CHAPTER 1 INTRODUCTION

1. Introduction 1.1 Nature and Scope of the project: The project is about the study of the basic operations in banking and also the day to- day problems faced by the customers. It also includes a study on the various steps to process the customer requests performed at the branch level. An attempt has also been made to study about how to analyze the balance sheet of a bank. The project was for a period of two months from 5th May 2013 to 3rd July 2013. 1.2 Implications of the Study: The outcome of the study is the learning about the regular activities in a bank. It also helps to give an idea about the purpose of the common customers in visiting the bank. It also provides an idea on how Axis Bank attracts its customers and the service offered. 1.3 Chapter Scheme Chapter 1: This chapter deals with the introduction about the project and the nature and scope of the project. Chapter 2: This chapter deals with the organization profile and review of literature. Chapter 3: This chapter deals with the various operations being performed at the branch. Chapter 4: This chapter involves the study of transfer and clearing operations. Chapter 5: This chapter deals with the various products offered at Axis Bank. Chapter 6: This chapter is about the various requests received from customers and the processing of the requests at the branch level.

Chapter 7: This chapter includes the financial analysis of Axis bank for the last three years and also the interpretations made.

CHAPTER 2 ORGANIZATION PROFILE

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2. Organization Profile and Review of Literature: 2.1 Profile of the Industry: The banking system is a crucial and vital component of the global economy. The system of money changing and money lending is as old as money. Banking is assumed to have started back in the 15th century. The health of an economy and the health of a countrys banks have been interrelated. Banks are a part of the group of financial institutions that profit from the creation of flow of money across an economy. The other financial institutions include insurance companies, finance companies, investment managers, mutual funds etc. But banks are the safest option among the minds of several people. As financial intermediaries, banks stand between depositors who supply capital and borrowers who demand capital. Banks are among the most heavily regulated businesses in the world as it handles great amount of commerce and individual wealth. 2.2 Indian Banking Industry: The Indian banking industry is governed by the Banking Regulation Act of India, (1949) and is closely monitored by the Reserve Bank of India (RBI). The major functions of the Reserve Bank of India (RBI) are as follows: 1. Formulates, implements and monitors the monetary policy in order to maintain the price stability in the economy 2. Acts as the regulator and supervisor of the Indian financial system 3. Acts as the manager of foreign exchange 4. Issues currency to the nation in times of real need Public sector banks account for 70 per cent of the Indian banking assets. The financial sector reforms were initiated in the early nineties. Guidelines for issuance of license to private banks were issued in January 1993. The objective of promoting private sector banks was to instill greater competition in the banking system and thereby leading to increased efficiency and productivity. Government support and huge development in other economic segments have made the Indian banking industry more progressive and inclusive with regard to global banking standards. 2.3 Functions of Banks: 1. Accept deposits and provide loans: The most basic function of bank is to accept deposits from customers, raise capital from investors or lenders and then use that money to provide loans, buy securities and provide other financial services to customers. These loans are then used by people and businesses to buy goods or expand business operations, which in turn leads to more deposited funds that make their way to banks. Banks can lend money at a higher interest rate than they have to pay for funds and operating costs. This is how the banks make money out of circulation of money.
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2. Provide Safety: Banks also provide security and convenience to their customers. By keeping physical cash at home, or in a wallet, there are risks of loss due to theft and accidents. Also customers will lose the income from interest. Consumers no longer need to keep large amounts of currency on hand; transactions can be handled with cheque, debit cards or credit cards, instead. Banks also provide vaults and rent it to customers in the form of safe deposit boxes or lockers. This is used by customers to keep precious items and also enables the bank to earn extra money or income without any risk to the capital. 3. Payment Agents: As payment agents, banks make commercial transactions much more convenient; it is not necessary to carry around large amounts of physical currency when merchants will accept the cheques, debit cards or credit cards that banks provide. Though a cheque is a promissory note between two people, no one will accept a cheque without a banks name and other details in the cheque. Here comes the importance of banks as payment agents. 2.4 Economic Concepts in Banking: 1. Settle Payments: Banks play an invaluable role in the settling of the payments made through cheques, electronic transfers and paper currency. Banks make sure that the proper accounts are credited or debited, in the proper amounts and with relatively little delay. 2. Credit Intermediation: Banks play a major role as financial intermediaries. Banks collect money from depositors, essentially borrowing the money, and then simultaneously lend it out to other borrowers, forging a chain of debts. 3. Maturity Transformation: Many investors are willing to invest only in short term deposits, but many projects will need long term financial support. In order to help the projects, banks obtain short term investments in the form of demand deposits and lend them in long term. Thus banks transform debts with short term into credits with long term maturities. The difference in the rates is collected as profit. 4. Money Creation: One of the most vital roles of banks is in money creation. Money creation at the individual bank level is not the same as "printing money". Banks create money through fractional reserve

banking. Fractional reserve banking refers to the fact that banks keep only a small portion of their deposits on hand. This phenomenon is known as the money multiplier. This is how banks increase the money supply and effectively create money. If banks simply acted as storehouses or vaults for money, then banks would not be able to lend money and provide other services as of now. 2.5 Axis Bank Ltd. Axis Bank Limited is an Indian financial services corporation. It has the headquarters at Mumbai, Maharashtra. It was started in the year 1994. It was initially called UTI Bank. The registered office is in Ahmadabad and the corporate office in Mumbai. It was promoted by Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance Corporation Ltd, National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation. The first branch was inaugurated in April 1994 at Ahmadabad by Dr. Manmohan Singh, the then Honorable Finance Minister. For the financial year 2012 13, Axis Bank had a profit after tax of Rs. 5179 crores and a net interest income of Rs. 9666 crores. During the year 2012 13, the bank raised capital in the form of equity and debt to support future growth. The Bank mobilized an aggregate of Rs. 5537.47 crores through this offering by issuing 34,000,000 equity shares through a QIP offering and 5,837,945 shares to the promoters in order to maintain their percentage shareholding of the Banks promoters at pre QIP offering levels. The equity shares offered under the QIP offering and preferential allotments were both priced at Rs. 1390 per share. Company Profile: Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of financial services to customer segments covering Large and Mid-corporates, SME, Agriculture and Retail Businesses. The Bank has a large footprint of 1787 domestic branches (including extension counters) and 10,363 ATMs spread across 1,139 centres in the country as on 31st December 2012. 2.6 Evolution of Axis Bank: The Bank was incorporated on 3rd December 1993 and Certificate of business was obtained on 14th December 1993. It was formerly known as UTI Bank. The bank was the first private sector bank to get a license under the modified guidelines issued by the RBI. The Bank obtained license to act as Depository Participant with NSDL in the year 1997. UTI contributed Rs. 100 crores, LIC contributed 7.5 crores, GIC and its four subsidiaries contributed 1.5 crores. The Bank came out with a public issue of 1,50,00,000 no. of equity shares of Rs 10 each at a premium of Rs 11 per share aggregating to Rs 31.50 crores and Offer for sale of 2,00,00,000 no. of equity shares for cash at a price of Rs 21 per share. Out of the public issue, 220000 shares
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were reserved for allotment on preferential basis to employees of UTI Bank. Balance of 34780000 shares were offered to the public. ICRA upgraded the rating of UTI Bank's Rs 500crore certificate of deposit programme to A1+ in the year 2000. UTI Bank launched a private placement of non-convertible debentures to raise the total debt to Rs 75 crores in 2001. The company name was changed from UTI Bank into Axis Bank in the year 2007. Axis bank received final clearance from the Securities Exchange Board of India (SEBI) to begin its mutual fund operations in the year 2009. Axis bank acquired 4 percent stake in Max New York Life in 2010. 2.7 Organization Structure: The Board of Directors consists of 15 members. The Chairman of the board of directors is Mr.Sanjiv Mishra. Mrs. Shikha Sharma is the Chief Executive Officer as well as the Managing Director. The other directors are K. N. Prithviraj, V. R. Kaundinya, S. B. Mathur, Prasad. R.Menon, R. N. Bhattacharrya, Samir K. Barua, A. K. Dasgupta, Som Mittal, Ireena Vittal and Rohit Bhagat. Somnath Sengupta is the Executive Director and Head of Corporate Centre. V.Srinivasan is the Executive and Head of Corporate Banking. P. J. Oza is the company secretary. The members of the core management are R. K. Bammi, P. Mukherjee, S. S. Bajaj, Vinod George, M. V. Subramanian, S. K. Mitra, B. Gopalakrishnan, Bapi Munshi, C. Babu Joseph, Sanjeev. K. Gupta, V. K. Bajaj, Sidharth Rath, A. R. Gokulakrishnan, Rajendra. D. Adsul, R. V. S. Sridhar, Lalit Chawla, Rajesh Kumar Dahiya, Sharad Bhatiya, Rajiv Anand and Jairam Sridharan as on April 1st 2013. The organization structure of Axis Bank Limited is as follows:

