CHAPTER 1

INTRODUCTION

A Bank is an institution which accepts deposits from the general

public and extends loans to the households, the firms and the government.
Banks are those institutions which operate in money. Thus, they are money
traders, with the process of development functions of banks are also
increasing and diversifying now, the banks are not nearly the traders of
money, they also create credit. Their activities are increasing and diversifying.
Hence it is very difficult to give a universally acceptable definition of bank.
"Banking business" means the business of receiving money on current or
deposit account, paying and collecting cheques drawn by or paid in by
customers, the making of advances to customers, and includes such other
business as the Authority may prescribe for the purposes of this Act

Accepting for the purpose of the landing of investment of deposits of

money from public repayable on demand or other wise and withdraw able by
cheques, draft, order or otherwise.

ORIGIN OF BANK

Today Bank has become part and parcel of our life. Apart from their
traditional business oriented functions, they have now come out with national
responsibilities. Banks accelerate the economic growth of the country and steer
the wheels of the country towards its goal of self-reliance in all fields. It
naturally arouses our interest in knowing more about the origin of bank. The
first banks were probably the religious temples of the ancient world.

It was probably established sometimes during the third millennium

Banks probably predated the invention of money. There are extant records from
18th century BC in Babylon that were made by temple priests or monks to
merchants. Since the banking activities were started in different countries, there
is no unanimous view regarding the origin of the word Bank. The word
Bank is said to have derived from the French word Banco or Bancus or

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Banc or Banque which means a bench. In fact the early Jews in
Lombardly transacted their banking business by sitting on benches. However,
Macleod in his book, Theory and Practice of Banking has expressed a
different view. According to him the money changes were never Called
Benchieri in the Middle Ages. So, this derivation may be a mere conjecture.
Another common held view is that the word Bank might be originated from
the German word Back which means a joint stock fund. In due course, it was
Italianised into Banco, Frenchised into Bank and finally anglicised into
Bank. This view is most prevalent even today.

CHARACTERISTICS / FEATURES OF BANK

1. Dealing in money

Bank is a financial institution which deals with other peoples

money i.e. money given by depositors.

2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company

means a company which is in the business of banking.

3. Acceptance of deposit

A bank accepts money from the people in the form of deposits

which are usually repayable on demand or after the expiry of a fixed
period. It gives safety to the deposits of its customers. It also acts as a
custodian of funds of its customers.

4. Giving Advances

A bank lends out money in the form of loans to those who

require it for different purposes.

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5. Payment and withdrawal

A bank provides easy payment and withdrawal facility to its

customers in the form of cheques and drafts. It also brings bank money
in circulation. This money is in the form of cheques, drafts, etc.

6. Agency and Utility services

A bank provides various banking facilities to its customers. They

include general utility services and agency services.

7. Profit and Service Orientation

A bank is a profit seeking institution having service oriented

approach.

8. Ever increasing Functions

Banking is an evolutionary concept. There is continuous

expansion and diversification as regards the functions, services and
activities of a bank.

9. Banking Business

A banks main activity should be to do business of banking

which should not be subsidiary to any other business.

10. Name Identity

A bank should always add the word bank to its name to enable
people to know that it is a bank that it is dealing in money.

11. Connecting Link

A bank act as a connecting link between borrowers and lenders

of money Banks collect money from those who have surplus money and
give the same to those who are in need of money.

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 IMPORTANCE OF BANK

Banks are one of the most important parts of any country. In this
modern time money and its necessity is very important. A developed financial
system of the country can ensure scope for attaining economic development. A
modern bank provides valuable services to a country. To attain development
there should be a good developed financial system to support not only the
economic but also the society. So, a modern bank plays a vital role in the socio
economic matters of the country. Some of the important role of banks in the
development of a country is briefly mentioned below.

