A REPORT ON BFSI

A Project Submitted to Bharathiar University of Coimbatore in Partial

Fulfillment of the requirements of the Award of the Degree of

Bachelor Degree of

Commerce Submitted By

LAKSHMI E

Reg. No: 212AB0367

NM ID: 5D3EA5C1399123EA3394D9CD726CFA77

Under the Guidance of

BFSI TRAINE

DEPARTMENT OF COMMMERCE

A.V.P. COLLEGE OF ARTS AND SCIENCE

TIRUPPUR

(AFFLIATED TO BHARATHIAR UNIVERSITY, COIMBATORE)

AN ISO 9001:2015 CERTIFIED INSTITUTION

October/November 2023
BFSI PROJECT
 Name LAKSHMI E

Department III – B.COM (B&I)

5D3EA5C1399123EA3394D9CD726CFA77
Nan-Mudhalvan ID

212AB0367
Register number

bruaj
College code

1. BANKING
2. HOUSING LOAN
Project Title 3. CHEQUE & DEMAND DRAFT

Date

SPOC
 ACKNOWLEDGEMENT

I wish to express my gratitude to the principal Dr. V.Kathiresan, Ph.D.,

A.V.P. College of Arts and Science, Tiruppur.

My deep sense of gratitude to the respected Dr.A.Mallika,M.com.,
M.phil., Ph.d Head, Department of Commerce for his encouragement throughout
the training session.

I also whole heartedly thanks to Ms.M.Veenashri,MBA., Co-Ordinater of

A.V.P. College of Arts and Science, Tiruppur.

I would like to convey my sincere thanks to trainer from BFSI for his
valuable guidance in completing this project.
 DECLARATION

I hereby declare that this BFSI Training report submitted to Bharathiar

University of Coimbatore for the academic year 2023-2024 is a record of my
original work done under the guidance of BFSI Trainer.

DATE: Signature of the student

PLACE LAKSHMI

1
 INDEX

S.No Contents Pg.No

1 PROJECT-7

BANKING

2 PROJECT -8

HOUSING LOAN

3 PROJECT 4 - B

CHEQUE &
DEMAND DRAFT

2
PROJECT -7

BANKING

3
INTRODUCTION:-

To maximize returns while considering risks, a investment strategy is

crucial. Allocating Rs.200,000 across different financial instruments involves
assessing the risk return profile of government banks, Private banks, Non-
Banking financial companies ( NBFCs), and post office savings.

If I have ₹2,00,000, I will invest the money in the following method.

Return
Organization Amount Interest rate
after24
months

Government Banks 500,00 4% 48000

Private Banks 70000 6% 100,800

Non Banking Financial
40000 8% 76800
Companies
Post Office Savings
40000 5% 48000

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Government Banks:

o Government banks typically offer lower interest rates but are

considered safer due to government backing. Allocating a portion of
the investment here ensures capital preservation, though the returns
may not be as lucrative.

o Invest Rs. 50,000 at a 4% interest rate, expecting a return of

approximately Rs. 4,8000 after 24 months.

Private Banks:

o Private banks often provide higher interest rates than government

banks. However, they come with a slightly elevated risk. Allocating a
portion of the funds here allows for potential higher returns, but it’s
essential to diversify to manage risk.

o Allocate Rs. 70,000 with a 6% interest rate, anticipating a return of

around Rs. 100,800after 24 months.

Non-Banking Financial Companies (NBFCs):

o NBFCs may offer attractive interest rates, but they also carry higher
risk. Allocating a smaller portion to NBFCs can enhance the overall
portfolio returns, but careful selection and due diligence are imperative
to mitigate risk.

o Invest Rs. 40,000 in an NBFC with an 8% interest rate, aiming for a

return of approximately Rs. 7,6800 after 24 months.

Post office Savings:

o Post office savings schemes often strike a balance between returns and
safety. Allocating a portion here provides a stable return, and
government-backed schemes like Public Provident Fund (PPF) or

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 Senior Citizens Savings Scheme (SCSS) can be considered for better
returns.

o Place Rs. 40,000 in a post office savings account with a 5% interest

rate, expecting a return of about Rs. 4,8000 after 24 months.

ALLOCATION STRATEGY:

Government Banks:

 Safety is paramount.

 Lower interest rates, but capital preservation.

Private Banks:

 Balanced approach for moderate risk.

 Potential for higher returns.

NBFCs:

 Higher risk, higher returns.

