BACKGROUND OF THE STUDY Organization is a set of people working together for accomplishment of a common objective.

The roles and responsibilities are stated clearly without any Ambiguity. The positions occupied by different individuals are presented in the form of organizational structure.

NEED FOR THE STUDY This Study is to fulfill the requirement of PGDM degree course of AIMA - New Delhi. Organizational structure is essential for continuity of the mission & coordinates & controls the business activities effectively. The training is undertaken during October and November 2011 and the main purpose of the training is to apply the theoretical aspects of the course in the corporate environment and gain firsthand experience and expose our self to policies, ethics, culture, practices, procedures, facts about the work culture and policies of the company.

1.0 INTRODUCTION Finance is the life blood of trade, commerce and industry. Now-a-days, bank money acts as the backbone of modern business. Development of any country mainly depends upon the banking system. The term Bank is derived from the French word Banco which means a Benchor Money exchange table. In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging. A Bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it.

In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. Banks have developed around 200 years ago. The natures of banks have changed as the time has changed. The term bank is related to financial transactions. It is a financial establishment which uses, money deposited by customers for investment, pays it out when required, makes loans at interest exchanges currency etc. however to understand the concept in detail Bank need to see some of its definitions. Many economists have tried to give different meanings of the term bank. 1.1 Definition & Meanings of a Bank: According to Prof. Sayers, "A bank is an institution whose debts are widely accepted in settlement of other bank's debts to each other." In this definition Sayers has emphasized the transactions from debts which are raised by a financial institution. According to the Indian Banking Company Act 1949, "A banking company means any company which transacts the business of banking. Banking means accepting for the purpose of lending of investment of deposits of money from the public, payable on demand or other wise and withdraw able by cheque, draft or otherwise." Bank is an institution which deals in money and credit. It accepts deposits from the public and grants loans and advances to those who are in need of funds for various purposes. Banking is an activity which involves acceptance of deposits for the purpose of lending or investing. In addition to accepting deposits and lending funds, banking also involves providing various other services along with its main banking activity. These are mainly agency services, but include several general services as well. A banker is one who undertakes banking activities, accepting deposits and lending money for different purposes. A Bank is a financial institution that is licensed to deal with money and its substitutes by accepting time and demand deposits, making loans, and investing in securities. The Bank generates profits from the difference in the interest rates charged and paid. It can also explained as an establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customers.


1.2 Features of a Bank: Bank is a financial institution which may be a person, firm, or a company. It deals with other people's money by accepting deposits from customers and lending loans to customers. Features are: a. Acceptance of Deposit: A Bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.

b. Giving Advances: A Bank lends out money in the form of loans to those who require it for different purposes such as home loans, car loans, educational loans etc. Bank charges a certain percentage of interest for providing loans for their customers. c. Payment and Withdrawal: A Bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts; it also brings Bank money in circulation. This money is in the form of cheques, drafts, etc. d. Agency and Utility Services: A Bank provides various Banking facilities to its customers. They include general utility services and agency services. e. Agency Services: Agency services are those services which are rendered by commercial banks as agents of their customers. They include:  Collection and Payment of Cheques and Bills on Behalf of the Customers  Collection of Dividends, Interest and Rent, etc. on Behalf of Customers, If So Instructed by Them  Purchase and Sale of Shares and Securities on Behalf of Customers  Payment of Rent, Interest, Insurance Premium, Subscriptions etc. on Behalf of Customers, If So Instructed  Acting as a Trustee or Executor  Acting as Agents or Correspondents on Behalf of Customers for Other Banks and Financial Institutions at Home and Abroad

f. General Utility Services: General utility services are those services which are rendered by commercial banks not only to the customers but also to the general public. These are available to the public on payment of a fee or charge. They include:  Issuing Letters of Credit and Travelers‘ Cheques  Underwriting of Shares, Debentures etc  Safe-keeping of Valuables in Safe Deposit Locker  Underwriting Loans Floated by Government and Public Bodies  Supplying Trade Information and Statistical Data Useful to Customers  Acting as a Referee Regarding the Financial Status of Customers  Undertaking Foreign Exchange Business g. Profit and Service Orientation: A Bank is a profit seeking institution having service oriented approach. Bank charges small sums of money for their services rendered to their customers. The difference between the interest paid to the depositors and interest & charges received from the customers is the profit for the bank. h. Ever Increasing Functions: Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a Bank. The growth, developments and improvements are ever increasing functions as those functions are increasing in a day today basis. i. Connecting Link: A Bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who are in need of money. j. Banking Business:

A Bank's main activity should be to do business of banking which should not be subsidiary to any other business. Their Main Function must be banking and they should give major preference to banking instead of any other businesses or functions. k. Name Identity:

A Bank should always add the word "Bank" to its name to enable people to know that it is a Bank and that it is dealing in money by accepting deposits and lending loans and advances.


1.3 Functions of Banks The functions of banks are divided into two categories: I. II. Primary Functions Secondary Functions

1.3.1 Primary Functions: The primary functions of a commercial bank include:  Accepting Deposits  Granting Loans and Advances Accepting Deposits: The most important activity of a commercial bank is to mobilize deposits from the public. Banks who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank.

Different Modes of Acceptance of Deposits: Banks receive money from the public by way of deposits. The following types of deposits are usually received by banks:      Current Deposit Saving Deposit Fixed Deposit Recurring Deposit Miscellaneous Deposits


Grant of Loans and Advances: The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank‘s income. a. Loans:

A loan is granted for a specific time period. Generally, commercial banks grant short-term loans. But term loans, that is, loan for more than a year, may also be granted. The borrower may withdraw the entire amount in lump sum or in installments. However, interest is charged on the full amount of loan. Loans are generally granted against the security of certain assets. A loan may be repaid either in lump sum or in installments. Different Methods of Granting Loans by Bank: The basic function of a commercial bank is to make loans and advances out of the money which is received from the public by way of deposits. The loans are particularly granted to businessmen and members of the public against personal security, gold and silver and other movable and immovable assets. Commercial banks generally lend money in the following form:  Cash Credit  Loans  Bank Overdraft  Discounting of Bill



An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount. Modes of Short-term Financial Assistance: Banks grant short-term financial assistance by way of cash credit, overdraft and bill discounting.