1. Promote Saving Habits among People

Bank attracts depositors by introducing attractive deposit schemes
and providing rewards or return in the form of interest. Banks providing
different kinds of deposit schemes to its customers. It enables to create banking
habits or saving habits among people.
2. Capital Formation and Promoting of Industries
Capital is one of the most important parts of any business or industry.
It is the lifeblood of business. Banks are helpful to increase capital formation
by collecting deposits from depositors and converting these deposits in to loans
and advances to industries.
3. Easiness of Trade and Commerce Functions
In this modern era trade and commerce plays vital role between any
countries. So, the money transaction should be user friendly. A modern bank
helps its customers to send funds to anywhere and receive funds from anywhere
of the world. A well-developed banking system provides various attractive
services like mobile banking, internet banking, debit cards, credit cards etc.
These kinds of services fasten and easing the transactions. So, bank helps to
develop trade and commerce.
4. Generate Employment Opportunities
Since bank promotes industry and investment, they automatically
generate employment opportunity. So, a bank enables an economy to generate
employment opportunity.

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 5. Promote Agricultural Development
Agricultural sector is one of the integral parts of any economy. Food
self-sufficiency is the major challenge and goal of any country. Modern banks
promotes agricultural sector by providing loans and advances with low rate of
interest compared to other loans and advances schemes.
6. Implementation of Monetary Policy
Monetary policy is an important policy of any government. The
major aim of monetary policy is to stabilize financial system of the country from
the dangerous of inflation, deflation, crisis etc. Banks are helpful to implement
policies relating to monetary matters successfully.
7. Balanced Development
Modern banks are spreading its operations throughout the world.
We can see number of big banks like Citi bank, Baroda bank etc. It helps a
country to spread banking activities in rural and semi urban areas. With the
spreading of banking operations around the country, they help to attain balanced
development by promoting rural areas.
Modern bank plays vital role in the social- economic development
of the country. A developed banking system enables the country to attain
balanced development without any special consideration of rich and poor, cities
and rural areas etc.

NEED OF THE BANK

Before the establishment of banks, the financial activities were

handled by money lenders and individuals. At that time the interest rates were
very high. Again there were no security of public savings and no uniformity
regarding loans. So as to overcome such problems the organized banking sector
was established, which was fully regulated by the government. The organized
banking sector works within the financial system to provide loans, accept
deposits and provide other services to their customers. The following functions
of the bank explain the need of the bank
To provide the security to the savings of customers.
To control the supply of money and credit

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 To encourage public confidence in the working of the financial system,
increase savings speedily and efficiently.
To avoid focus of financial powers in the hands of a few individuals and
institutions.
To set equal norms and conditions (i.e. rate of interest, period of lending, etc.)
to all types of customers.

DIFFERENT TYPES OF BANKS

Commercial Banks:

Commercial banks are the most important types of banks. The term
commercial carries the significance that banking is a business like any other
business. In other words, commercial banks are essentially profitmaking
institutions.
They collect deposits from the public and lend money to business
firms (manufacturers), traders, farmers and consumers. Commercial banks
normally meets the working capital needs of trade and industry and are a part
of the money market.
The current account deposits of commercial banks are used as a
medium of exchange, i.e., for making transactions. Deposits of other banks are
not so used. These are specialized institutions which give loans to specific
sectors of the economy. Here we are mainly concerned with commercial banks.
So we generally use the term banks to refer to commercial banks.
The commercial banks can be further classifies as: public sector bank,
private sector banks, foreign banks and regional banks.

1. The public sector banks are owned and operated by the government,
who has a major share in them. The major focus of these banks is to
serve the people rather earn profits. Some examples of these banks
include State Bank of India, Punjab National Bank, Bank of
Maharashtra, etc.

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 2. The private sector banks are owned and operated by private
institutes. They are free to operate and are controlled by market forces.
A greater share is held by private players and not the government. For
example, Axis Bank, Kotak Mahindra Bank etc.

Development Banks:
Development banks are parts of a countrys capital market. In India
they are called public financial institutions. They are specialized financial
institutions which supply long-term finance to large and medium industries.
They also perform various promotional functions for accelerating the rate of
capital formation in the country.
In this way they promote industrial development in particular and
economic development in general. IFCI, IDBI and ICICI are examples of such
banks. These institutions have assumed a crucial importance in providing an
ever-increasing proportion of industrial finance and various types of
development assistance to business enterprises in India.