 Due diligence on reputable NBFCs is essential.

Post Office Savings:

 Balance between safety and returns.

 Consider PPF or SCSS for better returns.

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DISADVANTAGES:

Government Banks:

Lower interest rates compared to some other options, limiting potential

returns.

Private Banks:

Higher risk due to market factors and economic conditions.

NBFCs:

Greater susceptibility to economic downturns, potentially leading to

losses.

Post Office Savings:

Returns might be lower compared to riskier options like NBFCs or

private banks.

ADVANTAGES:

Government Banks:

Generally considered safer due to government backing, offering moderate

returns with lower risk

Private Banks:

Potential for higher returns but with a slightly higher risk compared to
government banks.

Non-Banking Financial Companies (NBFCs):

Higher returns possible, but with increased risk due to market

fluctuations.

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Post Office Savings:

Relatively secure with moderate returns, suitable for risk-averse

investors.

IMPORTANT OF BANKING :

Government Banks:

 Consider allocating a portion of the funds to government banks for

stability and lower risk.

 Government banks typically offer moderate interest rates, providing a

safe investment option.

Private Banks:

 Allocate a portion to private banks with competitive interest rates for

potential higher returns.

 Private banks may offer more flexibility and diverse investment

products.

Non-Banking Financial Companies (NBFCs):

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  Allocate a smaller portion to NBFCs for potentially higher returns, but
be mindful of higher associated risks.

 NBFCs often provide diverse investment options with varying levels of

risk.

Post Office Savings:

 Consider allocating a portion to post office savings for a secure and

government-backed investment.

 Post office schemes often provide stable returns with lower risk
compared to some other options.

Risk Assessment:

 Assess the risk tolerance based on personal financial goals and

circumstances.

 Balance the portfolio by diversifying investments across different

instruments to manage overall risk.

Term Consideration:

 Since the investment horizon is 24 months, choose investment options

with maturity periods matching or slightly exceeding this duration.

Interest Rate Comparison:

 Analyze and compare the interest rates offered by different institutions

for the chosen investment periods.

Diversification:

 Diversify the investment across multiple avenues to spread risk and

enhance the overall stability of the portfolio.

Liquidity Needs:

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  Consider the liquidity requirements and allocate funds accordingly,
ensuring easy access to a portion of the investment if needed.

Stay Informed:

 Stay updated on economic conditions, interest rate trends, and any

regulatory changes that might impact your investments.

OBJECTIVES :

Maximizing Return:

 The primary objective is to strategically allocate the Rs. 200,000

in manner that yields the highest returns over the 24-month period.

Risk Management:

 Simultaneously, the objective is to consider and manage risks

associated with each investment option. Balancing the pursuit of
high returns with risk mitigation is crucial.

Diversification:

 The goal is to diversify investments across different types of

financial institutions, namely government banks, private banks,
non-banking financial companies, and post office savings.
Diversification helps spread risks and reduces exposure to a single
sector’s performance.

Government Banks for Stability:

 Allocating funds to government banks aims to provide stability

and security, even if the interest rates are relatively lower. This
choice aligns with the objective of minimizing risk.

Private Banks for Higher Returns:

10
  Investing in private banks targets higher interest rates,
acknowledging the increased risk associated with these
institutions. This decision is driven by the goal of maximizing
returns.

NBFCs for Potential Growth:

 Allocating a portion to non-banking financial companies

recognizes the potential for higher returns, but it requires a careful
consideration of associated risks, given the market dynamics.

Post Office Savings for Security:

 Putting money in post office savings emphasizes security backed

by the government, balancing risk with a stable return.

Justification and Explanation:

 The objective is not only to make investment decisions but also to

provide well-reasoned justifications for each allocation. This
demonstrates a sound understanding of the factors influencing
your investment choices.

By addressing these points, you aim to achieve a balanced portfolio

that aligns with the dual objectives of maximizing returns and managing risks
effectively.

JUSTIFICATION:

1. Diversification: Allocating across various instruments mitigates

specific risks associated with any single investment.

2. Risk-Return Tradeoff: Balancing the portfolio between safer options

(government banks, post office savings) and riskier ones (private
banks,NBFCs) optimizes the risk-return tradeoff.

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 3. Tenure Consideration: The 24-month horizon aligns with short to
medium-term goals, impacting the choice of instruments. For longer-
term goals, riskier assets might be more suitable.