Fig 2.7.1 Organization Structure

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The step by step growth of the employees at Axis Bank can be depicted from the following figure:

Fig 2.7.2 Growth of an employee The regions are divided into circles headed by the circle head. The circles are again divided into clusters which are headed by cluster head. The clusters consist of several branches headed by branch head. The Trichy Road branch of Axis Bank comes under the Coimbatore circle. 2.8 Launch of Products over the years: UTI Bank and Citibank launched an international co-branded credit card in 1997. The Bank has announced the launch of Tele-Depository Services for its depository clients. In the year 2000, UTI Bank launched `iConnect' as its Internet banking Product. UTI Bank signed a memorandum of understanding with equitymaster.com for e-broking activities of the site in the same year. Pre-paid travel card - 'Visa Electron Travel Currency Card' was unveiled in the year 2002. In 2004, UTI Bank unveiled premium payment facility through ATMs applicable to LIC & UTI Bank customers. UTI Bank entered into a bancassurance partnership with Bajaj Allianz General for selling general insurance products through its branch network in 2005. The priority banking was started in the year 2006. The launch of credit card business was also announced in the same year. The Gold Debit Card Master Card was launched in the same year and it was designed especially for business related transactions by SMEs and self employed persons. Axis Bank launched Indias first EMV chip based card- the Platinum Credit Card in 2008.

2.9 Review of Literature Differentiate or Die: Banks need Brand Personalities, Simon Clough Global Director at Clear (The Financial Brand, June 12, 2012) With customer sentiment at an all time low and a raft of new players entering the banking space, the last thing any financial institution wants to hear is bad news about their brand. But the reality is that consumers view most banking brands as undesirable and wholly undifferentiated. Thats why the battle cry Differentiate or Die has never been more relevant in the financial sector. The survey conducted by Clear in February 2012 confirmed what we all intuitively know about banking brands: they are virtually identical in consumers eyes. Every bank in the study was seen as being highly organized, serious and sensible. The banks considered in the survey include Amex, Citi, HSBC, ING, GE, MasterCard, Visa USAA, Allianz, StateFarm, Bank of China and Standard Chartered (among others). Its rare to find a bank that stands for much else. Incorporation of Banking Technologies, Bimal Jalan Former Governor of RBI (Economic Times, October 26, 2002) The Indian banking industry has to embrace new emerging technologies to enhance performance and profitability. Though India has emerged a major hub for software exports, it has been lagging behind in using the technologies. It was a paradoxical situation where the country continues to grow in software exports but does not extensively use the software for the domestic market. Government and Banking, Abraham Lincoln The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.

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CHAPTER 3 BASIC OPERATIONS IN BANKING

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3 Basic Operations in Banking The three basic operations in banking are: 1. Cash 2. Clearing 3. Transfer 3.1 Cash: As the basic function of a bank involves accepting deposits and lending money to the customers, it can be implemented only with money. The cash section deals with the withdrawal of money and also deposit of money. The person dealing with the cash section is called the teller. The teller performs the following duties: 1. Accepts cash from depositors 2. Lends cash to customers when demanded The other minor duties of a teller involves collection of application fee, Visa fee collection etc. 3.2 Cash Deposit Machine: The cash deposits can be made through the cash deposit machine. It is a type of self service being offered. There is no need of any intervention of any officials in depositing the cash into the account. The task of filling up deposit slips and the long queues can be avoided. The amount will get immediately credited into the account and the customer receives the receipt at the same moment. At present, these machines are available at 540 branches of Axis Bank. The maximum limit of cash deposit through machine for a savings account holder is as follows: i. ii. Rs. 49000 per day for customers who have not updated the PAN card number Rs. 2,00,000 per day for those who have updated the PAN number

To deposit money through the deposit machine, one should have the Axis bank debit card or the 15 digit account number to which the cash is to be deposited. Steps involved: 3.2.1 Using Debit Card: Insert debit card and enter PIN for validation. Select account type (Saving or Current). Place the money in the cash deposit slot and click Continue. Machine will sort the cash and will show denomination-wise amount to be deposited.
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If correct, click Deposit. Amount will be deposited. Receipt will be generated.

3.2.2 Using the account number: Click Cash deposit without card. Enter account number in which you wish to deposit cash. Machine will display the name of the account holder. If correct, click Enter. Place the money in the cash deposit slot and click Continue. Machine will sort the cash and will show the summary. If correct, click Deposit. Amount will be deposited. Receipt will be generated.

3.3 Automatic Teller Machine: The cash withdrawal for day to day purposes can be made through ATMs without visiting the banks. However, there are limits for transactions possible through machines. The withdrawal limits are set based on the debit card type the customer holds. The maximum limit for various cards is as follows: i. ii. iii. Visa Classic - Rs. 20000 per day Titanium Reward - Rs. 50000 per day Priority Platinum Rs. 100000 per day

Axis Bank provides one of the largest network of ATMs in the country. It has a network of over 7600 ATMs. The Axis Bank ATMs also offer a number of facilities other than cash withdrawal. The various other facilities involve: 1. 2. 3. 4. 5. 6. 7. 8. Balance enquiry Mini statement (last 7 transactions) PIN change Cheque book request Mutual Fund payment Insurance premium payment Register for SMS banking and NETSECURE Fund transfer between linked accounts

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3.3.1 Steps for fund transfer: Insert ATM card and enter PIN for validation. Select Banking transactions, followed by Funds Transfer Select Other Axis Bank account Enter beneficiary and other required details

When the customer has to perform transactions exceeding the limit or if the customer does not possess such cards, the cash section is necessary. In order to withdraw money, the customer has to bring a bearer cheque with the account holders signature at the back side. If it is an account payee cheque or order cheque, the cash cannot be withdrawn as such. In such cases, it can only be transferred from account to account. For both withdrawing as well as depositing money to an account through the cash counter, the customer should fill up the cash chellan with all the details. The account number to which the money is to be deposited has to be written in the corresponding column and also the name of the account holder should be filled. If the cash to be deposited exceeds Rs. 50000, the PAN number also needs to be filled. In case the customer has not updated the PAN number, then he should submit a copy of the PAN card to the Assistant Manager and get it verified to proceed further. The date, contact number and denomination must also be filled appropriately. In case when the customer hasnt updated the PAN number in the account, then he should fill up the Form 60. But as per the modified RBI regulations, these forms are no more accepted. In case of transactions involving huge amounts (more than Rs. 1000000), the purpose of the transaction, source of money and the KYC (Know Your Customer) verification must be done for income tax purposes. 3.4 Bait Money: Bait money refers to those currencies whose serial number is recorded by the bank by listing in a log book. During a bank robbery if robber has taken the bait money, details of this can be passed on to the police. If the money is found in the possession of someone or used to purchase goods then it is often easier to find the perpetrator of the bank robbery. When the bait money has left the bank it is known as hot money. There are three types of bait money 1. Vault bait 2. Counter bait 3. Transit bait 3.4.1 Vault bait: Vault bait refers to the money kept in the vault. This will be taken out only when the cash at the counter gets over.

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3.4.2 Counter bait: Counter bait refers to the cash kept in the counter for the transaction purposes of the customers. 3.4.3 Transit bait: Transit bait refers to the cash in transit from a bank to bank or even to other branches. The cash will be taken by a staff and also a gun man will always be present when cash is being transported. 3.5 Conclusion The general idea is that the teller has to collect money and lend money when approached by customers. This is not true. At the end of the day, it has to be checked whether the cash in hand gets balanced with the records in hand. Also the cash received has to be checked whether it is fake or not. If the cash is found to be fake, then the teller has to record the same and inform the higher official.

