CHAPTER 1 INTRODUCTION GENERAL INTRODUCTION BANKING Banking, the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. TYPES Four types of banks specialize in offering these basic banking services: 1) commercial banks, 2) savings and loan associations, 3) savings banks, and 4) credit unions. A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. This broader definition includes many other financial institutions that are not usually thought of as banks . These institutions include finance companies, investment companies, investment banks, insurance companies,
pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts. PURPOSE Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, checking accounts, and credit cards), Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important to a free market economy.
OBJECTIVES OF THE STUDY
The vital objectives of this project are To enhance and sharpens skill. To get awareness about changing business environment in banking. To understand the retail banking process.
INDUSTRY PROFILE ORIGIN AND DEVELOPMENT OF INDUSTRY Banking in India Banking in India originated in the first decade of 18th century. The General Bank of India came into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865.
By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.
The banking in India was controlled and dominated by the presidency banks, namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras which later on merged to form the Imperial Bank of India, and Imperial Bank of 4
India, upon India's independence, was renamed the State Bank of India. The presidency banks were like the central banks and discharged most of the functions of central banks. They were established under charters from the British East India Company. The exchange banks, mostly owned by the Europeans, concentrated on financing of foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency banks, and the exchange banks. There was potential for many new banks as the economy was growing.
Under these circumstances, many Indians came forward to set up banks, and many banks were set up at that time, and a number of them set up around that time continued to survive and prosper even now like Bank of India and Corporation Bank, Indian Bank, Bank of Baroda, and Canara Bank
GROWTH AND PRESENT STATUS OF THE INDUSTRY
By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.
A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India.
After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
Liberalisation In the early 1990s the then Narasimha Rao government embarked on a policy of liberalisation and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Current scenario Currently (2008), overall, banking in India is considered as fairly mature in terms of supply, product range and reach. Even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong
and transparent balance sheets-as compared to other banks in comparable economies in its region.
Indian economy is expected to be strong for long time-especially in its services sector. The demand for banking services-especially retail banking, home loans and investment services are expected to be strong.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank.
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake) and 31 foreign banks.
They have a combined network of over 55,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.
Total Income Wise Listing1 Bank Name State Bank of India ICICI Bank Limited Punjab National Bank Canara Bank Bank of Baroda Bank of India Industrial Development Bank of India Limited Union Bank of India Central Bank of India HDFC Bank Limited Indian Overseas Bank UCO Bank Oriental Bank of Commerce Syndicate Bank Allahabad Bank Number of Branches
9143 557 4066 2532 2687 2563 173 2095 3143 515 1523 1749 1161 1897 1932
Total Net No.of Income(Rs Profit Employees Mn) (Rs Mn)
198774 25479 58047 46893 38737 41808 4548 25421 37241 14878 24178 24510 14962 24624 18742 431836 187676 108153 100890 82917 82131 66612 64888 59164 55993 51345 48183 46717 46420 43739 44067 25401 14393 13432 8270 7014 5609 6752 2574 8708 7834 1966 5572 5365 7061
Source : http://www.dnb.co.in/topbanks/company_listing.asp?q=Total_Income
FUTURE OF THE INDUSTRY
A healthy banking system is essential for any economy striving to achieve good growth and yet remain stable in an increasingly global business environment. The Indian banking system, with one of the largest banking networks in the world, has witnessed a series of reforms over the past few years like the deregulation of interest rates, dilution of the government stake in public sector banks (PSBs), and the increased participation of private sector banks. The growth of the retail financial services sector has been a key development on the market front. Indian banks (both public and private) have not only been keen to tap the domestic market but also to compete in the global market place. New foreign banks have been equally keen to gain a foothold in the Indian market. The momentum in credit growth has been maintained during 2005-06 due to two factors: The corporate sector has stepped up its demand for credit to fund its expansion plans; there has also been a growth in retail banking. However, even as the opportunities increase, there are some issues and challenges that Indian banks will have to contend with if they are to emerge successful in the medium to long term. This report discusses these issues and challenges -- both intrinsic and external, such as Risk management and Basel II The future of banking will undoubtedly rest on risk management dynamics. Only those banks that have efficient risk management system will survive in the market in the long run. The effective management of credit risk is a critical 10
