XAVIER INSTITUTE OF SOCIAL

SERVICE

ASSIGNMENT
ON PRODUCTS
OF
COMMERCIAL
BANKS
Submitted to :
DR.BHASKAR BHAVANI
NO-14)

Submitted by :
NIKHIL KUJUR (ROLL

MURMU SUBHOJIT LEO (ROLL

NO-19)
MADHUSHREE RANG
(ROLL NO-20)
SATISH BHAGAT (ROLL NO25)
DEEPAK KUMAR (ROLL NO47)
DEPARTMENT: MARKETING
BATCH: 2013-2015

TABLE OF CONTENTS
SL NO.

PARTICULARS

1.
2.
3.
4.
4.1
4.2
4.3
4.4
4.5
4.6
5.

PAGE NO

Banking structure in India

Commercial Bank
Functions of Bank
Financial products of commercial bank
Liability Products
Advances
Asset product
Investment product
Credit & Debit card
Miscellaneous product
Bibliography

3
3-4
4
5-8
8-9
9-13
13-14
14-15
15-19
19-20

 Banking Structure In India:

Commercial Banks:
Commercial Banks: Are those banks which perform all kinds of banking
functions such as accepting deposits, advancing loans, credit creation and
agency functions.
Commercial Banks refer to both scheduled and non-scheduled
commercial banks which are regulated under Banking Regulation Act,
1949.
A commercial bank is owned by stockholders and operated for profit.
Its primary functions are to receive, transfer, and lend money to
individuals, businesses, and governments.
Indian banks consist mostly of Scheduled Commercial Banks (SCBs), which
includes both Public Sector Banks, and the Private Sector Banks.
In Public Sector Banks, the government must retain a 51% stake.
Scheduled Commercial Banks in India are categorized into five different
groups according to their ownership and / or nature of operation
These bank groups are:
I. State Bank of India and its Associates
II.
Nationalized Banks
III.
Private Sector Banks
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IV.
V.

Foreign Banks and

Regional Rural Banks

Functions of Bank:
Financia
l

Products of Commercial Bank

1. Liability Products:
Savings accounts
No-frills accounts
Current accounts
Fixed deposits/ Term deposits
Recurring deposits
2. Advances:
Advances are Running Loans where both Credit and Debit transactions are
involved.
Here two important criteria are Limits and DP (Drawing Power).
The Main Categories of Advances we will discuss here are
a) Cash Credit (CC)
b) Overdraft
c) Term Loan

3. Asset products:
Housing loans
Personal loans
Education loans
Gold loans
Loans to pensoiners
Property and mortgage loans
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Vehicle loans
Agriculture loans
4. Credit cards/ Debit cards
Credit cards
Debit cards
5. Investment products
Insurance products
Pension plans
Mutual funds
6. Miscellaneous
Remittances
Standing Instructions
E-cheques
Electronic fund transfer
Internet Banking
Mobile Banking
ATM
Issuance of DD/Pay order
Locker Facility
Cheque
DMAT Account
Travelers Cheques

Liability Products
Associated with a liability on the banks side.
According to RBIs guidelines of KYC(Know your customer), the bank
segregates their customer into different risk categories
Documentation requirements to open an account change with the risk
profile
In India, customer deposit accounts are insured by the Deposit Insurance and
Credit Guarantee Corporation (DICGC)
Savings account
Allows a customer of the bank to save a small amount of money
Money can both be deposited and withdrawn from the account
In India, saving account can be opened by depositing 100 to 5000.
The saving account holder is allowed to withdraw money from the account
as and when required.
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The interest which is given on saving accounts is sometime often

nominal.
At present, the rate of interest is 4%
The main objective of saving account is to promote savings.
Withdrawal is done through cheque books or withdrawal forms
In India, mandatory PAN (Permanent Account Number) details are
required to be furnished for doing cash transactions exceeding 50,000
A minimum amount has to be kept on saving account to keep it
functioning.
No loan and Overdraft facility is provided.
This account is suitable to salary and wage earners.
This account can be opened in single name or in joint names
ATM facility can be availed
Limited number of Transaction and with limited amount is allowed.
Specially designed savings accounts for children, women etc are a
new innovation by the banks
No- frills account
A type of savings account with zero-balance or low minimum balance
facility
In 2005, the RBI instructed the bank to introduce such accounts so as to
include the poor sections of the society in the financial system as well.
Eligibility: Pensioners, agriculture laborers, employees of unorganized
sector, member of SHG, self-employed person, students, rural folk etc.
Services available to such account are limited.
Internet and phone banking facility each available
Keep track of your account with free quarterly statement.
Have an option to receive E-Statement.
Accessibility of account through a Free ATM Card.

