been raised to 100% of net worth and the ceiling of $100 million on prepayment of external commercial borrowings has been removed. MFs and corporates can now undertake undertake FRAs FRAs with with banks. banks. Indians Indians allowe allowed d to mainta maintain in resident resident foreign foreign currency (domestic) accounts. Full convertibility for deposit schemes of NRIs introduced.

• Universal Banking has been introduced. With bankspermitted to diversify into longterm finance and DFIs into working capital, guidelines have been put in place for the evolution of universal banks in an orderly fashion.

• Technology infrastructure for the payments and settlement system in the country has been been streng strengthe thened ned with with elect electron ronic ic funds funds transf transfer, er, Cent Central ralise ised d Funds Funds Manag Managem ement ent System,Structured Financial Messaging Solution, Negotiated Dealing System and move towards Real Time Gross Settlement. • Adop Adopti tion on of glob global al stan standa dard rds. s. Prud Pruden enti tial al norm normss for for capi capita tall adeq adequa uacy cy,, asse assett classification, income recognition and provisioning are now close to global standards. RBI has introduced Risk Based Supervision of banks (against the traditional transaction based based appro approach ach). ). Best Best inter internat natio ional nal practi practice cess in accou accounti nting ng syste systems ms,, corpor corporat atee governance,payment and settlement systems, etc. are being adopted.

• Credit delivery mechanism has been reinforced to increase the flow of credit to priority sectors through focus on micro credit and Self Help Groups. The definition of priority sector has been widened to include food processing and cold storage, software upto Rs 1 crore, housing above Rs 10 lakh,selected lending through NBFCs, etc.

• RBI guidelines have been issued for putting in place risk management systems in banks. Risk Management Committees in banks address credit risk, market risk and operational risk. Banks have specialised committees to measure and monitor various risks and have been upgrading their risk management skills and systems.

• The limit for foreign direct investment investment in private banks has been increased from 49% to 74% and the 10% cap on voting rights has been removed. removed. In addition, addition, the limit for foreign institutional institutional investment in private banks is 49%. Gitarattan international business school

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• Wide ranging reforms have been carried out in the area of capital markets. Fresh investment in CPs, CDs are allowed only in dematerialised form. SEBI has reduced the settlement cycle from T+3 to T+2 from April 1, 2003 i.e. settlement of stock deals will be completed in two trading days after the trade is executed, taking the Indian stock trading system ahead of some of the developed equity markets. markets. Stock exchanges will set up trade guarantee funds. Retail trading in Government securities has been introduced on NSE and BSE from January 16, 2003. A Serious Frauds Office is proposed to be set up. Fungibility of ADRs and GDRs allowed.

Improvement in Performance of Commercial Banks

Ther Th eree is no doub doubtt that that bank bankin ing g sect sector or refo reform rmss have have incr increa ease sed d the the prof profit itab abil ilit ity, y, productivity and efficiency of banks. There has been an improvement in overall capital adequacy of banks and as on March 31, 2002 92 out of 97 commercial banks operating operating in India had capital adequacy above the statutory minimum level of 9%. Introduction of prudential norms relating to asset classification, income recognition and provisioning, along with legal and institutional institutional reforms, has led to visible improvement improvement in asset quality in banks. Net NPAs (i.e.that portion of NPAs which is not provided for) have declined gradually from 10.7% in 1994-95 to 5.8% in 2001-02.Increase in the number of players has increased competition, which is reflected in the decline in the bank concentration ratio. The share of top 5 banks in total assets declined from 51.7% in 1991-92 to 43.5% in 2001-02 while its share in profits fell from 54.5% to 41.4% in the same period.

Despite intensification of competition and introduction of prudential norms, all major bank groups in India have remained profitable. The Return on Assets has hovered in the range of 0.5-0.8% since the mid-1990s – while this is on the lower side compared to many many devel developi oping ng countr countrie ies, s, it is higher higher than than the profi profita tabil bilit ity y at aroun around d 0.5% 0.5% in indu indust stri rial alis ised ed coun countr trie ies. s. Th Thee impr improv ovem emen entt in effi effici cien ency cy is also also seen seen from from the the intermediation cost for scheduled commercial banks, which declined from 2.85% in 1996-97 to 2.19% in 2001-02·. According to data analysed by RBI, there has been a noticeable decline in the difference between real interest rates in India and international


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benchmark rates (LIBOR 1 year) since the mid-1990s, suggesting increased integration of the Indian banking sector with the rest of the world.

Challenges Ahead (i) Improving Profitability :

The most direct result of the above changes is increasing competition and narrowing of spreads and its impact on the profitability of banks. The challenge for banks is how to manage with thinning margins while at the same time working to improve productivity which remains low in relation to global standards. This is particularly important because with with dilut dilutio ion n in banks banks’e ’equi quity ty,, analy analyst stss and and shareh sharehold olders ers now close closely ly trac track k thei their r performance. Thus, with falling spreads, rising provision for NPAs and falling interest rates, greater attention will need to be paid to reducing transaction costs. This will require tremendous tremendous efforts in the area of technology and for banks to build capabilities capabilities to handle much bigger volumes.

(ii) Reinforcing Technology:

Technology has thus become a strategic and integral part of banking, driving banks to acquire and implement world class systems that enable them to provide products and services in large volumes at a competitive cost with better risk management practices. The pressure to undertake extensive computerisation is very real as banks that adopt the latest in technology have an edge over others. Customers have become very demanding and banks have to deliver customised products through multiple channels, allowing customers access to the bank round the clock.

(iii) Risk Management:

The deregulated environment brings in its wake risks along with profitable profitable opportunities, opportunities, and technology plays a crucial role in managing these risks. In addition to being exposed to credit risk, market risk and operational risk, the business of banks would be susceptible to country risk, which will be heightened as controls on the movement of capital are eased. In this context, banks are upgrading their credit assessment and risk management


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skills and retraining staff, developing a cadre of specialists and introducing technology driven management information systems.

(iv) Sharpening Skills:

The far-reaching changes in the banking and financial sector entail a fundamental fundamental shift in the set of skills required in banking. To meet increased competition and manage risks, the demand for specialised banking functions, using IT as a competitive tool is set to go up.Sp up.Speci ecial al skill skillss in reta retail il banki banking, ng, treas treasury ury,, risk risk manag managem ement ent,, forei foreign gn exchan exchange, ge, development banking, etc., will need to be carefully nurtured and built. Thus, the twin pillars of the banking sector i.e. human resources and IT will have to be strengthened.

(v) Greater Customer Orientation :

In today today’s ’s compet competit itive ive envir environm onment ent,, banks banks will will have have to striv strivee to attra attract ct and and retai retain n customers customers by introducing innovative products, enhancing enhancing the quality of customer service and marke marketi ting ng a varie variety ty of produ product ctss throug through h divers diversee channe channels ls targe targete ted d at spec specifi ificc customer groups.

(vi) Corporate Governance:

Besides using their strengths and strategic initiatives for creating shareholder value, banks have to be conscious of their responsibilities towards corporate governance. Following financial liberalisation, as the ownership of banks gets broadbased, the importance of institutional and individual shareholders will increase. In such a scenario, banks will need to put in place a code for corporate governance for benefiting all stakeholders of a corporate entity.

(vii) International Standards:

Introducing internationally followed best practices and observing universally acceptable standards and codes is necessary for strengthening the domestic financial architecture. This Th is includ includes es best best pract practic ices es in the area area of corpo corpora rate te gov govern ernanc ancee along along with with full full transparency in disclosures. In today’s globalised world, focusing on the observance of standards will help smooth integration with world financial markets.


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Chapter-2 Organization’s Profile

Organization’s Organization’s Profile


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Name of organization

:

Punjab National Bank

Head Office

:

Bhikaji Cama Place, New Delhi

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Origin of the Organization

Esta Establi blishe shed d in 1895 1895 at Lahor Lahore, e, und undiv ivide ided d India India,, Punja Punjab b Natio National nal Bank Bank (PNB (PNB)) has the the distinction of being the first Indian bank to have been started solely with Indian capital.The bank was nationalised in July 1969 along with 13 other banks. From its modest beginning, the bank has grown in size and stature to become a front-line banking institution in India at present. 

A professionally managed bank with a successful track record of over 110 years.