component of comprehensive risk management essential for long-term success of a banking institution. Although capital serves the purpose of meeting unexpected losses, capital is not a substitute for inadequate decontrol or risk management systems. Coming years will witness banks striving to create sound internal control or risk management processes. With the focus on regulation and risk management in the Basel II framework gaining prominence, the post-Basel II era will belong to the banks that manage their risks effectively. The banks with proper risk management systems would not only gain competitive advantage by way of lower regulatory capital charge, but would also add value to the shareholders and other stakeholders by properly pricing their services, adequate provisioning and maintaining a robust financial structure. ‘The future belongs to bigger banks alone, as well as to those which have minimised their risks considerably.’ Consolidation Consolidation, which has been on the counter over the last year or so, is likely to gather momentum in the coming years. Post April 2009, when the restrictions on operations of foreign banks will go, the banking landscape is expected to change dramatically. Foreign banks, which currently account for 5% of total deposits and 8% of total advances, are devising new business models to capture the Indian market. Their full-fledged entry is expected to transform the business of banking 11
in many ways, which would be reflected in terms of greater breadth of products, depth in delivery channels and efficiency in operations. Thus Indian banks have less than three years to consolidate their position. Despite the stiff resistance from certain segments, consolidation holds the key to future growth. This view is underpinned by the following: ► Owing to greater scale and size, consolidation can help save costs and improve operational efficiency. ► Banks will also have to explore different avenues for raising capital to meet norms under Basel-II ► Owing to the diversified operations and credit profiles of merging banks, consolidation is likely to serve as a risk-mitigation exercise as much as a growth engine. Though there is no confirmation yet, speculative signals arising from the market point to the prospect of consolidation involving banks such as Union Bank of India, Bank of India, Bank of Baroda, Dena Bank, State Bank of Patiala, and Punjab and Sind Bank. Further, the case for merger between stronger banks has also gained ground — a clear deviation from the past when only weak banks were thrust on stronger banks. There is a case being made for mergers between banks with a distinct geographical presence coming together to leverage their respective strengths.
GLOBALIZATION/ OVERSEAS EXPANSION Growing integration of economies and the markets around the world is making global banking a reality. The surge in globalization of finance has already begun to gain momentum with the technological advancements which have effectively overcome the national borders in the financial services business. Widespread use of internet banking will widen frontiers of global banking, and make marketing of financial products and services on a global basis possible. In the coming years globalization will spread further on account of the likely opening up of financial services under WTO. India is one of the 104 signatories of Financial Services Agreement (FSA) of 1997. This gives India’s financial sector including banks an opportunity to expand their business on a quid pro quo basis. As per Indian Banks' Association report ‘Banking Industry Vision 2010’, there would be greater presence of international players in Indian financial system and some of the Indian banks would become global players in the coming years. So, the new mantra for Indian banks is to go global in search of new markets, customers and profits. TECHNOLOGY There is an imperative need for not mere technology upgradation but also its integration with the general way of functioning of banks to give them an edge in respect of services provided to their constituents, better housekeeping, optimizing the use of funds and building up of MIS for decision making, better management of assets & liabilities and the risks assumed which in turn have a 13
direct impact on the balance sheets of banks as a whole. Technology has demonstrated potential to change methods of marketing, advertising, designing, pricing and distributing financial products and services and cost savings in the form of an electronic, self-service product delivery channel. These challenges call for a new, more dynamic, aggressive and challenging work culture to meet the demands of customer relationships, product differentiation, brand values, reputation, corporate governance and regulatory prescriptions. Technology holds the key to the future success of Indian Banks. Internet, wireless technology and global straight-through processing have created a paradigm shift in the banking industry. The explosive growth of both the Internet and mobile and wireless technology is revolutionizing the way the financial industry conducts business. The overall wireless technology market is expected to grow profoundly in the coming years. REGULATIONS The RBI's approval for banks to raise funds abroad through innovative capital instruments holds great significance. Such fund-raising, which includes preference shares, will, however, not just substitute equity; it could have unintended consequences on the strategies of banks and their profitability. While the cost of raising monies through such instruments is likely to be higher (close to 10 per cent), the consequent higher leverage on equity funds is likely to result in expansion of return on net worth. This is because the same amount of capital supports a higher volume of business, generating higher profits.
