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BANKING INDUSTRY
Indian banking is the lifeline of the nation and its people. Banking has helped in developing the
vital sectors of the economy and usher in a new dawn of progress on the Indian horizon. The
sector has translated the hopes and aspirations of millions of people into reality. But to do so, it
has had to control miles and miles of difficult terrain, suffer the indignities of foreign rule and
the pangs of partition. Today, Indian banks can confidently compete with modern banks of the
world. Before the 20th century, usury, or lending money at a high rate of interest, was widely
prevalent in rural India. Entry of Joint stock banks and development of Cooperative movement
have taken over a good deal of business from the hands of the Indian money lender, who
although still exist, have lost his menacing teeth.
In the Indian Banking System, Cooperative banks exist side by side with commercial banks and
play a supplementary role in providing need-based finance, especially for agricultural and
agriculture-based operations including farming, cattle, milk, hatchery, personal finance etc. along
with some small industries and self-employment driven activities.
Generally, co-operative banks are governed by the respective co-operative acts of state
governments. But, since banks began to be regulated by the RBI after 1st March 1966, these
banks are also regulated by the RBI after amendment to the Banking Regulation Act 1949. The
Reserve Bank is responsible for licensing of banks and branches, and it also regulates credit
limits to state co-operative banks on behalf of primary co-operative banks for financing SSI
units.
Banking in India originated in the first decade of 18th century with The General Bank of India
coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are
now defunct. After this, the Indian government established three presidency banks in India. The
first of three was the Bank of Bengal, which obtains charter in 1809, the other two presidency
bank, viz., the Bank of Bombay and the Bank of Madras, were established in 1840 and 1843,
respectively. The three presidency banks were subsequently amalgamated into the Imperial Bank
of India (IBI) under the Imperial Bank of India Act, 1920 which is now known as the State
Bank of India.
[1]
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 from 1935. After Indias independence in 1947, the
Reserve. Bank was nationalized and given broader powers. As the banking institutions expand
and become increasingly complex under the impact of deregulation, innovation and
technological up gradation, it is crucial to maintain balance between efficiency and stability.
During the last 30 years since nationalization tremendous changes have taken place in the
financial markets as well as in the banking industry due to financial sector reforms. The banks
have shed their traditional functions and have been innovating, improving and coming out with
new types of services to cater emerging needs of their 5customers. Banks have been given
greater freedom to frame their own policies.
Rapid advancement of technology has contributed to significant reduction in transaction costs,
facilitated greater diversification of portfolio and improvements in credit delivery of banks.
Prudential norms, in line with international standards, have been put in place for promoting and
enhancing the efficiency of banks. The process of institution building has been strengthened with
several measures in the areas of debt recovery, asset reconstruction and securitization,
consolidation, convergence, mass banking etc.
The acceptance of the Narasimham Committee recommendations by the Government has
resulted in transformation of hitherto highly regimented and over bureaucratized banking system
into market driven and extremely competitive one. The massive and speedy expansion and
diversification of banking has not been without its strains. The banking industry is entering a
new phase in which it will be facing increasing competition from non-banks not only in the
domestic market but in the international markets also. The operational structure of banking in
India is expected to undergo a profound change during the next decade. With the emergence of
new private banks, the private bank sector has 6become enriched and diversified with focus
[2]
spread to the wholesale as well as retail banking. The existing banks have wide branch network
and geographic spread, whereas the new private banks have the clout of massive capital, lean
personnel component, the expertise in developing sophisticated financial products and use of
state-of-the-art technology.
[3]
Current Scenario:
The industry is currently in a transition phase. On the one hand, the PSBs, which are the
mainstay of the Indian Banking system are in the process of shedding their flab in terms of
excessive manpower, excessive non Performing Assets (Npas) and excessive governmental
equity, while on the other hand the private sector banks are consolidating themselves through
mergers and acquisitions.
PSBs, which currently account for more than 78 percent of total banking industry assets are
saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional
sources, lack of modern technology and a massive workforce while the new private sector banks
are forging ahead and rewriting the traditional banking business model by way of their sheer
innovation and service. The PSBs are of course currently working out challenging strategies even
as 20 percent of their massive employee strength has dwindled in the wake of the successful
Voluntary Retirement Schemes (VRS) schemes.