Co-operative Banks:
Co-operative banks operate in both urban and non-urban areas. All
banks registered under the Cooperative Societies Act, 1912 are considered
cooperative banks. These are banks run by an elected managing committee with
provisions of members rights and a set of communally developed and
approved bylaws and amendments.
In the urban centres, they mainly finance entrepreneurs, small
businesses, industries, self-employment and cater to home buying and
educational loans. Likewise, co-operative banks in the rural areas primarily
cater to agricultural-based activities, which include farming, livestocks, dairies
and hatcheries etc. They also extend loans to small scale units, cottage
industries, and self-employment activities like artisanship.
Unlike commercial banks, who are driven by profit, co-operative
banks work on a no profit, no loss basis. These are regulated by the Reserve
Bank of India under the Banking Regulation Act, 1949 and Banking Laws
(Application to Co-operative Societies) Act, 1965.

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Scheduled Banks:
By definition, any bank which is listed in the 2nd schedule of the
Reserve Bank of India Act, 1934 is considered a scheduled bank. The list
includes the State Bank of India and its subsidiaries (like State Bank of
Travancore), all nationalised banks (Bank of Baroda, Bank of India etc.),
regional rural banks (RRBs), foreign banks (HSBC Holdings Plc, Citibank NA)
and some co-operative banks. These also include private sector banks, both
classified as old (Karur Vysya Bank) and new (HDFC Bank Ltd).
To qualify as a scheduled bank, the paid up capital and collected
funds of the bank must not be less than Rs5 lakh. Scheduled banks are eligible
for loans from the Reserve Bank of India at bank rate, and are given membership
to clearing houses.

Non-scheduled Banks:

Non-scheduled banks by definition are those which are not listed in

the 2nd schedule of the RBI act, 1934. Banks with a reserve capital of less than
5 lakh rupees qualify as non-scheduled banks. Unlike scheduled banks, they
are not entitled to borrow from the RBI for normal banking purposes, except,
in emergency or abnormal circumstances. Jammu & Kashmir Bank is a
example of a non-scheduled commercial bank.

Nationalised Banks:

In the Indian banking scenario, most public sector banks are referred
to as Nationalised Banks. This classification is, however, inaccurate.
According to the IMF (International Monetary Fund),
Nationalisation is defined as government taking control over assets and over
a corporation, usually by acquiring the majority or the whole stake in the
corporation

In 1949, during the early years of the countrys independence,

Indias central bank, the RBI (Reserve Bank of India) became the first bank to
be nationalised. This was an important move since the RBI would soon become
the regulatory authority for banking in India. Most Indian banks at that time
were privately owned. Thus, the Indian government then recognized the need
to bring them under some form of government control to be able to finance
Indias growing financial needs.

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Regional Rural Banks:

Regional Rural Banks or RRBs, simply put, serve the rural areas and
agricultural sectors with basic banking and adequate financial services. They
were set up in 1975, based on the recommendations of a committee. Based in
Moradabad, Prathama Bank, established on 2 October 1975, is the first RRB to
open in India. It was sponsored by Syndicate Bank. The RRBs are owned by
the central government (50%), the state government (15%) and the sponsor
bank (35%). Several commercial banks have sponsored RRBs. Prominent
examples include the Maharashtra Gramin Bank (sponsored by the Bank of
Maharashtra) and the Himachal Gramin Bank (sponsored by Punjab National
Bank). RRBs were set up to eliminate other unorganized financial institutions
like money lenders and supplement the efforts of co-operative banks.
Central Bank:
The central bank is also called the banker's bank in any country. In
India, the Reserve Bank of India is the central bank. The Federal Reserve in
USA and the Bank of England in UK function as the central bank. This bank
makes various monetary policies, decides the rates of interest, controlling the
other banks in the country, manages the foreign exchange rate and the gold
reserves and also issues paper currency in a country. The monetary control is
the primary function of a central bank in most countries and so they are
considered as the lender of last resort to various commercial banks.
The banking system has witnessed a huge growth and the competition
amongst various banks have increased these days. The boom in e-commerce
industry, globalization, and increased popularity of internet has made it vital
for the banks keep up with the latest technology trends. With the entry of the
private and global banks in the market, the competition amongst the banks has
increased in the country. They provide a wide variety of services other than
borrowing and lending money to people.

