INTERIM REPORT

ON
Study on Banking Sector and Life Insurance and Mutual Fund
Products
By
Rishi Mehta
18BSP0934

Bank of Baroda

Under Guidance of

Prof. Arun Chandaran Mr. Krushnakumar Hivre

(IBS Mumbai) (Senior Wealth Manager)
Faculty Guide Company Guide
 INTERIM REPORT ON
Study on Banking Sector and Life Insurance and Mutual Fund
Products

By
Rishi Mehta
18BSP0934

Bank of Baroda

IBS Business School

In partial fulfilment of the requirement of the award of the

Post-Graduation Program in Management

(2018-2020)

Hiranandani Knowledge Park, Opp. Hiranandani Hospital, Off Technology

Street, Hiranandani Gardens, Powai, Mumbai, Maharashtra 400076
Certificate by company

[i]
Authorization

[ii]
Declaration

[iii]
 Acknowledgements
I wish to express my special thanks to Mr. Krushnakumar Hivre, for providing
me an opportunity to do my internship and project work in “Bank of Baroda”
and being soo helpful.

I sincerely thank Prof. Arun Chandarana for his guidance and encouragement in
carrying out this project work.

I also wish to express my gratitude to the officials and other staff members of
Bank of Baroda, Shivaji Park Branch Dadar (W), who rendered their help
during the period of my project work.

I also thank the Dean of IBS Mumbai Prof Y.K. Bhushan for providing me the
opportunity to embark on this project.

Rishi Mehta
(18BSP0934)
 ABSTRACT
Bank of Baroda provides various banking products and services to individual
and corporate customers. It offers:-
• fixed, current, recurring, and savings deposit products,
• NRI account and foreign currency deposits.
• provides loans, such as home, education, vehicle, personal, mortgage,
commission agents, traders, and debit card EMI loans, as well as
advances against securities and gold ornaments/jewelries, and loans for
public issues/IPOs.
• short term corporate loans, as well as loans for micro, small, and
medium enterprises, commercial vehicle finance, export and import
finance, bill finance and debit, prepaid, and credit cards.
• In addition, it offers loans and advances, and pensions and other
government schemes to rural and agricultural customers
• life insurance, general insurance, and health insurance products
• Investment in Mutual Funds.
• merchant banking, correspondent banking, trade finance, digital banking
services.
As of March 31, 2018, the company operated 5,467 branches in India, as well
as 106 branches internationally.

As a partial fulfillment of PGPM Program at IBS Mumbai, all the students are
required to undergo summer internship program (SIP) of 3 months.
With respect to that, I have prepared this project report on “Study on Banking
Sector and Life Insurance and Mutual Fund Products“.

As a part of my training I have learnt many things from bank. In initial days I
was given Induction about what all things happen in bank and about banking
terminologies.
In this phase I learnt about :-

• different types of bank accounts

• different money transfer methods
• new account opening procedure
• how to operate the passbook kiosk
• the whole process behind NEFT and RTGS method of money transferring
• Security Features of currency notes in India
• DD Punching
• etc.

After some 20-25 days I got the opportunity to work in back office where I was
given access to finacle software by login detail of other employee of bank and
learnt many things like :-

• how to make a new account

• how to make entry of NEFT and RTGS
• how to make entry of amount transfer by cheque
• how to add or modify address, mobile number etc on the system
• how to add second account holder in the system
• scanning of documents
• uploading signature on SVS system
• how to unfreeze account
• how to print bankers cheque and demand draft
• upload documents of customers
• CKYC and EKYC
• Etc

After this I got opportunity to work with Govt. Business Department where Anil
Sir and Ravikiran Sir explained me all the government schemes which are :-

• Public Provident Fund

• Senior Citizen Saving Scheme
• Sukanya Samriddhi Account
• National Pension Scheme
• Prime Minister Vaya Vandhana Scheme
 • National Savings Certificate
• Atal Pension Scheme

Other than this I have got great chance to have talks with my Branch Manager
Wankhede Sir who have given me some great insights on banking which I
would have not got from anyone else...these are:-

• PLR- Prime Lending Rate

• AUCA – Advance Under Collection Account
• Mumbai Interbank Bid Rate
• MIBOR – Mumbai Inter Bank Offer Rate
• CASA – Current Account And Savings Account
• Banking Hierarchy and officer Grades
• Basel – I Norms
• Basel – II Norms
• Basel – III Norms
• Different Banking Rates
• LIBOR- London Inter Bank Offered Rate
• How Banks make(earn) money ?
• How Credit Cards help in making money ?
• Etc

Still I am left to go to Advances Department which my mentor have informed

me is busy so I will be able to join it after 25th April.
 COMPANY PROFILE

Bank of Baroda is an Indian state-owned International banking and financial

services company headquartered in Vadodara (earlier known as Baroda) in
Gujarat, India. It is the second largest bank in India, next to State Bank of India.
Its headquarters is in Vadodara, it has a corporate office in the Mumbai.

