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The Indian banking system is characterized by a large number of banks with mixed ownership. The commercial banking segment comprises 27 public sector banks in which the Government has majority ownership, 40 private sector banks, and 33 foreign banks. Total bank assets constituted a little over 70 percent of GDP in 2003-04. Public sector banks had 75 percent of the assets of the banking system in 2003-04, while private and foreign banks held 25 percent. In 1991, by comparison, public sector banks share of the total assets of the banking system was a little over 90 percent. Prior to the initiation of financial sector reforms in 1992, the Indian financial system essentially catered to the needs of planned development, and the government sector had a predominant role in every sphere of economic activity. The preemption of a large proportion of bank deposits in the form of reserves and an administered interest rate regime resulted in high-cost and low-quality financial intermediation. The existence of a complex structure of interest rates arising from economic and social concerns about providing concessional credit to certain sectors resulted in cross subsidization, which implied that higher rates were charged to non-concessional borrowers. The system of administered interest rates was characterized by detailed regulatory prescriptions on lending and deposits, leading to a multiplicity of interest rates. As a result, the spreads between deposit and lending rates of commercial banks increased, and the administered lending rates did not factor in credit risk. The period 1992-97 laid the foundations for reform in the banking system (Rangarajan, 1998). It saw the implementation of prudential norms pertaining to capital adequacy, income recognition, asset classification, provisioning, and exposure norms. While these reforms were being implemented, the world economy also witnessed significant changes, coinciding with the movement towards global integration of financial services (Government of India, 1998). Against such a backdrop, a second government-appointed committee on banking sector reforms provided the blueprint for the current reform process (Government of India, 1998). Critical and noteworthy reforms in the financial system during the reform period included the following (Bhide, Prasad, and Ghosh, 2001): Lowering of statutory reserve requirements to the current levels of 5 percent for cash reserves and 25 percent for statutory liquidity ratios. Liberalizing the interest rate regime, allowing banks the freedom to choose their deposit and lending rates. Infusing competition by allowing more liberal entry of foreign banks and permitting the establishment of new private banks.

Introducing micro-prudential measures such as capital adequacy requirements, income recognition, asset classification and provisioning norms for loans, exposure norms, and accounting norms. Diversifying ownership of public sector banks by enabling the state-owned banks to raise up to 49 percent of their capital from the market. Seventeen state-owned banks accessed the capital market and raised around 82 billion rupees (Rs) as of end-March 2004. Mandating greater disclosure in the balance sheets to ensure greater transparency. Adopting a consultative approach to policy formulation with measures being ushered in after discussions with market participants to provide useful lead time to market players to make necessary adjustments.

As a consequence of the reforms, public sector banks share of total assets in the banking system was reduced from 90 percent to 75 percent between 1991 and 2004. The fivebank asset concentration ratio declined from 0.51 in 1991-92, to 0.44 in 1995-96, and to 0.43 in 2003-04 (Table 1). Even the five-bank loan concentration ratio showed a decline from 0.68 in 1991-92, to 0.48 in 1995-96, and further to 0.41 percent in 2003-04. The entry of new banks in the private sector reduced asset concentration, which may have strengthened competition. The general notion is that competition enhances efficiency. This may not always be true. It is also argued that increased competition may lead to excessive risk-taking. Others have argued that concentration/consolidation is needed to gain economies of scale and scope so that increased concentration leads to efficiency improvements. This paper does not attempt to discuss the pros and cons of competition. It evaluates the degree of competition in the Indian banking system. A number of factors make the banking sector in India an interesting case study. First, during the 1990s, India underwent liberalization of the banking sector with the objective of enhancing efficiency, productivity, and profitability (Government of India, 1991). Second, the banking sector underwent an important transformation, driven by the need for creating a market-driven, productive, and competitive economy in order to support higher investment levels and accentuate growth (Government of India, 1998).

1.2 Objectives of Study:

The objectives of this organizational study are: To fulfill the requirement of the curriculum To study about the organization policies and procedures, its vision and mission To understand the organization hierarchy To study the functions of various departments To study about the products To understand the day to day activities of the departments and how they are inter-related.

To analyze financial performance To know how the theory learned are practically applied in an organization To evaluate the strength, weakness, opportunity and threats of the company To study the overall performance of the company

1.3 Scope of Study:

The purpose of the study is to familiarize with the industry and attain a firsthand experience of the functioning of the organization. It provides a chance to interact with the different department and authorities in the organization, and also enable to know how the theory learned are practically applied in an organization.

1.4 Period of Study:

The organization study was conducted at English Indian Bank, Villupuram for period of 40 days from May 28 to July 06, 2012.

1.5 Data Collection:

There are two types of data collection methods available. 1. Primary data collection 2. Secondary data collection

1) Primary data:
The primary data is that data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data.

2) Secondary data collection method:

The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc.

Data Collection Sources:

This project is based on primary data collected through personal interview of concerned staff member of the organization. Primary data collection had limitations such as matter confidential information thus secondary information collected through various books and internet sites are used. The data collection was aimed at organizational study at Indian Bank.

Primary Source:
Personal interview of staff members of the organization

Secondary Sources:
Books Websites Reports Research Papers

1.6 Limitation:
The study is conducted only in one branch on Indian Bank. Due to confidential information, most of the data are collected by means of secondary source. The study is confined to Indian bank alone among the whole Indian banking industry The study is conducted only during the 40 days of internship, hence only General banking procedures and familiar products were observed.


CHAPTER 2 2.1 Industry Profile:

Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dials a pizza. Money has become the order of the day. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks; Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms; New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

2.2. History of Banks:

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla. When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. The Bank of Bengal, which later became the State Bank of India. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments." The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then

have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervor of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalized banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

2.2.1 Pre-Independence:
The period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to warrelated economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Table 1: Banks failed between 1913-1918 YEAR 1913 1914 1915 1916 1917 1918 NUMBER OF AUTHORIZED BANKS FAILED CAPITAL 12 274 42 710 11 56 13 231 9 76 7 209 Source: PAID UP CAPITAL 35 109 5 4 25 1

2.2.2 Post-independence:
The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19 July, 1969.

2.2.3 Nationalization:
By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August, 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19. After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The nationalized banks were credited by some; including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 20072009.


2.2.4 Liberalization:
Until 1991, the financial sector in India was heavily controlled, and commercial banks and term lending institutions, the two dominant financial intermediaries, had mutually exclusive roles and objectives and operated in a largely stable environment, with little or no competition. Term lending institutions were focused on the achievement of the Indian governments various socio-economic objectives, including balanced industrial growth and employment creation, especially in areas requiring development. These lending institutions provided access to long-term funds at subsidized rates through loans and equity from the Government of India and from funds guaranteed by the Government of India originating from commercial banks in India and foreign currency resources originating from multilateral and bilateral agencies. The focus of the commercial banks was primarily to mobilize household savings through demand and time deposits and to use these deposits to meet the short-term financial needs of borrowers in industry, trade and agriculture. In addition, the commercial banks provided a range of banking services to individuals and businesses. However, since 1991, there have been comprehensive changes in the Indian financial system. Various financial sector reforms, implemented since 1991, have transformed the operating environment of the banks and long-term lending institutions. In particular, the deregulation of interest rates, the emergence of a liberalized domestic capital market, and entry of new private sector banks, along with the broadening of term lending institutions product portfolios, have progressively intensified the competition among banks and term lending institutions. RBI has permitted the transformation of term lending institutions into banks subject to compliance with the applicable law.

2.2.5 Banking Sector Reforms:

In the wake of the last decade of financial reforms, the banking industry in India has undergone a significant transformation, which has covered almost all important facets of the industry. Most large banks in India were nationalized by 1980 and thereafter were subject to a high degree of control until reform began in 1991. In addition to controlling interest rates and entry into the banking sector, the regulations also channeled lending into priority sectors. Banks were required to fund the public sector through the mandatory acquisition of low interestbearing government securities or statutory liquidity ratio bonds to fulfill statutory liquidity requirements. As a result, bank profitability was low, non-performing assets were comparatively high, capital adequacy was diminished, and operational flexibility was hindered. Recent Structural Reforms Proposed Amendments to the Banking Regulation Act Legislation seeking to amend the Banking Regulation Act has been introduced in the Indian Parliament. As presently drafted, the main amendments propose: to permit banking companies to issue preference shares that will not carry any voting rights, make prior approval of the Reserve Bank of India mandatory for the acquisition of more than 5.0% of a banking companys paid up

capital or voting rights by any individual or firm or group, remove the minimum statutory liquidity ratio requirement of 25.0%, giving the Reserve Bank of India discretion to reduce the statutory liquidity ratio to less than 25.0%; and remove the limit of 10.0% on the maximum voting power exercisable by a shareholder in a banking company.