Land Development Banks:

These banks (called land mortgage banks in India) provide longterm

credit to farmers for land development. They also give long-term loans to
farmers for acquiring new land.
Investment Banks:

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 When a corporate entity wants to issue new equity or debt securities,
an investment bank serves the role of an intermediary. They sometimes also
make investment in these companies through purchase of equity shares.

Merchant Banks:
A merchant bank helps a company to sell its new shares to the general
public. The main job of a merchant bank is raise money to lend to industry.
They do not lend money themselves but instead help circulate money from
those who want to lend to firms who wish to borrow.

Foreign Banks:

There are many foreign banks in India like the Citi Bank, the Hong
Kong and Shanghai Bank and the Bank of America. These are not nationalized
institutions like Indian commercial banks.

Specialized Banks:
These provide unique services to their customers. Some such banks
include, foreign exchange banks, development banks, industrial banks, export
import banks etc. These banks also provide huge financial support to
businesses and various kinds projects and traders who have to import or export
their goods or services.

1. Exchange Banks:
These banks are engaged in buying and selling foreign exchange.
These banks help the growth of international trade.

2. Exim Bank:
It is popularly known as Export Import Bank. Such banks
provide long term financial assistance to the exporters and importers.

National Bank for Agricultural and Rural Development (NABARD):

This bank was established in 1982 in India in view of providing the
rural credit to the farmers. Actually, it is an apex institution which coordinates
the functioning of different financial institutions working in the field of rural
credit. NABARD has been making continuous efforts through its micro-finance

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programme or improving the access of the rural poor to formal institutional
credit. The self-help group (SHG) Bank linkage programme was introduced
in 1992 as a mechanism to provide financial services to the rural poor people
on a sustainable basis.

DIFFERENT TYPES OF BANK ACCOUNTS

1. Saving Account

a)Basic Savings Bank Deposit Accounts

This account will be considered as normal banking service.

For this account, maintenance of minimum balance is not
required.
ATM card/ ATM cum Debit card, Rupay card will be given for
the account holders.
There are going to be no limit on the number of deposits that
can be made in a month but, account holders will be allowed
most of 4 withdrawals in a month, which includes ATM
withdrawals also.
The above facilities will be given without any charge. There
will be no charge levied for non-operation/ activation of
inoperative basic saving bank deposit account.
For this account, overdraft facility will be provided up to Rs.
5000/-.

b) Basic Saving bank Deposit Accounts Small scheme

These are accounts with relaxed KYC, with a minimum

document requirement of self-attested address proof &
photograph.

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 Total credit should not exceed 1Lakh rupees in a year.
Maximum balance should not exceed Rs. 50,000/- at any time.
Cash withdrawals & transfers must not exceed Rs.10, 000/- in a
month.
Remittance from foreign account cannot be credited to this
account without completing normal KYC formalities.
This account can be opened only at Core Banking Solution
linked branches of banks or at such branches, where it is possible
to manually monitor the fulfillments of the conditions.

2. Regular Saving Bank Account

Any resident individual- single accounts, two or more individuals

in joint accounts, Associations, clubs etc., are eligible for this
account.
Modest credit option available to the depositor.
Two free cheque books will be issued per year.
Internet banking facility will be provided without any charge.
Balance enquiry, NEFT, Bill payment, Mobile recharge etc., are
provided through mobile phones.
Students can open this account with zero balance by providing
the required documents.

