CHP1.

INTRODUCTION OF CITI BANK

1.1 INTRODUCTION

CITI Bank has been known worldwide for being one of the largest commercial banks, spanning across six continents and over 100 countries. Together with its 200,000 over employees, it continues to be a major player in the banking industry. Despite this, due to the constantly changing environment and also the rapid increase in knowledge workers in the society, upward potential and mobility for CITI Bank to grow is almost limitless. As Charles Darwin, father of the theory of evolution, once said, It is not the strongest species that survives, but the species most adaptive to change. The same goes to the banking and finance industry.

Therefore CITI Bank must not only be the leading pioneer in innovation of financial services but it must also be sensitive to the changes in the current global and local environment. Due to a globalizing world, competition has increased in the banking and finance sector. This forces governments worldwide to loosen the regulations concerning this sector enabling foreign banks to further penetrate into the local market. We can see

that CITI Bank is exploiting these advantages by establishing four more branches in peninsular Malaysia. It is expected that local barriers and regulations will continue to be removed. Therefore CITI Bank should continue to be on the lookout for opportunities to further reach out into previously impenetrable target market.

1.2 History of CITI Bank India Established 109 years ago in Kolkata, CITI Bank has a long history in India. Currently it is the largest foreign direct investor in financial services in India with a total capital commitment of approximately US$ 4 Billion in its onshore banking and financial services business and its principal and alternate investment programs. It operates 41 full-service CITI Bank branches in 40 cities and over 700 ATMs across the country. CITI Bank is an employer of choice to about 7,500 people.

1.3 Corporate History For almost two centuries, CITI Bank has been at the heart of the United States and the worlds financial system. CITI Bank is one of the few private institutions that have survived since 1812, through wars, panics, depressions, good times and bad. One of the keys to this long success has been its ability to develop innovative strategies to respond creatively and effectively to opportunities anywhere in the world .

CITI Bank Corporate history can be divided into five eras: The First Era (18121891) In the 19th century, City Bank served as a common treasury for a group of merchants with diverse business interests. By the early 1890s, however, City Bank was about to become the largest bank in the world.

1812 Authorized capital of $2 million and paid-in capital of $800, 0001813 Paid City Bank first dividend1865 joined the U.S. national banking system The Second Era (18921929) City Bank ride an entrepreneurial burst into the front ranks of world finance and became an all-purpose financial institution offering a diverse set of services to a large group of domestic and international customers.

1893 Became the largest bank in the City of New York1894 Became the larg est bank in the U.S.1897 First major U.S. bank to establish a foreign departm ent; began foreignexchange trading.1914 First U.S. national bank to open an overseas branch.

1915 Largest overseas branch network of any U.S. bank1919 First U.S. bank with $1 billion in assets1928 First major American bank to offer unsecured

personal loans to consumers1929 became the largest commercial bank in the world Source: www.mycitistory.com The Third Era (19301960) City Bank weathered the Depression and the age of regulation that followed.

1936 First bank offer consumers checking accounts with no minimum balan ce1941 Over 1,800 City Bankers served in World War II; 55 lost their lives1 945 Handled more than $5.6 billion in U.S. Treasury

securities in a series of War Loan and Victory Loan drives.1956 Installed first computera Burroughs EIOIin commercial loan operations Source: www.mycitistory.com The Fourth Era (19611990) The mid-century era began when CITI Bank introduced the negotiable certificate of deposit (CD). The CD changed CITI Bank and the entire banking industry.

1961 Invented the negotiable certificate of deposit (CD) 1965 Entered the leasing business and the credit card business1968 First Nat ional City Corp. become parent of First National City Bank1974 Citicorp be came the name of the First National City Corporation1976 CITI

Bank became the name of First National City Bank1977 Introduced ATMs for the first time used for more than emergency cash. 1979 worlds leading foreign exchange dealer a position maintained today198284 S&L acquisitions in California, Florida, Illinois and Washington, D.C195 Introduced Direct Access, linking personal computers in homes & offices19 87 Introduced unique touch screen automated teller machines in N.Y & HK1989 Became the leading iss uer of securitized credit card receivables Source: www.mycitistory.com The Fifth Era (1991Today) While the early 1990s were years of deteriorating financial conditions, by the mid 1990searnings had been restored, dividends reinstated and increased above the previous high, capital rebuilt, and ratings revived. Source: www.mycitistory.com

1992 Completed Five Point Plan to rebuild capital, reserves, and earnings19 93 Launched Windows on Risk to assess Citicorps aggregate risk profile1 994 Opened first fully foreign-owned commercial bank in RussiaCelebrated 20th anniversary of the Consumer Banking Group1995Opened first full service branch in Beijing, Vietnam and in South

Africa1996 Had largest number of credit cards in Asia CITI Microfinance Group, CITI in Bangladesh, and other partners, closed on local currency microcredit securitization for

BRAC.1998 All Citicorp and Travelers Group divisions merge to become Citi group2007 CITI losing $8-11billion several days after Merrill Lynch announced bankruptcy 2007 Charles Prince quit as the chairman and of Citigroup2008 Citigroup was forced to seek federal financing to avoid collapse. The US government provided $25 b & guarantees to risky assets to Citigroup in exchange for stock. 2009 Citigroup announced that it was splitting into two companies, the idea behind is Citigroup can dump "the dead weight" on CITI Holdings, allowing the prime assets of Citicorp to operate away from that of the toxic assets. chief executive

CHP2. COMMERCIAL BANK A commercial bank (or business It is bank) is a type lends of financial money and

institution and intermediary.

a bank that

provides transactional, savings, and money market accounts and that accepts time deposits. 2.1 The role of commercial banks Commercial banks engage in the following activities:

processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means

issuing bank drafts and bank cheques accepting money on term deposit lending money by overdraft, installment loan, or other means providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures

safekeeping of documents and other items in safe deposit boxes sales, distribution or brokerage, with or without advice, of: insurance, unit trusts and similar financial products as a financial supermarket

cash management and treasury merchant banking and private equity financing Traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related securities, but today large commercial banks usually have an investment bank arm.

