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ON
FINANCIAL SERVICES
OF
BANKS
EXECUTIVE SUMMARY
Banks are the Financial Institution which satisfies the individual & group
goals with proper systems of rules, regulations, policies, services, procedures
& strategies. To achieve the goals and objectives the main component of the
banks are the customers.
Banks are the diversified financial services company that provides a range of
services to customer including retail banking, venture capital, private equity,
working capital finance etc.
The aim of the banks is to provide state-of-the-art, low cost and efficient
banking services, with a focus on increasing fee-based income. New
innovative products are been offered, even a small investor is able to invest
in such products.
SR NO PARTICULARS PG NO
1 Overview of Banking
1.1 Introduction to Banks
1.2 History of Banks
1.3 Functions of Banks
1.4 Banking Products
1.5 Introduction to Financial Services
1.6 Features of Financial Services
1.7 Importance of Financial Services
1.8 Sources of Revenue
1.9 Objectives of Financial Services
1.10 Causes of Financial Innovation
1.11 Present Scenario of Financial Services
7 Conclusion
8 Suggestion
9 Bibliography
10 Annexure
CHAPTER- 1
OVERVIEW OF BANKING
CHAPTER – 1
OVERVIEW OF BANKING
1.1 INTRODUCTION TO BANK
A bank has been described as an institution engaged in accepting deposits
and granting loans. It is the institution which deals in money and credit. It
can also be described as an institution which borrows idle resources, makes
fund available to those who need it and helps in cheap remittance of money
from one place to another. In the modern time term bank is used in wider
term. Now it does not refer only to particular place of lending and depositing
money but it also acts as an agent which looks after the various financial
problems of its customers.
1.2 HISTORY OF BANKS:
ACCEPTING
OF
DEPOSITS
FUNCTION ADVANCE
AGENCY
OF
FUNCTIONS OF BANKS
LOANS
OTHER
FUNCTIONS
1.4 BANKING PRODUCTS
A few foreign & private sector banks have already introduced customized
banking products like Investment Advisory Services, SGL II accounts,
Photo-credit cards, Cash Management services, Investment products and
Tax Advisory services. A few banks have gone in to market mutual fund
schemes. Eventually, the Banks plan to market bonds and debentures, when
allowed. Insurance peddling by Banks will be a reality soon. The recent
Credit Policy of RBI announced on 27.4.2000 has further facilitated the
entry of banks in this sector. Banks also offer advisory services termed as
'private banking' - to "high relationship - value" clients.
1.5 INTRODUCTION TO FINANCIAL SERVICES
1 .Issue Management
1 .Leasing
2 .Portfolio Management
2 .Hire Purchase
3 .Capital Restructuring
3 .Discounting
4 .Loan Syndication
4 .Loans
5 .Merger & Acquisition
5 .Venture Capital
6 .Corporate Counseling
6 .Housing Finance
7 .Foreign Collaborations
7 .Factoring
1.9 OBJECTIVES OF FINANCIAL SERVICES
Fund raising: Financial services help to raise the required funds from
a host of investors, individuals, institution and corporate. For this
purpose, various instruments of finance are used.
Funds deployment: An array of financial services is available in the
financial markets which help the players to ensure an effective
deployment of funds raised. Services such as bill discounting, parking
of short-term funds in the money market, credit rating &securitization
of debts are provided by financial services firms in order to ensure
efficient management of funds.
Specialized services: The financial service sector provides
specialized services such as credit rating, venture capital financing,
lease financing, mutual funds, credit cards, housing finance, etc
besides banking and insurance. Institutions and agencies such as stock
exchanges, non-banking finance companies, and subsidiaries of
financial institutions, banks & insurance companies also provide these
services.
Regulation: There are agencies that are involved in the regulation of
the financial services activities. In India, agencies such as the
Securities and Exchange Board of India (SEBI), Reserve Bank of
India (RBI) and the Department of Banking and Insurance of the
Government of India, regulate the functioning of the financial service
institutions.
Economic growth: Financial services contribute, in good measure, to
speeding up the process of economic growth & development.