Evaluation:

a) Content:

The strategy encompasses a diverse range of financial instruments,

showcasing a comprehensive understanding of available options.

b) Details:

The allocation percentages and reasoning provide a detailed breakdown

of how the investment is distributed.

c) Understanding and Decision Making:

The choice of instruments reflects an understanding of risk, return, and

the need for diversification. The decision-making process is clear and
justifiable.

d) Calculations:

The investment amounts are calculated based on the specified

percentages, demonstrating a quantitative approach to portfolio
management.

CONCLUSION:

In conclusion, this investment strategy seeks to balance the pursuit of higher

returns with the need to manage risks effectively. Diversification, careful
consideration of risk-return profiles, and alignment with the investment
horizon are key principles guiding the allocation of funds.

12
 PROJECT-8

HOUSING LOAN

INTRODUCTION:

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 In evaluating the housing loan applications from the four different
individuals, several criteria need to be considered to ensure responsible
lending and minimize risks for the bank. The decision-making process
involves a thorough assessment of the applicants’ financial stability,
repayment capacity, and the nature of their income sources. Let’s explore the
criteria and details that would be crucial in making informed decisions for
each applicant.

A. Government Employee (A) with an annual income of Rs.10 lakh:

Criteria:

Job Stability:

 Verify the duration and stability of the government job.

Consistent Income:

 Assess the regularity and reliability of the income source.

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Debt-to-Income Ratio:

 Evaluate the debt burden relative to the income.

Details to Collect:

 Employment history and confirmation of government employment.

 Income proof such as salary slips and income tax returns.

 Current debts and monthly obligations.

LOAN PROCESSING:

 Verify employment details and stability.

 Assess the applicant’s ability to manage debt.

 Confirm the legitimacy of income through provided documents.

 Analyze credit history, if applicable.

B. Private Sector Employee (B) with an annual income of Rs.15 lakh:

Criteria:

Job Stability:

 Assess the stability of the private sector job.

Income Growth:

 Consider the potential for income growth.

Creditworthiness:

 Evaluate credit history and outstanding debts.

Details to Collect:

 Employment history and confirmation of job stability.

15
  Income proof, including salary slips and income tax returns.

 Credit score and existing financial liabilities.

LOAN PROCESSING:

 Verify the stability and growth potential of the private sector job.

 Assess creditworthiness and financial stability.

 Analyze income sources and consistency.

 Consider future income prospects.

C. Businessman turnover of Rs.50 lakh:

Criteria:

Business Stability:

 Assess the stability and success of the business.

Profitability:

 Evaluate the business’s profitability and cash flow.

Debt Service Coverage Ratio:

 Analyze the ability to cover loan payments.

Details to Collect:

 Business financial statements, including income statements and balance

sheets.

 Business tax returns and turnover details.

 Personal income and expenses of the businessman.

16
LOAN PROCESSING:

 Analyze the business’s financial health and stability.

 Evaluate the businessman’s personal financial situation.

 Assess the debt service coverage ratio.

 Consider the business’s growth prospects.

D.Rich Farmer (D) with lands worth over Rs.1 crore:

Criteria:

Land Valuation:

 Assess the value and marketability of the land.

Agricultural Income:

 Verify the stability and profitability of agricultural activities.

Loan-to-Value Ratio:

 Evaluate the loan amount in relation to the land value.

Details to Collect:

 Land documents and valuation reports.

 Agricultural income details and stability.

 Personal financial information and liabilities.

LOAN PROCESSING:

 Verify the ownership and value of the land.

 Assess the stability and profitability of agricultural income.

 Calculate the loan-to-value ratio.

 Consider the overall financial stability of the farmer.

17
ADVANTAGES:

Government Employee (A):

 Stable income from a reliable source, less risk of sudden job loss.

Private Sector Employee (B):

 Higher income potential, which may allow for larger loan repayments.

Businessman ©:

 Potentially high turnover, indicating a successful business.

Rich Farmer (D):

 Asset-rich, with significant land holdings.

DISADVANTAGES:

Government Employee (A):

 Limited income compared to private sector; potential bureaucratic

hurdles.

Consideration:

 Loan amount might be restricted due to lower income.

Private Sector Employee (B):

 Higher income volatility, potential economic downturn impacts.

Consideration:

 Thorough financial assessment to ensure stable repayment capacity.

Businessman ©:

 Business risks, market fluctuations, and uncertain income.

18
Consideration:

 Detailed analysis of business stability, industry trends, and financial

health.

