Project Report

ON

“INDIAN BANKING SYSTEM”

EXECUTIVE SUMMARY
 Banking in India originated in the first decade of 18 century with The General Bank of India
coming into existence in1786. This was followed by Bank of Hindustan. Both these banks are now
defunct. The oldest bank in existence in India is the State Bank of India being established as "The
Bank of Bengal" in Calcutta in June 1806.

The Reserve Bank of India formally took on the responsibility of regulating the Indian banking
sectorfrom1935. After India's independence 1947, the Reserve Bank was nationalized and given
broader powers.

Currently, banking in India is generally fairly mature in terms of supply, product range and reach-
even though reach in rural India still remains a challenge for the private sector and foreign banks. In
terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and
transparent balance sheets relative to other banks in comparable economies in its region. The Reserve
Bank of India is an autonomous body, with minimal pressure from the government. Thestated policy
of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this
has mostly been true.

The Modern Banking Functions are Fund based and Non-Fund based functions. These functions of a
bank are those in which banks extend various services to their customers or add their commitments to
certain transactions undertaken by their clients and charge their fees/ commissions for the services
rendered by them / their commitments added to the transactions undertaken by the clients. The
activities popularly known as ‘Non-fund facilities’ provided by Banks.

Thus, we conclude……………………………
 TABLE OF CONTENTS

1. INTRODUCTION -

• Objectives of the study

• Scope of study
• Limitations of study

2. INDIAN BANKS –

• Scope of Indian Bank

• Banking in India
• Definition of Banks
• Types of Bank
• Services Provided by Banks

4. STUDY OF SBI

5.STUDY OF ICICI BANK

OBJECTIVES OF THE STUDY

 To study broad outline of management of credit, market and operational risks associated with

banking sector.

 To understand the importance of banking sector.

 To study the Indian bank scenario and its problem.

 Long Term and Short Term Finances.

 To study the role of bank in Indian Market.

 Different types of services provided by the banks.

 To study various bank, Corporate and Commercial.

 To study the Indian bank scenario and its problem.

 Though the Indian Banking System is very wide and elaborated, still the project covers whole

subject in concise manner.

 The study aims at learning the techniques involved to manage the various types of Banks,

various methodologies undertaken.

 To offer suggestions based upon the findings.

SCOPE OF THE STUDY

  A healthy banking system is essential for any economy striving to achieve good growth
and yet remain stable in an increasingly global business environment. The Indian banking
system, with one of the largest banking networks in the world, has witnessed a series of
reforms over the past few years like the deregulation of interest rates, dilution of the
government stake in public sector banks (PSBs), and the increased participation of private
sector banks. The growth of the retail financial services sector has been a key development
on the market front. Indian banks (both public and private) have not only been keen to tap
the domestic market but also to compete in the global market place.
 Studying the increasing business scope of the bank.
 Market segmentation to find the potential customers for the bank.
 Customers’ perception on the various products of the bank.
 The corporate sector has stepped up its demand for credit to fund its expansion plans; there
has also been a growth in retail banking.

 The report seeks to present a comprehensive picture of the various types of bank. The
banks can be broadly classified into two categories:-

• Nationalize Bank

• Private Bank

 Within each of these broad groups, an attempt has been made to cover as comprehensively
as possible, under the various sub-groups.

LIMITATION OF THE STUDY: Every work has its own limitation. Limitations are
extent to which the process should notexceed. Limitations of this project are:-

1.The project was constrained by time limit of two months.

2. The major limitation of this study shall be data availability as the data is proprietary and not
readily shared for dissemination.
 3. Due to the ongoing process of globalization and increasing competition, no one model or
method will suffice over a long period of time and constant up gradation will be required. As
such the project can be considered as an overview of the various banks prevailing in Punjab
National Bank and in the Banking Industry.

4. Each bank, in conforming to the RBI guidelines, may develop its own methods for measuring
and managing risk.

5.The project study is restricted to banking sector used in India only.

6. The conclusion made is based on a sample study and does not apply to all the

Individuals.

7. In India the banks are being segregated in different groups. Each group has their own benefits
and limitations in operating in India.

8.All banks are not included.

PROBLEMS: --The corporate sector has stepped up its demand for credit to fund its expansion
plans, there has also been a growth in retail banking. However, even as the opportunities increase,
there are some issues and challenges that Indian banks will have to contend with if they are to emerge
successful in the medium to long term.

India's Banking Sector

India's banking sector is booming at a great pace in spite of its relatively small size in comparison of
its counterparts in other leading economies. Indian banking sector has been found lucrative by
eminent players from the international world. For e.g., In India, Citibank and Standard Chartered
Bank has more than half of all credit card receivables and personal loans, which has generated more
than Rs. 200 crore of profit for both banks. In 2003, Oriental Bank of Commerce was listed by Forbes
magazine in its 'Global 200 Best Companies' list. In 1990s, after a long gap of more than 20 years, the
apex bank, Reserve Bank of India (RBI) has issued licenses to 9 new private banks. In this, Times
Bank got merged with the HDFC Bank. The RBI also allowed Kotak Mahindra Finance Company to
become a bank. These banks have shown their edge over each others with the introduction of new
products and technologies. Most of the banks paid their focus on the retail sector and provide internet
banking, phone banking and mobile banking services to their customers and have cornered one of the
largest segments of the India's banking sector by targeting the India's growing middle income class.
The Indian banking sector has seen a proliferation of new services which has shown an improvement
in customer service.