2.2.6 Universal Banking Guidelines:

Universal banking in the Indian context means the transformation of long-term lending institutions into banks. Pursuant to the recommendations of the Narasimham Committee II and the Khan Working Group, the Reserve Bank of India, in its midterm review of monetary and credit policy for fiscal 2000, announced that long-term lending institutions would have the option of transforming themselves into banks subject to compliance with the prudential norms as applicable to banks. If a long-term lending institution chose to exercise the option available to it and formally decided to convert itself into a universal bank, it could formulate a plan for the transition path and a strategy for smooth conversion into a universal bank over a specified time frame. In April 2001, the Reserve Bank of India issued guidelines on several operational and regulatory issues which were required to be addressed in evolving the path for transition of a long-term lending institution into a universal bank.

2.2.7 Pension Reforms:

Currently, there are three categories of pension schemes in India: pension schemes for government employees, pension schemes for employees in the organized sector and voluntary pension schemes. In case of pension schemes for government employees, the government pays its employees a defined periodic benefit upon their retirement. Further, the contribution towards the pension scheme is funded solely by the government and not matched by a contribution from the employees. The Employees Provident Fund, established in 1952, is a mandatory programme for employees of certain establishments. It is a contributory programme that provides for periodic contributions of 10% to 12% of the basic salary by both the employer and the employees. The contribution is invested in prescribed securities and the accumulated balance in the fund (including the accretion thereto) is paid to the employee as a lump sum on retirement. Besides these, there are voluntary pension schemes administered by the government (the Public Provident Fund, to which contribution may be made up to a maximum of Rs. 70,000) or offered by insurance companies, where the contribution may be made on a voluntary basis. Such voluntary contributions are often driven by tax benefits offered under the scheme. In 1998, the government commissioned the Old Age Social and Income Security (OASIS) project and nominated an expert committee to suggest changes to the existing policy framework. The committee submitted its report in January 2000, recommending a system for private sector management of pension funds to provide market-linked returns. It also recommended the establishment of a separate pensions regulatory authority to regulate the pensions system.

Subsequently, in the budget for fiscal 2001, the government announced that a high level committee would be formulated to design a contribution-based pension scheme for new government recruits. The government also requested the Insurance Regulatory and Development. Authority has to draw up a road-map for implementing the OASIS report. The Insurance Regulatory and Development Authority submitted its report in October 2001. The report suggested that pension fund managers should constitute a separate legal entity to conduct their pension business. In August 2003, the government announced that it would be mandatory for its new employees (excluding defense personnel) to join a new defined contribution pension scheme where both the government and the employee would make monthly contributions of 10% of the employees salary. The government also announced that a Pension Fund Development and Regulatory Authority would be set up to regulate the pension industry. The government constituted the interim Pension Fund Development and Regulatory Authority on October 11, 2003. In December 2003, the government announced that the new pension scheme would be applicable to all new recruits to Indian Government service (excluding defense personnel) from January 1, 2004. Further, on December 30, 2004, the government promulgated an ordinance establishing the statutory regulatory body, Pension Fund Regulatory and Development Authority to undertake promotional, developmental and regulatory functions with respect to the pension sector. In March 2005, the Government tabled the Pension Fund and Development Authority Bill in Parliament. The Union Budget for fiscal 2006 has recognized the opportunities for foreign direct investment in the pension sector and it has also announced that the government would issue guidelines for such investment.

2.2.8 Technology:
Technology is emerging as a key-driver of business in the banking and financial services industry. Banks are developing alternative channels of delivery like ATMs, tele-banking, remote access and Internet banking etc. Indian banks have been making significant investments in technology. Besides computerization of front-office operations, the banks have moved towards back-office centralization. Banks are also implementing Core Banking or Centralized Banking, which provides connectivity between branches and helps offer a large number of value-added products, benefiting a larger number of customers. RBI Annual Report for the fiscal 2005 states that the use of ATMs has been growing rapidly and this has helped in optimizing the investments made by banks in infrastructure. Banks have joined together in small clusters to share their ATM networks during the year. There are five such ATM network clusters functioning in India. The payment and settlement system is also being modernized. RBI is actively pursuing the objective of establishing a Real Time Gross Settlement (RTGS) system, on par with other developed economies.


2.2.9 Corporate Governance:

Adoption of good corporate governance practices has been getting the attention of banks as well as the regulators and owners in India. Banks in India now invariably have an Audit Committee of the Board of directors which is entrusted with the task of overseeing the organization, operationalisation and quality control of the internal audit function, reviewing financial accounts and follow-up with the statutory and external auditors of the bank as well as examinations by regulators. Disclosure levels in bank balance sheets have been enhanced, while measures have also been initiated to strengthen corporate governance in banks.

2.3. Nature of Banking in India:

A banking company in India has been defined in the banking companies act, one which transacts the business of banking which means the accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise. Most of the activities a Bank performs are derived from the above definition. In addition, Banks are allowed to perform certain activities which are ancillary to this business of accepting deposits and lending. A bank's relationship with the public, therefore, revolves around accepting deposits and lending money. Another activity which is assuming increasing importance is transfer of money - both domestic and foreign from one place to another. This activity is generally known as "remittance business" in banking parlance. The so called FOREX (foreign exchange) business is largely a part of remittance albeit it involves buying and selling of foreign currencies.

2.4. Types of Banks:

Indian banking industry has been divided into two parts, organized and unorganized sectors. The organized sector consists of Reserve Bank of India, Commercial Banks and Co-operative Banks, and Specialized Financial Institutions (IDBI, ICICI, IFC etc). The unorganized sector, which is not homogeneous, is largely made up of money lenders and indigenous bankers.


An outline of the Indian Banking structure may be presented as follows:1. Reserve bank of India. 2. Indian Scheduled Commercial Banks. a) State Bank of India and its associate banks. b) Twenty nationalized banks. c) Regional rural banks. d) Other scheduled commercial banks. 3. Foreign Banks 4. Non-scheduled banks. 5. Co-operative banks.

2.4.1 Reserve Bank of India:

The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 cores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the beginning. The Government held shares of nominal value of Rs. 2, 20,000. Reserve Bank of India was nationalized in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five members each Central Government appointed for a term of four years to represent territorial and economic interests and the interests of co-operative and indigenous banks. The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank. The Bank was constituted for the need of following: To regulate the issue of banknotes To maintain reserves with a view to securing monetary stability and To operate the credit and currency system of the country to its advantage

2.4.2 Commercial Banks:

Commercial banks in India have traditionally focused on meeting the short-term financial needs of industry, trade and agriculture. At the end of March 2005 there were 284 scheduled commercial banks and four non-scheduled commercial banks in the country, with a network of 68,116 branches. Scheduled commercial banks are banks that are listed in the second schedule to the RBI Act, and may further be classified as public sector banks, private sector banks and foreign banks. Scheduled commercial banks have a presence throughout India, with nearly 69.49% of bank branches located in rural or semi-urban areas of the country. A large number of these branches belong to the public sector banks.

2.4.3 Public Sector Banks:

Public sector banks make up the largest category of banks in the Indian banking system. There are 28 public sector banks in India. They include the SBI and its associate banks and 19 nationalized banks. Nationalized banks are governed by the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and 1980. The banks nationalized under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and 1980 are referred to as corresponding new banks. At the end of March 2005, public sector banks had 47,320 branches and accounted for 74% of the aggregate deposits and 70.47% of the outstanding gross bank credit of the scheduled commercial banks.

2.4.4 Regional Rural Banks:

Regional rural banks were established from 1976 to 1987 jointly by the Central Government, State Governments and sponsoring public sector commercial banks with a view to develop the rural economy. Regional rural banks provide credit to small farmers, artisans, small entrepreneurs and agricultural laborers. There were 196 regional rural banks at the end of March 2005 with 14,433 branches, accounting for 3.50% of aggregate deposits and 2.81% of gross bank credit outstanding of scheduled commercial banks.