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CHAPTER 4 CLEARING AND TRANSFER

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4 Clearing and Transfer 4.1 Introduction on Clearing Clearing refers to the process of transferring money to the customers account when cheque of another bank is deposited in the customers name. In the earlier system of clearing cheques, the process was a tedious process. It used to take minimum of 4-5 days for clearing the cheques received from banks within the state. If the cheques received were from banks outside the state, then it used to take more than a week. The clearing cheques received at the bank are taken to the clearing house in the district. The clearing house receives cheques from other banks in the district too. The person in charge separates the clearing cheques bank-wise. Then the total amount to be credited and debited is calculated. If the amount is to be received, the cheques are taken to the respective banks and if the amount is to be given, then those cheques are received. The transit of cheques used to take several days. This process had several disadvantages. There are chances that the instrument may get lost during the transit. The transport of instruments to the other banks may take several days. In order to overcome such difficulties, the Cheque Truncation System (CTS) was introduced. 4.2 Cheque Truncation System: Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing. In order to implement effectively it has been ordered that the customers who are using older cheques must apply for CTS cheques. Beginning from July 1st 2013, the older cheques will not be accepted by any banks. The CTS cheques have a barcode which helps to recognize the corresponding cheques. For easy identification of the common man, the word CTS will be present on the left hand side of the instrument. 4.2.1 Cheque Truncation in India: Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related
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problems, thus benefitting the system as a whole. With the other major products being offered in the form of RTGS and NEFT, the Reserve Bank has created the capability to enable inter-bank and customer payments online in near-real time. However, as cheques are still the prominent mode of payments in the country and Reserve Bank of India has decided to focus on improving the efficiency of the cheque clearing cycle, offering Cheque Truncation System (CTS) as an alternative. CTS is a more secure system for the exchange of physical documents. In addition to operational efficiency, CTS offers several benefits to banks and customers, including human resource rationalization, cost effectiveness, business process re-engineering, better service, adoption of latest technology, etc. CTS, thus, has emerged as an important efficiency enhancement initiative undertaken by Reserve Bank in the Payments Systems area. The Reserve Bank has implemented CTS in the National Capital Region (NCR), New Delhi and Chennai with effect from February 1, 2008 and September 24, 2011. After migration of the entire cheque volume from MICR system to CTS, the traditional MICR-based cheque processing has been discontinued in these two locations. Based on the advantages realized by the stakeholders and the experienced gained from the roll-out in these centres, it has been decided to implement CTS across the country. Accordingly, Grid based CTS clearing started in Chennai by including a few banks from Coimbatore and Bengaluru with effect from March 2012. It has also been envisaged to bring all the bank branches in the states of Tamilnadu, Kerala, Karnataka, Andhra Pradesh and the Union Territory of Puducherry under Chennai Grid in a phased manner. Grid-based Approach: Under this approach the entire cheque volume in the country cleared across numerous locations will be consolidated into a much fewer number of grids. The concept of region wise grids will be replaced and operational freedom will be given to the operator in deciding the number of grids required to expand the reach of CTS Pan-India and also on choosing the locations for each grid for optimum use of the resources. Each grid will provide processing and clearing services to all the banks under its jurisdiction. Banks, branches and customers based at small / remote locations falling under the jurisdiction of a grid would be benefitted, irrespective of whether there exists at present a formal arrangement for cheque clearing or otherwise. 4.2.2 Process Flow of CTS: In CTS, the presenting bank (or its branch) captures the data (on the MICR band) and the images of a cheque using their Capture System (comprising of a scanner, core banking or other application) which is internal to them, and have to meet the specifications and standards prescribed for data and images.
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To ensure security, safety and non-repudiation of data / images, end-to-end Public Key Infrastructure (PKI) has been implemented in CTS. As part of the requirement, the collecting bank (presenting bank) sends the data and captured images duly signed and encrypted to the central processing location (Clearing House) for onward transmission to the paying bank (destination or drawee bank). For the purpose of participation, the presenting and drawee banks are provided with an interface / gateway called the Clearing House Interface (CHI) that enables them to connect and transmit data and images in a secure and safe manner to the Clearing House (CH). The Clearing House processes the data, arrives at the settlement figure and routes the images and requisite data to the drawee banks. This is called the presentation clearing. The drawee banks through their CHIs receive the images and data from the Clearing House for payment processing. The drawee CHI also generates the return file for unpaid instruments, if any. The return file / data sent by the drawee banks are processed by the Clearing House in the return clearing session in the same way as presentation clearing and return data is provided to the presenting banks for processing. The clearing cycle is treated as complete once the presentation clearing and the associated return clearing sessions are successfully processed. The entire essence of CTS technology lies in the use of images of cheques (instead of the physical cheques) for payment processing. 4.2.3 Features of CTS cheques: The CTS cheques must consist of minimum security features prescribed under CTS Standards 2010, such as embedded verifiable features such as bar-codes, encrypted codes, logos, watermarks, holograms, etc., for early interception of altered / forged instruments. Images that do not meet the specifications are rejected. As the payments are made on the basis of the images, it is essential to ensure the quality of the images. To ensure only images of requisite quality move in the CTS processing cycle, there is a rigorous quality check process at the level of the Capture Systems and the Clearing House Interface (of the presenting bank). The solution encompasses Image Quality Assessment (IQA) at different levels. The presenting bank is required to perform the IQA during the capture itself. Further IQA is done at the gateway before onward transmission to clearing house. The images are captured with digital signatures of the presenting bank and thereafter transmitted to the Clearing House and then to the paying banks. Further, the paying banks, if not satisfied with the image quality or for any other reason, can ask for the physical instrument to facilitate payment processing. 4.2.4 Clearing at Axis Bank: In this system, the cheques received from other banks are collected and taken to the service branch in the district. The cheques along with the pay slip are scanned and sent to the RBI through e-mail. The new process of clearing takes maximum of one day for clearing of cheques
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from anywhere across India. The first session of clearing has a cut off time till 11 am. The second session time limit is till 1.00 pm. The cheques which are collected after 1.00 pm are stocked with the seal Too late for todays clearing. These cheques are taken for the next days clearing. On Saturdays, the cut off time is till 11 am. The cheques received after that will be sent to the clearing house only on the next Monday. A list of the cheques collected is prepared with the details of the bank name, cheque number and the amount. This list is also necessary when the cheques are taken to the clearing centre. This will be used for the verification of the cheques at the clearing house. 4.3 Transfer: The transfers can be of three types: 1. Account to account transfer 2. RTGS (Real Time Gross Settlement) 3. NEFT ( National Electronic Fund Transfer) 4.3.1 Account to account Fund Transfer: As the name depicts, this refers to transfer of fund between accounts of the same bank (Axis Bank). This does not require any commission or charges. The one who transfers has to provide a cheque drawn in the name of the account holder to whom the fund is to be transferred. A transfer chellan or pay slip has to be filled up and submitted along with the cheque. The account details of the receiver are to be mentioned in the pay slip along with the cheque number. 4.4 National Electronic Fund Transfer: The Reserve Bank of India introduced the electronic system of fund transfer in India and this system is called the National Electronic Fund Transfer System or NEFT system. This system facilitates an efficient, secure, economical, reliable and expeditious system of funds transfer in the banking sector throughout India. If a person or customer wishes to transfer funds through the NEFT system, he should fill up the NEFT application form with the necessary details. Some of the most frequent terms in the NEFT system are as follows: Beneficiary refers to the customer in whose name the funds are to be transferred (the one who gets benefitted). Beneficiary Bank refers to the bank which holds the account of the beneficiary. NEFT clearing centre is any office designated by the Nodal department for receiving, processing and sending NEFT SFMS message and the debiting and crediting of accounts of the participating bank. The National Clearing Cell, Reserve Bank of India, Nariman Point, Mumbai has been designated as the NEFT Clearing Centre in India. NEFT SFMS message is an electronic Structured Financial Messaging Solution which contains a batch of NEFT payment instructions sent from NEFT service centre to NEFT clearing centre.

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4.4.1 Process Flow: Funds transfer refers to the series of transactions beginning with the issue of payment instruction to the sending bank and is completed by the acceptance of payment instruction by the beneficiarys bank for the purpose of making payment to the beneficiary as per the instruction. The customer who wants to transfer fund by NEFT should fill up the application form and it should be duly signed by the authorized signatory. The submission of this application form to the sending bank denotes that the bank is authorized to transfer funds from the senders account to the beneficiarys account. The application can be submitted either electronically or physically. The NEFT application form should be as per the standard model. A bank may reject a customers request for funds transfer in the following cases: There is insufficient fund in the senders account or if the funds available are reserved for some other purpose. If the customer has not filled up all the necessary details of the beneficiary required to perform NEFT.