3. Current Account

Any resident individual- single accounts, two or more

individuals in joint accounts, Associations, Limited
companies, Religious Institutions, Educational
Institutions, Charitable Institutions, clubs etc., are
eligible for this account.
Payments can be done unlimited number of times.
Funds can be remitted from any part of the country to
the corresponding account.
Overdraft facility will be available.
Internet banking facility is available.

4. Recurring Deposit Account

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 Any resident individual- single accounts, two or more
individuals in joint accounts, Associations, clubs,
Institutions/Agencies specifically permitted by the RBI
etc., are eligible to open this account in single/joint
names.
Periodic/Monthly installments can be for any amount
starting from as low as Rs.50/- onwards.
Account can be opened for any period ranging from 6
months to 120 months, in multiple of 1 month.
The amount selected for installment at the start of the
scheme will be payable every month.
The number of installments once fixed, cannot be
altered.
Approved rate of interest is compounded every quarter.
The amount after maturity will be paid to customers one
month after the deposit of the last installment.
Pass book will be given to the depositor.
TDS will be applicable on the interest, as per the latest
changes in the Income Tax Act on cumulative deposits
also.

5. Fixed Deposit Account

a) Short Deposit Receipt

Banks accepts deposits from customers varying from 7

days to a maximum of 10 years.
The period of 7 days & above but not exceeding
179days deposits is classified as Short Deposits.
The minimum amount that can be deposited under this
scheme is Rs. 5 lakh for a period of 7-14 days.

b) Fixed Deposit Receipt

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 Any resident individual- single accounts, two or more
individuals in joint accounts, Associations, Minors, societies,
clubs etc., are eligible for this account.
The minimum FDR in metro & Urban branches is Rs.
10,000/& in rural & semi urban & for Senior citizens is
Rs.5000/-.
For the subsidy kept under the government sponsored
schemes, Margin money, earnest money & court
attached/ordered deposits, minimum amount criteria
will not be applicable.
Depositors may ask for repayment of their deposits
before maturity. Repayment of amount before
maturity is allowable.
Interest rate differs from bank to bank depending
upon the tenure of the deposits & as when the bank
changes the rate.
Additional interest of 0.50% is offered for senior
citizens on deposits placed for a year & above.

6. Demat Account

Used to conduct stress-free transactions on the

shares.
An individual, Non-Resident Indian, Foreign
Institutional Investor, Foreign National, Corporate,
Trusts, Clearing Houses, Financial Institution,
Clearing Member, Mutual Funds, Banks and Other
Depository Account.
For opening this account, an individual has to fill a
form, submit a photo of the applicant along with a
photocopy of Voter ID/ Passport/ Aadhar card/
Driving License & Demat account number will be
provided to the applicant immediately after the
completion of processing of the application.
Facilities provided under this account are- Opening &
maintaining of Demat accounts, Dematerialization,
Rematerialization, Purchases, sales, Pledging &
Unpledging, safe custody.

7. No Frill Account

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 In simple words it: If a company makes its service/product
cheaper by removing the extra features, that is no frill. Eg.
Mobile phone postpaid package without unlimited ringtones or
free night talk. Dish TV package without 100 sports channels.
For our discussion purpose: No frill account is a type of bank
account, with low / Zero balance requirement with extrafeatures
removed.
RBI came up with this No-frill concept, because poor people
cannot open regular bank accounting having requirements like
Rs.5000/- minimum balance etc. So there are no frill accounts
for them. So that poor people can open bank accounts
and take
loans, thatll save them from the 36% interest rate
charged by
the evil money
lenders.

8. Joint
Account

A joint account is an account that belongs to more

than one
person. Joint accounts are often set up by couples that
are
living together or people who have finances that are
closely
linked. Both current and savings accounts can be
opened

jointly.
Joint accounts can be set up so each individual
account holder
can use the account or so that all account holders have
to
authorise .
transactions
With a joint account, you are liable for any debts run
up by
other account
holders.