[4]
The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed
banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75
percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of
2000-2001
[5]
A number of innovative and unique banking activities have been launched by Central Bank of
India and a brief mention of some of its pioneering services are as under:
1921 Introduction to the Home Savings Safe Deposit Schemeto build
saving/thrift habits in all sections of the society.
1924 An Exclusive Ladies Department to cater to the Bank's women
1926
1929
1932
1962
clientele.
Safe Deposit Locker facility and Rupee Travellers' Cheques.
Setting up of the Executor and Trustee Department.
Deposit Insurance Benefit Scheme.
Recurring Deposit Scheme.
Subsequently, even after the nationalisation of the Bank in the year 1969, Central Bank
continued to introduce a number of innovative banking services as under:
1976
1980
1986
1989
[6]
Customers' confidence in Central Bank of India's wide ranging services can very well be judged
from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as also almost all
major corporate houses in the country.
ORGANISATION STRUCTURE
Executive Director
Executive Director
Executive Director
[7]
11 th Floor,Chander
10 th Floor,Chander
10 th Floor,Chander Mukhi
Mukhi
Mukhi
Nariman Point
Nariman Point
Nariman Point
Prof. N. Balakrishnan
Government Nominee
Director
Director
and
Department of
Research Centre,
Expenditure,
KANPUR-208001.
Shri M. P. Shorawala
Shri S. B. Rode
Director
Director
1043, Sector-17B,
IFFCO Colony,
Swargate Branch
Ministry of Finance,
New Delhi.
[8]
Gurgaon-122001
(Haryana).
Swargate
Pune - 411 037.
Director
Director
61, Brahmin Street,
Central Bank of India
Functions
Item No. Provision
Information
4(1)bi
4(1)bii
including channels of
[10]
categories of branch.
ii.
iii.
iv.
v.
vi.
Executive Director.
vii.
viii.
Management Committee of
board.
ix.
Board of Directors.
[11]
functions.
[13]
public).
4(1)bvi
4(1)bvii
consultation with, or
implementation therof
[14]
Committee
4(1)bix
employees.
public.
4(1)bx
be published.
programmes.
concession, permits or
by it reduced in an electronic
form.
public use.
Information Officers.
Companys Mission
To transform the customer banking experience into a fruitful and enjoyable one.
To leverage technology for efficient and effective delivery of all banking services.
The pan-India spread of branches across all the state of the country will be utilized to further
the socio economic objective of the Government of India with emphasis on Financial Inclusion.
[17]
Our Vision
To emerge as a strong, vibrant and pro-active Bank/Financial Super Market and to positively
contribute to the emerging needs of the economy through consistent harmonization of human,
financial and technological resources and effective risk control systems
Top Competitors
Bank of Baroda
Indian Bank
Products:
Deposits
Traveller's Cheques
Gift Cheques
Mutual Funds
Debit Cards
Credit Cards
Services:
sectors like
agriculture, tiny industries and other weaker sections of the society. Today nearly 40% of the
total commercial bank advances are the priority sectors. Greater part of the commercial bank
funds are employed in the form of loans and advances. Loans bring good money to the bank in
[19]
the form of profit by charging interest. Lending function of a commercial bank benefits the bank
in the form of profit and the one who takes loans enjoy the benefit of money required for their
activities. The wheels of industry cannot run without the bank advances. The bank needs to
assess the condition of industry or trade or any business enterprise while making advances.
term requirements. The banks started giving term loans to meet the long term needs of the
industry. The refinance scheme of IDBI encouraged more term lending by commercial banks.
The commercial banks are assisting industrial units by granting term loans, subscribing to shares
and debentures of corporate units and underwriting securities issued of these companies.
1.) Housing
Purchase of house/flat, construction of house/ flat , repairs/improvement/extension, Repayment
of loan availed from other agency/bank/NBFC. Indian citizen not below 21 years, singly or
jointly with other co-owners. Maximum Rs.50 lacks depends on repayment capacity subject to
net, take home salary being35% of gross income. Maximum Rs.10 lacks for repairs. However,
maximum loan amount in Mumbai and New Delhi may be considered up to Rs.50 lacks.
