BOB: About bob: is the third largest bank in India, after the State Bank of India and the

Punjab National Bank and ahead of ICICI Bank.[1] BoB has total assets in excess of Rs. 2.27 lakh crores, or Rs. 2,274 billion, a network of over 3,000 branches and offices, and about 1,100 ATMs. IT plans to open 400 new branches in the coming year. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, credit cards and asset management. Its total business was Rs. 4,402 billion as of June 30. The Maharajah of Baroda, Sir Sayajirao Gaekwad III, founded the bank on 20 July 1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalised on 19 July 1969, by the government of India.

1. Retail banking refers to banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.
1

Types of banking: Commercial bank has two meanings: Commercial bank is the term used for a normal bank to distinguish it from an investment bank. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking). It is the most successful department of banking. Community development bank is regulated banks that provide financial services and credit to underserved markets or populations. Private banks manage the assets of high net worth individuals. Offshore banks are banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks. Savings banks accept savings deposits. Postal savings banks are savings banks associated with national postal systems. Retail Banking services are also termed as Personal Banking services

2. Core banking: Core Banking is normally defined as the business conducted by a banking institution with its retail and small business customers. Many banks treat the retail customers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the Corporate Banking division of the institution. Core banking basically is depositing and lending of money.
2

Nowadays, most banks use core banking applications to support their operations where CORE stands for "Centralized Online Real-time Exchange". This basically means that the entire bank's branches access applications from centralized datacenters. This means that the deposits made are reflected immediately on the bank's servers and the customer can withdraw the deposited money from any of the bank's branches throughout the world. These applications now also have the capability to address the needs of corporate customers, providing a comprehensive banking solution. A few decades ago it used to take at least a day for a transaction to reflect in the account because each branch had their local servers, and the data from the server in each branch was sent in a batch to the servers in the datacenter only at the end of the day (EoD). Normal core banking functions will include deposit accounts, loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking, and branches.

3. Wholesale banking: Wholesale banking is the provision of services by banks to the likes of large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/agencies), and services offered to other banks or other financial institutions. In essence, wholesale banking services usually involve high value transactions.
3

Wholesale banking contrasts with retail banking, which is the provision of banking services to individuals. (Wholesale finance means financial services, which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stockbrokers.) Modern wholesale banks are engaged in: finance wholesaling, underwriting, market making, consultancy, mergers and acquisitions, fund management. 4. Branch banking: A branch, banking center or financial center is a retail location where a bank, credit union, or other financial institution (and by extension, brokerage firms) offers a wide array of face-to-face and automated services to its customers 5. A current account is one in which you keep a certain amount of money and use it for your regular day to day transactions. For ex: to pay your phone bill, to pay for your groceries etc. Banks usually do not give you a significant interest on your deposit in this account because of the liquid nature of the account and because you can withdraw your funds anytime you want. A savings account is one in which customers save their monthly savings and they are not like the current account. Though the money is available at any time for the customer to withdraw, money is not as frequently deposited/withdrawn from it like the current account. Hence banks offer a meager interest rate for the money held in this account. A deposit account is one in which you keep a fixed sum
4

of money for a specific duration (Usually atleast a few months) based on an agreement with the bank. The bank does not expect you to withdraw funds regularly from this account and hence gives you a better interest rate. These are also called Term Deposit accounts or Fixed Deposit accounts. 6. Cash Credit is also known as Working Capital .Cash Credit is a facility to withdraw the amount from the business account even though the account may not have enough credit balance. The limit of the amount that can be withdrawn is sanctioned by the bank based on the business cycle of the client and the working capital gap and the drawing power of the client. This drawing power is determined, based on the stock and book debts statements submitted by the borrower at monthly intervals against the security by hypothecating of stock of commodities and/ or book debts. The excess withdrawal of cash is made generally on demand from the customer and the customer has to pay interest on the excess amount he/she has withdrawn. The Cash Credit facility is quite useful to those businesses where cash payment like wages, 7. A floating interest rate, also known as a variable rate or adjustable rate, refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the instrument. 8. A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. Variable rate loans, by contrast, are anchored to the prevailing discount rate.
5

9. Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply. 10. Difference between bank rate and reverse repo rate: While repo rate is a short-term measure, i.e. applicable to short-term loans and used for controlling the amount of money in the market, bank rate is a long-term measure and is governed by the long-term monetary policies of the governing bank concerned. Repo rate: Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo rate is the rate at which our banks borrow currency from the central bank. A reduction in the repo rate will help banks to get Money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market. In order to increase the liquidity in the market, the central bank does it. The Reverse repo rate is the rate at which the banks park surplus funds with reserve bank, while the Repo rate is the rate at which the banks borrow from the central bank. It is mostly done then, when there is surplus liquidity in the market by the central bank. A bank rate is the interest rate that is charged by a countrys central or federal bank on loans and advances to control money supply in the economy and the banking sector. This is typically done on a quarterly basis to control inflation and stabilize the countrys exchange rates. A
6

fluctuation in bank rates triggers a ripple-effect as it impacts every sphere of a countrys economy. For instance, the prices in stock markets tend to react to interest rate changes. A change in bank rates affects customers as it influences prime interest rates for personal loans. Types of Bank Rates Here are the different types of monetary instruments on which financial institutions offer the following bank rates: Savings account bank rate: Modest rates are charged on funds that are deposited in the savings accounts. However, investors have high flexibility in withdrawing the deposits. Certificates of deposit (CD) bank rate: These offer comparatively high interest rates compared to savings accounts. Bank rates on CDs are determined by the term period of a deposit and the current economic situation. The longer the term of a CD, the higher will be the bank interest rate. Money-market funds bank rate: The interest rate on money-market funds is relatively low. As most of the money market accounts are privately insured, it is a secure method of investment. Deposits in a money market account generate interest through short-term investments. 11. CRR: CRR, or cash reserve ratio, refers to a Portion of deposits (as cash) which Banks have to keep/maintain withthe RBI. This serves two purposes. It ensures that a portion of bank Deposits is totally riskfree Secondly It enables that RBI control liquidity In the system, and thereby, inflation.

This is the amount of money that the banks have to necessarily park with the RBI. The base of this is the total of the deposits that a bank has. The RBI pays the bank interest on the amount parked with it. 11.2 SLR.(STATUTORY LIQUIDITY RATIO) The amount of liquid assets, such as cash, precious metals or other short-term securities, that a financial institution must maintain in its reserves. The statutory liquidity ratio is a term most commonly used in India. 13tio, refers to a 12. CROSS CHEQUE: Crossing of a cheque means that the cheque is payable only through a collecting bank. Therefore it is not payable at the counter of any bank. A cheque across which have been drawn two parallel lines with the words 'not negotiable' written between them. A crossed cheque must be paid into a bank account and cannot be cashed over the counter. 13. An overdraft facility is a formal arrangement with a bank which allows an account holder to draw on funds in excess of the amount on deposit. Overdraft facility financing is most commonly used by businesses as a way of making their working capital more flexible, although it can also be available to individuals. Banks which offer this service typically have a number of expectations from customers who use it, and it is important to be aware of these expectations before entering an overdraft facility agreement. 14. BANK DRAFT: If you have to make a large purchase, and do not carry credit cards or cash with you, a private or public
8

seller may ask you to pay by bank draft. This term is more commonly used in the UK than it is in the US, where it is roughly equivalent to the word cashiers check. Essentially, up to a certain amount of money, a genuine bank draft or cashiers check is guaranteed. Crossing of a cheque means that the cheque is payable only through a collecting bank. Therefore it is not payable at the counter of any bank. A cheque across which have been drawn two parallel lines with the words 'not negotiable' written between them. A crossed cheque must be paid into a bank account and cannot be cashed over the counter. 15. CHEQUE: A cheque is a document (usually a piece of paper that orders a payment of money. The person writing the cheque, the drawer, usually has a chequing account where their money is deposited. The drawer writes the various details including the money amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay this person or company the amount of money stated. Cheques are a type of bill of exchange and were developed as a way to make payments without the need to carry around large amounts of gold andsilver. Paper money also evolved from bills of exchange, and are similar to cheques in that they are a written order to pay the given amount to whomever had it in their possession (the "bearer"). Technically, a cheque is a negotiable instrument[nb 2] instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer's name with
9