Banks are likely to be able to raise long-term preference shares at coupon rates 14
between six per cent and eight per cent. The positive impact on bank profitability could thus be significant. Preference capital can be used as the currency for acquisition. The advantage for public sector banks is that they no longer need to bother about government stake falling below 51 per cent. Banks such as Dena Bank, Oriental Bank of Commerce and Andhra Bank are most likely to benefit from this move. SKILLED MANPOWER There will be a sea change for employees too. Secure jobs will be replaced by contractual appointments, for a specified period of time. The unions will merge into the shadows and bank managements will turn effective. As a result there will be swifter turn over of personnel in banks. But at the same time, skilled personnel from other disciplines will enter banks in increasing numbers. Factors like skills, attitudes and knowledge of the human capital play a crucial role in determining the competitiveness of the financial sector. The quality of human resources indicates the ability of banks to deliver value to customers. Capital and technology are replicable but not the human capital which needs to be valued as a highly valuable resource for achieving that competitive edge.
Business model, which comprises a comprehensive range of business solutions delivered through a unique balance of portfolio and relationship management must be incorporated.
FUTURE CHALLENGES & SUGGESTIONS Competition Challenges Customer Retention Globalization Shrinking Margin
SUGGESTIONS Strong In-house research & market Intelligence Focused marketing- Focus on region-specific campaigns rather than national media campaigns
The growth of the retail financial services sector has been a key development on the market front. Indian banks (both public and private) will not only be keen to tap the domestic market but also to compete in the global market place. New foreign banks will be equally keen to gain a foothold in the Indian market.
ORIGIN OF THE ORGANIZATION
Punjab National Bank was established in the year 1895 found by Punjab Kesari Shri Lala Lajpat Rai at Lahore (now in Pakistan) as a joint stock company. After the partition in 1947, the bank grew steadily with its presence at the important centers and metropolitan cities of the country and emerged as one of the big five Indian banks during pre-nationalized period.
The bank was nationalized in 1969 along with 13 other banks. Subsequently, in 1993 it took over the New Bank of India, another bank that was nationalized in 1980. In 2003 the Nedungadi Bank Ltd., a south based private sector bank also merged the bank. Thus the bank, which previously had its main business area around the Indo-Gangetic belt and major metros, could ensure its remarkable presence in the entire country.
Presently, it is the second largest bank of the country rendering a wide variety of banking services (corporate/personal/industrial finance/agriculture
finance/financing of trade and commerce/international banking). It has a broad clientele base like Multi National Corporation, Indian Conglomerates,
medium/small industrial units and NRI’s. As a bank with global standard, it was ranked 416th among the biggest bank in the world by the banker’s Almanac in 2002.The bank is member of the SWITY (society for Worldwide International Financial Telecommunication) and has strong correspondent relationship with the leading international banks. Continued financial sector reforms led to greater 17
alignment of financial sector to the competition business environment. Operational and supervisory practices in the sector have been progressively matching international standards. In the process Indian banking system is
becoming increasingly mature in terms of transformation of business process and risk management. The head office of the Bank is at, Bhikaji Cama Place, New Delhi.
The bank also has subsidiaries like PNB Gilts Ltd., PNB Housing Finance Ltd., PNB Capital Services Ltd., PNB Assets Management Co .Ltd.
GROWTH AND DEVELOPMENT OF THE ORGANIZATION
To evolve and position the bank as a world class, progressive, cost-effective and customer friendly institution providing comprehensive financial and related services: integrating frontiers of technology and serving various segment of society especially the weaker section of the society: committed to excellence in serving the public and also excelling in the corporate values.