2.4.5 Private Sector Banks:

After bank nationalization was completed in 1969 and 1980, the majority of Indian banks were public sector banks. Some of the existing private sector banks, which showed signs of an eventual default, were merged with state-owned banks. In July 1993, as part of the

banking reform process and as a measure to induce competition in the banking sector, RBI permitted entry by the private sector into the banking system. This resulted in the introduction of nine private sector banks. These banks are collectively known as the new private sector banks. At year-end fiscal 2005, private sector banks accounted for approximately 18.1% of aggregate deposits and 20.0% of gross bank credit outstanding of the scheduled commercial banks. Their network of 6,143 branches accounted for 9.0% of the total branch network of scheduled commercial banks in the country.

2.4.6 Foreign Banks:

At the end of March 2005, there were 31 foreign banks with 220 branches operating in India, accounting for 4.40% of aggregate deposits and 6.60% of outstanding gross bank credit of scheduled commercial banks. The Government of India permits foreign banks to operate through (i) branches; (ii) a wholly owned subsidiary; or (iii) a subsidiary with aggregate foreign investment of up to 74% in a private bank. The primary activity of most foreign banks in India has been in the corporate segment. However, some of the larger foreign banks have made consumer financing a significant part of their portfolios. These banks offer products such as automobile finance, home loans, credit cards and household consumer finance. The Government of India in 2003 announced that wholly-owned subsidiaries of foreign banks would be permitted to incorporate wholly-owned subsidiaries in India. Subsidiaries of foreign banks will have to adhere to all banking regulations, including priority sector lending norms, applicable to domestic banks. In March 2004, the Ministry of Commerce and Industry, Government of India announced that the foreign direct investment limit in private sector banks has been raised to 74% from the existing 49% under the automatic route including investment by FIIs. The announcement also stated that the aggregate of foreign investment in a private bank from all sources would be allowed up to a maximum of 74% of the paid up capital of the bank.

2.4.7 Co-operative Banks:

Cooperative banks cater to the financing needs of agriculture, small industry and self-employed businessmen in urban and semi-urban areas of India. The state land development banks and the primary land development banks provide long-term credit for agriculture. In the light of the liquidity and insolvency problems experienced by some cooperative banks in fiscal 2001, RBI undertook several interim measures to address the issues, pending formal legislative changes, including measures related to lending against shares, borrowings in the call market and term deposits placed with other urban cooperative banks. RBI is currently responsible for the supervision and regulation of urban cooperative societies, the National Bank for Agriculture and Rural Development, state co-operative

banks and district central co-operative banks. The Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (which came into effect as of September 24, 2004), specifies that all co-operative banks are under the supervision and regulation of RBI. Until the early 1990s, the Indian financial system was strictly controlled. Interest rates were administered, formal and informal parameters governed asset allocation, and strict controls limited entry into and expansion within the financial sector. The Government of Indias economic reform program, which began in 1991, encompassed the financial sector. The first phase of the reform process began with the implementation of the recommendations of the Committee on the Financial System, the Narasimham Committee I. The second phase of the reform process began in 1999. The discussion below presents an overview of the role and activities of RBI and of each of the major participants in the Indian financial system, with a focus on the commercial banks. This is followed by a brief summary of the banking reform process along with the recommendations of various committees that have played a key role in the reform process. A brief discussion on the impact of the liberalization process on commercial banks and financial sector is then presented. Also, reforms in the non-banking financial sector are briefly reviewed.

2.5. Functions of a Bank:

Banking Regulation Act in India, 1949 defines banking as Accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand and withdrawal by cheque, drafts, orders etc. as per the above definition a bank essentially performs the following functions: Accepting Deposits or savings functions from customers or public by providing bank account, current account, fixed deposit account, recurring accounts etc. The payment transactions like lending money to the public. Bank provides an effective credit delivery system for loanable transactions. Provide the facility of transferring of money from one place to another place. For performing this operation, bank issues demand drafts, bankers cheques, money orders etc. for transferring the money. Bank also provides the facility of Telegraphic transfer or tele-cash orders for quick transfer of money. A bank performs a trustworthy business for various purposes. A bank also provides the safe custody facility to the money and valuables of the general public. Bank offers various types of deposit schemes for security of money. For keeping valuables bank provides locker facility. The lockers are small compartments with dual locking system built into strong cupboards. These are stored in the banks strong room and are fully secured.


Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the government disbursements like pension payments and tax refunds also take place through banks.

Functioning of a Bank is among the more complicated of corporate operations. Since Banking involves dealing directly with money, governments in most countries regulate this sector rather stringently. In India, the regulation traditionally has been very strict and in the opinion of certain quarters, responsible for the present condition of banks, where NPAs are of a very high order. The process of financial reforms, which started in 1991, has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated, sometimes bordering on illogical. This section, which is also intended for banking professional, attempts to give an overview of the functions in as simple manner as possible. Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheques, draft, and order or otherwise."

2.6 Structure of Indian Banking System:

The banking system, largely, comprises of scheduled banks (banks that are listed under the Second Schedule of the RBI Act, 1934). Unscheduled banks form a very small component (function in the form of Local Area Bank). Scheduled banks are further classified into commercial and cooperative banks, with the basic difference in their holding pattern. Cooperative banks are cooperative credit institutions that are registered under the Cooperative Societies Act and work according to the cooperative principles of mutual assistance.


Figure 1: Structure of Indian Banking System.


2.7 Major Players in Indian Banking Industry:

The banking in India started with the establishment of the General Bank of India in 1786. Later the Bank of Hindustan was also established. However, both the banks are not in functional state currently. It's the State Bank of India, which is currently the oldest bank in India in existence, established in 1806. Since the beginning, due to huge market potential, a number of banking companies have come up in India, which include both, public sector as well as private sector banks. However, the list of top 10 banking companies in India has mostly been dominated by the State Bank of India (SBI). Since the initial days, the State Bank of India has dominated the Indian banking industry accounting for nearly 20% of the Indian banking system's deposit base. It also has got almost 20% of the credit portfolio.The recent economic slowdown, like many other industries, also affected the Indian banking industry. However, it showed resilience to the global recession. Public Sector Banks (SBI and Nationalized banks) control more than 74-75% of the total credit and deposits businesses in India whereas Private Sector Banks around 17-18%.

Table 2: Major Players in Banking Sector


2.8 Market Share of Indian Banks:

Table 3: Market share of Major Banks in India Name SBI Bank of Baroda PNB Bank of India Canara Bank IDBI Bank Union Bank Indian Bank Allahabad Bank Oriental Bank Last Price 2,132.00 696.35 819.40 324.55 402.40 92.65 191.90 184.75 139.95 238.65 Market Cap. (Rs. Cr.) 143,066.76 28,716.59 27,792.30 18,646.05 17,826.32 11,844.45 10,565.04 7,940.00 6,997.87 6,962.88 Net Interest Net Profit Income 106,521.45 11,707.29 29,673.72 36,428.03 28,480.67 30,850.62 23,369.93 21,144.28 12,231.32 15,523.28 15,814.88 5,006.96 4,884.20 2,677.52 3,282.72 2,031.61 1,787.13 1,746.97 1,866.79 1,141.56 Total Assets 1,335,519.2 4 447,321.46 458,194.01 384,535.47 374,160.20 253,376.80 235,984.44 141,419.20 182,934.57 178,130.17


2.9Indian bank Profile:

Indian Bank was founded by Annamalai and Ramaswami Chettiar on 15August 1907. This was in response to the financial crash faced by two leading companies in Madras, Arbuthnots and Binns. Indian Bank began its international expansion in 1932 when it opened a branch in Colombo. A branch in jaffina followed three years later, but this was not successful and was closed in 1939, just before World War 2 reached the region. The Indian Bank Ltd, was born as Swadeshi Bank due to efforts of Shri. V Krishnaswamy Iyer and others in the wake of widespread misery caused to the depositors by the failure of M/S Arbuthnot & Co. 1906. With the support of cross section of community, the Indian Bank Ltd. Was born as on march 5, 1907 under the companies Act,1882. It started its transaction on 15/8/1907, the day that that happened to be the memorable day of Independence Day for the republic of India forty years later. Indian Bank is one of the indigenous banks of India that emerged as a result of the Swadeshi Movement during the British Raj.