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9. Student Account

Most banks provide accounts specifically for students in higher

education.
These are current accounts that have been designed with student
finance in mind.
They usually offer interest-free overdrafts up to a certain limit
to help students cope with the debts that often accumulate while
studying.

10. Business Account

Most people who run businesses have a business account so their

business and personal money are kept separate. They are more
or less same as Current Accounts.

11. Non-Resident Ordinary Rupee Account (NRO Account)

NRO accounts may be opened / maintained in the form of current,

savings, recurring or fixed deposit accounts

Account should be denominated in Indian Rupees.

Permissible credits to NRO account are transfers from rupee
accounts of non-resident banks, remittances received in
permitted currency from outside India through normal banking
channels, permitted currency tendered by account
holder
during his temporary visit to India, legitimate dues in
India of
the account holder like current income like rent,
dividend,

pension, interest, etc., sale proceeds of assets
including
immovable property acquired out of rupee/foreign
currency
funds or by way of legacy/.
inheritance
Eligible debits such as all local payments in rupees
including

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 payments for investments as specified by the Reserve
Bank
and remittance outside India of current income like
rent,
dividend, pension, interest, etc., net of applicable
taxes, of the
account
holder.
NRI/PIO may remit from the balances held in NRO
account an
amount not exceeding USD one million per financial
year,
subject to payment of applicable
taxes.
The accounts may be held jointly with residents and /
or with
non-resident
Indian.

12. Non-Resident (External) Rupee Account (NRE

Account)

NRE account may be in the form of savings, current, recurring

or fixed deposit accounts. Such accounts can be opened only by
the non-resident himself and not through the holder of the power
of attorney.
NRIs as defined in Notification No. FEMA 5/2000-RB dated
May 3, 2000 may be permitted to open NRE account with their
resident close relatives (relative as defined in Section 6 of the
Companies Act, 1956) on former or survivor basis. The
resident close relative shall be eligible to operate the account as
a Power of Attorney holder in accordance with the extant
instructions during the life time of the NRI/PIO account holder.
Account will be maintained in Indian Rupees.
Balances held in the NRE account are freely repatriveable.
Accrued interest income and balances held in NRE accounts are
exempt from Income tax and Wealth tax, respectively.
Eligible debits are local disbursements, transfer to other NRE /
FCNR accounts of person eligible to open such accounts,

17
 remittance outside India, investments in shares /
securities/commercial paper of an Indian company, etc.
Loans up to Rs.100 lakh can be extended against security of
funds held in NRE Account either to the depositors or third
parties.

13. Foreign Currency Non Resident (Bank) Account FCNR (B)

Account

FCNR (B) accounts are only in the form of term deposits of 1 to

5 years
All debits / credits permissible in respect of NRE accounts,
including credit of sale proceeds of FDI investments, are
permissible in FCNR (B) accounts also.
Account can be in any freely convertible currency.
Loans up to Rs.100 lakh can be extended against security of
funds held in FCNR (B) deposit either to the depositors or third
parties.
The interest rates are stipulated by the Department of Banking
Operations and Development, Reserve Bank of India.

14. Foreign Currency Account

A person resident in India who has gone abroad for studies or

who is on a visit to a foreign country may open, hold and
maintain a Foreign Currency Account with a bank outside
India during his stay outside India, provided that on his return
to India, the balance in the account is repatriated to India.
However, short visits to India by the student who has gone
abroad for studies, before completion of his studies, shall not
be treated as his return to India.

A person resident in India who has gone out of India to
participate in an exhibition/trade fair outside India may open,
hold and maintain a Foreign Currency Account with a bank
outside India for crediting the sale proceeds of goods on
display in the exhibition/trade fair. However, the balance in
the account is repatriated to India through normal banking
channels within a period of one month from the date of closure
of the exhibition/trade fair.

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15. Resident Foreign Currency Account

Returning NRIs /PIOs may open, hold and maintain with an

authorised dealer in India a Resident Foreign Currency (RFC)
Account to transfer balances held in NRE/FCNR(B) accounts.
Proceeds of assets held outside India at the time of return can
be credited to RFC account.