Maximum amount of loan may be calculated 4 times the annual gross salary or 5 times the
annual net salary of the applicant and his/her spouse whichever is higher in the case of salaried
people. The margin for purchase of new house/flat/construction 15% of cost. And for repair 30%
of cost.
To establishing a new industrial unit or for expansion of the existing unit or for modernization, a
detailed project feasibility report should be obtained. Industrial concerns are usually limited
companies or public sector undertakings, although individuals or partnerships owning small and
medium industries cannot be riled out. An industrial concern may be engaged in more than one
industrial activity and may also be engaged in other activities such as trade, import, export etc. if
the borrower is engaged in more than one type of activity for which finance is required. Credit
facilities may be extended by way of cash credit/bills discounting for working capital and by way
of term loans for acquiring capital assets namely, construction of factory building purchase and
installation of machinery, replacement of machinery etc. If the advance is required for
establishing a new industrial unit or for expansion of the existing unit or for modernization, a
detailed project feasibility report should be obtained. The feasibility plan and how advances are
proposed to be used to get with a view to satisfy about the technical feasibility, commercial
viability, financial stability and management competency
5.) Trade and commerce (other than small traders):
Trade and commerce is usually carried on by partnership firm, joint families and individuals,
limited liability companies and co-operative societies. The trade may be wholesale or retail and
principals or as distribution agents or commission agents. The business may be confined to one
or more articles of trade. The finance may be required by way of pledge or hypothecation of
commodities, for buying or holding the stocks or by way of purchase and discount of bills for
quick receipt of sale proceeds of the goods sold.
6) International trade:Manual of foreign exchange published by international banking division, central office explains
in detail various types of import and export transaction together with exchange control
requirement to be observed by bank officials as also the systems and procedures prescribed for
handling such transaction at branch level. We will see in brief, credit facilities usually extended
to the exporter/importer customers.
[23]
Finance for import trade could be either fund based or non-fund based or both. The non-fund
based credit facility is in the form of letters of credit. Since such letters of credit (L/C) contain an
undertaking by the bank to pay against presentation documents conforming to the terms and
conditions stipulated in the letter of credit, opening a letter of credit involves a credit decision for
which purpose, the proposal has to be processed in the same manner as it would be, if the
proposal were for grant of an advance for an equal amount. Since the bank relies on goods being
imported under letter of credit as a security for payment of relative bill, the marketability of such
goods, taking into account the licensing conditions should also be considered.
a)
The import of goods is controlled by government of India through import trade control
regulation. The import licenses are issued in 2 copies-customer copy is for the purpose
of clearing the imported goods through customs and exchange control copy to facilitate
[24]
place. Towards this, our personal loan products under retails banking have repackaged and relaunched.
PRODUCT PROFILE
Education Loan
Cent Vidyarthi
Purpose of Loan
Eligibility
[25]
Nature of Facility
Term Loan
Expenses considered for loan
[26]
The ceilings fixed for studies in India and abroad correspond to the limits
fixed by the RBI for treatment as priority sector lending.
No maximum celling if loan amount secured by 100% collateral security.
Margin
Rate of Interest
Type of Borrower
Male Students
Female SC,ST,IIT
Rate of interest
Base Rate+2.00%
Base Rate+1.50%
students
Incentive
of first installment.
Disbursement
Repayment
Upto Rs 4 lacs
[28]
Insurance
It need to be noted that while the Central Sector Interest Subsidy Scheme
[29]
Fee Structure
Security
[30]
Others
Processing Fees
Purpose
Eligibility
90% (for loans up to Rs.20 lakh) 80% (for loans above Rs.20.00 lakh and
upto Rs. 75 lakh) and 75% (for loans above Rs.75 lakh) of the cost of construction /
purchase of new / existing home/flat or cost of extension of existing home/flat,
(including cost of land) subject to Net Take Home Pay/Income norm. (Stamp duty,
registration and other documentation charges, cost of life insurance cover on the
life of the borrower should not be included in cost of housing unit).