The necessary details of the beneficiary involve name, branch name, bank name, account type, account number and branch IFSC. IFSC stands for Indian Financial System Code. This code is used to identify the participating banks branch in the NEFT system. 4.4.2 NEFT at Axis Bank: The process of NEFT followed at Axis Bank is as per the regulations mentioned by the Reserve Bank of India. The NEFT application form provided at Axis Bank requires the details of the customer as well as the beneficiary. The senders name, account type, account number, contact details, the amount to be transferred and the cheque number must be filled up. Under the column beneficiary details, the beneficiarys name, account number, bank name, branch name and IFSC should be mentioned. The contact details of the beneficiary also should be mentioned. The form should be duly signed by the authorized signatory. The terms and conditions are mentioned at the back side of the form. The terms and conditions should also be accepted and signed by the person authorized to handle the account. NEFT can be done for any amount from Rs.1 onwards. It may take maximum of 48 hours for the funds to get transferred. The forms for NEFT are accepted till 3.30 pm during the regular working days and on Saturday the time limit is till 12.00 pm. Once the form is received from the customer, the signature on the cheque as well as the form is verified. If the signature does not match, then the ID proof of the customer is verified and then the form is processed. In such cases, if there is no identity proof, then the transaction will not be done.

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4.5 Real Time Gross Transfer: Real Time Gross Transfer is also like the NEFT system. The transfers beyond Rs. 200000 are transferred through RTGS. The fund transfer takes place almost immediately. Once the transaction is done, a reference number will be generated and also a message will be sent to the beneficiary. The requirements of RTGS are also similar to that of NEFT. The necessary details should be filled up in the form. The cheque should be named as Yourself for RTGS. The forms for RTGS and NEFT are similar. Once the form is submitted along with the cheque, then the official processes the transaction and a transaction id will be created. The id, time and date of the transaction will be noted down in the corresponding column of the form. The form is then given to another official for the purpose of verification. Each official will be given a limit for verification. The process of verification is done in order to check if the particulars have been entered correctly by the officer. If there are any mistakes, then the corrections should be made by the one who has done the entry by the process of modifying the corresponding transaction id. If there are no mistakes, the RTGS will be posted and the amount will be debited from the particular account and credited to the desired beneficiarys account. For the reference of tracking the transaction, a number called UTR number will be generated and sent to the customers account. In case there is any mismatch between the account number and name or any other error, then the amount will be credited back to the customers account. In such cases, the customer should be contacted and the information should be conveyed. The customer can give the correct details either in a new form or the correction can be made in the same form. The corrections should be signed by the authorized signatory. The official should then delete the entry made priorily and new entry of the transaction should be made. The new transaction id should be noted down and then should be verified by the authorized official. In case the time limit for RTGS is over, then the entry has to be deleted and a new entry can be done for the same transaction as NEFT. During regular days, the time limit for RTGS is till 4.00pm. On Saturday, the time is till 1.00 pm. On Saturdays if the entry gets delayed, then it cannot be done through NEFT as the time limit for NEFT gets over by 12.00 pm. In such cases the entry has to be deleted and should be re-entered only on the next banking day.

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CHAPTER 5 PRODUCTS & SERVICES OFFERED

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5 Products and Services Offered at Axis Bank: The products offered at Axis Bank are based on the various segments personal, corporate, business, NRI, rural and agriculture. 5.1 Personal Banking: Under the personal banking, the major products offered are savings account, current account and salary account. A special account called Womens Account is also available now. 5.1.1 Easy Access Savings Account: The Easy Access Savings account provides the customer continuous and easy access to the funds available in the account. Tracking the account activities is also easier in this type of account. The minimum opening deposit is Rs. 10000 for urban and semi-urban areas. The customer will receive an interest of 4% for the daily balance and this will be paid quarterly to the account. The account holders can have internet banking as well as mobile banking facilities. Also five free transactions are allowed in other bank ATMs for a month. The minimum average quarterly balance to be maintained is Rs. 10000 in urban and semi-urban areas. In rural areas the average quarterly balance to be maintained is Rs. 5000. The debit cards can be used to withdraw a maximum of Rs. 40000 per day from ATM. The account holders will get one free at-par cheque book with 20 leaves for one quarter. If an account holder needs more than one cheque book per quarter, it will be charged and debited from the account. The charge per leaf is Rs. 5. 5.1.2 Personal Current Account: The types of current accounts offered for individuals are the Resident Foreign Currency (Domestic) Account. The RBI has permitted Indian residents to hold foreign currency without any charges. This is facilitated by RFC (D) accounts. The RFC (D) accounts are more commonly known as NRO account. Axis Bank enables its customers to maintain non-interest bearing current account in four major currencies - USD, EURO, GBP and Japanese Yen. There is no ceiling on the balances held in the account. Cheque books denominated in USD or GBP or EURO or Yen will be issued on these accounts with 25 leaves. The cheques thereby branded as RFC (Domestic) Account cannot be presented in clearing and will be payable only at the issuing branch. The minimum balance for such a current account will be USD 100 or GBP 60 or EURO 100 or Yen 20,000. There will be a penal charge of USD 5 or GBP 3 or EURO 5 or Japanese Yen 1,000 per quarter in case of failure to maintain the minimum balance requirements. The RFC (D) account holders are not given the facility of ATM usage. They can use the iConnect facility (internet banking for Axis Bank) for any enquiry purposes.

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5.1.3 Salary Power Scheme: Savings Account under Salary power scheme is a special account offered to customers with regular direct salary credits coming into this account. In case, the monthly salary is not credited into the account for more than 3 consecutive months, the special features offered under this account will be withdrawn and the account shall be treated as Normal Savings Account under the standard charge structure and Average Quarterly Balance (AQB) is required to be maintained. All charges shall be levied and applied as applicable to normal savings accounts. Moreover the Know Your Customer (KYC) must be complied with as applicable to a Normal Savings Bank account and documents are to be submitted, failing which there would be a credit freeze marked on the account. The Easy access salary account provides a number of benefits to the account holders. The holder can access at any of the branches and ATMs across India. The holder will be provided one free at-par cheque book per quarter. The customer can take one free Pay Order / Demand Draft drawn at Axis Bank locations per month. There will not be any commission or charge for collection of outstation cheques drawn on Axis bank locations. They can have electronic banking facility across all banks in India. The account holder is also facilitated with Internet banking and mobile banking facilities. Also, they will be provided with free SMS alerts for debits and credits over Rs. 5000, balance enquiry, enquiry on last three transactions and status of cheque clearance. If the customer prefers, a free quarterly statement will be provided either in the physical form or the electronic form as per the preference. The holder will be provided with a Visa Classic debit card. It has unlimited transactions over any of the Axis ATMs over India and 5 free transactions in other bank ATMs for a month. It will be charged Rs. 100 per annum for purchase transactions exceeding Rs. 15,000. The maximum withdrawal limit per day is Rs. 40,000. The customer will get an overdraft facility limit of up to 2/3 times of the net salary as per the eligibility. Also they can avail preferential rates on personal loans, auto loans and home loans as per eligibility criteria. 5.1.4 Prime Salary Account: The employees who earn a minimum of Rs. 25000 per month can hold a prime salary account in Axis bank. The account holder will be provided with a Master card Titanium Reward Debit card, for which the issuance charges will be waived. Unlimited cash withdrawal across any ATM and also the maximum withdrawal limit per day will be Rs. 50,000. Purchase transaction limit will be Rs. 2 lakhs per day. They will also be provided with occasion based cash back offers. The holder will be provided a personal accident cover of up to Rs. 5 lakhs on MasterCard Titanium Reward Debit card. All consumer durable goods bought using the debit card are insured against fire, natural calamity, and theft for up to 90 days from the date of purchase.

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5.1.5 Womens Account: There is a special scheme of account for women. The unique feature of this account is that it is a zero balance account. It is not necessary to maintain any minimum average balance as in other personal savings account. The major purpose of introducing this account is to attract household women toward opening an account. The initial funding for this account will be Rs. 10000. Once the account is opened and the customer receives a message, she can withdraw the money immediately. The customer will receive an instant kit of debit card and debit card pin. Cheque books are not issued for this type of accounts and also pass books will not be issued. If the customer wants to know the details of the transactions done in the account, then she has the option of getting the statement for the period desired. 5.2 Business Purposes: For business purposes, the following types of accounts are offered by Axis Bank: 1. 2. 3. 4. 5. 6. 7. 8. Normal Current Account Local Current Account Business Advantage Account Business Select Account Business Classic Account Privilege Account Channel One Account Club 50 Current Account

5.2.1 Normal Current Account: The monthly average balance to be maintained is Rs. 10000. At home branch, the cash deposits upto Rs. 200000 per month is devoid of charges. If the deposits are made at a branch other than the home branch, then deposits of more than Rs. 100000 will be charged. Cash withdrawal of upto Rs. 100000 from branches other than home branch is free. The DD and PO will be charged at nominal cost. Also a free transaction package of 25 transactions is also provided. 5.2.2 Local Current Account: Small businesses coming up in the local areas are provided with this type of account. They may not be able to maintain the monthly average balance of Rs. 10000. Hence to promote such people, Axis Bank offers the local current account. Almost 75 transactions are free in a month based on a combination of services. A nominal annual charge of Rs. 1999 and Service Tax will be charged. The account can be renewed every year with a nominal fee to continue with the same benefits. If average balances maintained in a quarter exceeds Rs. 50000, there will be a rebate of 15% on the annual charges.