What is a Bank?

A banker or bank is a financial institution whose primary activity is to act as a payment agent for
customers and to borrow and lend money. In other words, an institution where one can place and
borrow money and take care of financial affairs.

Function of Banks

• Lending money to public (loans)

• Transferring money from one place to another (Remittances)
• Acting as trustees
• Keeping valuables in safe custody
• Government business

Types of Banks

• Public sector Banks

• Private sector Banks
• Co-operative Bank
• Development Bank/Financial institutions

Reserve Bank of India

RBI is the banker to banks—whether commercial, cooperative, or rural. The relationship is

established once the name of a bank is included in the Second Schedule to the Reserve Bank of India
Act, 1934. Such bank, called a scheduled bank, is entitled to facilities of refinance from RBI, subject
to fulfillment of the following conditions laid down in Section 42 (6) of the Act, as follows:

It must have paid-up capital and reserves of an aggregate value of not less than an amount specified
from time to time. It must satisfy RBI that its affairs are not being conducted in a manner detrimental
to the interests of its depositors.

Services Provided By a Bank

• Demat Account
• Lockers
• Cash Management
• Insurance Product
• Mutual Fund Product
• Loans
• ECS (Electronic clearance system)
• Taxes

An Overview
The country’s middle class accounts for over 320 million people. In correlation with the growth of
the economy, rising income levels, increased standard of living, and affordability of banking products
are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, focusing on the expansion of retail
and rural banking. Players are becoming increasingly customer-centric in their approach, which has
resulted in innovative methods of offering new banking products and services. Banks are now
realizing the importance of being a big player and are beginning to focus their attention on mergers
and acquisitions to take advantage of economies of scale and/or comply with Basel II regulation.

"Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to receive
a greater infusion of foreign capital. The banking industry should focus on having a small number of
large players that can compete globally rather than having a large number of fragmented players."

BANK NATIONALISATION & PUBLIC SECTOR BANKING

Organized banking in India is more than two centuries old. Till 1935 all the banks were in private
sector and were set up by individuals and/or industrial houses which collected deposits from
individuals and used them for their own purposes. In the absence of any regulatory framework, these
private owners of banks were at liberty to use the funds in any manner, they deemed appropriate and
resultantly, the bank failures were frequent.

Move towards State ownership of banks started with the nationalization of RBI and passing of
Banking Companies Act 1949. On the recommendations of All India Rural Credit Survey Committee,
SBI Act was enacted in 1955 and Imperial Bank of India was transferred to SBI. Similarly, the
conversion of 8 State-owned banks (State Bank of Bikaner and State Bank of Jaipur were two
separate banks earlier and merged) into subsidiaries (now associates) of SBI during 1959 took place.
During 1968 the scheme of ‘social control’ was introduced, which was closely followed by
nationalization of 14 major banks in 1969 and another six in 1980.

Keeping in view the objectives of nationalization, PSBs undertook expansion of reach and services.
Resultantly the number of branches increased 7 fold (from 8321 to more than 60000 out of which
58% in rural areas) and no. of people served per branch office came down from 65000 in 1969 to
10000. Much of this expansion has taken place in rural and semi-urban areas. The expansion is
significant in terms of geographical distribution. States neglected by private banks before 1969 have a
vast network of public sector banks. The PSBs including RRBs, account for 93% of bank offices and
87% of banking system deposits.
STRUCTURE OF THE BANKING INDUSTRY

According to the RBI definition, commercial banks which conduct the business of banking in India
and which (a) have paid up capital and reserves of an aggregate real and exchangeable value of not
less than Rs 0.5 mn and (b) satisfy the RBI that their affairs are not being conducted in a manner
detrimental to the interest of their depositors, are eligible for inclusion in the Second Schedule to the
Reserve Bank of India Act, 1934, and when included are known as ‘Scheduled Commercial Banks’.
Scheduled Commercial Banks in India are categorized in 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) Nationalised Banks, (iii) Regional Rural Banks, (iv) Foreign Banks and (v) Other
Indian Scheduled Commercial Banks (in the private sector). All Scheduled Banks comprise Schedule
Commercial and Scheduled Co-operative Banks. Scheduled Cooperative banks consist of Scheduled
State Co-operative Banks and Scheduled Urban Cooperative Banks

There are 71,177 bank offices spread across the country, of which 43 % are located in rural areas,
22% in semi-urban areas, 18% in urban areas and the rest (17 %) in the metropolitan areas. The major
bank groups (as defined by RBI) functioning are State Bank of India and its seven associate banks, 19
nationalised banks and the IDBI Ltd, 19 Old Private Sector Banks, 8 New Private Sector Banks and
29 Foreign Banks.

Public Sector Banks in India

Among the Public Sector Banks in India, United Bank of India is one of the 14 major banks which
were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the United Bank of
India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla Banking
Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922) and
Hooghly Bank Ltd. (1932).

Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRI and
Commercial banking services. OBC is implementing a GRAMEEN PROJECT in Dehradun District
(UP) and Hanumangarh District (Rajasthan) disbursing small loans. This Public Sector Bank India
has implemented 14 point action plan for strengthening of credit delivery to women and has
designated 5 branches as specialized branches for women entrepreneurs.

The following are the list of Public Sector Banks in India

• Allahabad Bank
• Andhra Bank
• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Central Bank of India
• Corporation Bank
• Dena Bank
• Indian Bank
• Indian Overseas Bank
• Oriental Bank of Commerce
• Punjab & Sind Bank
• Punjab National Bank
• Syndicate Bank
• UCO Bank
• Union Bank of India
• United Bank of India
• Vijaya Bank

Private Sector Banks

Private banking in India was practiced since the beginning of banking system in India. The first
private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the
fastest growing Private Sector Bank in India. IDBI ranks the tenth largest development bank in the
world as Private Banks in India and has promoted a world class institution in India.

The first Private Bank in India to receive an in principle approval from the Reserve Bank of India
was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks
in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in
August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as
Scheduled Commercial Bank in January 1995.

ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a
pride of place for having the first branch inception in the year 1934. With successive years of
patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its
account.

List of Private Banks in India

• Bank of Punjab
 • Bank of Rajasthan
• Catholic Syrian Bank
• Centurion Bank
• City Union Bank
• Dhanalakshmi Bank
• Development Credit Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• IndusInd Bank
• ING Vysya Bank
• Jammu & Kashmir Bank
• Karnataka Bank
• Karur Vysya Bank
• Laxmi Vilas Bank
• South Indian Bank
• United Western Bank
• UTI Bank

Banking Industry at a Glance

Table 1: Indian Banking at a Glance

Source: Reserve Bank of India

Table 2: Number of Banks, Group Wise

Source: Indian Banks’ Association/ Reserve Bank of India.
* Includes Industrial Development Bank of India Ltd.

Table 3: Group Wise: Comparative Average

Source: Reserve Bank of India.

Table 4: Bank Groups: Key Indicators

Source: Reserve Bank of India.

Major reforms initiatives

Some of the major reform initiatives in the last decade that have changed the face of the Indian
banking are:-

• Interest Rate Deregulation-Interest rates on deposits and lending have been deregulated with
banks enjoying greater freedom to determine their rates.
• Government equity in banks has been reduced and strong banks have been allowed to access
the capital market for raising additional capital.
• New private sector banks have been set up and foreign banks permitted to expand their
operations in India including through subsidiaries.
• New areas have been opened up for bank financing like- insurance, credit cards,
infrastructure financing, leasing, gold banking, besides of course investment banking, asset
management, factoring, etc.
• Banks have specialized committees to measure and monitor various risks and have been
upgrading their risk management skills and systems.
• Adoption of prudential norms in terms of capital adequacy, asset classification, income
recognition, provisioning, exposure limits, investment fluctuation reserve, etc.

Emergence of New Competitive Spirit in context of the customers

Different economic reforms in the early 1990s have injected competition in the banking sector with
the entrant of many new private and foreign players. The RBI issued new bank licenses with the
motive of forming a new cohort of private players, which would ensure high level of service to
customers and ensure unprecedented growth of the India. The last half of the nineties has witnessed
the massive growth of the new private banking players, which has grown by approximately 50% per
year and by 2001, they hold more than 6% of assets and nearly 10% of profits.

Effect of New Technologies on Banks

The Indian banking sector has seen an acceleration with the introduction of technological
transformation like ATMs, telephone banking, online banking, web based products, e-cheques, call
centers etc. Use of credit cards, debit cards has touched the sky of popularity. Even the old public
sector banks are keeping themselves tune with the new technological changes. Like State Bank of
India (SBI) has set aside more than Rs 500 crore during its 3 years of time span for the up gradation
of its IT systems along with the computerization and networking of branches. Presently, SBI has
more than 3000 computerized branches and over 1000 new ATMs. Similarly, United Bank of India
(UTI) has started its computerization process in 1986 and so far it has completed its computerization
work of more than 774 branches. It has also set up 25 ATMs in throughout the India and has signed
agreement with other banks of the public sector for ATM sharing. In some of its branches, it has
already started doing tele-banking and mobile banking.

Banks and the Internet World

Due to the advantages of inherent conveniences, 24x7 internet banking has proved to be an attractive
service for the customers. Transactions done through the internet cost relatively less as compare to
visit bank branch. Some banks also offer unique features of internet banking to their customers. Like
Punjab National Bank has come up with their new online payment service, facilitating the online
railway reservation. Notable features of the internet banking are -

• Transfer of money to your account at the same bank's branch in another city.
• Opening of a fixed deposit.
• Issuing of a banker's cheque or a demand draft.
• Checking of bank balance.
• Stopping the clearance of cheque.
• Request for the cheque book.
• Retail Sector Growth