2.9.1 Global Presence:

The modest beginning made by the Indian Bank has come a long way since then, with 1642 branches located nationwide within India and Overseas branches in Singapore and Colombo as of April 2009. The bank also has 40 Overseas Correspondent banks in 70 countries, giving a strong presence internationally. A 22,000 strong workforce of dedicated employees takes pride in serving the Indian Bank.

2.9.2 Banking Activities:

Indian Bank offers a wide variety of Banking Products and Services to its customers, including various Deposit Schemes, Loan Options, Financial Services, Stock Investment Services and a number of specialized services such as Remittance, Collection, 7 Day Banking Branches, Cash Management and Electronic Funds Transfer. As of April 2009, the bank has Core Banking Solution (CBS) implemented in its 1642 branches and 66 extension counters. The bank has 755 connected Automatic Teller Machines (ATMs) installed in 225 locations nationwide.


2.9.3 Subsidiary Companies:

Apart from its Regular Banking Services, the Indian Bank has also been offering various other services through its 3 subsidiary companies, which are; Indbank Merchant Banking Services Ltd., IndBank Housing Ltd. IndFund Management Ltd.

2.9.4 Rural Banking:

Indian Bank has been a leader in bringing new initiatives for development of rural banking and extending help to the farmers of India. The bank has received award from Honorable Union Minister of Finance for Excellence in Agricultural Lending. Apart from it, the bank also received the Best Performer Award for Micro-Finance activities in Tamil Nadu and Union Territory of Puducherry from National Bank for Agriculture and Rural Development (NABARD).

2.9.5 Personal Banking:

Under this it offers fixed deposits, saving accounts, recurring accounts, saving accounts for kids and senior citizens, internet banking, ATM facility, debit/credit cards, home loans, personal loans.

2.9.6 NRI services:

It offers banking products and services to NRI clients such as saving accounts, remittance facilities, forex advisory services, home loans, etc. Indian Bank provides cash management services (CMS), eletronic funds transfer schemes. It also provides seven-day banking at few of its branches.


2.9.7 Time-line:
1932: Indian Bank opened a branch in Colombo. 1935: IB opened a branch in Jaffna. 1940: IB opened a branch in Rangoon (Yangon). 1941: IB closed the Rangoon branch but opened branches in Singapore (where future branch manager KB Pisharody(1915-1998) started his career in the same year), and in Kuala Lumpur, Ipoh, and Penang. The rapid advance of the Japanese Army forced IB to close all its branches in Malaya and Singapore. 1942: IB closed the Colombo branch. Post-WWII: IB reopened its Malayan and Singapore branches. 1948: IB reopened its branch in Colombo. 1960: IB acquired Mannargudi Bank (est. 1932) and Salem Bank (est. 1925). 1969: The Government of India nationalized 14 top banks, including Indian Bank. 1973: Indian Overseas Bank, Indian Bank and United Commercial Bank established United Asian Bank Berhad in which IOB held 16.67% of the paid up capital, as a result of a new banking law in Malaysia that prohibited foreign government banks from operating in the country. 1978: IB became a technical adviser to P T Bank Rama in Indonesia, the result of the merger of P T Bank Masyarakat and P T Bank Ramayana. 1980: IB, Bank of Baroda, and Union Bank of India established IUB International Finance, a licensed deposit taker in Hong Kong. Each of the three banks took an equal share in the joint venture. 1987: IB acquired Bank of Tanjore (Bank of Thanjavur) in Tamil Nadu in a rescue. 1998: Bank of Baroda bought out its partners in IUB Intl. Fin. in Hong Kong. Apparently this was a response to regulatory changes following Hong Kongs reversion. IUB became Bank of Baroda (Hong Kong), a restricted license bank. 2007: IB celebrated its centenary year.


2.9.8 International Presence:

Overseas branches in Singapore and Colombo including a Foreign Currency Banking Unit at Colombo 240 Overseas Correspondent banks in 70 countries

A front-runner in specialized banking:

90 Forex Authorized branches inclusive of 1 Specialized Overseas Branch at Chennai exclusively for handling forex transactions arising out of Export, Import, Remittances and Non Resident Indian business One Small Scale Industries Branch extending finance exclusively to SSI units

Leadership in Rural Development:

Pioneer in introducing Self Help Groups and Financial Inclusion Project in the country Award winner for Excellence in Agricultural Lending from Honorable Union Minister for Finance Best Performer Award for Micro-Finance activities in Tamil Nadu and Union Territory of Pondicherry from NABARD Established 7 specialized exclusive Microfinance branches called "Microstate" across the country to cater the needs of Urban poor through SHG (Self Help Group)/JLG (Joint Liability Group) concepts A special window for Micro finance viz., Micro Credit Kendras are functioning in 44 Rural/Semi Urban branches Harnessing ICT (Information and Communication Technology) for Rural Development and Inclusive Banking Provision of technical assistance and project reports in Agriculture to entrepreneurs through Agricultural Consultancy & Technical Services (ACTS)

A pioneer in introducing the latest technology in Banking

100% Business Computerization 168 Centers throughout the country covered under 'Anywhere Banking' Core Banking Solution (CBS) in 1648 branches and 61 extension counters. 775 connected Automated Teller Machines(ATM) in 250 cities/towns 24 x 7 Service through 40000 ATMs under shared network Internet and Tele Banking services to all Core Banking customers

e-payment facility for Corporate customers Cash Management Services Depository Services Reuter Screen, Telerate, Reuter Monitors, Dealing System provided at Overseas Branch, Chennai Indian Bank Credit Card facility Launched I B Gold Coin system launched

Strategic Tie-Up with HDFC Standard Life Insurance Company:

Indian bank with over 90 years of standing in the financial market with the reputation for excellent customer service has entered into a strategic tie-up with HDFC Standard Life Insurance Company Ltd., the first in the private sector to receive the Certificate of Registration for foray into Life Insurance business for distribution of latters insurance products. A Memorandum of understanding has been signed by the Bank with the Insurance Company on 8th February 2001 to this effect. The Bank has to its strength 1377 branches spread across the country with ready built infrastructure and the expertise in marketing financial products. Initially the insurance products will be marketed through select branches in the South where the Bank has strong presence. The insurance products from HDFC Standard Life, will be competitive and customer friendly. The tie-up would benefit the Bank's customers, as they will have wider choice of life insurance policies at competitive premium.

2.9.9 Awards:
Indian Bank received the Skoch Challenger Award for its financial inclusion initiatives in Pondicherry and Dharavi. The bank bagged first prize for excellent performance under SHG-Bank Linkage Programme conducted by NABARD. Three branches of Indian Bank located in Tamil Nadu were awarded best performing commercial bank. Government of TamilNadu has conferred the Best Performing Bank Award to Indian Bank for the outstanding achievement under Self Help Group (SHG) INDIAN BANK was declared as a Winner in BEST BANKs category and Best Education Loan category in the Banking Survey conducted by OUTLOOK MONEY Award 2010 on the basis of its performance during the year 2009-10 Indian Bank Conferred with SKOCH Financial Inclusion Award 2011


2.9.10 Financial Highlights:

The major highlights of the Banks performance are as follows: Operating profit increased to 3463.17 crore as against 3291.68 crore for 2010-11. Net profit for 2011-12 stood at 1746.97 crore as compared to 1714.07 crore for 2010-11. Net Interest Margin was at 3.43 per cent. Return on average assets was at 1.31 per cent. Capital Adequacy Ratio was at 13.47 per cent as compared to 13.56 per cent as of March 2011. Return on Net worth for FY2011-12 was at 18.73 per cent. Earnings per share were at 39.57 and Book value per share was 214.94 during 2011-12. Global Business of the Bank reached 2, 11,988 crore during the year, registering a growth of 16.8 per cent. Total Deposits grew by 15,000 crore to 1, 20,804 crore, a growth of 14.2 per cent for the year 2011-12. Gross Advances were at 91,184 crore, registering an increase of 15,458 crore (20.4 per cent) as on 31.3.2012. Overall Credit Deposit ratio was at 75.5 per cent. Priority Sector advances at 30,027 crore, grew by 4,058 crore (15.6 per cent). Agriculture credit grew by 2,306 crore (20.9 per cent) to 13,354 crore and accounted for 18.47 per cent of Adjusted Net Bank Credit. During 2011-12, total recovery of NPAs (including AUC) amounted to 466.26 crore. Gross NPA was at 2.03 per cent and Net NPA was at 1.33 per cent in March 2012. Under Financial Inclusion project 5.98 lakh No-Frill accounts have been opened. The Net worth of the Bank improved to ` 9637.41 crore as on 31.3.2012 from `8326.55 crore as on 31.03.2011, reflecting a growth of 12.5 per cent


2.9.11 Indian Bank Profile:

Date of Establishment Market Capital Corporate Address 15-08 1907 Rs. 7,940.00 cr. PB No: 5555, 254-260, Avvai Shanmugam Salai, Royapettah, Chennai 600 014

Head Office Chairman & M.D Executive Director Directors

IndianBank, 66 Rajaji Salai, Chennai-600001. Shri T.M. Bhasin Shri B Raj Kumar, Shri Rajeev Rishi Shri Shaktikanta Das Dr. N Krishna Mohan Shri M. Jayanath Prof. Narendra Kumar Agrawal Shri Chintaman Mahadeo Dixit Shri. Sanjay Maken, Shri Amarjit Chopra Shri. M. Butchi Rami Reddy

Business Operation Net Profit

Bank (Public) Rs. 1,746.97 cr. Table 4: Indian Bank Profile.