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5.2.3 Business Advantage Account: The Business advantage account offers a wide variety of attributes with a requirement of maintaining Rs. 25000 as the monthly average balance. At home branch a cash deposit limit of upto Rs. 3 lakhs is allowed. Inter branch transactions of upto Rs. 1 lakh is permitted per month. A cheque book of 50 leaves can be received on request at zero charges in a month. Inter branch cash withdrawal limit is set to Rs. 3 lakhs per month. A free transactional package of 50 transactions consisting of cash or transfer or clearing is also provided. 5.2.4 Business Select Account: Business select account is a unique current account which has flexibility of free limits as its core feature. The monthly average balance to be maintained should be Rs. 50000. Flexibility in limits refers to cash deposits. The minimum free limit of cash deposit is Rs. 600000. Also the customer gets a free deposit limit of upto 12 times the monthly average balance maintained in the same cycle. Also there is free limit in deposits at home branch as well as other branches. Also the account holder can avail a cheque book with 100 leaves per month without any charge. The account holder also gets a free transactional package of upto 100 transactions per month. 5.2.5 Business Classic Account: In this account, the customer gets a free cash deposit limit of Rs. 1200000 at the home branch and a limit of Rs. 250000 per month at branches other than the home branch. The customer can avail 200 cheque leaves per month for zero charges. Intercity cash withdrawal of upto Rs.1200000 is permitted. A free transactional package consisting of 200 transactions per month is also available. 5.2.6 Privilege Account: The Business privilege account is for those customers who are ready to maintain a monthly average balance of Rs. 500000. As the name denotes, this account has enhanced facilities when compared to the other business accounts. The home branch cash deposits is free till Rs. 60 lakhs and inter branch cash deposit is free till Rs.1250000 per month. The customer will not be charged for taking Demand draft and Pay order. Free 500 cheque leaves are available per month. The transactional package consists of free 500 transactions per month. Also the customer will not be charged for any NEFT or RTGS. 5.2.7 Channel One Account: Channel One account is the high end current account for which the minimum monthly average balance to be maintained is Rs. 1000000. Free monthly cash deposits upto Rs. 1.2 crores at any Axis branch across India is permitted per month. Customer can avail 1000 free cheque leaves per month. The transactional package consists of 1000 transactions per month. As in privilege

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account, DD and PO issuance charges will be nil and also the NEFT and RTGS charges will also be nil. 5.2.8 Club 50 Current Account: The minimum average quarterly balance to be maintained is Rs. 50 lakhs in urban areas whereas it is Rs. 25 lakhs in semi-urban and rural areas. The major attractive features are as follows: 1. 2. 3. 4. 5. Free cash deposit of upto 2 crores at any Axis branch across India Free DD and PO transactions Any number of cheque leaves can be availed free of charge Free transactional package of 2000 transactions Free NEFT and RTGS services

All these business accounts are provided with some ancillary services like mobile alerts, ATM cum debit card, phone banking, corporate net banking and account statements through e-mail. The charges will be different for the different business accounts. 5.3 Salary Account: Axis bank provides salary accounts to employees of the various companies. Customized salary accounts are provided based on the requirements. 5.3.1 Corporate Salary Account: As mentioned, there are customized salary accounts. The types are as follows: Prive Salary - For employees with net monthly salary of Rs.5,00,000/- or more Wealth Salary - For employees with net monthly salary of Rs.2,00,000/- or more Priority Salary - For employees with net monthly salary of Rs.60,000/- or more Prime Salary - For employees with net monthly salary of Rs.25,000/- or more Easy Access Salary - For employees with net monthly salary of Rs.9,000/- or more Salary Plus - For employees with net monthly salary of Rs.9,000/- or more. Currently being offered only to existing relationships Smart Pay Card - For employees with net monthly salary less than Rs.9,000/The major feature is that it is not necessary to maintain average balance and hence there will not be any penalties for not maintaining the balance. Also the customers will get concession in taking pay orders and demand drafts. The major advantage for the employers in creating salary accounts for the employees in Axis bank lies in the fact that web upload facility to upload salaries at the employers convenience. Also depending on the necessity, the employer can install an Axis bank ATM at the premises. 5.3.2 Defense Salary Account (Power Salute): The defense accounts are provided with unlimited at par cheques. Also, there are no commission charges for taking demand drafts, pay orders, electronic fund transfers and for collection of outstation cheques. The account holder gets SMS alerts on transactions above Rs. 5000. Also a quarterly e-statement will be sent to the account holders address. As an additional service to the
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family, add-on ATM card facility is also provided. Also the defense people are provided with preferential rates for personal loans, auto loans and home loans based on the eligibility criteria. 5.3.3 NRE Salary Account: When any establishment has more than ten NRI employees, then they can avail for NRE salary accounts. All the basic facilities are available like free multi city cheques, free international debit card, free internet banking, free demand draft issuance, monthly e-statement etc. The cash withdrawal limit is Rs. 40000 per day. 5.4 Agriculture and Rural Accounts: India has an agro-based economy. Though majority of the population is involved in agricultural activities and is from rural areas, it is understood that they may not be able to meet the requirements of several other accounts. To encourage people with such background, Axis bank provides a number of special accounts. Some of them are discussed below: 5.4.1 Krishi Savings Account: This account was started with the aim of reaching the farmers. The account is designed as per the basic requirement of a farmer. The half-yearly average balance to be maintained in urban centres is Rs. 5000 whereas in semi-urban and rural centres, it is Rs. 2500. The customers will get an international debit card with a withdrawal limit of Rs. 25000 per day. 5.4.2 Krishi Current Account: The Krishi current account is also meant for farmers and agriculturalists. The minimum halfyearly average balance to be maintained is Rs. 10000 in urban areas, Rs. 5000 in semi-urban and Rs. 2500 in rural areas. If the account holder maintains a higher average balance, he will get a rebate on transaction charges. The percentage of rebate varies with the balance maintained. The higher the average balance, the higher the rebate. Also multi city at par cheques are also provided. The other facilities involve mobile alerts, internet banking, ATM cum debit card etc. 5.5 Fixed Deposits: Fixed Deposit, also called Term Deposit is an investment where the interest rate is guaranteed not to change for the nominated term. Axis Bank offers a variety of fixed deposit schemes. The minimum amount for opening a fixed deposit should be Rs. 10000 and the minimum period should be for 6 months. The additions of amount can be made at any time later. 5.5.1 Reinvestment Deposits: In a reinvestment fixed deposit scheme, the interest accrued on the deposit at the end of each quarter is invested along with the principal. The tenure of deposit must be a minimum of 6 months. At the end of the quarter, the interest and the principal are both rolled over, and the interest is calculated on the total sum. Income tax is deducted at source.
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5.5.2 Automatic Rollover: As a Fixed Deposit holder, the customer can avail of the facility for automatic rollovers on maturity (for both the principal and interest). This option can be selected in the Account Opening Document (AOD). The options available are: Rollover only Principal: Only the principal amount of the fixed deposit will be rolled over. The interest will be either credited to the designated account or paid out. Rollover Principal and Interest accrued in Reinvestment Deposit scheme: These types will rollover both the deposit and the interest accrued for the same tenure at the interest rates applicable on the maturity date. 5.6 Recurring Deposits The recurring deposit is a type of term deposit in which a fixed amount has to be deposited every month into the recurring deposit account and the interest will be at the rate that is offered for fixed deposit. At Axis Bank, recurring deposits are accepted at equal monthly installments of minimum Rs.1000 and above in multiples of Rs. 500. The minimum period should be for 12 months and can be multiple of 12 months. The maximum period allowed is 120 months (10 years). Once the amount of installment is fixed, it cannot be changed after that. The installment for a month should be made on or before the last working day of the same month.

5.7 Conclusion The above mentioned accounts are few of the accounts offered by Axis Bank Ltd. Other than offering accounts and deposits to customers, Axis Bank also offers insurance policies joining hands with Bajaj Allianz as well as Tata AIG. There are insurance like medical insurances, accident shields, insurance policies for automobiles etc. Also Axis Bank has a joint venture with Max Life Insurance.