Current account
It is mainly for Business Establishments and for traders who have a higher
number of regular transactions with the bank.
The account holder can withdraw their balance without any limit,
In India, current account can be opened by depositing Rs.5000 to Rs.
25,000.
It helps businessmen to make a direct payment to their creditors by
issuing cheques, demand-drafts or pay-orders, etc.
It enables the current account holder to obtain overdraft (short-term
borrowing) facility.
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In current account, amount can be deposited and withdrawn at any

time without giving any notice.
Generally, bank does not pay any interest on current account.
Operational charges such as Folio charges are charged for the current
account holders.
Penalty is charged if minimum balance is not maintained in the current
account.
Banker requires KYC (Know your Customers) norms to be completed
before opening a current account.
There is no restriction on the number and amount of deposits.
There is also no restriction on the number and amount of withdrawals
made, as long as the current account holder has funds in his bank
account.
It enables a bank to collect money on behalf of its customers and credits
the same in their customers' current accounts.
Periodical (monthly, quarterly or yearly) e-mail or download of bank
statements
It has the facilities of Internet-banking and mobile-banking to carry
out important business transactions with ease and quickly.
Fixed deposits/Term deposits
Type of a time deposit
Lump sum amount is deposited for a fixed period of time
A Deposit held in the Bank for a Period of less than 6 months is called
Short Term Deposits and for more than 6 months it is called Long
Term Deposits.
Higher rate of interest is paid which varies with the period of deposit
Interest can be paid Quarterly, Semi-Annually or annually as req. by
customer.
The money can be withdrawn at maturity, but if its withdrawn before
that the bank pays less interest
Those who have surplus funds go for fixed deposit
FDs many a times also linked with safe deposit locker facility
Interest Rate: Up to 1 Year around 8%
1 year to 5 years around 9%
Recurring deposits
A type of time deposit which allows the customer to save small
amounts of money with bank every month.
This type of account is operated by salaried persons and petty traders.
A certain sum of money is deposited at every month for a certain period
of time into the bank.
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Withdrawals are permitted only after the expiry of certain period.

For pre closure a Penalty is charged.
Modest interest paid for the amount saved, quarterly, half yearly or
annually.
The main objective of recurring deposit account is to develop regular
savings habit among the public.
In India, minimum amount that can be deposited is Rs.10 at regular
intervals.
The period of deposit is minimum six months and maximum ten years.
No withdrawals are allowed. However, the bank may allow closing the
account before the maturity period.
The bank provides the loan facility. The loan can be given up to 75% of
the amount standing to the credit of the account holder.

Advances:
a) Cash Credit:
A cash credit is an arrangement by which a bank allows his customer to
borrow money up to a certain limit against some tangible securities or
guarantees.
The interest is charged on the daily balance and not on the entire
amount of the account. Hence it is the most favorite mode of
borrowing by industrial and commercial concerns.
Cash credits are normally granted against the security of goods e.g. raw
materials, stock in process, finished goods.
In a Cash Credit the goods are taken as Primary Security and Building or
Real estate will be the collateral security.
Every month the Borrower should submit the Stock Statement to the
Banker.
The Borrower can withdraw the amount also deposit when he has surplus
hence called Running Loan.
b) Overdraft
It means an agreement with a bank by which a current account holder is
allowed to withdraw more than the balance to his credit up to a
certain limit.
For example, if there is a credit balance of Rs.40, 000/- in a customer's
current account and an overdraft limit of Rs. 50,000/- is sanctioned to the
party, he can draw cheques up to Rs. 90,000/- .
It is a fluctuating account wherein the balance sometimes may be in
credit and at other times in debit.
The security in an overdraft account may be either personal or tangible.
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The tangible security may be in the form of shares, government paper,