75% of the cost of repairs/renovations/alterations of existing house/flat
subject to a maximum of Rs.10.00 lakh subject to Net Take Home Pay/Income norm.
75% of the cost (registered value) of Plot after complying with Net Take
Home Pay/Income norm. Plot on standalone basis should not be financed. Cost of
the Plot should not exceed 75% of the total cost of housing unit.
[32]
Margin
[33]
Security
Guarantee
Repayment
[34]
Rate of Interest
Loan amount
Rate of interest
BR+0.25=10.50%
( Floating)
Processing Charges
Prepayment
Charges
No prepayment charges.
[35]
Takeover of loan
For borrowers with annual income upto Rs.5.00 lakh, the Net Take Home
Pay/Income should not be less than 35% of Gross Monthly Salary/Income after
including the income of the co-borrower/s. This can be relaxed upto 30% for
borrowers with annual income above Rs.5.00 lakh but upto Rs.10.00 lakh and upto
25% for borrowers with annual income above Rs.10.00 lakh.
[36]
RESEARCH OBJECTIVE
Primary objective:
Analysis of loans and advances of Central bank of India
Secondary objective:
The operational jurisdiction of the research is limited to Central bank of India. The scope
organisation performance.
This project is mainly concerned with the lending practises in the nationalised bank of
RESEARCH METHODOLOGY:
This refers to the method of data description. Descriptive research includes surveys and fact
finding enquire of different kinds. The major purpose of descriptive research is description of
[37]
the state of affair as it exists at present. In business research we quite often use the term export
facto research for descriptive research studies.
The main characteristics of this method is that the researcher has no control over the variable, he
can only report what has happened or what is happening. The method of research utilised in
descriptive research are survey methods of all kinds including comparative and correlation
methods.
Sampling Design
1. Sampling Area:
For this survey I have covered the credit department of the organization Central bank of India
2. Sampling Population:
[38]
In order to take a reasonable sample size and not to disturb the functioning of the organization, a
sample size of reasonable strength of the Company has been taken in order to arrive at the
present practices of training in the Company.
Accordingly, 7 officers and 10 workers have been selected at random from all the departments of
the organization and feedback forms (questionnaire) have been obtained. The data has been
analyzed in order to arrive at present training practices in the organization.
3. Sampling Unit:
The technique of Random Sampling has been used in the analysis of the data.
My sampling unit were the customers who use the product and avail the service of Central bank
of India..
4. Sampling Technique
Simple random sampling. Every member of the population has an equal chance of
selection. I have used simple random sampling for our project
[39]
( )
No. of People
CENTRAL BANK OF INDIA
50%
ICICI
20%
20%
10%
100
SALES
CBI
ICICI
OTHER
5%
25%
50%
20%
[40]
It has been observed that approximately 50% correspondents are using the service of CBI for their
daily transaction, around 20% of people are using ICICI Bank for their transaction, 20% & 10% of
people are using HDFC & other Bank service respectively in New delhi It also shows that CBI have
the highest market position in Delhi as per my sample
Q2. Are you aware of products & services provided by CBI?
YES
85%
NO
15%
100
NO; 15%
YES; 85%
[41]
From the above data it is clear that most of the customers (around 85%) of Delhi have the idea about
the product & services of CBI, the rest 15% have the idea about the product they are using. In this
15% most of the people are from typical rural area (Farmers).
Q3. If yes are you aware of the advance products (Loan segments) of CBI?
YES
95%
NO
5%
100
[42]
% OF PEOPLE
5%
YES
NO
95%
It is clear that most of the people have the idea about the advance product of CBI. Almost all the 95%
people who have the idea about the advance product are the user of CBI product & service.
75%
CBI
ICICI
15%
8%
OTHER
2%
[43]
100
SALES
CBI
ICICI
OTHER
5%
25%
50%
20%
According to my sample size 75% of people prefer CBI for loan product, but some people prefer
ICICI, PNB or OTHER Bank for loan because they are working with that bank & it is easier for them
to get loan from their bank & it easier for them to pay the interest because it is less as compare to
other bank because they are the employee of that bank.