2.2 Types of loans granted by commercial banks

1. SECURED LOANS

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally lent to the borrower, for example, foreclosure of a home. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. If the sale of the collateral does not raise enough money to pay off the debt, the creditor can often obtain a deficiency judgment against the borrower for the remaining amount. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may only satisfy the debt against the borrower rather than the borrower's collateral and the borrower.

2. MORTGAGE LOAN A mortgage loan is a very common type of debt instrument, used to purchase real estate. Under this arrangement, the money is used to purchase the property. Commercial banks, however, are given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

3. UNSECURED LOANS Unsecured loans are monetary loans that are not secured against the borrower's assets (i.e., no collateral is involved). There are small businesses unsecured loans such as credit cards and credit lines to large corporate credit lines. These may be available from financial institutions under many different guises or marketing packages: 4. BANK OVERDRAFT An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the positive balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

corporate bonds credit card debt credit facilities or lines of credit personal loans

CHP3. PRODUCTS AND SERVICES Products and services

CITI

offers consumers and

institutions

broad

range

of financial

products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's franchise in India includes businesses such as equity

brokerage, equities distribution, private banking (CITI Private Bank) and alternate investments and private equity (CVCI). 3.1 TYPES OF SERVICE

1. FINANCIAL 2. BANKING

1. Financial services are the economic services provided by the finance industry, which encompasses a broad range of organizations that manage money, including credit unions, banks,

credit companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises. As of 2004, the financial services industry represented 20% of the market capitalization of the S&P 500 in the United States

2. Banking services The primary operations of banks include:

Keeping money safe while also allowing withdrawals when needed Issuance of checkbooks so that bills can be paid and other kinds of payments can be delivered by post

Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business)

Issuance of credit cards and processing of credit card transactions and billing

Issuance of debit cards for use as a substitute for checks Allow financial transactions at branches or by using Automatic Teller Machines (ATMs)

Provide wire transfers of funds and Electronic fund transfers between banks

Facilitation of standing orders and direct debits, so payments for bills can be made automatically

Provide overdraft agreements for the temporary advancement of the Bank's own money to meet monthly spending commitments of a customer in their current account.

Provide internet banking system to facilitate the customers to view and operate their respective accounts through internet.

Provide Charge card advances of the Bank's own money for customers wishing to settle credit advances monthly.

Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a cashier's check or certified check.

Notary service for financial and other documents Accepting the deposits from customer and provide the credit facilities to them.

3.2 Other types of bank services 1. Private banking - Private Banks provide banking services exclusively to high net worth individuals. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services. Private Banks often provides more personal services, such as wealth management and tax planning, than normal retail banks.

Capital market bank - bank that underwrite debt and equity, assist company deals (advisory services, underwriting and advisory fees), and restructure debt into structured finance products.

Bank cards - include both credit cards and debit cards. Bank of America is the largest issuer of bank cards.

Credit card machine services and networks - Companies which provide credit card machine and payment networks call themselves "merchant card providers".

2. Foreign exchange services Foreign exchange services are provided by many banks around the world. Foreign exchange services include:

Currency exchange - where clients can purchase and sell foreign currency banknotes.

Foreign Currency Banking - banking transactions are done in foreign currency.

Wire transfer - where clients can send funds to international banks abroad.

3. Investment services

Asset management - the term usually given to describe companies which run collective investment funds. Also refers to services provided by others, generally registered with the Securities and Exchange Commission as Registered Investment Advisors.

Hedge fund management - Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades.

Custody services - the safe-keeping and processing of the world's securities trades and servicing the associated portfolios. Assets under custody in the world are approximately US$100 trillion.

4. Insurance

Insurance brokerage - Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently a number of websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry.

Insurance underwriting - Personal lines insurance underwriters actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Underwriters may

also offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement

insurance, health insurance, and property & casualty insurance.

Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

5. Application and Delivery

CUSTOMER can complete the cardholder application process using the Online Card Application (OCA) module within CITI Manager. Using the OCA module, cardholders enter their demographic information and submit the form electronically to their manager for approval. The Program Administrator may add default limits or create new limits for the account, and then approves the application for electronic submission to CITI. The OCA module is provided at no extra cost. Cardholder applications require a signature or authorization from a CUSTOMER manager or Program Administrator. The online application process allows for the ability to issue cards within 48 hours of initial application. Faxed applications typically take 72 hours for fulfillment. Once CUSTOMERs program is live, we can accept rush applications via fax. Upon approval, we can request overnight delivery of the card. We will not charge CUSTOMER for rush applications, issuance, or delivery. Card Deployment Reporting Activation data will be captured

in our system and will be visible to both CITI and CUSTOMER via our reporting tool.