 Cash Credit Cash credit is an arrangement whereby the bank allows the borrower to draw amounts up to a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn. Cash Credit is granted as per agreed terms and conditions with the customers.  Overdraft Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit is allowed either on the security of assets, or on personal security, or both.  Discounting of Bills Banks provide short-term finance by discounting bills that is, making payment of the amount before the due date of the bills after deducting a certain rate of discount. The party gets the funds without waiting for the date of maturity of the bills. In case any bill is dishonored on the due date, the bank can recover the amount from the customer. 1.3.2 Secondary Functions Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called secondary functions. These are as follows:  Issuing Letters of Credit, Traveler‘s Cheques, Circular Notes etc  Undertaking Safe Custody of Valuables, Important Documents, and Securities By Providing Safe Deposit Vaults or Lockers  Providing Customers With Facilities of Foreign Exchange  Transferring Money From One Place to Another; and From One Branch to Another Branch of The Bank  Standing Guarantee on Behalf of Its Customers, For Making Payments For Purchase of Goods, Machinery, Vehicles etc  Collecting and Supplying Business Information  Issuing Demand Drafts and Pay Orders  Providing Reports on the Credit Worthiness of Customers


1.4 Distinguish between Banks and Money Lenders: In order to distinguish between banks and money lenders, it is necessary to known who is a money lender. A money lender is an individual who lends money to meet the cash requirements of people. He may or may not be a professional money lender. A professional money lender is one who is exclusively engaged in money lending activity. He may occasionally accept deposits and provide agency services to his customers. A non–professional money lender, on the other hand, is either a merchant, or a trader, or a member of the business community, whose main activity is not money lending. Such money lenders engage in money lending as a side activity. A money lender normally meets the cash requirements of the public. He gives loans for consumption purposes such as marriages and other social functions. The rate of interest charged by him is generally very high. He may give loans against the security of jewellery, household items, property and assets as well as against personal security. Practices adopted by money lenders are known to be manipulative in nature. For instance, they do not furnish receipt of payments made, manipulate books of accounts, and realize more money than the original loan. The money lending practices of money lenders are considered to be exploitative and socially undesirable. Advantages of Commercial Banks: In view of their functions and services, commercial banks play a crucial role in the development of business activities. Business activities cannot run smoothly without banking services. Following are the advantages of commercial banks in a modern society.  Money deposited in commercial banks can be withdrawn on demand by cheque. Payments can also be made by cheque. Thus, business firms are not required to maintain large cash balances with them. They are also not required to make large payments in cash. Moreover, payments by cheque provide documentary proof of the transaction  Financial assistance is provided by commercial banks by way of cash credit, overdraft, loans and advances on discounting of bills of exchange. Availability of short-term funds helps business enterprises to overcome the problem of liquidity due to the time lag between current expenses and realization of sale proceeds  Various agency services provided by commercial banks are prompt and reliable. For all these services banks charge only a nominal fee or commission. Trade and industries get the benefit of these services available at a reasonable charge  Banks offer attractive rates of interest for savings by the public which help to mobilize funds for lending and investment. Banks encourage the habit of thrift among them, and attract deposits, whereby scattered household savings of the banks are pooled and made available for productive purposes


 Many general utility services are available to the public through banks, such as acting as referee, accepting bills of exchange, providing locker facility, etc. These are of great advantage in meeting recurrent as well as occasional needs of business firms and individuals  Foreign trade cannot be carried on smoothly without banking services. Banks receive and make payments, provide credit and deal in foreign exchange. Most commercial banks currently have separate foreign exchange divisions


1.5 History of Banking in India: 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 reason 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 dial a pizza. Money have 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 Nationalisation 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.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III. PhaseI: The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The

Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in india as the Central Banking Authority. During those days public has lesser confidence in the banks. As an aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. PhaseII: Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural and semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969, major process of nationalisation was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalised. Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:
       

1949: Enactment of Banking Regulation Act. 1955: Nationalisation of State Bank of India. 1959: Nationalisation of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalisation of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.


PhaseIII: This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.


1.6 Indian Banking System 1.6.1 Introduction A Bank is a commercial or state institution that provides financial services, including issuing money in form of coins, Banknotes or debit cards, receiving deposits of money, lending money and processing transactions. A commercial Bank accepts deposits from customers and in turn makes loans based on those deposits. Some Banks (called Banks of issue) issue Banknotes as legal tender. Many Banks offer ancillary financial services to make additional profit. For example: selling insurance products, investment products or stock broking. The Evolution of Banking in India could be traced back to the establishment of Bank of Bengal (Jan 2, 1809), the first joint stock Bank sponsored by the Government of Bengal and governed by the royal charter of the British India Government. It was followed by establishment of Bank of Bombay (Apr 15, 1840) and Bank of Madras (Jul 1, 1843). These three Banks, known as the presidency Banks, marked the beginning of the limited liability and joint stock banking in India and were also vested with the right of note issue. In 1921, the three presidency Banks were merged to form the Imperial Bank of India, which had multiple roles and responsibilities and that functioned as a commercial Bank, a Banker to the government and a Banker‘s Bank. Following the establishment of the Reserve Bank of India (RBI) in 1935, the central Banking responsibilities that the Imperial Bank of India was carrying out came to an end, leading it to become more of a commercial Bank. At the time of independence of India, the capital and reserves of the Imperial Bank stood at Rs 118 mn, deposits at Rs 2751 mn and advances at Rs 723 mn and a network of 172 branches and 200 sub offices spread all over the country. In 1951, in the backdrop of central planning and the need to extend Bank credit to the rural areas, the Government constituted All India Rural Credit Survey Committee, which recommended the creation of a state sponsored institution that will extend Banking services to the rural areas. Following this, by an act of parliament passed in May 1955, State Bank of India was established in Jul, 1955. In 1959, State Bank of India took over the eight former state-associated Banks as its subsidiaries. To further accelerate the credit to flow to the rural areas and the vital sections of the economy such as agriculture, small scale industry etc., that are of national importance, Social Control over Banks was announced in 1967 and a National Credit Council was set up in 1968 to assess the demand for credit by these sectors and determine resource allocations. The decade of 1960s also witnessed significant consolidation in the Indian Banking industry with more than 500 Banks functioning in the 1950s reduced to 89 by 1969. For the Indian Banking industry, Jul 19, 1969, was a landmark day, on which nationalization of 14 major Banks was announced that each had a minimum of Rs 500 mn and above of aggregate deposits. In 1980, eight more Banks were nationalized. In 1976, the Regional Rural Banks Act came into being, that allowed the opening of specialized regional rural Banks to exclusively cater to the credit requirements in the rural areas. These Banks were set up jointly by the central government, commercial Banks and the respective local governments of the states in which these are located. The period following nationalization was characterized by rapid rise in Banks business and helped in increasing national savings. Savings rate in the country leapfrogged from 10-12% in the two decades of 1950-70 to about 25 % post nationalization period. Aggregate

deposits which registered annual growth in the range of 10% to 12% in the 1960s rose to over 20% in the 1980s. Growth of Bank credit increased from an average annual growth of 13% in the 1960s to about 19% in the 1970s and 1980s. Branch network expanded significantly leading to increase in the Banking coverage. Indian Banking, which experienced rapid growth following the nationalization, began to face pressures on asset quality by the 1980s. Simultaneously, the Banking world everywhere was gearing up towards new prudential norms and operational standards pertaining to capital adequacy, accounting and risk management, transparency and disclosure etc. In the early 1990s, India embarked on an ambitious economic reform programme in which the Banking sector reforms formed a major part. The Committee on Financial System (1991) more popularly known as the Narasimhan Committee prepared the blue print of the reforms.