Corporate excellence emanate from good corporate governance exercised by adopting standard of transparency, accountability, professionalism, social responsiveness, and ethical business practices with this in view, the has been making efforts for adopting the best practices. The bank commitment towards corporate governance is to bestow greater transparency and openness in the management and to ensure best performance by staff atall the levels to maximize the operational efficiency. Adopting the corporate governance as a work ethos, the bank is committed to enhancing the stakeholders value.
PRESENT STATUS OF THE ORGANIZATION With its presence virtually in all the important centers of the country, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Among the clients of the Bank are Indian conglomerates, medium and small industrial units, exporters, non-resident Indians and multinational companies. The large presence and vast resource base have helped the Bank to build strong links with trade and industry. Punjab National Bank is serving over 3.5 crore customers through 4540 Offices including 421 extension counters - largest amongst Nationalized Banks. Punjab National Bank with 112 year tradition of sound and prudent banking is one among 300 global companies and seven Indian companies which are expected to emerge as challengers to World’s leading blue chip companies. While among top 1000 world banks, “The Banker”, the leading magazine in London, has placed PNB at the 248th position, the bank features at 1308th position among Forbe’s Global 2000 list of global giants and fast growing companies. At the same time, the bank has been conscious of its social responsibilities by financing agriculture and allied activities and small scale industries (SSI). Considering the importance of small scale industries bank has established 31 specialised branches to finance exclusively such industries.
Strong correspondent banking relationship which Punjab National Bank maintains with over 200 leading international banks all over the world enhances its capabilities to handle transactions world-wide. Besides, bank has Rupee Drawing Arrangements with 15 exchange companies in the Gulf and one in Singapore. Bank is a member of the SWIFT and over 150 branches of the bank are connected through its computer- based terminal at Mumbai. With its state-ofart dealing rooms and well-trained dealers, the bank offers efficient forex dealing operations in India. The bank has been focusing on expanding its operations outside India and has identified some of the emerging economies which offer large business potential. Bank has set up representative offices at Almaty: Kazakhistan, Shanghai: China and in London. Besides, Bank has opened a full fledged Branch in Kabul, Afghanistan. Keeping in tune with changing times and to provide its customers more efficient and speedy service, the Bank has taken major initiative in the field of computerization. All the Branches of the Bank have been computerized. The Bank has also launched aggressively the concept of "Any Time, Any Where Banking" through the introduction of Centralized Banking Solution (CBS) and over 2409 offices have already been brought under its ambit. PNB also offers Internet Banking services in the country for Corporate as well as individuals. Internet Banking services are available through all Branches of the Bank networked under CBS. Providing 24 hours, 365 days banking right from the PC of the user, Internet Banking offers world class banking facilities like anytime, 21
anywhere access to account, complete details of transactions, and statement of account, online information of deposits, loans overdraft account etc. PNB has recently introduced Online Payment Facility for railway reservation through IRCTC Payment Gateway Project and Online Utility Bill Payment Services which allows Internet Banking account holders to pay their telephone, mobile, electricity, insurance and other bills anytime from anywhere from their desktop. Another step taken by PNB in meeting the changing aspirations of its clientele is the launch of its Debit card, which is also an ATM card. It enables the card holder to buy goods and services at over 99270 merchant establishments across the country. Besides, the card can be used to withdraw cash at more than 25000 ATMs, where the 'Maestro' logo is displayed, apart from the PNB's over 1094 ATMs and tie up arrangements with other Banks Latest Quarterly/Half yearly Income statement2
As on(Months) Interest Income Other Income Total Income Interest Expenses Other Expenses Provision & Contingencies OPBDT Depreciation Extra-Ordinary / Cash Adjustment Provision for Tax After tax Profit Equity Capital Reserves
31-Mar-08(3) 38797.90 5372.10 44170.00 23625.10 8277.10 1676.70 10591.10 0.00 0.00 5153.50 5437.60 3153.00
31-Mar-07(3) 31944.00 5183.90 37127.90 17713.70 10590.70 6126.90 2696.60 0.00 0.00 319.60 2377.00 3153.00
% Change 21.46 3.63 18.97 33.37 -21.85 -72.63 292.76 --1512.48 128.76 0.00
FUTURE PLANS OF THE ORGANIZATION
To provide excellent professional services and improve its position as a leader in the field of finance and related service, build and maintain a team of motivated and committed workforce with high work ethos; uses latest technology aimed at customer satisfaction and act as effective catalyst for socio-economic development.