In addition, CITI will create an online dashboard that displays card activation by hierarchy as shown below. The dashboard will allow A/OPCs to view the following within their span of control: Number of cards mailed Number of cards activated Cards returned.

6. Emergency and Lost Cards

Cardholders should notify immediately in the case of lost, stolen, or compromised cards, in order to remove the potential for fraudulent charges. Once a card is listed as lost or stolen, we may elect to hot list the card, placing the card on a bulletin that provides a reward to the merchant for picking up the card if it is presented at the point of sale. Emergency card replacement is sent next day via overnight courier, provided the request is received by 3:00 p.m. (ET). For non-emergencies, it issue a replacement card within 48 hours of notification.

Program Administrators and cardholders can contact Customer Service to request a new card. CUSTOMER is not liable for unauthorized charges that occur 17 after the bank has been notified of the loss, theft, or possible fraudulent use of the card. There is no charge for the shipping of routine or emergency replacement cards.

7. Card Replacement For expedited card requests, you may contact your Client Account Service (CAS) Manager prior to faxing the application. Your CAS Manager will facilitate the card replacement process and request delivery to the location or address specified by CUSTOMER. CITI has an operational "do not strand" policy, which enables our customer service representatives to adjust account limits or approve transactions to ensure cardholders can cover expenses and safely return home. Bank will do whatever is necessary to ensure CUSTOMERs cardholders are not stranded. In most cases, we can provide assistance to adjust the various limits and restrictions on cards to ensure card use is freely available. In addition, MasterCard has services and easy to remember phone number to provide assistance as well; 1-800MCASSIST. The card associations provide emergency assistance including various travels, medical, and legal services.

Bank can provide emergency cards for any number of cardholders on short notice for any centrally billed card program. Emergency cards

enable CUSTOMER to quickly activate a commercial card within minutes for crisis and emergency purchasing needs.

The cards have single authorizations and a hierarchy that is separate from CUSTOMERs standard, ongoing program. Emergency cards have a preset limit, can be loaded with preset controls as determined by CUSTOMER, and are delivered in a deactivated state. The cards can be activated as needed by placing a call to the Voice Response Unit or Customer Service. Limits can be changed at the time the card is needed through a call to Customer Service.

CHP4. CONSUMER A consumer is a person or group of people that are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household. The concept of a consumer may vary significantly by context.

4.1 There are three contents under consumer :

1. Economics and marketing 2. Law and politics 3. Public reaction 4. Market Share

1. Economics and marketing The consumer is the one who pays to consume the goods and services produced. As such, consumers play a vital role in the economic system of a nation. In the absence of their effective demand, the producers would lack a key motivation to produce, which is to sell to consumers.

Typically when business people and economists talk of consumers they are talking about person as consumer, an aggregated commodity item with little individuality other than that expressed in the buy/not-buy decision. However there is a trend in marketing to individualize the concept. Instead of generating broad demographic profiles and psycho-graphic profiles of market segments, marketers have started to engage in personalized marketing, permission marketing, and mass customization. There is increasing backlash from the public over use of the label "consumer" rather than "customer", with many finding it offensive and derogatory

2. Law and politics The law primarily uses the notion of the consumer in relation to consumer protection laws, and the definition of consumer is often restricted to living persons (i.e. not corporations or businesses) and excludes commercial users. A typical legal rationale for protecting the consumer is based on the notion of policing market failures and inefficiencies, such as inequalities of bargaining power between a consumer and a business. As of all potential voters are also consumers, consumer protection takes on a clear political significance. In India, the Consumer Protection Act 1986 clearly differentiates a consumer as consuming a commodity or service either for his personal domestic use or to earn his livelihood. Only consumers are protected as per this act and any

person, entity or organization purchasing a commodity for commercial reasons are exempted from any benefits of this act. Furthermore, Indian case law has quite a few references on how to distinguish a consumer from a customer

3. Public reaction While use of the term consumer is widespread among governmental, business and media organizations, many individuals and groups find the label objectionable because it assigns a limited and passive role to their activities.

3. Market share The financial services industry constitutes the largest group of companies in the world in terms of earnings and equity market capitalization. However it is not the largest category in terms of revenue or number of employees. It is also a slow growing and extremely fragmented industry, with the largest company (Citigroup), only having a 3 % US market share. In contrast, the largest home improvement store in the US, Home Depot, has a 30 % market share, and the largest coffee house Starbucks has a 32% market share.

4.2 Retail Banking Retail banking is 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, and credit cards.

Commercial bank has two meanings:

Commercial bank is the term used for a normal bank to distinguish it from an investment bank. (After the great depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. This separation is no longer mandatory.)

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 are 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

4.3 CREDIT (FINANCE) Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower. Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. The purest form is the credit default swap market, which is essentially a traded market in credit insurance. A credit default swap represents the price at which two parties exchange this risk the protection "seller" takes the risk of default of the credit in return for a payment, commonly denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be referenced, while the protection "buyer" pays this premium and in the case of default of the underlying (a loan, bond or other receivable), delivers this receivable to the protection seller and receives from the seller the par amount (that is, is made whole).

4.4 Investment banking

An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (GlassSteagall Act) until 1999 (GrammLeachBliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including

G8 countries, have historically not maintained such a separation. There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with pension funds, mutual

funds, hedge funds, and the investing public (who consume the products and services of the sell-side in order to maximize their return on investment) constitutes the "buy side". Many firms have buy and sell side components.