1.6.2 A few of the major aspects of reforms include:  Moving Towards International Norms In Income Recognition and Provisioning and Other Related Aspects of Accounting  Liberalization of Entry and Exit Norms Leading to The Establishment of Several New Private Sector Banks and Entry of a Number of New Foreign Banks  Freeing of Deposit and Lending Rates (Except the Saving Deposit Rate)  Allowing Public Sector Banks Access To Public Equity Markets For Raising Capital and Diluting The Government Stake  Greater Transparency and Disclosure Standards In Financial Reporting  Suitable Adoption of Basel Accord On Capital Adequacy  Introduction of Technology In Banking Operations etc The reforms led to major changes in the approach of the Banks towards aspects such as competition, profitability and productivity and the need and scope for harmonization of global operational standards and adoption of best practices. Greater focus was given to deriving efficiencies by improvement in performance and rationalization of resources and greater reliance on technology including promoting in a big way computerization of Banking operations and introduction of electronic Banking. The reforms led to significant changes in the strength and sustainability of Indian Banking. In addition to significant growth in business, Indian Banks experienced sharp growth in

profitability, greater emphasis on prudential norms with higher provisioning levels, reduction in the non performing assets and surge in capital adequacy. All Bank groups witnessed sharp growth in performance and profitability. Indian Banking industry is preparing for smooth transition towards more intense competition arising from further liberalization of banking sector that was envisaged in the year 2009 as a part of the adherence to liberalization of the financial services industry. Reserve Bank of India is established in 1935. It has Central Board of Directors with 20 members. It is the only one local board for each of the regions. It undertakes traditional central Banking functions. It also does all Regulatory functions as well as promotional functions.

1.6.3 Composition of Indian banking system:

Reserve Bank of India Commercial Banks Development Banks Regional Rural Banks Co-operative Banks NABARD (National Bank for Agriculture and Rural Development) Land Development Banks Exim Banks


1.6.4 Evolution of Banking in India:

Presidency Banks: • 1809 - Bank of Bengal • 1840 - Bank of Bombay • 1843 - Bank of Madras 1921 - Imperial Bank of India

1935 - Reserve Bank of India

1955 - State Bank of India

1969 - Nationalization of 14 Banks

1980 - Second Dose of Nationalization

1990s - Narasimham Committee Reforms

2003 - ICICI Merger



Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus ―Mutual‖, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.



Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity


No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme


The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India.. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.




Mutual funds can be classified as follow :  Based on their structure:

Open-ended funds: Investors can buy and sell the units from the fund, at any point of time.

 Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.  Based on their investment objective:

Equity funds:

These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as:


i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and

individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and Tbills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt papers.


vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.


1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.




1.8 Company Profile

1.8.1 Introduction Dhanlaxmi Bank was incorporated in November 1927 with its head office at Thrissur, Kerala by a group of 7 entrepreneurs with a capital of Rs. 11,000/- and 7 employees. Dhanlaxmi Bank with its 83 years of banking experience and with its rich heritage has earned the trust and goodwill of clients and due to their strong belief in the need to seek innovation, deliver best service and demonstrate responsibility, they have grown from strength to strength. With over 730 touch points across India; their focus has always been on customizing services and personalizing relations.

1.8.2 Vision & Mission

―To become a strong and innovative Bank with integrity and social responsibility and to maximize customer satisfaction and the satisfaction of its employees, shareholders and the community‖


1.8.3 Achievements:  Serviced business Worth Rs 21,595 Crores as on 31 March 2011, Comprising Deposits of Rs 12,530 Crores and Advances of Rs 9,065 Crores  Earned a Net Profit of Rs. 26.1 Crores for the Financial Year Ended 31st March 2011, With a Capital Adequacy Ratio of 11.8% (Basel II) During the Same Period  Put in Place the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) Systems to Facilitate Large Value Payments and Settlements Online in Real Time, on a Transaction-by-Transaction Basis  Set up NRI Boutiques (Relationship Centre‘s) Across Nine Locations in Kerala and Tamil Nadu, With Plans to Open specialized NRI Outlets at Potential locations With Emphasis on Impeccable Service Levels  Bank is a Major Player in Micro Credit in Kerala and the Bank's Outstanding Under Micro Credit was Rs. 266 crores at the End of March 2011  Attained ISO 9001-2000 Certification for the Bank's Corporate Office at Thrissur and Industrial Finance Branch at Kochi 1.8.4 Affiliations: Major Exchange Houses:  UAE Exchange Centre LLC  Al Ahalia Money Exchange Bureau Foreign Correspondent Banks:  Deutsche Bank Trust Company Americas  Wachovia Bank NA - A Wells Fargo Company  CommerzBank AG  National Westminster Bank PLC

Insurance Partner:  Bajaj Allianz

1.8.5 Milestones:  1927 - Founded on 14 November, 1927, at Thrissur, Kerala  1975 - Set up the First Branch Outside the Home State of Kerala, at Chennai Mount Road  1977 - Designated as Scheduled Commercial Bank by the Reserve Bank of India (RBI)  1980 - 100- Strong Branch Network  1986 - Total business of Rs. 100 crores  1996 - First Public Issue. Total business of Rs. 1,000 crores  2000 - Installed the First ATM  2002 - First Rights Issue, Platinum Jubilee Year  2007 - Total Business of Rs. 5,000 Crores. 80th Anniversary Year  2008 - Total Business of Rs. 7,500 Crores. Second Rights Issue  2009 - Opened 45 new Branches and 102 New ATMs  2010 - Raised Rs. 381 Crores Through QIP in July 2010, Opened 20 New Branches and 280 New ATMs, Launched New Brand Identity; Created Platform for a Unified Image  2011- Launched its 275th Branch in Jan 2011; ATM Network Expanded to 460, Total Asset Base for the Bank was Rs.14, 268 Crores, as on 31.03.2011

1.8.6 Business Strategy (Dec 2010 Onwards)  Focus on Incremental Asset Creation in the Retail and SME Segments  Enhancing Income From Distribution of Third Party Products  Increase in Retail and Low Cost Liabilities Franchise  Enhance Productivity per Branch / per Employee  Growth in Non Fund Income


1.9 Product Profile

Personal Banking

Financial Planning

Corporate Banking

Product Profile

Micro & Agri Banking

NRI Banking


1.9.1 Different Products Dhanlaxmi Bank has the following product profile: a. Personal Banking: Private banking is a term for banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers. It should not be confused with a private bank, which is simply a nonincorporated banking institution. Personal Banking services provided by Dhanlaxmi Bank are:  Accounts    Saving Account Current Account Term Deposit

 Loans      Property Loans Car Loans Commercial Loans Personal Loans Loan Against Securities

 Education Loans  Gift Card  Credit Card   Gold Card Platinum Card

 Debit Card   Debit Card Debit Card Offers Register for Verified by VISA


 Depository Services  Locker Facilities  Forex Services     Foreign Currency Cash Cheque Deposits Foreign Currency DD Remittances

 Online services     Bill Payment Insta Pay Shopping E-IT Return Filing

 Insurance  Mobile Banking

b. Corporate Banking: Financial services specifically offered to corporations, such as cash management, financing, underwriting, and issuing of stocks, bonds, or other instruments. Financial institutions often maintain specific divisions for handling the needs of corporate clients, separate from consumer or retail banking activities for individual accounts.

