Project Report "Banking System" in India Introduction of Banking

Banking regulation Act, 1949, defines banking as accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demands or otherwise and with draw able on demand by cheques, draft or order otherwise.

Functions of Commercial Banks :
1. To change cash for bank deposits and bank deposits for cash. 2. To transfer bank deposits between individuals and or companies. 3. To exchange deposits for bills of exchange, govt. bonds, the secured and unsecured promises of trade and industrial units. 4. To underwrite capital issues. They are also allowed to invest 5% of their incremental deposit liabilities in shares and debentures in the primary and secondary markets. 5. The lending or advancing of money either upon securities or without securities. 6. The borrowing, raising or taking of money. 7. The collecting and transmitting of money and securities. 8. The buying and selling of foreign exchange including foreign bank notes.

Banking scene in India
The banking sector in India is passing through a period of structural change under the combined impact of financial sector reforms, internal competition, changes in regulations, new technology, global competitive pressure and fast evolving strategic objectives of banks and their existing and potential competitors. Until the last decade, banks were regarded largely as institutions rather akin to public utilities. The market for banking services were oligopolies and Centralized while the market place was regulated and banks were expected to receive assured spreads over their cost of funds. This phenomenon, which was caricatured as 36-3 banking in the united states, meaning that banks accepted deposits at 3%, lent at 6%, and went home at 3 p.m. to play golf, was the result of the sheltered markets and administrated prices for banking products. Existence of entry barriers for new banks meant that competition was restricted to existing players, who often operated as a cartel, even in areas where the freedom to price their products existed. The market place began to change for banks in India as a result of reforms of the financial sectors initiated in the current decade. On account of policy measures introduce to infuse greater competitive vitality in the system, the banking has entered in to a competitive phase. Competition has emerged not only from within the banking system but also from non-banking institutions. Lowering of entry barriers, deregulation of interest rates and growing sophistication of customers have made banking far less oligopolistic today. Introduction of capital adequacy and other prudential norms, freedom granted to enter into new turf’s and greater overlap of

functions between banks and non-banks have forced banks to get out of their cozy little world and think of the future of the banking.

Emerging Environment of Banking in India
Full convertibility of rupee leading to free mobility of capital, which will mean virtual collapse of the national borders for trade and capital flows. Greater coordination between monetary, fiscal and exchanged rate policies for achieving the goals of faster and sustainable economic growth, macro-economic stability and export promotion. Close integration of various financial markets such as money market, capital market and forex market. Removal of lowering of existing barriers of competitiveness, which are present today in the form of quantitative instructions on certain imports protective custom duties, reservation of certain utilities for the public sector. Growing privatization and commercialization infrastructure sector. Today, Banks customers are better informed, more sophisticated and discerning. They also have a wide choice to choose from various banks and non-bank intermediaries. Their expectations are soaring. This is particularly true for banks corporate clientele but also applies to customers from personal segment. This is changing profile of customer’s call for a shift from product-based approach to customers-based approach. A bank aiming at maximizing customer value must, of necessity, plan for customized products. A combination of marketing skills and state-of-the-art technology should enable to bank in maximizing its profits through customer satisfaction. In the next millennium banks will have to be more and more cautions about customer service, profitability, increased productivity, to keep face with changing banking scenario. As banks in India prepare themselves for the millenium these are the shifts in the paradigm they are likely to experience. The 21st century may see the dawn of “DARWINIAN BANKING”. Only the banks could fulfill the demands of markets and changing items would survive and prosper. A word about SBI card SBI Segment : Small business credit card (SBI credit card) Preamble : Small business units, retail traders, artisans, village industries, small-scale industrial units and tiny units, professionals and self employed persons etc., contribute significantly to the growth of our economy. The entrepreneur himself manages many of the units. Very often, these