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CHAPTER 6 CUSTOMER SERVICE

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6 Customer Service at Axis Bank Ltd: 6.1 Introduction One of the major reasons that customers are attracted towards Axis Bank is their service to the customer. Customers consult the bank for a variety of enquiries and requests to be processed. Though the banking operations are being mechanized, the significance of banks has not been reduced. There are still a lot more areas in which a customer requires the help of banking official. There are requests which can be processed at the branch level as well as requests when it has to be sent to the service branch in Mumbai. 6.2 Types of Requests There are so many enquiries and requests to be processed for customers. In order to process the requests in the bank, there are specific formats for each type of requests. The various forms available are customer request form, account opening form, account transfer form, account closure form, debit card application, corporate net banking requests etc. 6.3 Customer Request Form This is a single form which has several options. It is necessary to fill up the date, name, account number and customer id columns. There are separate columns for the following needs: 6.3.1 Mobile number updation When a customer has changed his mobile number and wishes to change the mobile number for future communication purposes like SMS alerts and transaction alerts, he can fill up the corresponding column in the request. If the customer wants to update it himself, he can do it by going to the Axis bank ATMs and then go for the option mobile banking and proceed based on the instructions. When the customer submits the form for mobile number updating, the official goes to the site for iConnect mobile banking and then changes the number using the option Mobile banking modification. 6.3.2 Landline Number Updation This is similar to that of mobile number updating. But this is not often received as request in the bank and also not much desired by the customers as it is the era of mobile phones. The landline number is updated only in the account details. The bank uses this number when bank cannot contact the customers on mobile phones.

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6.3.3 E-mail id updation If the customer wishes to receive the monthly or quarterly e-statements, then he can register by updating the mail id in the account. To process this request, the official scans and send the request to the service branch in Mumbai. It will be updated in 2 to 3 days and an acknowledgement mail will be sent to the official who has sent the request. 6.3.4 PAN and Aadhar updation As per the RBI regulations, when a customer has to perform transactions of more than Rs. 50000, the PAN number (Permanent Account Number) has to be updated in the account for security purposes. In such cases, it is safe for the customers to keep their PAN updated. For both PAN and Aadhar updating, the customer has to fill up the corresponding columns and also submit a photocopy of the PAN or Aadhar as required. The original has to be checked and verified by the official who is receiving the request from the customer. Also the signature has to be verified. The request is then scanned and sent to the service branch in Mumbai. 6.3.5 Change of Address For changing the mailing address in the account, the customer has to fill in the column for change of address and all the necessary details required in the request. An address proof in the name of the account holder is also required. The same is scanned and sent. The address gets updated in 2 to 3 days. 6.3.6 Cheque Book Request The cheque book requisition slip is provided in the cheque book. In case if the customer does not have the slip, then he can get the customer request form and fill in the details required and also write down the number of cheque books required. The signature of the customer is verified and then sent to the service branch. The cheque book will be sent to the customer as per the address in the account. It will take atleast 7 banking days for the customer to receive a new cheque book after submitting the request. The cheque book requisition can also be done at the Axis Bank ATMs. The processing time is the same for both. 6.3.7 Statement Request There are several conditions in which a customer may require a printed copy of the statement of their account. In such cases, they may also require a statement with the seal of the bank. The date for the period in which the statement is needed has to be written down and the form must be signed. The signature is verified by the official and the statement for the period can be

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generated by going to the web site Finacle MIS. The statement will be printed and the hard copy will be given to the customer immediately. 6.3.8 Account Activation In cases when the account has been frozen or become dormant as there have not been any transactions for a long period of time, the customer can request for account activation for using the account in future. The customer has to mention the reason for not using the account for such a long period of time. The identity proof and address proof of the customer should be submitted along with the request. The account activation request has also to be sent to the service branch. 6.3.9 Debit card Related Requests There may be situations when a customer has to de-activate the debit card. This occurs mostly when the customer has lost the card and it has to be blocked to prevent any unnecessary transactions. The 16 digit debit card number has to be written down and the colum n Debit card de-activation has to be ticked. There is a link for knowing the card details and also an option for hot listing or blocking is also available. The official can hotlist the card immediately. If the customer has got back the debit card, then he will have to re-activate his card to continue using the same. For re-activation of the card, the customer must submit the identity proof along with the request. On receiving the request, the official must sent a mail to the corresponding mail id asking to re-activate the debit card along with the account number and debit card. The card will be activated on the same day. If the customer has forgotten the secret pin of the debit card, then he has to apply for a duplicate pin. Tick the corresponding column and the form must be signed. The request will be sent to the service branch. A new duplicate pin will be generated and sent to the customers address. It will take upto 5 7 banking days. 6.3.10 Stop Payment If a customer has given a cheque for payment and there is no sufficient balance in the account, then he can stop the payment of the cheque by specifying the cheque number in the request. The payment can be stopped only if there is sufficient balance to debit the stop payment charges. The customer can also submit a letter along with the details of the cheque like cheque number and the amount mentioned. It is mandatory to process the stop payment requests immediately on receiving the request.

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6.3.11 Reversal of Charges If the customer finds that his account has been debited of a specific charge more than once or due to some other mistakes, he can request for the reversal of charges in the customer request. The details like the date and amount being debited should be mentioned. 6.3.12 Issuance of Pass book For most of the accounts, pass books are not provided. In case the customer prefers to have a pass book, then a request has to be submitted along with a passport size photograph. The pass book will be issued immediately. 6.3.13 Other Requests Other than these specified requests, customer may have some additional requests like net banking activation, de-activation of SMS alerts etc. Such requests must be mentioned in the Others column. It should be signed by the customer. 6.4 Account Opening There are different account-opening forms based on the type of account being opened. The format is different for each type. The three major formats are Savings Account form, Current Account form and Prime Account form. The details have to be filled up and the passport size photograph along with identity proof and address proof must be submitted. The initial funding should also be deposited based on the type of account. The duration for the processing of the form is 7 days. The officials are allotted points for the accounts they open. Each official will be given a target for each quarter which he or she has to achieve. 6.5 Account Transfer When a customer has shifted to a new place, he may wish to transfer his account to the branch in the new place. There is an account transfer form in which the details will have to be filled and the form must be signed. A photograph, identity proof and address proof must also be submitted along with the form. The reason for transfer should also be mentioned. If it is a joint account, then the photographs of all the joint holders along with their signature must be on the form. The signatures of the holders are verified and the forms are scanned and sent to the service branch.

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6.6 Account Closure If the customer wants to close the account, there is a separate format. The form should be filled with the details like account number, name, reason for closure, whether the cheque book and debit cards are destroyed or not etc. must be filled. The account holder must write the name and sign in the corresponding column. Once the form is submitted, the official has to go the link CUSTEYE in Finacle. On entering the account number, there will be a score called CVS score displayed on the screen. This score will be based on the transactions of the customer. The CVS should be filled in a separate form and signed by the official. If the score is more than 3, then the form should be attested by the Branch Head. 6.7 Debit Card Application There may be several situations when a customer wants a new debit card like card being lost or damaged or expired and not renewed etc. In such cases, he has to request for the issue of a new card. There are separate columns for single account and joint account. The customer should fill in the corresponding columns appropriately and completely along with the nomination details. The reason for the application should also be mentioned. The customer can choose the type of card he/ she prefers to have (Classic, Titanium Premium, and Titanium Rewards etc.) Also there is an option of getting an image card. If the customer prefers to have a classic card, then a passport size photograph is required. For the other cards, photograph is not a necessary requirement. If it is an image card, then the customer should sent the soft copy of the image he prefers to have on the card to the concerned officials mail id. All the applications are verified for the signature and also must be signed by the Operations Head. The employee code of the official who has accepted the application form from the customer must also be filled. For normal cards, the application forms are sent to the service branch in Coimbatore (RS Puram). If it is an image card, then the application should be sent to the service branch in Mumbai and the image should be sent to concerned mail id. The issuance charge of the debit card varies with the type of card. The card will be received by the customer in 7 to 10 banking days. The cards are directly sent to the customers address as in the account. If the customer is not able to receive the courier because of any reason, then it will be sent back to the home branch of the customer. The customer will then be informed via telephone for collecting the card from the bank. The debit card pin is sent separately to the customers address for security reasons. 6.8 Signature Updation A persons signature may not necessarily remain the same throughout his life. It may change as time passes. But the signature is verified for each and every process in a bank. If there are even
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minor variations, the banker may not proceed with the process. So if the signature has been changed, then the customer should fill up the corresponding application form. The customer should fill up the account number, customer id and name. He should sign in the column specified. A self attested identity proof must also be submitted. The application is scanned and sent by mail. The signature gets updated in the customers account in 3 to 4 banking days. 6.9 Corporate Net Banking For individuals to get access to internet banking, the process is very simple. One just needs to fill up the customer request form and submit it to the Front Desk Officer. He will get the iConnect pin in 4 to 7 banking days. But when it comes to the corporate, the process of applying is different. Priorily the customer request form was sufficient. But at present the forms have been updated. Depending on whether a concern is a partnership firm or proprietorship firm, there are different formats. It is in the form of a letter where blanks are provided to be filled up. The details like account number, firms name, the limit of transactions etc. have to be mentioned. In case of partnership firm, it should be confirmed if the initiator and approver can be a single person or it should be two different persons. This is done for security purposes for the transactions in firms. The letter should be printed on the firms letterhead and must be signed by the authorized signatory in case of sole proprietorship. In case of partnership firm, all the partners must sign the letter and also the firms seal must be kept. Along with the letter, there is a separate iConnect form for corporates. In the application form, the firms name, account number, customer id, preferred user id, the limit of transaction, the type of initiation and approval, the number of transactions that can be allowed in a month etc. should be filled up necessarily. There are columns specified for the signature of the authorized people. Once the form along with the letter is submitted, the signature is verified and the Operations Head signs the form. The form along with the letter are scanned and sent to the service branch in Mumbai. Once the application is processed, the iConnect pin will be sent to the firms address as in the account. In case of not being received by the customer, the courier is directed back to the home branch. The customer will be contacted later and will be asked to collect the pin from the bank. If the pin is collected by the customer from the bank, the identity proof of the customer should be photocopied along with the courier cover. The photocopy must be signed by the authorized person stating that he has received the password on the particular date. This is done for the safety purpose of banks so that complications do not arise later.