The bank is committed to its corporate mission to provide excellent professional services and improve its position as leader in the field of financial and related services, build, maintain a team of motivation and committed workforce with high work ethos, use latest technology, aimed at customers and act as an effective catalyst of socio-economic development. Punjab National Bank has focused quite a bit in rural areas, which is actually needed for our country. Their ATMs are given the facility of English, National Language Hindi and the local language of the state. They also provide mobile top-up facility.
FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION HEAD OFFICE
BRANCHES Executive cards of the organization. They are Executive Director, General Manager (GM), Deputy General Managers (DGM), assistant General Managers (AGM), Chief Managers (CM), Managers and other officers are in the hierarchy at the head office level functioning in various Departments. The Zonal Manager and regional Managers head the Zonal Offices and Regional Officers respectively who are assisted by other down in the hierarchy. The Branch is headed by AGM\CM\ Senior Managers\Managers depending upon the size of the Branch activities and rendering of satisfactory customer service. The bank has a very good system of delegating power to the different functionaries in the hierarchy to facilitate speedy decision- making process even up to the branch Level.
2.6 Organization chart3
Mr. O.P Arora (Branch Manager)
Mr. Rajbir Singh (Manager)
Mr. C.S. Kshatriya (Dy. Manager)
Mr. Rajesh Menon (C.T.O) Mr. Ajit Singh Rana (Clerk)
Mr. S.K Jindal (C.T.O)
Mr. J.D Mittal (Clerk)
PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION
Source : Bank administration
Presently, it is the second largest bank of the country rendering a wide variety of banking services: CENTRALISED BANKING SOLUTION (CBS) CBS, an inter-branch networking and data-sharing platform helps to operate account from any city in India having CBS networked branches. Changing status from Customer of the Branch’ to ‘Customer of the Bank’, presently, there are over 2,616 CBS networked brandies in 820 cites,
NRI’S & TOURISTS Currency exchange services are being provided by our 68 Exchange Bureau’s spread throughout the country
ONLINE TAX PAYMENT PNB provides the facility of online payment of service tax, excise duty, DGFT, custom duty & all charges urlderMCA2l
CASH MANAGEMENT SERVICE (CMS) PNB’s CMS facilitates management of receivables and payments in technology driven environment, ensuring availability of funds at reduced cost, helping reconciliation at multi location accounts besides providing customized MIS. MUTUAL FUNDS & INSURANCE 26
The bank has tied-up with Principal Financial Group for providing Mutual Funds and Insurance services & also tied up for distribution & marketing of UTI Mutual Funds.
NRI SERVICES NRE, FCNR, RFC, NRO Deposit a/c investment Management & Housing Loan facilities for NRI’s.
FOREIGN EXCHANGE PNB has 150 branches authorized for handling foreign exchange business and these branches have been provided with SWIFT connectivity to ensure faster realisation of funds.
e-MONEYINDIA Send money to the loved ones in India through PNB’s eMoneyIndia service. Draft delivery across 4,038 locations and Bank Credit to over 2,500 branches in India.
ONLINE RAILWAY RESERVATION/AIR TICKET BOOKING Say goodbye to long queues. PNB offers online booking & information through IRCTC payment gateway. Just click and travel comfortably. DEPOSITORY SERVICE
PNB Depository service provides the facility of having shares & securities in Demat form & executes transactions of sales & purchase hassle free electronically.
LOCKERS Now, customer can relax with assurance of having your locker at the PNB branch nearest to their home.