1.10 CAUSES OF FINANCIAL INNOVATION
Conservatism to dynamism:
At present, the financial system in India is in a process of rapid
transformation, particularly after the introduction of reforms in the
financial sector. The main objective of the financial sector reforms is
to promote an efficient, competitive and diversified financial system
in the country. This is essential to raise the allocative efficiency of
available savings and to promote the accelerated growth of the
economy as a whole. The emergence of various financial institution
and regulatory bodies has transformed the financial services sector
from being a conservative industry to a very dynamic one.
Emergence of Primary Equity Market: The capital markets have
become a popular source of raising finance. The aggregate funds
raised by the industries have gone from Rs. 5976 crore in 1991-92 to
Rs. 32382 crore in 2006-07. Thus the primary market has emerged as
an important vehicle to channelize the savings of the individuals and
corporates for productive purposes and thus to promote the industrial
& economic growth of our nation.
Concept of Credit Rating: The investment decisions of the investors
have been based on factors like name recognition of the company,
reputation of promoters etc. now, grading from an independent agency
would help the investor in his portfolio management and thus, equity
grading is going to play a significant role in investment decision
making.
Now it is mandatory for non-banking financial companies to get
credit rating for their debt instruments. The major credit rating
agencies functioning in India are:
i. Credit Rating Information Services of India Ltd.
ii. Credit Analysis and Research Ltd.
iii. Investment Information and Credit Rating Agency.
iv. Duff Phelps Credit Rating Pvt. Ltd.
Process of Globalization: The process of globalization ha paved the
way for the entry of innovative financial products into our country.
The government is very keen in removing all obstacles that stand in
the way of inflow of foreign capital. India is likely to enter the full
convertibility era soon. Hence, there is every possibility of
introduction of more and more innovative financial services in our
country.
Process of Liberalization: The government of India has initiated
many steps to reform the financial services industry. The Government
has already switched over to free pricing of issues from pricing issues
by the Controller of capital issues. The interest rates have been
deregulated. The private sector has been permitted to participate in
banking and mutual funds and the public sector undertakings are
being privatized. The financial service industry in India has to play a
positive and dynamic role in the years5 India has to play a positive
and dynamic role in the years to come by offering many innovative
products to suit to the varied requirements of the millions of
prospective investors spread throughout the country.
CHAPTER- 2
BRANCHES
INTERNET BANKING
MOBILE BANKING
TELEPHONE BANKING
ATM
2.1 BRANCHES
In the period from 1100-1300 banking started to expand across Europe and
banks began opening ‘branches’ in remote, foreign locations to support
international trade. Historically, branches were housed in imposing
buildings, often in a neo-classical architecture style. Today, branches may
also take the form of smaller offices within a larger complex, such as a
shopping mall.
Mobile banking also known as M-Banking, SMS Banking is a term used for
performing balance checks, account transactions, payment etc. Over the last
few years, the mobile and wireless market has been one of the fastest
growing markets in the world and it is still growing at a rapid pace. With
mobile technology, banks can offer services to their customers such as doing
funds transfer while travelling, receiving online updates of stock price or
even performing stock trading while being stuck in traffic.
A specific sequence of SMS messages will enable the system to verify if the
client has sufficient funds in his or her wallet and authorize a deposit or
withdrawal transaction at the agent.
Many believe that mobile users have just started to fully utilize the data
capabilities in their mobile phones. In Asian countries like India, China,
where mobile infrastructure is comparatively better than the fixed-line
infrastructure, and in European countries, where mobile phone penetration is
very high, mobile banking is likely to appeal even more.