life insurance policies, fixed deposit receipts etc. i.e. paper securities
Many drawings and repayments are permitted as the customer would
desire, provided the total amount overdrawn, i.e. the debit balance at any
time does not exceed the agreed limit.
The interest is charged on daily overdrawn balances.
Overdraft is allowed for a short period whereas the cash credit is allowed
for a longer period. .
Overdraft can be clean overdraft, partly secured or fully secured.
Interest Rate: Around 18% p.a
c) Term Loan
When a loan is granted for a fixed period exceeding three years and is
repayable according to the schedule of repayment, it is known as a term
loan.
The period of term loan may extend up to 10 years and in some cases up
to 20 years.
A term loan is generally granted for fixed capital requirements, e.g.
investment in plant and equipment, land and building etc.
Interest Rate: 13-15% p.a

Asset products
An asset is what the bank holds in terms of the credit given to the customer
Interest rate charged are different for different products
Fixed interest followed for some products while a floating interest
charged for others
The interest rate varies with the changes in the inter-bank rates like
Benchmark Prime Lending Rates
If there is an increase in the BPLR then the customer has to pay a higher
EMI and vice-versa
In fixed interest rates, the customer is protected against fluctuations in
the interest rate
Housing loans
These form majority of the asset portfolio for a retail bank
Home Loan is offered to individuals to extend financial support who wish
To purchase a ready built flat/ House (new and also existing ones not

older than 5 years).

To purchase a plot and construction of house.

For repairs/renovations/additional construction.

Margin: 10-25 %
Repayment period: Max. 30 Years
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Rate of Interest : 10 to 25%

Security: Equitable mortgage of Land/Building.
The property is mortgaged to the bank as a security till the repayment of
the loan.
The bank or financial institution will hold the title or deed of the
property till the loan has been paid back with the interest due for it.
The amount extended depends on the expenditure involved and the
repaying capacity of the customer
The repayment period is long term in nature
Personal loans
Is given to customers to help them meet personal expenses like
marriage, travel etc
Depends on the customers ability to repay and his credibility
Personal loans given to salaried employees and self employed people
Loan Amount: up to Rs. 15 lakh for salaried, up to Rs.30 lakh for self
employed and up to Rs.40 lakh for doctors.
Repayment period: 12-60 months.
Interest Rate : Around 13.5-18%
Education Loan
Purpose: A term loan granted to Indian Nationals for pursuing higher
education in India or abroad
Eligible Expenses: College fees/cost of books/equipments, instruments,
uniform/Caution deposit/study tour project
Amount of Loan
For studies in India, maximum Rs. 10 lacs

Studies abroad, maximum Rs. 30 lacs

Rate of Interest: Around 12 to 13%

Repayment Tenure: Up to 10-12 years
Security:
Up to 4 lacs: Only Parent/ Guardian as co-borrower

Up to 7.5 lacs: Parent/ Guardian as co-borrower and Collateral security

in the form of suitable third party guarantee.

Above 7.5 lacs.: Parent/ Guardian as co-borrower and tangible collateral

security
Margin
For loans up to Rs.4.0 lacs :

For loans above Rs.4.0 lacs:

No Margin
Studies in India: 5%
Studies Abroad: 15%

Gold Loan
Eligibility
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Age : 21 years and above

Profession : Anybody with Steady source of income including :

Bank's Employees, Pensioners

Loan Amount

MINIMUM :Rural/Semi Urban : Rs10,000/-

Urban/Metros : Rs 20,000/MAXIMUM : Rs 20lacs/Margin : 25%

Repayment Period : 30 months
Interest Rate: 12.50% p.a. currently
Security: Security of gold ornaments.
Loans to Pensioners:
Eligibility:
a) Retired employee of Government
b) Age: below 72 years
Loan Amount:
o A maximum of 12 months pension with a ceiling of Rs.1, 00,000/Repayment Period:
o 60 Equated Monthly Installments (EMIs) if age of Pensioner at the
time of loan sanction is up to 70 years
o 48 Equated Monthly Installments (EMIs) if age of Pensioner at the
time of sanction is between 70 72 years
Interest Rate: 15% p.a approx.
Collateral Security:
o The spouse eligible for family pension should guarantee the loan or
any other family member or a third party worth the loan amount.
Property loans/Mortgage loans
One of the most common type of loan extended by the banks
Under this, property assets like land, buildings, vehicles and gold etc are
mortgaged
This is an all purpose loan, i.e., the loan can be obtained for any
purpose whatsoever.
Eligibility:
A. An individual who is;
An Employee or

A Professional, self-employed or an income tax assesse or

engaged in agricultural and allied activities.