CUSTOMER CARE FACILITY All the banking queries and problems are just a call away! PNB presents 24 hr. customer care facility. Call at toll free no. at 1800 180 2222 from MTNL/BSNL or 0124-2340000 from other no.s
PNB GOLD COIN PNB gives opportunity to dazzle the well wishers, patrons, partners and acquaintances with the mystical charisma of PNB’s 999.9 fineness pure 24-carat gold coins and to convey the true value of treasured relationship. Enjoy guarantee of purity & weight of hallmarked gold coins. ELECTRONIC CLEARING SERViCE (ECS) & ELECTRONIC FUNDS TRANSFER (EFT) Avail ECS for quick movement of funds in a paperless mode & EFT to ensure an expeditious transfer of funds by using electronic media.
WEALTH MANAGEMENT SERVICE PNB provides customized financial advisory services for
individuals that includes Mutual Funds, insurance, Retirement Planning, Tax planning, & Debt Management to customers for wealth maximization
ONLINE BILL PAYMENT No more queues to pay your bills. Now pay telephone, mobile, electricity, insurance & several other bills 24 hours, 365 days, from the desktop. LOANS CAR LOAN/2 WHEELER LOAN Drive dream car/bike home. PNB gives loan for the purchase of new/old car, van or jeep, new bike at very attractive interest rates with a convenient repayment period.
LOAN AGAINST JEWELLERY Loan against Gold & Jewellery for individuals/business
enterprises, both for business & personal needs.
TRADERS LOAN Maximize business turnover with PNB traders loan with minimum paper work and attractive rate of interest, for whole sellers,
dealers, distributors, individuals, firms, registered cooperative societies & companies. Loans also available for purchase of shop /showroom.
HOUSING LOAN Bring own dream home to life. Avail ‘flexi’ housing loan and have the advantage of substantial savings on the interest component. Insurance cover for home loan borrowers available.
PERSONAL LOANS A scheme to meet all types of personal needs, for and
Professionally Qualified Doctors.
CORPORATE LOANS Corporate can expand & diversify with user friendly Corporate Loans Products Working Capital, Term Loan, Bank Guarantee, Letter of Credit & others.
EDUCATIONAL LOAN Avail “Sarvottam Shiksha & Vidyalakshyapurti” schemes for studies In India & abroad and ensure a great career for child.
PNB GRAMIN CHIKITSAK
Scheme for financing qualified medical practitioners for setting up clinics in rural areas at concessional rate of interest.
LOAN TO PENSIONERS PNB values the traditions of India by giving special benefits to the senior citizens.
LOANS TO WOMEN PNB’s “Mahila Sashaktikaran Abhiyaan” & “Mahila Samridhi Yojana” give special benefits to women customers that help in building their confidence & self-esteem.
DEPOSITS PNB MET LIFE Delighting depositors with life insurance by extending the facility of insurance cover (death only) to all Saving Fund & Current Account (Individuals) holders.
PNB VIDYARTHI ACCOUNT Empowering the young generation with a zero balance account for students with overdraft facility.
TOTAL FREEDOM SALARY ACCOUNT Discover the freedom of flexibility with PNB’s Total Freedom Account. A zero balance account for employees having salary account in the bank, with overdraft facility.
PNB TAX SAVER PNB offers term deposit scheme to avail tax benefit under Sec 80(C)2 (xxi) of income Tax Act.
PNBMITRA PNB offers no frill saving account for financial inclusion -
MARKET PROFILE OF THE ORGANIZATION
Today, PNB operates 4,070 branches and 443 service counters across the country, consolidating its position as one of the top nationalized banks of India. PNB has been ranked at395Th position amongst the top 1000 global banks by the prestigious international publication The Banker.
Like other scheduled banks in India, the PNB also comes under the guidance of the Reserve Bank of India (RBI) and as a government establishment, it has to follow directions of the government. Two directives, one from the Reserve Bank of India and the other from India’s Department of Official languages are key in this context. In 1985, the Department of Official Languages mandated that all electronic equipment used in ministries and departments of the government and their attached and subordinate offices would need to be bilingual. That is, they should be able to handle both Hindi and English. By the year 2000, the Reserve Bank of India had mandated that banks should have a clear IT plan that should be implemented: that at least 7O percent of all branches should be computerized.
