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INTERNSHIP PROJECT REPORT ON CORE BANKING AND FINANCE ACTIVITIES OF ALLAHABAD BANK (A STUDY ON

INTERNSHIP PROJECT REPORT

ON

CORE BANKING AND FINANCE ACTIVITIES OF ALLAHABAD BANK (A STUDY ON HOWRAH MAIN BRANCH)

Submitted in Partial Fulfillment of Master of Business Administration (MBA) Programme : 2016 -18 of National Institute of Technology, Rourkela

FACULTY ADVISOR, PROF. (Dr.) DINABANDHU BAG

SUBMITTED BY,

SUNIL NANDI

316SM1021

DATE OF SUBMISSION: 30 th June, 2017

An Institution of National importance under MHRD,Government of India National Institute of Technology, Rourkela School

An Institution of National importance under MHRD,Government of India

National Institute of Technology, Rourkela School of Management

Certificate

This is to certify that Mr. Sunil Nandi, a student of MBA II Semester has completed his Research Project Report titled “Core Banking and Finance activities from Allahabad Bank” assigned by MBA Department and under my supervision. It is further certified that He has personally prepared this report that is the result of his personal survey/observation. It is of the standard expected to MBA student and hence recommended for evaluation.

Faculty Advisor

(Dr. Dinabandhu Bag)

Head- School of Management

NIT, Rourkela

ACKNOWLEDGEMENT

The extensive endeavor, bliss and euphoria that accompany the successful completion of

the task that would not be complete without the expression of gratitude to the people who made it possible .I take this opportunity to acknowledge all those who guided, encouraged and helped me in winding up this project. I am very thankful to Mr. Tarun Kumar Bishnoi (Chief Manager, Allahabad Bank, Howrah Main Branch), Miss Neelam Kumari (Manager, Allahabad Bank, Howrah Main Branch) and Mr. D. K. Singh (Sr. Manager, Allahabad Bank, Howrah Main Branch) who gave me guidance throughout my Project work. I would also like to extend my feelings of gratitude towards my Faculty Advisor Dr. Dinabandhu Bag sir for his constant guidance, support and correcting where I was wrong. I thank them with full zeal and enthusiasm that they gave this big opportunity to me.

DATE:

Sunil Nandi

PLACE:

MBA-2 ND SEM

EXECUTIVE SUMMARY

This internship report consists of profile of the banking sector (industry), its origin, the

functioning, how the banks are classified on the based on function, and the trends being followed in the industry. Besides the above mentioned this report is fo cused on core Banking and to be more precise it discusses the inner details of the bank situated in Howrah N. S. Road . Allahabad Bank is a nationalized bank, origin and its setup in Allahabad with its headquarters in Kolkata, India.

Allahabad Bank came to India and gave banking sector a new horizon, today Allahabad Bank has set firm foot in the industry.

The report further guides through the department and working of the general banking. The activities taking place in the bank, the various products of banking are discussed in the report. The report is a very good description of what Allahabad Bank and its significance .

TABLE OF CONTENT

PAGE NO.

CHAPTER-1 Introduction

1-15

1.1 About Allahabad bank

6-7

1.2 Vision & Mission

8-9

1.3 Project & background

12

1.4 Objectives of the project

13

1.5 Scope & Limitations

13

CHAPTER-2 Literature Review

16

CHAPTER-3 Research methodology

17

3.1 Research design

17

3.2 Method of data collection

17

CHAPTER-4 Data Analysis and Interpretation

18-26

CHAPTER-5

27-29

5.1

Findings

27

5.3

Conclusion

28

5.3

suggestion

29

CHAPTER-6 Bibliography

30

CHAPTER-1

INTRODUCTION

Allahabad Bank is the oldest joint stock bank in India. On 24 April 2014, the bank entered into its 150th year of establishment. It was founded in Allahabad in 1865. As of 31 March 2012, Allahabad Bank had over 2,500 branches across India. The bank did a total business of INR 3.1 trillion during the FY 2012 - 13. The bank has a branch in Hong Kong and a representative office in Shenzen. It’s headquarter in Kolkata.

