SUMMER TRAINING REPORT

on
PNB BHOPAL

GENERAL BANKING SYSTEM

Submitted in partial fulfilment of the requirements of the two year

Post Graduate Programme (PGP).

Submitted by
Jubin Modi
……………………………………………………………………………….

Roll No: PG20095641

Batch: 2009-2011

IILM Institute for Higher Education

1
 DECLARATION FORM

I hereby declare that the Project work entitled, GENERAL BANKING SYSTEM

submitted by me for the partial fulfillment of the Post Graduate Program (PGP) to

IILM Institute for Higher Education, is my own original work and has not been

submitted earlier either to IILM or to any other Institution for the fulfilment of the

requirement for any course of study. I also declare that no chapter of this manuscript in

whole or in part is lifted and incorporated in this report from any earlier / other work

done by me or others.

Jubin Modi (PG20095641)

Place : BHOPAL

2
 Acknowledgement

I express my heartfelt gratitude to Mr. Bhagirath Choudhary ( Manager- T.T.

NAGAR,PNB BHOPAL), for giving me the opportunity to undertake a project on
GENERAL BANKING SYSTEM under his guidance and observation.

I also express my deep sense of gratitude to my mentor Mr. Harshvardhan for his
unflinching support and making himself available for discussion and providing me as
required facilities whatever, whenever needed throughout duration of my dissertation.

Last but not least I would like to sincerely acknowledge the help received from various
persons and sources in collecting data’s and information in completing this satisfactory
Project.

3
4
 Executive Summary

As a part of my MBA curriculum I have done my summer internship training at Punjab

National Bank. In this report I am going to share my experience in the company. I

worked as a management trainee in Punjab National Bank, T.T. Nagar Branch. I

was responsible for multiple type of work involved in banking which our services

best in the industry. While working in Punjab National Bank’s 1st Micro Branch of

India I got in-depth knowledge about Micro finance. I recognize that there is a lot

more to discover and learn, I learned to be more responsible, have more

patience and most important it helped me to learn how to handle the work

pressure.

5
 CONTENT

1. HISTORY OF ORGANISATION 6

2. FUTURE PLANS 11

3. PRODUCT AND SERVICES 14

4. MARKET PROFILE 20

5. GENERAL BANKING 23

6. INDUSTRY PROFILE 27

7. FUTURE OF INDUSTRY 30

8. DISCUSSION ON TRAINING 37

9. EXPERIENCE 39

10. SUMMARY 43

11. ANNEXURE 46

12. BIBLIOGRAPHY 57

6
 ORIGIN OF THE ORGANIZATION

Punjab National Bank was established in the year 1895 found by Punjab Kesari

Shri Lala Lajpat Rai at Lahore (now in Pakistan) as a joint stock company. After

the partition in 1947, the bank grew steadily with its presence at the important

centers and metropolitan cities of the country and emerged as one of the big five

Indian banks during pre-nationalized period.

The bank was nationalized in 1969 along with 13 other banks. Subsequently, in

1993 it took over the New Bank of India, another bank that was nationalized in

1980. In 2003 the Nedungadi Bank Ltd., a south based private sector bank also

merged the bank. Thus the bank, which previously had its main business area

around the Indo-Gangetic belt and major metros, could ensure its remarkable

presence in the entire country.

Presently, it is the second largest bank of the country rendering a wide variety of

banking services (corporate/personal/industrial finance/agriculture

finance/financing of trade and commerce/international banking). It has a broad

clientele base like Multi National Corporation, Indian Conglomerates,

medium/small industrial units and NRI’s. As a bank with global standard, it was

ranked 416th among the biggest bank in the world by the banker’s Almanac in

2002.The bank is member of the SWITY (society for Worldwide International

Financial Telecommunication) and has strong correspondent relationship with the

leading international banks. Continued financial sector reforms led to greater

alignment of financial sector to the competition business environment.

7
Operational and supervisory practices in the sector have been progressively

matching international standards. In the process Indian banking system is

becoming increasingly mature in terms of transformation of business process and

risk management. The head office of the Bank is at, Bhikaji Cama Place, New

Delhi.

The bank also has subsidiaries like PNB Gilts Ltd., PNB Housing Finance Ltd.,

PNB Capital Services Ltd., PNB Assets Management Co .Ltd.

GROWTH AND DEVELOPMENT OF THE ORGANIZATION

To evolve and position the bank as a world class, progressive, cost-effective and

customer friendly institution providing comprehensive financial and related

services: integrating frontiers of technology and serving various segment of

society especially the weaker section of the society: committed to excellence in

serving the public and also excelling in the corporate values.

Corporate excellence emanate from good corporate governance exercised by

adopting standard of transparency, accountability, professionalism, social

responsiveness, and ethical business practices with this in view, the has been

making efforts for adopting the best practices. The bank commitment towards

corporate governance is to bestow greater transparency and openness in the

management and to ensure best performance by staff atall the levels to

maximize the operational efficiency. Adopting the corporate governance as a

work ethos, the bank is committed to enhancing the stakeholders value.