With technology emerging as a key driver of business growth, the bank has taken a number of IT initiatives to provide its large clientele spread all across the country with the best of technology while retaining the all- essential human warmth. Its core banking system (CBS) already acts as a single data bank, a backbone to 2,108 service outlets with internet banking services spread over 28 33
states in the country. This deployment has lent PNB the status of being the largest core banking system in Asia.
The bank has 676 ATMs and also coordinates with the MITR group of six banks with 2,200 ATMs. PNB is a member of Institute Development and Research in Banking Technology (IDRBT)-sponsored National Financial Switch (NFS) for mutual ATM transactions. NFS at present has 18 banks and a pool of 6,197 ATMs. PNB has also pioneered the cheque truncation system in India. Other software fuelling the systems are instant fund transfer mechanism, data warehouse for decision control and MIS and risk management software based on Basel II guidelines set by the Bank for International Settlements.
About 77 percent of its business is connected through leased lines, ISDN and VPN. Other services such as mobile banking utility bill payments, funds transfer, e-commerce and CRM through mobile shall be introduced for the PNB branches including setting up a network operating centre (NOC) to monitor the CBS network.
⇒ Spreads: PNB has the best margins in the banking sector. ⇒ Return Parameters: On both the return parameters i.e. return on average asset and return on average networth, PNB is close to the average of the peer set. 34
⇒ Asset Quality: PNB’s asset quality as measured by the net NPA ratio is on the higher side. It is just better than the largest scheduled commercial bank i.e. SBI. ⇒ Coverage Ratio: The provision coverage ratio third best after HDFC Bank and OBC in our set of banks. ⇒ Operating Efficiency: PNB’s cost to income ratio is higher than the average of the peer set. However, we believe that once the technological platforms are put in place, the bank will be able to bridge the gap with the numero uno in this regard. CHART FOR RELATIVE PERFORMANCE OF BANKS2
CHAPTER 3 DISCUSSION ON TRAINING STUDENT’S WORK PROFILE (ROLE AND RESPONSIBILITY) I worked as a management trainee in Punjab National Bank, Mukundpur Branch, I was responsible for multiple type of work involved in banking which our services best in the industry. ♦ Customers Service This is the counter where customer interacts with the bank personnel firstly. Here, I got a chance to know about the different problems of the customers visiting the bank. I helped them to solve their different problems which are as follows: Query solutions: Solving their Different queries such as: Document required for new a/c Documents for loan Requirement for new ATM card Providing different forms for different purposes Documents for Micro finance
New account opening: To help the customer in opening the new account by filling up their forms along with scrutinizing their documents. This includes checking of residence proof,
address proof and witness required. Then generating account number and customer Id in the presence of banking employee.
♦ Frills Account They are also known as PNB MITR account. These are the zero balance account specially created for these poor peoples. This account has the facility to avail the overdraft limit of up to Rs.3,000. The branch has opened 40,000 accounts by 30 June.
♦ Cheque clearing This includes checking the cheque details like date of cheque, account number of the customer, signature of the customer.
♦ Loan department It includes clearing of various types of loans including personal loans, vehicle loan, home loan etc. In the branch I got a chance to visit the working site of the loan applicant with the bank personnel.
DESCRIPTION OF LIVE EXPERIENCE The first day in this industry made me feeling like in a heaven because this was my first step toward my dream and this was a new thing for me, this was practical exposure because till now I read only in books about banking ,first day when I reached bank premises at 9:30 am ,I saw crowd of over 100 people waiting outside the bank . I usually worked under the supervision and direction of the asst. manager Mr.Rajveer Singh. He gave me different responsibilities as per the need, and at the end of the day I had to report the full day’s work to him.