3.1 Functional Areas:

There are various functional areas where different types of works are done. Various sections and their function are listed below:

Deposit Section Clearance Section Loan Section Demand Draft Section Systems Section

3.2 Deposit section:

There are various kinds of deposits the bank accepts, and each kind of deposit differs from the other deposits. The various deposits the bank provides are Savings Bank Account, Current Account, Fixed Deposit, Re-Investment Plan and Recurring Deposit among the various other Term deposits which include Variable Recurring Deposit, Insured Recurring Deposit, NRE SB And NRE Term Deposits. The major deposits that were opened were Savings Bank Account Fixed Deposit Re-Investment Plan Recurring Deposit.

3.2.1 Savings Account:

The Savings Bank Account are for all kind of people who can be Individuals (Single or Two or more individuals jointly), Minors through the natural guardians (either jointly with the minor or singly or guardians appointed by a competent court), Illiterate people, blind people, Clubs, Societies, Associations, Places of religious worship, Charitable institutions (which are approved by the bank), Trusts, HUF, SHGs, Government organizations mainly for the purpose of saving money. The savings bank kind of account is offered for the people to cultivate the habit of saving money.


3.2.2 Current Account:

Current accounts are cheque operated accounts maintained for mainly business purposes. Unlike savings bank account, no limits are fixed by banks on the number of transactions permitted in the Account. Banks generally insist on a higher minimum balance to be maintained in current account. Considering the large number of transactions in the account and volatile nature of balances maintained overnight banks generally levy certain service charges for operating a Current account. The Current Account deposits can be opened by a person in his/ her own name, two or more than 2 people in their joint names with either or Survivor, Joint or Survivor and anyone or survivor or survivors. Companies, partnership firms, Clubs, Associations, Religious, educational, charitable and other institutions (on production of necessary documents, copies of rules, byelaws duly attested by authorized people) can also open Current Accounts. The bank does not offer interest to the current account balance.

3.2.3Fixed Deposit:
The fixed deposit can be opened by anyone from Individuals (a) single (b) Two or more individuals severally or jointly (c) Minors (d) Illiterates (e) Blind people to Executors and Administrators. Liquidators and Receivers, Sole Proprietorship concerns, Joint Hindu families, Partnership firms, Limited Companies, Trusts, Non-Corporate bodies like Clubs, Committees, Associations, Schools, Colleges, Government / Semi-Government bodies can also open a fixed deposit with the bank for a minimum period of 15 days up to a maximum period of 120 months.

3.2.4 Re-Investment Plan:

Re-Investment Plan, a time deposit to earn cumulative compounded interest with easy liquidity is also like fixed deposit but earns a cumulative interest. The minimum period for this kind of deposit is 6 months.

3.2.5 Recurring Deposit:

The Recurring Deposit is a regular monthly savings grow into a large sum to meet the financial needs at the end of the agreed period. Loan can be taken up to 90% of the principal amount with rate of interest at 2% p.a. over the rate of interest payable to deposit.


3.3 Clearance Section:

Clearance section deals with how the cheques and demand drafts are cleared through the clearing house. Since the whole system of banking is computerized under the CBS (Core Banking System), the work is less to do, but the details of the cheque and the drawee and the drawer had to be feed into the system. The process of clearance and return of cheque and traditional arrangements involved the exchange of cheques, computation of net payment obligations among the participating banks and settlement of claims through funds transfers in the books of the settling bank are learnt. The place where the exchange of instruments occurs and the claims are settled is known as the Clearing House. All payment instructions made through the medium of cheques are debit transactions. A debit transaction occurs when the intended recipient initiates the payment transaction by depositing the instrument in his bank. During the course of a business day a number of instruments are deposited with a bank for collection by its customers. These instruments may be drawn on different branches of various banks and a collecting bank has to physically present the instruments for collection to each drawee bank/branch. The clearing system provides a convenient and well established institutional mechanism to take care of the problem of physical delivery of instruments as well as funds transfer between different banks. The clearing process begins with the deposit of a cheque in a bank. The cheque (along with other cheques) is delivered to the bank/branch where it is drawn. The cheque is passed for payment if the funds are available and the banker is satisfied about the genuineness of the instrument. The banker carefully scrutinizes the cheque drawn. The cheques that are unpaid are returned to the presenting bank through another clearing called the Return Clearing. The realisation of the funds occurs after the completion of return clearing and by the absence of an unpaid cheque. The cheque number is noted and the 9-digit MICR number at the bottom of the cheque refers to the particular branch. The first three digits is the area code, the next three are the bank code and the final three refer to the branch code. The essential elements in a cheque are, The date The amount in words as well as digits The signature The cheque number The MICR code

The settlement of funds in clearing occurs at several levels. The aggregate amount or value of cheques presented by a bank on other banks represents the claim by that bank on other banks. Similar claims are made by all the banks on every other bank in the clearing. A net settlement is arrived at the clearinghouse and the debit or credit position of the bank is determined. These are booked in their current accounts maintained by the settling bank. This represents the inter-bank settlement. The settlement of funds between the service branch and the

branch concerned represents the transfer of funds to the branch level. The payment process is completed only when the funds are debited from the drawer's account and credited to the payee's account. Inter-branch clearing need not go to the clearinghouse. Cheques presented by customers drawn on different branches of the same bank need not be sent to the clearinghouse, as the transfer of funds is internal to the bank. The service branch usually acts as a settlement branch for the branches and the instruments are sent to the drawee branches while the interbranch accounts are credited or debited internally.

3.4 Demand Draft Section:

Demand Draft sections, where works related to issuing of cheque book, pass book, locker facility are done. This section needs lots of manual work and is one of the important sections of the bank.

3.4.1 Demand draft:

The uses and the security of the Demand Draft are learnt. The Demand Draft is a written order for making payments. The bank providing the service is called drawer bank.

The essentials of a DD should include Name of the recipient Name of the sender Amount to be transferred Place where the transferred money is to be paid, Mode in which money is to be paid i.e. in cash or through a Bank Account.

The demand draft is generally crossed for security purpose. This process is checked by an officer and only then is the Demand Draft signed upon.


3.4.2 Cheque Book:

The issuance of cheque book and pass book does not take much time but needs to be carefully dealt with. The code of the cheque book is to be carefully noted in case of future reference. The details are fed into the system as well as it is manually recorded. There are cases where there is a change in address of a customer, or a single account holder wants to add another person as a joint account. The formalities regarding these changes are dealt with in this section.

3.4.3 Locker facility:

The bank also offers locker facility. This facility is also dealt with in this section. The customers account number is recorded manually and the locker is opened with two keysone that the customer holds and another, the master key with the bank. In case if the key is lost by the customer, the vault will be replaced by the bank for which the customer has to bear the expense. To avail the locker facility the user must deposit an amount in the account which will be able to give the locker rent as interest.

3.4.4 Cash counter:

This is the place where all the cash transactions of the bank takes place. The staffs require special password and authority to do cash transactions. Third Party Cash withdrawal is limited to Rs.1000, where own withdrawal has no limit but it should be accompanied with passbook. Cash deposit to other account holder is limited to Rs.49, 999. To deposit more than that pan card number should be accompanied.