Q5. If you prefer CBI for taking loan than what influence you to take Loan from CBI?
Most of the people said that they prefer CBI for taking loan because of the transparency and the
lowest interest rate for any kind of loan product. And it is easy to get loan from CBI as compare to
other bank because less paper work is require and as it is the largest govt. bank in India and having
partnership with RBI (Reserve Bank of India) and other association, it is easier for CBI to give loan
to people with a longer repayment period.
Q.6 Which loan product of CBI you have used?
HOME LOAN
40%
EDUCATIONAL LOAN
30%
[44]
CAR LOAN
15%
PERSONAL LOAN
10%
OTHER
5%
100
SALES
HOME LOAN
EDUCATION LOAN
PERSONAL LOAN
OTHER
10% 5%
15%
CAR LOAN
40%
30%
From the sample size 85% of people are using the CBI loan product. From the 100 people 40% of
people took home loan from CBI. 30% of people took education loan for their children, 10% of
people took car loan from CBI. Some of the customer took 2 type of loan from CBI like both car &
educational loan and home & car loan. 5% of people took personal loan.
Q7. What do you feel about the services providing by CBI in advance product?
Bad
0%
Satisfactory
2%
Good
55%
Excellent
43%
100
[45]
2%
43%
55%
BAD
SATISFACTORY
GOOD
EXCELLENT
From this it is clear that the service provide by CBI in its advance product is good in between the
customer. All of them satisfy with the product provide by CBI. 55% of people said that the service
provide by CBI is good & 43% said it is excellent & just 2% of people said that it is satisfactory.
3%
35%
TRANSPARENCY
20%
2%
40%
[46]
100
Most of the people like the attractive interest rate & longer repayment period. Its easier for people to
repay the whole loan amount with its interest with low interest rate and with longer repayment
period.
Mar '14
Mar '13
Mar '12
12 mths
12 mths
12 mths
2,967.44
1,350.44
0.00
1,617.00
12,821.12
0.00
2,661.58
1,044.58
0.00
1,617.00
12,651.27
0.00
2,353.12
736.12
0.00
1,617.00
8,201.45
1,896.96
[47]
Net Worth
Deposits
Borrowings
Total Debt
Other Liabilities & Provisions
Total Liabilities
Assets
Cash & Balances with RBI
Balance with Banks, Money at Call
Advances
Investments
Gross Block
Accumulated Depreciation
Net Block
Capital Work In Progress
Other Assets
Total Assets
Contingent Liabilities
Bills for collection
Book Value (Rs)
15,788.56
240,068.9
9
22,079.78
262,148.7
7
11,558.90
289,496.2
3
Mar '14
15,312.85
12,451.53
226,038.31
196,173.33
18,305.51
12,919.60
244,343.82
209,092.93
8,472.87
8,255.29
268,129.54
229,799.75
Mar '13
Mar '12
12 mths
12 mths
12 mths
11,926.63
451.40
177,315.1
7
86,135.14
2,804.39
0.00
2,804.39
0.00
10,863.49
289,496.2
2
13,560.17
532.04
13,114.18
1,012.42
171,935.84
147,512.85
72,603.79
2,684.75
0.00
2,684.75
0.00
6,812.95
59,243.27
3,770.80
1,296.89
2,473.91
0.00
6,443.11
268,129.54
229,799.74
46,881.78
18,732.82
131.11
50,885.06
14,183.44
121.42
96,224.25
0.00
104.94
FINDINGS
From this project it is found that CBI advance product having the 1 st place in the market at
New delhi, there is a great opportunity to compete with ICICI Bank & to retain its customer
by fulfilling the requirement of customer in CBI advance product.
[48]
It has been observed that approximately 85% correspondents are using advance product of
CBI and 15% are not using any type of advance product of CBI in New delhi
All of CBI customers are satisfied with the services provided by the bank.
Many of these customers satisfied with the low interest rate and longer repayment period of
the advance product.
Most of the customers at Bhubaneswar prefer to take loan from CBI.
