PROJECT REPORT

ON

Customer Services & Financial Analysis Of IDBI BANK

SUBMITTED BY:-

Ankita Gupta

REG NO.-9212400072

for the Partial fulfillment of MBA course

IIBS, Bangalore

Under the guidance of

Minal Sayeesh Naik

Service & Operation Manager

IDBI Bank Ltd

R.T. Nagar

Bangalore

1
 DECLARATION
I, Ankita Gupta, the undersigned student of International Institute Of Business
Studies, Bangalore, declare that this project report titled “Customer Services &
Financial Analysis Of IDBI Bank” is submitted in partial fulfillment of the
internship project during the MBA Course in Internatinal Institute of Business
Studies, Bangalore.

The all information, facts & figures used in this project are true and based on my
own finding & experience. The findings and conclusions of the data in this report
are based on my personal study, during the internship.

The information has been used for purely academic purpose.

2
 ACKNOWLEDGEMENT
There are number of people to acknowledged and thank for their contribution to
this project. Here is a consideration of all those esteem people who have not only
contributed their precious time bit also knowledge and experiences which further
enhanced the project and made more proper .

I acknowledge with reference and offer my thanks with profound gratitude to my

esteemed management and respected academic director prof. k.Ramdas, for giving
me sufficient encouragement and facilities to do my project work.

I thank to Prof. V padhmnabhan, Faculty,IIBS, for being my mentor and whose

continuous support has helped me to make this possible parameter analysis.

I express my courteous affection of gratefulness to , Mrs. Jyothi Mohan, Branch

Head, IDBI Bank Ltd, R.T. Nagar, Bangalore Branch for giving me a golden
opportunity to do the internship and I also acknowledge and offer thanks to Mrs.
Minal Sayeesh Naik, Service & Operation Manager who not only helped me as a
guide but also enthused me with the ardor to scrutinize the substantial financial and
other information and also gave her steady assistance, direction and
encouragement.

Last, but far from least, I express my heartfelt gratitude to all employees and all
those who directly or indirectly contributed their modicum without whose
coordination and support this report would not have been possible.

3
 CONTENTS
CHAPTER TITLE Page. No
1. General Introduction of Banking Industry 10-14
1.1. An Overview of Banking Industry 10
1.2. Banking Structure in India 10-12
1.3. Present Situation of Banking Industry 12
1.4. New Generation Banking 12
1.5. Retail Banking 13
1.6. Scope of Retail Banking 13-14

2. Introduction to the Study 15-16

2.1. Theoretical background of the Study 15
2.2. Objectives of the Study 15
2.3. Research Methodology 16

3. Company Profile of IDBI Bank 17-21

3.1. Brief Introduction of IDBI Bank 17
3.2. IDBI Bank: A journey from Development 17-18
Banking to Commercial Banking
3.3. Capital Structure of IDBI Bank 18
3.4. IDBI Bank: Highlights of the Annual Report 18-19
2009-10
3.5. SWOT Ananlysis of IDBI Bank 19-21

4. Bank Deposits 22-41

4.1. Introduction 22
4.2. Types of Deposit Accounts 22-23
4.3. Common guidelines of Opening & 23-24
Operating Deposit Accounts
4.4. Types of Deposit Accounts in IDBI 24-27
4.5. CASA Deposits performance in IDBI for the 27-31
past 3 years

4
 4.6. Other Deposit Accounts in IDBI 31-34
4.7. Analysis of Interest Expenses 34-36
4.8. Quantitative Study of Deposits with IDBI 36-41
Bank

5. Bank Loans 42-55

5.1. Basics of Bank Lending 42
5.2. Principles of Lending & Loan Policy 42-43
5.3. Loan Policy 43-46
5.4. IDBI: Retail Loan 47-50
5.5. Comparative Analysis of Lending Operation 50-55
of Bank on different parameters

6. Non Depository Services 56-60

6.1. Consumer Cards 56-58
6.2. Phone Banking 58-59
6.3. SMS Banking 59-60
6.4. Account Alerts 60
6.5. Internet Banking 60

7. Capital Market Products 61-62

7.1. Initial Public Offerings 61
7.2. Demat Account 61-62
7.3. 3-in-1-Account 62

8. Investment Advisory Services 63-65

8.1. Mutual Funds 63-64
8.2. Insurance 64
8.3. New Pension System 64-65

9. NRI Services 66-67

9.1. Non Resident External Account 66
9.2. Non Resident Ordinary Account 66-67
9.3. Foreign Currency Non Resident Deposit 67
Scheme
9.4. Demat Account 67

5
10. Ratio Analysis 68-70
10.1. Capital Adequacy Ratio 68
10.2. Balance Sheet Ratio 69
10.3. Key Operating Indicators 69
10.4. Asset Quality Indicators 69-70
10.5. Business Ratios 70

11 Recommendations 71-72
12 Bibliography 73

6
 CHAPTER-1
INTRODUCTION
1.1. An overview of Banking Industry:

The Banking Industry is a reliable business that took deposits from investors at a
lower interest rate and loaned it out to borrowers at a higher rate. The Banking
Industry at its core provides access to credit. In the lenders case, this includes
access to their own savings and investments, and interest payments on those
amounts. In the case of borrowers, it includes access to loans for the
creditworthy, at a competitive interest rate.

Banking is generally a highly regulated industry, and government restrictions on

financial activities by banks have varied over time and location. The current set of
global bank capital standards are called Basel II. A bank is a financial intermediary
that accepts deposits and channels those deposits into leng activities, either
directly or through capital markets. A bank connects customers with capital
deficits to customers with capital surpluses

Banks have played an important role in the economic development of many

developed country and also emerging economies such as India. Banks are
important not only from the point of view of economic growth but also financial
stability. In India, banks are important mainly for the following three reasons:

a. They take a leading role in the development of other financial

intermediaries and markets.
b. Due to the absence of well developed equity and bond market,
corporate sector depends heavily on banks to meet its financing needs.
c. In India, banks cater to the need of a vast number of savers from the
household sector, who prefer assured income, liquidity & safety of
funds.

7
 History
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is
the State Bank of India, which originated in the Bank of Calcutta in June 1806,
which almost immediately became the Bank of Bengal. This was one of the three
presidency banks, the other two being the Bank of Bombay and the Bank of
Madras, all three of which were established under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central
banks, as did their successors. The three banks merged in 1921 to form the
Imperial Bank of India, which, upon India's independence, became the State Bank
of India.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another
in Bombay in 1862; branches in Madras and Puducherry, then a French colony,
followed. HSBC established itself in Bengal in 1869. Calcutta was the most active
trading port in India, mainly due to the trade of the British Empire, and so became
a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank,
established in 1881 in Faizabad. It failed in 1958. The next was the Punjab
National Bank, established in Lahore in 1895, which has survived to the present
and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a
relative period of stability. Around five decades had elapsed since the Indian
Mutiny, and the social, industrial and other infrastructure had improved. Indians
had established small banks, most of which served particular ethnic and religious
communities.

The presidency banks dominated banking in India but there were also some
exchange banks and a number of Indian joint stock banks. All these banks
operated in different segments of the economy. The exchange banks, mostly
owned by Europeans, concentrated on financing foreign trade. Indian joint stock

8
banks were generally under capitalized and lacked the experience and maturity to
compete with the presidency and exchange banks.

The period between 1906 and 1911, saw the establishment of banks inspired by
the Swadeshi movement. The Swadeshi movement inspired local businessmen
and political figures to found banks of and for the Indian community. A number of
banks established then have survived to the present such as Bank of India,
Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of
India.

The fervour of Swadeshi movement lead to establishing of many private banks in

Dakshina Kannada and Udupi district which were unified earlier and known by the
name South Canara ( South Kanara ) district. Four nationalised banks started in
this district and also a leading private sector bank. Hence undivided Dakshina
Kannada district is known as "Cradle of Indian Banking".