Account Information
1) Mini-statement and checking of account history
2) Alerts on account activity
3) Monitoring of term deposits
4) Access to loan statements
5) Access to card statements
6) Mutual fund/ equity statements
7) Pension plan management
8) Insurance policy management
9) Status on cheque, stop payment on cheque
10) Ordering cheque books
11) Balance checking in the account
12) Recent transactions
13) Due date of payment
14) PIN provision
15) Blocking of cards
Payments, Deposits, Withdrawals and Transfers
1) Domestics and international fund transfers
2) Micro-payment handling
3) Mobile recharging
4) Commercial payment processing
5) Bill payment processing
6) Peer to Peer payments
7) Withdrawal at banking agent
8) Deposit at banking agent
2.3 TELEPHONE BANKING
Internet banking or E-banking means any user with a personal computer and
a browser can get connected to his bank -s website to perform any of the
virtual banking functions. In internet banking system the bank has a
centralized database that is web-enabled. All the services that the bank has
permitted on the internet are displayed in menu. Any service can be selected
and further interaction is dictated by the nature of service. The traditional
branch model of bank is now giving place to an alternative delivery channels
with ATM network. Once the branch offices of bank are interconnected
through terrestrial or satellite links, there would be no physical identity for
any branch. It would a borderless entity permitting anytime, anywhere and
any how banking
ATMs act as off-site branches of banks and provide almost all services that
are available from a manually operated branch. The customer can, not only
withdraw cash, but also deposit money, get account statements, enable
transfer of funds etc. The customer who wants to deposit cash should put the
notes in the pouch available at the ATM counter close it, seal it by signing &
put it in the slot provided for this purpose. The bank staff will collect the
packet when they come for loading cash in the machine & credit the amount
to the account. However, the customer has to sign an undertaking with the
bank that he would not dispute on the amount credited. ATM has gained
prominence as a delivery channel for banking transactions in India. Now
customers will not be levied any fee on cash withdrawals using ATM &
debit cards issued by other banks. This will in turn increase usage of ATMs
in India. ATM allows customers:
1) ATM customer can utilize any possible facility availed from the ATM
e.g. balance enquiry, withdrawal, deposits, etc
2) Anytime banking, 24 hours a day, 7 days a week has become a main
service to the ATM customers who cannot manage to visit bank
during banking hours
3) Convenience acts as a tremendous psychological benefit all the time
4) Cash withdrawal from any branch through ATM
To the Bank
3.1 Deposits
Banks provide various deposit schemes for keeping the savings of people.
Some of these schemes are common in nature. Banks have to comply with
the ‘Know Your Customer’ (KYC) norms introduced by the Reserve Bank
of India while opening & allowing operations in the accounts. A few deposit
schemes offered by banks are as follows:
Current
Account
Safe-
Fixed
Deposits
Deposit
Lockers
Demat Savings
Account Account
Reccurin
g Deposit
1) Current Account:
Current account is primarily meant for businessmen, firms, companies
and public enterprises etc. that have numerous daily banking
transactions. Individuals generally do not open this account. Current
accounts are meant neither for the purpose of earning interest nor for
the purpose of savings but only for convenience of business hence
they are non-interest bearing accounts. In a current account, a
customer can deposit & withdraw any amount of money any number
of times, as long as he has funds to his credit.
As per RBI directive, banks are not allowed to pay any interest on the
balances maintained in Current Accounts. However, in case of death
of the account holder his legal heirs are paid interest at the rates
applicable to Savings bank deposit from the date of death till the date
of settlement. Because of the large number of transactions in the
account and volatile nature of balances maintained, banks usually levy
certain service charges for opening a Current Account.
2) Fixed Deposits:
Bank Fixed Deposits are also known as Term Deposits. In a Fixed
Deposit Account, a certain sum of money is deposited in the bank for
a specified time period with a fixed rate of interest. The rate of interest
for Bank Fixed Deposits depends on the maturity period. It is higher
in case of longer maturity period. There is great flexibility in maturity
period & it ranges from 15 days to 5 years. The interest can be
compounded quarterly, half-yearly or annually and varies from bank
to bank. Loan facility is available against bank fixed deposits up to
75-90 % Premature withdrawal is permissible but it involves loss of
interest.
Fixed deposits with banks are nearly 100% safe as all the banks
operating in the country, irrespective of whether they are nationalized,
private or foreign are governed by the RBI’s rules & regulations and
give due weight age to the interest of the investors.
5) Demat account:
Some banks are depository participants. These banks offer demat
accounts to their corporate clients. Demat account is just like a bank
account where actual money is replaced by shares. Just as a bank
account is required if we want to save money or make cheque
payments, we need to open a demat account in order to buy or sell
shares. A Demat Account holds portfolio of shares in electronic form
and obviates the need to hold shares in physical form. The account
offers a secure and convenient way to keep track of shares and
investment without the hassle of handling physical documents that get
mutilated or lost in transit. The Securities and Exchange Board of
India (SEBI) mandates a demat account for share trading involving
more than 500 countries.