4.5 Core investment banking activities 1. Sales and trading On behalf of the bank and its clients, a large investment bank's primary function is buying and selling products. In market making, traders will buy and sell financial products with the goal of making money on each trade. Sales is the term for the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on a caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, which can price and execute trades, or structure new products that fit a specific need. Structuring has been a relatively recent activity as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities. In 2010, investment banks came under pressure as a result of selling complex derivatives contracts to local municipalities in Europe and the US. Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects the

way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structures create new products. Banks also undertake risk through proprietary trading, performed by a special set of traders who do not interface with clients and through "principal risk"risk undertaken by a trader after he buys or sells a product to a client and does not hedge his total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics, mathematics and engineering Ph.D.s who act as quantitative analysts.

2. Equity Research The research division reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. While the research division may or may not generate revenue (based on policies at different banks), its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. Research also serves outside clients with investment advice (such as institutional investors and high net worth individuals) in the hopes that these clients will execute suggested trade ideas through the sales and trading division of the bank, and thereby generate revenue for the firm. There is a potential conflict of interest between the investment bank and its analysis, in that published analysis can affect the bank's profits. Hence in recent years the relationship between investment banking and research has become highly regulated, requiring a Chinese wall between public and private functions.

CHP5. CUSTOMER SERVICE UNIT

The Customer Service Unit handles inquiries from merchants, individual cardholders, program managers, and third parties, while the Client Account Service Manager supports specific customers and their Program Administrators. Citis Commercial Card Customer Service Unit can handle all emergencies, including reports of fraudulent transactions and can be reached toll-free at (800) 790-7206 in the U.S., or via collect call to (904) 954-7314 if the cardholder is out of the country. Additionally, a designated fax and e-mail will be provided for use of CUSTOMER cardholders. Our primary call center is located in Jacksonville, Florida with major back-up centers in Norfolk, Virginia and Sioux Falls, South Dakota.

CITI also has call centers in San Antonio, Texas and Irving, Texas. Customer Service is available 24/7 to handle a variety of inquiries including, but not limited to: Balance and payment inquiries x Credit availability Decline reasons Security closures Account closures Billing disputes Reporting lost or stolen cards Help Desk support for our online systems - 7:00 a.m. 11:00 p.m. (ET) Help Desk support for file delivery issues - 7:00 a.m. 11:00 p.m. (ET) Interface with MasterCard and third party vendors.

CUSTOMERs designated Technical Implementation Manager provides technical support for all application interfaces during the initial implementation period and ongoing service. We provide initial setup and training for file deliveries and Web-based reporting tools at no cost to CUSTOMER. Our Technical Help Desk, based in the United States but available to all Citi Commercial Cards customers, is available from 7:00 a.m. until 11:00 p.m. (ET) to provide technical support. For password resets, the Customer Service Unit can assist 24/7 via a toll free phone number. The Technical Help Desk supports: File delivery issues Web-based systems Technical Help Desk teams are specially trained to provide ongoing technical support for these processes and systems, as well as to answer any operational questions CUSTOMER may have.

5.1 Client Account Service (CAS)

Access and entitlements for Customers CitiDirect Global Card Management System Issuer Program Administrators, CUSTOMER

Program Administrators, and cardholders: All have read and write access for transaction reallocation CITI Custom Reporting System.

All external users have read only access at various hierarchy levels. Access and entitlements for the major roles for Citis online systems .The following list outlines the access and entitlements for the major roles for Citis online systems: Help Desk: Read-only access to minimal client data to support and the ability to perform user security administration functions such as resetting user passwords and creating new users Client Account Services: As this team manages client and Program Administrator requests, they have the ability to maintain and alter client profiles and accounts Customer Service: As this team manages cardholder requests, they have the ability to maintain and alter cardholder profiles and accounts Production support: Access to database with read only access (with exception of Citi Custom Reporting System, where production support have read-only and update access) Developers: No access to client data in production Client roles by applications: Client access is restricted to respective customer data only: Reporting Citis Custom Reporting System enables CUSTOMERs Program Administrator(s) to access, navigate, customize, and explore standard and

customized reports online at a click of a button or via a scheduler C itis Custom Reporting Features include: User-friendly application for generating both standard and customized reports from over 650 data elements, including Level III and enhanced folio data Utilizes drag and drop dynamic report creation and view f iltering technologies Program wide or organizational/ department level hierarchy based reporting with account, transaction, and enhanced data drill down capability Download capability supports spreadsheets, PDF, HTML, and text delimiters Ability to save queries in private or public folder to facilitate sharing of reports Reports can be pre-scheduled or run on an ad hoc basis Advanced features include filtering, column calculation using an expression editor, creation of custom prompts, and on-the-fly charting capabilities and available in 12 languages. Web-based reporting for Citis commercial card programs will be provided on demand at intervals defined by CUSTOMER. Reports can be issued at the following frequencies, depending on the type of report: Cycle Daily Month end Quarter Fiscal quarter

 Semi-annually Year Fiscal year. Historical transaction and card data is maintained for 36 months and archived up to 7 years. In addition, CUSTOMER can pre-schedule specific reports to run in the format and time intervals you have defined. Once a report has run, the user will have the ability to print or export using various formats (PDF, XLS, .CSV, HTML, or using Text delimiters). During implementation, CITI will work with CUSTOMER to determine which reports and formats will be most effective. The following report formats are available: Hard copy: If CUSTOMER decides to receive paper reports, we will work with you to determine the appropriate method for report delivery. However, as a part of our environmental initiatives, we encourage our customers to utilize other report formats. Direct transmission to mainframe: CUSTOMER can receive statement / billing information directly to a mainframe via FTP or VAN. Internet: CUSTOMER will be able to use our Internet-based account management and information reporting tools as business needs dictate. E-mail: For security reasons, CITI does not send reports via e-mail. However, we can provide CUSTOMER with e-mail notification capability.