Liberalisation

 In the early 1990s, the then Narsimha Rao government embarked on a

policy of liberalization, licensing a small number of private banks. These
came to be known as New Generation tech-savvy banks, and included
Global Trust Bank (the first of such new generation banks to be set up),
which later amalgamated with Oriental Bank of Commerce, Axis
Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with
the rapid growth in the economy of India, revitalized the banking sector in
India, which has seen rapid growth with strong 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 set up 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 74% with some restrictions.

9
1.2. Banking structure in India:
The Reserve Bank of India(RBI) is the central banking and monetary
authority of India and also act as the regulator and supervisor of
commercial banks in India.

Scheduled Banks in India:

Scheduled banks comprise both the Scheduled Commercial bank and
Scheduled Co-operative banks. Scheduled commercial banks form the
bedrock of the Indian financial system, currently accounting for more then
3/4th of all financial institution assets. SCB/s branches have increased four-
fold since the time of independence.

Public Sector Banks:

In India, there are 27 Public Sector banks which includes SBI and its six associates
and 19 nationalized banks and IDBI.
10
Private Sector Banks:

As on March 2011, there were 7 new privates sector banks and 15 old private
sector banks.

Foreign Banks:

In India, there are 32 foreign banks with 293 branches.

Regional Rural Banks:

As on 31st March, 2011, the total number of RRB’s stand at 86.

1.3. Present Situation of Banking Industry:

Banking industry is one of the fastest growing industry. In India, it has increased
manifold and this is mainly because of the growing middle class population whose
aspirations and dreams are financed by the banks.

Banking industry is expected to grow in the coming years as the government is

inclined towards its expansion. In the Budget 2010-11, the government has made
the announcement that more licenses will be provided to those industries who
wants to venture into the Banking industry which is a positive indication.

1.4. New Generation Banking:

The Indian Banking Industry saw dramatic changes in the last decade and so ever
since the advent of liberalization and India’s integration with the worked
economy. This economic reforms and the advent of the private players saw
nationalized banks revamp their services and product portfolio to incorporate
new, innovative and customer- centric schemes. The need to become highly
customer focused forced the slow moving public sector banks to adopt a fast
track approach. These customer friendly programs included revamping the
product and the services schemes like credit cards, hassle free housing loan

11
scheme, educational loans and Flexi- deposits. The objective of all these strategies
was very clear to bridge the gap between service and product gap that was
inherent in the banking system.

CHAPTER 2
INTRODUCTION TO THE STUDY

2.1. Theoretical Background of the Study:

The Banking industry in India has undergone a sea of change since the period
of economic reforms since 1991. From an industry almost monopolized by the
nationalized bank till the 90’s, it has now emerged as a conglomerate of
nationalized, foreign and private banks setting new trends in the way banking
is carried out.
The deregulation of interest rates, grant of functional autonomy to the banks
in the area of credit, entry of foreign banks and emergence of private banks
has raised the level of competition fiercely.
Lately, Indian banks are diverting from their bread and butter business of
lending and accepting deposits to other related activities. To sustain the
market share and to maintain profitability, nationalized banks are also trying
to incorporate product diversity and with more focus on customer needs.
More and more banks are adopting the model of Universal Banking. Universal
banking means the banks have all the financial products and services for its
customers.

12
 2.2. Objectives of the study:

The objective of the study was:

 To study the customer Services provided by IDBI Bank

 To analyze the growth in IDBI bank
 To know the services and products being offered by IDBI Bank
 Compare the performance of IDBI Bank with its competitors

2.3. Research Methodology:

The study is mainly based on quantitative data which was provided by the banks.
It is mainly based on unstructured and undisguised observation.
METHODOLOGY OF REASERCH:-

a) Type of research-Descriptive &conclusive

b) Data type –Primary data
c) Data size -100
d) Data collection method –questionnaire
e) Data collection instruments-structured questionnaire
f) Sample unit-All
g) Sample technique –Random
h) Data analysis Tools and techniques –Bar and Pie Charts
4.2. Types of Data:

Primary Data:

In my study I will be using both primary and secondary data. For primary
data collection I have prepared a questionnaire consisting of both open
ended and close ended questions. Questions are prepared in such a way that
maximum information can be obtained from the respondents. This data will
be collected from discussions and interactions by:

13
  Observation method.
 Interviewing method.
 Through questionnaires

 Secondary Data:

Secondary data means data that are already available that is they refer
to the data which have already been collected and analyzed by someone
else. The sources of secondary data can be given as under.

 Books, magazines and newspapers, Internet etc.

 Reports and publications of various associations connected with
business and industry banks stock exchanges etc.

14
 CHAPTER 3
COMPANY PROFILE
3.1. Brief Introduction of IDBI:

Today, Industrial Development Bank of India(IDBI) is one of India’s largest bank. It

has essayed a significant role in the country’s industrial and economic progress
for over 40 years-first as a development financial institution and now as a full
service commercial bank.

Post the 2004 merger of the erstwhile IDBI bank with its parent company(IDBI
ltd),IDBI is now a universal bank. The merger was aimed at consolidating business
across the value chain and reaping the benefits of economies of scale, thus
enabling it to offer an array of customer-friendly service to its existing and
prospective clients.

Today IDBI is the 10th largest bank in India in terms of reach with 1210 ATM’s, 720
branches and 474 centre’s.

3.2. IDBI Bank: A journey from Development banking to Commercial banking:

1st July 1964: IDBI was established by an Act of Parliament, as a wholly owned
subsidiary of Reserve Bank of India, to catalyze the development of a
diversified and efficient structure in the country, in tune with national
priorities.

1976: 100% ownership of IDBI was transferred from RBI to the Govt. of
India(GOI)

1995: Domestic IPO reduced the GOI stake, initially to 72% and post capital
restructuring to 58.1%. The current GOI holding is 53%

2004: On 1st October, IDBI was converted into a banking company( as

Industrial Development Bank of India ltd) to take the entire gamut of banking
activities while continuing to play its secular DFI role
15
2005: On 2nd April, IDBI merged its hitherto banking subsidiary(IDBI Bank ltd.)
with itself.

2006: IDBI announced its foray into life insurance business jointly with
Federal Bank and Fortis Insurance International. A memorandum of
Understanding was signed by the three partners on 11th July, 2006 to this
effect followed by a joint venture agreement on November 23, 2006.

2006: IDBI Gilts Ltd was incorporated as a wholly owned subsidiary of the
bank on 13th Dec, 2006 to undertake primary dealership issues.

3.3. Capital Structure:

As on 31st March,2011, the authorized capital was Rs.20101 crores and

reserves and surplus was Rs.9438 crores. Total loan funds stood at Rs. 138202
crores. Total fixed assets including leased assets stood at Rs.2997 crores. Total
deposits stood at Rs. 167667 crores. Total assets of Rs. 13903 crores is with RBI
in the form of SLR and CRR.

3.4. Highlights: As on 31st March, 2011

 Business stands at Rs. 3.06 lakh crore.

 Deposits at Rs. 1,67,667 crore which shows a growth rate of 49 %.
 CASA deposits at 14.59% of the total deposits.
 Advances at Rs. 1,38,202 crore, showing a growth of 34% over the
previous financial year.
 Total business (deposits + advances) grew by 42% to Rs.3,05,869 crore.
 Branches increased to 720.
 ATM’s increased to 1210.
 Profit after tax stood at Rs.1031 crore which shows an increase of 20%.

16
 PAT(in crores)

1200
1000
800
600 PAT(in crores)

400
200
0
2007-08 2008-09 2009-10

Fig 3(a): Graph showing the value of PAT(Profit after tax) for the past 3
financial years.

Conclusion: In 2009-10, PAT has increased by 20% while in 2008-09, it

increased by 18%.