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Largest branch network in India - 4525 Offices including 432 Extension Counters spread throughout the country.

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Strategic business area covers the large Indo-Gangetic belt and the



metropolitan centres. Ranke Ranked d as 248th 248th bigges biggestt bank bank in the the world world by Banke Bankers rs Alman Almanac ac ,

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London. Stro Strong ng corr corres espo pond nden entt bank bankin ing g rela relati tion onsh ship ipss with with more more than than 217 217

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international banks of the world. More More than than 50 renow renowne ned d inte interna rnati tiona onall banks banks maint maintain ain their their Rupee Rupee

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Accounts with PNB. Well equipped dealing rooms; 20 different foreign currency accounts are

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maintained at major centres all over the globe. Rupee drawing arrangements with M/s UAE Exchange Centre, UAE, M/s Al Fardan Exchange Co. Doha, Qatar ,M/s Bahrain Exchange Co, Kuwait, M/s M/s Bahra Bahrain in Finan Finance ce Co, Bahrain ,M/ ,M/ss Thom Thomas as Cook Cook Al

Rostamani Exchange Co. Dubai,UAE, and M/s Musandam Exchange, Ruwi, Sultanate of Oman. Growth and Development

With over 38 million satisfied customers and 4668 offices, PNB has continued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals,


20


0421 04 2191 9117 1706 06

large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; life and non-life insurance business; Gold coins & asset management business, etc.

Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs 2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd largest network of branches (4668 including 238 extension counters and 3 overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst nationalized nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March’09. As on March’09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. respectively. During the FY 2008-09, its’ ratio of priority priority sector credit to adjusted net bank credit at 41.53% & agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective national goals of 40% & 18%. Present Status of the Organization

PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its ‘IT strategy’ follows follows the ‘Business ‘Business strategy’ so as to arrive at “Best Fit”. The bank has made rapid strides in this direction. Alongwith the achievement of 100% branch computerization, one of the major achievements of the Bank is covering all the branches of the Bank under Core Banking Solution (CBS), thus covering 100% of it’s business and providing ‘Anytime Anywhere’ banking facility to all customers including customers of more than 2000 rural branches. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc.Towards developing a cost effective alternative channels of delivery, the bank with more than 2150 ATMs has the largest ATM network amongst Nationalised Banks.


21


0421 04 2191 9117 1706 06

With the help of advanced technology, technology, the Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned. With it’s policy of inclusive growth in the Indo-Ganget Indo-Gangetic ic belt, belt, the Bank’s mission mission is “Bankin “Banking g for Unbanked”. Unbanked”. The Bank has launched a drive for biometric biometric smart card based technology enabled Financial Financial Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile customer. The BC/BF will address the outreach issue while technology will provide cost effective and transparent services. The Bank has started several innovative initiatives for margina marginall groups groups like rickshaw rickshaw pullers, pullers, vegetab vegetable le vendors, vendors, diary diary farmers, farmers, constru constructio ction n workers, etc. Thee Bank Th Bank has has alre alread ady y achi achiev eved ed 100% 100% fina financ ncia iall

incl inclus usio ion n in 21,4 21,408 08 vill villag ages es..

Backed by strong domestic performance, the bank is planning to realize its global aspirations. In order to increase its international presence, the Bank continues its selective foray in internat internationa ionall markets markets with with presence presence in Hongkong Hongkong,, Dubai, Dubai, Kazakhst Kazakhstan, an, UK, Shanghai Shanghai,, Singapore, Kabul and Norway. A second branch in Hongkong at Kowloon was opened in the first week of April’09. Bank is also in the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal.

Future Expansion of the Organization

Under the long term vision, Bank proposes to start its operation in Fiji Island, Australia and Indonesia. Bank continues with its goal to become a household brand with global expertise. Amongst Top 1000 Banks in the World, ‘The Banker’ listed PNB at 250th place. Further, PNB is at the 1166th position among 48 Indian firms making it to a list of the world’s biggest companies compiled by the US magazine ‘Forbes’.

Parameters Operating Profit* Net Profit*

Mar'07 36 1 7 15 4 0

Mar'08 4 0 06 2 0 49


Mar'09 5 74 4 3 09 1

CRAR 26.02 41.67

22


Deposit

13 9 8 6 0

16 64 57

2 09 76 0

22.47

Advance Total Business

96 5 9 7 23 6 4 5 6

11 95 02 28 59 59

1 54 70 3 3 64 46 3

26.55 24.15

0421 04 2191 9117 1706 06

(Rs. In Crores) * Respective figure for the corresponding financial year

Departments of The Organization The bank has following organization

Finance Personal Administration Human Source Sales & Marketing Retailing Treasury Management Information Technology

Product Profile of the Organization Saving Account •

PNB Prudent Sweep


23


•

Total Freedom Salary Account

•

PNB Vidyarthi Salary Account

•

PNB Mitra SF Account

0421 04 2191 9117 1706 06

Current Accounts •

Smart Romer

•

PNB Vaibhav

•

PNB Gaurav

Fixed Deposit Accounts •

Spectrum fixed deposit scheme

•

Anupam account

•

Multi benefit deposit scheme

•

Special fixed deposit scheme

•

Recurring deposit scheme

•

PNB swecha jama yojna/flexi rd

Credit schemes •

Housing loan

•

Car finanace

•

Personal loan

•

Professional loan

•

Educational loan scheme

•

Loan against mortgage of property

•

PNB financial basket scheme

•

Personal loan scheme for pensioners

•

Privilege card scheme

•

Other credit scheme

Social Banking •

Farmers

•

Krishi card

•

Agriculture credit scheme


24


•

PNB farmers welfare trust

•

Scheme for house wife and other women

•

Mahila udhyam nidhi scheme

0421 04 2191 9117 1706 06

Women

Savings Accounts TOTAL FREE DOOM – SAVING FUNDS SALARY ACCOUNT

Purpose: To offer an attractive Saving Fund Account to Corporate Employees for enabling them to have their Salary Credited as well as availing overdraft facility up to Rs. 15,000/- or the last salary credited in the account whichever is lower, at our interest rates applicable to Personal Loans to employees, it would be adjustable in bullet repayment at the time of next salary credit ELIGIB ELIGIBILI ILITY: TY: OF THE EMPLOY EMPLOYEE EE AS WELL WELL AS CORPO CORPORAT RATES ES UNDER UNDER TIE-UP TIE-UP ARRANGEMENT: The employ employee ee whose salary salary accoun accountt is being opened opened should should be a permanent permanent The minimum number of accounts to be opened should be 25 or 75% of the permanent employees of the corporate (in that location),

employ employee. ee.

strength of the

whichever is lower.

Initial Deposit and Minimum Balance Requirements : Zero Service Charges : It will be a ZERO CHARGES ACCOUNT, i.e., the customer would not be subjected to any charges in respect of any of the services related to this account. Other facilities offered :

Free Free Cheque Books Books for routine routine require requiremen ments ts (except (except bulk require requirement mentss for availed at any other bankin that case normal cheque book

loans loans to be

charges would be levied);

Free Statement of Accounts; Free inter-sol transactions;


25


0421 04 2191 9117 1706 06

Free funds transfer from their accounts within our CBS branches and at 50% discount at nonCBS branches; Free issuance of all types of certificates including interest certificate and

balance certificate,

etc; Free of Cost maintena maintenance nce of Demat Demat Account Account (we (we shall be waiving waiving the charges by PNB PNB as annual fee, charges payable to NSDL would be

to be earned earned

recovered from the customers);

50% discount in one locker at the branch convenient to the customer; Free of Cost PNB Debit/ ATM Card; PNB-HSBC Credit Cards shall also be got considered by HSBC on priority

basis

Eligibility Accounts can be opened in the name of students who have attained the age of 10 years and above,

studying at VARIOUS RECOGNISED EDUCATIONAL INSTITUTIONS. Initial Deposit Amount/ QAB/Minimum Balance Required Zero Overdraft Facility The overdraft facility shall be given to students (of reputed educational institutions only) who are staying away from their parents. It would be made available on the request of the student with the UNDERTAKING TO PAY/ CONSENT LETTER from earning parents/natural guardian/local guardian of student. In the first year of opening of account, the facility would be available up-to a maximum limit of Rs.5,000/-. Subsequent to the satisfactory conduct of the account, in second year it could be enhanced upto Rs. 10,000/-. Other terms & conditions of this overdraft facility would be as under: Rate of Intere erest The ove overdra draft fac facility woul would d att attract act at th the rat rate of int inteerest as as appl appliicable ble to Age of of Stude udent