The founder of Bank of Baroda :- Maharaja Sayajirao Gaekwad III

Bank of Baroda, along with 13 other major commercial banks of India, was
nationalised on 19 July 1969, by the Government of India and has been
designated as a profit-making public sector undertaking (PSU).

Bank of Baroda started its overseas journey by opening its first branch way
back in 1953 in Mombassa, Kenya. Since then the Bank has come a long way in
expanding its international network to serve NRls/PIOs, Indian Corporates
around the world and to meet the banking requirements of the local
population in the country of operation. The Bank has transformed into 'India's
International Bank.

INDUSTRY BRIEF:-

BANKING:-

The Indian banking system consists of

• 27 public sector banks
• 21 private sector banks
• 49 foreign banks
• 56 regional rural banks
• 1,562 urban cooperative banks
• 94,384 rural cooperative banks, in addition to cooperative credit
institutions.
Banks have already embraced the international banking supervision accord of
Basel II, and majority of the banks already meet capital requirements of Basel
III, which has a deadline of March 31, 2019.

Reserve Bank of India (RBI) has decided to set up Public Credit Registry (PCR)
an extensive database of credit information which is accessible to all
stakeholders. The Insolvency and Bankruptcy Code (Amendment) Ordinance,
2017 Bill has been passed and is expected to strengthen the banking sector.

Indian Banking have modernized from use of internet banking to mobile

banking to new payments banks and small finance banks coming newly into
the industry.

Payments Bank

Payments bank is a new model of banks conceptualised by the Reserve Bank of

India (RBI). These banks can accept a restricted deposit, which is currently
limited to 1 lakh per customer. These banks may not issue loans or credit
cards, but may offer both current and savings accounts. Payments banks may
issue ATM and debit cards, and offer net-banking and mobile-banking. The
banks will be licensed as payments banks under Section 22 of the Banking
Regulation Act, 1949, and will be registered as public limited company under
the Companies Act, 2013.

There are many payments banks

1. Aditya Birla Idea Payments Bank Ltd.

2. Airtel Payments Banks Ltd.
3. Fino Payments Bank Ltd.
4. India Post Payments Bank Ltd.
5. Jio Payments Bank Ltd.
6. PayTm Payments Bank Ltd.
Small finance banks

To further the objective of financial inclusion, the RBI granted approval in 2016
to ten entities to set up small finance banks. Since then, all ten have received
the necessary licenses. A small finance bank is a niche type of bank to cater to
the needs of people who traditionally have not used scheduled banks. Each of
these banks is to open at least 25% of its branches in areas that do not have
any other bank branches (unbanked regions). A small finance bank should hold
75% of its net credits in loans to firms in priority sector lending, and 50% of the
loans in its portfolio must be less than 25 lakh.

There are many small finance banks

1. AU Small Finance Bank Ltd.

2. Capital Small Finance Bank Ltd.
3. Equitas Small Finance Bank Ltd.

MUTUAL FUNDS INDUSTRY:-

The first introduction of a mutual fund in India occurred in 1963, when

the Government of India launched Unit Trust of India (UTI). UTI enjoyed a
monopoly in the Indian mutual fund market until 1987, when a host of other
government-controlled Indian financial companies established their own
funds, including State Bank of India, Canara Bank and by Punjab National Bank.

Mutual fund is pooling of funds and their investment in different market by

experts hired for same.

There are 44 asset management companies (AMC’s) or mutual fund houses

operating in India.

LIFE INSURANCE INDUSTRY:-

Life Insurance is one of the fastest growing sectors in India since 2000 as
Government allowed Private players and FDI up to 26% and recently Cabinet
approved a proposal to increase it to 49%. Life Insurance in India was
nationalised by incorporating Life Insurance Corporation (LIC) in 1956. All
private life insurance companies at that time were taken over by LIC.
In 1993, the Government of India appointed RN Malhotra Committee to lay
down a road map for privatisation of the life insurance sector.

There are currently, a total of 24 life insurance companies in India. Of these,

Life Insurance Corporation of India (LIC) is the only public sector insurance
company. All others are private insurance companies.

All About Mutual Funds:-

Mutual fund is pooling of funds and their investment in different market by

experts hired for same.

There are 44 asset management companies (AMC’s) or mutual fund houses

operating in India.

Different types of Mutual Funds:-

1) Index Funds:- These are funds which are passive and invest in the stocks
which are part of the Sensex or Nifty like market Indices. Relatively safer with
low potential returns.

2) Equity Funds:- These funds invest their money in the equity stocks and the
return and risk both are higher here.

3) Debt Funds:- These are funds which invest their money in debt market and
hence they generate lower returns and also are very less risky.

4) Balanced Funds:- these funds are Hybrid Funds which invest in both debt
and equity market and they give more weightage in equity funds out of which
they invest half in arbitrage deals where there is minimal to no risk.

5) Focused Funds:- these are the funds which invest in either a theme or some
industry itself and hence are very highly risky with more of return generations.

Mutual funds offered by Bank of Baroda

Baroda asset management India limited (AMC) is investment manager to

Baroda Mutual fund is positioned to serve the different asset management
needs of Investors in India through a range of Equity , Debt and money market
offerings.

