Introduction

A bank is a financial institution licensed by a government (RBI). Its primary activities

include providing financial services to customers while enriching its investors. Many financial activities
were allowed over time. For example banks are important players in financial markets and offer financial
services such as investment funds. Structure of the organized banking sector in India. Number of banks is in
brackets.

Indian Banking

Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is the State Bank of India, a government-owned bank that traces its origins back to June
1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the
Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank
of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve
Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest
commercial banks; the government nationalized the six next largest in 1980.

No’s of Bank

1.) 88 scheduled commercial banks (SCBs) –

2.) 27 public sector banks (that is with the Government of India holding a stake)

3.) 31 private banks (these do not have government stake; they may be publicly listed and traded on
stock exchanges)

4.) 38 foreign banks

5.) They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75
percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.
 Type of Bank
A.) National Bank:

The term national bank especially in developing countries, a bank owned by the state an
ordinary private bank which operates nationally.

B.) Private Bank :

The private banks are not incorporated. A private bank is owned by either individual or a
general partner with limited partners. In any such case, the creditors can look to both the "entirety of
the bank's assets" as well as the entirety of the sole proprietor's/general-partners' assets.

C.) Co-operative Bank:

Co-operative banking is retail and commercial banking organized on a cooperative basis.

Cooperative banking institutions take deposits and lend money in most parts of the world.
 Nationalized Bank

 Types of Deposit and Process

State Bank of India M.I.Mevada

Rishala Chowk Branch Branch Manager
Deesa (B.K)-385535 Mo-94260 04863

Savings A/c Current A/c Fixed Deposit NRO

Process Prescribe Prescribe Prescribe Prescribe
Documents with Documents with Documents with Documents
Photo graphs, ID Photo graphs, ID Photo graphs, IDwith Photo
Proof, Proof, Introduction Proof graphs, ID
Introduction a/c no a/c no, Signature Proof ,
and Signature and Firm ref Resident proof
must be
required
Deposit Minimum Personal a/c Minimum Rs.1000 Minimum
1.)Rs.500 without Rs.5000 minimum, Maximum no Rs.1000
cheque book Firm a/c Rs.10000 limit, Minimum
2.) With Cheque minimum Minimum period period 1 year
Book Rs.1000 1 year

Facilities Insurance for Unlimited cheque Over draft ATM, Debit

ordinary death withdrawal, at par facilities card, SMS
Rs.100000 and cheque Facilities
accident Rs. RTGS, NEFT
200000
ATM, Debit card, ATM, Debit card, Internet
SMS Facilities SMS Facilities banking facility
,Credit card, gold
card
Internet banking Free statement
facility
 Co-operative Bank
The Mehsana Urban Co-Operative Bank Limited
Arati complex,
Garden road
Deesa (B.K)-385535

Savings A/c Current A/c Fixed Deposit

Process Prescribe Prescribe Documents Prescribe Documents
Documents with with Photo graphs, ID with Photo graphs, ID
Photo graphs, ID Proof, Introduction a/c Proof
Proof, Introduction no, Signature and Firm
a/c no and Signature ref
Deposit Minimum 1.)Rs.500 Firm a/c Rs.30000 Minimum Rs.1000
without cheque book minimum Minimum period 30
2.) With Cheque days, Maximum 3
Book Rs.1000 years onwards

Facilities Accident Insurance Unlimited cheque Over draft facilities

Rs.100000 & Acc. withdrawal, at par
Death Rs 200000 cheque
Accident Insurance
Rs.100000 & Acc.
Death Rs 200000
cover 2 or 3 Partner
 Private Bank
Kotak Mahindra Bank Ltd. Himanshu M Bharakhada
63/66, Aditya Complex Branch Manager
Near Jalaram Temple Mo-98250 14980
Deesa-385535