3.5. SWOT of IDBI:

STRENGHTS:

 A well diversified customer profile, including blue chip companies,

SME’s, high net worth individual, retail customers, trusts, self help
groups, etc.
 A strong capital base with a capital adequacy ratio of 11.31% well above
the regulatory minimum of 9% which ensures that it is well placed for
growth of business.
 IDBI has been a robust builder and has helped erect many reputed
institutions like EXIM, SIDBI, NSE, CARE etc.
 The value of Non performing assets as a percentage of net advances
has decreased rapidly

17
 NPA(as % of net advances)

1.4
1.2
1
0.8
NPA(as % of net advances)
0.6
0.4
0.2
0
2006-07 2007-08 2008-09

Fig.3(b): Graph showing that the value of NPA(Non performing asset) for the
given 3 financial years

Conclusion: NPA has decreased rapidly from 1.12 in 2007 to 0.92 in 2009
which is a good sign that the loans are being recovered efficiently.

WEAKNESS:

 No doubt the NPA has decreased, but still it is higher if compared to

other banks.

Bank NPA(as % of Net advances) as on 31st

March 2010
Punjab National Bank 0.17
State Bank 1.20
Axis Bank 0.40
HDFC Bank 0.63
ICICI Bank 2.09
YES bank 0.33
18
Conclusion: IDBI NPA stands at 0.92% which is greater then PNB, Axis,
HDFC and YES bank which shows that IDBI still has to put a lot of effort in
order to save itself from the burden of NPA.

OPPORTUNITIES:

 Indian economy is the world’s second largest growing economy in the

world and it has created a lot of opportunities for the banking industry.
 IDBI being a public sector bank has excelled in all the spheres. It has the
confidence of individuals to big business house which no other bank has
on its side.

THREATS:

 Increased competition from foreign banks, which has already has made
its presence felt in the financial services segment.

19
 CHAPTER 4
CUSTOMER SERVICES

4.1. Bank deposits: Introduction:

One of the important service of the bank is to accept deposits from

public for the purpose of lending. Infact, depositors are the major
stakeholders of the banking system. Since the first episode of bank
nationalization in 1969, banks have been at the core of the financial
intermediation process in India. They have mobilized a sizeable share of
savings of household sector, the major surplus sector of economy.
The safety of depository funds, forms a key area of the regulatory
framework for banking. In India, this aspect is taken care of in the
Banking Regulation Act, 1949. The RBI is empowered to issue
directives/advices on several aspects regarding the conduct of deposit
accounts from time to time. Further, the establishment of the Deposit
Insurance Corporation in 1962 offered protection to bank depositors.

4.2. Types of Deposits Account: Introduction

In India, there are several types of deposits account, but then they can
be broadly classified into the following 3 types:

(i). Current Account

(ii). Savings bank Account
(iii). Term deposit account

(i). Current account:

A current account is a form of demand deposit, as the banker is obliged
to repay these liabilities on demand from the customer. Among the
three broad categories of deposits- current account forms the smallest

20
fraction. The primary objective of current account is to provide
convenient operation facility to its customer, via continuous liquidity.

(ii). Savings Account:

Savings deposits are a form of demand deposits, which is subjected to
restrictions on the number of withdrawals as well as the amounts of
withdrawal during any specific period. It cannot be opened by big
trading or business firms.

(iii). Term deposits:

A term deposit is a deposit which received by the bank for a fixed period
after which it can be withdrawn. Term deposits includes deposits such
as fixed deposits/reinvestment deposit/ recurring deposits etc. The term
deposits accounts for the largest share and have remained within the
range of 61-67% of total deposits in the recent years.

4.3. Common guidelines of opening and operating deposit accounts:

To open and operate a banks account, the following guidelines needs to
be followed:

(i). Due Diligence:

A bank before opening any deposit account has to carry out due
diligence under “Know Your Customer” guidelines issued by RBI and or
such other norms or procedures adopted by the bank. The due diligence
process involves the bank having adequate knowledge of the person’s
identity, occupation, source of income and location.

(ii). Minimum balance:

For deposit products like the savings account and current accounts,
banks normally stipulate certain minimum balance to be maintained as
part of the terms and conditions governing operations of such accounts.

(iii). Transparency:
21
Failure to maintain minimum balance in the accounts, where applicable
will attract levy of charges as specified by the bank from time to time.
Similarly, the bank will specify charges for issue of cheque books,
additional statements of accounts etc.

(iv). Eligibility:
A savings bank account can be opened by only eligible persons and
certain organizations/agencies as per the guidelines set by RBI. But,
current accounts can be opened by individuals, partnership firms,
private and public limited companies.

(v). Requirement of PAN:

In addition to the due diligence process, under KYC norms, banks are
required by law to obtain a Permanent Account Number from the
prospective account holder.

(vi). Operation of Joint Account:

Deposits account can be hold by an individual or also by group of
individuals in the form of joint account. Accountholders of a joint
account can give mandates on the operation of the account and the
disposal of balances in the event of demise of one or more of the
holders. Banks classify these mandates as ‘Either or Survivor’ and
‘Anyone or Survivor’.

(vii). Power of Attorney:

At the request of the depositor, the bank can register mandate/power
of attorney given by him authorizing another person to operate that
account.

22
 4.4. Types of Deposit Accounts in IDBI:
(a). Savings Account:
IDBI has two types of savings account:
(i). Super Saving Account
(ii). PowerKidz

(i). Super Savings Account:

The super savings account is a complete financial package which
provides the customer to easy access to money and complete banking
convenience to. It offers a whole range of options for optimal
management of money. In order to enjoy the advantage of Super
savings account, a minimum balance of Rs. 5000 has to be maintained in
the account or otherwise charges has to be levied. Apart from the given
advantages which are already mentioned, the following services are also
provided under this account scheme:
 Instant banking
 International Debit card
 Family Account
 Quick money transfer
 Easy payments
 Bank on the move
 Value added services
 Travel and gift solutions

(ii). PowerKidz:

With the growing focus on the Kidz segment and its requirement, IDBI
bank realized the importance of introducing a product specially catering to
this market. It is a piggy bank for the kids which will just not keep their
money safe, but they will also earn interest on the same. This will teach
them to operate their account from time to time and will also advise them
from time to time about the various investment options available.

23
(b). Current Account:

Current accounts are different from savings account because whereas

deposits in savings account are subjected to interest earnings, current
accounts are not. IDBI provides 5 basic roaming current accounts. One can
open a current account with a minimum balance of Rs.10,000. It should be
noted that the customers are required to maintain an average quarterly
balance(AQB) of Rs.10,000 in order to have an access to the added
advantage of current account.

On current account, IDBI bank provides the following added services:

 Multi city and multi branch banking

 Electronic funds transfer
 National clearing
 ATM card
 RTGS facility

The five current accounts provided by the IDBI are as follows:

(i). Basic Current Account:

 Free home branch cash deposit upto Rs.1 lakh per month
 Any branch maximum cash deposit of Rs. 20,000 per day
 Any branch maximum cash withdrawal of Rs. 5 lakh per day
for self and Rs.2 lakh for third party

(ii). Special Current Account:

 Free PAP( payable at par) upto Rs.75 lakh per month

 Free home branch cash deposit of Rs.5 lakh per month
 Free any branch maximum cash deposit of Rs.20,000 per day

24
  Free any branch cash withdrawal of Rs.1 lakh per day

(iii). Bronze Current Account:

 Free PAP utilization of upto Rs. 1.50 crores per month

 Free home branch cash deposit of upto Rs.10 lakh per
month
 Free any branch maximum cash deposit of Rs.20,000 per day
 Free any bank maximum cash withdrawal of Rs.1 lakh per
day

(iv). Silver Current Account:

 Free PAP utilization of upto Rs.3 crore per month.

 Free home branch cash deposit of any branch is Rs.20 lakh
per day
 Free any branch cash deposit of Rs. 50,000 per day.
 Free any branch cash withdrawal of Rs.1 lakh per day.