Bank of Baroda provides Mutual fund products under its wholly owned
subsidiary known as BAML (Bank Asset management India Limited)

Bank of Baroda Mutual fund products are categorised into Equity schemes,
Debt schemes, Liquid schemes.

1-Equity schemes

• Baroda Dynamic equity fund- The primary objective of the Scheme is to

generate capital appreciation by investing in a portfolio of equity or
equity linked securities while the secondary objective is to generate
income through investments in debt and money market instruments. It
also aims to manage risk through active asset allocation.
• Baroda Hybrid equity fund- It provides capital appreciation in long term
along with stability through a well balanced portfolio comprising of
equity, equity related instruments, money market instruments and debt
securities.
• Baroda Mid-cap fund-The primary objective of this scheme is to
generate capital appreciation by investing predominantly in diversified
portfolio of Equity and Equity related stocks of growth oriented Mid-cap
stocks. It is an Open-ended scheme.
• Baroda Banking and Financial Service fund- It aims at generating long
term capital appreciation for unit holders from a portfolio invested
predominantly in equity and equity related securities of companies
engaged in the Banking and Financial service sector.
• Baroda large cap fund- The primary objective of the scheme is to
generate capital appreciation by investing predominantly in a diversified
portfolio of equity and equity related securities of large cap companies.
• Baroda ELSS’96- To provide the investor with long term capital growth
and also tax benefits under section 80-C of income tax.
2-Debt schemes

• Baroda Credit Risk fund- It provides returns by investing in debt and

money market instruments across the companies.
• Baroda Ultra-duration fund- It is an open ended debt scheme that
invests in instruments such the duration of investment is between 3
months and 6 months
• Baroda Short term Debt fund- It generates income from a portfolio
constituted of short term debt and money market securities.
• Baroda conservative Hybrid fund- It generates regular income through
investment in debt and money market instruments and also to generate
long-term capital appreciation by investing a portion in equity and
equity related instruments.
• Baroda Treasury Advantage fund- It provides optimal returns and
liquidity through a portfolio comprising of debt securities and money
market instruments.
• Baroda Gilt fund- It generates income by investing in a portfolio of
government securities.
• Baroda Dynamic Bond fund- It generates returns with liquidity by
managing the portfolio through interest rate cycles.

3-Liquid Funds

• Baroda Liquid fund- This is one of the most sold Mutual Fund whose
AMC is Bank of Baroda itself. It generates income with a high level of
liquidity by investing in a portfolio of money market and debt securities.

Other than these products Bank Of Baroda also offers Mutual Funds of
different AMC as intermediary working for some commission.
All About Life Insurance Product:-

Life Insurance :- a contract which promises Reimbursement of the loss of life

for some small amount premium paid.

Different types of Insurance:-

1) Traditional Plan:- plans with both death and maturity benfits. It is

combination of Term and Endownment plan.

2) Ulip Plan :- These plans park their money in mutual funds and are
participative in nature.

3) Annuity Plan:- These plan are such that they provide pension at the end of
the stipulated period.

Life Insurance Products offered by Bank of Baroda

Bank of Baroda has tie up with IndiaFirst Life insurance limited through which
it has various product offerings of Life insurance.

Bank Of Baroda has used Bancassurance Concept which is selling insurance

with banking services which build trust to customers. They have many variety
of schemes for different purposes. Some of the schemes allows you to
maximise your wealth along with the Life cover.

It has 5 main Life insurance policies under which it fulfils the needs of various
people across the country.

• IndiaFirst Life wealth maximizer Plan-This is the best selling plan of

Indiafirst. It is for investment above 1.5 lakhs. This plan chooses from
multiple investment strategies and fund options, it facilitates systematic
partial withdrawals, additional benefits for paying timely premium, tax
benefits, choosing policy term, switch between asset classes, multiple
premium payment options, life cover.
• IndiaFirst Money Balance Plan- It is a Unit linked insurance plan which
invests in equity and debt both in a fixed proportion. Now after one year
the folio value is checked and the proportion which have changed due to
return on investment on both debt and Equity is again made in same
proportion by pulling and pushing funds in these. This way it helps you
to protect your money from volatility of markets, Balanced portfolio as
you grow older, safeguards your loved ones, options of regular, limited
or single premiums, Tax benefits.
• IndiaFirst Smart Save Plan- In today’s world the difference between
Insurance and mutual fund is reducing day by day because both AMC
and Insurance companies are merging the benefits of each other into
one pla. Smart save plan is also one of the same type. It is a Unit linked
insurance plan which offers Life insurance cover and additionally helps
your money to grow through market linked instruments.
• IndiaFirst Maha Jeevan Plan– It is Non-linked participating Endowment
plan. This is a typical traditional type of plan with death and maturity
benefits. It gives benefits of bonuses, more protection for family, tax and
premium benefits.
• IndiaFirst Guaranteed Retirement Plan- It is a Non-linked, Participating,
Deferred pension plan, one can earn 9 % on the premiums paid during
2/4/6 plan years as per premium paying term, Annual bonuses, tax
benefits, options of regular, limited or single premiums.
What I learnt in Initial Days:-