 Cash Management Services  Credit   Industrial Advance Trade Advance

 

Import Export Assistance Agriculture Assistance

 Corporate Salary Account  Forex and Trade Services  Export Services   Import Services Forex Services


NRI Banking:

With a view to attract the savings and other remittance into India through banking channels from the person of Indian Nationality / Origin who are residing abroad and bolster the balance of payment position, the Government of India introduced in 1970 Non-Resident(External) Account Rules which are governed by the Exchange Control Regulations.  Account & Deposit      Accounts for Returning NRIs (Resident Foreign Currency Account) Foreign Currency Non-Resident Fixed Deposit NRO Account Recurring and Term Deposit NRE Account

 Money Transfer  NRI property loans     Lease Rental Discounting Loan Against Property Commercial Property Loan Home Loan

 Investment Opportunities  Micro & Agri Banking  Kissan Vahana: Kissan Vahana is a specially structured two-wheeler loan for farmers with significant benefits for their agricultural operations  Agri- Gold Loan: The Agri Gold Loan is extended to individuals against security of gold ornaments owned by them for the purpose of agricultural activities  Micro Credit- SHG‘s: Micro Credit involves the provision of thrift, credit and other financial services and products of lower value to the poor in rural, semi urban and urban areas for enabling them to raise their income levels and improve their living standards  Kissan Card: The Dhanam Kissan Card directly addresses a farmer‘s short-term and contingent credit needs  Micro Credit - MFI: Dhanlaxmi Bank's micro-credit scheme was introduced in 1998 to aid the efforts of Micro Finance Institutions in empowering women and helping in poverty alleviation


1.10 Competitors Profile

Major Competitors of Dhanlaxmi Bank are:  HDFC BANK  ICICI BANK  AXIS BANK  YES BANK  FEDERAL BANK


Market Capitalization: BANKS HDFC Bank ICICI Bank Axis Bank Yes Bank Federal Bank Dhanlaxmi Bank MARKET CAP 100204.67 100109.7 44313.31 9680.1 6336.45 2348.05

3.68% 2.41% 0.89%

16.85% 38.10%

HDFC Bank Axis Bank Federal Bank

ICICI Bank Yes Bank Dhanlaxmi Bank


Competitors’ Analysis: The following banks are the major competitors of Dhanlaxmi bank because:

 They Have Established Early and Have More Experience Than Dhanlaxmi  Of Their Capital Structure  Of Their Productivity  Of Their Quality of Services  Of Their Improved Customer Care  They Have More Improved and Experienced Labor Force

HDFC Bank: The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‗in principle‘ approval from the RBI to set up a Bank in the private sector as part of RBI‘s liberalization policy. The Bank was incorporated in August 1994, with its registered office in Mumbai, India. Is commenced its operations in January 1995. Since its inception in 1977, the corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. With its experience in the financial markets, strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a Bank in the Indian Environment. The shares are listed on the Bombay Stock Exchange and the National Stock Exchange as well as New York Stock Exchange and Luxemburg Stock Exchange. ICICI Bank: India‘s second largest bank with 2,533 branches and 6,700 ATMs, ICICI Bank offers a wide range of Banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment Banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the U.K, Russia and Canada and branches in U.S, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Dubai, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. ICICI Bank‘s equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depository Receipts (ADR) are listed on the New York Stock Exchange (NYSE).


AXIS Bank: Axis Bank was the first of the new private Banks to have begun operations in 1994 after the government of India allowed new private Banks to be established. The Bank was promoted jointly by the administrator of the specified undertaking of the Unit Trust of India (UTI), Life Insurance Corporation of India (LIC) and the General Insurance Corporation of India (GIC) and other PSU Insurance Companies. The Bank as on 30th June 2011 is capitalized to the extent of 411.88cr with the public holding at 52.87%. The Banks registered office is at Ahmadabad and its central office is located at Mumbai. The Bank has a very wide network of more than 1281 branches and 6270 ATMs, which is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate Banking and is committed to adopting the best industry practices internationally in order to achieve excellence. YES Bank: Yes bank, India‘s new age private sector bank was incorporated in 2003 by Rana Kapoor and late Ashok Kapoor. It is the only bank that has been awarded a Greenfield license by the RBI. It offers a full range of products and services in the area of corporate and institutional Banking, financial markets, investment Banking, corporate finance, business and transaction Banking, retail and Wealth management. Total Income: Rs. 46650.182 million (year ending 2011).Net Profit: Rs. 7271.378 million (year ending 2011) FEDERAL Bank: Federal Bank was founded as Travancore Federal Bank in the year 1931. Thirteen years later, in 1944, Shri K.P. Hormis took over the controlling interest in the bank. It was in 1947, that the bank‘s name was changed to Federal Bank Limited. Its registered office is in Aluva, Kerala. It is arguably the ―numero uno‖ in Kerala. The fourth largest bank in India in terms of capital base.

These banks with their quality services, improved customer care, professional experience and powerful resources & capital termed to be the major threats and competitors for Dhanlaxmi Bank.


2.0 Organization Structure 2.1. Introduction: Every organization functions on some basic principles and a particular structure. Working by the principles of a particular organizational structure enables the achievement of a common goal, i.e., growth and development of the organization and the employees that comprise it. Assigning tasks, dividing and executing them, and working together to attain specific goals is possible in any organizational culture that functions on a structured hierarchy. There are different types of organizational structures namely, the flat organizational structure, matrix organizational structure, a divisional organizational structure, pre-bureaucratic, bureaucratic, and post-bureaucratic structure, and a functional organizational structure. Every organization should have a defined organizational structure. A Well thought out and strategic structure helps support good processes for communication and clarifies lines of authority and reporting relationships to assure that work processes flow in a defined process. An organization structure shows lines of authority and reporting relationships. Having this mapped out helps to ensure efficient work flow and project management as well as elimination of duplicate systems and processes. Organization structures are defined by using different criteria. Things to think about are what is the functional grouping of work processes and are there natural groupings of teams, work groups or units. This is a decision from senior management on how they would like work activities to be organized and carried out. This also identifies natural reporting relationships and chain of command. Reporting relationships can be both vertical as well as horizontal. ―Organizational structure is perhaps the least understood and most under-appreciated topic in business.‖ James Schermerhorn, Jr.Professor, Ohio University Organizational Structure is a topic seldom contemplated by most people working in organizational settings. Everybody goes to work every day, go to assigned locations, and perform their jobs — and everyone doesn‘t ever think about how their organization is arranged. However, Organizational Structure is critical both for a company and its employees. Everybody should think very carefully about the organizational structure of the companies for which they work or of companies for which they intend to work. In the long run, Organizational Structure can spell the difference between success and failure for a company, as well as for the individuals who work there. Organizational structure refers to how authority and responsibility for decision making are distributed in the entity. Top managers make judgments about how to organize subunits and the extent to which authority will be decentralized. Although the current competitive environment is conducive to strong decentralization, top managers usually retain authority over operations that can be performed more economically centrally because of economies of scale.