The bank's market capitalisation in May 2016 was US$543 million and it ranked #1834 on the Forbes Global 2000 list.

19th century

On 24 April 1865, a group of Europeans at Allahabad founded Allahabad Bank. By the end of the 19th century it had branches at Jhansi, Kanpur, Lucknow, Bareilly, Nainital, Calcutta, and Delhi.

20th century

In the early 20th century, with the start of Swadeshi movement, Allahabad Bank witnessed a spurt in deposits. In 1920, P & O Banking Corporation acquired Allahabad Bank with a bid price of ₹436 (US$6.80) per share. In 1923 the bank moved its head office and the registered office to Calcutta for reasons of both operational convenience and business opportunities. Then in 1927 Chartered Bank of India, Australia and China (Chartered Bank) acquired P&O Bank. However, Chartered Bank continued to operate Allahabad Bank as a separate entity.

Allahabad Bank opened a branch in Rangoon (Yangon). At some point Chartered Bank amalgamated Allahabad Bank's bra nch in Rangoon with its own. In 1963 the revolutionary government in Burma nationalized the Chartered Bank's operations there, which became People's Bank No. 2.

On 19 July 1969, the Indian Government nationalized Allahabad Bank, together with 13 other banks.

In October 1989, Allahabad Bank acquired United Industrial Bank, a Calcutta-based bank that had been established in 1940 and that brought with it 1 45 branches. Two years later, Allahabad Bank established AllBank Finance Ltd, a wholly owned Merchant Banking subsidiary.

21st century

The government's ownership of Allahabad Bank shrank in October 2002 after the bank engaged in an Initial Public Offering (IPO) of ₹100 million (US$1.6 million) of shares, each with a face value ₹ 10. The IPO reduced the Government's shareholding to 71.16%. Then in April 2005 the bank conducted a second public offering of ₹ 100 million of shares, each with a face value ₹ 10 and selling at a premium of ₹ 72. This offering reduced the Government's ownership to 55.23%.

In June 2006 the bank opened its first office outside India when it opened a representative office in Shenzen, Mainland China. In February 2007, Allahabad Bank ope ned its first overseas branch, in Hong Kong. In March, the bank's business crossed the ₹ 10 million mark.

As on 31 March 2013, the bank had 22,557 employees, out of which 3,293 were women (15%). Out of the total employees, 51% were officers, 30% were clerks and remaining 19% were subordinate staff. The bank recruited 1,950 employees (1,421 Officers, 390 Clerks and 139 subordinate staff) during the same financial year. The company incurred INR 20 billion on employee benefit expenses during the same financial year.

Employee productivity: During the FY 2013-14, the business per employee was INR 13.50 crores and it earned a net profit of INR 4.77 lakhs per employee.

Listing and Shareholder

Listing and Shareholder 8

VISION and MISSION

Vision :

To put the Bank on a higher growth path by building a Strong Customer-base, through talent Management, induction of State-of-the-art Technology and through Structural Re-organization.

Mission :

To ensure anywhere and any time banking for the customer with latest state-of-the-art technology and by developing effective customer centric relationship and to emerge as

through efficient utilization of Human Resources and

a world-class service

product innovation.

provider

Allahabad Bank at a Glance

Allahabad Bank at a Glance 10
Allahabad Bank at a Glance 10

The official Website of Allahabad Bank

The official Website of Allahabad Bank 11

PROJECT & BACKGROUND

T he name of my project is ‘Core banking and finance activities’. This is the short part of

finance as well as Banking which involves general banking & various types of loans. The

Banking architecture of Allahabad bank is determined by two major sections 1)

Operational Banking and 2) Advances or Loans. This two major section further sub-

sectioned into 1.1) Cash Receipt, 1.2) Cash Deposit, 1.3) Bank Balance Book and 2.1)

Funded Limit, 2.2) Non-Funded Limit Respectively. The diagram of this architecture are

shown belo.

Bank
Bank
Operational Banking Bank Cash Reciept Cash Deposit Balance Book
Operational
Banking
Bank
Cash Reciept
Cash Deposit
Balance
Book
Advances or Loans
Advances or
Loans
Funded Limit
Funded Limit
Non-Funded Limit
Non-Funded
Limit

Objective of the project

The study requires various types of information of present policies, procedures and methods of General Banking Operation. Both primary and secondary data available have been used in preparing this report.