Benefits of Demat Account
Protection against loss, theft, mutilation etc
Transfer of shares immediately
Shorter settlement cycles
Protection against bad deliveries.
6) Safe-Deposit Lockers:
Safe deposit locker is a facility provided by banks to their customers
to keep their valuables like jewellery, title deeds etc. Safe deposit
locker is a steel cabinet having multiple cubicles. The safe deposit
locker is kept inside the safe room and can be accessed only with the
permission of the bank officials. A customer who is in need of a
locker has to approach the bank. Customer has to mention a password
in the application form for identification purpose when he comes for
operating the locker. The customer has to remit annual rent for using
the locker facility. The customer has full privacy in operating the
locker.
As per RBI guidelines, the place where the locker is kept should be
segregated from the place where cash and valuables are stored using
iron grill. When the customer wants to open the locker, he has to
identify himself by telling the password and sign in a register noting
the date and time of opening the locker which will be countersigned
by the bank officials. The agreement of locker is a contract of
bailment and the bank can terminate the agreement and demand the
customer to vacate locker if any of the terms and conditions in the
agreement are violated or the annual rent is not remitted for a long
period. At present all the banks are having safe deposit locker facility.
3.2 CREDIT CARDS:
Credit cards are innovative ones in the line of financial services offered by
commercial banks. Credit card culture is an old hat in the western countries.
In India, it is relatively a new concept that is fast catching on. Since the
plastic money has today become as good as legal tender more people are
using them in their day-to-day activities. A credit card is a card or
mechanism which enables cardholders to purchase goods, travel and dine in
a hotel without making immediate payments. It is a convenience of extended
credit without formality. Credit cards can be classified as follows:
Corporate Credit
Credit Card
Card
Debit Card
ATM Card
Virtual Card
S
Old types of Credit Cards:
1) Credit Card:
It is a normal card whereby a holder is able to purchase without
having to pay cash immediately. Generally, a limit is set to the amount
of money a cardholder can spend a month using the card. At the end
of every month, the holder has to pay a percentage of outstanding.
Interest is charged for the outstanding amount which varies from 30 to
36 per cent per annum. An average consumer prefers this type of card
for his personal purchase.
2) Charge Card:
A charge card is intended to serve as a convenient means of payment
for goods purchased at Member Establishments rather than a credit
facility. Instead of paying cash or cheque every time the credit card
holder makes a purchase, this facility gives a consolidated bill for a
specified period, usually one month. There are no interest charges and
no spending limits either. The charge card is useful during business
trips and for entertainment expenses which are usually borne by the
company. Andhra Bank card, BOB cards, Can card, Diner’s Club card
etc. belong to this category.
3) In-Store Card:
The in-store cards are issued by retailers or companies. These cards
have currency only at the issuer’s outlets for purchasing products of
the issuer company. Payment can be on monthly or extended credit
basis. For extended credit facility interest is charged. In India, such
cards are normally issued by Five Star Hotels, resorts and big hotels.
NEW TYPES OF CREDIT CARDS
Personal Loans
Housing Loans
Educational Loans
Automobile Loans
Mortgage Loans
1) Personal loans:
The personal loans are granted to any customer or the non-customer if
the bank is satisfied with the repayment capacity of the borrower. The
borrower should have a steady income. Installment can be paid by
depositing post dated cheques, authorization to debit the amount to the
borrower’s savings or current account, authorization to transfer
interest on term deposit to the loan account, authorization to deduct
the installment from the salary by the employer and remit to the bank
etc. The interest varies from bank to bank. Normally banks allow 12
months to 60 months for repayment.
Banks also charge time processing fee ranging from 1 to 3 percent per
annum. Personal loans are generally unsecured because in most cases
there is no primary security. Therefore, many banks demand collateral
security in the form of landed property, gold ornaments, third party
guarantee etc. Some banks instead of third party guarantee insist that
another person should join as co-obligant. Many banks prefer co-
obligant as a guarantor because a co-obligant signs the original loan
documents along with the borrower & therefore has a joint liability.