(v). Gold Current Account:

 Free PAP utilization of upto Rs.5 crore per month

 Free home branch cash deposit of Rs. 40 lakh per month
 Free any branch cash deposit of Rs. 50,000 per day
 Free any branch cash withdrawal of Rs. 1 lakh per day

25
4.5. CASA (Current account & Savings account) deposits
performance in IDBI for the past 3 financial years:

Year Total deposits(in CASA(as % of CASA

crores) total deposit) deposits in
crores

2007-08 72998 16.56 12088.46

2008-09 112401 14.78 16122.86

2009-10 167677 14.59 24464.07

25000

20000

15000
Deposits in CASA(in crores)
10000

5000

0
2007-08 2008-09 2009-10

Fig 4(a). Graph showing the value of CASA deposits of IDBI for the
past 3 financial years.

26
 18
16
14
12
10 % of CASA of Total
8 deposits
6
4
2
0
2007-08 2008-09 2009-10

Fig 4(b). Graph showing the percentage of CASA deposits of the total
deposits.

Conclusion: From the above two graphs, it is quite clear that the amount
in CASA deposits have increased but the % of CASA deposits as of total
deposits have declined.

Importance of CASA deposits: From a bank’s viewpoint CASA deposits

are low cost deposits as compared to other types of deposits. Current
account is non-interest bearing whereas savings account are interest
bearing which is very low(currently it is 3.5%). To be competitive, it is
important for banks to garner as much low cost deposits as possible,
because by doing so banks can control the cost of raising deposits and
hence can lend at more competitive rates.

27
 Comparison of quantum of CASA deposits of IDBI with other banks:

Bank wise share of CASA deposits as % of total deposits:

March End
Bank 2006 2007 2008 2009
State Bank 43.4 42.9 42.0 38.6
Group
Nationalised 38.2 35.4 33.0 29.9
Bank
Private 30.4 29.8 32.8 32.9
Banks
Foreign 50.5 45.1 44.7 41.7
Banks

200
180
160
140
2009
120
2008
100
80 2007
60 2006
40
20
0
State Bank Nationalised Private Bank Foreign Bank Total SCB's
Group Bank

Fig 4(c). Graph showing CASA deposits as percentage of total deposits for
different banks.

28
Conclusion: As it is very clear from the above graph that the volume of CASA
deposits have shown falling trends as compared to the total deposits. It shows
that the Current and Savings account have lost its popularity.

However, one thing has to be noticed here that the volume of CASA deposits in
case of IDBI is very low when compared to other banks.

The main reasons responsible for CASA deposits being less popular are as follows:

(a). The face of today’s customer is changing and now the people are turning
towards those investment where they could earn good profits. The interest which
is being earned on savings account, hardly attracts the modern customers.
Everyone is in the run of making quick money and hence CASA has lost its charm.

(b). There are so many investment opportunities in the market today which
promises better returns that the people have lost interest in saving.

(c). Earlier India was represented by middle class Indians who were risk averse
and wanted to have a safe deposit because they couldn’t handle losses. But today
the customers profile is changing rapidly. The buying power of the people coupled
with the living standard has improved manifold and so the customers have
become aggressive in their investments.

Suggestions: As it is very clear from the above discussion, that CASA deposits are
very important for any bank, as it equips the bank to lend at competitive rates. It
is important for any bank to raise the quantum of CASA deposits.

So, it is highly suggested to IDBI bank that they should take steps in order to
attract its customers more towards current and savings account.

4.6. Other deposits account in IDBI :

(a). Fixed Deposits:

For fixed deposits the BPLR is 14.25% per annum.

29
Options available under the IDBI Suvidha Fixed deposits are as follows:

(i). Monthly Quarterly Income Plans:

It is a very good option for people who require interest income at regular
intervals. The interest income will be credited automatically into savings account
at the interval(monthly/quarterly) as specified. The deposit is automatically
renewed on maturity. A balance of Rs.10,000 has to be maintained.

(ii). Quarterly compounding fixed deposit:

This option re-invests the interest earned on deposit, every quarter resulting in a
higher rate of return. There is also an automatic renewal of FD’s on maturity and
hence, the customer does not loose interest even for a single day.

(iii). Recurring deposits:

It is ideal for those customers who want to save a fixed sum every month. Every
month, a fixed sum of money will debited from the savings account and will be
automatically invested in the chosen re-investment plan. There is no tax
deduction on these deposits.

(iv). Sweep in savings account:

This option offers you the flexibility of a savings account combined with the safety
and higher rate of interest of an fixed deposit. One has to open a deposit starting
from Rs.50,000 and can get a free balance saving account. One will get all the
benefit of savings account along with the returns of fixed deposits.

(v). Senior Citizens Fixed deposits:

For senior citizens, the interest rate is 0.50% higher then the normal plans. The
minimum deposit has to start from Rs.10,000 and the tenure ranges from 46 days
to 10 years.

(d). Suvidha tax saving fixed deposit:

30
IDBI Suvidha Tax saving fixed deposit gives the dual benefit of tax exemption
under Section 80(c) and higher returns on your investments with interest rates at
7.5% per annum for regular deposits and 8% for senior citizens.

Along with the above benefits, other benefits are as follows:

 Zero balance savings account

 Free local Cheque book
 International ATM-cum-Debit card
 Free Internet Banking facility

(e). Pension Account:

With the help of Pension account, the ole people can get their pension at regular
interval as been mentioned by them. IDBI bank has been authorized to disburse
Central civil and defense pension payments by RBI across our 92 branches.

Additional features:

 A zero balance account

 Free International Debit-cum-ATM card
 Payable At Par facility
 Any Branch Banking
 ATM services
 Phone banking services
 Mobile banking etc..

(f). Sabka Account- No Frill account:

IDBI bank introduced Sabka Account with just Rs.250/zero balance for financial
inclusion.

Features of Sabka Account:

 Low/Nil average quarterly balance

 Debit cum ATM card and Cheque book

31
  Multiple ways to access account
 Quarterly account statements
 Recurring deposits

(g). SuperShakti(Women’s account):

This is a special savings account meant specially for women. Along with this
account, IDBI also offer one zero balance savings account absolutely free for the
child below the age of 18 years.

Added features includes:

 Free transactions at other bank ATM’s

 An account opening balance of just Rs.1000
 An AQB requirement of Rs.5000
 Debit card free for the first year, etc..

(h). Jubilee Plus Savings Account:

It is meant for the senior citizens:

Features available are:

 An account with a balance of just Rs.5,000(Category A branches),

Rs.2,500(Category B branches), Rs.1,000(Category C branches)
 Free sponsors account with AQB of Rs.1000 with the senior citizen account
 Auto Sweep out/sweep in facility
 Free demand draft at home branch and free pay order.

32
4.7. Analysis of Interest expenses:

IDBI Bank:

Interest expenses(in crores)

14000
12000
10000
8000
Interest expenses(in crores)
6000
4000
2000
0
2007-08 2008-09 2009-10

Fig 4(d). Graph showing the interest expense incurred by IDBI Bank in the
past 3 financial years.
Conclusion: In the year 2007-08, interest expenses was Rs.7364 crores, in
2008-09 Rs.10306 crores and again in the year 2009-10 it has increased to
Rs.13005 crores.
From this quantitative analysis it is quite clear that the interest expenses is
increasing for the past 3 years and it is mainly because the quantum of
deposit is increasing and the main factor is that the deposits apart CASA
deposits is increasing considerably which is considered to be high cost
deposits.

 Interest expenses of IDBI Bank in comparison with other banks:

33
 Interest expenses(in crores)

14000
12000
10000
8000
Interest expenses(in crores)
6000
4000
2000
0
HDFC IDBI Axis

Fig. 4(e). Graph showing the Interest expenses of HDFC and Axis Bank in
comparison with IDBI Bank.

4.8. Quantitative Analysis of Deposits with IDBI Bank

 Savings deposit in IDBI Bank:

Year Saving deposits(Rs. in crores)

2007-08 4821
2008-09 5498
2009-10 8787

34
 Saving deposits(in crores)

9000
8000
7000
6000
5000
Saving deposits(in crores)
4000
3000
2000
1000
0
2007-08 2008-09 2009-10

Fig.4(f). Graph showing that the volume of saving deposits in the past 3
financial years has increased.