Personal Loans to the general public. The ove overdra draft fac facility wou would be av available ble for for the the stu studen dents, ha having com compl pleeted

Purpose

the age of 18 years Contingent da day to da day needs of of th those students wh who are st staying aw away from their parents for the study purposes having got an admission admission with recognised recognised

Repayment

and reputed educational institutions. For re repayment pu purposes, a si single po post da dated ch cheque mu must be be ob obtained fr from

Reco Recove very ry Aspec spects ts

earning parents/natural guardian/local guardian of student and kept on record. Thee overd Th overdra raft ft faci facili lity ty mus mustt be brou brough ghtt into into cred credit it once once in in 3 mont months hs,, fail failin ing g which recovery process be started. The facility would be recalled and the student would not be eligible for this overdraft facility at any branch of our


26


0421 04 2191 9117 1706 06

Bank. In any case, this facility should not be allowed to continue when the student is in the final year of study at that educational institution, institution, i.e. account has to be got into credit at least six month before the expiry of the tenure of the study period without any further continuation of overdraft facility. Attractive Freebies/Conc Freebies/Concessions essions The following freebies are also admissible: Dem Demand and draf drafts ts for for all all type typess Free of cost

of fees/examination fees Ini Initial Deposi positt Amount unt

The accou count will be ope opened ned without hout any initial depos eposiit, i.e., e., it

Incidental Charges Ledger Folio Charges Retail Internet

Will be Zero Balance Saving Fund Account NIL NIL Free (at CBS branches only)

Services Intersol transactions transactions

Banking

including including Free

cash withdrawal/deposits ATM Card/DEBIT CARD Cheque Book Facility

Free (subject to availability of ATMs in the area) Free (2 cheque books in a year)

NO-FRILLS SAVING BANK ACCOUNT FOR FINANCIAL INCLUSION OF OOREST/DESERVING SECTIONS OF SOCIETY

To ensure ensure the financ financial ial incl inclusi usion on of the poo poore rest st / deser deservi ving ng secti sections ons of the society, PNB has launched a No-frills Savings Bank Account Scheme known as that can can be open opened ed by an PNB ‘M ‘MIT ITRA’ RA’ SAV SAVING INGS S BAN BANK K ACC ACCOUN OUNT T that INDIVIDUAL INDIVIDUAL singly or jointly, jointly, minors of the age of 10 years and above, minors under natural/legal guardianship. An illiterate or a visually impaired person is also eligible to open account under the scheme with usual safeguards. safeguards. Simplified Simplified KYC procedures may be adopted for opening of these accounts. Product Highlights :

Initial

ZERO

opening

of

MINIMUM

account

with

BALANCE

ju st

Rs.25/-,

requirement;

Our Bank would allow first 50 transactions in a calendar year Free of Charge,


27


thereafter

a

charge

of

Rs.10/-

per

0421 04 2191 9117 1706 06

transaction

would

be

levied.

Customer Customer would not be allowed to keep balance in this account (taken together with all

other accounts with our Bank) more than Rs.50,000/Rs.50,000/- in this account

in

view

of

related

KYC

Norms;.

NO FREE OF COST CHEQUE BOOKS; PNB SMART ROAMER The product is aimed at offering Current Account Customers convenient opportunity opportunity to earn extra-returns on surplus funds lying in the accounts which may not normally be utilised in the near future or are likely to remain un-utilized. The automated nature of the facility for 'Sweep In or Sweep Out' of more than a lac of rupees, and creating fixed deposits for desired period, would save lot of operational hassles and create Customer Value. Roaming Features: The Customers Customers would be able to operate their 'Current Comfort' at all other CBS branches of our Bank. It will facilitate transfer of funds as well as much faster cheque collection services services for the custome customers, rs, simultaneo simultaneously usly customers customers will will be able to withdra withdraw w cash from our CBS branches. Sweep in and Sweep out Features: The Custome Customerr shall shall be able able to profit profitabl ably y deplo deploy y his funds funds which were were earlie earlierr not attracting any interest . Funds (above Rs. One Lac) lying in Current Accounts and their

ready availability availability when required for payment/clearance payment/clearance of cheques. The bank would provide the facility of automatic transfer of balance from Current Accounts having a balance of over Rs.1,00,000/- (Rupees one lac only) in multiples of Rs.10,000/- (Rupees Ten Thousand

Only) to Fixed Deposit Accounts. Sweep In Funds would be accepted for a minimum maturity maturity period of 15 days and Maximum maturity period of 45 days . It will be optional for the customers to indicate desired periodicity in multiples of 15 days . The customer would get the interest on such deposit at the term deposit rate applicable applicable for the period indicated by him/her. Additional Features (subject to maintenance of stipulated 'minimum balance' in the account throughout during

previous quarter i.e. clear balance on the closing of everyday should have been Rs.25,000/- or above) :


28


0421 04 2191 9117 1706 06

i.

Free ATM Card;

ii. ii.

Free Free Debit Debit Card Card (sla (slate ted d to be introdu introduced ced by the the Bank Bank shortl shortlyy-pub publi lici city ty on this this aspect aspect will begin only after launch)

iii.

Free remittance of funds upto an extant of Rs. 25000/- per month at any of our branches having connectivity under CBS.

iv.

One Cheque book of 50 leaves free of cost per quarter to be issued (inclusive of item no. xii)

v.

Free Free e-m e-mai ails ls for for sta state teme ment nt of of acco account unt on month monthly ly basis basis

vi.

Same Same day day Credi Creditt for outst outstat ation ion cheq cheques ues draw drawn n on other other branc branches hes of our our Bank Bank unde under r CBS Connectivity

vii. vii.

Free Free colle collecti ction on of one outs outsta tati tion on cheque cheque (issu (issued ed in favou favourr of custom customer) er) per per quarte quarter r upto Rs. 10000/-(however, out of pocket expenses shall be recovered)

viii. viii.

Imme Immedia diate te credit credit of outsta outstati tion on cheq cheques ues upto upto 15,0 15,000/ 00/--

ix.

25% conce concessi ssion on on Annua Annuall Custo Custody dy Char Charges ges for Dema Dematt Servi Services ces

x.

25% conce concessi ssion on on servi service ce char charges ges for for prov provid iding ing EFT EFT Serv Service ices; s;

xi. xi.

Tran Transa sact ctio ion n i.e. i.e. T + 3 Days Days'' Credi Creditt for outst outstat atio ion n cheq cheque uess draw drawn n on othe otherr bank bra branc nche hess at loca locati tion onss wher wheree we have have at leas leastt one one PNB bran branch ch unde underr CBS CBS connectivity.

xii. xii.

If possi possibl ble, e, Free Free Speci Special al Chequ Chequee Book Book (unde (underr rele releva vant nt MICR MICR Code Code)) shal shalll also also be issued to customers enabling them to make payment by cheque to outstation parties at CBS centers.

PNB VAIBHAV ACCOUNT Features Quarterly average balance required Rs.5,00,000/- and above Init Initia iall Depo Deposi sitt Amou Amount nt requ requir ired ed for for ope openi ning ng of of the the acc accou ount nt.. Rs.5, s.5,00 000/ 0/-Non-maintenance charges Rs.3000/- Qty. Free (o f transaction charges) Unlimited

Transactions allowed Transaction charged/L.F. charges Inter sol transfer Local non-base branches Inter so l

charges

transfer

Outstation non-base branches Outstation/local-cheques/ Bi Bills, et etc. co collection ch charges Free Statement on request. Statement of Account(e-mail on request)


Free – Free charges- Free 50% di discount on no normal ch charges Upto 4 in a month Free on monthly basis

29


0421 04 2191 9117 1706 06

Remittance charges/Drafts issuing, etc. 50% discount on normal charges. Standing Instructions Regn. Free De-mat A/c Charges (except charges to be paid by Ban to First Year Free NSDL) Rebate on Locker Rent (of any size) Internet Banking Services Debit-cum-ATM Card RTGS Services Personalised Multi-City Cheque Book Stop Payment Instruction charges Interest/Balance certificate Cash Cash Withd Withdraw rawal als/D s/Depo eposi sits ts charge chargess – at Lo Loca call NonNon-Ba Base se

50% rebate in locker rent of one locker Free Free 50% concessions on normal charges. UNLIMITED Free Free Rs.5 s.5 lac per per day, ther hereaft after 50%

Branches, free upto: discount on normal charges. Cash Withdrawals/Deposits charges – at outstation Non-Base Rs.1 s.1 lac per per day, ther hereaft after 50% Branches, free upto Char Charge gess on paym paymen entt of outs outsta tati tion on Mu Mult ltic icit ity y Cheq Cheque ues, s, Free Free upto upto

discount on normal charges Rs.1 Rs.1 lac lac per per day, day, ther therea eaft fter er 50% 50% discount on normal charges.