Types Of Account:-

• Savings account- Bank of Baroda provides 10 different types of savings

account to its customers and thereby fulfilling different needs of
different customers. The 10 different savings account offered are
namely- Baroda centenary savings account, Baroda advantage savings
account, Super savings account, Baroda basic savings account, Baroda
pensioners savings bank account, Baroda salary privilege, Baroda salary
Premium, Baroda salary super, Baroda salary classic, Baroda champ
account.
• Current account- Current accounts are most commonly used by
professionals, entrepreneurs and large and small-scale businesses.
Unlike savings accounts, current accounts generally have no transaction
limits and let the holder opt for overdraft facilities. Bank of Baroda offers
various types of current accounts to suit different customer needs which
are namely Baroda premium current account, Baroda premium current
account Privilege, Baroda small business current account, Baroda
advantage current account.
• Fixed deposits- Bank of Baroda offers several fixed deposit schemes to
choose from, depending on your chosen preferred term period (short-
term or long-term). This range of choices makes fixed deposits a
convenient option for a range of investors, from salaried employees to
self-employed professionals to senior citizens.Apart from attractive
interest rates and convenient withdrawal options, fixed deposit accounts
of BOB offer several other features such as nomination facility, overdraft
facility, outstation cheque collections, safe deposit lockers, ATMs, etc.
• NRI Account:-In India banking terminology, the term NRI Account refers
to funds deposited by a Non-Resident Indian or NRI with a financial
institution authorized by the Reserve Bank of India to provide such
services. A Non-Resident Indian is an Indian citizen who primarily resides
outside of India.
 • NRO Account:- NRO stands for Non-Resident Ordinary account. It refers
to the savings or Fixed Deposit account of a Non-resident Indian in a
bank in India. This is a Rupee account. Interest earned in this account is
taxable. The account can be jointly held with a resident Indian. The
principal and interest in this account are non-repatriable.
• FCNR account (Foreign Currency Non-Resident) :-An FCNR account is a
fixed term bank account that can be opened in India by an NRI or a
person of Indian origin (PIO) to transfer their foreign income in the same
currency. These accounts can be opened and maintained in 6 different
currencies:-
•Pound Sterling (GBP)
•Euro (EUR)
•Japanese Yen (JPY)
•Australian Dollar (AUD)
•Canadian Dollar (CAD)

Any balance in this account can be freely repatriated. Neither the

principle amount deposited into this account nor the interest accrued
thereon is subject to tax under the Income Tax Act 1961. These accounts
eliminate the risks due to currency fluctuations since they are required
to be maintained in foreign currencies and conversion to INR is not
permissible. The minimum tenure of these fixed deposits is 1 year, while
the maximum tenure is 5 years. Premature withdrawals are subjected to
penalties.

Different Money Transfer Methods:-

NEFT (National Electronic Fund Transfer):- The National Electronic Fund

Transfer or NEFT is the simplest and most liked form of money transfer from
one bank to bank.To make any NEFT transaction, you just need two important
pieces of information -- firstly, account number and secondly, the IFSC Code of
the destination account.In Bank Of Baroda if amount is below 2 lakh then it is
considered as NEFT.
RTGS (Real Time Gross Settlement):- A Real Time Gross Settlement or RTGS is
almost similar to NEFT but the minimum payment and how it credits to the
destination account differs. If you want to transfer more than 2 lakhs then you
can use this. There is no upper cap on the amount. An RTGS money transfer
happens on a real-time basis. The bank of the person to whom the money is
transferred gets 30 minutes to credit it to his/her account.

Cheque: You can transfer money from your one account to another account by
cheque. You have to simply draw a stating payee as your name along with the
account number wherein you want to transfer the amount along with your
signature.It's done immediately at a branch if the transfer is within your bank.

There is no limit if you want to transfer money from your a/c to another bank
a/c, but if you want to withdraw a certain amount, there are
restrictions.Through a cheque, you cannot withdraw more than Rs 50,000 from
a non-home branch.

New Account Opening Procedure:-

Documents Required to Open a Bank of Baroda Savings Account:-

To be eligible for a Bank of Baroda Savings Account (Retail) , customers will

have to submit the following documents along with account opening form.

• Proof of identity - Passport, Driving license, Voter’s ID card, etc.

• Proof of address - Passport, Driving license, Voter’s ID card, etc.
• PAN card
• Form 16 (only if PAN card is not available)
• 2 latest passport size photographs

The applicant will then have to fill in the application form. Note, all fields will
be required to be filled in to avoid rejection of the application. If one faces
issues filling in the form, he/she can contact any executive of Bank of Baroda
for assistance.
Once the above mentioned documents are ready and the form filled, the
individual will be required submit the form and the KYC documents at the Bank
of Baroda branch of choice.

The bank executive will now verify the documents and ensure that the name,
date of birth, address, signature, and so on, in the KYC documents and what’s
mentioned in the application form match.