The documentation is quite simple because there will be only a
promissory note.
2) Housing Loans:
Housing loans are given as direct loans and indirect loans. Direct
loans are those loans given to the individuals or group of individuals
including co-operative societies. The indirect loans are the term loans
granted to housing finance institution, housing boards etc primarily
engaged in the business of supplying serviced land and constructed
house units. Banks are permitted to extend term loans to private
builders. Banks are also granting loans under priority sector for
housing purpose.
Eligibility:
Any person above 21 years but below the age of 65 years having
sufficient disposable income, can avail housing loan from a bank.
Some banks permit even up to 70 years if the borrower can produce
proof of sufficient income to repay the loan. A self-employed person
can also avail of housing loan, subject to compliance of the income
criteria.
Amount of Loan:
The loan amount starts from Rs 2 lakh. However for weaker sections
the loan can be availed even for a small amount. The maximum
amount of loan is decided after considering the disposable income of
the borrower. While calculating the income eligibility spouse’s
income can also be considered. The other factors considered for
deciding the repayment capacity are age, qualification, status of
assets, liabilities, stability and continuity of occupation and savings
history etc.
3) Educational Loans:
Educational loans are extended with the aim to provide financial
support from the banking system to deserving students for pursuing
higher education in India & abroad. The main emphasis is that every
student should get an opportunity to pursue education with financial
support from the banking system on affordable terms and conditions.
All banks are offering educational loans, but the schemes differ from
bank to bank. The scheme aims at providing financial assistance on
reasonable terms to the poor and needy to undertake basic education.
Student Eligibility:
The student should be an Indian national and should have secured
admission to professional courses through entrance test process or
should have secured admission to foreign university. The students
have scored minimum 60 percent in the qualifying examination for
admission to graduation courses.
Repayment:
Course period + 1 year or 6 months after getting job, whichever is
earlier. The loan has to be repaid in five to seven years from
commencement of repayment. If the student is not able to complete
the course for the reasons beyond his control, sanctioning authority
may at his discretion consider such extensions as may be deemed
necessary to complete the course.
Security:
Up to Rs 2 lakh:- no security
Above Rs 2 lakh:- collateral security equal to 100 % of the loan.
Amount of guarantee of third person known to bank for 100% of the
loan amount.
4) Automobile Loans:
Banks are extending credit for purchase of new two or four wheeler
for personal or professional use. Bank finance is also available for
purchase of used cars less than 3 years old. Each bank has formulated
their own schemes. Vehicle finance has now become one of the highly
profitable areas and therefore banks and other financial institutions are
competing with each other for attracting the customers, even by
offering some concessions. As a result, the margin, interest rate &
eligibility criteria differ from one bank to the other. The loans are to
be repaid in 36 to 60 equated monthly installments. The maximum
amount of loan is limited to 3 times of net income annual salary
subject to a maximum of Rs 10 lakh.
Security:
Hypothecation of vehicle financed by the bank.
Bank’s lien to be noted with the transport authorities.
Guarantee of the spouse
In case of unmarried, third party guarantee of sufficient means
or other collateral securities acceptable to the bank.
5) Mortgage Loans:
Mortgage loan is a financing arrangement in which a lender extends
finance for acquisition of real estate against the security of the real
estate purchased out of the loan. The borrower executes a mortgage
deed which registers a lien on the property in favor of the lender. The
title will be re-transferred when the borrower repays the loan in full
with interest. Banks provide loan/overdraft facility against mortgage
of property at low rate of interest to people engaged in trade,
commerce and business and also to professionals and self employed,
partnership firms, companies, NRI’s and individuals with high net
worth including salaried people. The product provides an opportunity
to customers to borrow against a fixed asset at short notice.
Repayment:
The loan has to be repaid within a period of eight years by way of
equated monthly installments. The repayment shall commence from
the month subsequent to the month in which final disbursement is
made or 6 months from the first disbursement, whichever is earlier. In
case of agriculturists the repayment is related to the generation of
farm income from crops & other subsidiary activities.