Reports may be exported to popular Microsoft Office word processing and spreadsheet applications in RTF, XLS, CSV, TXT, and PDF formats. Standard files work with many system providers. Specific providers of travel and expense management systems include IBM, SAP R/3 Enterprise, Concur, Necho, and Extensity. We will work with CUSTOMER to decide

which standard file and transmission frequency, whether daily, weekly, or monthly, best fit your data needs.

CITI has measures in place to ensure the data received from the card associations is incorporated completely into our GDR, and that no data loss occurs. Each data file received is checked to ensure it is not corrupted, that it is complete, and that it is not a duplicate transmission. The data is then incorporated into the database and, in some cases, cleansed for accuracy.

The CAS teams work in groups of four people that know your account in detail and are available should your dedicated person be away from their desk. In total, the Customer Service Team has approximately 44 Intermediate Service Representatives, 12 Senior Service Representatives, three Operations Assistants, two Recovery Specialists, and eight Collectors. Four Customer Service Managers and a Collections Manager lead these teams and oversee the day-to-day activities of the department. All groups work together to ensure that phones are answered in a timely manner. We use cross training to enable the service center to handle peaks in call volumes.

In addition, our Managers, Operations Assistants, and Quality Department staff answer calls during peak periods to minimize client impact. CITI will provide 24/7 Client Account Service to CUSTOMER, including weekends

and holidays. Cardholders and Program Administrators can leverage our online system 24/7 to access information and perform inquires in real-time.

Citis automated voice response unit (VRU) provides users with a payment address, enables users to change their PIN, and allows users to hear balance and available credit information. The VRU system is available toll free, 24/7. We strive to answer all calls in the queue in less than 21 seconds, which means that callers can expect timely service without long hold times. CITI has dedicated experienced Customer Service Representatives to CUSTOMERs card program for all day-to-day Customer Service and operating support.

CHP6. BANKING OPERATIONS:

6.1 Front office

Investment banking Corporate finance is the traditional aspect of investment banks which also involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A). This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Another term for the investment banking division is corporate finance, and its advisory group is often termed mergers and acquisitions. A pitch book of financial information is generated to market the bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment banking division (IBD) is generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry, such as healthcare, industrials, or technology, and maintain relationships with corporations within the industry to bring in business for a bank. Product coverage groups focus on financial products, such as mergers and acquisitions, leveraged finance, public finance, asset finance and leasing, structured finance, restructuring, equity, and high-grade debt and generally work and collaborate with industry groups on the more intricate and specialized needs of a client.

6.2 Middle office This area of the bank includes risk management, treasury management, internal controls, and corporate strategy. Additionally, corporate treasury is responsible for an investment bank's funding, capital structure management, and liquidity risk monitoring. Financial control tracks and analyzes the capital flows of the firm; the Finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the United States and United Kingdom, a Financial is a senior position, often reporting to the Chief Financial Officer. Corporate strategy, along with risk, treasury, and controllers, also often falls under the finance division.

6.3 Back office

1. Operations

This involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank. Due to increased competition in finance related careers, college degrees are now mandatory at most Tier 1 investment banks.

A finance degree has proved significant in understanding the depth of the deals and transactions that occur across all the divisions of the bank.

2. Technology Every major investment bank has considerable amounts of in-

house software, created by the technology team, who are also responsible for technical support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading. Some trades are initiated by complex algorithms for hedging purposes. Firms are responsible for compliance with government regulations and internal regulations.

We encourage Customers to report CITI Banks performance (satisfactory , unsatisfactory, or exceptional) on this contract. The method for reporting is through the Vendor Performance Tracking System (VPTS), which can be accessed online at Vendor Performance Tracking System.

CHP7. Hierarchy Levels

Citis online reporting systems allow for seven hierarchy levels. This structure generally provides sufficient reporting hierarchy scenarios to mirror any organization. Within the hierarchy, CUSTOMER can include security parameters that will limit access to data for the Program Administrator(s) to their individual level of hierarchy, or allow Program Administrators to access all levels of the hierarchy, depending upon your preference. For example, if CUSTOMER grants a Program Administrator access at the Entity level, this individual can also be given access to the Division and Department levels that fall below the entity level. Once CUSTOMERs program hierarchy is established, your Program Administrator(s) will need to identify the hierarchy string when subsequent cardholder applications are submitted. CUSTOMER can set up as many centrally billed accounts as needed. These are not actual card accounts, and cannot have transactions post directly against them. The corporate billing account is used to roll up all cardholder spend so that we are able to provide CUSTOMER with a corporate bill at the end of each billing cycle. This will not in any way cause duplication. When sending CUSTOMERs ERP daily transaction reports, only daily postings against cardholder accounts are included for loading into the application for pre-population. Citis online systems provide for multiple hierarchy levels.