Once the verification process is over, the account holder will now have to
make an initial deposit - depending on the minimum balance requirement of
the savings account he/she has chosen. The customer can make the initial
deposit at the cash deposit counter of the bank. No deposit will be required for
zero-balance savings accounts.

Once the deposit has been made, the executive will hand you a debit card and
the relevant bank documents with regard to the savings account.

Process behind NEFT/RTGS:-

1. Once the customer gives cheque with duly filled Slip the amount from the
payee account is debited and is credited to NEFT/RTGS pool account of
the payee bank.
2. From there the amount goes to Bank of Baroda main Pool account
3. From here the amount goes to RBI pool account
4. From there the payments gets divided in clusters of payment to different
banks Main pool account
5. From main pool account the respected amount is sended to Individual
branches pool account
6. Then the respected payments are made into different accounts with
different branches and the amount is credited to receiver account.
DD Punching:-

There are 2 punching done on a DD

Left Side:- here the amount minimum limit is punched. example if the DD is of
31,000.00 then it is more than 10000 so one lakh is punched. Such other
punching options available are :-

1) Ten Thousand (TT)

2) One Thousand(OT)
3) One Lakh (OL)
4) Ten Lakh(TL)
5) Above 10 lakh free punch above

Right Side :- Here the staring digit of DD amount is Punched the Options here
are 1,2,3,4,5,6,7,8,9

Example if the DD is of 20,000.00 Rs then 2 number will be punched.

About Finacle Software :-

Operation Finacle Menu Code used

Make a new account FINCORE->HOPNACCT
Make entry of NEFT and RTGS FINCORE->HPORDM
Make entry of amount transfer by FINCORE->HTM
cheque
Add or modify address, mobile FINCORE->MRCR
number etc on the system
Add second account holder in the FINCORE->HACM
system
Complaint Issuing FINCORE->RMENU
Uploading signature on SVS system SVS
Print bankers cheque and demand FINCORE->HDDVP
draft
Upload documents of customers FINCORE->MRCR
CKYC CKYC
EKYC EKYC
Find customer ID FINCORE->FINDCUST

All About Government Businesses:-

Public Provident Fund (PPF)

A PPF or Public Provident Fund is a savings scheme offered by the Government

of India. The interest on the account is paid by the government of India and set
every quarter. It is also tax-free.

How to open a PPF Account:-

PPF accounts can be opened a post office, 23nationalized banks and major
private banks such as ICICI and Axis. In several banks like ICICI and Axis, you can
open a PPF account online through net banking as well. Once the account is
opened a passbook similar to the bank passbook is issued. All transactions such
as subscription, interest, withdrawals, etc. are recorded in this passbook. Some
banks simply allow PPF entries to be viewed online instead of issuing a
passbook.

Documents Needed :-

• PPF account opening form (Form A)

• ID proof
• Address proof
• Photograph of the account holder
• Nomination form

Eligibility Criteria for PPF:-

Any individual who is a resident of India can open a PPF account. PPF accounts
can also be opened by parents for their minor children. NRIs cannot open PPF
accounts. However a resident Indian who has become an NRI after opening a
PPF account can continue the account till maturity. Opening of joint accounts
and multiple account is not allowed.

Minimum and Maximum Contribution:-

The minimum annual contribution is Rs 500 and the maximum is Rs 1.5 lakh.
The maximum limit applies to contributions made by a person for himself and
for a minor child. There can be a maximum of 12 contributions in a year.

PPF Interest:-

PPF is a fixed income investment. The interest rate on PPF account is notified
by central government every quarter. Current rate is 8%.

Interest on PPF is calculated monthly on the lowest balance between the close
of the fifth day and the last day of every month, i.e. for the purpose of interest
calculation, amount that is deposited into the account before 5th of the month
is only considered. So if any money is deposited on 6th of a month, then no
interest will be paid on that amount in the respective month. Hence it is
advised that deposits should be made between 1st and 5th of the month to
maximize the returns.

PPF Tenure:-

PPF account matures after the expiry of 15 years from the end of the financial
year in which account was opened. At maturity, you can extend the PPF
account indefinitely in blocks of 5 years at a time.
Senior Citizen Saving Scheme (SCSS)

Why invest in SCSS?

Investing in SCSS is a good opportunity for senior citizens above 60 years to

make money. This is an effective and long-term saving option which offers
security and added features that are usually associated with any government-
sponsored savings or investment scheme. These schemes are available through
certified banks and post offices across India.

Eligibility for SCSS:-

The following people/groups are eligible to opt for SCSS: 1. Senior citizens of
India aged 60 years or above. 2. Retirees who have opted for the Voluntary
Retirement Scheme (VRS) or Superannuation in the age bracket 55-60. Here
the investment has to be done within a month of receiving the retirement
benefits. 3. Retired defense personnel with a minimum age of 50 years. 4.
HUFs and NRIs are not allowed to invest in this scheme.