2.2. The Different Organization Structures Are:  Matrix Structure  Functional Structure  Product Structure  Customer Structure  Geographic Structure  Bureaucratic Structure  Team Structure  Network Structure  Virtual Structure 2.3. The Structure of Dhanlaxmi Bank:








2.4. Organizational Structure Analysis of Dhanlaxmi Bank:  Dhanlaxmi Bank is Using Mixed Organization Structure  It Is Mixture of Functional, Matrix, and Divisional Organizations  A matrix structure provides for reporting levels both horizontally as well as vertically. Employees may be part of a functional group (i.e. production) but may serve on a team that supports new product development Functional organizational structures are the most common. A structure of this type groups individuals by specific functions performed. Common departments such as human resources, accounting and purchasing are organized by separating each of these areas and managing them independently of the others Divisional structure also called a "product structure"; the divisional structure groups each organizational function into a division. Each division within a divisional structure contains all the necessary resources and functions within it. Divisions can be categorized from different points of view. One might make distinctions on a geographical basis or on product/service basis

 Matrix Structure is Mostly Used by Companies With a Wide Range of Projects  It Is More Useful When Project Has More Than One Purpose  In Matrix Structure people are Organized on a Sub-project Basis  The Matrix Structure Integrates Various Aspects of the Other Structures  It Uses Both Horizontal and Vertical Ways of Communication  In Matrix Structure Each Team of people Assigned to Manage a Product Group Might Have an Individual(s) Who Also Belonged to Each of the Functional Departments, and Vice-versa  Matrix Management is a Technique of Managing an Organization (or, More Commonly, part of an organization) Through a Series of Dual-reporting Relationships Instead of a More Traditional Linear Management Structure



Advantages of Matrix Organizational Structure:

 Extreme Flexibility in Way Organization Adapts to Project Work  Coordinates Resources in a Way That Applies Them Effectively to Different Projects  Staff Can Retain Membership on Teams and Their Functional Department Colleagues  Improves Decision Making  Encourage Team Spirit  Identification With Region/Product  Fixes Accountability For Performance  Increases Coordination of Functions  Manager Can Develop Broad Skills  Manager Has Control Over Basic Functions  Good at Responding well to an Immediate Project Need  Flexibility  Responsibility for Success of Project Clearly Identified  Releases Top Management From Micromanaging Operations, So That the Management Can Focus on the Overall Company Strategy Rather Than Detailed Nuts and Bolts  Familiarity of the Team  Established Administrative System  Staff Availability  Scheduling Efficiency  Clear Authority  It Facilitates Rapid Response to Change in Two or More Environments.  Flatter and More Responsive Than Other Types of Structures Because They Permit More Efficient Exchanges of Information

2.6. Disadvantages of Matrix Organizational Structure:

 Potential Incompatibilities  Confusion  Conflicts  Duplication of Efforts  Department Orientation


3.0 Functional Departments

Sales Department Forex Department Functional Departments Credit Department Operations Departmen t

Accounts Department


Dhanlaxmi Bank has five departments. They are:

    

Operations Department Sales Department Accounts Department Credit Department Forex Department

Dhanlaxmi Bank does not have HR and Finance Departments for all of their branches. These two functions are being controlled and managed directly from the head office which is in THRISSUR, KERALA.

3.1 Operations Department: Operations Department consists of following functions; a. Pre-planning  Obtain the following:     Prior internal audit work papers Prior internal audit report(s) and management replies Staff assignments for the audit Time budget

 Review work program and prior reports. Interview division management and personnel to determine the procedures utilized in each department. Obtain documented policies and procedures, if available  Coordinate audit with external auditors and compliance auditors as necessary to understand their role in the audit (if any), and the responsibilities of each group  Review prior internal audit work papers and reports extracting and/or noting any pertinent data or report items yet to be implemented


b. Item Processing:  Request the following and prove totals to the corresponding daily statement on a scope basis:      Official Checks Expense Checks Certified Checks Money Orders Dealer Finance

 Determine that reconciliations are being properly performed and reviewed  Determine if official checks have been paid with no credit. Follow-up on any such items outstanding for more than XXX Week(s)  Select a sample of official checks and trace official check signatures to the signature card file. Determine a process is in place for updating official check signatures on a timely basis  Determine that all checks outstanding in excess of X months have been moved into a dormant account  Perform a review of the dormant check account. Determine that a proper reconciliation is being performed. Determine if there are any accounts or documents over XXX years old that have not been remitted to the state. If so, ascertain the reason  Review the process in place for reconciling the municipal accounts. Determine if proper procedures are in place  Review the procedures performed in operations relating to the Federal Reserve reconciliation. Determine that there is adequate and timely follow-up performed on outstanding items  Perform a review of the procedures in place for high dollar verification. Select a sample of items in excess of $xxxx to determine if operations is complying with procedures  Review the procedures in effect for follow-up on non-sufficient funds return items.


3.1.1 Customer Accounting:  Obtain a complete understanding of the Deposit Auto Loan Journal. Determine how it is used to reconcile deposits (demand deposit accounts, time, and cash reserves) on a daily basis  Collect supporting documentation for all entries required for reconcilement. Obtain explanation for all reconciling items and trace through to resolution  Review the Deposit Unposted Transaction Report. Determine if proper follow up procedures are in place to clear items on a timely basis  Review automatic teller machine (ATM) settlement. Trace all reconciling items to resolution. Review rejected items 3.1.2 Retail Services:  Obtain the listing of outstanding collections and review for proper documentation  Review the procedures in effect over restraining notices and tax levies. Select a sample and verify that they are handled in accordance with proper procedures  Restraining notices cannot exceed one year  Tax levies should be paid after XX days  Determine that the bank follows policies and procedures in accordance with the Right to Financial Privacy Act. Complete questionnaire. Note the number of records released by the Bank since mm/dd/yy Review a sample of these records for completeness. A representative list of items to be found: o Copy of request for research o Copy of letter sent to court/agency o Certified mail card to prove it was received  Determine how management ensures that bank personnel know the conditions under which they may provide to any federal government authority access to, or copies of, the information contained in the financial records of any customer  How is bank records required to be maintained on government agency requests for customer records and is that requirement adequately conveyed to all affected bank personnel?  Are bank policies, procedures, and training adequate, on an ongoing basis, to ensure compliance with the Right to Financial Privacy Act? Obtain latest abandoned property report filed with the State. Determine procedures in effect over remittance of abandoned property Ensure the bank is following proper account disclosures for their customers and proper funds availability policy ATM Hot Card Request – cards that have been lost, stolen, or have been subject to unauthorized use are hot carded to the date via a fax. Select a sample of hot card request forms received by retail services over the last 12 months  Review the form to determine if it was properly completed  Determine if date was notified the same day the card was reported lost/stolen. If not, ascertain if the delay was caused by the branch or retail services Review the procedures relating to reporting ATM transaction irregularities to retail services  Ensure that the bank reports the results of preliminary investigation within XX days