3.4 INVESTMENT
Investment is the employment of funds with the aim of getting return on it. It
is the commitment of funds which have been saved from current
consumption with the hope that some benefits will receive in future. Thus, it
is a reward for waiting for money. Savings of the people are invested in
assets depending on their risk and return. Investment avenues are the outlets
of funds. In India, investment alternatives are continuously increasing along
with new developments in the financial market. An investor can himself
select the best avenue after studying the merits and demerits of different
avenues. Even financial advertising, newspapers supplements on financial
matters and investment journals offer guidance to investors in the selection
of suitable investment avenues.
Real
Estates
Bonds
GOI
&
Savings
Debentu
Bond
Investmen res
t Avenues
1) Merchant Banking:
A merchant banker is a financial intermediary who helps to transfer
capital from those who possess it to those who need it. Merchant
banking includes a wide range of activities such as management of
customer securities, portfolio management, project counseling and
appraisal, underwriting of shares and debentures, loan syndication,
acting as banker for the refund orders, handling interest and dividend
warrants etc. Thus, a merchant banker renders a host of services to
corporate and thus promotes industrial development in the country.
2) Loan Syndication:
This is more or less similar to ‘consortium financing’. But, this work is
taken up by the merchant banker as a lead manager. It refers to a loan
arranged by a bank called lead manager for a borrower who is usually
a large corporate customer or a Government Department. The other
banks who are willing to lend can participate in the loan by
contributing an amount suitable to their own lending policies. Since a
single bank cannot provide such a huge sum of loan, a number of
banks join together and form a syndicate.
3) Leasing:
A lease is an agreement which a company or a firm acquires a right to
make use of capital asset like machinery, on payment of a prescribed
fee called “rental charges”. The lessee cannot acquire any ownership to
the asset, but he can use it and have full control over it. He is expected
to pay for all maintenance charges and repairing and operating cost. In
countries like the U.S.A., the U.K. and Japan equipment leasing is very
popular and nearly 25% of plant and equipment is being financed by
leasing companies. In India also, many financial companies have
started equipment leasing business by forming subsidiary companies.
4) Mutual Funds:
A mutual fund refers to a fund raised by a financial service company
by pooling the savings of the public. It is invested in a diversified
portfolio with a view to spreading and minimizing risk. The fund
provides Investment Avenue for all small investors who cannot
participate in the equities of big companies. It ensures low risk, steady
returns, high liquidity and better capital appreciation in the long run.
5) Factoring:
Factoring refers to the process of managing the sales ledger of a client
by a financial service company. In other words, it is an arrangement
under which a financial intermediary assumes the credit risk in the
collection of book debts for its clients. The entire responsibility of
collecting the book debts passes on to the factor. His services can be
compared to Del credre agent who undertakes to collect debts. But, a
factor provides credit information, collects debts, monitors the sales
ledger and provides finance against debts. Thus, he provides a number
of services apart from financing.
6) Forfeiting:
Forfeiting is a technique by which a forfeiter (financing agency)
discounts an export bill and pay ready cash to the exporter who can
concentrate on the export front without bothering about collection of
export bills. The forfeiter does so without any recourse to the exporter
and the exporter is protected against the risk of non-payment of debts
by the importers.
7) Venture Capital:
A venture capital is another method of financing in the form of equity
participation. A venture capitalist finances a project based on the
potentialities of a new innovative project. It is in contrast to the
conventional “security based financing”. Much thrust is given to new
ideas or technological innovations. Finance is being provided not only
for ‘start-up capital’ but also for ‘development capital’ by the financial
intermediary.
8) Reverse Mortgage:
In 2007-08, the National Housing Bank and commercial banks have
introduced an innovative product viz., reverse mortgage to enable the
senior citizens to fetch value out of their property without selling it. In
normal mortgage, a home buyer borrows money to finance his home.