3.5 Loan Section:

Loan Section was the most interesting department in the bank. The bank provides various kinds of loans tailor-made for various needs of the customer. The various loans the bank offers include Home Loans, NRI Home Loans, Vehicle Loan, Jewel Loans, Educational loans, Plot Loans, Pension Loans, Loans against deposits, Loans to Small-Scale Industries, Holiday loans, Doctor Plus loans for the doctors.


Among these loans, the most popular loans are, Home loans Educational loans Jewel loans

3.5.1 Home Loan:

Home loans are given for purchasing, or to construct a house / flat / renovate / repair or alter an existing house / flat. The maximum permissible age at the time of applying is 50 years & at the end of repayment period is 60 years. The Quantum of Loan is 36 times of Gross Monthly Income or 60 times of Net Monthly Income whichever is higher. Spouses Income can be included for calculating eligible amount if he / she has steady income. The security of the loan is Equitable Mortgage of Property purchased / constructed out of loan proceeds registered at Applicants cost. The following documents need to be submitted for processing the loan. 1. Completed Application Form with passport size photograph. 2. Proof of Identity such as PAN Card / Voters ID/Passport/Driving License. 3. Proof of residence such as Recent Telephone Bill / Electricity Bill / Property Tax Receipt / Passport / Voters ID 4. Proof of business address in respect of businessmen / industrialists. 5. Proof of Employment. 6. Salary Certificate. 7. Proof of other income like rent, interest on investment, if any. 8. Balance Sheet for the past three financial years in the case of Professionals, Businessmen & Self employed. 9. Income Tax / Wealth Tax (if applicable) Returns for the past 3 years 10. Agreement of Sale / Sale Deed. 11. Approved Building Plan. 12. Title Deed Documents for 30 years.

13. Proof of title in the Revenue Records.(Legal Opinion from Advocate & Valuation of property from Engineer will be arranged by Bank at applicants cost)

3.5.2 Jewel Loan:

Jewel loans are given to customers for providing short-term credit facility to them. The Quantum of loan should be determined based on the net weight of the jewel/ornament and rate per gram fixed from time to time or 70 % of market value of the jewels to be pledged whichever is lower. The bank has its own appraiser for valuation of the jewel produced. The jewel is the only security that the bank asks as security.

3.5.3 Educational Loan:

Educational loan is provided to meet the cost of education covering fee payable to college/school/hostel, exam fees, purchase of books/equipments, travel expenses/passage money for studies abroad, purchase of computers essential for completion of the course etc. of the customer. For availing the loan, the applicant should be an Indian National. He/ She should have secured admission to professional/technical courses in India/Abroad through Entrance Test/Merit based selection process. The quantum of loan for Studies in India is Rs.10.00 lakhs and for Studies Abroad is Rs.20.00 lakhs. Higher Quantum of loan subject to a maximum of Rs.15 lakhs for studies in India and Rs.25 lakhs for studies abroad would also be considered in deserving and meritorious cases at the discretion of the manager. The security to be submitted for educational loan is Co obligation of parents and no security for loan up to Rs. 4 lakhs. For loans above Rs.4 lakhs and up to Rs.7.50 lakhs, Co obligation of parents together with collateral in the form of a satisfactory third party guarantee is required. Loans above Rs.7.50 lakhs requires Co obligation of parents together with tangible collateral security of suitable value along with the assignment of future income of the student for payment of installments. The Student's Age should be 15 to 30 years for studying in India and 18 to 35 years for studying abroad. The creditability of the borrower is carefully scrutinized and the documents are verified carefully before the loan can be given. The officer scrutinizes the documents and sends the files to the head office for sanctioning of the loan. Then the branch disburses the loan amount in installments. The banks job does not end with giving loan but also to check whether the loan money is used properly for the said purpose.


3.5.4 Other Loans:

There are special calculations that need to be worked out, in order to find the capacity of the borrower to repay the loan in case of loans to Small-Scale Industries. The bank offers loans to SSIs (Small Scale Industries) and SMEs (Small and Middle-sized Enterprises) based on their credibility and their power to repay the loan.

3.6 System Section:

The System Managers desk, where all the transaction records and other records are maintained. The branch records the transactions in the system as well as saves hard copies at the branch for future reference. The bank at present contains records of transactions that happened during the past ten years. The banks ATM facilities are also taken care at this section. The customer needs to given the ATM card and the PIN number. These are done in this section. Any problem with the ATM machine the branch holds is also dealt with in this section. The branch makes sure that the ATM card and the PIN number are not with the same officers. The customers application for Internet Banking and Mobile Banking are also processed in this section.




CHAPTER 4 4.1 Products:

Indian bank provides more products and services for their customers. Some of the products, their eligibility criteria, salient features are discussed. Various products provided by the Indian bank are: Savings Bank Current Account Recurring Deposit Re-investment plan Educational loan Home loan IB Vehicle loan Plot loan

4.1.1 Savings Bank:

Interest Rates: In January and July on a daily product basis

Salient Features: ECS/RTGS/NEFT facilities are available Two cheque books of 2x20 leaves free in a calendar year for cheque operated SB accounts Collection of local cheques free Collection of Outstation cheques with the presecibed charges No charges for Intra city transactions ICOOC ( Local / Outstation) facility available ATM cards/Debit cards are provided free of cost 24 hrs ATM facility with arrangements with various banks for sharing of their ATMs Multicity cheque facility Intra city, intercity transactions,Internet/ mobile /phone banking facilities are available at all branches 50 withdrawals permitted free per half year No TDS on interest earned on SB deposits

Min Amount: Minimum amount- Rs.250/- for non cheque operation Minimum balance of Rs.500/- for cheque operation Lesser minimum balance for pensioners and bonafide students

4.1.2 Current Account:

Salient Features: Ordinary Current Account

Minimum Amount: Quarterly average balance Rs.5000 prescribed

Other Requirements/Details: Suitable for all type of customers ECS/RTGS/NEFT facilities are available Nomination facility for individuals and sole proprietor concerns, Multicity cheque facility, Intra city, intercity transactions are permitted in CBS branches Free ATM card cum Debit card No charges for Intra city transactions

4.1.3 Recurring Deposit:

Interest Application: Quarterly compounding

Salient Features: A regular monthly savings grow into a large sum to meet the financial needs at the end of the agreed period

Minimum Amount: Monthly installment Rs.5 and in multiples thereof.


Min Period: Minimum 6 months In multiples of 3 months with a maximum of normally 10 years

Other Requirements/Details: Loan, Foreclosure, Nomination facilities are available. TDS not applicable

4.1.4 Re-investment Plan:

Interest Application: Quarterly compounding

Min Amt: Minimum amount Rs.100/- and in multiples of Rs.100/No maximum amount

Min Period: Minimum- 6 months. Maximum normally- 10 years

Other Requirements/Details: Automatic renewal facility for equal period. Loan. Foreclosure, Nomination facilities are available

4.1.5 Educational Loan:

Eligibility: The applicant should be an Indian National. She/he should have secured admission to professional/technical courses in India/Abroad through Entrance Test/Merit based selection process.

Amount of Loan: For Studies in India: Rs.10.00lakhs and for Studies Abroad: Rs.20.00 lakhs. Higher Quantum of loan subject to a maximum of Rs.15 lakhs for studies in India and RS.25 lakhs for studies abroad also can be considered in deserving and meritorious cases

Margin Upto Rs.4.00 lakhs - Nil. Above Rs.4.00 lakhs: For Studies in India - 5%. For Studies Abroad - 15%.

Repayment: Maximum period The loan is to be repaid in 5-7 years after commencement of repayment.

Security: Up to Rs.4.00 lakhs - Co obligation of parents. No Security. Above Rs.4.00 lakhs and up to Rs.7.50 lakhs - Co obligation of parents together with collateral in the form of a satisfactory third party guaranty. Above Rs.7.50 lakhs - Co obligation of parents together with tangible collateral security of suitable value along with the assignment of future income of the student for payment of installments.

Salient Features: To meet the cost of education covering fee payable to college/school/hostel, exam fees, purchase of books/equipments, travel expenses/passage money for studies abroad, purchase of computers essential for completion of the course etc.