Savings A/c Current A/c Fixed Deposit

NRI
Process Prescribe Prescribe Prescribe Prescribe
Documents with Documents with Documents with
Documents
Photo graphs, ID Photo graphs, ID Photo graphs, ID
with Photo
Proof, Proof, Introduction Proof graphs, ID
Introduction a/c no a/c no, Signature Proof ,
and Signature and Firm ref Resident proof
must be
required
Deposit Minimum Firm a/c Rs.10000 Minimum Rs.1000 Minimum
Rs.2500 without minimum Maximum no Rs.10000
cheque book With limit, Minimum
Cheque Minimum period period 1 year
1 year
Facilities Insurance for Unlimited cheque Over draft Ace deposit,
ordinary death withdrawal, at par facilities Free at par
Rs.100000 and cheque cheque,
accident Rs. RTGS, NEFT no Mandate
200000 extra charge Facility
ATM, Debit card, ATM, Debit card, Global Access,
SMS Facilities, at SMS Facilities Over draft,
par cheque book ,Credit card, gold ActivMoney
DD card ,DD
Internet banking Free statement Free statement
facility Net banking, Net banking,
phone banking phone banking
 Core Banking
The platform where communication technology and information technology are merged to suit
core needs of banking is known as Core Banking Solutions. Here computer software is developed to
perform core operations of banking like recording of transactions, passbook maintenance, and
interest calculations on loans and deposits, customer records, balance of payments and withdrawal
are done.

This software is installed at different branches of bank and then interconnected by means of
communication lines like telephones, satellite, internet etc. It allows the user (customers) to operate
accounts from any branch if it has installed core banking solutions.

SBI Core banking system

• Branch to branch core banking system

• Inter- transaction banking system

• Branch to another bank

• RTGS & NEFT system (Real time gross statement, Net electronic fund term)

The Mehsana Urban Co-Operative Bank Limited

• Branch to branch core banking system

• Inter- transaction banking system

• Branch to another bank

Kotak Mahindra Bank Ltd.

• Branch to branch core banking system

• Inter- transaction banking system

• Branch to another bank

• RTGS & NEFT system

 Type of service proved by the bank

 Investment

A.) Mutual funds:

I.) Kotak Mutual Fund

There are 3 type of mutual fund.

• Open ended
• Close ended
• Tax saving

The popular Kotak Mahindra Mutual Fund Schemes have been listed below.

o Kotak Lifestyle
o Kotak Global India
o Kotak Income Plus
o Kotak Tax Saver
o Kotak Opportunities
o Kotak 3

B.) PPF
I.) State Bank India: PPF, 8 %, 15 years, Min: Rs.500. Max: Rs.70000 in a year, as announced
by the Government of India from time to time. All HPO’s authorized Post Offices. The duration of the
scheme is of 15 years but can be extended for 1 or more terms of 5 years. The PPF account can be
terminated at any time but further contributions to the scheme later can only be made once 15 year
term is over.

I.) Investment amounts

 A minimum amount of Rs.500 can be made per annum and any further amount can be made
in multiples of Rs.5 subject to a maximum of Rs.70000 per annum.

II.) Interest rate calculation

The interest rate for your PPF account is calculated on every 31st of March at 8%. This
interest rate is calculated based on the minimum amount that exists in your account between
5th of March and 31st of March.

So one should not withdraw any part of the PPF amount between March 5th and 31st if the
Interest rate is to be fully utilized.

III.) Tax benefits

The Interest accrued from PPF is completely exempted from the Income Tax under section 88
of IT Act. And any amount that is to be credited is also fully exempted from wealth tax.

IV.) Loan facility

Loans of up to 25% of the balance at the end of 1st financial year from 3rd to 6th year can be
taken. Next loan can be taken once the first loan is completely paid off.

V.) Withdrawal policy

Withdrawal of PPF amount is not possible for the first 5 years. From the 6 th year you can
withdraw amount from your account but that can be made only once in a financial year. If the
account is extended beyond 15 years, up to 60% of the balance at the start of the extended
period can be withdrawn.

 Insurance:

A.) State Bank of India: Account holder may be given a facility by taking the premium amount as
per the age limit and paid general death 1 lack and accident case 2 lacks.

B.) The Mehsana Urban Co-Operative Bank Limited: Co-operative banks give a life insurance
cover to the share holder and bond holder.
Account holder insurance Rs.1 lacks
Share holder insurance Rs.5 lacks

 D-mats

A.) Kotak Mahindra Bank Ltd :

Investing from your perspective, and make recommendations based on your needs.
One of our important goals is to simplify investing for you; along with this we also provide long
term values to our customers.
 Kotak security provides different type of service Auto-pay service, Auto sweep
service, and Power of attorney for share trading online. AMC- Rs.550

 Portfolio management service:

A.) Kotak Mahindra Bank Ltd :

Portfolio management means to understand the client needs and requirements in

terms of risk and returns and providing asset portfolio recommendations

Advantages of Using a Portfolio Management Service

• Lower cost as compared to a mutual fund

• Tailor-made solutions & services
• Privileged access to the Fund Manager
• Control of Portfolio is ultimately in the Client's hands.
• Regular Reporting and communications
• A dedicated Investment manager