8
PRESENT STATUS OF THE ORGANIZATION

With its presence virtually in all the important centers of the country, Punjab

National Bank offers a wide variety of banking services which include corporate

and personal banking, industrial finance, agricultural finance, financing of trade

and international banking. Among the clients of the Bank are Indian

conglomerates, medium and small industrial units, exporters, non-resident

Indians and multinational companies. The large presence and vast resource

base have helped the Bank to build strong links with trade and industry.

Punjab National Bank is serving over 3.5 crore customers through 4540 Offices

including 421 extension counters - largest amongst Nationalized Banks.

Punjab National Bank with 112 year tradition of sound and prudent banking is

one among 300 global companies and seven Indian companies which are

expected to emerge as challengers to World’s leading blue chip companies.

While among top 1000 world banks, “The Banker”, the leading magazine in

London, has placed PNB at the 248th position, the bank features at 1308th

position among Forbe’s Global 2000 list of global giants and fast growing

companies.

At the same time, the bank has been conscious of its social responsibilities by

financing agriculture and allied activities and small scale industries (SSI).

Considering the importance of small scale industries bank has established 31

specialized branches to finance exclusively such industries.

9
Strong correspondent banking relationship which Punjab National Bank

maintains with over 200 leading international banks all over the world enhances

its capabilities to handle transactions world-wide. Besides, bank has Rupee

Drawing Arrangements with 15 exchange companies in the Gulf and one in

Singapore. Bank is a member of the SWIFT and over 150 branches of the bank

are connected through its computer- based terminal at Mumbai. With its state-of-

art dealing rooms and well-trained dealers, the bank offers efficient forex dealing

operations in India.

The bank has been focusing on expanding its operations outside India and has

identified some of the emerging economies which offer large business potential.

Bank has set up representative offices at Almaty: Kazakhistan, Shanghai: China

and in London. Besides, Bank has opened a full fledged Branch in Kabul,

Afghanistan.

Keeping in tune with changing times and to provide its customers more efficient

and speedy service, the Bank has taken major initiative in the field of

computerization. All the Branches of the Bank have been computerized. The

Bank has also launched aggressively the concept of "Any Time, Any Where

Banking" through the introduction of Centralized Banking Solution (CBS) and

over 2409 offices have already been brought under its ambit.

PNB also offers Internet Banking services in the country for Corporate as well as

individuals. Internet Banking services are available through all Branches of the

Bank networked under CBS. Providing 24 hours, 365 days banking right from the

PC of the user, Internet Banking offers world class banking facilities like anytime,
10
anywhere access to account, complete details of transactions, and statement of

account, online information of deposits, loans overdraft account etc. PNB has

recently introduced Online Payment Facility for railway reservation through

IRCTC Payment Gateway Project and Online Utility Bill Payment Services which

allows Internet Banking account holders to pay their telephone, mobile,

electricity, insurance and other bills anytime from anywhere from their desktop.

Another step taken by PNB in meeting the changing aspirations of its clientele is

the launch of its Debit card, which is also an ATM card. It enables the card holder

to buy goods and services at over 99270 merchant establishments across the

country. Besides, the card can be used to withdraw cash at more than 25000

ATMs, where the 'Maestro' logo is displayed, apart from the PNB's over 1094

ATMs and tie up arrangements with other Banks

Latest Quarterly/Half yearly Income statement1

As on(Months) 31-Mar-08(3) 31-Mar-07(3) % Change

Interest Income 38797.90 31944.00 21.46
Other Income 5372.10 5183.90 3.63
Total Income 44170.00 37127.90 18.97
Interest Expenses 23625.10 17713.70 33.37
Other Expenses 8277.10 10590.70 -21.85
Provision & Contingencies 1676.70 6126.90 -72.63
OPBDT 10591.10 2696.60 292.76
Depreciation 0.00 0.00 --
Extra-Ordinary / Cash Adjustment 0.00 0.00 --
Provision for Tax 5153.50 319.60 1512.48
After tax Profit 5437.60 2377.00 128.76
Equity Capital 3153.00 3153.00 0.00
Reserves 104673.50 98263.10 6.52

12
source:http://www.dnb.co.in/topbanks/company_listing.asp?q=Total_Income
11
 FUTURE PLANS OF THE ORGANIZATION

To provide excellent professional services and improve

its position as a leader in the field of finance and

related service, build and maintain a team of motivated

and committed workforce with high work ethos; uses

latest technology aimed at customer satisfaction and act

as effective catalyst for socio-economic development.

The bank is committed to its corporate mission to

provide excellent professional services and improve its

position as leader in the field of financial and related

services, build, maintain a team of motivation and

committed workforce with high work ethos, use latest

technology, aimed at customers and act as an effective

catalyst of socio-economic development.

Punjab National Bank has focused quite a bit in rural

areas, which is actually needed for our country. Their

ATMs are given the facility of English, National

Language Hindi and the local language of the state.

They also provide mobile top-up facility.

12
FUNCTIONAL DEPARTMENTS OF THE
ORGANIZATION

HEAD OFFICE

ZONAL OFFICES

REGIONAL OFFICES

BRANCHES

Executive cards of the organization. They are Executive

Director, General Manager (GM), Deputy General

Managers (DGM), assistant General Managers (AGM),

Chief Managers (CM), Managers and other officers are

in the hierarchy at the head office level functioning in

various Departments.