PNB GAURAV– CURRENT ACCOUNT Features Quarterly average balance required Rs.1,00,000/- and above Initial Initial Depos Deposit it Amount Amount requi required red for for opening opening of the the account account.. Rs.5,000 Rs.5,000//Non-maintenance charges Rs.1200/- Qty. Free (of transaction charges) 200 in a quarter

Transactions allowed Transaction charged/L.F. charges Inter

so l

transfer

Local non-base branches Inter sol

Rs.2/- per transaction beyond 200 transaction. – Free

charges

transfer

charges- Upto Upto Rs.5 Rs.50, 0,00 000/ 0/-- per per day day – no

Outstation non-base branches

charges, thereafter, 50% discount

Outs Outsta tati tion on/l /loc ocal al-c -che hequ ques es// Bil Bills ls,, etc etc.. col colle lect ctio ion n cha charg rges es Free Statement on request. Statement of Account(e-mail on request) Remittance charges/Drafts issuing, etc. Standing Instructions Regn.

on normal charges. 25% 25% dis disco coun untt on on nor norma mall cha charg rges es Upto 2 in a month Free on Quarterly basis 20% discount on normal charges. 50% concessions on normal

charges. De-mat A/c Charges (except charges to be paid by Ban to First Year Free NSDL) Rebate on Locker Rent (of any size)

25% rebate in in lo locker re rent of one locker


30


Internet Banking Services Debit-cum-ATM Card RTGS Services

Free Free 20%

Stop Payment Instruction charges Interest/Balance certificate

charges. Free Free

0421 04 2191 9117 1706 06

co concessions

on on

n no ormal

A Multi-Option Fixed Deposit Scheme that fit your needs, timing & resources, to match your convenience •

Initial Deposit of Rs.1000/-only, and thereafter in convenient multiples of any amount of Rupee one

•

Period of Deposit: (a) Maturity Option: For any period from 15 days to 120 monthsFor a single Term Deposit less than Rs. 15 lac and for any period from 7 days to 120 months-For

a

s i ng l e

Deposit

of

Rs.

15

lac

&

above.

(b) Income Option: For any period from 6 months to 120 months. •

At PAR Collection of Fixed Deposit Receipt

•

Payable Payable at par at all CBS branches(premature branches(premature payment, loans andother miscellaneous miscellaneous matters before maturity of the FDR shall be attended to only by the issuing branch)

•

Multi Mu ltipl plee option optionss avai availab lable le for for inter interest est payme payment nt viz. viz. Mon Monthl thly/ y/Qua Quart rterl erly/ y/Ha Half lf-Yearly/Yearly or on maturity

•

For an amount of Rs. 10,000/- and above overdraft with cheque book facility is available, available, to enable use of deposits. The customer shall also be at liberty to make use of the facility facility through ATM-cum-Debit ATM-cum-Debit Card under 'Anywhere-Anytim 'Anywhere-Anytimee Banking'. Banking'. It will enable customers to have freedom to utilise their Fixed Deposits as and when needed without even coming to the Bank. The interest is chargeable only for the amount and period for which the overdraft facility has been availed; The illiterate and blind persons can also open the account without exercising the option of Overdraft Facility.

•

Margin and rate of interest on Loans against deposits under the scheme shall be as per prescribed guidelines which shall be subject to modifications from time to time

•

Automatic payment of LOCKER rent out of Interest proceeds


31


•

0421 04 2191 9117 1706 06

Conversion facility regarding mode of payment of interest allowed;(provided FDR has been issued for a period of 12 months or more and remaining period of FD is more than 6 months) without invoking any penal provision

•

Premature withdrawal of Deposit without any penalty

•

Automatic Renewal facility is provided as per option exercised by the depositor

•

Availability of premature extension

•

Part withdrawal in multiples of Rs.1000/- without loss of interest on remaining FDR

ANUPAM ACCOUNT

Our Bank has several Domestic Deposit Schemes designed to cater to the needs of various segments of customers to meet your specific requirement. The features of the Anupam Account Deposit Scheme are as under: 1. Participation

Anup Anupam am Acco Accoun untt Sche Scheme me may may be open opened ed in the the name name of indi indivi vidu dual al(s (s), ), sole sole propr proprie ietor torshi ship p conce concern, rn, partn partners ership hip firm firm,, associ associat ation ion,, trust trust,, Ltd. Ltd. Compan Company y etc. etc. However, Anupam Account shall not be opened in the name of a minor, illiterate illiterate and blind persons. 2. Minimum Initial Deposit

Rs.10,000/- and thereafter in multiples of Rs.1000/- thereof. 3. Period of Deposit

For any period from 6 months to 120 months. Existing deposits under Multi Benefit Deposit Scheme for Rs.10,000/- and above with unexpired term of 6 months or more are eligible for transfer to Anupam Account Scheme. 4. Overdraft Facility

Overdraft facility shall be permitted through a Current Account and a Cheque Book will be issued to the depositor on the same day.


32


0421 04 2191 9117 1706 06

The margin on the amount of overdraft against the deposit is For Public

Matur Maturit ity y Peri Period od rema remaini ining ng at the the time time of grant granting ing Margin overdraft Upto 2 years

5%

Above 2 years and upto 3 years

7.5%


10.0%


12.5%

Above 5 years

25%

5. Third Party Advance Only depositors can avail overdraft facility against their deposits under this scheme.

No third party advance ie Credit Facility Facility / overdraft to persons other than depositors depositors is allowed under Anupam Account. Even the overdraft facility to a proprietorship firm against Fixed Deposit in the name of its proprietor is not allowed. 6. Premature withdrawal of Deposit

If any depositor desires to withdraw the deposit before maturity, Bank may at its discretion repay the deposit with upto date quarterly compounded interest at the rate applicable to the period for which deposit remained with the bank 7. Facility of Further Fixed Deposit in the same Anupam Account

Further, Fixed Deposit can be accepted in the same Anupam Account on your request and the limit in the overdraft account be increased accordingly against the additional deposit and it will also be endorsed in the Receipt Form with you. 8. Renewal of Term Deposit on Maturity

Renewal of Fixed Deposit is permitted at your request, if no overdraft is outstanding against it. 9. Withdrawable in multiples of Rs.1000/-


33


0421 04 2191 9117 1706 06

You You may may with withdra draw w any amoun amountt before before matur maturit ity y anyti anytime me as well well in mult multipl iples es of Rs.1000/Rs.1000/- any time according to your convenience without breaking the entire deposit and also without losing interest on remaining part of Fixed Deposit Receipt under the Scheme.

MULTI BENEFIT BENEFIT FIXED DEPOSIT SCHEME

It entitles you to earn interest at term deposit rates on quarterly compounding basis. You may open with any amount with a minimum deposit of Rs.1000/- for any period from 6 months to 120 months. You can avail the additional facility of automatic renewal of fixed deposit with or without interest on maturity. On demand, Loan in this MBFD scheme is also made available by us.

Interest at term deposit rates is computable on quarterly compounded basis The small monthly savings in the Recurring Deposit scheme enable you to accumulate a handsome amount on maturity.

Account can be opened with a minimum monthly deposit of Rs.100/or its multiples for a period of 6 months to 120 months in multiples of 3 months. Interest at term deposit rates is computable computable on quarterly quarterly compounded basis The small monthly savings in the Recurring Deposit scheme enable you to accumulate a handsome amount on maturity.