B. Net Monthly Income (salaried) is in excess of Rs.25, 000/- or Net Annual
Income (others) is in excess of Rs.3, 00,000/-.
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C. Maximum age limit: 60 years.

Loan Amount
Minimum: Rs.25, 000/

Maximum: Rs.1 crore.

Margin: Finance up to 40% of the market value of property.

Rate of Interest: 13% p.a. approx.
Repayment period:
Maximum of 60 equated monthly installments, up to 120 months for
salaried individuals
Processing Fees: 1% of the loan amount. Max of Rs. 50,000/ Agriculture loans
Typical products include crop loans, farm equipment loans against
warehouse receipts
Provide loans for horticulture activities, poultry, dairy, rearing of goat and
sheep, sericulture etc
Depends on mortgaging or hypothecation in most loans
Loan cards have been brought by many banks which can be ATMs or
credit cards
Vehicle loans
Provide loans for purchasing new/second two wheelers, four wheelers and
commercial vehicles
Eligibility: Individuals/proprietorship/Corporates except those engaged in
car hiring business
Loan amount : 80-100% of Ex-showroom price
Interest Rate: 11-14% for new cars, 14-17% for 2nd hand cars
Repayment tenure: 1 to 7 Years
Security: Hypothecation of Car.

Investment products
A fairly new category as compared to asset and liability products
Includes pension and mutual funds, insurance products etc
Provides additional liquidity to the bank to invest in other avenues
These products are also used as tools to retain the customers
These are mainly cross-sold
a) Insurance plans
It provides the best to our families so that they lead happy and comfortable
lives.

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Certain events like unfortunate death of earning member, critical illness,

medical emergencies, accidents, natural and man made calamities etc. can
adversely affect our family's well being and finances.
Insurance plans provide us protection from life's uncertainties and avenues to
save for your long term financial goals.
b) Mutual Fund
Mutual fund is an entity that pools money of large number of investors to
invest in different securities.
This money is then managed by a professional Fund Manager on behalf
of the unit-holders, to invest it in various financial instruments.
Features & Benefits
Risk diversification Diversification of funds in equity and debt
securities
Liquidity Investor can do partial or full withdrawal as per their need
Transparency Investors know where exactly money is getting
invested
Low cost No entry load while investing in mutual fund
Professional management- Industry experts will manage the funds
Tax efficient Investor get tax benefit in equity and debt funds
Flexibility Flexibility to switch investment amount from one fund to
another fund
c) PPF Scheme
Public Provident Fund (PPF) scheme is a popular long term investment
option
It is backed by Government of India which offers safety with attractive
interest rate and returns.
Investors can invest minimum Rs. 500 to maximum Rs. 1,00,000 in one
financial year and can get the facilities such as loan, withdrawal and
extension of account
Attractive interest rate of around 9% and is fully exempted from Income
Tax under section 80 C
Good long term investments of 15 years
Loan can be availed between 3rd to 6th financial year
Partial withdrawal facility can be availed from 7th financial year
onwards

Credit Card:
It is nothing but a very small pay later card
It contains a means of identification, such as a signature and a small photo.
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It authorizes the holder to change goods or services to his account, on which

he is billed.
The bank receives the bills from the merchants and pays on behalf of the
card holder.
These bills are assembled in the bank.
Bank gives the card holder a grace period to pay totally or by installments.
The bank charges the customer a small amount for these services.
If the amount is not paid full by the end of the period, one is charged
interest.
The card holder need not have to carry money/cash with him when he
travels or goes for purchasing.
Credit cards have found wide spread acceptance in the metros and big
cities.
India at present has about 3 million credit cards in circulation.