Investment Amount:-

An individual can invest a maximum amount of Rs 15 lakhs, individually or

jointly in an SCSS account. The amount invested in the scheme cannot exceed
the money that has been received on retirement. Hence, the individual can
invest either Rs 15 lakhs or the amount received as a retirement benefit,
whichever is lower.

How to open SCSS account:-

An SCSS account can be opened in any of the authorized banks or post office
branch across India with following documents:
1. Form A has to be filled for opening an SCSS Account.
2. Identity proof like PAN card, Passport to be presented.
3. Address proof such as Telephone bill, Aadhar card is required.
4. Age Proof Document is required. This could be in the form of a Passport,
Senior Citizen Card, a Birth certificate issued by the Corporation or registrar of
births and death, Voter ID card, PAN card etc.
5.Two Passport size photographs.
All the above documents must be self-attested.

Sukanya Samriddhi Account

Sukanya Samriddhi Yojana is a government-backed savings scheme as part of

the “Beti Bachao, Beti Padhao Yojana” for the benefit of the girl child. It can be
opened by the parents of a girl child below the age of 10. Parents can open up
to two such accounts for girls (they cannot open a third or fourth account etc,
if they have more than two girls). These accounts have tenure of 21 years or
until the girl child marries after the age of 18.

Minimum and Maximum Amount for SS Account:-

The minimum annual contribution to the Sukanya Samriddhi Account is Rs.250

and the maximum of Rs.1.50 lakh in a financial year. You have to invest at least
the minimum amount every year for up to 15 years from the date of account
opening. Thereafter the account will continue to earn interest till maturity.

Rate of interest:-

Sukanya Samriddhi Yojana offers 8.5 per cent per annum. The interest is
calculated and compounded on a yearly basis.

Tenure of Sukanya Samriddhi Account:-

Sukanya Samriddhi Yojana has a tenure equal to the time the girl child is 21
years of age or upon her marriage attaining the age of majority (18 years).
However contributions only need to be made for 15 years. Thereafter the
account continues to earn interest until maturity even if no deposits are made
into it.
Atal Pension Yojana (APY)

Features:-

• Guaranteed monthly pension for subscribers, ranging from Rs. 1,000 to

Rs. 5,000 per month.
• Government of India (GoI) will also co-contribute 50% of the subscriber’s
contribution or Rs. 1,000 per annum, whichever is lower. The
Government co-contribution is available for those who are not covered
by any Social Security Schemes and is not an Income Tax payer
• GoI will co-contribute to each eligible subscriber, for a period of 5 years
who joins the scheme in the period June 1 to December 31, 2015. The
benefit of five years of Government co-contribution under APY would
not exceed 5 years for all subscribers including migrated Swavalamban
beneficiaries.

Eligibility:-

APY is applicable to all citizens of India aged between 18 - 40 years.KYC

compliant Bank account is mandatory for this product

Returns:-

Based on the Chart which have returns based on Age of entry and Year of
Contribution.

What I learnt From Wankhede Sir (Manager)

Prime Lending Rate (PLR) -The interest rate charged by banks to their largest,
most secure, and most creditworthy customers on short-term loans. This rate
is used as a guide for computing interest rates for other borrowers.
AUCA- Advance Under Collection Account (AUCA) is an account to hold the
portion of a Non-Performing Asset (NPA) accounts. AUCA is an NPA reduction
strategy that allows the bank to take the bad debt off their balance sheet but
will have the option of recovering the amount from its promoter. By writing-off
bad and doubtful assets, bank can improve its NPA ratio.

Mumbai Interbank Bid Rate – The Mumbai Interbank Bid Rate (MIBID) is the
interest rate that a bank participating in the Indian interbank market would be
willing to pay to attract a deposit from another participant bank. The MIBID
used to be calculated every day by the National Stock Exchange of India (NSEIL)
as a weighted average of interest rates of a group of banks, on funds deposited
by first-class depositors.

MIBOR-Mumbai Inter Bank Offer Rate- The Mumbai Inter-Bank Offer Rate
(MIBOR) is one iteration of an interbank rate, which is the rate of interest
charged by a bank on a short-term loan to another bank. Banks borrow and
lend money to one another on the interbank market in order to maintain
appropriate, legal liquidity levels, and meet reserve requirements placed on
them by regulators. Interbank rates are made available only to the largest and
most creditworthy financial institutions.

CASA – Current Account And Savings Account- CASA is a commonly used

parameter that is used to understand the amount of liabilities that the bank
pays relatively less interest on. The higher the amount of CASA as a percentage
of total liabilities, the lesser will be the interest paid by the bank. Investors
should look at the CASA numbers carefully, as CASA is a source of strength for
the bank. For example, ICICI Bank is considered to have a comparatively
healthy CASA percentage.
Banking Hierarcy and Officer Grade:-

There are two type of people who work in a bank

1. Clerical Staff – This staff don’t have a big grading system but they are
just senior clerk, clerk and main
2. Officers – This Staff have a huge Grade system with 8 Grades named
below:-

• Scale 1:- Asst. Manager

• Scale 2:- Manager
• Scale 3:- Senior Manager
• Scale 4:- Chief Manager (Wankhede Sir(Branch Manager) is Scale
4 officer)
• Scale 5:- Asst. General Manager
• Scale 6:- DGM
• Scale 7:- GM
• Executive:- ED

Basel 1 – The first set of Basel Accords, known as Basel I, was issued in 1988
with the primary focus on credit risk. It proposed creation of a banking asset
classification system on the basis of the inherent risk of the asset.