that institution. Both the drawer and payee may be natural persons or legal entities. Specifically, cheques are order instruments, and are not in general payable simply to the bearer (as bearer instruments are) but must be paid to the payee. 16. Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act. As on 30th June, 1999, there were 300 scheduled banks in India having a total network of 64,918 branches. The scheduled commercial banks in India comprise of State bank of India and its associates (8), nationalized banks (19), foreign banks (45), private sector banks (32), cooperative banks and regional rural banks. "Scheduled banks in India" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank". "Non-scheduled bank in India" means a banking company as defined in clause (c) of section 5 of the
10

Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank". 17. NATIONALIZED BANK: Nationalized Bank refers to Government Undertaking or ManagingBank. The major objective behind nationalization was to spread banking infrastructure in rural areas and make cheap finance available to Indian farmers. The nationalized 14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India (UBI), and Vijaya Bank. In the year 1980, the second phase of nationalisation of Indian banks took place, in which 7 more banks were nationalised with deposits over 200 crores. With this, the Government of India held a control over 91% of the banking industry in India. After the nationalisation of banks there was a huge jump in the deposits and advances with the banks. At present, the State Bank of India is the largest commercial bank of India and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9,000 branches. 18. FLEXI / RECURRING DEPOSITS Flexi and Recurring Deposits can both be managed by the system since the difference between the two is very minor. In Recurring Deposits, a fixed installment amount has to be made across a fixed tenor and interest is earned at a fixed rate. Whereas, in case of a Flexi Deposit, the
11

installment amount as well as the tenor can be flexible while the interest is still earned at a fixed rate. The Screens for Recurring and Flexi deposits are a superset of the Fixed Deposit. Here, in a manner similar to fixed deposits the user can define and maintain the main product. The additional parameters required to define a recurring or flexi deposit are the Payment Instructions, Payment Frequency and Conditions in case of delayed and early payments. This deposit type also has an additional interface for the user to define and view the payment schedule. 19. Current problem with home loan scheme of sbi: 20. Nostro and Vostro account: Nostro and vostro (Italian, from Latin, noster and voster; English, 'ours' and 'yours') are accounting terms used to distinguish an account held for another entity from an account another entity holds. The entities in question are almost always, but need not be, banks. Nostro An account that a bank holds with a foreign bank. Nostro accounts are usually in the currency of the foreign country. This allows for easy cash management because currency doesn't need to be converted. Vostro: The account a correspondent bank, usually U.S. or UK, holds on behalf of a foreign bank. Also known as a loro account. Local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.
12

A vostro bank account is an account that one party is holding for another party. In a vostro account, the administrators are not actually the owners of the money. They must keep this account solvent on behalf of its owner. Vostro account administrators, often banks, frequently pay interest to other parties for the use of their money. Vostro accounts are just a way of talking about who owns the capital invested in them. To a customer who puts money into a bank account, that account is a nostro account, meaning that it belongs to that person. From the standpoint of the bank, it is a vostro account, meaning that it is not the banks own money, but the customers, and the bank bears a responsibility for good accounting of the customers money. This makes sense, since voster in Latin or vuestra in Spanish means yours. 21. Npv: The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.

NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.
13

22. Irr: The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as "economic rate of return (ERR)". The Internal Rate of Return, or IRR for short, is a measure of your investment performance, and is expressed as percent return per year. It is essentially equal to the (annualized) interest rate a bank would have to pay you to duplicate the performance of your portfolio. NPV is the Net Present Value . It is the summation of present values of future cash flows less the present value of cash outflow. This method takes into accoutn the time value of money. Generally present value of cash outflow is determined by multiplying with the discounting factor which is the cost of capital of the company. IRR is the Internal rate of return . It is the rate at which the PV of Inflow is equal to the PV of outflow. If IRR is positive then we can go with the project else ditch it. For capital budgeting decisions a mix of techniques is used. No single method is accurate enough.
14

Difference between IRR and NPV While both the IRR and NPV try to do the same thing for a company, there are subtle differences between the two that are as follows. While NPV is expressed in terms of a value in units of a currency, IRR is a rate that is expressed in percentage which tells how much a company can expect to get in percentage terms from a project down the years. NPV takes into account additional wealth while IRR does not calculate additional wealth If cash flows are changing, IRR method cannot be used while NPV can be used and hence it is preferred in such cases While IRR gives same predictions, NPV method generates different results in cases where different discount rates are applicable. Business managers are more comfortable with the concept of IRR whereas for general public, NPV is better for grasping. 23. Ratio:
Liquidity Analysis Ratios Current Ratio Current Ratio = Quick Ratio Quick Ratio = Quick Assets ---------------------Current Liabilities Current Assets -----------------------Current Liabilities

Quick Assets = Current Assets Inventories Net Working Capital Ratio Net Working Capital Ratio = Net Working Capital -------------------------Total Assets

15

Net Working Capital = Current Assets - Current Liabilities

Profitability Analysis Ratios Return on Assets (ROA) Return on Assets (ROA) = Net Income ---------------------------------Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 Return on Equity (ROE) Return on Equity (ROE) = Net Income -------------------------------------------Average Stockholders' Equity

Average Stockholders' Equity = (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2 Return on Common Equity (ROCE) Return on Common Equity = Net Income -------------------------------------------Average Common Stockholders' Equity

Average Common Stockholders' Equity = (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2 Profit Margin Profit Margin = Net Income ----------------Sales

Earnings Per Share (EPS) Earnings Per Share = Net Income --------------------------------------------Number of Common Shares Outstanding

Activity Analysis Ratios Assets Turnover Ratio Assets Turnover Ratio = Sales ---------------------------Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 Accounts Receivable Turnover Ratio Sales

16

Accounts Receivable Turnover Ratio =

----------------------------------Average Accounts Receivable

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 Inventory Turnover Ratio Inventory Turnover Ratio = Cost of Goods Sold --------------------------Average Inventories

Average Inventories = (Beginning Inventories + Ending Inventories) / 2

Capital Structure Analysis Ratios Debt to Equity Ratio Debt to Equity Ratio = Total Liabilities ---------------------------------Total Stockholders' Equity

Interest Coverage Ratio Interest Coverage Ratio = Income Before Interest and Income Tax Expenses ------------------------------------------------------Interest Expense

Income Before Interest and Income Tax Expenses = Income Before Income Taxes + Interest Expense

Capital Market Analysis Ratios Price Earnings (PE) Ratio Price Earnings Ratio = Market Price of Common Stock Per Share -----------------------------------------------------Earnings Per Share

Market to Book Ratio Market to Book Ratio = Market Price of Common Stock Per Share ------------------------------------------------------Book Value of Equity Per Common Share

Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares Dividend Yield Dividend Yield = Annual Dividends Per Common Share ------------------------------------------------

17

Market Price of Common Stock Per Share Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares Dividend Payout Ratio Dividend Payout Ratio = Cash Dividends -------------------Net Income

ROA = Profit Margin X Assets Turnover Ratio ROA = Profit Margin X Assets Turnover Ratio Net Income ROA = ------------------------ = Average Total Assets Profit Margin = Net Income / Sales Assets Turnover Ratio = Sales / Averages Total Assets Net Income -------------- X Sales

Sales ------------------Average Total Ass

24. Bill discounting: Bill discounting is a major activity with some of the smaller Banks. Under this particular type of lending, Bank takes the bill drawn by borrower on his(borrower's) customer and pay him or her immediately deducting some amount as discount/commission. The Bank then presents the Bill to the borrower's customer on the due date of the Bill and collect the total amount. If the bill is delayed, the borrower or his customer pay the Bank a pre-determined interest depending upon the terms of transaction.

18