  

 

Ensure a written confirmation request form was sent to the customer If customer followed up with written confirmation, retail services are required to give a provisional credit and resolve the matter within 45 days. Trace credit to customers account. If no written confirmation was received then the bank does not have to give a provisional credit

 Review the ATM cash proof. Determine the procedures in effect for review, follow up and resolution of the overages/shortages  Review procedures in effect in the operations area for ensuring that proper back-up withholdings are set up when necessary  Review the procedures in place for properly filing reclamations. (Returning social security deposits and checks upon death of depositor, etc)  Obtain the reconciliations prepared by the department relating to travelers checks (e.g. Visa and American Express). Review the procedures in effect for reconciling these accounts to the vendor statements and controlling the distribution of the checks to the various branches 3.1.3 ATM Section: Obtain an understanding of the controls over the ATM branch administration. Indicate in a memo the procedures that are followed relating to maintenance, upgrades, etc. of ATMs.  Determine if a log is kept for maintenance calls. Review for frequent calls for the same ATM 3.1.4 Support:  Review the rate change process. Obtain copies of the rate change fax. Determine that the rate change was properly approved. Determine that the rate change was properly entered onto the system  Ascertain that the Bank is in compliance with Truth in Savings Regulations  Select a sample of each type of deposit account (money market, time deposits, etc) Recalculate the APR rate calculations to determine that they are in compliance within the acceptable tolerance levels as specified by Truth in Savings Regulations  Obtain the latest proof prepared by comptrollers. Determine that branch reconciling items are being cleared on a timely basis by the support group. Ensure that a clear path of resolution is maintained in the files and that an aging of unresolved items is maintained  Determine the progress that has been made on the unreconciled items for the period mm/dd/yy through mm/dd/yy. Ensure that a clear path of resolution is maintained in the files. Determine the action plan for recovering funds, if necessary

3.1.5 General Ledger and Suspense Accounts:  Obtain a listing of all general ledger suspense accounts for which the operations area has responsibility for reconciling  Determine how often departmental proofs are prepared and confirm that an officer regularly reviews the proofs  Determine that aging of all suspense items are performed timely

 Verify the balances in the general ledger accounts as of the audit date  Trace clearance of reconciling items to subsequent suspense listing  Trace item to subsequent posting to general ledger  Obtain a listing of all accounts for which the operations area maintains responsibility. Review the activity in the accounts and determine that these accounts are properly reviewed. A list of these accounts should include:  Origination fees  Other fee income  Teller clearing account  Other assets – cash items 3.1.6 Disaster Recovery and Business Resumption Request whether a contingency plan exists for the department. Determine that key employees are aware of the plan in case it needs to be put in effect. 3.1.7 Summary and Report  Re-review previous audit report and management‘s replies and determine that all items were properly addressed by department management. If appropriate, include any remaining outstanding items in the new audit report  All current exceptions should be discussed with management prior to completion of the fieldwork  Review the work papers and draft the report  Discuss the report draft with management 3.2 Sales Department The sales department of the bank is responsible for improving the sales of the bank. They are responsible for reaching out to new/potential customers and canvassing them to open Bank accounts or to apply for loans and other products like credit cards etc. If the sales department is not working efficiently, the bank may not be able to expand its customer base. The sales department is responsible for reaching out to clients and expands the customer base of the bank. They come up with plans to attract new customers, convince them to make business with the bank, keep them happy and satisfied etc. The sales department of the bank is responsible for improving the sales of the bank. They are responsible for reaching out to new/potential customers and canvassing them to open bank accounts or to apply for loans and other products like credit cards etc. If the sales department is not working efficiently, the bank may not be able to expand its customer base. This is the opposite function to purchasing. The sales team records to whom the organization has sold its products, when and for what price they were sold. This data will come from the sales order. They may also be responsible for defining these output products. Ultimately the main goal of any sales assistant of executive is to sell to the customer; therefore they will be most interested in getting you to buy the product that is on offer. Alternatively the sales department is also there to advise as well as suggest ideas and is there to help the customer select the best product which is the most appropriate for them. This is done by the sales advisor giving the customer the appropriate information for them to be able to base their choice on.

Role of Sales Department:    Creating positive customer relations Communicate with customers at all time Process and monitor customer needs

3.3 Accounts Department

 Maintenance of nooks of accounts and preparation of financial statements of the bank in accordance with the IAS, as adopted by the bank  Coordination and facilitation for Business planning and budgeting function in the Bank and periodic reporting to the management and to the Board  Maintenance of foreign currency accounts/ investments and execution of International payments and receipts  Maintenance of account relating to International Organizations and Donor Agencies  Currency issuance and its overall management The primary responsibilities of the accounts department consist of:  General Ledger  Budgeting  Cash and Investment Management  Asset Management  Grants and Contracts Administration  Purchasing  Accounts Receivable and Billing  Cash Receipts

 Accounts Payable  Cash Disbursements  Payroll and Benefits  Financial Statement Processing  External Reporting of Financial Information  Bank Reconciliation  Compliance with Government Reporting Requirements  Annual Audit  Lease  Insurance 3.4 Credit Department In the large banks it would be impractical, if not impossible, for the cashier, in addition to his other duties, to keep track of every local borrower and the bank may employ a "credit man," who specializes in credits. The next step is the organization of a credit department, usually in charge of one of the officers of the bank.  The credit department collects and files every available bit of information concerning people or firms that borrow money This material consists of financial reports, press clippings, personal interviews, and statements of condition and, in fact, every item that has even a remote bearing upon the standing of borrowers. It requires technical training of a high order properly to classify and analyze this data, but the fundamental idea is to acquire the same knowledge of the true facts that a country bank cashier has with respect to his neighbor. A simple but practical definition of credit is "the ability to buy with a promise to pay," in other words, to obtain present value for a promise to pay in the future. He who has "good credit" can command either goods or money because of the faith or belief that others have in his promise. The word "credit" is derived from the Latin "credo." It is not only essential that the borrower have the ability to pay his note when it is due - he must also have the desire or inclination to pay. Credit is primarily based upon confidence which has as its basis three things.  First and foremost is character, the "moral risk" which is indispensable in every case