SCOPE OF THE REPORT

This report covers Allahabad bank's Products and Services, Organizational Overview, Management and Organizational Structural functions. It also covers overview of the general banking division, processes and other functions.

LIMITATION OF THE REPORT

The one of the main limitations of the report was to conduct a small scale survey on clients.

Time period was the other limitation for collecting information, which was only two month long.

Insufficient supply of relevant books and journals.

The branch is too much busy branch as for this to operate the survey on the basis of questionnaire

Deficiencies in data required for the study.

Field practice varies with the standard practice that also created problem.

Time provided for conducting the study is another important constraint.

Salient Contribution of the project

RAM (Risk Assessment Model)

Sorting credits from Data sheet of MDM excel data sheet

Making entry in excel sheet from Profit and loss statement and Balance sheet

Making entry in bank’s excel sheet from Trading and P/L accounting statement

DEVA (Document E-verification & Approval)

CERSAI(Central Registry of securities Assets Reconstruction & Security Internet)

Loan appraisal

Preparing CIF link

Updating MDA in E- 1

Work in Risk assessment Model

E- verification, creation and updating of KYC documents

PAN verification

ATM Card Activation, Deactivation and Blocking

Preparing Loan application

Preparing Loan Credit Report

Unit Visit

CIBIL (Credit Information Bureau India Limited) Generation

LAMP(Loan Asset Monitoring Portal)

RTGS(Real Time Gross Settlement)

NEFT(National Electronic Funds Transfer)

New accounts opening

Cheques clearing

Ledger Book entry for locker rent

Locker rent balance checking

Locker rent letter issue

Transfer of Voucher

Transaction details checking of accounts

Account merging of joint account

Barcode Generation of passbook

The Products of Allahabad Bank

Social Banking Other Personal services Banking Bank International Retail Credit Banking Product Corporate MSME
Social
Banking
Other
Personal
services
Banking
Bank
International
Retail Credit
Banking
Product
Corporate
MSME
Banking
Banking

CHAPTER-2

LITERATURE REVIEW

We review the growing literature relating a banking environmental performance to financial performance. Financial analysis is the process of identifying the strengths, weakness, oppurtunity and threat of the firm with the help of accounting information provided in the profit and loss Account and Balance sheet. It is the process of evaluation of relationship between component parts of financial statements to obtain a better understanding of the firm’s position and performance.

Corporations are learning how to turn sustainability plans into action. What was once little more than an annual report documenting environmentally friendly business activities has grown into something with measurable bottom-line impact- the kind requiring accurate, audit-proof data. Today, corporate sustainability involves an integrated strategy for managing resources, maximizing efficiency, and meeting financial objectives. Yet, even as more and more companies’ acknowledge the value of a well-structured sustainability strategy, many still lack a cohesive, integrated approach to implementation.

CHAPTER-3

RESEARCH METHODOLOGY

Research Design:

Descriptive research procedure is used for describing the recent situation in Allahabad Bank and analytical research to analyses the result by using research tools.

Methods of data collection :

Primary Data sources:

Practical banking work.

Personal discussion with the officers and executives of Allahabad Bank.

Personal interview with the customers.

Secondary Data sources:

Daily diary (containing my activities of practical orientation in Allahabad Bank)

Various publications on banking operation, Website of Allahabad Bank,

Annual Report of the Allahabad Bank, Personal investigation with bankers, Different circulars issued by Head Office and RBI

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

CREDIT APPRAISAL PROCESS

Receipt of application from applicant

APPRAISAL PROCESS Receipt of application from applicant (Balance sheet, KYC papers, Different govt. registration

(Balance sheet, KYC papers, Different govt. registration no., MOA, AOA, and Properties

Different govt. registration no., MOA, AOA, and Properties Pre-sanction visit by bank officers Check for RBI

Pre-sanction visit by bank officers

MOA, AOA, and Properties Pre-sanction visit by bank officers Check for RBI defaulters list, willful defaulters

Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC caution list, etc.