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6.10 Demand Draft Cancellation The validity of a demand draft from 1st April 2013 is three months from the date of the demand draft. If the demand draft is not deposited in the corresponding account within three months, then it has to be revalidated by submitting a letter in the bank where it was taken. The officials who have signed in the DD must sign it again after changing the date. In case, there are some mistakes in the demand draft like the amount being incorrect or the name being wrong, corrections cannot be made. The DD has to be cancelled in such cases and new DD must be taken. The customer should submit a letter stating the reason for cancelling the demand draft. Also a revenue stamp should be pasted behind the demand draft and it should be signed crossly over the stamp by the account holder from whose account the amount was debited. Once the letter along with the DD is submitted, the official cancels the DD. The amount gets remitted to the customers account. The charges for cancellation will be debited. If the mistake in the demand draft occurred due to the officials error, then it can be manually corrected and the banks label is pasted over the area where the correction is made. The correction is then signed by the concerned official. 6.11 Customer Complaint The most frequently received customer complaint is for debiting the account of money when customers try to withdraw money from ATM and the money does not come out from the machine. Usually, the amount gets credited back in 24 hours of the transaction. But there may be cases when it is not credited back. In such cases, the customer can submit a complaint. There is a separate complaint format. The customer has to mention the basic details and the nature of complaint. If it is in the case of money withdrawal from ATM, there are specific columns. The time of transaction, the ATM at which the problem occurred and the date of transaction should be mentioned. Once the complaint is received, the official submits the request through customer leverage site. The service team will investigate the case and when the reason for the error is found, then the amount will be credited back in the account. Also there is a complaint box in the bank. In case the customers are not satisfied with the service offered in the bank, then he can write a complaint letter and drop in the complaint box. The box will be checked frequently and the necessary measures will be taken as per the customer complaint.

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6.12 Conclusion These are some of the most common requests from customers and are processed almost daily. Most of the processing of requests was done manually initially. Now almost all processes are being centralized and automated to offer better customer service. There are advantages as well as disadvantages for this updation. The major advantage is the automated processing and security available. The major disadvantage which has been observed was that some processes are taking a longer period to get processed. In case there are any corrections in the request given by the customer, then it can be made known only after the service team has rejected the request mentioning the reason.

There are chances customers will get frustrated when they are made to know about the corrections after few days. Hence officials must check the requests if all the necessary details are mentioned by the customer. Else it may lead to customer dissatisfaction. But the proper processing of the requests can result in customer satisfaction and when they receive the response earlier than expected, it can lead customer delight.

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CHAPTER 7 FINANCIAL ANALYSIS

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7 Financial Analysis of Axis Bank 7.1 Introduction The banking sector in India is in a stage of transformation at present. Many of the public sector banks are undergoing structural changes whereas the private sector is getting modified by mergers and acquisitions. There have been several changes in the policies and regulations in the banking sector. Entry of private and foreign banks in the segment has provided healthy competition and is likely to bring more operational efficiency into the sector. However, before investing in a banking stock an investor should look at certain key performance ratios. The analysis of a banks accounts differs significantly from any other company due to their structure and operating systems. Hence the analysis and the ratios used are also different. 7.2 Operating Performance The operating performance of the bank can be measured using the following ratios. 7.2.1 Net interest margin (NIM) For banks, interest expenses are their main costs and interest income is their main revenue source. The difference between interest income and expense is known as net interest income. It is the income, which the bank earns from its core business of lending. Net interest margin is the net interest income earned by the bank on its average earning assets. These assets comprises of advances, investments, balance with the RBI and money at call. NIM = Interest income Interest expenses ----------------------------------------Average earning assets 7.2.2 Operating profit margins (OPM) Banks operating profit is calculated after deducting administrative expenses, which mainly include salary cost and network expansion cost. Operating margins are profits earned by the bank on its total interest income. OPM = Net interest income (NII) operating expenses --------------------------------------------------------Total interest income
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7.2.3 Cost to income ratio The cost to income ratio is calculated as a proportion of operating profit including non-interest income. Cost to income ratio = Operating expenses -------------------------NII + non interest income

7.2.4 Other income to total income This ratio can be calculated as a rate of the other income to the total income which includes both interest and non-interest income. Other income to total income = Other Income ---------------------Total Income 7.3 Financial Performance The next step of analysis is to find out the financial performance of a bank. This can be calculated using the following ratios. 7.3.1 Credit to deposit ratio (CD ratio) The ratio is indicative of the percentage of funds lent by the bank out of the total amount raised through deposits. Higher ratio reflects ability of the bank to make optimal use of the available resources. CD Ratio = Advances Deposits 7.3.2 Capital adequacy ratio (CAR) A bank's capital ratio is the ratio of qualifying capital to risk weighted assets. The RBI has set the minimum capital adequacy ratio at 10% as on March 2002 for all banks. A ratio below the minimum indicates that the bank is not adequately capitalized to expand its operations. The ratio ensures that the bank do not expand their business without having adequate capital.

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CAR =

Tier I capital + Tier II capital -----------------------------------Risk weighted assets

7.3.3 NPA ratio The net non-performing assets to loans (advances) ratio are used as a measure of the overall quality of the banks loan book. Higher ratio reflects rising bad quality of loans. NPA ratio = Net non-performing assets --------------------------------Loans given

7.3.4 ROA Returns on asset ratio is the net income generated by the bank on its total assets. The higher the proportion of average earnings assets, the better would be the resulting returns on total assets. Similarly, ROE (returns on equity) indicates returns earned by the bank on its total net worth. ROA = Net profits --------------Avg. total assets

7.4 Efficiency Analysis The efficiency of a bank can be measured in terms of the performance per employee. The major ratios used to analyze the efficiency are as follows: 7.4.1 Interest income per employee The interest income per employee denotes the income generated through interest per employee and can be calculated as follows: Interest Income per Employee = Total Interest Earned Number of employees 7.4.2 Net Profit per employee The net profit earned per employee can be calculated using the formula:
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Net profit per employee =

Net profit Number of employees

7.4.3 Business per employee The total business for a bank is the sum of the advances lent by the bank and the deposits received by the bank from the customers. The business per employee can be calculated using the formula: Business per employee = Total Business Number of employees 7.5 Analysis of Axis Bank: The profit and loss statement for Axis Bank from the years 2010 to 2013 is as follows: Table 7.5.1 Profit and Loss Statement
P&L Statement INCOME Interest earned Interest/discount on advance/ bills Income on investments Interests on balances with RBI & inter-bank funds Others Other income Total EXPENDITURE Interest expended Interest on deposits Interest on RBI/ inter bank borrowings Others Operating expenses Gross Profit Provisions and contingencies Total NET PROFIT 2013 271825744 191662356 77469805 1112621 1580962 65511063 337336807 175163111 150155486 4596175 20411450 69142375 93031321 41236992 285542478 51794329 2012 219946474 153793526 63942666 984267 1226015 54202163 274148637 139769024 121836378 2319578 15613068 60070995 74308618 31886564 231726583 42422054 2011 151548058 104031107 44386841 1826199 1303911 46321338 197869396 85918230 74985188 1609768 9323274 47794281 64156885 30271979 163984490 33884906 2010 116380215 79866040 34283084 1200049 1031042 39457819 155838034 66335261 57145252 1493646 7696363 37097223 52405550 27260217 130692701 25145333