 Then comes capacity, the borrower‘s ability and business methods  Thirdly, Bank Shave capital which, while essential, is distinctly secondary to character and capacity, a combination which is very apt to attract capita The banker, naturally, in selecting his customers knows that he may be asked to extend credit. He first satisfies himself that the factors of character and capacity are such as to justify confidence. This information is obtained from personal knowledge of the borrower, and by information obtained through other banks, through "the trade" and by agency reports. Trade inquiries are directed to bank selling goods to and competitors of the borrower. If all this information is satisfactory, the capital factor is studied in the borrower‘s financial statement of condition, which balance sheet should be taken off at regular intervals. It must show a sufficiently "liquid" position to satisfy the banker that his loan can and will be repaid when due. To show this, there must be an ample margin of quick assets (those readily convertible into cash) over current liabilities to enable the borrower, despite any natural shrinkage of values in liquidation, readily to meet his obligations. This ratio is often called the 2 to 1 ratio, but differs in proportion according to the character of the business in question. The ability to loan money wisely and to those who are entitled to it - in short, the ability to distinguish between a safe risk and an unsafe one - is the quality that marks the good banker. 3.5 Forex(Foreign Exchange) Department The foreign exchange department is responsible for dealing with and managing the purchase and sale of foreign currencies and is a highly specialized business. All banks, private or state owned, have foreign exchange departments that work closely with the foreign exchange markets in each country trading with other financial centers worldwide. The greatest share of currency trading is specific to a bank‘s own account although a small proportion will be on behalf of its personal customers. Foreign Exchange department in a bank has following functions: Exports  Pre-shipment Advances  Post-shipment Advances  Export Guarantees  Advising/Confirming Letter of Credit  Facilitating Project Exports  Bills for Collection


Imports  Opening Letters of Credit  Advance Bills  Import Loans and Guarantees.

Exchange Dealings  Rate Computation  Nostro/Vostro Accounts  Forward Contracts  Derivatives  Exchange Position and Cover Operations

    

Issue of DD, MT, TT etc Encashment of Cheques, DD, MT, TT etc Issue and Encashment of Travelers' Cheques Sale and Encashment of Foreign Currency Notes Non-resident Deposits

 

Submission of Returns Collection of Credit Information


4. 0 SWOT analysis







4.1. Strengths:  Strong Network in Kerala & South India Dhanlaxmi has a very strong network in Kerala and other three states of South India as it is started in Thrissur, Kerala  Experience Dhanlaxmi Bank has 83 years of wide experience in banking sector  Unlimited Transactions Through ATM From Any Bank Without Charge: Unlike most of the banks Dhanlaxmi is among the very few banks which offer this service without any charge  ATM Card Can be Used Internationally: Dhanlaxmi Bank‘s ATM card can be used outside India for transactions subject to some nominal charges  Attractive Fixed Deposit Rates (10.25%): Dhanlaxmi Bank has one of the most attractive interest rates among the private sector banks on fixed deposits  Capital Adequacy: Capital adequacy of 13.4% with a Tier-I ratio of 10.7% as at Dec 31, 2011. Here Capital adequacy ratio (CAR) is a ratio of a bank's capital to its risk. It is also called Capital to Risk (Weighted) Assets Ratio (CRAR)


4.2. Weaknesses:

 Late entry in to North, East & West Indian Markets: Dhanlaxmi Bank was always concentrating mostly in south India. Recently they have started their operations in the north, east& West which were very late since many big players in the industry have already captured most of the market  Dhanlaxmi Bank Was Only Focusing in Kerala & South India Earlier: Since Dhanlaxmi Bank started its operations in the north, east & West recently, Dhanlaxmi as a brand does not have much awareness in those areas  Less No. of Branches and ATMs As Compared to Competitors: As compared to its competitors, Dhanlaxmi Bank has very less no. of branches (275) and ATMs (456) which restricts their operations


4.3. Opportunities:

 Expansion Option in North , East & West India: The north, east& west part of India is yet to be explored on a larger basis by Dhanlaxmi Bank. They have a huge opportunity if adequate awareness is created among the customers  Customers Have Become More Service-oriented: Earlier customers used to go blindly for PSUs. But now they have become more service – oriented. Customers will select a bank which provides quality services for them  Customers Keep Fluctuating From Banks to Banks: In relation with the above point, customers keep changing their bank based on the services and products provided


4.4. Threats:

 Big Players in the Industry: Banks like ICICI, HDFC, SBI etc… are the major threats for Dhanlaxmi Bank in their operations  A False Rumor of Reliance Taking Over the Bank: There has been a false rumor that Anil Ambani‘s Reliance Industries have taken over Dhanlaxmi Bank. The rumor has come up because the present M.D & CEO of Dhanlaxmi Bank was the right hand of Anil Ambani. When Amitabh Chaturvedi became the CEO of Dhanlaxmi Bank, rumor began to spread over  Nationalized Banks are Growing Fast: There is a tough competition for the private sector banks from the PSUs. PSUs have been growing rapidly and many still believe only in those banks since the government is involved in its operations  Economic Conditions In India: The poor economic conditions in Indian markets badly affected not only to Dhanlaxmi Bank but also for the entire banking sector as well  RBI’s Policy Regarding CRR: The RBI, to cut down the inflation which is prevailing in the market, increases the CRR of the banks, which in turn reduces the liquidity of the banks forcing them to increase the lending rates, to which customers get offended


5.0 Special Task 5.1 Title of the Study: ―A Study of Preferences of the future investors in mutual funds‖

5.1.1 Statement of problem In the capital market, there are different instruments are being traded in the capital market for the investors and the speculators to invest in the market. There are different instruments in the market for trading like shares, mutual funds, commodities and insurance. Everything has its own Risk and return in the investments. In this problem we have studied about the investors characteristics in the buying of the mutual funds in the market in different sectors and categories. 5.1.2 Type of study Evaluation study is carried out to know the investors characteristics and preferences in the investment in the mutual funds 5.1.3 Scope of Study The scope of the study is vast. The study can be extended to offer the following benefits:    The study would enable us to know the functioning of selling the mutual funds in the market in the recent era To know the Customer preferences and the behavior To know how the company‘s preferences of the customer

5.1.4 Objectives of Study    To have an overview of Mutual funds customers behaviour To study the functioning of Stock market with respect to companies decisions To draw the conclusion and offer suggestions for the investors for better investment

5.1.5Tools for data Collection The accuracy of collection data is a greater significance for drawing correct and valid conclusion for the investigation. The sources can be classified into two:  Primary data  Secondary data


a. Primary data The Primary data is used, by collecting the data through the Questionaire

b. Secondary data Major sources of secondary data that can be collected from various websites and magazines

5.1.6 Tools of analysis After collecting the data its variable having defined character, were tabulated and analyzed with the help of line graphs in Microsoft excel and formulas. On the basis of this analysis findings were chalked out and based on that suggestions were made.

5.1.7 Limitations of Study 1. Time Constraint: In a period of only 30 days it is very difficult to understand the whole market scenario 2. The detail information of companies


5.2 Data Interpretation Are you interested in investment?

yes 36 86% no 6 14% People may select more than one checkbox, so percentages may add up to more than 100%. What kind of investments you prefer most?

Saving account 19 50% Fixed deposits 9 24% Insurance 8 21% Post Office-NSC, etc 2 5% Mutual Fund 10 26% Shares/Debentures 11 29% Gold/ Silver 17 45% Real Estate 7 18% Other 2 5% People may select more than one checkbox, so percentages may add up to more than 100%.