This structure is generally sufficient to mirror any organization. Our online tools can manage user entitlements within a hierarchy structure that allows access to only that hierarchy node or below. We also can manage reporting access at the field level by disallowing fields such as Full Account Number or other personal identifiable information. The following table presents examples of user entitlements provided within our system.

7.1 General Ledger Interface Citis Global Card Management System can interface accounts payable information into CUSTOMERs General Ledger (GL) system using automatic mapping and a file of valid GL codes from CUSTOMERs system. These GL codes can be joined by hierarchy, merchant, or Merchant Category Code. We can also map the data received from the point-of-sale to a particular GL code on a daily basis from GCMS or send transactions directly to CUSTOMERs in-house reconciliation system. Custom file programming for Outbound (CITI to State Agency) file needs of the State Agencies.

File integration of data into your internal systems can, in most cases, be accomplished using Citi's standard file offerings, which includes highly configurable mappers from our transaction management system. These mappers are configurable by the end user organization from similar technology that exists today in the Texas program. CITI has integrated with

hundreds of public and private sector clients using our standard file offerings to map to common systems such as SAP, Oracle, and Concur, etc. as well as "home grown" applications.

CITI will make every attempt to utilize one of these common files for your program. In the event your requirements include elements not captured in these standard files and mappers from our transaction management system, CITI may create unique files through custom development at a rate of up to $150 an hour. Scoping and estimated cost of the work will be determined during the implementation process and alternate solutions discussed. All estimates will be presented to the Comptroller's Office for approval, upon approval CITI Bank may present to State Entity or Co Op in writing and their formal approval will be sought prior to any work being performed. CITI will identify form of payment at the time of estimate. Citis online reporting and program management systems are available 24/7. Data files backed up Our File Delivery Help Desk can recreate and redeliver files should a delivery be lost, destroyed, or corrupted. Data files are backed up to a media that permits recovery, and we store the programs used to create archived data to facilitate recovery in the event of a disaster. We copy files sent to customers and can redeliver them to customers upon request. Should an emergency arise, CUSTOMERs designated Client Account Services Manager will provide further support.

7.2 Program Management and Reporting Tools (CitiManager):

Our single sign-on web-based platform provides CUSTOMER users with a single point of access to every type of application needed to manage a commercial cards program. Robust Reporting: CUSTOMERs users can access consolidated program data to generate over 3,000 types of customized, ad-hoc, or prescheduled reports from over 650 data elements. Efficient Application Process: Citis online application capability allows users to overlay their organizational structure and automatically route cardholder applications to the correct approver Online Statements: CUSTOMERs Cardholders and Program Administrators have 24/7 access to review statements, download reports, and make payments within our secure web environment Program Audit Tool Citis Program Audit Tool (PAT):

PAT is a configurable Web-based data mining and transaction certification application integrated within Citis Custom Reporting System. This p roduct is available and customizable for CUSTOMERs card programs. This rules based engine evaluates transactions against a series of predefined business rules, identifying possible exceptions and violations. Flexibility enables these rules to be applied to specific hierarchies according to MCC exceptions, dollar thresholds, and other key indicators. Potential transaction violations are presented for review, explanation as to why they have been identified as suspicious, and documentation. PAT includes dashboards for easy interpretation of data and trend analysis, provides drill

down capability for explanations, and allows notes to be added to transactions. Reviewed transactions are available in reports for Program Administrators, supervisors, and managers. The features and benefits of PAT include: Ability to review data available after statement cycle Mining criteria configurable at hierarchy level One screen overview of review status Identification, reporting, and analysis of potential card misuse Ability to flag transactions that are subject to compliance audits based on predefined rules E-mail notification to appropriate personnel Predefined report generation and distribution Section 508 (user disability) and PCI compliant.

7.3 Program Dashboard Residing within our CITI Custom Reporting System are our Program Dashboards. CITI Custom Reporting System (CCRS) already provides users with access to standard and customized reporting across over 650 data elements with consolidated global data. The Program Dashboard tool helps customers in three key areas:

 Program Performance: Credit usage, payments, delinquencies, cards, and span of control Spending Analysis: Usage and growth by division; intra-entity comparisons and benchmarking Vendor Management: Aggregate spend by vendor, average ticket/room prices, total and average spend metrics across vendors. 12 Customers can use the dashboard to access dynamically integrated views of all transaction data by business unit, cardholder, and vendor; generate metrics and diagnostics; identify spending patterns, trends, anomalies, and root causes; zero-in on program exceptions, trends, and data points, and then drill down into the specific transactions, cardholders, or vendors that account for the exception or trend; issue real-time alerts based on user-defined criteria and eliminate unnecessary costs associated with late fees and misuse. Using our online tools, CUSTOMER can receive notification of spending activity on established customer limits, and monitor spending by cardholders and merchants in real time.

7.4 CitiDirect Global Card Management System (GCMS) It utilizes icons for type of transaction and as indicators for various actions the user can take. Program Administrators can leverage our online system 24/7 to access, navigate, and explore data to make key business decisions in real-time, including: Available credit, current balance, previous balance, current amount due, days past due

 Disputed amount Credit limit and cash advance limit (percentage) Single transaction limit Client authorizations and declines against the card Daily, cycle, and monthly number of transactions Daily, cycle, and monthly dollar amount Program Administrators will also have the ability to drill down to specific details on spending activity across the various entities through the CitiDirect Custom Reporting System (CCRS) dashboards. `Within CITI Direct Global Card Management System (GCMS), the following fields are updated in real time with account details and transaction authorizations. Some fields may also be maintained by Program Administrator(s), and are updated immediately in the system. GCMS also enables your Program Administrator(s) to request replacement cards.