Purpose : To meet the credit requirements of small business units. Units who do not enjoy credit limit with us/other banks at present with excellent performance and credential may be considered. stock statements and other statements are done with credit delivery made simple and easy.     Small industrial units (SSI and tiny units including artisans) Small retail traders (Under SBF) Professional and self employed persons Small business enterprise B.   For professionals and self employed persons. retail trader. whichever is higher. . With a view to providing hassle free financial supports to the above categories of entrepreneurs who have shown commitment to run the unit successfully and who are dealing with the banks for last two years satisfactorily. tiny sector units the assessment norms in vogue as per the Nayak Committee recommendations would continue. 20% of the annual turnover declared for tax purpose or last twelve months turnover in the operative accounts. new and friendly credit product namely small business credit card scheme is designed. For small scale industrial units. artisan. Quantum of loan : Loan up to Rs. They also find it difficult to cope with the demands for audited balance sheet and other statements sought by the bank from time to time for availing credit facilities. In respect of parties with good track record. Under the scheme. the credit limits may be decided taking into consideration the actual turnover in the accounts during the last two years. Eligibility : A. 5 Lakh can be sanctioned to eligible persons. submission of balance sheet. retail trader etc.entrepreneurs complain of procedural delay in sanctions and renewal of limits. cumbersome procedural aspects relating to reviews and renewals. 50% of their gross annual income as per IT return shall be considered as the limit for issuing the SBI credit card. where sales tax returns are not available. industrial unit. Small Scale Industry (SSI) and tiny units. Assessment : The small business credit card limit can be fixed as follows :  For small business. Customers of the following segments with a satisfactory track record for the last two years enjoying credit facilities.

Annual review will be done based on conduct/operations of the A/cs. The outstanding as on the due date of review should be made repayable in suitable monthly installments.Validity :   Credit card limit will be valid for a period of three years. A major portion of the sales turnover should have been routed through the accounts as revealed by the credit summations. office equipment. in case of the excellent track record. If the credit summations is less than 50% of projected sales turnover. 25000/. sanctioning authority may waive collateral requirement. Repayment :    The working capital advance may be continued subject to that review every year provided the credit summations in the account is not less than 50% of the projected sales turnover. only the term loan is repayable in installments up to a maximum period of five years. Over Rs.No collateral security. Interest rate : As per extent instructions issued from time to time relating the market segment. subject to satisfactory conduct of the accounts.charge over movable/immovable property or third party granted. The term loan is repayable in suitable installments with in a maximum period of five years. Collateral : Under SSI-No collateral security as per existing guidelines of RBI. In case of composite loans. Margins : . However. Refinance : No refinance is to be claim from SIDBI Security : Primary : Hypothecation of the stock in trade receivables. 25000/. machinery. User SBF :   Up to Rs.

25000/- Cover under credit guarantee scheme : All eligible loan accounts sanctioned for small scale industries (other than services) would qualify for cover under CGTFSI scheme (presently the scheme has been introduce in five circles on pilot basis viz.000/.NIL Rs. The credit limit will be worked as detail above. Name Account No. Patna & Hydrabad). 25001/. submission of stock statement.. New Delhi.A Convenient Banking Product : The credit card is a hassle free convenient banking product aimed at simplifying the credit delivery mechanism. No. Limit Rs. Date of issue Valid upto …………. Chandigarh.20% Documentation : Documents as per extant instructions. Lucknow. Small business credit card         Card No. 5. Bank may waive insurance of assets for equipment against the fire and other risk up to Rs. balance sheet and other statements are done away with. Credit Card .00. Operation : Rs. Tel. 25000/. (Branch Code) Card holder’s Photograph with signature Signature of the Brach Manager The borrower would be issued a photo card indicating sanctioned limit and validity of the limit (sample card) Insurance :   Fixed assets/stock pledged/hypothecated to the bank be fully insured at least to the extent of the bank interests. Cumbersome procedural aspects relating to reviews and renewals..Up to Rs.