 Electronic clearing service

The Scheme shall be called "Electronic Clearing Service (Debit Clearing)" and will be referred
to as ECS (Debit Clearing) hereinafter. These services should be registrar given a bank detail for their
account to the require institute. This is paper less service to save the time to credit their payment easily
and safely. There are different type of service provide. Transfer funds between your own accounts or to
any accounts with Kotak Mahindra Bank or with any other Bank* which participates in RBI NEFT
scheme.

a.) Banking Accounts

b.) Demat Accounts
c.) Investments
d.) netc@rd
e.) Kotak Bill Pay / Get Money
f.) Requests Profile
g.) Mail
 High value clearing service

1. High value clearing, the facility that enables depositors to encash cheques drawn for over Rs 1 lakh
the next day, is set to be phased out.
2. Time by time RBI change their policy.
3. The electronic alternatives service, such as national electronic fund transfer (NEFT) and real time
gross settlement (RTGS) have reduced the need for cheque-based clearing.
4. In every bank not exceeding Rs 5 per transaction for Rs 1 lakh and Rs 25 per transaction for above
Rs 1 lakh — for transactions done through NEFT has been fixed. An amount not exceeding Rs 25
per transaction for Rs 1-5 lakh and Rs 50 per transaction for Rs 5 lakh and above for RTGS
transactions has been introduced by RBI.
5. Most banks in Mumbai that participate in high value clearing are RTGS/NEFT enabled and
payments can be effected more efficiently using RTGS and NEFT fund transfer mechanisms.

Types of Loan and Advance

 State Bank of India The Mehsana Urban Kotak Mahindra
Co-Operative Bank Bank Ltd
Limited

Term loan 1.) min Rs.15000 to 1.) Up to 10 lakes Min. - Rs 50000

Max. - Rs 5000000
Max Rs. 2 Lakes 11.75% (2.) Above
15% 5 or 3 times 10 lakes 12.75% Min.- 15%
gross salary if Max. - 19 %
salary above Rs.
10,000/-,
whichever is less
Housing 1.) up to Rs. 30 lakes 1.) Up to 10 lakes up to Rs. 30 lakes
(20 year period ) 8% 10.75% (2) Up to 20 12.5%
lakes 11.50% (3)
More then 20 lakes
12%
Vehicle Min: Rs.50, 000/- 1.) Up to 10 lakes Min. - Rs 100000
Max:Rs:8,00,000/- Max. - Rs 80
10.75% (2.) More Min. - 12 Yrs
Not exceeding Rs. than 10 lakes 14 %(new car)
5 lacs for old 10.75% (Only
vehicles personal use)
1% of loan
amount.
Personal Min : Rs. 25,000/- Min- 5 lack
Max :Rs. Max- 50 lack
1,00,000/- or 5 15%
times gross salary,
whichever is less
Net take home
salary should be
50% of gross
salary after EMI of
proposed loan
Education From Rs. 2 lacs to 11%
Rs. 15 lacs. Not
exceeding Rs. 7.50
lacs for studies in
India
Mortgage Rs.2 lacs to Rs.25
loans lacs, 60% of the
market value of
the property
External
Commercial
Borrowings
Agricultural loans upto
loan Rs25,00000 to 8%
 Locker facility

 State bank of India: there are providing 2 type of service. Medium range Rs. 750 per year (2.)
High range Rs.1250 per year

ATM and other online banking facilities

 State bank of India:

1. SBI ATM services are available for any individual account holder (savings, current,
pension, and NRE accounts) with SBI.
2. Cash Withdrawals as fast as in mere 60 seconds from any SBI ATM, anywhere and at any
time.
3. The transaction limits set by State Bank of India also known as ATM withdrawal limit is a
minimum of Rs. 100 and maximum of Rs. 15, 000 (in multiples of 100) per day.
4. A Mini-statement showing the past few transactions can be generated from any of the SBI
ATMs. State Bank also provides account Balance Check facility at the ATMs.
5. SBI provide E-Ticking, E-Tax, E-Payment, Donation, Third party transfer and
RTGS/NEFT any other facility.

 Kotak Mahindra Bank Ltd:

1. Affiliated to the VISA network

2. Access any ATM in the country absolutely free
3. The state of the art touch screen Kotak Mahindra Bank ATMs are part of the Visa/Plus and
Cash net ATM network. That means you can withdraw cash from our ATM Network with
any International and Domestic Visa/Visa Electron/Plus Credit Cards/Debit Cards.
4. Transfer funds between accounts
5. Mobile recharge, banking a/c, Demat a/c, Kotak payment gateway and any other facility.