While investing your money, which factor you prefer most?

Liquidity 8 21% Low Risk 20 51% High Return 22 56% Company reputation 7 18% People may select more than one checkbox, so percentages may add up to more than 100%. Have you ever invested your money in mutual fund?

Yes 9 21% NO 33 79% People may select more than one checkbox, so percentages may add up to more than 100%. If YES In which kind of mutual you would like to invest?

Public 14 74% Private 10 53% People may select more than one checkbox, so percentages may add up to more than 100%.


How do you come to know about Mutual Fund?

Advertisement Peer Group Banks Financial Advisors

7 17% 3 7% 6 14% 3 7%

Which mutual fund scheme have you used?

Open-ended Close-ended Liquid fund Mid- Cap Growth fund Regular Income fund Long-Cap Sector fund

6 14% 3 7% 4 10% 0 0% 1 2% 1 2% 2 5% 0 0%


If NO If not invested in Mutual Fund then why?

Not aware of MF 6 17% Higher risk 5 14% Not any specific reason 25 69% People may select more than one checkbox, so percentages may add up to more than 100%


Which feature of the mutual funds attracts you most?

Diversification Better return and safety Regular Income Tax benefit Other

7 17% 18 43% 5 12% 6 14% 6 14%


In which Mutual Fund you have invested?

HDFC 7 37% Reliance 0 0% UTI 2 11% ICICI prudential funds 8 42% JM mutual fund 1 5% Kotak 0 0% Other 4 21% People may select more than one checkbox, so percentages may add up to more than 100%. When you invest in Mutual Funds which mode of investment will you prefer?

Systematic Investment Plan (SIP) 17 46% One Time Investment 7 19% Both Combination 15 41% People may select more than one checkbox, so percentages may add up to more than 100%.


Where from you purchase mutual funds?

Directly from the AMCs 18 58% Brokers/ sub-brokers 10 32% Brokers only 2 6% Other 1 3% People may select more than one checkbox, so percentages may add up to more than 100%. Which AMC will you prefer to invest? Assets Management Co.

SBIMF UTI HDFC Reliance JM finance ICICI Kotak Other

8 24% 6 18% 15 45% 4 12% 2 6% 13 39% 1 3% 1 3%

Which sector are you investing in mutual fund sector?

General 1st 5 14% Oil and petroleum 8 23% Gold fund 16 46% Diversified equity fund 9 26% Power sector 5 14% Debt fund 2 6% Banking fund 11 31% Real estate fund 8 23% Other 0 0% People may select more than one checkbox, so percentages may add up to more than 100%.


How would you like to receive the returns every year?

Dividend payout 19 54% Dividend re-investment 10 29% Growth in NAV 10 29% People may select more than one checkbox, so percentages may add up to more than 100%.


6.0 RECOMMENDATIONS AND SUGGESTIONS:    Improve sales after services. Provide customer needed information. Don‘t confuse customer with multiple products or scheme. Customer education of the salaried class individuals is far below standard. Thus Asset Management Company‘s need to create awareness so that the salaried class people become the prospective customer of the future.   Always keep employee updated with information. Early and mid earners bring most of the business for the Asset Management Company‘s. Asset Management Company‘s thus needed to educate and develop schemes for the person‘s who are at the late earning or retirement stage to gain the market share.   Update your competitor information and their strategy to planning the process Return‘s record must be focused by the sales executives while explaining the schemes to the customer. Pointing out the brand name of the company repeatedly may not too fruitful.  Keep employee happy to provide better services to customer. The target market of salaried class individual has a lot of scope to gain business, as they are more fascinated to Mutual Funds than the self employed.     Schemes with high equity level need to be targeted towards self employed and professionals as they require high returns and are ready to bear risk. Salary class individuals are risk averse and thus they must be assured of the advantage of ―risk – diversification‖ in Mutual Fund. Think globally not only for domestic market. There should be given more time & concentration on the Tier-3 distributors. The resolution of the queries should be fast enough to satisfy the distributors.

Should have to provide more advertisements, canopies in the shopping mall, main Markets because no. of people visiting these places are mostly of service classes and they have to save tax, hence there is more opportunity of getting more no. of applications.


6.1CONCLUSION Finding & Conclusion: - The mutual funds are one of the best avenues of investment as it is a beautiful combination of risk and growth. After the economic reforms, the mutual funds has come a long way and has increased manifold since then. With increased popularity and better returns in the mutual funds have miles to go, Better option for investment. Better option for investment but people are not willing to invest because not wanting risk and this is because stereotype of Indian culture. Investment community in India is less compare to foreign countries but in savings India is no.1


7 7.1 Books:


Toor,N.S, Arundeep Singh. 2011. Principles and Practices of Banking. Sixth Edition

Dr. Paul, Thomas, Roy, Ghosh, Bhattacharya, B.B., & Smt. Jamkhandi, J.M. 2007. International Corporate Finance. M/s Macmillan India Limited David Bledin. 2007-05-31. Bank. Paperback Edition. Back Bay Books Ross Cranston. 2002-12-31. Principles of Banking Law. PaperbackEdition. Oxford University 7.2 Websites: referred on November 2011 referred on Novembr 2011 referred on November 2011 referred on November 2011 referred on November 2011

71 referred on November 2011 referred on November 2011 referred on November 2011 referred on November 2011 referred on November 2011 referred on November 2011



A study of preferences of the investors for investment in mutual funds
Are you interested in investment? Yes No

What kind of investments you prefer most? Saving account Post Office-NSC, etc Gold/ Silver Fixed deposits Mutual Fund Real Estate Insurance Shares/Debentures Other:

While investing your money, which factor you prefermost? Liquidity Low Risk High Return Company reputation

Have you ever invested your money in mutual fund? Yes NO

If Yes
In which kind of mutual you would like to invest? Public Private

how do you come to know about Mutual Fund? Advertisement Peer Group Banks Financial Advisors

Which mutual fund scheme have you used? Open-ended Growth fund Close-ended Regular Income fund Liquid fund Long-Cap Mid- Cap Sector fund


If no
If not invested in Mutual Fund then why? Not aware of MF Higher risk Not any specific reason

which feature of the mutual funds attract you most? Diversification Tax benefits Better return and safety Other: Regular Income

In which Mutual Fund you have invested? HDFC JM mutual fund Reliance Kotak UTI Other: ICICI prudential funds

When you invest in Mutual Funds which mode of investment will you prefer? Systematic Investment Plan (SIP) Both Combinations Where from you purchase mutual funds? Directly from the AMCs Brokers/ sub-brokers Brokers only One Time Investment

Which AMC will you prefer to invest? Assets Management Co. SBIMF JM finance UTI ICICI HDFC Kotak

Reliance Other:


Which sector are you investing in mutual fund sector? General 1st Diversified equity fund Banking fund Oil and petroleum Power sector Real estate fund Gold fund Debt fund Other:

How would you like to receive the returns every year? Dividend payout Dividend re-investment Growth in NAV

Name: AGE: Address: : Phone No:


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