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The balance sheet of Axis Bank for the period 2010 to 2013 is given below: Table 7.5.2 Balance Sheet for the year ending on March 31st 2013
BALANCE SHEET CAPITAL AND LIABILITIES Capital Reserves & Surplus Employee Stock Option Deposits Current Savings Term Borrowings Other Liabilities and Provision TOTAL ASSETS Cash and Balances with RBI Balances with banks and money at call on short notice Investments Advances Fixed Assets Other Assets TOTAL 2013 4679545 326399054 0 2526135881 483220974 637777349 1405137558 439510984 108881120 3405606584 147920883 56428716 1137375370 1969659574 23556420 70665621 3405606584 2012 4132039 223953384 0 2201043033 397540719 516679577 1286822737 340716721 86432757 2856277934 107029214 32309943 931920859 1697595386 22593250 64829282 2856277934 2011 4105458 185882797 1892378019 369170932 408503090 1114703997 262678824 82088627 2427133725 138861630 75224929 719916208 1424078286 22731456 46321207 2427133716 2010 4051741 156392749 1734 1413002175 321677365 338617974 752706836 171695512 61334608 1806478519 94820456 57218631 559748156 1043409464 12224199 39057613 1806478519

The operating performance of Axis Bank Ltd for the years 2011, 2012 and 2013 have been calculated using the data available in the profit and loss statement and is shown below: Table 7.5.3 Operating Performance of Axis Bank Ltd OPERATING PERFORMANCE Net Interest Margin Operating Profit Margin Cost To Income Ratio Other Income To Total Income 2013 3.32% 10.12% 20.50% 19.42% 2012 3.29% 9.14% 21.91% 19.77% 2011 3.38% 11.77% 24.15% 23.41%

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The financial performance of Axis Bank Ltd is displayed below: Table 7.5.4 Financial Performance of Axis Bank Ltd FINANCIAL PERFORMANCE CD RATIO CAR NET NPA ROA 2013 77.97% 17.00% 0.36% 1.65% 2012 77.13% 13.66% 0.28% 1.61% 2011 75.25% 12.65% 0.29% 1.60%

The next stage in the analysis is to find out the efficiency of the employees in the bank. This can be interpreted using the following rates: Table 7.5.5 Efficiency Analysis EFFICIENCY Interest Income Per Employee Profits Per Employee Business Per Employee 2013 7171.993984 1366.56893 118619.4416 2012 2011

6930.06724 5732.85636 0.01088125 0.0102172

122838.188 125457.019

7.6 Comparative Analysis of Operating Performance The operating performance of Axis bank has been compared with that of HDFC bank and ICICI bank for the last three years. The chart below depicts the comparison of operating performance for the year ended on March 31st 2013.
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% NIM OPM COST TO INCOME OTHER INCOME TO TOTAL INCOME AXIS ICICI HDFC

Fig 7.6.1 Comparative Operating Performance for the year 2013

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The chart below depicts the comparison of operating performance for the year 2012.
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% NIM OPM COST TO INCOME OTHER INCOME TO TOTAL INCOME AXIS ICICI HDFC

Fig 7.6.2 Comparative Operating Performance for the year 2012

The chart below depicts the operating performance of the three banks for the year 2011.
35.00% 30.00% 25.00% 20.00% AXIS 15.00% 10.00% 5.00% 0.00% NIM OPM COST TO INCOME OTHER INCOME TO TOTAL INCOME ICICI HDFC

Fig 7.6.3 Comparative Operating Performance for the year 2011

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Inference Over the years, it can be seen that the net interest margin as well as the operating profit margin is low when compared to HDFC Bank. Axis Bank has higher cost to income ratio when compared to ICICI Bank but lower than HDFC Bank. This higher rate may be due to the structural developments being taken place. Axis Bank enjoys higher rate of other income to total income when compared to HDFC Bank and ICICI Bank. The other income might be generated through the variety of other products being offered like various insurance policies. 7.7 Comparative Analysis of Financial Performance The other parameter to be analyzed is the financial performance. The financial performance of a bank can be measured majorly using the four ratios Credit to Deposit Ratio (CD), Capital Adequacy Ratio (CAR), Non- performing assets to advances and Return on Assets. The chart below depicts the comparative analysis for the year 2013.
120.00% 100.00% 80.00% AXIS 60.00% 40.00% 20.00% 0.00% CD CAR NPA ROA ICICI HDFC

Fig 7.7.1 Comparative Financial Performance for the year 2013 The chart below is for the comparative analysis of financial performance for the year 2012. As in the previous chart, the three banks have been compared for the CD ratio, CAR, NPA and ROA.

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120.00% 100.00% 80.00% AXIS 60.00% 40.00% 20.00% 0.00% CD CAR NPA ROA ICICI HDFC

Fig 7.7.2 Comparative Financial Performance for the year 2012 The comparative analysis of the financial performance for the year 2011 has been given below.
120.00% 100.00% 80.00% AXIS 60.00% 40.00% 20.00% 0.00% CD CAR NPA ROA ICICI HDFC

Fig 7.7.3 Comparative Financial Performance for the year 2011 Inference It can be clearly understood that the three banks maintain a higher credit to deposit ratio which shows that the banks are utilizing the deposits received from customers effectively. Over the three years, it can be seen that the NPA is very low which means that the bad debts or nonperforming assets are less. It can be seen that Axis Bank has a comparatively better financial performance.
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7.8 Comparative Analysis of the Efficiency The efficiency of the banks can be measured using the ratios like business per employee, profit per employee and interest income per employee. The chart below is for the comparison of efficiency for the three banks for the year 2013.
140000 120000 100000 80000 60000 40000 20000 0 INTEREST INCOME PER EMPLOYEE PROFIT PER EMPLOYEE BUSINESS PER EMPLOYEE AXIS ICICI HDFC

Fig 7.8.1 Efficiency Analysis for the year 2013 The efficiency analysis for the year 2012 has been dispalyed below.
140000 120000 100000 80000 60000 40000 20000 0 INTEREST INCOME PER EMPLOYEE PROFIT PER EMPLOYEE BUSINESS PER EMPLOYEE AXIS ICICI HDFC

Fig 7.8.2 Efficiency Analysis for the year 2012

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The efficiency of the employees of the three banks have been analyzed for the year 2011 and displayed below.
140000 120000 100000 80000 60000 40000 20000 0 INTEREST INCOME PER EMPLOYEE PROFIT PER EMPLOYEE BUSINESS PER EMPLOYEE AXIS ICICI HDFC

Fig 7.8.3 Efficiency Analysis for the year 2011 Inference It can be seen that Axis Bank has higher efficiency when compared to both HDFC bank and ICICI Bank. The employee strength in Axis Bank is noticeably lower than the other two banks. Though the total business of Axis Bank is lower than that of HDFC Bank, the efficiency rates are higher due to the lower employee strength. 7.9 Conclusion The analysis of Axis Bank on the operational performance, financial performance and also the efficiency of the employees of Axis Bank Ltd have been calculated. In order to get a better idea of Axis Bank in relation to other major players in the private sector like HDFC and ICICI, a comparative analysis has been done.

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REFERENCES

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 www.axisbank.com www.rbi.org.in Principles and Practices of Banking Accounting and Finance for Bankers Legal and Regulatory Aspects of Banking www.investopedia.com Annual Report of Axis Bank for the financial year 2012 2013 Annual Report of Axis Bank for the financial year 2011 2012 Annual Report of Axis Bank for the financial year 2010 2011 Annual Report of Axis Bank for the financial year 2009 2010 Annual Report of HDFC Bank for the financial year 2012 2013 Annual Report of HDFC Bank for the financial year 2011 2012 Annual Report of HDFC Bank for the financial year 2010 2011 Annual Report of HDFC Bank for the financial year 2009 2010 Annual Report of ICICI Bank for the financial year 2012 2013 Annual Report of ICICI Bank for the financial year 2011 2012 Annual Report of ICICI Bank for the financial year 2010 2011 Annual Report of ICICI Bank for the financial year 2009 2010

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