Rich Farmer (D):

 Agricultural income can be unpredictable due to factors like weather.

Consideration:

 Evaluation of land value, diversification of income sources, and risk

mitigation.

COMMON CRITERIA AND DETAILS TO COLLECT:

1. Employment stability and verification.

2. Income details and consistency.

3. Credit history and credit score.

4. Financial statements for businesses.

5. Asset valuation, especially for the rich farmer.

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LOAN PROCESSING:

 Evaluate the applicant’s financial stability and ability to repay.

 Consider the purpose of the loan (e.g., house purchase).

 Assess risk factors and potential challenges.

 Verify all provided information.

 Comply with regulatory requirements.

 Decide loan amounts based on the applicant’s financial health.

 Remember, the goal is to minimize risk while ensuring fair and

responsible lending practices.

FINAL DECISION:

After collecting and thoroughly analyzing the required details, the final
decision should be based on a comprehensive risk assessment, considering
factors like income stability, debt levels, creditworthiness, and the overall
financial health of the applicants. The goal is to approve loans to individuals
with a high likelihood of timely repayment while minimizing the risk.

In summary, the loan approval process involves a meticulous evaluation of

each applicant’s financial situation, income sources, and overall
creditworthiness, ensuring responsible lending practices and mitigating
potential risks for the bank.

20
 PROJECT 4- B

CHEQUE & DEMAND DRAFT

21
INTRODUCTION:

22
 CHEQES VS DEMAND DRAFT

Every Indian bank offers the demand draft and cheque facility to its
customers to ensure hassle-free transactions. This streamlines the whole
process and provides a more flexible and simple banking experience.

Having said that, you must note that these two documents are not the
same and learning the critical difference between a demand draft and a cheque
is essential to know when and where to use them to maximise their benefit.

DIFFERENTS BETWEEN CHEQES & DEMAND DRAFT

23
ASPECTS CHEQES DEMAND DRAFTS

PAYMENT A cheque is a A Demand draft

PROCESS written order from an also known as a
individual to their bank bankers cheque is a
to pay a specific pre-paid instruments
amount to another issued by bank on its
individuals or entity own behalf

ISSUER Cheque can be Demand draft are

issued by individuals, exclusively issued by
businesses, or other bank themselves
entities from their own
bank accounts

PAYMENT While cheque Demand draft, on the

GUARANTEE provides a means of other hand provide a
payment, they may not higher level of
always be guaranteed. payments guarantee as
There is a risk of a they are pre-paid
cheque bouncing if the instruments the bank
drawers account lacks
sufficients funds

ISSUER An individual or A bank

organization

DRAWEE The bank on which Provides a guarantee

the cheque is drawn of payment

SECURITY Can be lost, stolen or Secure and less pron

bounced to fraud

SUITABILITY Suitable for small Suitable for large

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 transactions transactions and
payments outside the
country

DISHONOR Yes No

PARTIES 1.DRAWER 1.DRAWER

INVOLVED
2.DRAWEE 2.PAYEE

3.PAYEE

Though increasingly convenient, both cheques and demand drafts are

slowly getting outdated because of their slow processing periods. Now, you
have instant banking solutions like NEFT and RTGS mechanisms that do not
get dishonoured and may be availed from anywhere.

CHEQUES:

Definition and Usage in Financial Transactions

A cheque, also spelled as “check” in American English, is a written

order or negotiable instrument issued by an account holder of a bank, directing
the bank to pay a specified sum of money to a designated recipient or “payee.”
Cheques are commonly used as a form of payment, allowing individuals and
businesses to transfer funds from one bank account to another in a secure and
convenient manner.

Key features of a cheque include:

DRAWER:

The person who writes the cheque and holds the bank account from
which the funds will be withdrawn is known as the “drawer.”

25
PAYEE:

The individual, organization, or entity to whom the payment is being

made is referred to as the “payee.” The payee’s name is typically written on
the cheque.

AMOUNT:

The numerical and written amount of money to be paid is specified

on the cheque. The written amount is important in case there is a discrepancy
between the two.

DATE:

The date on which the cheque is issued is indicated. This date is used to
determine the validity and timing of the payment.

SIGNATURE:

The drawer’s signature is required on the cheque to authenticate and

authorize the payment. This signature must match the specimen signature on
record with the bank.

BANK DETAILS:

The cheque includes details of the bank and branch where the drawer
holds an account. This information is used by the bank to identify the account
from which the payment will be debited.