34


0421 04 2191 9117 1706 06

PNB SWICHA JAMA YOJNA/FLEXI

Individuals can open account, singly or jointly, by a minor of the age of 10 years and above in his name or through his guardian. A depositor can choose a monthly installment with a minimum of Rs.100 or above in its multiples. However, the subsequent monthly installment will not exceed ten times of such core amount without any ceiling on maximum amount. No matter, even if the monthly installment is skipped. Deposit accepted accepted for any period from 6 months to 120 months and interest is paid at term deposit rates on half yearly basis.

Credit Scheme Housing Loan Car Loans Own a vehicle with the friendliest and most convenient car loan. Either you can purchase a new Car/ Van/ Jeep or raise loan to purchase old vehicles that are not older than 3 years. Finance will be provided for purchase of vehicle of indigenous/ foreign makes. Individuals as well as Business Concerns (Corporate or non-corporate). For Individuals: 25 times of the monthly net salary OR Rs.15 lac, whichever is

lower. Income of spouse can be taken into account for determining loan amount. In such cases, the spouse shall stand as a guarantor.


35


0421 04 2191 9117 1706 06

For Business Conerns : No ceiling on loan amount.

The vehicle purchased purchased with the amount of loan is to be hypothecated hypothecated to the Bank. It will be registered in the name of the borrower jointly with the Bank. •

Guarantee of spouse, if employed or third party guarantee, OR

•

Collateral Security in the shape of either Immovable Property or Liquid Security equivalent to 100% of loan amount

For new Car/ Van/ Jeep: The loan amount together with interest is to be repaid

maximum in 84 Equated Monthly Instalments (EMIs) For old Car/ Van/ Jeep : The loan amount together with interest is to be repaid

maximum in 60 Equated Monthly Instalments (EMIs) 1% of the loan amount unt, with a maximum of Rs.4,000/Rs.300/- upto Rs.2 Lac Rs.500/- over Rs.2 Lac The intending borrower will be required to settle the transaction for purchase of vehic vehicle le neede needed d by him/he him/herr with with the sell seller er and will will be requi required red to deposi depositt the the difference of the cost of the vehicle to amount of loan, and thereafter, the advance will be allowed to him/her from the bank by paying the entire price of the vehicle to the seller directly on behalf of the borrower ) All All perm perman anen entt Defe Defenc ncee Pers Person onne nell incl includ udin ing g offi offici cial alss of Mili Milita tary ry Stat Statio ion n Headquarters,

BSF,

CRPF,

CISF,

ITBP

ii) Confirmed/ permanent employees of Central/ State Govt/ PSUs and all reputed companies/ Institutions, who are drawing their salary through accounts maintained with Employees

our of

above

branches. categories

under

‘check-off

facility’

iii) iii) Professi Professional onally ly qualifie qualified d Doctors Doctors viz. MBBS, BDS & above above having having annual annual income

of

Rs.4.00

lac

&

above.

Minimum Net Monthly Income


36


-

Rs.15000

-

Rs.12500

per per

month month

for fo r

eligible

eligible

customers

customers

at

at

0421 04 2191 9117 1706 06

Metro

Urban

Centres;

Centres;

and

- Rs.10000 per month for eligible customers at Semi-Urban and Rural Centres. However However,, for Teacher Teachers, s, Army Army Jawans, Jawans, other other permanen permanentt employ employees ees of Militar Military y Station Headquarters and Para Military Personnel whose salary is being credited and disbursed through our branches the minimum Net Monthly Income criteria shall be Rs.7500/- at all Centres viz. Metro, Urban, Semi-Urban and Rural. Term Term Lo Loan an// Over Overdr draf aftt – Mini Minimu mum m amou amount nt of loan loan will will be Rs.5 Rs.50, 0,00 000/ 0/-- and and maximum amount of loan Rs.4,00,000/- or 20 times monthly net salary, whichever is lower, depending upon the repaying capacity. Term

Loan:

60 Equated Monthly Instalments (EMIs) OR remaining period of service, whichever is earl earlie ier. r. Inst Instal alme ment nt to comm commen ence ce one one mont month h afte afterr disb disbur urse seme ment nt of loan loan.. Overdraft:

The overdraft limit shall be adjusted within a maximum period of 60 months by reducing Drawing Power(DP) equivalent to EMI amount at the beginning of every month. However, loan allowed to Army Jawans, other permanent employees of Military Station Headquarters and Para Military Personnel shall be Repayable in maximum 36 Eq Equa uated ted Mon Month thly ly Inst Instalm alment entss or rema remain ining ing period period of stay stay at the parti particu cular lar posting, whichever is lower In Case of Employees of Govt./Institutions etc.

In case of employees of government/institution etc., irrevocable letter of authority from the borrower to remit salary/installment and other amount payable to bank. Post dated cheques towards monthly installments be obtained from the borrower under the cover of ‘letter of deposit’ (Mandate (Mandate of the borrower conveying conveying deposit of PDCs

fo r

appropriation

in

t he

loan

account).

Where the employer agrees to check off facility, at least one PDC to be obtained.


37


0421 04 2191 9117 1706 06

In case of Army Officers :

In case case of Army Army Jawa Jawans ns,, Othe Otherr perm perman anen entt empl employ oyee eess of Mili Milita tary ry Stat Statio ion n Headquarters and Para Military Personnel (Undertaking to be obtained from the Station Commandant/ Unit Incharge at the time of retirement/death/transfer of a particular Jawan/Personnel or on transfer of a unit, loan under the scheme will get adjusted.) Professional Loan Schemes PNB extends assistance to self-employed persons, firms and joint ventures of such professional persons engaged in professions such as: Medical practitioners practitioners including including dentists, chartered accountants, cost accountants, accountants, practicing company secretaries, who are not in regular employment of any employer, accredited journalists or cameramen who are free lancers, i.e. not employed by a p part artic icula ularr

newsp newspap aper/ er/ma magaz gazine ine,, lawy lawyer erss

or solic solicit itors ors,, engine engineer ers, s, archi archite tect cts, s,

surveyors, construction contractors or management consultants or to a person trained in any other art or craft who holds either degree or diploma from any institution established, established, aided or recognised recognised by Government Government or to a person who is considered by the bank as technically qualified or skilled in the field in which he is engaged. Loans under und er this this schem schemee may may be grante granted d for the purpos purposee of finan financin cing g purcha purchase se of equipm equipment ent used used by the the borrow borrowers ers,, busin business ess premi premises ses,, constr construct uctio ion, n, maki making ng alterations alterations or renovation renovation of business premises/nursing premises/nursing homes or for working capital requirements, in their professions. Persons already practicing or new entrants in various professions, having licenses issued under Central or State Legislations; Associations of persons engaged in a single profession provided that each member of such an association is qualified and duly licensed to practice in the profession; and The qualified professionals will be required to produce a certified copy of the license


38


0421 04 2191 9117 1706 06

for the record at the bank. Need based on merits within the overall permissible limits as under: Metro/ Urban

S.Urban/Rural Area

1. Medical practitioners

Rs 5.00 lac

Rs 10.0 lac

2. Other professionals

Rs 5.00 lac

Rs

5.00 lac

25000/-. Margin : Nil up to Rs.25000/-. 25% Above Rs. 25000/-. Hypothecation/Mortgage of the goods purchased/created with the amount of loan till the final adjustment of bank's loan and interest thereon. Coll Collat atera erall securi security ty by way way of immo immovab vable le prope propert rtie iess or acce accepta ptable ble third third party party guarantee in case of advances above Rs. 25000/-. Term Loan Loans up to Rs.50000/- 48 months Loans beyond Rs.50000/- 60 months Working Capital loans are renewable every year. Payments will be made direct to the suppliers/ dealers. In case of construction of the premises, the loan may be disbursed in phases after verifying the end use in terms of the plan as also at the spot.

The Scheme Scheme aims aims at providi providing ng financia financiall assistan assistance ce to deservin deserving g / meritor meritorious ious students students pursuing higher education in India or abroad. viz., Graduation courses – B.A., B.Com., B.Sc., etc., Post-Graduation Post-Graduation courses, Masters & Ph.D; Professional Professional courses, Engineering, Engineering, Medical, Medical, Agriculture, Agriculture, Veterinary, Veterinary, Law, Dental, Management, Computer etc., Computer Computer Certificate Certificate courses of reputed Institutes accredited to Department of Electronics or institutes affiliated to University; Courses like ICWA, C.A., CFA, etc., courses conducted by IIM, IIT, IISc, XLRI, NIFT, etc., Regular Diploma/Degree courses conducted by Colleges/Universities approved by UGC/Govt./AICTE/AIBMS/ICMR, Regular Degree / Diploma courses like Aeronautical,


39


0421 04 2191 9117 1706 06

Pilot training, Shippling etc. approved by DGCA/ etc., Courses offered by National Institutes and other reputed Private Institutes. Students

should

approach

t he

branch

nearest

to

th e

place

of

domicile.