Controls may be changed at any time via the following methods: An authorized CUSTOMER representative may contact your designated Client Account Service Manager via phone, e-mail, or fax. CUSTOMERs Program Administrator(s) can utilize CitiDirect Global Card Management System to update a cardholders profile online, including a variety of controls. Your Program Administrators can also use templates to change sets of parameters. CUSTOMERs Program Administrator(s) can use

CitiDirect Global Card Management System to modify controls and perform routine maintenance, including: Change and increase transaction limits in real time Change and increase monthly limits in real time Review and update the number of transactions per day in real time Review and update the number of transactions per month in real time Update address changes Update name changes in real time View and / or modify account information, as well as hierarchy and business unit information Close accounts in real time Check client authorizations and declines against the card in real time View profile information and status of the card Inquire about accounts and current balances Change billing and accounting cycles, as needed Report lost or stolen cards Execute and manage disputes online.

7.5 CITI Online Statements Program Administrators: Set up other administrators and cardholders Cardholders: View and download their data and make payments. In Online Applications (part of CITI Online Statements); both Program Administrators

and cardholders have read-write access; for CITI Online Statements, cardholders have read-only access to credit card data; however, cardholders can change their personal profile data

7.6 CITI offers liability programs CITI offers liability programs specifically for protection against misuse of the card, via MasterCard and provides the additional protections and limitation of potential entity liability. 13 CUSTOMER is not liable for unauthorized charges occurring after the bank is notified of the loss, theft, or possible fraudulent use of the card. For unauthorized charges made prior to the card being reported lost or stolen, CUSTOMERs liability is limited to a maximum of $50 per card. While this is an industry standard, CITI has never imposed the charge on customers. CUSTOMER is also liable for employee fraudulent charges on an account with a credit limit over $100,000 in the amount that exceeds $100,000 (CITI maintains liability for the first $100,000)

7.7 Collection of Individually Billed Accounts: An individually billed/Individual liability account is considered delinquent if payment is 60 days past due. A delinquency charge of 2.5% of the outstanding balance is applied if payment is not received by day 60. One occurrence of bad check/insufficient funds results in account

cancellation/closure. CITI takes the following action regarding past due accounts: The CITI Bank Collections Department contacts the client by

phone at approximately 15-20 days after the payment due date, which is 30 days after cycle close. Once client contact is made and a promise to pay is secured, we allow 10 business days for receipt of payment. If payment is not received, we contact the client again. This continues through all delinquency stages. Letters are sent monthly to advise the client of their past due status. Suspension of charging privileges occurs at 61 days late. Account cancellation and Adverse Bureau reporting occur at 91 days past due, if the program is individual liability. Programs that are joint and several liabilities are not reported to the bureaus, and an invoice is prepared for the program for all accounts with balances outstanding at 61 days. Cardholder payment after suspension, but before cancellation, results in the opening of charging privileges. CITI utilizes an in-house collections process for all accounts prior to write-off, which is 180 days past due. Bank reserve the right to sell accounts that are charged off to a third party agency. If an account is assumed by a third party after 180 days past due, the cardholders obligation is legally discharged to the third party, who will be governed by Federal regulations. We follow the same collection process for CUSTOMERs active and departing employees, except for the participation of CUSTOMER. Any funds recovered by the outside collection agency are posted to the account after the collection agency takes a percentage Assist Customer's Travel Agents with reconciling travel spend 7.8 Normal Card Application and Delivery Cardholder applications require a signature or authorization from a CUSTOMER manager or Program Administrator. The online application

process allows for the ability to issue cards within 48 hours of initial application. Faxed applications typically take 72 hours for fulfillment. Only CUSTOMER Program Administrators will have the authority to approve card requests and delivery methods. CITI Bank will ensure the timely and safe delivery of all cards for the CUSTOMER program. CITI will mail cards according to the need/situation. CITI mails all cards using mail services with tracking capability. CITI utilizes overnight signature delivery to ship and track cards to street addresses. CITI provides bulk shipping for ten cards and over, and will ship to the address on the account and to alternate addresses when required. In emergencies situations, CUSTOMER has the ability to apply for cards via a secure electronic process. CITI is flexible as to the method of input and collection of cardholder names and data. CITI can deliver a new card within 24 hours to physical addresses, if the request is received prior to the daily cutoff time. We have the ability to deliver cards to a central point of contact or an individual as specified by CUSTOMER.

CHP9. CURRENT SCENARIO

9.1 CITI Bank Changes Banking Relationship Packages

CITI Bank announced changes to its banking relationship packages. The bank said that existing customers will begin receiving notification of these changes at the end of this month, with the enhancements becoming effective for all clients in December of this year. For its Basic Checking package, CITI Bank noted that it will offer three clear options for clients to get great value and worry-free pricing: 1) Clients pay no monthly service fee if they make one Direct Deposit and one Online Bill Payment during each monthly statement period; 2) Clients can also avoid a monthly service fee by maintaining $1,500 in combined average monthly balances in their Basic Checking and linked Basic Savings accounts; or 3) Clients can choose to pay a flat $10 monthly service fee for the Basic Banking package, which includes more standard features and services than competitor offerings. For its full-service and premium checking packages, CITI Bank stated that it is keeping the choices simple: clients can either choose to maintain a minimum relationship balance level that recognizes all their savings, borrowing, and investing activities, or they can pay a competitive monthly service fee for the expanded features and services these packages offer. Regardless of which option clients choose, CITI Bank said that it does not charge additional fees for debit card usage or online bill payments, tools that

clients consistently say are among the most important for simplifying the complexities of their financial lives. CITI Bank said that its position on usage fees reinforces its broader commitment to give clients the control they need to better manage their finances, including not allowing any form of opt-in for debit card point-ofsale and ATM overdrafts, posting transactions from lowest to highest order for both checks and automated clearing house transactions to reduce overdraft fees, and not charging for ATM balance inquiries or transfers at non-CITI Bank ATMs.