ATM card Facilities

 State bank of India

1.) SBI Credit Card or State Bank of India Credit Card offers you exclusive deals and
convenience of cashless shopping with complete online payments and balance transfer
 solutions and all this come with redeemable reward points system. The benefits and
features of State Bank of India credit cards do not end here.

The available SBI Credit Cards are:

SBI Silver, Gold & Platinum Card and SBI partnership cards that include Go Air, Hero
Honda, LG, SBI Advantage Card, SBI Card For Doctors, Employee Card, Lifestyle Card,
Railway Card, Vishal Mega Mart Card, Social Card, UBI Cards, Spice Jet SBI Card and
more.

2.) State Bank ATM-cum-Debit Card: State Bank if India offers unparalleled convenience
through State Bank ATM-cum-Debit card. With this card, there is no need to carry cash
in your wallet. You can now withdraw cash and make purchases anytime you wish to
with your ATM-cum-Debit Card. You can use your ATM-cum-Debit card to transact for
FREE at any of over 12,000 ATMs of any bank in State Bank Group within the country.

All Debit/ Credit Cards issued by any bank outside India displaying Maestro, Master
Card, Cirrus, VISA and VISA Electron logos.

 Kotak Mahindra Bank Ltd

Credit Cards
Simple. Transparent. Powerful. What a Credit Card should be!
Platinum Debit Card
Exclusive privileges for elite customers, with unmatched convenience and flexibility.
Gold Debit Card
A world of privileges to match your style, status and lifestyle.
Global Debit Card
Convenient access to your account with the Global Debit Card.
Best Compliments Card
Give a loved one the perfect gift - with the Kotak Mahindra prepaid credit card!
Netc@rd
Online shopping across the world is now easy, secure and within your reach!
Access India Debit Card (NRO Card)
A domestic use only card for customers holding Non Resident (Ordinary) accounts.

External Policy

 RBI Policy

a) Restructuring of the system of bank inspections

 b) Introduction of off-site surveillance,
c) Strengthening of the role of statutory auditors and
d) Strengthening of the internal defences of supervised institutions.
e) Supervision of financial institutions
f) Consolidated accounting
g) Legal issues in bank frauds
h) Divergence in assessments of non-performing assets
i) Supervisory rating model for banks.
j) The Bank Rate has been retained unchanged at 6.0 per cent.
k) To reduce the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points
from 5.0 per cent to 4.75 per cent with immediate effect
l) To reduce the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points
from 5.0 per cent to 4.75 per cent with immediate effect
m) The cash reserve ratio (CRR) of scheduled banks has been retained unchanged at 5.0 per cent
of net demand and time liabilities (NDTL).

 Government Policy

No business can isolate themselves from the external economic environment. Business has to
take account of government economic policy, regulations and the state of the economy. In
this section, the Virtual Bank advises you on how to make the best of all these factors. We
explain relevant concepts and theories and also give you some worksheets to see how well
you understand them all.

Follow the links below to the area you would like to look at in more detail:

Government policy - in this section we look at the different types of government policy,
fiscal policy, monetary policy and supply-side policy.

• long term interest rates;

• velocity of money through the economy;
• exchange rates;
• credit quality;
• bonds and equities (corporate ownership and debt);
• government versus private sector spending/savings;
• international capital flows of money on large scales;
• Financial derivatives such as options, swaps, futures contracts, etc.

Consumer grievances handling system

 Consumer grievances handling system there are different objective need are not satisfied,
objective are not achieved. Process of consumer grievances system and this process every
bank follow:

• Appointment of a Grievance Redressed Officer

• Compliance with Licensee’s Code of Practice
• Grievance Filing
• Commission procedure
• Monitoring of Complaints brought to the Commission

Banking Ombudsman
An ombudsman is a person who acts as a trusted intermediary between an
organization and some internal or external constituency while representing the broad scope of
constituent interests. The Terms of Reference define the principal powers and duties of the
Banking Ombudsman, and also set out limits to those powers. In accordance with the
Banking Ombudsman constitution, alterations to the Terms of Reference require approval by
the Board of the Banking Ombudsman Scheme Ltd.