 Saving deposit of IDBI bank in comparison with other banks:

350000

300000

250000

200000 Saving Depsoits(Rs. In

crores)
150000

100000

50000

0
HDFC IDBI Axis

Fig.4(g). Graph showing the volume of Saving deposit of IDBI Bank in

comparison to Axis and HDFC Bank(trends as on Sep. 2010)

35
  Demand deposits in IDBI Bank:
Year Demand deposits(in crores)
2007-08 7268
2008-09 11119
2009-10 15673

Demand deposits(in crores)

20000

15000
Demand deposits(in
10000 crores)

5000

0
2007-08 2008-09 2009-10

Fig .4(h). Graph showing that the volume of demand deposits have increased
considerably during the past 3 financial years.

 Demand deposits of IDBI Bank in comparison with other banks:

36
 Demand deposits(in crores)

40000
35000
30000
25000
Demand deposits(Rs. In
20000
crores)
15000
10000
5000
0
Axis HDFC IDBI

Fig. 4(i). Graph showing the demand deposits of IDBI bank in comparison
with HDFC and Axis Bank.

 Term deposit in IDBI Bank:

Year Term deposit(Rs. in crores)

2007-08 60908
2008-09 95782
2009-10 143206

Term deposit(in crores)

160000
140000
120000
100000
80000 Term deposit(in crores)
60000
40000
20000
0
2007-08 2008-09 2009-10

37
 Fig 4(j). Graph showing the increament in the term deposits in IDBI Bank
since the past 3 financial years.

 Term deposit of IDBI Bank in comparison with HDFC and Axis Bank:

Term deposits(in crores

160000
140000
120000
100000
80000 Term deposits(in crores
60000
40000
20000
0
HDFC Axis IDBI

Fig.4(l). Graph showing the volume of Term deposit of IDBI Bank in comparison to
HDFC and Axis Bank(trends as on Sep. 2010)

Conclusion:
 Percentage increase in savings, demand and term deposits in terms of IDBI
Bank:
Year % increase in % increase in % increase in
savings deposits demand deposits term deposits
2009 14.04 52.98 57.25
2010 59.82 40.95 49.51

From the above figures it is quite clear that savings deposit has increased
almost four fold and this is mainly because the people tended to be more
risk averse during the period of economic downturn and wanted to save
themselves from unwanted risk. Demand deposits and term deposits both
has come down, but still term deposits accounts for almost 60-70% of the

38
 total deposits with IDBI Bank and remains to be the most popular among
the lot.
 Apart from the above findings, it is also clear that IDBI bank has less volume
of savings and demand deposits when compared to Axis and HDFC Bank,
but the volume of term deposits is higher in case of IDBI Bank.

39
 CHAPTER 5
Bank Loan
5.1. Basics of bank lending:
Banks extend credit to different categories of borrowers for a wide variety
of purposes. Bank credit is provided to households, retail traders, SMEs,
corporate, the Govt. undertaking etc. in the economy
When dealing with bank loan it is important to demarcate the difference
between retail lending and wholesale lending.
Retail lending is for financing the purchase of consumer durables, housing
or even day-to-day consumption. But on the other hand, wholesale lending
meet the need for capital investment, and operations of private corporates
and the government undertakings.

5.2. Principles of Lending and Loan policy:

To lend, bank depends heavily on the deposits from the public. Banks act as
the custodian of the deposits. Since depositors require safety and security
of their deposits, want to withdraw deposits whenever they need and also
expect good returns on their deposits, bank lending must necessarily be
based on the principle that reflects the concern of the depositors and these
principles includes:
(a). Safety: Banks need to ensure that the deposits are safe with them.
Since the repayment of loans depend on the borrowers capacity to repay,
the banker must be satisfied before lending that the person concerned will
be in a position to repay the loan within time. In addition to this banker also
asks for security and it is important that this security must be adequate,
readily marketable and without any encumbrances.
(b). Liquidity: In order to maintain liquidity, banks must ensure that money
lent out by them is not locked up for a long time. Further, more important
is that money should come back as per the repayment schedule.

40
 (c). Profitability: To remain viable, a bank must earn adequate profit on its
investment. This calls for adequate margin between the interest rates and
the deposits rate.
(d). Risk diversification: To mitigate risk, banks should lend to a diversified
customer base. Diversification should be in terms of geographic location,
nature of business etc.

5.3. Loan Policy:

Loan policy outlines lending policy and establishes operating procedures in
all aspects of credit management. The Credit Policy Committee of individual
banks prepares the basic credit policy of the bank, which has to be
approved by the Board of Directors of the bank.
The loan policy typically lays down the lending guidelines in the following
areas:
(a). Level of credit-deposit ratio:
A bank can lend out only a certain portion of its deposits, since some part
of the deposits has to be maintained as Cash Reserve Ratio(CRR) deposits,
and an additional part has to be maintained for investing in securities as
Statutory Liquidity Ratio.

CD Ratio:
 Following is the CD Ratio of IDBI bank for the past 3 financial years:

41
 CD Ratio of IDBI Bank

160
140
120
100
80 CD Ratio of IDBI Bank
60
40
20
0
2007 2008 2009

Fig 5(a). Graph showing the CD ratio of IDBI bank for the past 3 financial
years.

 Analysis of the CD ratio for Public sector banks:

Bank 2007 2008 2009

SBI 76.13 76.72 73.44
PNB 60.76 73.87 70.99
UCO Bank 72.45 68.93 68.65

42
 100%
90%
80%
70%
UCO Bank
60%
50% PNB
40% SBI
30%
20%
10%
0%
2007 2008 2009

Fig 5(b). Graph showing the CD Ratio for SBI, PNB and UCO bank for the past 3
financial years

 Analysis of the CD Ratio of the private sector banks:

Bank 2007 2008 2009

Axis Bank 62.73 68.09 63.48
HDFC Bank 68.74 62.94 69.24
ICICI Bank 84.97 92.30 99.98

43
 250

200

ICICI Bank
150
HDFC Bank
100 Axis Bank

50

0
2007 2008 2009

Fig 5(c). Graph showing the CD ratio for three major private banks in India.

(b). Targeted portfolio mix:

CPC (Credit Policy Committee) always aims at a targeted portfolio mix keeping I n
view both return and risk. To achieve this end, it lays down the guidelines on
choosing the preferred areas of lending.

(c). Hurdle ratings:

There are a number of diverse risk factors which is associated with the borrowers.
Banks should have a comprehensive risk rating system that serves as a single
point indicator of diverse risk factors of a borrower.

(d). Pricing of loans:

Borrowers with weak financial position are placed in high risk category and are
provided credit facilities at a higher price. The higher the credit risk of the
borrower, higher will be the cost of borrowing.

(e). Collateral security:

As part of the prudent lending policy, banks usually advance loans against some
security. Sometimes loans are extended as ‘clear loans’ for which only the
personal guarantee of the borrower is taken.

44
5.4. IDBI: Retail loans:

IDBI provides a wide range of loans to its customer base which has been
mentioned below:

(a). Home loan:

Features of Home loan:

 Tenor of a home loan can be upto 25 years for a resident individual

whereas for an NRI the maximum tenure is 15 years subject to maximum
age of 60 years at maturity.
 Loan can be applied for a maximu of 85%of the property value subject to
property discretion.
 As far as the interest rates are concerned BPLR is 12.75%.

Home loans(Floating)
Loan tenure ROI(%) p.a
Up to Rs.30 lacs 8.75%

Up to 25 years 30-50 lacs 9.00%

50 lacs & above 9.25%

Home loan(fixed)

Options ROI(%) p.a

Fixed for 3 years 10.75%

Fixed for 5 years 11.00%

45
 (b). Loan against property:

Loan is also available to the customers against property and the loan can be
used for marriage, education, business, purchase or improvement of
property, medical treatment etc.