Features Of Basel 1 – The Basel I Accord attempted to create a cushion against

credit risk. The norm comprised of four pillars, namely Constituents of Capital,
Risk Weighting, Target Standard Ratio, and Transitional and implementing
arrangements.

Tier 1 – Tier I capital or Core Capital consists of elements that are more
permanent in nature and as a result, have high capacity to absorb losses. This
comprises of equity capital and disclosed reserves. Equity Capital includes fully
paid ordinary equity/common shares and non-cumulative perpetual
preference capital, while disclosed/published reserves include post-tax
retained earnings. However, given the quality and permanent nature of Tier I
capital, the accord requires Tier I capital to constitute at least 50 percent of the
total capital base of the banking institution.

Tier 2 – Tier II capital is more ambiguously defined, as it may also arise from
difference in accounting treatment in different countries. In principal, it
includes, revaluation reserves, general provisions and provisions against non-
performing assets, hybrid debt capital instruments, and subordinated term
debt

Basel 2 – Basel II, the second set of Basel Accords, was published in June 2004
– in order to control misuse of the Basel I norms, most notably through
regulatory arbitrage. The Basel II norms were intended to create a uniform
international standard on the amount of capital that banks need to guard
themselves against financial and operational risks. This again would be
achieved through maintaining adequate capital proportional to the risk the
bank exposes itself to (through its lending and investment practices). It also
laid increased focus on disclosure requirements.

Limitations of Basel 2

The financial crisis of 2007 and 2008 exposed the limitations of Basel II,
wherein certain risks were not under the purview of this regulation.
Amendments were made to the Basel II in 2009 to make it more robust.

The revisions were as under:

Augmenting the value-at-risk based trading book framework with an additional

charge for risk capital, including mitigation risk and default risk.

Addition of stressed value-at-risk condition. This condition takes into account

probability of significant losses over a period of one year.
Basel 3 - The issues surrounding Basel II together contributed to the
emergence of the Basel III accord. The essence of Basel III revolves around two
sets of compliance:

1) Capital
2) Liquidity

While good quality of capital will ensure stable long term sustenance,
compliance with liquidity covers will increase ability to withstand short term
economic and financial stress.

Liquidity Rules : One of the objectives of Basel III accord is to strengthen the
liquidity profile of the banking industry. This is because despite having
adequate capital levels, banks still experienced difficulties in the recent
financial crisis. Hence, two standards of liquidity were introduced.

Liquidity Coverage Ratio (LCR) – LCR was introduced with the objective of
promoting efficacy of short term liquidity risk profile of the banks. This is
ensured by making sufficient investment in short term unencumbered high
quality liquid assets, which can be quickly and easily converted into cash, such
that it enables the financial institution to withstand sustained financial stress
for 30 days period. It is assumed, within 30 days, the management of the bank
shall take corrective actions to deal with the adverse situation.

Net Stable Funding Ratio (NSFR) – Long term stability of financial liquidity risk
profile is an important objective to be achieved. The Net Stable Funding Ratio
incentivizes banks to obtain financing through stable sources on an ongoing
basis. More specifically, the standard requires that a minimum quantum of
stable and risk less liabilities are utilized to acquire long term assets. The
objective is to determine reliance on short term means of finance, especially
during favourable market periods.
Capital Adequacy Ratio (CAR) – The Capital Adequacy Ratio (CAR) is a measure
of a bank’s available capital expressed as a percentage of a bank’s risk-
weighted credit exposures. The Capital Adequacy Ratio, also known as capital-
to-risk weighted assets ratio (CRAR), is used to protect depositors and promote
the stability and efficiency of financial systems around the world.

Two Types Of Capital Are Measured: tier one capital, which can absorb losses
without a bank being required to cease trading, and tier two capital, which can
absorb losses in the event of a winding-up and so provides a lesser degree of
protection to depositors.

Once the asset base is adjusted based on credit risk, and reserves in respect of
operational risk and market risk are computed, a bank can readily calculate its
reserve requirements to meet the capital adequacy norms of Basel II. As in the
case of Basel I, a bank must maintain equal amounts of Tier 1 and Tier 2 capital
reserves. Further, the reserve requirement continued at 8 percent.
Different Banking Rates:-

SLR – SLR stands for Statutory Liquidity Ratio. This term is used by bankers and
indicates the minimum percentage of deposits that the bank has to maintain in
form of gold, cash or other approved securities. Thus, we can say that it is ratio
of cash and some other approved securities to liabilities (deposits) It regulates
the credit growth in India.