Cost of photograph to be borne by banks.         Small business credit card accounts should be maintained in a separate ledger. State Bank Cash Plus CARD   Signature Panel.00. Brief opinion report should be recorded.000/. Sanction :   Required loan may be sanctioned with in a week after receipt of detailed information. Scoring Model :  Loan would be sanctioned up to Rs. Stock statement waived. Rationale :  New schemes for hassle free credit facilities to small borrower. Cheque book should be issued and marked as small business credit card account. IRAC norms would be applicable. Inspections :  Half-yearly inspection/monitoring to ensure the end user funds. Borrower would be issued a small business credit card with photograph thereon. Marked inquiries should be made and recorded in the opinion report and singed by the field officer/cash officer or officers not below that rank. Submission of audited balance sheet waived. 5. Units within a radius of 5 kilometers may be covered intensively for the issue of credit card.based on the simplified scoring model as given in annexure. Those who are scoring less than 60% would not qualify for the loan. Automatic Teller Machine (ATM) An ATM (Automatic Teller Machine) card is useful to a card holder as it helps him to withdraw cash from banks even when they are closed. Pass book should be issued for mall business credit card holders. This can be done by inserting the card in the ATM installed at various banks locations. Control return after sanction may be sent to next higher authority for approval . This condition may be waived for such of those units already in the book of the branch. Magnetic Stripe Features of State Bank Cash Plus Card .II.

SBI card provides customers with an option. which contains encoded information. The magnetic stripe. It identifies the card as your State Bank Card Plus Card. We uses it for making the payments for purchase made at the merchant establishments.e. This study would help us to know about the problems that are faced by the consumers during transactions. which is available with the bank. for customers while deciding their financing needs and also helpful for other researchers for further research in the future. With an SBI card customers can enjoy hassle-free credit facilities. Therefore both the terms are taken into consideration in the proposed study. how and to what extent ? And because of this scholar has to go through all the existing literature related to the study. Significance of the Study This study entitled “comparative study of various credit schemes of SBI V/s other banks” will be helpful for bankers to maintain customers service policy. Due to the time restrictions scholar could seek advice from only the limited literature. Name of the card holders mention there on it. Due to the privatization of banking sector many big private players entered in this sector giving a tough . in addition to the existing banking credit facilities available.      State Bank Cash Plus Card having the 19 digit. In case of State Bank Cash Plus Card. Conceptualization As the concept includes two terms i. If so. ATM card possess pincode which having the 4 digit. Signature panel on which you must sign as soon as you’re your card. It would also reveal the problems that are being faced by the bank employees while dealing with customers and would also highlight the future prospect of SBI card. SBI Card. As the concept is completely under the control of various banks and RBI. Review of Existing Literature : It is very essential to know whether the study has already been conducted before. So the information is directly taken from these sources. there is no expiry period but for the old card. cash credit or working capital loans and terms loans. Use of State Bank Cash Plus Card   We uses our State Bank Cash Plus Card for cash withdrawal from ATMs. the date after which your card needs to be renewed is the last day of the month indicated on your card. very limited studies have been conducted on the subject.

card no. question crops in mind what is a SBI card. A SBI card is nothing but a identity card containing card holder’s photographs with signature. This study has been conducted by classifying customers into two categories. to face this stiff competition all the public sector banks have to review their functioning. As SBI card is an integral part of SBF (small business financing). what is its function. What is its shape and size.  To know customer’s perceptions about various credit schemes of different banks. . So the due weightage is given to SBI card. These aspects will be given importance in this project report. The main focus of the study is to know about customer’s perceptions about various credit schemes.   SBI Card holders Non SBI Card holders Objective of the Study  To find out the market potential of SBI card in Bhiwani. validity period. A/c No. To find out main obstacles while getting finance under various credit schemes. limit. Name.competition to the existing players. The concept of SBI card.   To compare the credit schemes of different banks. branch code with signature of Branch Manager. Focus of the problem The study has been conducted at SBI Bhiwani. So.

Limitations of the study  The time was very limited as for requirement of study. The sample size was restricted to Bhiwani only.  Taking Sample has carried out the study. CHAPTERISATION The Chapterisation of the project report is as following : Chapter –1 : . all the limitations associated with sampling. Therefore.  Sometimes the respondent does not want to disclose some relevant information.   The information provided by the respondent may not be authentic.