Features of loan against property:

 Tenor up to 15 years
 Fixed and floating rate of interest
 Free legal and technical assistance

(c). Education Loan:

Features of IDBI Education loan:

 Maximum loan amount:
o Study in India: Rs.10 lakhs
o Study abroad: Rs.20 lakhs

 Loan margin:
o Upto Rs.4 lac- Nil
o Above Rs. 4 lac:
Studies in India- 5% of the total course expenditure
Studies abroad- 15% of the total course expenditure
 Expenses covered under loan:
o Fees payable to college/school/hostel
o Travel expenses
o Essentials for completion of the course
o Caution deposit/building fund
o Purchase of books
 Repayment terms:
The repayment of loan has to begin after the course period + 1 year or 6
months after getting a job, whichever is earlier. The loan has to be repaid
within 5-7 years with the maximum tenor of 84 months.

46
 BPLR is 12.75% p.a
For loan up to Rs.4 lakhs, it is 11.75% whereas for the loan amount above
Rs.4 lakhs, it is 12.75%.
 For education loan, no collateral security is needed for a loan up to Rs.4
lacs. For loan amount in the range of Rs. 4 -7.5 lacs, collateral security is
required in the form of a third party gurantee. For loan amount exceeding
Rs.7.5 lacs, collateral security is required in the form of land/building.

(d). Personal Loan:

It is a loan designed to meet various personal requirements of the salary
holders with IDBI Bank Ltd.
Features:
 Loan Amount:
o Minimum: Rs.25000
o Maximum: Rs.5 lakh
 Minimum net salary:
o Minimum: Rs.15,000
o Maximum: Rs.25,000
 Tenor:
o Minimum 12 months
o Maximum 36 months
 Rate of interest is 13% p.a

(e). Loan against securities:

IDBI Bank provides loan to its customer against securities like shares, GoI
bonds, mutual fund units, type insurance policies etc.
Features:
 The most important factor is that the customer can enjoy the benefit of
securities and along with it, is not required to pay any EMI on the loan
amount.
 Interest is charged only on the utilized amount

47
 (f). Reverse Mortgage loans:

IDBI introduces Reverse Mortgage loans for senior citizens. IDBI introduced
this loan because in the past few years, there has been an considerable
increament in the cost of good health care facilities along with little social
security. Reverse mortgage seeks to monetize the house as an asset and
specifically the owners equity in the house.

(g). Auto loan:

Features of Auto loan:

 Repaymemt period up to 60 months
 Eligibilty:
 For salaried employees:
o Min age of the applicant: 22 years
o Max age of the applicant: 60 years
o Min 2 years in service
o Min annual income of Rs. 1,50,000/-
 For Self-Employed Professionals:
o Min age of the applicant: 22 years
o Max age of the applicant: 65 years
o Min 2 years in profession
o Min. Annual income of Rs.1,50,000/-

48
 5.5. Comparative analysis of lending operation of banks on different
parameters:

(a). Loan:

IDBI Bank:

Year Total advances(in crores)

2007-08 82213
2008-09 103444
2009-10 138202

Total advances(in crores)

140000
120000
100000
80000
Total advances(in crores)
60000
40000
20000
0
2007-08 2008-09 2009-10

Fig 5(d). Graph showing the total advances of IDBI bank in the past 3 financial
years.

Conclusion: It is very clear that that the total advances in the past 3 financial years
has increased considerably which is a good sign.

Comparison of the deposit and credit in terms of IDBI Bank:

Year Total deposits(in crores)

2007-08 72998
2008-09 112401
2009-10 167667

49
Conclusion: An important fact arises here that in the year 2009, total deposits
increased by 53.97% against 2008 but the total advances have shown an
increment of 25.82% which is just the half of the of total deposits. Again for the
year 2010, the total deposit has increased by 49.16%(which is less then the
previous year) and the total advances has shown an remarkable increment of
33.6%.

This shows that IDBI bank is stressing on availing loans which is a good sign and
with the increment in total deposits, it is expected that the quantum of the total
advances will also go up.

 IDBI bank in comparison with other banks:

Below is the quantum of total advances(in crores) with respect to three
major private banks:

Bank 2007-08 2008-09 2009-10

HDFC Bank 63426.9 98883 125830
IDBI Bank 82213 103444 138202
Axis Bank 59661.4 81556.77 104343.13

Conclusion: HDFC 55.9%, 27.52, 25.82, 33.6, 36.69, 27.93

From the above figures it is quite clear that in the financial year 2008-09, IDBI
Bank has shown an increase of 25.82% in total advances and again in the year
2009-10, it has increased by 33.6%.

When compared this figures to HDFC Bank, it is seen that in 2008-09 and 2009-10,
it has increased by 55.9% and 27.52%. In case of Axis Bank, it has increased by
36.69% and 27.93% for the financial year 2008-09 and 2009-10 respectively.

Both HDFC Bank and Axis Bank has shown a falling trend and compared to it, IDBI
Bank has shown an increasing and favorable trend.

50
 NPA (Non Performing Asset) analysis of IDBI Bank in comparison with other
banks:
o NPA for IDBI bank as percentage of total advances for the past 3
financial years:
Year NPA(as % of net advances)
2007-08 1.30
2008-09 0.92
2009-10 1.02

NPA or Non Performing assets is that asset of a bank which ceases to

generate regular income for the bank. In other words, when a bank
lends loan and it fails to get the principal amount and interest on
time, then it is known as Non Performing asset.
From, the above figures it is quite clear that the NPA as % of net
advances has come down from 2008 to 2010. But still there are loop
holes in the loan lending process as a consequence because from
2009 to 2010, the NPA has shown an increament of 0.1% which is not
a good sign.

o NPA of IDBI Bank in comparison with other banks for the year 2009:

Bank NPA(as % of net advances)

IDBI Bank 0.92
PNB 0.17
SBI 1.20
Axis Bank 0.40
HDFC 0.63

51
 NPA(as % of net advances)
1.2

0.8

0.6 NPA(as % of net

advances)
0.4

0.2

0
IDBI PNB SBI Axis HDFC
Bank Bank

Fig.5(f). Graph showing the net NPA as % of net advances for some of
the major banks in India.
Conclusion: As it is very clear from the above graph, that none of the
banks in India, have been able to completely get rid of the non
performing assets but again they are in a position to control it. IDBI
Bank still has a high NPA when the above banks come into scene. And
its important for the bank to stricten its lending policy so that the
value of NPA could be brought down.

 Net NPA as % of Net advances for some other banks for the financial year
2009:

Public Sector Banks:

Bank NPA(as % of net advances)
Syndicate Bank 0.77
UCO Bank 1.18
United bank of India 1.48
Union Bank of India 0.34
Vijaya Bank 0.83

Private Sector Banks:

52
 Bank NPA( as % of Net advances)
ICICI Bank 2.09
Kotak Mahindra Bank 2.33
Indusind Bank 1.14
YES Bank 0.33
Development Credit Bank 3.88

Conclusion: From the above two tables, it is quite clear that the public sector
banks are better in terms of managing the NPA when compared to the private
sector banks which is showing a very high value for NPA. ICICI Bank and
Development Credit Bank need to revise their standards in order to avoid NPA.

From the above analysis, it is quite clear that IDBI bank has done a good work in
this context, but still there is a long way to go.

53
 CHAPTER 6
NON DEPOSITORY SERVICES
6.1. Consumer cards:

 Gold Debit-cum-ATM card:

Features of Gold Debit-cum-ATM card:
o This card can be used to transact at IDBI Bank ATMs. It has also got
international validity and can be used abroad to make purchases at
merchant locations and withdraw local currency.
o In addition to the insurance cover for lost/stolen cards, this card also
helps its customer to avail of the following insurance covers:
 Personal accident cover- Rs.5 lakh
 Loss of checked baggage-Rs.50,000
 Purchase protection- Rs.20,000 for 90 days
 Fire and burglary for household contents- Rs.50,000
o This card enables its customer to withdraw cash up to Rs.75,000/-
and make purchases worth Rs.75,000 in a day.
o Loyalty redemptions: customer will gain 1 loyalty point for every
Rs.100/- spent on the Gold Debit-cum-ATM card. Each point can be
redeemed for a cash credit of Re.1 to your savings account.