In a Reverse Mortgage (RM) the owner of a house property surrenders
the title of his property to a lender and raises money. Again, in normal
mortgage the borrower gets 60-70% of the money upfront. But, in a
RM generally the lender does not pay the entire amount. On the other
hand, he pays out a regular sum each month for the agreed time. The
owner, normally a senior citizen, can use the property and stay with his
spouse for the rest of their lives. Thus, the owner can ensure a regular
cash flow in times of need and enjoy the benefit of using the property.
Usually, after the death of the owner, the spouse can continue to use
the property. In case, both die during the period of the RM scheme the
lender will sell the property, take his share and distribute the rest
among the heirs. It is called reverse mortgage because the payment
steam is “reversed.” Instead of making monthly payments to the
lender, as in the case of a regular mortgage, a lender makes regular
payments to the senior citizen. A RM facilitates to convert an
immovable asset into an income generating one
i. Forward Contracts:
A forward transaction is one where the delivery of a foreign
currency takes place at a specified future date for a specified
price. It may have a fixed maturity for, e.g., 31st May or a
flexible maturity for, e.g., 1st to 31st May. There is an
obligation to honour this contract at any cost, failing which,
there will be some penalty. Forward contracts are permitted
only for genuine business transactions. It can be extended to
other transactions like interest payments.
ii. Options:
As the very name implies, it is a contract wherein the buyer of
the option has a right to buy or sell a fixed amount of currency
against another currency at a fixed rate on a future date
according to his option. There is no obligation to buy or sell,
but namely call options and put options. Under call options, the
customer has an option to buy and it is the option to sell under
put option. Option trading would lead to speculation and hence
there are much restrictions in India.
iii. Futures:
It is a contract wherein there is a agreement to buy or sell a
stated quantity of foreign currency at a future date at a price
agreed to between the parties on the stated exchange. Unlike
options, there is an obligation to buy or sell foreign exchange
on a future date at a specified rate. It can be dealt only in a
stock exchange.
iv. Swaps:
A swap refers to transaction wherein a financial intermediary
buys and sells a specified foreign currency simultaneously for
different maturity dates-say, for instance, purchase of spot and
sale of forward or vice versa with different maturities. Thus,
swaps would result in simultaneous buying and selling of the
same foreign currency of the same value for different
maturities to eliminate exposure of risk. It can also be used as a
toll to enter arbitrage operations, if any, between two countries.
CHAPTER 5
OVERVIEW OF ICICI BANK
CHAPTER 5
OVERVIEW OF ICICI BANK
ICICI Bank is the largest private sector bank in India in terms of market
capitalization. It is also the second largest bank in India in terms of assets
with a total asset of Rs. 3,674.19 billion (US$ 77 billion) as on June 30,
2009, the total profit after tax has been Rs. 8.78 billion. Formerly known as
Industrial Credit and Investment Corporation of India, ICICI Bank has an
extensive network of 1,544 branches with about 4,816 ATMS located across
India and in 18 other countries. ICICI Bank serves about 24 Million
customers throughout the world. It is considered as one of the ‘Big Four
Banks’ in India along with State Bank of India, HDFC Bank and Axis Bank.
ICICI Bank also has the largest international balance sheet among all the
banks in India. It is also expanding its business in the overseas market at an
enviable pace. In Q2 September 2008, ICICI Bank recorded a 1.15% growth
in net profit over Q2 September 2007 to reach at Rs 1,014.21crores. The
current and savings account (CASA) ratio of bank also went up from 25% in
2007 to 30% in 2008
Vision
Our vision is a world free of poverty in which every individual has the
freedom and power to create and sustain a just society in which to live.
Mission
ICICI Bank offers a host of products and services to its clients. The various
types of services are as follows:
1) Deposits
Savings Account
Advantage Deposit
Special Savings Account
Life Plus Senior Citizens Savings Account
Fixed Deposits
Security Deposits
Recurring Deposits
Young Stars Savings Account
Advantage Woman Savings Account
Self Help Group Accounts
Family banking
2) Cards
ICICI Bank is India’s largest issuer of credit cards. It also offers other
types of card. The various cards offered by ICICI bank are as
follows:
Consumer Cards
Credit Cards
Travel Cards
Debit Cards
Commercial Cards
Corporate Cards
Prepaid Cards
Purchase Cards
Distribution Cards
Business Cards
3) Loans
Home Loans
Loan against Property
Personal Loans
Car Loans
Two Wheeler Loans
Commercial Vehicle Loans
Loans against Securities
Loan against Gold Ornaments
Pre-approved Loans
4) Investments
ICICI Bank Tax Saving Bonds
Mutual Funds
Government of India Bonds
Initial Public Offers by Corporate
Foreign Exchange Services
ICICI Bank Pure Gold
Senior Citizens Savings Scheme
5) NRI Services
Money Transfer
Bank Accounts
Investments
Home Loans
Insurance
Loan against
6) Insurance
ICICI Bank offers various types of insurance.