Debit Cards:
Debit Card is a pay now card.
Every time a person uses the card while purchasing goods, the merchant get
the money transferred to his account from the bank of the buyers,
The exact amount of purchased goods is debited or subtracted from ones
savings account.
The customer gets a debit card along with a Personal Identification
Number (PIN).
When he makes a purchase, he enters this number on the shops PIN pad.
When the card is swiped through the electronic terminal, it dials the
acquiring bank system
Either Master Card or Visa validates the PIN and finds out from the issuing
bank whether to accept or decline the transaction.
The amount spent is debited immediately from the customers account.
For the debit card to work, one must already have the money in the account
to cover the transaction.
There is no grace period for a debit card purchase.
Debit Card holder need not have to carry a checkbook or large sums of
cash when he/she goes at for shopping.
This is a fast and easy way of payment.
Debit cards use ones own money, so they are often easier than credit
cards to obtain.
The major limitation of Debit Card is that currently only some 3000-4000
shops country wide accepts it.
No interest is paid by the Debit card holder

Miscellaneous product:
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 Automatic Teller Machine:

The introduction of ATMs has given the customers the facility of round the
clock banking.
ATM is a device that allows customer who has an ATM card to perform routine
banking transaction at any time.
This service helps the customer to withdraw money even when the banks ate
closed.
This can be done by inserting the card in the ATM and entering the Personal
Identification Number (PIN) and secret Password.
It provides the customers to withdraw or deposit funds, check account
balances, transfer funds and check statement information.
HSBC First Bank to Introduce ATM: 1987
Advantages of ATMs:
ATMs provide 24 hrs x 7 days x 365 days a year service.

Service is quick and efficient

Privacy in transaction

Wider flexibility in place and time of withdrawals.

The transaction is completely secure

Crowding at bank counters considerably reduced.

Alternative to new branches and to reduce operating expenses.

Relieves bank employees to focus on more analytical and innovative work.

E-Cheques:
This chequering system uses the network services to issue and process
payment.
The payer issues a digital cheque to the payee and the entire transactions
are done through internet.
Electronic version of cheques are issued, received and processed.
A typical electronic cheque transaction takes place in the following manner:

The customer accesses the merchant server and the merchant server
presents its goods to the customer.

The consumer selects the goods and purchases them by sending an echeque to the merchant.

The merchant validates the e-cheque with its bank for payment
authorization.

The merchant electronically forwards the e-cheque to its bank.

The merchants bank forwards the e-cheque to the clearing house for
cashing.
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The clearing house jointly works with the consumers bank clears the
cheque and transfers the money to the merchants banks.

The merchants bank updates the merchants account.

The consumers bank updates the consumers account with the

withdrawal information.

The e-chequing is a great boon to big corporate as well as small retailers.

Most major banks accept e-cheques.

Electronic Funds Transfer (EFT):

Many modern banks have computerized their cheque handling process with
computer networks and other electronic equipments.
These banks are dispensing with the use of paper cheques. .
This system facilitates speedier transfer of funds electronically from any
branch to any other branch.
In this system the sender and the receiver of funds may be located in
different cities and may even bank with different banks.
The scheme has been in operation since February 7, 1996, in India.
The other important type of facility in the EFT system is automated
clearing houses.
In big companies pay is not disbursed by issued cheques or issuing cash.
The payment office directs the computer to credit an employees
account with the persons pay.

Tele banking:
Tele banking refers to banking on phone services
A customer can access information about his/her account through a
telephone call by giving the coded Personal Identification Number (PIN) to
the bank.
Tele banking is extensively user friendly and effective in nature.
Advantages:

To get a particular work done through the bank, the users may leave his
instructions in the form of message with bank.

Facility to stop payment on request.

One can easily know about the cheque status.

Information regarding current interest rates and foreign exchange

rates.

Request for a DD or pay order etc.