Other Requirements/Details: Holiday Period: The course period PLUS 1-year or 6 months after getting a job, whichever is earlier. Family Income: There is no restriction. The main emphasis is that no deserving student is denied an opportunity to pursue higher education for want for financial support. Place of availment: The loan is to be availed from the branch nearest to the place of domicile of the student. Course of study in India : Diploma/Graduation/Post graduation courses in various disciplines Computer Certificate courses in reputed institutes accredited to the Department of Electronics. Course of study abroad : Job-oriented professional/technical courses offered by reputed universities, MCA,MBA, MS etc. Courses conducted by CIMA - London, CPA in USA etc.


4.1.6 Home Loan 2011:

Eligibility: Minimum entry age is 18 years and maximum exit age is 60 years

Amount of Loan: 36 times of Gross Monthly Income or 60 times of Net Monthly Income whichever is higher. Spouse Income can be included for calculating eligible amount if he / she have steady income. 60% of future rental income, if any from the house property to be purchased / constructed shall also be included (quantum of rent receivable to be certified by our panel engineer). (Take home Income should be more than 40% of gross monthly income after deduction of EMI for the proposed loan, apart from other deductions.)

Margin: For Loans upto Rs. 20 lakhs : 10% For Loans above Rs. 20 lakhs : 20%

Processing fee: For limits upto 10.00 lakhs: 0.25% of loan amount ; For limits above 10.00 lakhs: 0.20% of loan amount with a minimum of Rs. 2,500/- and maximum of Rs. 20,000/- (Non refundable)( to be remitted at the time of submission of application)

Administrative fee: For limits upto 10.00 lakhs: 0.32% of loan amount ; For limits above 10.00 lakhs: 0.25% of loan amount with a minimum of Rs. 3,200/- and maximum of Rs. 25,000/- (at the time of acceptance of sanction)

Interest Rates: Fixed rates are subject to reset once in 5 years After the account has run for 3 years, from the date of sanction, one time option can be exercised for converting fixed rate into variable rate. For the said Switch over, a one time fee of 1% on the outstanding balance in the loan account will be charged as service charges. If conversion of fixed rate to variable rate is sought after 5 years, from the date of sanction, the onetime fee of 1% shall not be applicable.

Conversion from floating to fixed rate is not permitted.

Repayment: Loans for purchase / construction of House / Flat: 20 years (including holiday period) Maximum Holiday Period of 18 months allowed for Home Loans for the purpose of construction of House / Flat

Security: Equitable Mortgage of Property purchased / constructed out of loan proceeds Equitable Mortgage to be registered (at Applicants cost) if there is a provision for the same in the State where property is located

Documents to be submitted for processing the application: 1. Completed Application Form with 3 passport size photograph. 2. Assets and liabilities statement in the Banks format from applicant(s), Co-applicant(s) and guarantor(s) 3. Proof of Identity such as PAN Card / Voters ID/Passport/Driving License. 4. Proof of residence such as Recent Telephone Bill / Electricity Bill / Property Tax Receipt / Passport / Voters ID 5. Proof of business address in respect of businessmen / industrialists. 6. Proof of Employment. 7. Salary Certificate generally for the last 6 months. 8. Statement of Bank account of the applicant(s) for a reasonable period, say 6 months for verifying salary credit/other income/nature of transaction etc 9. Proof of other income like rent, interest on investment, if any. 10. Balance Sheet for the past three financial years in the case of Professionals, Businessmen & Self employed. 11. A brief note on the nature of business/service, year of establishment, constitution, securities charged in respect of other loans availed from our Bank/other Branches/Banks/Finance companies/Other sources. 12. Form16/Income Tax / Wealth Tax (if applicable) Returns for the past 3 years 13. Agreement of Sale / Sale Deed. 14. Approved Building Plan. 15. Title Deed Documents for 13 years/30 years as the case may be. 16. Proof of title in the Revenue Records. 17. Property Tax receipts wherever applicable (Up-to-date EC, Legal Opinion from Advocate & Valuation of property from Engineer will be arranged by Bank at applicants cost)


Salient Features: Home Loans can be considered a) b) c) d) e) f) to purchase / construct a new house / flat to purchase house site and construction of house thereon to purchase an existing house / flat to extend an existing house/ additional construction to repair / renovate an existing house / flat to take over Home Loans from other Banks / Housing Finance Institutions approved by National Housing Bank for Housing Finance/ Co-operative Societies. g) For reimbursement of cost incurred for purchase/construction of house/flat Insurance: Property (offered as security) to be insured at borrowers cost with Bank clause against fire, flood, earthquake, riot and other risks, which are normally covered by insurance companies.

4.1.7 IB Vehicle Loan:

Eligibility: Salaried Class Individuals. Businessmen, Professionals and Self-employed . Pensioners with repayment capacity. Minimum Gross monthly income for purchase of Four wheeler should be Rs.20,000/-.

Amount of Loan: 20 times of Gross Monthly Income Spouse Income can be included for calculating eligible amount if he / she has steady income. Take home Income should be more than 40% of gross income after deduction of EMI for the proposed loan, apart from other deductions. For Businessmen, Professionals & self-employed, based on their average income earned in the last 3 years and capacity / ability to repay the loan. Maximum Loan amount for purchase of Two Wheeler : Rs.75,000. Four Wheeler: Rs. 15,00,000 Margin : 15% for New Vehicle. 40% for used vehicle (Four wheeler).


Processing fee: 0.30% of loan with a minimum of Rs. 300/-

Repayment: Four Wheeler: Maximum 84 EMIs (No holiday period) for salaried class individuals; Maximum 60 EMIs (No holiday period) for others. For 2 wheeler: Maximum 60 EMIs (No holiday period)

Security: Hypothecation of Vehicle to be purchased out of Loan. If the loan amount exceeds Rs. 10.00 lakhs, additional security equivalent to amount exceeding Rs. 10.00 lakhs to be provided in the form of Fixed Deposit Receipts / NSCs / LIC Policy (with surrender value equivalent to the security to be provided) / Mortgage of immovable property.

Documents to be submitted for processing the application: 1. Completed Application Form with passport size photograph. 2. Proof of Identity such as PAN Card / Voters ID/Passport/Driving License. 3. Proof of residence such as Recent Telephone Bill / Electricity Bill / Property Tax Receipt / Passport / Voters ID. 4. Proof of business address in respect of businessmen / industrialists. 5. Proof of Employment. 6. Salary Certificate. 7. Proof of other income like rent, interest on investment, if any. 8. Balance Sheet for the past three financial years in the case of Professionals, Businessmen & Self employed. 9. Income Tax / Wealth Tax (if applicable) Returns for the past 3 years. 10. Copy of Driving License. 11. Quotation for Vehicle to be purchased from the authorized dealer Salient Features: For purchase of New Two Wheeler or New / Used Four Wheeler(Used four wheeler should not be more than 3 years and should be certified by reputed automobile engineer)


4.2 Services:
The various services provided by Indian bank are Ind Net banking Ind Mobile banking Ind Phone banking NEFT Credit Cards ATM/Debit Cards Money Gram

4.2.1 Ind Net banking:

Eligibility: Customers having Savings Bank, Current Account with us

Salient Features: Customers can use the internet to do their banking at the convenience of their home

Other Requirements/Details: Visit the Website : Customer can view their accounts. Customer can get the statement of account. Customer can transfer funds to his own accounts. Customer can transfer funds to other Indian Bank accounts. Customer can remit funds to anyone having account with any bank through RTGS/NEFT charges applicable as per RTGS/NEFT). Customer can know the cheque details. Indian Bank is not liable for non-availability of services due to reasons beyond the controls of the bank. Charges for Net Banking facility: Free. DP account maintained with Indian Bank can be viewed.


At present the following payments can be made through net banking: AP online TNEB Payment IRCTC (Rail ticket) Payment IBMBS Payment Income tax/TDS Payment Service Tax Payment Central Excise Payment MCA 21 Payment

4.2.2 Ind Mobile banking:

Eligibility: Customers having Savings Bank, Current Account with us

Salient Features: Customers can use their mobile phones to do their banking

Other Requirements/Details: SMS to 9444394443 from your mobile. Customer can do the balance enquiry. Customer can see their last 3 transactions. Customer can enquire about the issued/deposited cheque status.. Customer will get mobile alert if Account is Debited/ Credited for Minimum of Rs.5000. Customer will get mobile alert if there is a cheque bounce in their account. Indian Bank is not liable for non-availability of services due to reasons beyond the controls of the bank. Charges : Free.


4.2.3 Ind Phone banking:

Eligibility: Customers having Savings Bank, Current Account with us

Salient Features: Customers can call for enquiries anytime, anywhere through telephone.