The Zonal Manager and regional Managers head the

Zonal Offices and Regional Officers respectively who

are assisted by other down in the hierarchy. The Branch

is headed by AGM\CM\ Senior Managers\Managers

13
depending upon the size of the Branch activities and

rendering of satisfactory customer service.

The bank has a very good system of delegating power

to the different functionaries in the hierarchy to facilitate

speedy decision- making process even up to the branch

Level.

PRODUCT AND SERVICE PROFILE OF THE

ORGANIZATION

Presently, it is the second largest bank of the country

rendering a wide variety of banking services:

 CENTRALISED BANKING SOLUTION (CBS)

CBS, an inter-branch networking and data-sharing

platform helps to operate account from any city in India

having CBS networked branches. Changing status from

Customer of the Branch’ to ‘Customer of the Bank’,

presently, there are over 2,616 CBS networked

brandies in 820 cites,

 NRI’S & TOURISTS

14
Currency exchange services are being provided by our

68 Exchange Bureau’s spread throughout the country

 ONLINE TAX PAYMENT

PNB provides the facility of online payment of service

tax, excise duty, DGFT, custom duty & all charges

urlderMCA2l

 CASH MANAGEMENT SERVICE (CMS)

PNB’s CMS facilitates management of receivables and

payments in technology driven environment, ensuring

availability of funds at reduced cost, helping

reconciliation at multi location accounts besides

providing customized MIS.

 MUTUAL FUNDS & INSURANCE

The bank has tied-up with Principal Financial Group for

providing Mutual Funds and Insurance services & also

tied up for distribution & marketing of UTI Mutual Funds.

 NRI SERVICES

NRE, FCNR, RFC, NRO Deposit a/c investment

Management & Housing Loan facilities for NRI’s.

 FOREIGN EXCHANGE

15
PNB has 150 branches authorized for handling foreign

exchange business and these branches have been

provided with SWIFT connectivity to ensure faster

realisation of funds.

 e-MONEYINDIA

Send money to the loved ones in India through PNB’s e-

MoneyIndia service. Draft delivery across 4,038

locations and Bank Credit to over 2,500 branches in

India.

 ONLINE RAILWAY RESERVATION/AIR TICKET

BOOKING

Say goodbye to long queues. PNB offers online booking

& information through IRCTC payment gateway. Just

click and travel comfortably.

 DEPOSITORY SERVICE

PNB Depository service provides the facility of having

shares & securities in Demat form & executes

transactions of sales & purchase hassle free

electronically.

 LOCKERS

16
Now, customer can relax with assurance of having your

locker at the PNB branch nearest to their home.

 CUSTOMER CARE FACILITY

All the banking queries and problems are just a call

away! PNB presents 24 hr. customer care facility. Call

at toll free no. at 1800 180 2222 from MTNL/BSNL or

0124-2340000 from other no.s

 PNB GOLD COIN

PNB gives opportunity to dazzle the well wishers,

patrons, partners and acquaintances with the mystical

charisma of PNB’s 999.9 fineness pure 24-carat gold

coins and to convey the true value of treasured

relationship. Enjoy guarantee of purity & weight of

hallmarked gold coins.

 ELECTRONIC CLEARING SERViCE (ECS) &

ELECTRONIC FUNDS TRANSFER (EFT)

Avail ECS for quick movement of funds in a paperless

mode & EFT to ensure an expeditious transfer of funds

by using electronic media.

 WEALTH MANAGEMENT SERVICE

17
PNB provides customized financial advisory services for

individuals that includes Mutual Funds, insurance,

Retirement Planning, Tax planning, & Debt

Management to customers for wealth maximization

 ONLINE BILL PAYMENT

No more queues to pay your bills. Now pay telephone,

mobile, electricity, insurance & several other bills 24

hours, 365 days, from the desktop.

 LOANS

 CAR LOAN/2 WHEELER LOAN

Drive dream car/bike home. PNB gives loan for the

purchase of new/old car, van or jeep, new bike at very

attractive interest rates with a convenient repayment

period.

 LOAN AGAINST JEWELLERY

Loan against Gold & Jewellery for individuals/business

enterprises, both for business & personal needs.

 TRADERS LOAN

Maximize business turnover with PNB traders loan with

minimum paper work and attractive rate of interest, for

whole sellers, dealers, distributors, individuals, firms,

18
registered cooperative societies & companies. Loans

also available for purchase of shop /showroom.

 HOUSING LOAN

Bring own dream home to life. Avail ‘flexi’ housing loan

and have the advantage of substantial savings on the

interest component. Insurance cover for home loan

borrowers available.

 PERSONAL LOANS

A scheme to meet all types of personal needs, for

permanent/confirmed employees/Defence Personnel

and Professionally Qualified Doctors.

 CORPORATE LOANS

Corporate can expand & diversify with user friendly

Corporate Loans Products Working Capital, Term Loan,

Bank Guarantee, Letter of Credit & others.