Here the complete analysis of the data. It means what are the steps have been taken for doing this study. Why this study is required? What are the limitations? What are the objectives and what are the steps I have adopted for doing this project. Chapter –3 :  It consists the detail descriptions about the raw data. On the basis of this data the graph are inserted. In this chapter the profile of organisation has been also covered. For tabulation the data is converted into the percentage and after that it is tabulated. I have discussed about the relevance and importance about the project. At last the conclusion is drawn on the basis of this data. Chapter –2 :  This study consists of the whole research methodology about the project. Chapter –4 : . I have explained the topic with ATM facilities. which is collected from the primary sources. How much the sample size and what are the variables? So this study consist the complete research methodology.

which is used for collecting the data. It consists the appendices part of the project report in this part I have mentioned the names of all those books. Criteria of selecting sample : We are taking the sample on our convenience. non-zero chance of being included in the sample. (2) Non-probability sampling : . journals and websites from where I have collected the material comes under the head of bibliography. The sample unit is individuals. It also consists the questionnaire. Sampling techniques : Sampling techniques may be divided into two categories : (1) Probability sampling : Probability samples are characterized by the fact hat each element of the population has known. magazines. Universe or survey population All the customers availing credit schemes in Bhiwani is our universe while the sample size is 50.

   Exploratory Research Descriptive Research Casual or Experimental Research Data Collection : There are two sorts of data available : 1. Depending upon the objective of the study there is three-research design available : . 2.Non-probability sampling involves personal judgement somewhere in the process. These data are basically observe and recorded by the researcher for the first time used primary data for my project work. Primary Data : Primary Data are those data which are collected to solve a problem or take advantage of any opportunity on which a decision is depending. convenient technique of sampling (non-probability) was used. It helps the researcher to conduct the study and ensure that economical procedures are employed and probing is relevant to the problem. Research Design A research design is simply a plan for study in collection and analyzing the data. For the present study. Secondary Data : .

Secondary data are those data which are primarily collected by other person for his own purpose. Methods of Data Collection :   Observation Method Questionnaire Method Identified Independent and Dependent variables : Independent variables : All the external factors are independent variables :      Govt. policy of RBI Environmental factors War Technology Natural Calamities Dependent variables : All the internal factors of organization are dependent variables :  Company policy .

 Infrastructure .

1 Awareness level about various credit facilities YES NO 46 04 Most of the respondent are well awared about the credit facilities of different Banks Table No. 3 Distribution of Respondents availing the credit facilities from banks.Table No. Table No. of respondents availing the credit facilities YES NO 44 06 Most of the respondent are availing credit facilities from Banks. SBI PNB UCO IOB Others . 2 No.

of satisfied customers Yes No 32 12 Customers are highly satisfied with their banks. Table No. Table No. . 4 Time since customers are availing credit facilities More than 3 2 to 3 1 to 2 Less than One 10 16 14 04 Most of the respondents are availing the credit facilities ranging from 1 to 3 years. 5 No.18 14 04 06 02 Nearly 40% of the Respondents are availing credit facilities from SBI followed by PNB.

7 (a) Ranking of banks on the basis of interest rate SBI PNB IOB UCO CANARA OBC 30 27 08 13 08 14 SBI and PNB are the most preferred banks in regard of interest rates. Table No. .Table No. 6 Awareness level about various credit facilities of different banks SBI PNB IOB UCO CANARA OBC 42 40 22 14 12 08 The credit facilities of SBI and PNB are well known to every respondent.

PNB and IOB. 7 (b) Ranking of banks on the basis of collateral security requirement SBI PNB IOB UCO CANARA OBC 26 30 16 10 06 12 Respondents are very much satisfied with SBI and PNB in respect of collateral security requirement. Table No.Table No. Table No. 7 (d) Ranking of banks on the basis of services . 7 (c) Ranking of banks on the basis of attitude of the employees SBI PNB IOB UCO CANARA OBC 28 27 20 8 10 07 Respondents appreciate the attitude of employees of the SBI.

.SBI PNB IOB UCO CANARA OBC 26 32 26 06 06 04 Respondents appreciate the level of services provided by SBI. PNB and IOB. 7 (f) Ranking of banks on the basis of renewal process SBI PNB IOB UCO CANARA OBC 38 22 16 08 08 08 Customers are very much satisfied with the renewal process of SBI and tanks to SBI card. Table No. Table No. 7 (e) Ranking of banks on the basis of documents required SBI PNB IOB UCO CANARA OBC 28 24 18 12 08 10 Customers are happy with the document requirement of SBI and PNB.