Approximately 43% of advance product users said that the service of CBI in advance product
is excellent.
A response from customer care is so clear & good.
Many customers have no time to call customer care so that they are not able to know about
the service & features of CBI advance product.
Most customers are shifted from other banks advance product to CBI because of hidden
charges, high interest rate, less repayment period.
Government employees are more concern than private employees for advance product.
1. Time Constraints:
[49]
The time stipulated for the project to be completed is less and thus there are chances that some
information might have been left out, however due care is taken to include all the relevant
information needed.
2. Sample size:
Due to time constraints the sample size was relatively small and would definitely have been more
representative if I had collected information from more respondents.
3. Accuracy:
It is difficult to know if all the respondents gave accurate information; some respondents tend to
give misleading information.
4.
It was difficult to find respondents as they were busy in their schedule, and collection of data
was very difficult. Therefore, the study had to be carried out based on the availability of
respondents
[50]
CBI must take some steps so that customers can get their loan in time. Like phone
verification by customer care that one customer is got their loan on time or not .It must be
before a certain date so necessary steps can be taken.
CBI should more concern about physical verification rather than phone verification so it will
avoid fraud or cheating.
Advance product selling agents must not give any type of wrong information regarding
advance product.
For the better service new offers would be require.
CBI customer care should more concern about the fastest settlement of customer problems.
Before deducting or charging any monetary charge CBI must consult with customer.
Agents should be trained, well educated & proper trained to convince the people about
different advance product.
It is the duty of the bank to disclose all the material facts regarding advance product, like
interest charged, repayment period, other types of charges, etc.
Special scheme should be implemented to encourage both customer and agents.
The bank should increase the period for repayment of loan.
CBI should more focus on Retaining existing customers.
SBI must focus on Segmentation based on customer knowledge Product offering based on
customer demand.
CBI must take feedbacks of customers regarding features & services .
Conclusion
From the analysis part it can be conclude that customers have a good respond towards CBI advance
products in NEW DELHI. CBI is in 1st position having large number of customers & providing good
services to them. The bank has a wide customer base, so the bank should concentrate on this to retain
these customers.
[51]
In present scenario CBI is the largest advance product issuer in India. Within a very short period of
time the achievement made by CBI is excellent, what a normal bank cannot expect, but it is being
done by CBI. It happens due to employee dedication towards the organization, fastest growing Indian
economy, & brand image.
To be the largest advance product issuer, CBI should focus on
Apart from all the above, CBI believe in providing good customer services to their customers which
is a key factor for success in future.
Bibliography
Credit Management
Machi Raju
Arun Chatterjee
[52]
Websites
http://www.rbi.org.in
http://www.google.com
http://www.centralbankofindia.co.in
Questionnaire
Name - _____________________________________
[53]
Occupation-__________________________________
CBI
ICICI Bank
PUNJAB NATIONAL BANK
Other Bank, Specify (_____________)
Q. If yes are you aware of the advance products (Loan segments) of CBI?
a) YES
b) NO
CBI
ICICI Bank
PUNJAB NATIONAL BANK
Other Bank, Specify (_____________)
Q. If you prefer SBI for taking loan than what influence you to take Loan from CBI?
_____________________________________________________________________________________
_____________________________________________________________________________________
______________________________________________________________________________
Q. Which loan product of CBI you have used?
a) Home Loan
b) Education Loan
[54]
c) Car Loan
d) Personal Loan
e) Other Loans, Specify ( ______________ )
Q. What do you feel about the services providing by CBI in advance product?
a) Bad
b) Satisfactory
c) Good
d) Excellent
Q. Which features you like most in Loan segments of CBI?
a) Less paper work
b) Attractive interest rate
c) Transparency
d) Simple & fast processing
e) Flexibility to choose an EMI base loan or an overdraft
f) Longer tenure lone for ease of repayment
g) Specially design product for self employed
h) Any other feature, specify ( _____________ )
Q. Any suggestion you want to give for the betterment of CBI advance product.
_____________________________________________________________________________________
_____________________________________________________________________________________
____________________________________________________________________________________
[55]