Earlier the Indian mortgage market was minuscule- less than 1% of GDP. But after the introduction
of economic reforms by the government, tremendous development has been seen in the mortgage
market, getting an impetus from the declination of the interest rates. Many banks like HDFC, SBI and
ICICI has put the housing finance on their priority list. As per an estimate, India's mortgage assets
have reached to nearly 2% of the India's GDP, Which could heightened to the 20%. Credit card has
emerged out as another important product of the personal finance which is growing rapidly. Personal
loan is another area which is growing rapidly. HDFC Bank is quick enough in providing new
products like car loans, personal loans, debit cards etc. The bank is also engage in loan pricing in
various innovative ways for building healthy customer relationship.
RESEARCH METHODOLOGY:-

The first stage included the introduction of Indian Banks and how they work in India. I choose five
criteria Growth, Credit quality, Strength, Profitability, Efficiency / Profitability. The next stage
involved determining the objectives of the study, drafting a questionnaire will be designed keeping in
mind the target audience and objectives of the study. It will non-disguised in nature and will include a
few open-ended questions.

DATA COLLECTIONS

Secondary data

The Preparation of the project report also required data from various journals, newspapers ( like The
Economic Times, Times of India etc.) books ( like Working Capital Management written by Sarbesh
Mishra and Financial Service written by M Y Khan etc.)
 Services provided by the bank

Banks provide two types of services

1. Fund Based
2. Non-Fund Based

Banking Services

Fund Based Services Non-Fund Based Services

FUND BASED AND NON-FUND BASED FUNCTIONS

The difference between fund-based and non-fund based credit assistance lies mainly in the
cashoutflow. While the former involves all immediate cash outflow, the latter may or may not
involve cashoutflow from a banker. In other words, a fund based credit facility to a borrower
would result indepletion of actual liquidity of a banker immediately whereas grant of non-fund
based credit facilitiesto a borrower may or may not affect the banker’s liquidity.

Fund Based Services

Fund Based Services

Loans & Advances Leasing & Hire Purchase Investment

Capital Market Investment

Debt Market Investment
Commercial Loans Personal Loans

FUND BASED SREVICES

I. LOANS AND ADVANCES

1. Commercial Loans Segment

 A.Working Capital:-Working Capital is Current assets minus current liabilities.
Working capitalmeasures how much in liquid assets a company has available to build its
business. The number can be positive or negative, depending on how much debt the company
is carrying. In general, companies that have a lot of working capital will be more successful
since they can expand and improve their operations. Companies with negative working
capital may lack the fundsnecessary for growth, also callednet current assets or current
capital.

A loan whose purpose is to finance everyday operation of a company.A working capital loan
is not used to buy long term assets or investments. Instead it's used to clear up accounts payable,
wages, etc.

I. Cash Credit:- This facility is given by the banker to the customer by way of a certain amount
of credit facility. Its limit is fixed on the basis of security of the company`s current assets.

II. Overdraft:-Banks allow selected customers to write cheques in excess of the balance in their
current account, ie, to overdraw. Overdrafts are arranged up to limits which depend on the
customer's credit standing and the bank manager's humour. The arrangements allow flexibility in
the amount spent and, equally, allow flexibility in repayments (although technically a bank can
demand repayment of an overdraft within 24 hours). In that respect overdrafts are unlike
personal loans, which are structured with regular repayments. Interest on overdrafts is charged
on the fluctuating daily balance.

II. Bills Finance:-

III. IV. Bills Purchase:-

V. Bills Discounting:-This is the most important form in which a bank lends without any
collateral security. The seller draws bills of exchange on the buyer of goods on credit. Such a
bill may either be a clean bill or documentary bill which is accompanied by documents of title to
goods,viz railway receipts. The bank purchase bills payable on demand and credit the
customer`s account with the amount of bills less the discount. On maturity of the bills, the bank
present them to its acceptor for payment. In case the discounted bill is dishonored by the non-
payment, the bank can recovers the full amount from the customer along with the expense in
that connection.
B. Term Loans:-A bankloan to a company, with a fixedmaturity and often featuring amortization of
principal. If this loan is in the form of a line of credit, the funds are drawn down shortly after the
agreement is signed. Otherwise, the borrower usually uses the funds from the loan soon after they
become available. Bank term loans are very a common kind of lending.

This content can be found on the following page:

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I. Capital Expenditure:-Money spent to acquire or upgrade physical assets such as buildings and
machinery. also calledcapital spending or capitalexpense.

This content can be found on the following page:

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II. Fixed Assets Finance:-

III. Project Finance:-Financing arrangements where the funds are made available for a specific
purpose (the project), with the loan repayments geared to the project's cashflow. Project finance is
used in connection with raising large amounts of money for big-ticket, energy-related facilities. The
term has come to be loosely applied to various forms of financing. 'A financing of a particular
economic unit in which a lender is satisfied to look initially to the cashflows and earnings of that
economic unit as the source of funds from which a loan will be repaid and to the assets of the
economic unit as collateral for the loan.'