CRR – CRR means Cash Reserve Ratio. Banks in India are required to hold a
certain proportion of their deposits in the form of cash. However, actually
Banks don’t hold these as cash with themselves, but deposit such case with
Reserve Bank of India (RBI) / currency chests, which is considered as equivalent
to holding cash with RBI. This minimum ratio (that is the part of the total
deposits to be held as cash) is stipulated by the RBI and is known as the CRR or
Cash Reserve Ratio.

Repo Rate – Repo (Repurchase) rate is the rate at which the RBI lends short-
term money to the banks against securities. When the repo rate increases
borrowing from RBI becomes more expensive. Therefore, we can say that in
case, RBI wants to make it more expensive for the banks to borrow money, it
increases the repo rate similarly, if it wants to make it cheaper for banks to
borrow money, it reduces the repo rate.

Reverse Repo Rate – Reverse Repo rate is the rate at which banks park their
short-term excess liquidity with the RBI. The banks use this tool when they feel
that they are stuck with excess funds and are not able to invest anywhere for
reasonable returns. An increase in the reverse repo rate means that the RBI is
ready to borrow money from the banks at a higher rate of interest. As a result,
banks would prefer to keep more and more surplus funds with RBI.
LIBOR- London Inter Bank Offered Rate

The London Inter-bank Offered Rate is the average of interest rates estimated
by each of the leading banks in London that it would be charged were it to
borrow from other banks. It is usually abbreviated to Libor or LIBOR

HOW BANKS MAKE (EARN) MONEY :-

There are many areas from where a bank earns money. They are discussed
below:-

Deposit – The largest source by far of funds for banks is deposits money that
account holders deposit in the bank for safekeeping and use in future
transactions, as well as modest amounts of interest. Generally referred to as
“core deposits,” these are typically the checking and savings accounts that so
many people currently have. In most cases, these deposits have very short
terms.

The customer reserves the right to withdraw the full amount at any time.
Customers have the option to withdraw money upon demand and the
balances are fully insured.

Many banks pay no interest at all on checking account balances, or at least pay
very little, and pay minimal interest rates for savings accounts. By lending on
high rates to borrower’s banks make money through deposits.

Bank of Baroda provides 3.5%-4% interest rate on deposits.

Wholesale Deposits – If a bank cannot attract a sufficient level of core

deposits, that bank can turn to wholesale sources of funds. In many respects
these wholesale funds are much like interbank CDs.

While some banks de-emphasize the branch-based deposit-gathering model, in

favor of wholesale funding, heavy reliance on this source of capital can be a
warning that a bank is not as competitive as its peers.
Higher cost of wholesale funding means that a bank either has to settle for a
narrower interest spread, and lower profits, or pursue higher yields from its
lending and investing, which usually means taking on greater risk.

Shareholders Equity – While deposits are the primary source of loanable funds
for almost every bank, shareholder equity is an important part of a bank’s
capital. Several important regulatory ratios are based upon the amount of
shareholder capital a bank has and shareholder capital is, in many cases, the
only capital that a bank knows will not disappear.

Common equity is straight forward. This is capital that the bank has raised by
selling shares to outside investors. While banks, especially larger banks, do
often pay dividends on their common shares, there is no requirement for them
to do so. Banks often issue preferred shares to raise capital. As this capital is
expensive, and generally issued only in times of trouble, or to facilitate an
acquisition, banks will often make these shares callable.

Apart from the initial capital raised to fund a new bank, banks do not typically
issue equity in order to fund loans.

Interchange Fee – Interchange is the money banks make from processing

credit and debit transactions. Each time you swipe your card at a store, the
store, or merchant, pays an interchange fee. The majority of money from
interchange goes to your bank–the consumer’s bank–and a little goes to the
merchant’s bank. Merchants are charged a higher interchange fee when
reward program credit cards are used to make purchases. Additionally, banks
cover the cost by charging membership fees.

Loans – For most banks, loans are the primary use of their funds and the
principal way in which they earn income. Loans are typically made for fixed
terms, at fixed rates and are typically secured with real property often the
property that the loan is going to be used to purchase.

When considering a loan, banks will often evaluate the income, assets and
debt of the prospective borrower, as well as the credit history of the borrower.
HOW CREDIT CARDS HELP IN MAKING MONEY?

How VISA and banks make money in the Transaction Process? They make
money from the transaction fees charged to merchants. To understand how it
works, imagine Rs 100 payment from a cardholder to merchant. In case the
merchant fee is 2.4%, the merchant would get Rs. 97.60 from the transaction.
Rs. 2.40 would get unevenly split between issuer and acquirer, depending
upon the interchange fee. In case of an interchange rate of 1.8%, the issuer will
keep Rs. 1.80 and acquirer will keep Rs. 0.60. Issuer gets to keep more of the
merchant fee because of a higher risk of payment default from the cardholder.

VISA makes money on payment volumes, transaction processing, and value-

added services.

VISA creates value for all its stakeholders during the process. Cardholders’
benefit because of convenience, security, and rewards associated with card
payments.

Merchants benefit from improved sales by offering payment method options

to the customers. Banks get new revenue streams through card fees, late
payment interests, and transaction fee cuts.