 International Debit-cum-ATM card:

Features:
o This card enables its customers to access their bank account not only
in India but also in abroad.
o Zero lost card liability insurance
o Loyalty points with great rewards
o Daily card limits:
 ATM Rs. 25,000
 POS Rs. 25,000

54
 o This card can be used only at merchant locations that have an
electronic data capture machine or electronic point of sale machine.
 Gift Card:
Features:
o This card enables its holders to purchase goods and services at over
4.70 lakh merchant establishments in India, that accept Visa card.
o Its usable more then once, till the value on the card is exhausted.
o To apply for this service, one ha to fill an application form , deposit
the amount to be loaded on the card by paying cash or cheque.

 World Currency Card:

Features:
o This card is accepted everywhere across the world at over 14 million
merchant establishments that accept visa cards and credit cards.
o It is cheaper then the credit cards as:
 The annual fee on most international credit cards is much
higher than the nominal fee on the World Currency card
 In case of credit cards, the rate of exchange depends on the
rate applicable the day you transact which may be
unfavourable. Whereas, with the World Currency Card, the
rate of exchange is fixed the very day one purchases the card.
 Insurance cover is upto a maximum of Rs.2,00,000 per card.

 Cash Card:
Features:
o This card is meant mainly for the corporate an easy solution for their
employees for salary disbursement & other reimbursements.
o The corporate opting for IDBI bank cash card can give this card to
their employees for getting their salary disbursed and they need not
open their accounts with the bank for this.
o This card can be loaded for any amount up to Rs.25,000/- per card
per month as per the instructions from the corporate.

55
 Kids Debit Card:
Features:
o Daily limit:
 Rs.2,000
o Customer stands to earn 2 loyalty points for every Rs.100 spent
using the KIDS card for purchases at merchant establishments.
o This card is valid for 5 years
o This card can be used only in India
o Free SMS alerts will be sent to the guardian/parents for the
transactions above than Rs.5,000/- on KIDS card.

 Platinum Debit-cum-ATM Card:

Features:
o The Platinum Debit Card offers cash withdrawal limit of Rs.1 lakh
and purchase at Point of Sale(POS) limit of Rs.2 lakh in a day.
o In addition to the insurance cover for lost/stolen cards, the
customer can also avail of the following insurance covers:
 Personal Accident Cover- Rs.5 lakh
 Loss of checked baggage- Rs.50,000/-
 Purchase protection- Rs.20,000 for 90 days
 Fire and burglary for household contents- Rs.50,000
o With the help of this card, one can easily track spends on a regular
basis.

6.2. Phone Banking:

IDBI Bank offers phone banking facility to its customers.

Mentioned below are the services that the customers can avail out
of the Phone banking facility:

Account related services:

 Updated balance enquiry

 Balance as on date
56
  Last five transactions
 Statement of account by fax
 Request for a cheque book
 Hotlisting of ATM or Debit Cards
 Bill payment details
 Status of cheques issued or deposited
 Funds in clearing

Demat account related services:

 Details of Demat account
 Holding details in ascending or descending order
 Holding statements by fax, mail or email
 Last five transactions
 Transaction statements by fax, mail or email
 Billing details
 Billing details by Fax, mail or email

Many other services like information about loan accounts,

product information and related services are also provided with
the help of Phone banking facility.

6.3. SMS banking:

SMS banking provides its customer the luxury of banking anywhere,

anytime.

SMS banking for NON-WAP Enabled Mobile phones:

The following services is available for NON-WAP enabled mobile

phones on SMS banking facility:

 Balance enquiry
 Last three transaction
 Cheque payment status
 Cheque book

57
  Statement request
 Demat-free balance holding
 Demat- last two transactions
 Bill payment

SMS banking for WAP enabled Mobile Phones:

If the customer is a WAP Enabled mobile phone user, the customer

can do interactive banking for eg. If the customer wants to withdraw
cash then the mobile will show the nearest IDBI branch and its phone
number.

6.4. Account Alerts:

The customer with the help of Account alerts can get the alerts on
the mobile in the form of message on the customers inbox ie. when
the account is credited or debited or what is the current account
status.

This days it has become quite popular and more and more users are
switching to it because the charges are quite low.

6.5. Internet Banking:

For getting the added advantage of Internet banking, the customer

has to fill in the channel registration form which is available at our
branches and ATMs

The products and services that are available on the Internet banking
are as follows:

 Account information
 Demat account information
 Online instructions and requests
 Customer service in the form of mails/messages, alerts etc
 Online payment services

58
 CHAPTER 7
CAPITAL MARKET PRODUCTS
7.1. Initial Public Offerings:

 ASBA IPO Payment option:

ASBA stands for Applications Supported by Blocked Amount which
is an application for subscribing to an issue, containing an
authorization from the bank customer(who invests in a particular
IPO through ASBA) to block the application money in his bank
account.

SCSB i.e. Self Certified Syndicate Bank is a bank which offers to its
customers the facility of applying to IPO through the ASBA process.

Only an investor who have an account with the SCSB can apply for
an IPO using ASBA payment option.

7.2. Demat Account:

With the help of Demat Account, the customers can convert their
securities to dematerialsied form.

Benefits of Demat account with IDBI:

 Minimum transaction Charges: Rs.30/-

 Account maintenance Charges: Rs.350/-
 Statements on E Mail
 Portfolio valuation on the statements
 Online execution of delivery instructions
 Service available at all branches
 Special rates for Stock Market Intermediaries

59
IDBI bank also provides an opportunity to the NRI to invest in shares,
bonds, debentures of Indian companies by opening a demat account.

Services offered:

 Dematerialisation: Converting physical shares into electronic

form
 Rematerialization: Converting electronic shares into physical
form
 Freeze and Defreeze: customer has the option to freeze or
defreeze the operations in his/her account
 Pledging: Customer also has the option of pledging the demat
shares and availing loan facility

7.3. 3-in-1 account:

This product is mainly designed for those customers who trade in

securities. In 3-in-1 account saving and demat account are linked to
the online trading account. With this facility customers can trade in
securities at nominal rates and also stand to get invaluable
investment advice which will make their money grow.

Benefits offered:

 Trade without any hassles of writing transfer instruction/ cheques

 Can place orders from anywhere any time using phone or internet
 Online share quotes available
 Multiple product offering
 Speedy and secure trading
 Can open all 3 accounts in a single account opening form

60
 CHAPTER 8
INVESTMENT ADVISORY SERVICES
8.1. Mutual funds:

Investing in Mutual Funds through IDBI Bank:

Why to invest in Mutual funds with the help of IDBI Bank?

 IDBI helps in fulfilling your dreams by assisting to select the

scheme, which will be in consonance with the needs of the
customer.
 IDBI helps to inculcate saving and organized investing habit in
its customer. It will help in planning investments and build a
healthy mutual fund portfolio.
 Equity funds which mainly consist of the stock investments
are the most common type of mutual funds. IDBI provides
with various recommended equity schemes.

IDBI’s key focus plans are as follows:

(a). SIP- Systematic Invetment Plan:
SIP is a simple and time honored investment strategy
for accumulation of wealth in a disciplined manner over
long time period.SIP investor gets good rate of returns
compared to one time investor.
With the help of SIP, one can start investing as soon as
the earning is started. Investing a portion of the income
one can meet the greater expenses of type at a later
stage.

(b). ELSS- Equity Linked Saving Schemes:

Features:

61
  ELSS is having a short lock-in period of only 3 years.

 It gives the investor the option of saving tax

 Investor can also opt for dividend option and get
some gains in the lock-in period
 Some ELSS schemes also offer personal accident
death cover insurance.