 EDUCATIONAL LOAN

Avail “Sarvottam Shiksha & Vidyalakshyapurti” schemes

for studies In India & abroad and ensure a great career

for child.

19
  PNB GRAMIN CHIKITSAK

Scheme for financing qualified medical practitioners for

setting up clinics in rural areas at concessional rate of

interest.

 LOAN TO PENSIONERS

PNB values the traditions of India by giving special

benefits to the senior citizens.

 LOANS TO WOMEN

PNB’s “Mahila Sashaktikaran Abhiyaan” & “Mahila

Samridhi Yojana” give special benefits to women

customers that help in building their confidence & self-

esteem.

 DEPOSITS

 PNB MET LIFE

Delighting depositors with life insurance by extending

the facility of insurance cover (death only) to all Saving

Fund & Current Account (Individuals) holders.

 PNB VIDYARTHI ACCOUNT

20
Empowering the young generation with a zero balance

account for students with overdraft facility.

 TOTAL FREEDOM SALARY ACCOUNT

Discover the freedom of flexibility with PNB’s Total

Freedom Account. A zero balance account for

employees having salary account in the bank, with

overdraft facility.

 PNB TAX SAVER

PNB offers term deposit scheme to avail tax benefit

under Sec 80(C)2 (xxi) of income Tax Act.

 PNBMITRA

PNB offers no frill saving account for financial inclusion -

21
 MARKET PROFILE OF THE ORGANIZATION

Today, PNB operates 4,070 branches and 443 service

counters across the country, consolidating its position

as one of the top nationalized banks of India. PNB has

been ranked at395Th position amongst the top 1000

global banks by the prestigious international publication

The Banker.

Like other scheduled banks in India, the PNB also

comes under the guidance of the Reserve Bank of India

(RBI) and as a government establishment, it has to

follow directions of the government. Two directives, one

from the Reserve Bank of India and the other from

India’s Department of Official languages are key in this

context. In 1985, the Department of Official Languages

mandated that all electronic equipment used in

ministries and departments of the government and their

attached and subordinate offices would need to be

bilingual. That is, they should be able to handle both

Hindi and English. By the year 2000, the Reserve Bank

of India had mandated that banks should have a clear

IT plan that should be implemented: that at least 7O

percent of all branches should be computerized.

22
With technology emerging as a key driver of business

growth, the bank has taken a number of IT initiatives to

provide its large clientele spread all across the country

with the best of technology while retaining the all-

essential human warmth. Its core banking system (CBS)

already acts as a single data bank, a backbone to 2,108

service outlets with internet banking services spread

over 28 states in the country. This deployment has lent

PNB the status of being the largest core banking system

in Asia.

The bank has 676 ATMs and also coordinates with the

MITR group of six banks with 2,200 ATMs. PNB is a

member of Institute Development and Research in

Banking Technology (IDRBT)-sponsored National

Financial Switch (NFS) for mutual ATM transactions.

NFS at present has 18 banks and a pool of 6,197

ATMs. PNB has also pioneered the cheque truncation

system in India. Other software fuelling the systems are

instant fund transfer mechanism, data warehouse for

decision control and MIS and risk management software

based on Basel II guidelines set by the Bank for

International Settlements.

23
About 77 percent of its business is connected through

leased lines, ISDN and VPN. Other services such as

mobile banking utility bill payments, funds transfer, e-

commerce and CRM through mobile shall be introduced

for the PNB branches including setting up a network

operating centre (NOC) to monitor the CBS network.

RELATIVE PERFORMANCE

⇒ Spreads: PNB has the best margins in the

banking sector.

⇒ Return Parameters: On both the return

parameters i.e. return on average asset and

return on average networth, PNB is close to the

average of the peer set.

⇒ Asset Quality: PNB’s asset quality as measured

by the net NPA ratio is on the higher side. It is

just better than the largest scheduled commercial

bank i.e. SBI.

⇒ Coverage Ratio: The provision coverage ratio

third best after HDFC Bank and OBC in our set of

banks.

24
 ⇒ Operating Efficiency: PNB’s cost to income

ratio is higher than the average of the peer set.

However, we believe that once the technological

platforms are put in place, the bank will be able

to bridge the gap with the numero uno in this

regard.

CHART FOR RELATIVE PERFORMANCE OF BANKS2

GENERAL INTRODUCTION

BANKING

Banking, the business of providing financial services to

consumers and businesses. The basic services a bank

provides are checking accounts, savings accounts and

25
time deposits that can be used to save money for future

use; loans that consumers and businesses can use to

purchase goods and services; and basic cash

management services such as check cashing and

foreign currency exchange.

TYPES

Four types of banks specialize in offering these basic

banking services:

1) commercial banks,

2) savings and loan associations,

3) savings banks, and

4) credit unions.

A broader definition of a bank is any financial institution

that receives, collects, transfers, pays, exchanges,

lends, invests, or safeguards money for its customers.

This broader definition includes many other financial

institutions that are not usually thought of as banks .

These institutions include finance companies,

investment companies, investment banks, insurance

companies, pension funds, security brokers and

dealers, mortgage companies, and real estate

investment trusts.