IV. Consumer Loans Advance against Shares:-

V. Housing Loans:-

VI. Education Loans:-

1. Personal Loans Segment:-Loan granted for personal, family, or household use, as

distinguished from a loan financing a business. Though in some situations the lender may
require a co-signer or guarantor. If unsecured, the loan is made on the basis of the borrower's
integrity and ability to Pay. Generally, these loans are used for debt consolidation, or to pay
for vacations, education expenses, or medical bills, and are amortized over a fixed term with
regular payments of principal and interest.
 Non-Fund based services

It is generally perceived that the non-fund based business is very remunerative to bank and the
borrowers. The banks, besides getting handsome commission or fee and some other service
charges, also get the low cost deposits in the shape of margin and ancillary business. The funds
of the borrower are not blocked in the advances to be given to the suppliers or beneficiaries and
this keeps his liquidity position comfortable, production smooth and costs low.

Non-Fund Based Services

Merchant Banking Functions

Funds remittance/Transfer Letter of Credit/ Bank Guarantee Agency Functions
Facilities

PURPOSE FOR NON-FUND BASED FACILITIES:-

The borrowers need such facilities not only for purchases of current assets or financing there of
ortake benefit of certain services with the help of non-fund based facilities. They also need the
facilitiesfor acquisition of fixed assets including their financing.

RBI NORMS:

Prudential exposure norms as per extant guidelines of Reserve Bank of India provides that the
maximum exposure of a bank for all its Fund based and Non-fund based credit facilities,
investments, underwriting, investments in Bonds and commercial paper and any other commitment
should not exceed 25 percent of its (bank's) net worth to an individual borrower and 50 percent of its,
net worth to a 'group'. It may however, be rioted that while calculating exposure, the Non-fund based
facilities are to be taken at 50 percent of the sanctioned limit. example:-

FUNDS REMITTANCE/ TRANSFER FACILITIES

• Issue of demand draft

• Collection of bills and cheques
ESTABLISHMENT OF LC/ BG

Letter of credit:-A Letter of Credit (L/C) is a written document issued by the Buyers' Banker (BBK),
at a request of the Buyer (B), in favour of the Seller(S), whereby the Buyer's Banker (BBK) gives an
undertaking to the Seller(S) that, in the event of the Seller tendering the Bill of Exchange to the
Seller's Banker (SBK), along with all the required documents, in strict compliance of all the terms
and conditions stipulated in the L/C, the entire amount of the bill will be paid to the Seller (S) by the
Seller's Banker (SBK), on behalf of the Buyer's Banker (BBK) immediately, as has been, in turn,
undertaken by the buyer to his own Banker(BBK).

Bank guarantee: -It is customary for the Bank, in normal course of business, to issue and execute
guarantees in favor of third parties on behalf of the customers. The Bank guarantees are governed by
various provisions as contained in the Indian Contract Act, 1872. The commercial transactions,
bank’s customers are sometimes required to give a Bank Guarantee. This is mostly as an alternate to
keep cash as a security deposit. The third party who seeks the guarantee, not being aware of the
customer’s financial standing prefers a bank guarantee. In turn the Bank, which very well
understands the financial standing of the customer, undertakes the guarantee of the customer’s
financial commitments or performance of contracts by him. The bank charges commission for this
service, which depends on the security available and the financial stability of the customer.

AGENCY FUNCTIONS

• Collecting of B/E, P-notes, cheques & securities

• Selling of products of insurance co./ MF
• Granting & issuing LC, travelers cheque
• Agent for any govt., local authority, etc
MERCHANT BANKING

• Syndication of loans
• Venture capital finance
• Public issue management
• Corporate counseling
• Mergers & acquisitions
• Portfolio management services
• Investment counseling

E-BANKING

• Electronic payment system

• ATM
• Tele-banking
• Credit card and debit card
• Online banking
 MOBILE BANKING

• Account services
• Credit card services
• DEMAT account
• Loan account services
• Bill services
• Other services

DEPOSIT SCHEMES FOR NRI's

Foreign Currency Nonresident (FCNR-B) Deposits :

• Tax Exemption
• Choice of Currency
• Remit in any Currency
• Minimum & Maximum Amount
• Joint account
• Power of Attorney (P/A)
• Nomination

Resident Foreign Currency (RFC):- Deposits Returning Indians for permanent settlement, after
staying abroad for not less than one year, can-

➢ Retain their savings in foreign currency in a RFC account.

➢ Get the proceeds of FCNR (B)/NRE Deposits credited to this account.

Non Resident external (NRE):-Deposits can be placed in

➢ Savings Bank A/c

➢ Fixed Deposit A/c

Non Resident Ordinary (NRO) Deposits:-Where an Indian citizen having a resident account leaves
India and becomes non-resident, his resident account should be designated as NRO account.

Where non-resident Indian receives income in India, he can open a NRO a/c with such funds
State Bank of India

Company Profile of SBI:

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of over
9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and
loans of all scheduled commercial banks in India.

The State Bank Group includes a network of eight banking subsidiaries and several non-banking
subsidiaries offering merchant banking services, fund management, factoring services, primary
dealership in government securities, credit cards and insurance.

The eight banking subsidiaries are:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)
• State Bank of India (SBI)
• State Bank of Indore (SBIR)
• State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank
of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of
Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the
controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the
State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial
Bank of India.

Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches
spanning all time zones. SBI's International Banking Group delivers the full range of cross-border
finance solutions through its four wings - the Domestic division, the Foreign Offices division, the
Foreign Department and the International Services division.

State Bank of India (SBI) (LSE: SBID) is the largest bank in India. If one measures by the number of
branch offices and employees, SBI is the largest bank in the world. Established in 1806 as Bank of
Calcutta, it is the oldest commercial bank in the Indian subcontinent. SBI provides various domestic,
international and NRI products and services, through its vast network in India and overseas. With an
asset base of $126 billion and its reach, it is a regional banking behemoth. The government
nationalized the bank in 1955, with the Reserve Bank of India taking a 60% ownership stake. In

recent years the bank has focused on three priorities, 1), reducing its huge staff
through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of
its best and brightest defect to the private sector, 2), computerizing its operations and 3), changing the
attitude of its employees (through an ambitious programme aptly named 'Parivartan' which means
change) as a large number of employees are very rude to customers.

Foreign Offices:

State Bank of India is present in 32 countries, where it has 84 offices serving the
international needs of the bank's foreign customers, and in some cases conducts retail operations. The
focus of these offices is India-related business.

Foreign Branches:

SBI has branches in these countries: Australia ,Bahrain ,Bangladesh ,Belgium ,Canada ,

Dubai, France ,Germany , Hong Kong , Israel , Japan

People's Republic of China ,Republic of Maldives

Singapore , South Africa ,Sri Lanka , Sultanate of Oman

The Bahamas , U.K. , U.S.A

Subsidiaries and Joint Ventures:

In addition to the foreign branches above, SBI has these wholly owned subsidiaries and joint
ventures:

• Nepal State Bank Limited

• SBI Mauritius
• Indian Ocean International Bank (Mauritius)
• SBI Canada
• SBI California

Growth: State Bank of India has often acted as guarantor to the Indian Government,
most notably during Chandra Shekhar's tenure as Prime Minister of India. With more than 9400
branches and a further 4000+ associate bank branches, the SBI has extensive coverage. Following its

arch-rival ICICI Bank, State Bank of India has electronically networked most of its
metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500

branches being incorporated so far. The bank has the largest ATM network in the

country having more than 5600 ATMs. The State Bank of India has had steady
growth over its history, though the Harshad Mehta scam in 1992 marred its image. In recent years,

the bank has sought to expand its overseas operations by buying foreign banks. It is
the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating and
various other rankings. According to the Forbes 2000 listing it tops all Indian companies.
Fortune Global 500 Ranking – 2007:SBI debuted in the Fortune Global 500[2] at 498 in 2006. In
2007 it moved up to 495. As per fortune 500-2007 following are the data for SBI in $ million.
Revenues 15,119.4. Profits 1,407.3. Assets 187,547.1. Stockholders' Equity 9,786.2

Group companies:

• SBI Capital Markets Ltd

• SBI Mutual Fund (A Trust)
• SBI Factors and Commercial Services Ltd
• SBI DFHI Ltd
• SBI Cards and Payment Services Pvt Ltd
• SBI Life Insurance Co. Ltd - Bancassurance (Life Insurance)
• SBI Funds Management Pvt Ltd
• SBI Canada

IT Initiatives:

According to PM Network (December 2006, Vol. 20, No. 12), State Bank of India
launched a project in 2002 to network more than 14,000 domestic and 70 foreign offices and
branches. The first and the second phases of the project have already been completed and the third
phase is still in progress. As of December 2006, over 10,000 branches have been covered. The new
infrastructure serves as the bank's backbone, carrying all applications, such as the IP telephone
network, ATM network, Internet banking and internal e-mail. The new infrastructure has enabled

the bank to further grow its ATM network with plans to add another 3,000 by the end
of 2007 raising the total number to 8,600. As of September 20, 2007 SBI has 7236 ATMs.

Corporate Details:

This site provides comprehensive information on State Bank of India or SBI Bank, the premier
Nationalized Indian Bank. State Bank of India is actively involved since 1973 in non-profit activity
called Community Services Banking.

State Bank of India is India's largest bank amongst all public and private sector banks operating in
India. State Bank of India owns and operates the following subsidiaries and Joint Ventures –

• State Bank Of India Credit Card

• State Bank Of India Online
• State Bank Of India USA
• State Bank Of India Services
• State Bank Of India Mutual Funds
• State Bank Of India Branch
• State Bank Of India NRI Account

Banking Subsidiaries:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)
• State Bank of Indore (SBI)
 • State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)

Foreign Subsidiaries:

• State bank of India International (Mauritius) Ltd

• State Bank of India (California)
• State Bank of India (Canada)
• INMB Bank Ltd, Lagos

Non- banking Subsidiaries:

• SBI Capital Markets Ltd (SBICAP)

• SBI Funds Management Pvt Ltd (SBI FUNDS)
• SBI DFHI Ltd (SBI DFHI)
• SBI Factors and Commercial Services Pvt Ltd (SBI FACTORS)
• SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

Joint ventures:

• SBI Life Insurance Company Ltd (SBI LIFE).