Citigroup Announces Senior Management Changes

New York Vikram Pandit, Chief Executive Officer of Citigroup, today announced several senior management changes to support the company's business and strategic priorities and to ensure that proper management is secured to lead these efforts. "Our relentless focus on executing against our strategic priorities at CITI continues as we remain focused on rationalizing CITI Holdings, and on

Citicorp as our core operating business," Mr. Pandit said. "We are making consistent and substantial progress towards these goals. The senior management changes I am making today will further help in positioning our company for the future." Edward "Ned" Kelly, previously Chief Financial Officer, will take on broader responsibilities for strategy and M&A and will become Vice Chairman of Citigroup. Mr. Kelly will work closely with Mr. Pandit in order to drive the execution of Citi's strategic and operational priorities. John Gerspach, previously the Controller and Chief Accounting Officer of CITI, will assume the role of Chief Financial Officer. Eugene M. McQuade will join CITI as Chief Executive Officer for CITI Bank, N.A. Mr. McQuade most recently served as Vice Chairman of Merrill Lynch and President of Merrill Lynch Banks (U.S.). Previously, he was the President and Chief Operating Officer of Freddie Mac and served as President of Bank of America Corporation. In addition, Bill Rhodes has informed the company of his desire to reduce his level of operating responsibility in order to focus more of his time on Citi's international franchise. He will continue as Senior Vice Chairman of Citigroup and CITI Bank and will step down as Chairman and CEO of CITI Bank, N.A. Over the last 50 years, Mr. Rhodes has built invaluable international experience and relationships on behalf of the CITI franchise. Also, Gary Crittenden, Chairman of CITI Holdings, has decided to leave CITI to relocate to Utah to devote more time to his family and other business interests. "We appreciate Gary's contributions in his various roles and wish

him and his family all of the best in the next phase of their lives," Mr. Pandit said.

CHP10. CONSTRAINTS Verification laws play a major role in the Banking Industry. Foreign sector focusing on other investment options. Banks, which are old, still not introduced to Customer Relationship Management. Resources are not being fully utilized. Banks need to set up separate divisions for taking care of the problems apart from the phone Banking Services.

CHP11. FUTURE

One more reason being the opacity of the The Reserve Bank of India. This does not mean a forecast of doom for the Indian Banking sector the kind that has washed out south east Asia And also not because Indian banks are healthy. Bank still have no clue about the real non-performing assets of financial institutions and banks. Many banks are now listed that puts additional responsibility of sharing information. It is now clear that it was the financial sector that caused the sensational meltdown of some Asian nations like India Thailand, Indonesia and Korea. Borrowed investment in property in India is low and property prices have already fallen, letting out steam gently. Our micro-meltdown has already been happening.

CHP12. FACTS AND FINDINGS Market focus is shifting from mass banking to class banking. Introduction of customized and value added products. Foreign banks have a major role to play. Entry of local private players is increasing.

Entry of banks into various other financial products.

CHP13. CONCLUSION

Still, there are several other worries about the banking sector, mainly confusion over ownership and control. Sometimes soon India will be forced to apply the norms of developed countries and many banks (including some of the biggest) will show very poor returns ratios and dozens of banks will be bankrupt. When that happens the two popular reasons to defend bad banks will disappear. These are: one to save face in the remote hope of that fortunes will revive and two, some banks are too big to be allowed to fail, fearing social upheaval.

CHP14. BIBLIOGRAPHY

www.google.com www.CITI Bank.com Times of India Newspaper Banking and Insurance book. Author: O.P. Agarwal

 INDEX

Chapter

Particulars

Page no

Introduction of CITI Bank 1.1 Introduction

1.2 Objective

1.3 History of CITI Bank

1.4 Corporate History

COMMERCIAL BANKS 2

2.1 Role of commercial banks

2.2 Types of loans granted by Commercial Banks

Products and Services

3.1 Types of Services

3.2 Other Types of Banking Services

Consumer

4.1

4.3Credit(Finance)

4.4 Investment Banking

4.5 Core Investment Banking Activities

Consumer Unit

5.1 Client Account Services (CAS)

Banking Operations

6.1 Front Office

6.2 Middle Office

6.3 Back Office

Hierarchy Levels

7.1 General Ledger Interface

7.2 Program Management and Reporting tools

7.3 Program Dashboard

7.4 CitiDirect Global Card Management System(CGMS)

7.5 CITI Online Statements

7.6 CITI Offers Liability Programs

7.7 Collection of Individually Billed Accounts

7.8 Normal Card Application and Delivery

Performance Chart of CITI Bank

Current Scenario

10

Constraints

11

Future

12

Facts and Findings

13

Conclusion