CROSSING:

A cheque can be crossed by drawing two parallel lines across the top
left corner. This signifies that the cheque must be deposited into a bank

26
account and cannot be encashed directly.

BOUNCING:

If there are insufficient funds in the drawer’s account or if there are

other issues, the cheque may be returned unpaid, commonly referred to as a
“bounced” or “dishonored” cheque.

TYPES OF CHEQUES

All of the cheque variants eventually depend on the nature of the

issuer and its drawee. While exploring Indian bank cheques, you are most
likely to come across the following-

BEARER CHEQUE:

 Payable to the person who presents it; does not require endorsement.

ORDER CHEQUE:

 Payable only to the person or organization named on the cheque;

requires proper endorsement.

CROSSED CHEQUE:

 Contains two parallel lines across the top left corner, indicating it must
be deposited into a bank account, not cashed over the counter.

OPEN CHEQUE:

 A cheque that is not crossed, can be encashed by anyone presenting it at

the bank.

POST-DATED CHEQU:

 A cheque with a future date, cannot be cashed until that date arrives.

27
STALE CHEQUE:

 A cheque presented for payment after a certain period (usually 6

months) from the date of issue.

SELF CHEQUE:

 A cheque made payable to oneself, often used for withdrawing money

from one’s own account.

TRAVELER’S CHEQUE:

 Preprinted cheques used for travel, can be replaced if lost or stolen.

CERTIFIED CHEQUE :

 Issued by a bank with a guarantee of sufficient funds, often used for

large transactions.

BANKER’S CHEQUE:

 Issued by a bank, drawn on its own funds, used for secure payments,
also known as a cashier’s cheque.

GIFT CHEQUE:

 Used as a gift, can be exchanged for goods or services at specific

merchants.

CANCELLED CHEQUE:

 A cheque that has been marked as cancelled and is often used for
verification of account details.

DEMAND DRAFTS:

A demand draft, often abbreviated as DD, is a type of financial

28
instrument issued by a bank or financial institution. It is a pre-paid negotiable
instrument, similar to a check, used for making payments. Demand drafts are
considered a secure and reliable method of transferring funds, especially for
large amounts or when a high level of certainty is required in the payment
process.

Key features of a demand draft:

PREPAYMENT:

The issuer of the demand draft (usually a bank) collects the entire
amount of the draft upfront, ensuring that the funds are available before
issuing the draft.

PAYEE SPECIFICATION:

The demand draft specifies the name of the payee (the person or entity
who will receive the payment) and is usually made payable to a specific
individual, organization, or entity.

CROSSED FORMAT:

Demand drafts are typically crossed, which means they can only be
deposited into a bank account and cannot be directly encashed over the
counter like a regular check.

SECURE PAYMENT:

Demand drafts are considered a secure payment method because the

funds are already collected by the issuing bank, reducing the risk of
dishonored payments due to insufficient funds.

VALIDITY:

Demand drafts usually have an expiration date, after which they may be

29
subject to additional processing or revalidation.

USAGE:

Demand drafts are commonly used for various purposes, such as making
payments for educational fees, purchasing property, settling bills, or
conducting business transactions.

INTERNATIONAL TRANSACTIONS:

In international trade, demand drafts can be used for cross-border

payments, acting as a secure way to remit funds to another country.

TYPES OF DEMAND DRAFT

SIGHT DEMAND DRAFT

 You may find using this instrument to be highly beneficial while

ordering items from a business or individual situated abroad. Once the
authorising bank issues this kind of demand draft, the international
vendor gets his payment swiftly. This allows him to release the
commodities faster and assume full ownership of these goods until the
beneficiary receives them.

TIME DEMAND DRAFT:

 These instruments come in handy when you need to schedule any future
payment. The drawee won’t be able to claim their money immediately
after the bank has already issued the DD.

 Some international deals, particularly the import-export segment,

necessitate the use of these demand drafts. Generally, the drawer’s bank
does not approve the quoted payment at least 15 days after the
ownership of goods or services has been transferred.

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CONCLUSION:

Demand drafts (DDs) offer versatile payment options, ranging from

immediate settlements to scheduled transactions, accommodating various
financial needs. Cheques, while impacted by digital trends, remain valuable
for their reliable record-keeping and widespread acceptance. Together, DDs
and cheques continue to play pivotal roles in modern transactions, contributing
to financial flexibility and efficiency.

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