Other Requirements/Details: Call telephone toll free 1800-425-3425. Customer can do the balance enquiry. Customer can have their account details. Customer can have the issued cheque status. Customer can have the deposited cheque status. Indian Bank is not liable for non-availability of services due to reasons beyond the controls of the bank. Charges : Free

4.2.4 N E F T:
Eligibility: Any customer of a CBS Branch for any amount. For non-customers NEFT is available against cash remittance up to Rs.50000/-

Salient Features: Transfer of funds to any account in any bank branch enabled for NEFT within the same day.

Other Requirements/Details: Any amount can be remitted. Customer is required to provide beneficiary's account number, name, address, bank and branch name. The beneficiary's bank account is credited on the same day. (If the remittance is in the afternoon, the amount may be credited on the next day). Week days 09.00 A M to 07.00 P M (Settlement in hourly batches) Saturdays 09.00 A.M to 01.00 P.M (Settlement in hourly batches)

4.2.5 Credit Cards:

Eligibility: Gold and Classic cards: Indian Nationals and NRIs in the age group of 18-80 years. Bharat cards: Indian Nationals in the age group of 25-60 years.

Salient Features: VISA cards available in three variants : Gold, Classic and Bharat cards

Other Requirements/Details: Gold and Classic cards are Global cards and Bharat cards are domestic cards. Revolving credit Gold card: Rs.75001 to Rs.3 lakhs. Classic cards : Rs.25000 to Rs.75000 Bharat cards: Rs.10000 to Rs.20000. Up to 4 add on cards can be issued for Gold/Classic cards. Insurance cover on death due to accident is available. Baggage cover is available. Credit Shield on death is available. Purchase protection cover is available. No Joining / annual membership fee. Card holder can avail reimbursement of loyalty points (Rs.1/= for every Rs.200/= spent.) Interest free credit period for purchases: Minimum - 15 days and Maximum - upto 45 days.

4.2.6 ATM/Debit Cards:

Eligibility: Our Savings Bank and Current account customers

Salient Features: Our 24 hour Hi-powered, value-added ATM cum Debit card, just the size of a visiting card, is the passport to the facilities available with ATM and for shopping at Merchant establishment. It brilliantly complements customer's ambitions, offering more value, more excitement, more service, more extras.

Other Requirements/Details: It can be used in more than 30000 ATMs of various banks. The Maestro Debit cards can be used for purchase of merchandize/services from commercial establishments/service organizations that display the "MasterCard", "Maestro" and "Cirrus" logo. In India, over 150,000 POS terminals and more than 15000 ATMs are available that accept Maestro Debit Cards. Round-the-clock cash withdrawals. 24 hrs cash and cheque deposits. Request can be given for a cheque book through ATM. Customer can use the following Bank's ATMs : Punjab National Bank, Oriental Bank of Commerce, Karur Vysya Bank, IndusInd Bank, UCO Bank, Bank of India, United Bank of India, Union Bank of India, Syndicate Bank, Dena Bank, Bank of Rajasthan, Bank of Maharastra, Karnataka Bank, Indian Overseas Bank, Allahabad Bank, Bank of Baroda, City Union Bank, Corporation Bank, Development Credit Bank, ICICI Bank, IDBI Bank, Tamilnadu Mercantile Bank Ltd, The Cosmos Cooperative Bank Ltd, The Dhanalakshmi Bank Ltd., The Jammu and Kashmir Bank Ltd, The South Indian Bank Ltd., YES Bank Ltd, State Bank of India and its Associate Banks and Andhra Bank.

4.3 Interest Rates: 4.3.1 Deposit Rates:

Interest Rates on Domestic Term Deposits % p.a (w.e.f. 23.09.2011) (% per annum) Table 5: Deposit Rates

7days to 14 days 15 days to 29 days 30 days to 45 days 46 days to 90 days 91 days to 120 days 121 days to 180 days 181 days to less than 9 months 9 months to less than 1 year 1 year to less than 3 years 3 years and above

Less than Rs. 15 Lakhs

6.25 6.25 6.25 6.25 7.00 7.50 7.75 9.25 9.50 9.00 Source :

Rs. 15 Lakhs to Rs. 5 Crore

6.25 6.25 6.25 6.25 7.00 7.50 7.75 9.25 9.25 9.00

4.3.2 Home Loan:

Home loan 2011 scheme: Table 6: Home loan 2011 scheme interest rate



Home Loan - Fixed Rate of Interest: Table 7: Home loan-Fixed Rate Interest



4.3.3 IB Vehicle Loan Scheme:

Table 8: IB Vehicle loan Interest rate

Car Loan (New Cars) Car Loan (Used Cars) 2 Wheeler Loan

Rate of Interest
BR + 0.75%(variable) = 11.25% BR + 3.50%(variable)= 14.00 % BR + 3.00%(variable) = 13.50 %

Source: 4.3.4 IBA Educational loan Scheme:

Table 9: Educational loan Interest rate

Sanctioned limits

Interest Rate w.e.f. 01.05.2012(for A/Cs availed after 30.06.2010) (BR+Spread+TP)

Base Rate + TP (1%) + Spread (3.00%) = 14.50 % Base Rate + TP (1%) + Spread (3.25%) = 14.75 % Source:

Up to Rs. 7.50 lakhs

Above Rs. 7.50 lakhs

4.3.5 Base Rate and BPLR:

Base Rate is 10.50 % p. a. with effect from 01.05.2012 Benchmark Prime Lending Rate is 14.75 % p. a. with effect from 01.05.2012






SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization. Strengths: characteristics of the business, or project team that give it an advantage over others Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others Opportunities: external chances to improve performance (e.g. make greater profits) in the environment Threats: external elements in the environment that could cause trouble for the business or project

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated. Users of SWOT analysis need to ask and answer questions that generate meaningful information for each category (strengths, opportunities, weaknesses, and threats) in order to maximize the benefits of this evaluation and find their competitive advantage.


5.2 Indian Bank SWOT Analysis: Strength:

High end banking technology with core banking at all 1500 branches including two foreign branches Singapore and Colombo. It has 26000 employees including 9000 officers. Diversified banking activities under 3 subsidiaries i.e. Indbank Merchant Banking Services Ltd, IndBank Housing Ltd, IndFund Management Ltd. Strong international network of banks with 240 overseas correspondent banks in 70 countries. A 100 year old bank with good and loyal clients which has been operating successfully right up to the late 80s. In case of rural banking they also started taking agriculture colleges as summer trainees to further improve agriculture credit. Bank has got 200 very bright young officers who have undergone training and are doing exceedingly well.

Low number of ATMs and branches as compared to its competitors. Low advertising and publicity. Employee management was not good. Morale of the workforce was low. Due to indiscriminate lending from the period 1996 to 1999 bank had frozen credit.

Bank has the opportunities in the retail banking as well as urban market banking. Favorable government rural schemes. More expansion in untapped rural markets and to tapped rural market they are planning to have separate rural branches. During the restructuring of the bank they hired young, smart and energetic MBA student in order to improve the marketing area and to bring lots of new business.

Economic crisis and fluctuating market scenarios. Highly competitive environment. Stringent Banking Norms by Governments and RBI. Threat from the competitors like SBI, BANK OF BROADA, ICICI BANK, ANDHRA BANK.



6.1 Findings and Suggestions: Findings:

The relationship between the customer and the organization is not satisfactory. The progress of work is slow compared to other privatized banks. There is no proper guidance to the public Poor Toll-Free assistance. Complaints are forwarded to higher officials instead of rectifying. This takes more time. It is difficult for the public to see the Manager. New recruits are not given proper training before appointing.

The organization should bring customer help desk to guide the customers and help the public. Every branch should consider having a complaint section. Organization should consider improving its online and toll-free complaining service. Organization should consider implementing a good training institute for new recruits. The manager should be allotted time to hear customer problems. Unwanted things should be omitted so that the processing time can be reduced.

Indian Banks performance and strategic direction have broadly been positive and balanced since its listing, leading to a gradual improvement in the quality of earnings vis--vis its peers. Additionally, the banks CMD has a five-year tenure, which provides a reasonable strategic stability to the bank. Moreover, the banks predominantly rural and semi-urban presence has enabled it to maintain reasonable cost of funds, resulting in more flexible than other mid-size PSU banks.