Procedural Chart for new account opening:-
New customers at help desk
If Yes Documents as per rule If No
Fill up the form and send for verification
Ask for the necessary documents
Verification by Mr.Rajveer
Customer ID & A/C No. generated
Pass Book, ATM Card & Check Book issued
STUDENT’S CONTRIBUTION TO ORGANIZATION
As a Management Trainee I worked in all of teams, as a team member my role was such as follows:-
Marketing To collect data from the: Local community their existing customers NGOs and SHG(Self Help Groups).
Cheque clearance It includes: Inward cheque clearance Outward cheques Verifying Cheque details like date of cheque, a/c no. of the customer, signature of the customer, cutting on cheque if any. Loan clearance It includes: Document verification Site visit with bank employee for Micro loans Clearance of various types of loans including Micro loan, personal loans, vehicle loan, etc. 40
Customer relationship Provide information such as: Providing information about different products such as FD(Fixed Deposit),RD(Recurring Deposit),mutual funds, Flexible Deposit. Help in solving problems of customers. Procedure and conditions for getting loan
SUMMARY AND CONCLUSIONS SUMMARY OF LEARNING EXPERIENCE While working in Punjab National Bank’s 1st Micro Branch of India I got in-depth knowledge about Micro finance. I recognize that there is a lot more to discover and learn, I learned to be more responsible, have more patience and most important it helped me to learn how to handle the work pressure.
I got to know what all different types of question can be asked by a banking customer, as the branch was in the village area with population of 2 lakh peoples where there was no other bank’s branch, it was difficult to handle minimum 500700 per day with the queries like : ℵ What’s the procedure to open an account? ℵ What’s the procedure to get an ATM card? ℵ What’s the procedure to get a pass book? ℵ What’s the procedure to get a cheque book? ℵ How to fill ATM form? ℵ How to fill all other different forms like cheque clearance form, cash deposit form, cash withdrawal form, etc.? Besides the query solution I also filled up the form for the illiterate and old peoples and helping them for their requirements. Apart from customer service I got to know about the micro finance and the procedure and all document required for it and types of people who can get the micro loan. 42
OBSERVATIONS AND RECOMMENDATIONS
It has been observed that to put a new organization into a running position is much more difficult than to handle a already working organization, manager’s task is difficult in a banking industry he is the person who is completely liable for the working of branch. To put a right person at a right job is not an easy task for the manager.
I observed some of the factors in my branch such as: ϒ Lack of staff ϒ lack of Efficient staff ϒ Brach working space ϒ lack of speed ϒ Lack of quality service ϒ Complicated work procedure ϒ Not providing service on time
Beside all these factors the branch has also achieved some achievements such as 12000 accounts in 2 days and distribute micro loan of around 5 crore rupees to different 55 Self Help Groups to start their small businesses.
Opening of 1st Micro branch in India is also a achievement and it is a starting of new type of banking revolution which can change the life of villagers which depends on the “MAHAJAN” to lend them money at high interest rate.
With the changing banking system, this branch has also to adapt the new ways of banking such as:
ψ Shifting new and young staff to this branch ψ Give them good incentives so that they stay their for longer time period as
per the location
ψ Complicated form should be replace with easy forms ψ Provide easy norms for new account opening. ψ Well trained staff be placed to increase work pace and to decrease per
transaction time also.
ψ Local people should be appointed to handle the customers.
(Annexure) VARIOUS FORMS USED IN PNB:
FORM No.60 (For person not having PAN card)
ACCOUNT OPENING FORM 46
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CUSTOMER MASTER FORM
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List of tables:Page no. Table 1:Table 2:Total Income Wise Listing of banks Latest Quarterly/Half yearly Income statement -9 - 22
List of Charts:Chart1:Chart2:Chat 3:Graphical organizational structure Chart for relative performance of banks Procedural Chart for new account opening - 25 - 35 - 39
www.finance.indiamart.com www.allbusiness.com www.ficci.com www.business.mapsofindia.com www.pnbindia.com www.gyanguru.org www.info.gov.hk www.indiainfoline.com www.indiaearnings.moneycontrol.com www.assamagribusiness.nic.in www.bna.com/ www.corporateinformation.com www.outlookmoney.com www.business-standard.com Magazine:India today Business world Businesstoday
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