willful defaulters list, CIBIL data, ECGC caution list, etc. Title clearance reports of the properties to

Title clearance reports of the properties to be obtained from empanelled advocates

of the properties to be obtained from empanelled advocates Valuation reports of the properties to be

Valuation reports of the properties to be obtained from empanelled valuer/engineers

properties to be obtained from empanelled valuer/engineers Preparation of financial data Proposal preparation

Preparation of financial data

empanelled valuer/engineers Preparation of financial data Proposal preparation Assessment of proposal

Proposal preparation

Preparation of financial data Proposal preparation Assessment of proposal Sanction/approval of proposal by

Assessment of proposal

financial data Proposal preparation Assessment of proposal Sanction/approval of proposal by appropriate sanctioning

Sanction/approval of proposal by appropriate sanctioning authority

of proposal by appropriate sanctioning authority Documentations, agreements, mortgages Disbursement of loan 18

Documentations, agreements, mortgages

of proposal by appropriate sanctioning authority Documentations, agreements, mortgages Disbursement of loan 18

Disbursement of loan

Application form: For consumer loans, banks generally use standard forms for

the applicant to fill- in the information. A loan application entails neither a pledge by the applicant nor a commitment by the lender. It also called credit application.

Top sheet: In top sheet, ”Check point” to receive the necessary documents for the

loan from the customers.

Sanction letter: It is a proof that the applicant is eligible to avail a certain amount

of loan from its lender. In the entire process of home loanright from the application to the final disbursement, the sanction letter from a bank or financial institution holds a lot of importance.

Appraisal: Credit Appraisal of Term Loans by Financial Institutions like Banks.

Credit appraisal of a term loan denotes evaluating the proposal of the loan to find out repayment capacity of the borrower. The primary objective is to ensure the safety of the money of the bank and its customers

Credit information of Borrower & guarantor: This letter of authority shall

not be revoked by us except with the prior concurrence of the bank and you may act upon this authority until such time this authority is revoked. Please acknowledge receipt of this letter and also return the duplicate copy thereof duly confirmed by you to the bank.

Risk Assessment Model (RAM): RAM is an internal rating software designed

to assist a bank or financial institution in complying with the requirements under the internal ratings-based approach of the Basel 2 Accord. RAM facilitates credit risk appraisal of a borrower through a judicious mix of objective and subjective methodologies and acts as a comprehensive database for all borrower-specific information. RAM is the largest deployed internal risk rating solution in India.

Loan and its Types: In Finance a loan is the lending of money from one

individual, or business organization or entity to another individual, organization or entity. A loan is a debt provided by an entity to another entity at an interest rate. A bank loan is a fixed amount for a fixed term with regular fixed repayments. A bank loan can be further sub-divided into: Secured Loan (Example: - Home loan, vehicle loan, etc.) and Overdraft. Unsecured Loan (Example: - Credit card facility, personal loan, etc.) Subsidized Loan (Example :- Subsidized Education Loan) Concessional Loan (Example :- The Chinese government announced a grant and soft loan package totaling US$23 million to support Ethiopian development activit the study: The project has been undertaken to study the procedure of disbursing commercial loan of Allahabad Bank, Howrah Main Branch.

commercial loan of Allahabad Bank, Howrah Main Branch.  Commercial loan: A commercial loan is a

Commercial loan: A commercial loan is a debt- based funding arrangement

between a business and a financial institution, typically used to fund major capital expenditures and/or cover operational costs that the company may otherwise be unable to afford. Most of the commercial loans are secured. Expensive upfront costs and regulatory hurdles often prevent small businesses from having direct access to debt and equity markets for financing. So, smaller businesses must rely on other lending products, such as a line of credit, unsecured loans or term loans. Types of Commercial Loan 1) Cash Credit Facility: Cash C redit Facility are loans granted in the form of overdrafts on the security of stock in trade or process or raw materials. Cash credit facilities are usually secured by pledging current assets of the organization like inventory or receivables. Cash credit limits are based on drawing power which is arrived at after deduction of margin fixed by the bank over the stocks. It is ensured that the balance outstanding doesn’t exceed the drawing power. Cash credit facility is ideal for financing working capital. 2) Accounts Receivable Loan: An Accounts receivable loan allows us to pay monthly operating expenses while waiting for payments from customers. This type of loan is based on having credit worthy customers.