Interest is charged monthly on simple basis during the repayment repayment holiday/moratorium holiday/moratorium period & concession of 1% in rate of interest is allowed provided the same is serviced regularly during study period. Punjab National Bank has tied up with Kotak Mahindra Insurance to provide life insurance cover for Student borrowers. Need based finance, subject to repaying capacity of the parents / students with margin and the following ceilings :For studies in India: Maximum Rs.10.00 lacs. For studies abroad: Maximum Rs.20.00 lacs. Nil. Above Rs.4.00 lacs:

Studies in India Studies Abroad Reimbursement of related expenses such as admission fee, monthly fee,

5% 15%

Boarding and lodging expenses in recognized Boarding Houses etc. already incurred by way of loan taken from own sources (to meet the contingency) contingency) by the applicant, if claimed within 3 (three) months of such payment and before consideration of the loan by the Bank.

can be sanct sanctio ioned ned to the the same same stude student nt Second Second time Education Education Loan can borrower for completion of next higher course . Loan against Mortgage

Scheme seeks to provide finance against mortgage of immovable property situated in Metro/ Urban/ Semi Urban centres. The scheme is designed to offer instant solutions relating to business needs or for personal needs such as, children's higher education, travel, daughter's marriage, medical emergencies, etc. Loan is, however, not available for speculative purpose. Eligibility


40


•

0421 04 2191 9117 1706 06

Employees of Central/ State Govt/ Schools/ Colleges/ Public Sector Undertakings (PSUs), (PSUs), Reputed Corporates and other intcome tax assesses who are below the age of 60 years

•

Business Enterprises having a satisfactory track record of o

o

3 years of cash profit; and Net profit in the immediately preceding financial year

For Individuals •

Minimum net monthly salary/ net annual income of Rs.10,000/ Rs.1,20,000/- for salaried and for other income tax assesses respectively

•

Net annual income should be double that of total EMIs for the year

For Business Enterprises •

•

Minimum net annual income/ profit of Rs.1,20,000/ Net income/ profit should be 1.5 times that of total EMIs for the year

Term Loan & Overdraft

Minimum Loan:- Rs. 1 Lac Lac Maximum Loan:- Rs.100 Lacs . OBJECTIVE

Offers attractive benefits as part of a Package to those customers who have the capacity and are willing to avail a minimum specified loan amount under at least two or more specified Retail Loan Schemes. 2. SCHEME APPLICABILITY

Authorised Branches. 3. ELIGIBILITY


41


0421 04 2191 9117 1706 06

Individuals, including joint owners, who are willing to avail a minimum loan of Rs.5.00 lac as a package under at least two specified Retail Loan Schemes at a time. One of which necessarily be for HOUSING and the other may be any one of the following purposes: Car, Personal

or

Education. At the same time, such individuals/ including joint owners should have adequate capacity to regularly service such loans. 4. PURPOSE

Finance will be allowed for: Meeting

need

based

requirement

of

purchase

/

construction

/addition

/

repair/alteration/renovation/furnishing of House/Flat. Loans are also available for purchase of land/plot for House Building. Loan on pari passu or second charge basis only to confirmed employees of Central/ State Government / Public Sector Undertakings (PSUs) maximum upto Rs. 20 lacs. The quantum of loan be decided taking into account the amount of earlier loan availed and repaying capacity of the borrower. Purchase of New Car. Meeting Meeting urgent urgent requirem requirements ents of personal personal nature, nature, such as marria marriage ge of children children,, holiday holiday,, foreign travel, family function, medical expenses etc. However, loan will not be granted for speculation purposes.Education for Self or Children, including the school education of the child. 5. AMOUNT OF LOAN

For Housing: Need Based - Minimum Rs.2 lac. Maximum Rs. 50 lacs For Car : Need Based - Minimum Rs.2 lac.

For Personal Needs: Need Based - Minimum Rs.1 lac Maximum Rs. 2 lacs


42


0421 04 2191 9117 1706 06

For Education: For Studies in India - Minimum Rs.1 lac Max. Rs.5.00 lac For Studies abroad - Minimum Rs.1 lac Max. Rs.10.00 lac 6. MARGIN

10% except when loan is availed for Personal and or Educational needs in which case it shall be Nil.

7. RATE OF INTEREST

Housing TENOR For

loans

repayable

in/upto i) Upto 5 years ii) Above 5 & upto 10 years

Rate of Interest @percent p.a. REVISED w.e.f. 01.08.2003

7.75 8.25

Car - PTLR presently 11.50% Personal - 13% Education - 50 basis points below PTLR viz.11% 8. REPAYMENT

Housing - Maximum 10 years (120 months) in equal Monthly Instalments. For Car and Personal - Maximum 4 years (48 months) in equal Monthly Instalments. For Education - Maximum 7 years (84 months) in equal Monthly Instalments. Obte Obtent ntion ion of advan advance ce cheque chequess (P.D (P.D.C .Cs) s) signe signed d by the the borrow borrower erss be ensur ensured ed towa toward rdss repayment of equated monthly instalments alongwith letter of deposit. In case of Housing and Education Loans minimum 24 advance cheques be obtained at a time. In case of loan of other purposes cheque for complete repayment period be taken. No No morat moratori orium um perio period d for repay repayme ment nt will will be allow allowed ed and repay repayme ment nt to comme commence nce immediately.


43


0421 04 2191 9117 1706 06

9. MODE OF DISBURSEMENT

As per extant guidelines of specific schemes viz. Housing, Car, Personal and Education. However, No charges for issue of Demand Draft /Bankers cheques are to be levied. 10. INSURANCE

Comprehensive Insurance Policy to be obtained where loan is allowed for Housing and Car needs. 11. SECURITY:

Housing Equitable/ Registered Mortgage of the House/Flat/ Plot Financed. Obtention of pari passu or second charge over the property mortgaged in favour of other Lender Lender in situati situations ons where where senior senior authorit authorities ies consider consider requests requests and allow allow loan only to confirmed employees of Central / State Govts. / Public Sector Undertakings, who have raised funds funds for const construc ructi tion on / acqui acquisit sitio ion n of accom accommo modat datio ion n from from other other sourc sources es and need need supplementary finance, for an amount of loan of maximum upto Rs. 20 lacs, which, however, should be for a minimum of Rs. 2lacs as prescribed above. Car Hypothecation of the Vehicle financed. Equitable mortgage should be for the total amount of loan. 12. GUARANTEE

Suitable guarantee acceptable to the Bank may be obtained which may also include guarantee from family members/other relatives. 13. UPFRONT & DOCUMENTATION CHARGES

Flat Upfront charges of Rs.2,500/- & no documentation charge.


44


0421 04 2191 9117 1706 06

14. PREPAYMENT PENALTY

In case any of the loan facilities allowed are adjusted within a period of three years, borrower(s) will be required to pay a prepayment Penalty @ 2% on the amount which had not become due for payment. 15. GENERAL

The concessional loan facility is available provided the combined availment is Rs. 5 lacs or more. Equitable Mortgage of the Immovable Property against which Housing loan has been allowed will secure the combined loan for two or more purposes. Equitable Mortgage shall not to be released till final adjustment of all the loans. Indian Retail Banking continues to redefine the credit growth in the country. It grew by a whopping 44.4% in 2005-06 to touch Rs3,538 billion. This leap was despite the increase in risk weight by RBI for housing and real estate loans during August, 2005. Housing, which constitutes more than 52% of all retail loans, grew at a robust rate of 44.35% during 2005-06. In order to help banks in India to understand the market and competition and plan future strategies, we have just come out with an Industry Insight on Indian Retail banking – 2006 edition. This report analyses the retail banking market and its segments in India and presents the key trends, along with issues and challenges. The report also paints a future outlook for thee ma th marke rket. t. Be Besi sides des it pro profi files les 21 ma major jor pl play ayers ers in th thee ret retai aill ban bankin king g spa space ce and th thei eir r strategies.