8.2. Insurance:

(a). Life Insurance:

IDBI provides various life insurance products with the help of IDBI
fortis which is mainly built to look after the life insurance sector. IDBI
Fortis operations are independent of the retail operations of IDBI
branch

(b). General Insurance

8.3. New Pension System:

NPS has the following objectives:

 To provide old age income

 Reasonable market based returns over long term
 Extending old age security coverage to all citizens

NPS allows its customer to choose from any one of the following six
entities:

 ICICI Prudential Pension Funds Management Company limited

 IDFC Pension fund Management Company Limited
 Kotak Mahindra Pension Fund Limited
 Reliance Capital Pension Fund Limited
 SBI Pension Funds Private limited
62
 UTI Retirement Solutions Limited

PFRDA is the regulator of the NPS and will endeavour to protect

the interests of the subscribers through prudential forms of
investments.

63
 CHAPTER 9
NRI SERVICES
IDBI also provides services to the NRI.

NRI – centric bank solutions are as follows:

9.1. Non Resident External Account:

Current/savings/term deposits accounts can be opened under thus scheme.

Funds can be held by NRIs/PIOs in convertible Indian rupees.

Minimum balance required:

1. Current Account: Rs.10,000

2. Savings Account: Rs. 5,000
3. Term Deposits: Rs. 10,000

A joint account can also be opened by two or more individuals, provided all
of them are NRIs. In case of account in the name of a minor, both the minor
and the guardian has to be an NRI.
Balance in the NRE account is exempted from Income tax under the
provisions of Income Tax Act in India.

9.2. Non Resident Ordinary Account (NRO):

This account has to be maintained in local currency.

Features of this account are as follows:

 NRIs should have local income or expenses in India. The account can be
savings, current or fixed deposit account.
 Interest earned on this account is not exempt from Income tax under the
provisions of Income Tax Act.
 Joint account with Resident/ Non Resident can be opened

64
Minimum balance required:

1. Current account: Rs. 10,000

2. Savings Account: Rs.5,000
3. Term deposits: Rs. 10,000

9.3. Foreign Currency Non Resident Deposit Scheme:

This account has to be maintained in foreign currencies.

Main features of the account are:

 Funds can be held by Non Resident Indian/persons of Indian origin

 Fixed deposit accounts maintained only in US Dollars, Sterling Pounds,
Japanese yen and Euro
 The deposits can be accepted for a minimum period of 12 months and up
to 36 months. Minimum deposit amount is USD 1,000 or equivalent
 Interest payments would be at half yearly

9.4. Demat Account:

An NRI who has invested in shares, bonds and debentures of Indian companies or
would like to do so, can open a demat account under the appropriate category of
NRI Repatriable or NRI Non-Repatriable.

65
 CHAPTER 10
FINANCIAL ANALYSIS
A.RATIO ANALYSIS
10.1. Capital Adequacy Ratio:

Capital Adequacy Ratio(CAR) which is also known as Capital Risk Weighted Assets
Ratio(CRAR) is a simple measure of the soundness of banks. The ratio is the
capital with the bank as a percentage of its risk weighted assets. This ratio
determines the maximum extent to which the bank can lend.

Tier 1 capital (as on 31st March 2010): Rs.11095 crores

Tier 2 capital (as on 31st March 2010): Rs. 9006 crores

Total Risk weighted assets (as on 31st March 2010): Rs.177688 crores

CAR = Total capital/Total risk weighted assets

CAR= 20101/177688*100= 11.31%

Note:

Tier 1 capital includes paid up capital, statutory reserve, general reserve, balance
in profit and loss account and amalgamation reserve. Outstanding deferred tax
asset is deducted.

Tier 2 capital includes general loan loss reserves, investment fluctuation reserve
and subordinated debt.

CAR of some other banks:

Bank CAR(as on 31st March 2010)

Axis Bank 15.80%
HDFC Bank 16.45%
66
10.2. Balance Sheet Ratios:

Ratio 2009-10 2008-09

Net NPAs to Net advances 1.02% 0.92%
Saving bank deposit to Total 5.24% 4.89%
deposit
Current account deposit to Total 9.35% 9.89%
deposits
Time deposits to Total deposit 85.41% 85.22%
Total risk weighted assets to Total 76.07% 81.44%
assets

10.3. Key Operating Indicators:

Particulars 2009-10 2008-09

Non-Interest Income to Total 13.04% 11.34%
Income
Efficiency ratio 40.18% 49.26%
Staff expenses to Total income 4.31% 4.37%
Staff expenses to Total expenses 5.10% 5.00%
Overhead efficiency ratio 125.09% 110.35%

10.4. Key Profitability Indicators:

Particulars 2008-09 2009-10

Return on Assets 0.53% 0.62%
Return on Equity 13.14 12.11
Yield on Total assets 9.03% 9.34%
Return on Earning assets 9.38% 9.87%
Low cost funds to Total funds 14.58% 14.78%

67
10.5. Asset Quality Indicator:

Particulars(Rs.in crores) 2008-09 2009-10

Gross Advances 103915 138925
Gross NPAs 1436 2129
Gross NPAs as % of Gross 1.38 1.53%
advances
Net Advances 103428 138202
Net NPAs 949 1406
Net NPA as % of Net 0.92 1.02%
advances

10.6. Business Ratios:

Particulars 2008-09 2009-10

Profit per employee Rs.8.42 lakh Rs.8.44 lakh
Business per employee Rs.21.16 crores Rs.24.17 crores
Profit After Tax Rs.859 crores Rs.1031 crores

68
 CHAPTER 11
Recommendations
IDBI Bank which began with an equity capital base of Rs. 100 crore in November,
1995, was earlier catering primarily to the corporate clients. In 2001, the bank
decided to focus on retail banking and then there was no looking back.

Today, IDBI Bank is using Finacle, a core banking solution introduced by Infosys.
Before using Finacle, IDBI was using Kindle banking system. But Finacle has
improved its efficiency to meet the daily requirements efficiently. Finacle Core
Banking has helped the bank to handle over 300,000 transactions a day from
750,000 customers accounts.

No doubt today IDBI has made a name for itself in the banking industry, has
strong banking operations and believe in customer satisfaction in every single
way, but there is still a long way to go.

Some steps which IDBI Bank can implement in order to increase its customer base
and to make huge profits are:

(a). Banking industry is expanding at a very fast rate and in order to keep up, it is
suggested that IDBI Bank should try to think on new and more possible avenues
which could increase the attraction in its banking portfolio.

(b). CASA depsoits which is considered to play a very crucial role in the lending
operation of any bank, should be increased considerably. No doubt, for the past
two financial year, it has increased but the increament have been almost
negligible. For this, it is needed that the bank should try out new methods that
the customers are more attracted to this deposits.

(c). Today, the customers are more aggressive and believe in making quick profits.
As a consequence more and more people are interested in making investment in
69
mutual funds, stocks and shares. IDBI should also emphasize on its investment
advisory services and capital market products.

(d). The company needs to adequately promote its new scheme. At many
instances it is seen that the customers lack the basic information. This will also
increase its brand awareness and brand recall.

(e). Indian economy is the worlds second largest growing economy and this
motivates people to invest in our country. Taking this into consideration, IDBI
Bank should emphasize more on the NRI services which has a great potential and
needs to be catered.

(f). Non depository services such as Internet banking, SMS banking, Account alerts
are very popular this days. But there popularity is more or less confined only in
the rural areas. It is high time that IDBI Bank should try to find its possibilities in
rural areas where this services are almost unknown.

(g). Banks lending policy has a very crucial role to play. Although, RBI looks after
the lending operations but it is the bank itself which determines the rate of
interest and hence it is important that this decisions are made in such a way that
the bank benefits in the long run. IDBI Bank being a nationalized bank has the
faith of the customers on its side. But the availability of loans depends on the
deposits with the banks. Hence it has to increase its deposits considerably which
requires enumerable steps in this direction.

70
 BIBLIOGRAPHY
1. NCFM Module on Commercial Banking
2. www.idbi.com
3. IDBI intranet enabled websites
4. Report on Trends and Progress of Banking in India 2008-09

71