Home Insurance
Health Insurance
Health Advantage Plus
Family Floater
Personal Accident
Travel Insurance
Individual Overseas Travel Insurance
Student Medical Insurance
Motor Insurance
Car Insurance
Two Wheeler Insurance
Life Insurance
ICICI Pru Life Time Gold
5.4 Awards and Recognitions
ICICI Bank was voted as the Most Trusted Brand among private
sector banks in the 2010 Economic Times – Brand Equity Most
Trusted Brands Awards and ranked 7th in the list of the Top 50 service
brands.
ICICI Bank received the 2010 World Finance UK award for:
i. Excellence in Remittance Business, Worldwide
ii. Excellence in NRI Services, Worldwide
iii. Excellence in Private Banking Business, APAC Region
For a sixth time in a row, ICICI Bank has received the Most Preferred
Auto Loan Brand in the Financial Services category at the CNBC
Consumer Awards.
ICICI Bank has won Gold in the Readers Digest Trusted Brands 2010
Consumer award in the Finance category for.
i. Best Bank
ii. Best Credit Card Issuing Bank
ICICI Bank amongst the top 3 to receive the FE-EVI Green Business
Leaders Award, in the banking industry.
ICICI Bank wins the Asian Banker Award for Best Banking Security
System.
Forbes 2000 most powerful listed company’s survey ranked ICICI
Bank 4th among the Indian companies and 282nd globally.
ICICI Bank wins the Asian Banker Award for Excellence in SME
Banking 2009.
Mr. N. Vaghul, Former Chairman, ICICI Bank was awarded the
“Padma Bhushan”.
CHAPTER- 6
DATA ANALYSIS & INTERPRETATION
CHAPTER- 6
DATA ANALYSIS AND INTERPRETATION
1st Qtr
4th Qtr 37%
100% 2nd Qtr
46%
3rd Qtr
17%
Interpretation
From the above chart we came to know that, overall percentage of service
class people having complete knowledge about different types of services
provided by the bank is 37%, that having some idea about it is 46% and the
percentage of people having no awareness of various services provided by
the bank is 17%. It can reasonably, be concluded that nearly 85% of the
population is having awareness about newly introduced services.
Q2 Awareness of various banking services provided by banks
25.00%
20.00%
15.00%
Percentage
10.00%
5.00%
0.00%
ATM Debit Credit Phone Mobile Internet
Card Card Banking Banking Banking
Interpretation
4%
15%
26%
Personal Visit
Executive from Bank
21%
Advertisements
Friends/Relatives
Others
34%
Interpretation
5% Yes No
10%
Interpretation
The above table indicates the KYC norms followed by the banks. The
banks are providing the customer with proper information about
various banking services. The banks are trying to find the expected
service of the customer.
Q5) Growth rate of credit cards
0.8
Number of credit cards
0.5 0.6
0.3
0.3
0.0
2007 2008 2009
(0.2)
Interpretation
The above table indicates the growth rate of credit cards, which scores
0.3 million in the year 2008 and it has grown up to 0.6 million in
2009.The growth rate is 100%. This indicates that the distribution of
credit cards is on large scale. The ICICI Bank is considered as largest
issuer of credit cards.
CONCLUSION
CONCLUSION
The Financial Services of the Banks has become very vital in the smooth
operation of the banking activities. The Project work has certainly enriched
the knowledge about the effective management of the various services in
Banking Sector.
BOOKS:
Web Sites:
www.wikipedia.com
www.icici bank.com
www.google.com
www.ask.com