This report will be of immense use to all banks in India to review and formulate their strategies strategi es in the retail space. It primar primarily ily covers analysis of the present status, current trends, major

Major

issues

&

points

challenges

in

the

growth

discussed

in

of

the

this

retail

banking

r e po r t

sector.

are:

-Global retail banking vis-à-vis Indian scenario -Indian retail banking overview


45


-What

a re

the

regulatory

factors

involved

in

Indian

0421 04 2191 9117 1706 06

banking

industry?

- How interest rate risks, money laundering, and outsourcing are affecting the performance of banking sector? - What woul uld d be the impa pacct of Basel el--II no norrms in In Indi diaan ban anki kin ng ind ndus usttry ry?? - How the banking industry would combat the competition from upcoming sectors like mutual

f u n ds ?

- What are the various issues and challenges before this industry? With a jump in the Indian economy from a manufacturing sector, that never really took off, to a nascent service sector, Banking as a whole is undergoing a change. A larger option for the consumer is getting translated into a larger demand for financial products and customisation of services is fast becoming the norm than a competitive advantage.

With the Retail banking sector expected to grow at a rate of 30% [Chanda Kochhar, ED, ICICI Bank] players are focussing more and more on the Retail and are waking up to the potential potential of this sector of banking. At the same time, the banking sector as a whole is seeing structural changes in regulatory frameworks and securitisation and stringent NPA norms expected to be in place by 2004 means the faster one adapts to these changing dynamics, the faster is one expected to gain the advantage. In this article, we try to study the reasons behind the euphemism regarding regarding the Retail-focus Retail-focus of the Indian banks and try to assess how much of it is worth the attention that it is attracting. Potential for Retail in India: Is sky the limit?

The Indian players are bullish on the Retail business and this is not totally unfounded. unfounded. There are two main reasons behind this. Firstly, it is now undeniable that the face of the Indian consumer is changing. This is reflected in a change in the urban household income pattern. The direct fallout of such a change will be the consumption patterns and hence the banking habits of Indians, which will now be skewed towards Retail products. At the same time, India compar compares es prett pretty y poo poorly rly with with the other other econom economies ies of the the world world that that are are now becom becoming ing comparable comparable in terms of spending patterns with the opening up of our economy. For instance, while the total outstanding Retail loans in Taiwan is around 41% of GDP, the figure in India stands at less than 5%. The comparison with the West is even more staggering. Another comparison that is natural when comparing Retail sectors is the use of credit cards. Here also, the potential lies in the fact that of all the consumer expenditure in India in 2001, less than 1% was through plastic, the corresponding US figure standing at 18%.


46


0421 04 2191 9117 1706 06

But how competitive are the players?

The fact that the statistics reveal a huge potential also brings with it a threat that is true for any sector of a country that is opening up. Just how competitive are our banks? Is the threat of getting drubbed by foreign competition real? To analyze this, one needs to get into the shoes of the foreign banks. In other words, how do they see us? Are we good takeover targets? Going by international standards, a large portion of the Indian population is simply not “bankable” – taking profitability into consideration. On the other hand, the financial services market is highly over-leveraged in India. Competition is fierce, particularly from local private banks such as HDFC and ICICI, in the business of home, car and consumer loans. There, precisely precisely lie the pitfalls of such explosive explosive growth. All banks are targeting targeting the fluffiest fluffiest segment i.e. the upwardly mobile urban salaried class. Although the players are spreading their operations into segments like selfemployed selfemployed and the semi-urban semi-urban rich, it is an open secret that the big city Indian yuppies form the most profitable segment. Over-dependence on this segment is bound to bring in inflexibility in the business.

What about the foreign giants?

The foreign banks have identified this problem but there are certain systematic risks involved in operating in the Retail market for them. These include regulatory restrictions that prevent them from expanding their branch network. So these banks often take the Direct Selling Agent Agent (DSA (DSA)) route route where whereby by low-e low-end nd jobs jobs like like sourc sourcing ing or trans transact actio ion n proce processi ssing ng are are outsourced to small regional layers. So now on, when you see a loan mela or a road show showcasing the retail bouquet of an elite MNC giant, you know that a significant commission earned out of any such booking gets ploughed back to our own economy. Perhaps, one of the biggest impediments in foreign players leveraging the Indian markets is the absence of positive credit bureaus. In the west the risk profile can be easily mapped to things like SSNs

and this information can be publicly traded. PAN is a step in this direction direction but lot more work need to be done. What has been a positive step towards this is a negative file sharing started by a consortium of 11 banks. However, as a McKinsey study points out actual write-offs on NPAs show a strong negative correlation with sharing of positive information. On top of this, the the spendspend-now now-pa -payy-la later ter “cred “credit it cultur culture” e” in India India is just just not picki picking ng up. A swift swift legal legal procedure against consumers creating bad debt is virtually nonexistent. Finally, the vast Gitarattan international business school

47


0421 04 2191 9117 1706 06

geographical and cultural diversity of the country makes credit policy formulation a tough job and it simply cannot be dictated dictated from a Wall Street or a Singapore boardroom! All these add up to the unattractiveness of the Indian retail market to the foreign players. So over the past few years, in spite of the entry of MNCs in many industries, industries, Retail Banking has seen a flurry of panicky exits. Fewer than 40 remain in India and their share of total bank assets currently 7.2% is falling. Those that remain might be thought to be likely buyers of Indian banks. Yet Citibank, HSBC and Standard Chartered—all in India for more than a century, and with relatively large retail networks—seem to have no pressing need to acquire a local bank. Established foreign banks have preferred to take over customers or businesses from other foreign banks that want to leave. Thus HSBC, in recent years, has acquired customers from France's BNP, Germany's Deutsche Bank and Japan's Bank of Tokyo-Mitsubishi. ABN Amro took over Bank of America's retail business.

So all for the keeping then?

This will perhaps be the most wrongful inference that can be drawn from the above. We just cannot afford to look inwards and repeat the mistakes that were the side effects of the Nationalization of the Banking System. A growing market can never be an alibi for lack of innov innovat ation ion.. India Indian n banks banks have have shown shown littl littlee or no inter interest est in innov innovat ativ ivee tailo tailor-m r-mad adee prod produc ucts. ts.Th They ey have have often often trie tried d to copy copy proce process ss desig designs ns that that have have been been teste tested, d, albe albeit it successfully, successfully, in the West. Each economic culture has its own traits and one who successfully successfully adapts those to the business is the eventual winner. A case in point is the successful implementation of micro-credit networks in Bangladesh. Positioning a bank as a tech-savvy financial vendor in a country where Internet penetration is an abysmal 1.65% can only add to the the over-l over-leve evera ragin ging g as point pointed ed out earli earlier er.. Th Thee focus focus of the the sector sector should should rema remain in in macroeconomic wealth creation and not increasing the per capita indebtedness that will do little but add to the NPA burden. Retail Banking in India has to be developed in the Indian way, notwithstanding the long queues in front of the teller counter in the SBI Joka branch!


48



0421 04 2191 9117 1706 06

49


0421 04 2191 9117 1706 06

Chapter-3 Research Methodology


50


0421 04 2191 9117 1706 06

RESEARCH METHODOLOGY

Research Methodology refers to the method the researchers use in performing research

operations. In other words, all those methods, which are used by the researcher during the course of studying his research problem, are termed as Research Methods.

RESEARCH DESIGN

A researc research h project project conducted conducted scientif scientifical ically ly has a specifi specificc frame frame work work of researc research h from problem problem identif identificat ication ion to presenta presentatio tion n of research research report. report. This This framew framework ork of conducti conducting ng research is known as Research Design. A research can be conducted without a research plan but it may not solve the problem. A research cannot achieve its objectives without proper research design, without design, it increase its cost and energy.