Term Loan: Term loans provide a set amount of capital for a particular need.

These loans are funded all at once and then paid back over a specified length of time, generally 5 to 15 years. Term loans are secured with cash, inventory,

equipment, securities or real estate. Equipment and Vehicle Loan- These loans are provide for purchase of computer, heavy equipment, new or used car, van, truck or other machinery for commercial use. Repayment terms are dependent upon type and age of collateral. Real Estate Loan- Financing is for purchase, refinance or construction of office buildings, apartments, retail buildings, industrial buildings, medical/dental offices or warehouses. Collateral is usually the property acquired or refinanced. Land and Subdivision Development This typ e of loan allows us to purchase a lot to build on or buy land to subdivide. Subdivision loans usually allow up to 18 months to subdivide, improve and begin selling. Lot loans usually allow up to 5 years. Letter of Credit - A Letter of Credit is a type of credit facility wherein the bank guarantees that the seller will receive payment on certain conditions. In the event that the buyer vies unable to make payment on the purchase, the bank will cover the outstanding amount. Letters of Credit are often used by import/export business. Contractors and travel agencies to serve as an assurance of payment. Documentary letters of credit are usually for less than six months. A stand-by letter of credit may be renewed annually. Types of commercial loan rendered by Allahabad Bank A variety of business loans are available to suit the requirements of various types of requirements of the divergent business units. Allahabad Bank believes that for any business unit to succeed the availability of funds throughout its life cycle is of paramount importance and hence Allahabad Bank offers a wide range of services in loan segment to meet the banking requirements of its business clients. However the limit of the loans to be provided are decided keeping a view the need of the organization / proprietor, value of security offered, credit score of the customer, previous relationship with the bank and other alike factors. The various kinds of business advances under the roof of Allahabad Bank include the following: - 1) Commercial Vehicle Finance Scheme 2) Trade Loan 3) Property Loan.

Role of smart bank in smart city: Smart City will have Smart citizens who

demands: • Cashless Banking • E-Governance • Innovative products • Speedy Services • Flawless connectivity • Service at your door step • Safe Deposit Lockers.

To cater the needs of smart citizens Allahabad Bank has following smart products. Mainly we are having two types of credit products: Products: This segment targets to basic needs of a person. • All Bank Aashiyana • Dream Car • Education Loan • Mo-bike Loan • Personal Loan For all this products we have a centralized solution centre named as CRBB

MSME Products: Optimum financing to the productive section of economy is a

Optimum financing to the productive section of economy is a crucial responsibility of the public sector

crucial responsibility of the public sector Banks. So, we understand the need of the business and Allahabad Bank is in fore front to cater the needs of the MSME segments. Further, we are also actively participating in the Stand Up and Start up India scheme to promote entrepreneurship among young generations.

Mobile Banking & Internet Banking: To cater the needs of smart citizens

Allahabad Bank has following smart products: MOBILE BANKING / INTERNET BANKING: One of the best user friendly and secured product of the industry. Features of Mobile banking for smart citizens are as follows: • Instant Fund Transfer. • IMPS • Mobile Recharge. • DTH Recharge. • Balance enquiry. • Mini presently 40% of the cashless transactions are currently through

40% of the cashless transactions are currently through Banking Only.  E-Lobby : In order to

Banking Only.

E-Lobby : In order to provide 24*7 customer services Allahabad Bank has

introduced many E- lobbies in the Jabalpur city and planning to increase this number for the unreached localities. Following are the four types of kiosk machines available in e- lobby:

Internet Banking kiosk.

machines available in e- lobby: Internet Banking kiosk.  Issue of the cheque book: Many steps

Issue of the cheque book: Many steps are followed while issuing cheque book.

The verification of client’s signature is done at first. Then the cheque book is given. The books serial number is written down in the requisition slip and cheque register. After completing all steps, the client’s signature is taken on the cheque register.