Table No. 8 Main obstacle while getting finance (a) Security (b) Document Requirements (c) Red Tapisam 04 (d) Guarantee requirement 08 (e) Attidute of Bank Employees 06 24 08 Security requirements are the main obstacle while availing any credit facility. 9 Preference order of different parameters (a) Interest Rate 42 (b) Collateral Security 12 (c) Attitude of Bank Emp.Table No. 10 Preference level of banks SBI PNB IOB UCO CANARA OBC . 08 16 (d) Services (e) Document requirement 14 08 (f) Validity Customer prefer low interest rates followed by services. Table No.

1 :To find out the Market Potential of SBI card. 12 Sources of information about SBI card Friends 06 Bank Employees 22 Advertisement 04 Publicity 06 Most of the respondents gets information about SBI card from bank employees. 11 Awareness level of SBI Card Yes No 38 12 A good awareness level is exist about SBI cards.56 24 10 04 04 02 More than half of the respondents prefer SBI followed by PNB. . Objective No. Table No. Table No.

. Ø Ø Most of the respondents like the credit facilities provided by SBI and PNB.e. Ø Ø Respondents even require further guidance related to few things. 11.25% whereas other banks are offering 11.00 lacs. PNB is the fastest service provider.Ø Most of the respondents covered in the survey know about the SBI card and feel that this facility is beneficial to them as they can fix the limit for three years. It takes only 15 days to disburse the sanctioned loans whereas other banks including SBI takes 40 to 45 days. Customers feel very enthusiastic about the launch of SBI card in Bhiwani and very sure about its success. 2 : To know customer’s perceptions about various credit schemes of different banks. Objective No. 3 : To find out main obstacle while getting finance under various credit schemes. Ø PNB is offering the lowest PLR i. 5.5%.e. Objective No. According to most of respondents. Ø Most of the respondents want an increase in existing limit i.

. Ø RBI Should reduce the SLR and CRR to increase the credit creation capacity of the banks. Ø Bank employees should bring more professionalism in their attitude while dealing with customers to retain and attract more customers. the following suggestions can be made. Ø Banks should reduce the time length between sanction and disbursement of loan. Ø SBI should increase the limit under SBI card to fulfill the growing requirement of the customers. Ø Banks should narrow down the spread between PLR and deposit rates. security and document requirement are the main obstacles while getting finance under various credit schemes. Ø All the nationalized banks should try to improve their service level to face the stiff competition given by private banks..According to most of respondents. Suggestions On the basis of data analysis and interpretations.

Are you aware of various credit facilities of banks ? Yes No Q2. …………………………………………………………..Ø Banks should advertise and conduct special awareness programs to make SBI cards more popular among customers. Are you satisfied with your existing bank ? Yes No Q6. Are you availing credit facility from any bank ? Yes No Q3. Occupation…………………. Age ………………………….. Q1. If yes. from which bank you are availing credit facility ? ………………………………………………………… Q4. If no.. a) c) More than 3 year 1-2 years b) d) 2-3 years Less than 1 year Q5.. Since when you are availing this facility. Questionnaire Name ………………………… Income………………………. .. then why ………………………………………….

According to you what is the main obstacle while getting finance under various credit facilities? a) c) e) Security Red Tapism b) d) Document Requirement Guarantee requirement Attitude of bank employees Q10. Rate the banks on the basis of following parameters : Factors Interest Collatarel Rate Banks SBI PNB UCO OBC CANARA IOB Attitude of Field officer Services Document Renewal required process Security Q9.Q.7 Tick the name of banks whose credit facilities are known to you ? a) d) SBI CANARA b) e) PNB UCO c) f) IOB OBC Q8. According to you arrange the parameters in the descending order of their preference? a) Interest Rate b) Collateral Security .

Q12. Which banks name comes to your mind first while availing credit facility and why? ………………………………………………………………………. ………………………………………………………………………. If yes. ………………………………………………………………………. Have you heard about SBI card? Yes No Q13. Do you want to give any suggestions to banks? ………………………………………………………………………. ..c) e) Services Document required d) f) Attitude of field Officer Validity period Q11.. from where? a) c) Friends Advertisement b) d) Bank Employees Publicity Q14.

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