DESCRIPTIVE RESEARCH DESIGN

Descriptive research includes surveys and facts finding enquiry’s of different finds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The main characteristics of this method are that the researcher has no control over the variable. He can only report what has happened or what is happening. Most are post facts research projects are used for descriptive studies in which the researcher seeks to measure such items as for example frequency of shopping, preference of people or similar data. Ex post facts studies also include attempt by researchers to discover causes even way when they


51


0421 04 2191 9117 1706 06

cannot control the variables. The method of research utilized in descriptive research is survey method of all kinds, including comparative and correctional methods. The study is about customer satisfaction regarding services in PNB. It is being made because Customer Customer satisfaction is the key to the profitability profitability of the banking. It implies implies the retention retention of customers for the long term, which is cheaper than altercating new customers. In current scenario bank becoming larger the closure of branches and the advent of internet banking, the question arises whether the customers are satisfied or not.

DATA COLLECTION

PRIMARY DATA with the help of self structured, questionnaire was collected to the address the research objectives and keeping in tune with the research design. SECONDARY DATA consisted from “Journals, Magazines, and Books & Websites.”

SAMPLING TECHNIQUE

Sampling is necessary because it is almost impossible to examine the entire parent population or universe. Various factors such as time available, cost, purpose of study etc. make it necessary for the researchers to choose a sample. It should neither be too small nor too big.

SAMPLE SIZE 

40 Customers.

MODE OF DATA COLLECTION


52




0421 04 2191 9117 1706 06

Questionnaire

Objectives of study 

To study the various services offered by PNB



To measure behavior of staff is satisfactory towards customers.



To check out staff co-operation towards customers.



To measure manager co-operation towards customers.

ROLES AND RESPONSIBILITIES RESPONSIBILITIES •

Opening of accounts of customer.

•

Opening of accounts of students.

•

Filling the forms of the customers.

•

Help customers to learn how to fill different types of vouchers.

•

Receiving the cheques.

•

Ascertain progress regarding student accounts in various branches.

•

Deposited the cheques of the customers.


53


0421 04 2191 9117 1706 06

•

Made transfer entries on the computer.

•

Entries of the cheques in the computer.

•

Checking of records in the locker room.

•

Made reminders for customers so that they can know rather they have paid their rent for the locker.

•

Went to schools so that help them to open the student accounts.

•

Entries of cash vouchers and evaluation of entries of the Fixed deposit from one ledger to another.

DESCRIPTION OF EXPERIENCES 

Uneducated customers were not abling to fill their Forms properly



Due to the lack of the employees’ ledger were not in good condition.



Recording of the data was incomplete and due to which they were not able to clarify the dues.

 

But due to the computer the job of the employees is simpler. Now they have to pass simple entries and all records is maintained easily without any confusion.



There job is much simpler than before now they can make changes, add, modify at the same time in a easy manner that is an achievement for bank



I learnt many things in the bank but the most interesting thing I like there is the Environment of the bank the employees help each other rather they the job of other or not but they help each other.



Conflicts arise between them because of the lack of the customers they add wrong information in their cheques or vouchers that cannot be passed.



I learnt many things I have good and bad experiences both over their before I I was not aware of anything in the bank now I know many things.



I can say that while working over their no employee leaves its work pending for net day because if they let it pending than they can not end their day and by hook or crook they have to finish it.



My experience says that working in bank is not as easy as we think because Managing each and every thing is not easy task.



They have to interact with differ rent types of people so it’s very tough.


54



0421 04 2191 9117 1706 06

55


0421 04 2191 9117 1706 06

Chapter-4 DATA ANALYSIS AND INTERPRETATION


56


0421 04 2191 9117 1706 06

DATA ANALYSIS and INTERPRETATION TABLE HOW IS BEHAVIOUR OF STAFF? OCCUPATION

GOOD

SATISFA-

VERY

UNATIS

CTORY

GOOD

FACTORY

TOTAL

%AGE

SERVICE

6

4

1

2

13

32.5

STUDENT

4

2

1

1

8

20.0

RETIRED

2

0

2

0

4

10.0

BUSINESS

4

2

3

2

11

27.5

HOUSE HOLD

2

1

0

1

4

10.0

TOTAL

18

9

7

6

40

100

GOOD SATISFACTORY VERY GOOD UNSATISFACTORY


57


0421 04 2191 9117 1706 06

TABLE DO YOU FIND OUT STAFF CO-OPERATVE/COURTEOUS? OCCUPATION

YES

NO

TOTAL

%AGE

SERVICE

5

8

13

32.5

STUDENT

3

5

8

20.0

RETIRED

2

2

4

10.0

BUSINESS

8

3

11

27.5

HOUSE HOLD

2

2

4

10.0

TOTAL

20

20

40

100


58


0421 04 2191 9117 1706 06

yes no

TABLE WHETHER FACILITY OF LOCKER IS UPTO THE MARK?


59


OCCUPATION

YES

NO

0421 04 2191 9117 1706 06

TOTAL

%AGE

SERVICE

10

3

13

32.5

STUDENT

6

2

8

20.0

RETIRED

3

1

4

10.0

BUSINESS

9

2

11

27.5

HOUSE HOLD

3

1

4

10.0

TOTAL

31

9

40

100

yes no

TABLE IS MANAGER & STAFF RECEPTIVE RECEPTIVE TO YOUR PROBLEMS? PROBLEMS?


60


0421 04 2191 9117 1706 06

OCCUPATION

YE S

NO

TOTAL

%AGE

SERVICE

9

4

13

32.5

STUDENT

3

5

8

20.0

RETIRED

3

1

4

10.0

BUSINESS

6

5

11

27.5

HOUSE HOLD

3

1

4

10.0

TOTAL

24

16

40

100

yes no


61


0421 04 2191 9117 1706 06

TABLE HOW MUCH TIME IS TAKEN IN OPENING OF AN ACCOUNT? OCCUPATION

15 MINUTES

30 MINUTES

1 2 HOUR

HOURS/ TOTAL

%AGE

MORE

SERVICE

6

5

2

0

13

32.5

STUDENT

2

4

2

0

8

20.0

RETIRED

2

2

0

0

4

10.0

BUSINESS

5

3

2

1

11

27.5

HOUSE HOLD

3

1

0

0

4

10.0

TOTAL

18

15

6

1

40

100

15 minutes 30 minutes 1 hour 2 hours/more


62


0421 04 2191 9117 1706 06

TABLE DO YOU WANY TO AVAIL OUR CREDIT FACILITIES? OCCUPATIO

PERSONAL

CONSUMER OTHERS

HOUSING CAR

TOTA

N

LOAN

LOAN

LOAN

L

SERVICE

1

1

6

2

3

13

32.5

STUDENT

1

4

1

1

1

8

20.0

RETIRED

4

0

0

0

0

4

10.0

BUSINESS

2

5

0

2

2

11

27.5

HOUSEHOLD

2

0

0

2

0

4

10.0

TOTAL

10

10

7

7

6

40

100

LOAN

%AGE

personal loan consumer loan others housing loan car loan


63


0421 04 2191 9117 1706 06

Chapter-5 FINDINGS AND CONCLUSIONS


64


0421 04 2191 9117 1706 06

FINDINGS AND CONCLUSIONS FINDINGS



PNB is having a distribution network of more than 4000 branches. This is the main strength of the PNB, which cannot be the strength of any other bank.



PNB is the oldest bank from 1895, so it has a strong band image in the market built over the time & a huge stockpile of the customers under its arms.



The age group of employees is mostly towards at higher side, which is adversely affecting the productivity, as they do not have any enthusiasm left.



PNB as not much computer savy and works more manually, manually, which restricts restricts its scope of business.



The process of certain activities of the bank is very much lengthy, as a result of which now a day’s people prefer to go towards private banks.



The working environment of the bank is not so much healthy and clean as result of which customers even hesitate to enter the bank.


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Conclusions 

Bank requires good sitting arrangements for the old generation so that they can get their work done easily and in a manner and get fully satisfied.



Promotions to the employees should be given and their salary must be increased.



Maximum tax benefit is availed from home loan and minimum from car loan.



Maximum number of borrowers were get influenced by dealer/agent and minimum by relative. So bank requires introducing new advertisement for loan schemes.



Bank requires to make better arrangements in sitting and standing in the branch.



Bank has to maintain its working environment as result of which customers not even hesitate to enter the bank.


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References


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References 

Philip Kotler, 2004-2005 Marketing Management, PHI, NewDelhi.



C.R. Kothari, 2001Research Methodology, Wishwa prakashan, New Delhi.



Indian Journal of Marketing.



Website of PNB.


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Project Report on Punjab National Bank Aakash

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