a) the amount which the complainant has claimed or could claim in respect of the subject
matter of the complaint exceeds the financial limit;
b) to the extent that the complaint relates to a Participating Bank’s interest rate policies;
c) The Banking Ombudsman may take account of a Participating Bank’s security measures
of which he or she has knowledge notwithstanding that no disclosure of those measures
has been or will be made to the complainant.
d) At any time that a complaint is under consideration by him or her the Banking
Ombudsman may seek to promote a settlement or withdrawal of the complaint by
agreement between the complainant and the Participating Bank concerned.
e) In making any recommendation or award under these Terms of Reference the Banking
Ombudsman shall do so by reference to what is, in his or her opinion, fair in all the
circumstances
f) The type and scope of the complaints which may be considered by a Banking
Ombudsman is very comprehensive.
g) Non-payment or inordinate delay in the payment or collection of cheques, drafts, bills,
etc.
h) Non-acceptance, without sufficient cause, of small denomination notes tendered for any
purpose, and for charging of commission for this service;
i) Non-acceptance, without sufficient cause, of coins tendered and for charging of
commission for this service;
j) Non-payment or delay in payment of inward remittances ;
k) Failure to issue or delay in issue, of drafts, pay orders or bankers’ cheques;
l) Non-adherence to prescribed working hours;
m) Failure to honor guarantee or letter of credit commitments;

Credibility of customer

CIBIL - India's first credit information bureau- is a repository of information, which contains
the credit history of commercial and consumer borrowers. CIBIL provides this information to
its Members in the form of credit information reports.
Source: cibil web site

Check the credibility of customer by Bank

1. For credit grantors to gain a complete picture of the payment history of a credit
applicant.
2. They must be able to gain access to the applicant's complete credit record that may be
spread over different institutions.
3. Bank collects commercial and consumer credit-related data and collates such data to
create and distribute credit reports to Members.
4. Bank get the by cibil and check the public domain information in order to create a truly
comprehensive snapshot of an entity’s financial track record.
5. Records of all the credit facilities availed by the borrower
6. Past payment history
7. Amount overdue
8. Number of inquiries made on that borrower, by different Members
9. Suit-filed status

NPA in Banks and their rules

Bad bank is a term for a financial institution created to hold nonperforming

assets owned by a state guaranteed bank. Such institutions have been created to address
challenges arising during an economic credit crunch wherein private banks are allowed to
take problem assets off their books.
 The increase in NPA figures year after year indicates that more of the loans are turning
bad/ doubtful and thus the bank will not be able to recognise any due but unpaid interest on
those loans. This may bring down the earnings in gross term and will certainly bring down
the ROI ratio.

RBI rules for NPA

1. At present, an asset is considered bad when the borrower defaults on the

principal and interest repayments for more than two quarters of 180 days. Globally, this
cut-off is 90 days.

There have been noticeable improvements in the financial health of banks in terms of
asset quality. Further, pre and post reform NPA levels are not strictly comparable as
there has been a significant tightening of accounting norms.

To repair the balance sheet of the banks is only one important element to get the banks
back to normal lending activities. The other major element is the organizational
processes.
2. Irregular
3. Sub standard
4. Doubt full
5. Loss

But that could NOT be done every now and then. So, there after, the banks are required
tom ensure that the NPAs are cleared within 6 months, to avoid getting them converted to
loss. Because if that happens, such officers shall have to give reasons and/or may face
enquiry for being incompetent. Therefore, technically, the officers visit the clients and
physically grab the asset that was earlier hypothecated to the bank, and show the recovery.

The said asset, in real terms, is NOT of any use to the bank, and if possible, is sold
separately to square-off the NPAs. But in such cases, nominal amount of loss or profit gets
booked along with the squaring off of the NPAs.
 KYC norms

Banking operations are susceptible to the risks of money laundering and terrorist
financing. In order to arrest money laundering, where banks are mostly used in the process, it
is imperative that they know their customers well.

 Customer identification means identifying the customer and verifying his/her/its

identity by using reliable, independent source documents, data or information.

 Customer Identification is carried out at different stages i.e., while establishing a

banking relationship, carrying out a financial transaction or when the branch has a
doubt about the authenticity/veracity or the adequacy of the previously obtained
customer identification data.

 Branches need to obtain sufficient information to their satisfaction, to establish the

identity of each new customer, whether regular or occasional and the purpose of the
intended nature of banking relationship.

 Identification Documents to be submitted by customers for opening of accounts

 The identity of the customer, his/her address location and his /her recent photograph.

 In respect of Medium/High risk customers, besides the normal documents prescribed

above for low risk customers, branches shall call for additional information and
documentary evidence

 Furnishing of Photographs