26
PURPOSE

Banking services serve two primary purposes. First, by

supplying customers with the basic mediums-of-

exchange (cash, checking accounts, and credit cards),

Second, by accepting money deposits from savers and

then lending the money to borrowers, banks encourage

the flow of money to productive use and investments.

This in turn allows the economy to grow.

Enabling the flow of money from savers to investors is

called financial intermediation, and it is extremely

important to a free market economy.

OBJECTIVES OF THE STUDY

The vital objectives of this project are-

 To enhance and sharpens skill.

 To get awareness about changing business

environment in banking.

 To understand the retail banking process.

INDUSTRY PROFILE

27
 ORIGIN AND DEVELOPMENT OF INDUSTRY

Banking in India

Banking in India originated in the first decade of 18th

century. The General Bank of India came into existence

in 1786. 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. A couple of decades later, foreign banks like

Credit Lyonnais started their Calcutta operations in the

1850s. At that point of time, Calcutta was the most

active trading port, mainly due to the trade of the British

Empire, and due to which banking activity took roots

there and prospered. The first fully Indian owned bank

was the Allahabad Bank, which was established in

1865.

By the 1900s, the market expanded with the

establishment of banks such as Punjab National Bank,

in 1895 in Lahore and Bank of India, in 1906, in Mumbai

- both of which were founded under private ownership.

The Reserve Bank of India formally took on the

responsibility of regulating the Indian banking sector

28
from 1935. After India's independence in 1947, the

Reserve Bank was nationalized and given broader

powers.

The banking in India was controlled and dominated by

the presidency banks, namely, the Bank of Bombay, the

Bank of Bengal, and the Bank of Madras - which later

on merged to form the Imperial Bank of India, and

Imperial Bank of India, upon India's independence, was

renamed the State Bank of India. The presidency banks

were like the central banks and discharged most of the

functions of central banks. They were established under

charters from the British East India Company. The

exchange banks, mostly owned by the Europeans,

concentrated on financing of foreign trade. Indian joint

stock banks were generally under capitalized and

lacked the experience and maturity to compete with the

presidency banks, and the exchange banks. There was

potential for many new banks as the economy was

growing.

Under these circumstances, many Indians came

forward to set up banks, and many banks were set up at

29
that time, and a number of them set up around that time

continued to survive and prosper even now like Bank of

India and Corporation Bank, Indian Bank, Bank of

Baroda, and Canara Bank

GROWTH AND PRESENT STATUS OF THE

INDUSTRY

By the 1960s, the Indian banking industry has become

an important tool to facilitate the development of the

Indian economy. At the same time, it has emerged as a

large employer, and a debate has ensued about the

possibility to nationalize the banking industry. Indira

Gandhi, the-then Prime Minister of India expressed the

intention of the GOI in the annual conference of the All

India Congress Meeting in a paper entitled "Stray

thoughts on Bank Nationalisation." The paper was

received with positive enthusiasm. Thereafter, her move

was swift and sudden, and the GOI issued an ordinance

and nationalised the 14 largest commercial banks with

effect from the midnight of July 19, 1969. Jayaprakash

Narayan, a national leader of India, described the step

as a "masterstroke of political sagacity." Within two

weeks of the issue of the ordinance, the Parliament

30
passed the Banking Companies (Acquition and Transfer

of Undertaking) Bill, and it received the presidential

approval on 9th August, 1969.

A second dose of nationalisation of 6 more commercial

banks followed in 1980. The stated reason for the

nationalisation was to give the government more control

of credit delivery. With the second dose of

nationalisation, the GOI controlled around 91% of the

banking business of India.

After this, until the 1990s, the nationalised banks grew

at a pace of around 4%, closer to the average growth

rate of the Indian economy.

Liberalization

In the early 1990s the then Narasimha Rao government

embarked on a policy of liberalization and gave licenses

to a small number of private banks, which came to be

known as New Generation tech-savvy banks, which

included banks such as UTI Bank (the first of such new

generation banks to be set up), ICICI Bank and HDFC

Bank. This move along with the rapid growth in the

economy of India, kick started the banking sector in

India, which has seen rapid growth with strong

31
contribution from all the three sectors of banks, namely,

government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup

with the proposed relaxation in the norms for Foreign

Direct Investment, where all Foreign Investors in banks

may be given voting rights which could exceed the

present cap of 10%,at present it has gone up to 49%

with some restrictions.

The new policy shook the Banking sector in India

completely. Bankers, till this time, were used to the 4-6-

4 method (Borrow at 4%; Lend at 6%; Go home at 4) of

functioning. The new wave ushered in a modern outlook

and tech-savvy methods of working for traditional

banks. All this led to the retail boom in India. People not

just demanded more from their banks but also received

more.

Current scenario

Currently (2008), overall, banking in India is considered

as 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. Even

in terms of quality of assets and capital adequacy,

Indian banks are considered to have clean, strong and

32
transparent balance sheets-as compared to other banks

in comparable economies in its region.

Indian economy is expected to be strong for long time-

especially in its services sector. The demand for

banking services-especially retail banking, home loans

and investment services are expected to be strong.