Activities:

State Bank of India administrative structure is well equipped to oversee the large network of branches
in India and abroad. The State Bank of India 14 Local Head Offices and 57 Zonal Offices are located
at important cities spread throughout the country. State Bank of India has 52 foreign offices in 34
countries across the globe. The Corporate Accounts Group is a Strategic Business Unit of the Bank
set up exclusively to fulfill the specialized banking needs of top corporate in the country.

The main activities are -

• Personal Banking.
• NRI Services.
• Agriculture.
• International.
• Corporate.
• SME.
• Domestic Treasury

State Bank of India offers the following services to its customers: Domestic Treasury, SBI
Vishwa Yatra Foreign Travel Card, Broking Services, Revised Service Charge, ATM Services,
Internet Banking, E-Pay, E-Rail. RBIEFT, Safe Deposit Lockers. Gift Cheques. MICR Codes,
Foreign Inward Remittances.

Moreover, State Bank of India has Colleges/Institutes/Training Centers that are the seats of learning
and research and development. It caters not only to the employees of State Bank of India but also
other banks/establishments in India and abroad.

Performance:
State Bank of India, the country’s largest lender, today reported a 68.11 per cent rise in its
consolidated net profit to Rs 2,758.53 crore during the first quarter of the current financial year,
thanks largely to the performance of its treasury.

The bank’s total income went up 39.52 per cent to Rs 33,132.70 crore during April-June 2009,
against Rs 23747.43 crore during the corresponding period last year. On a standalone basis, SBI’s net
profit went up 42.03 per cent to Rs 2,330.37 crore, while total income was 29.86 per cent higher at Rs
21,041.51 crore.

While net interest income rose 4.30 per cent to Rs 5,025 crore, there was a 48.46 per cent rise in other
income to Rs 3,568.75 crore during the first quarter of the current financial year. The treasury
operations generated pre-tax profit of Rs 4,075 crore during the quarter-ended June 2009, as against a
loss of Rs 817 crore during the corresponding period last year.

Exceeds Expectations:

(Rs crore) April-June % Change

2008 2009

Interest income 20224.08 24641.11 21.84

Other income 3523.35 8491.59 141.01

Total income 23747.43 33132.70 39.52

Interest paid 13509.96 17524.15 29.71

Total expenses 18578.47 28238.18 51.99

Operating profit 5168.96 4894.52 (5.31)

Non-tax provisions 2640.28 394.40 (85.06)

Net profit 1640.92 2758.53 68.11

Gross NPA 10827.81 15318.29 41.47

Net NPA 6298.44 8402.48 33.41

Gross NPA % of advances 2.42 2.79

Net NPA % of advances 1.42 1.55

NPA data is for SBI standalone Source: SBI

Organization:

State Bank of India is headed by Mr. Shri O. P. Bhatt, Chairman.

Company Profile of ICICI:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70 billion (US$ 82 billion) at
September 30, 2008 and profit after tax Rs. 17.42 billion for the half year ended September 30, 2008.
The Bank has a network of about 2,500 branches and 6400 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its specialized subsidiaries and
affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,
branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh,
Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and
Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE).

History:

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and
was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a
public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the
NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal
2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government
of India and representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering only
project finance to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia
to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI
shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning
fee-based income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in various business
segments, particularly fee-based services, and access to the vast talent pool of ICICI and its
subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger
of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by
shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad
in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in
April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both

ess.

Personal Banking: Deposits, Loans, Cards, Investments, Insurance, Demat Services, Wealth

management
NRI Banking: Money Transfer Bank Accounts Investments, Property Solutions ,Insurance, Loans

Business Banking: Corporate net banking , Cash Management , Trade services , FXonline SME
services , Online taxes , Custodial services

Performance:

ICICI Bank, the country’s second largest bank, has seen its net profit fall by around 35% during the
fourth quarter of 2008-09 to Rs 744 crore against Rs 1,150 crore in the corresponding period last
fiscal. With this, the bank is witnessing the sharpest decline in profit in over six years.
The bank’s total income for the reporting period went down by around 11% to Rs 9,203 crore against
Rs 10,391 crore earned in the corresponding period of fiscal 2007-08. However, ICICI Bank board
has declared a dividend of Rs 11 per share.
In view of rising bad loans, ICICI Bank has scaled down its unsecured lending and would focus on
enhancing the net interest income (NII), current and savings accounts (CASA) and fee-income.
The bank expects a 5-10% loan growth in retail and corporate portfolios in the current fiscal 2008-09.
The bank’s provisioning for the fourth quarter of the fiscal 2008-09 rose by around 15% to Rs 1,085
crore, against Rs 947 crore in the same period last fiscal. As on March 31, 2009, the bank’s NPA
ratio was 1.96%.
The bank’s total loan book has share of 49% of retail, 37% of corporate, 10% rural and 4% of SME.
For the financial year 2008-09, ICICI Bank’s profit after tax (PAT) plunged by around 11% to Rs
3,758 crore, compared to Rs 4,158 crore earned in 2007-08.
The bank’s total income for the last financial year went down by marginally around 2% to Rs 38,696
crore, against Rs 39,599 crore in 2007-08. The net interest margin improved marginally to 2.4% in
2008-09, against 2.2% in 2007-08. The total deposits of the bank were Rs 218,348 crore as on March
31, 2009 against Rs 244,431 crore deposits as on March 31, 2008.
The loan book of ICICI Bank also decreased to Rs 218,311 crore as on March 31, 2009 against Rs
226,616 crore as on March 31, 2008. During the last fiscal, the bank restructured loans aggregating to
Rs 1,115 crore.
The bank’s capital adequacy ratio and CASA as on March 31, 2009 were 15.53% and 28.7%,
respectively.
Organization:Chanda Kochhar has been appointed as non-executive chairperson of ICICI Life,
ICICI General, ICICI Prudential Asset Management Company, ICICI Securities, ICICI Bank UK
PLC and