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 Mobile Banking:
On-line banking is now moving to the mobile world,
With the help of a mobile phone, access to real-time banking services is
possible regardless of their location.
The potential of mobile banking is limitless and is expected to be a big
success.
According to this system, customer can access account details on mobile
using the Short Messaging System (SMS) technology6 where select data is
pushed to the mobile device.
The wireless application protocol (WAP) technology, which will allow user to
surf the net on their mobiles to access anything and everything.
This is a very flexible way of transacting banking business.
Internet Banking
Internet banking involves use of internet for delivery of banking products and
services.
In internet banking, any inquiry or transaction is processed online without any
reference to the branch (anywhere banking) at any time.
The Internet Banking is now the cheapest way of providing banking services.
ICICI bank was the first one to offer Internet Banking in India.
Benefits of Internet Banking:

Reduce the transaction costs of offering several banking services.

Diminishes the need for several branches and staff.

Customers can conduct many banking transaction 24 hours a day.

Easy online application for all accounts, including personal loans and
mortgages.

Remittance:
A remittance is a transfer of funds to an overseas account.
Pay Order:
It is an instrument issued and paid by the same branch itself.
It is also called Managers Cheque or Bankers
If anyone wants to make payment of any amount to anyone locally/in the same city,
he takes a Pay Order from the bank after paying nominal commission.
He then sends it to the beneficiary who will deposit in his account & get the
payment through clearing with in 2 days.

Travelers Cheques :
Travelers Cheques are a safe and easy way to protect customers money
when he/she travels.
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Customer can encash them only when he/she needs to, and only against
his/her signature, unlike cash which can be stolen and misused by anybody,
Cheque:
When the bank account is opened, the bank gives a cheque book for
making payments.
Cheque is used to make safe and convenient payment.
The cheque may be crossed generally or specially, so that the payment to a
wrong person is prevented.
Bank Draft:
Bank drafts are often used for the purpose of transferring funds from
one place to another within a country or from one country to another.
The contents of bank draft are more or less that of a cheque, but it
is signed not by the payer but by the banker.
DEMAT Account:
o The term DEMAT Account refers to a deposit made at an Indian financial
institution that can be used for investing in shares of stocks and
other financial assets.
o Securities are held electronically in a DEMAT Account, thereby eliminating the
need for physical paper certificates.
o India adopted the DEMAT system in 1996.
DEMAT is short for Dematerialized and such accounts require that an
investor open an account with an investment broker linked to a savings
or other funded account.
o Access to a DEMAT Account requires both an Internet and transaction
o

password.
Standing Instructions
It is an instruction given by the Customer to the Banker to debit or credit the
customers account on a specified date without the presence of the customer at the
bank.
For example: Payment of LIC insurance Premium or a recurring deposit.
Criteria needed:
a) Customers Account Number
b) Number of Installments and amount.
c) Specified date of action.
Locker
It is given to Reputed Customers who hold a Deposit account in the Branch.

Nominal annual rent is charged which depends on the size of the locker
and the centre at which the branch is located.
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The rent is payable in advance for the Financial Year.

If the sole locker hirer nominates a person, Bank normally allows access of
the locker to such nominee and liberty to remove the contents of the locker
in the event of the death of the sole locker hirer.
The Rent Received Per Annum ranges from Rupees 600 to 1000.

KYC norms are applicable for locker hirers.

The Contents of the Lockers could be Gold Ornaments, Documents of Title Deeds or
Securities.

BIBLIOGRAPHY :
http://en.wikipedia.org/wiki/Commercial_bank
https://www.citizensbank.com/commercial-banking/banking-

needs/
https://www.sbi.co.in/portal/web/personal-banking/gold-loans
https://www.sbi.co.in/portal/web/agriculture-

banking/agricultural-banking
https://www.sbi.co.in/portal/web/student-platform/
https://www.sbi.co.in/portal/web/personal-banking/apply-

online
https://www.sbi.co.in/portal/web/personal-banking/car-loansapply-online
http://www.icicibank.com/Personal-Banking/cards/ConsumerCards/Credit-Card/all-cards.page?
http://www.icicibank.com/PersonalBanking/insurance/insurance.page?
http://kalyan-city.blogspot.com/2011/02/what-is-current-bankaccount-its.html
http://kalyan-city.blogspot.com/2011/02/saving-account-bankmeaning-features.html
http://kalyan-city.blogspot.com/2011/02/fixed-deposit-accountof-bank-meaning.html
http://kalyan-city.blogspot.com/2011/02/recurring-depositaccount-in-bank.html

THANK YOU

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