In March 2006, the Reserve Bank of India allowed

Warburg Pincus to increase its stake in Kotak Mahindra

Bank (a private sector bank) to 10%. This is the first

time an investor has been allowed to hold more than 5%

in a private sector bank.

Currently, India has 88 scheduled commercial banks

(SCBs) - 28 public sector banks (that is with the

Government of India holding a stake), 29 private banks

(these do not have government stake) and 31 foreign

banks.

They have a combined network of over 55,000

branches and 17,000 ATMs. According to a report by

ICRA Limited, a rating agency, the public sector banks

hold over 75 percent of total assets of the banking

industry, with the private and foreign banks holding

18.2% and 6.5% respectively

33
 Total Income Wise Listing2

Total N
No.of
Bank Name Number of Branches Income(Rs P
Employees
Mn) (R
State Bank of India 9143 198774 431836 4
ICICI Bank Limited 557 25479 187676 2
Punjab National Bank 4066 58047 108153 1
Canara Bank 2532 46893 100890 1
Bank of Baroda 2687 38737 82917 8
Bank of India 2563 41808 82131 7
Industrial Development 173 4548 66612 5
Bank of India Limited
Union Bank of India 2095 25421 64888 6
Central Bank of India 3143 37241 59164 2
HDFC Bank Limited 515 14878 55993 8
Indian Overseas Bank 1523 24178 51345 7
UCO Bank 1749 24510 48183 1
Oriental Bank of Commerce 1161 14962 46717 5
Syndicate Bank 1897 24624 46420 5
Allahabad Bank 1932 18742 43739 7
Source : http://www.dnb.co.in/topbanks/company_listing.asp?

q=Total_Income

34
 FUTURE OF THE INDUSTRY

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. New foreign banks

have been equally keen to gain a foothold in the Indian

market.

The momentum in credit growth has been maintained

during 2007-08 due to two factors: 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

35
will have to contend with if they are to emerge

successful in the medium to long term. This report

discusses these issues and challenges -- both intrinsic

and external, such as

Risk management and Basel II

The future of banking will undoubtedly rest on risk

management dynamics. Only those banks that have

efficient risk management system will survive in the

market in the long run. The effective management of

credit risk is a critical component of comprehensive risk

management essential for long-term success of a

banking institution.

Although capital serves the purpose of meeting

unexpected losses, capital is not a substitute for

inadequate decontrol or risk management systems.

Coming years will witness banks striving to create

sound internal control or risk management processes.

With the focus on regulation and risk management in

the Basel II framework gaining prominence, the post-

Basel II era will belong to the banks that manage their

risks effectively. The banks with proper risk

36
management systems would not only gain competitive

advantage by way of lower regulatory capital charge,

but would also add value to the shareholders and other

stakeholders by properly pricing their services,

adequate provisioning and maintaining a robust

financial structure.

‘The future belongs to bigger banks alone, as well as to

those which have minimised their risks considerably.’

Consolidation

Consolidation, which has been on the counter over the

last year or so, is likely to gather momentum in the

coming years. Post April 2009, when the restrictions on

operations of foreign banks will go, the banking

landscape is expected to change dramatically. Foreign

banks, which currently account for 5% of total deposits

and 8% of total advances, are devising new business

models to capture the Indian market. Their full-fledged

entry is expected to transform the business of banking

in many ways, which would be reflected in terms of

greater breadth of products, depth in delivery channels

and efficiency in operations.

37
Thus Indian banks have less than three years to

consolidate their position. Despite the stiff resistance

from certain segments, consolidation holds the key to

future growth. This view is underpinned by the following:

► Owing to greater scale and size, consolidation can

help save costs and improve operational efficiency.

► Banks will also have to explore different avenues for

raising capital to meet norms under Basel-II

► Owing to the diversified operations and credit profiles

of merging banks, consolidation is likely to serve as a

risk-mitigation exercise as much as a growth engine.

Though there is no confirmation yet, speculative signals

arising from the market point to the prospect of

consolidation involving banks such as Union Bank of

India, Bank of India, Bank of Baroda, Dena Bank, State

Bank of Patiala, and Punjab and Sind Bank. Further, the

case for merger between stronger banks has also

gained ground — a clear deviation from the past when

only weak banks were thrust on stronger banks. There

is a case being made for mergers between banks with a

38
distinct geographical presence coming together to

leverage their respective strengths.

GLOBALIZATION/ OVERSEAS EXPANSION

Growing integration of economies and the markets

around the world is making global banking a reality. The

surge in globalization of finance has already begun to

gain momentum with the technological advancements

which have effectively overcome the national borders in

the financial services business. Widespread use of

internet banking will widen frontiers of global banking,

and make marketing of financial products and services

on a global basis possible. In the coming years

globalization will spread further on account of the likely

opening up of financial services under WTO. India is

one of the 104 signatories of Financial Services

Agreement (FSA) of 1997. This gives India’s financial

sector including banks an opportunity to expand their

business on a quid pro quo basis.