KYC id verification: These six documents are Passport, Voter card, Adhaar card,

PAN card, Driving License need to submit as a mandatory Know Your Customer (KYC) document.

KYC Documents (PAN and Adhaar linked mandatory)  CIBIL(Credit Information Bureau India Limited): A credit

KYC Documents (PAN and Adhaar linked mandatory)

CIBIL(Credit Information Bureau India Limited): A credit score or the

CIBIL score is a three - digit numeric summary of your credit history. The score is derived using the credit history found in the CIR. A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time.

A CIR is an individual’s credit payment history across loan types and credit institutions over a
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SWOT ANALYSIS:

By analyzing the performance of the bank, we get the following Strengths, Weaknesses, Opportunities and Threats (SWOT).

Strengths:

1. Allahabad Bank is the first generation public bank in India.

2. It has well reputation in the market.

3. Not engaged in unfair

business practice.

4. Executives are highly educated and experienced.

5. Allahabad Bank allows all local remittances such as TT, DD, PO, etc. free of cost.

6. Bank has many attractive deposit schemes.

7. Well-furnished and Air-conditioned Banks.

8. Efficient management practice in the Bank.

9. Located in important commercial area.

Weaknesses:

1. Officers in the junio r level are not sufficient.

2. Absence of long-term credit.

3. Small market shares in banking business.

4. Lack of promotional activities.

Opportunities:

1.

Can increase the credit scheme.

2.

Public Banks becomes more reliable to local public.

3.

Have opportunity to increase market share.

4.

Public Banks can contribute more in the economic development of our country.

5.

By doing social welfare activities it can create a good impact on public mind.

Threats:

1.

There are many competitors in the market.

2.

Govt. pressures to reduce interest rate.

3.

Banking technologies are changed.

4.

Govt. imposes tax, VAT and GST on profit.

CHAPTER-5

OVERALL FINDINGS

From results of survey, we can see that during last few years, numbers of clients of Allahabad Bank has grown rapidly, which indicates that the bank has been successful to attract clients. But there are certain factors that the bank management should look at. Customers are not happy with the interest rate of Loan as most of the competitors of Allahabad Bank are offering lower interest rate, which attracts more clients to those banks. Respondents co nsider the interest rate on savings account of Allahabad Bank is pretty reasonable, where as they consider the interest rat e on FDR is not very attractive. Respondents strongly recommend that the bank should immediately install more ATM Booth all over the district and improve the power card services to retain old customers as well as attract potential customer and attracts clients. Most of the respondents are attracted to the deposit schemes of the Allahabad Bank as they think these schemes will be able to help them to fulfill their financial needs. Customers also expressed their concern about the lengthy process for applying and getting loan. Most of the respondents appreciate the security facilities of Allahabad Bank. Staffs are adequate enough to provide efficient services. Scarcity of staffs is a very important p roblem Last but not least majority of the respondents think opening account in Allahabad Bank is helpful for their business purposes as well individual purposes.

Conclusion

It’s a public sector bank, so it has to abide by the plans that the GOI makes and help the GOVT. Achieving its targets.

The bank has successfully made a positive contribution to the economy of India with in very short period of time. Its profit is gradually increasing. It plays a great role in collecting scattered Deposit, Loan settlement and International Trade etc. The Bank ensures quality services to the customers. For better growth and healthy economic position, it should introduce new and lucrative long-term credit schemes especially for new investors and schemes for poverty alleviation like micro credit.

I hope Allahabad Bank do more work for socio-economic development besides their

banking business. To keep pace with ever-changing uncertain domestic business environment and face the challenges of revised global economic scenario, the bank should

be more

position in home and abroad.

pro-active and responsive to introduce new marketing strategy to hold the strong

For the future planning and the successful operation in its prime goal in this current competitive environment I hope this report can provide a good guideline. I wish continuous success and healthy business portfolio of Allahabad Bank, Howrah main Branch.

Suggestions

I.

All details or works should be done by computers so all job will be done within very short time.

II.

Employees should keep back up file for less Data redundancy.

III.

The employee shortage can be overcome by outsourcing manpower or by installation more E-Lobby.

IV.

New GST service Tax should be informed and proper knowledge should be given to customers.

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