Data Analysis and Interpretation:

The following information contains the data interpretation of the questionnaires. The respondent’s
responses for the questions have been interpreted and a finding has been made based on the
respondents responses.

Reasons to Choose the Service

Frequency Percentage

Efficient Customer Service 14 45.2

Time Saving 8 25.8

Transaction Cost 3 9.7

Technology 1 3.2
More ATMs 4 12.9

Total 30 100

Interpretation: From the above table 45.2% of respondents are saying that the reason to choose SBI
is they are providing efficient customer service. And 25.8% of respondents are saying that the reason
to choose SBI is they are reducing our waiting time. And 9.7% of respondents are saying that the
reason to choose SBI is Transaction costs. And 3.2% of respondents are saying that the reason to
choose SBI is Technology. And 12.9% of respondents are saying that the reason to choose SBI is
they are provided more ATM facility.

Type of Service Prefer the Most

Frequency Percentage

ATM Service 19 61.3

Internet Banking 3 9.7

Mobile Banking 3 9.7

Core Banking System 5 16.1

Total 30 100

Interpretation:From the above table 61.3% of respondents prefer the ATM service. And 9.7% of
respondents are preferred the internet banking and mobile banking. And 16.1% of respondents prefer
the core banking system.

Frequency Table for the ICICI Respondent’s

Reason for Choosing ICICI Services

 Frequency Percentage

Efficient Customer Service 8 26.7

Efficient Complaints Handling 8 26.7

Time Saving 4 13.3

Transaction Costs 2 6.7

Technology 4 13.3

Reliable 4 13.3

Total 30 100

Interpretation:

From the above table 26.7% of respondents are saying that the reason to choose ICICI is they are
providing efficient customer service and efficient complaint handling. And 13.3% of respondents are
saying that the reason to choose ICICI is they are reducing our waiting time, technology and reliable.
And 6.7% of respondents are saying that the reason to choose ICICI is Transaction costs.

Type of Services Prefer the Most

Frequency Percentage

ATM Service 13 43.3

Internet Banking 9 30.0

Mobile Banking 4 13.3

Core Banking System 4 13.3

Total 30 100

Interpretation:From the above table 43.3% of respondents prefer the ATM service. And 30% of
respondents are preferred the internet banking. And 13.3% of respondents prefer the core banking
system and mobile banking.

Conclusion:

• Since both the banks are competing equally with each other.
 • But SBI bank is little bit below the line in customer complaints handling when compared to
ICICI bank.
• The ICICI bank is little bit below the line in concentrating on female customers when to SBI
bank.

Findings:

• Sum Of the respondents to choose the SBI bank is because the bank is proving more ATM
facility to the customers.
• Many of the respondents are saying the reason to choose the services of the SBI bank is
because they are good in efficient customer service.
• of Rs. 5,000 – Rs. The income level of the respondents who are having an account in SBI
bank falling under the income level 15.000.
.
• Many of the respondents are not aware of the many services rendered by the SBI bank. The
few are deposit of cash in ATM, request for cheque book in ATM, end of the day balance in
mobile, etc.
• Sum Of the respondents to choose the ICICI bank is because the bank is more reliable to the
customers.
• Many of the respondents are saying the reason to choose the services of the ICICI bank is
because they are good in efficient customer service and efficient complaint handling.
• The income level of the respondents who are having an account in ICICI bank falling under
the income level of Rs. 5,000 - Rs.15.000.
• The age group of 25yrs - 35yrs respondents mostly is having an account in ICICI bank.
• The male gender is mostly having an account in ICICI bank.
• Many of the respondents are not aware of the many services rendered by the ICICI bank. The
few are deposit of cash in ATM, request for cheque book in ATM, end of the day balance in
mobile, etc.

Recommendation:

• Since many of the respondents are not aware of their key services. The bank has to take some
initiatives.
 • The bank can post a list of services that they are rendered to the customers inside the bank
Premises.
• They can post demo of all these services in their bank website.
• They can concentrate more on the respondents are falling under the age group 25yrs – 35yrs.
• The SBI bank can concentrate on customer complaints handling.
• The ICICI bank can concentrate on the female gender.
• The bank can also send a post to their customers by informing there services and how to
proceed with that and all details they can mention it in the post.

BIBLIOGRAPHY:

Research Methodology
Statistical Analysis – S.P. Gupta

Websites:

• www.rbi.com
• www.iba.org.in
www.wikipedia.com