As per Indian Banks' Association report ‘Banking

Industry Vision 2010’, there would be greater presence

of international players in Indian financial system and

some of the Indian banks would become global players

39
in the coming years. So, the new mantra for Indian

banks is to go global in search of new markets,

customers and profits.

TECHNOLOGY

There is an imperative need for not mere technology

upgradation but also its integration with the general way

of functioning of banks to give them an edge in respect

of services provided to their constituents, better

housekeeping, optimizing the use of funds and building

up of MIS for decision making, better management of

assets & liabilities and the risks assumed which in turn

have a direct impact on the balance sheets of banks as

a whole. Technology has demonstrated potential to

change methods of marketing, advertising, designing,

pricing and distributing financial products and services

and cost savings in the form of an electronic, self-

service product delivery channel. These challenges call

for a new, more dynamic, aggressive and challenging

work culture to meet the demands of customer

relationships, product differentiation, brand values,

reputation, corporate governance and regulatory

40
prescriptions. Technology holds the key to the future

success of Indian Banks.

Internet, wireless technology and global straight-through

processing have created a paradigm shift in the banking

industry. The explosive growth of both the Internet and

mobile and wireless technology is revolutionizing the

way the financial industry conducts business. The

overall wireless technology market is expected to grow

profoundly in the coming years.

REGULATIONS

The RBI's approval for banks to raise funds abroad

through innovative capital instruments holds great

significance. Such fund-raising, which includes

preference shares, will, however, not just substitute

equity; it could have unintended consequences on the

strategies of banks and their profitability. While the cost

of raising monies through such instruments is likely to

be higher (close to 10 per cent), the consequent higher

leverage on equity funds is likely to result in expansion

of return on net worth. This is because the same

amount of capital supports a higher volume of business,

generating higher profits.

41
Banks are likely to be able to raise long-term preference

shares at coupon rates between six per cent and eight

per cent. The positive impact on bank profitability could

thus be significant.

Preference capital can be used as the currency for

acquisition. The advantage for public sector banks is

that they no longer need to bother about government

stake falling below 51 per cent. Banks such as Dena

Bank, Oriental Bank of Commerce and Andhra Bank are

most likely to benefit from this move.

SKILLED MANPOWER

There will be a sea change for employees too. Secure

jobs will be replaced by contractual appointments, for a

specified period of time. The unions will merge into the

shadows and bank managements will turn effective. As

a result there will be swifter turn over of personnel in

banks. But at the same time, skilled personnel from

other disciplines will enter banks in increasing numbers.

Factors like skills, attitudes and knowledge of the

human capital play a crucial role in determining the

competitiveness of the financial sector. The quality of

42
human resources indicates the ability of banks to deliver

value to customers. Capital and technology are

replicable but not the human capital which needs to be

valued as a highly valuable resource for achieving that

competitive edge.

Business model, which comprises a comprehensive

range of business solutions delivered through a unique

balance of portfolio and relationship management must

be incorporated.

FUTURE CHALLENGES & SUGGESTIONS

 Competition

 Challenges

 Customer Retention

 Globalization

 Shrinking Margin

SUGGESTIONS

 Strong In-house research & market Intelligence

 Focused marketing- Focus on region-specific

campaigns rather than national media campaigns

43
The growth of the retail financial services sector has

been a key development on the market front. Indian

banks (both public and private) will not only be keen to

tap the domestic market but also to compete in the

global market place. New foreign banks will be equally

keen to gain a foothold in the Indian market.

44
 DISCUSSION ON TRAINING

STUDENT’S WORK PROFILE (ROLE AND

RESPONSIBILITY)

I worked as a management trainee in Punjab National

Bank, T.T. Nagar Branch, I was responsible for multiple

type of work involved in banking which our services best

in the industry.

♦ Customers Service

This is the counter where customer interacts with the

bank personnel firstly. Here, I got a chance to know

about the different problems of the customers visiting

the bank. I helped them to solve their different problems

which are as follows:-

 Query solutions:

Solving their Different queries such as:-

 Document required for new a/c

 Documents for loan

 Requirement for new ATM card

 Providing different forms for

different purposes

 Documents for Micro finance

45
  New account opening:

To help the customer in opening the new account by

filling up their forms along with scrutinizing their

documents. This includes checking of residence proof,

address proof and witness required. Then generating

account number and customer Id in the presence of

banking employee.

♦ Frills Account

They are also known as PNB MITR account. These are

the zero balance account specially created for these

poor peoples. This account has the facility to avail the

overdraft limit of up to Rs.3,000. The branch has

opened 40,000 accounts by 30 June.

♦ Cheque clearing

This includes checking the cheque details like date of

cheque, account number of the customer, signature of

the customer.

♦ Loan department

46
It includes clearing of various types of loans including

personal loans, vehicle loan, home loan etc. In the

branch I got a chance to visit the working site of the loan

applicant with the bank personnel.

47
 DESCRIPTION OF LIVE EXPERIENCE

The first day in this industry made me feeling like in a

heaven because this was my first step toward my dream

and this was a new thing for me, this was practical

exposure because till now I read only in books about

banking ,first day when I reached bank,I saw crowd of

over 100 people waiting outside the bank .

I usually worked under the supervision and direction of

the manager Mr. Bhagirath Choudhary. He gave me

different responsibilities as per the need, and at the end

of the day I had to report the full day’s work to him.

48
Procedural Chart for new account opening:-

New customers at help desk

Documents Provided

Documents checking
If Yes
If No
Documents as per rule

Fill up the form and Ask for the necessary

send for verification documents

Verification by
If approved Mr. Bhagirath If Not
Chaudhari

Customer ID & A/C Application rejected

No. generated

Pass Book, ATM Card &

Check Book issued

49
 STUDENT’S CONTRIBUTION TO ORGANIZATION

As a Management Trainee I worked in all of teams, as a

team member my role was such as follows:-

 Marketing

To collect data from the:

 Local community

 their existing customers

 Cheque clearance

It includes:

 Inward cheque clearance

 Outward cheques

 Verifying Cheque details like date of cheque, a/c

no. of the customer, signature of the customer,

cutting on cheque if any.

 Loan clearance

It includes:-

 Document verification

 Site visit with bank employee for Micro loans

 Clearance of various types of loans including

Micro loan, personal loans, vehicle loan, etc.

50
  Customer relationship

Provide information such as:

 Providing information about different products

such as FD(Fixed Deposit),RD(Recurring

Deposit),mutual funds, Flexible Deposit.

 Help in solving problems of customers.

 Procedure and conditions for getting loan

51
 SUMMARY AND CONCLUSIONS

SUMMARY OF LEARNING EXPERIENCE

While working in Punjab National Bank’s 1st Micro

Branch of India I got in-depth knowledge about Micro

finance. I recognize that there is a lot more to discover

and learn, I learned to be more responsible, have more

patience and most important it helped me to learn how

to handle the work pressure.

I got to know what all different types of question can be

asked by a banking customer, as the branch was in the

village area with population of 2 lakh peoples where

there was no other bank’s branch, it was difficult to

handle minimum 500-700 per day with the queries like :

ℵ What’s the procedure to open an account?

ℵ What’s the procedure to get an ATM card?

ℵ What’s the procedure to get a pass book?

ℵ What’s the procedure to get a cheque book?

ℵ How to fill ATM form?

ℵ How to fill all other different forms like cheque

clearance form, cash deposit form, cash

withdrawal form, etc.?

52
Besides the query solution I also filled up the form for

the illiterate and old peoples and helping them for their

requirements.

Apart from customer service I got to know about the

micro finance and the procedure and all document

required for it and types of people who can get the

micro loan.

OBSERVATIONS AND RECOMMENDATIONS

It has been observed that to put a new organization into

a running position is much more difficult than to handle

a already working organization, manager’s task is

difficult in a banking industry he is the person who is

completely liable for the working of branch. To put a

right person at a right job is not an easy task for the

manager.

I observed some of the factors in my branch such as:

ϒ Lack of staff

ϒ lack of Efficient staff

ϒ Brach working space

ϒ lack of speed

ϒ Lack of quality service

53
 ϒ Complicated work procedure

ϒ Not providing service on time

Beside all these factors the branch has also achieved

some achievements such as 1200 accounts in 2 days

and distribute micro loan of around 5 crore rupees to

different 55 Self Help Groups to start their small

businesses.

Opening of 1st Micro branch in India is also a

achievement and it is a starting of new type of banking

revolution which can change the life of villagers which

depends on the “MAHAJAN” to lend them money at

high interest rate.

Recommendations:-

With the changing banking system, this branch has also

to adapt the new ways of banking such as:

ψ Shifting new and young staff to this branch

ψ Give them good incentives so that they stay their

for longer time period as per the location

54
ψ Complicated form should be replace with easy
forms

ψ Provide easy norms for new account opening.

ψ Well trained staff be placed to increase work

pace and to decrease per transaction time also.

ψ Local people should be appointed to handle the

customers.

55
 (Annexure)

VARIOUS FORMS USED IN PNB:

56
FORM No.60 (For person not having PAN card)

57
ACCOUNT OPENING FORM

Page
1 of 4

58
 Pa
ge 2 of 4

59
 Page 3
of 4

60
 Page 4
of 4

61
CUSTOMER MASTER FORM

Page 1
of 4

62
 Page 2
of 4

63
 Page 3
of 4

64
 Page 4
of 4

65
66
List of tables:-

Page no.

Table 1:- Total Income Wise Listing of banks

-9

Table 2:- Latest Quarterly/Half yearly Income

statement - 22

List of Charts:-

Chart1:- Graphical organizational structure

- 25

Chart2:- Chart for relative performance of banks

- 35

Chat 3:- Procedural Chart for new account opening

- 39

67
 BIBLIOGRAPHY

Websites:-

www.finance.indiamart.com

www.allbusiness.com

www.ficci.com

www.business.mapsofindia.com

www.pnbindia.com

www.gyanguru.org

www.info.gov.hk

www.indiainfoline.com

www.indiaearnings.moneycontrol.com

www.corporateinformation.com

www.outlookmoney.com

www.business-standard.com

Magazine:-

India today

Business world

68