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 The funds in RFC accounts are free from all restrictions
regarding utilisation of foreign currency balances including any
restriction on investment in any form outside India.
RFC accounts can be maintained in the form of current or
savings or term deposit accounts, where the account holder is
an individual and in the form of current or term deposits in all
other cases.
RFC accounts are permitted to be held jointly with the resident
close relative(s) as defined in the Companies Act, 1956 as joint
holder (s) in their RFC bank account on former or survivor
basis. However, such resident Indian close relative, now being
made eligible to become joint account holder shall not be
eligible to operate the account during the life time of the
resident account holder.

FUND BASED BANK SERVICES

The fund based finance in banks is in different forms. The facilities

like Overdraft, Cash Credit A/c, Bills Finance, Demand Loans, etc, wherein
immediate flow of funds available to borrowers, are called funds based facility.
The non -fund base facilities like issuance of letter of guarantee, letter of credit
wherein banks get fee income and there is no immediate outflow of funds from
bank. The process of appraisal of a credit proposal is not uniform; it varies
according to nature of facilities required by the borrower and borrowers type,
viz. individuals, proprietorship, partnership firm, limited company etc. The
types of fund based finances available at banks as under.

Overdrafts:

Overdraft means allowing the customer to draw cheques over and

above credit balance in his account. Overdraft is normally allowed to Current
Account Customers and in exceptional case SB A/c holders are also allowed to
overdraw their account. The high rate of interest is charged but only on daily
debit balance. An overdraft is payable on demand. There are two types of
overdraft prevalent in banks i.e. 1) Temporary overdraft or clean overdraft 2)
Secured overdraft. Temporary overdrafts are allowed purely on personal credit
of the party and it is for party to meet some urgent commitments on rare
occasions. Allowing a customer to draw against his cheques sent in
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clearing also falls under this category. Secured overdraft is allowed up to
certain limit against some tangible security like bank deposits, LIC policies,
National Saving certificates, shares and other similar assets. Secured overdraft
is most popular with traders as lesser operating cost, simple application and
document formalities are involved in this facility.

Cash Credit Account (CC A/C):

Cash credit account is a running account just like a current account

where debit balance in the account up to a sanctioned limit or drawing power
fixed based on stock holding whichever is less. Sanction of Limit generally for
1 year. The limits are renewed or enhanced/reduced based on assessment of
customers actual requirement on the basis of working of the unit. Customer
has to submit periodic Stock statements depending on Operating Cycle. Turn
over, and Cash Budget or Projected Balance Sheet. Cash credit facility is
offered normally against pledge (key Cash Credit) or hypothecation of prime
security such as, book debts (receivables), stocks of raw materials, semi-
finished goods and finished goods. In some cases, customers, mainly traders
find it difficult to maintain stock register and submitting periodic stock
statements. For such customers also CC facility is provided by banks against
pledge of gold jewellery, assignment of Life policies, NSC, bank deposits,
there is no need to submit periodic stock statements. In case of manufacturing
units this facility is required for purchase of raw materials, processing and
converting them into finished goods. In case of traders the limit is allowed for
purchase of goods which they deal.

Bills Finance:

Bills finance is short term and self-liquidating finance in nature.

Demand Bill is purchased and Usance bill is discounted by the banks. The bills
drawn under Letter of Credit (LC may be on sight draft or usance draft) are
negotiated by the banks. The advantage of bills finance is that the seller of
goods (borrower) gets immediate money from the bank for the goods sold by
him irrespective of whether it is a purchase, discount or negotiation by the bank
according to type of bills. Demand bills can be documentary or clean. Usually
banks accept only documentary bills for purchase. However purchase of clean
bills from good parties also permitted by banks based on sanction terms of the
limit. Usance bills means bills maturing on a future date. Documentary usance
bills may be on D/P (Delivery against payment) or D/A (Delivery against
Acceptance) terms. In case of D/P terms the documents of title to goods are
delivered to the goods (drawee) against payment of bill
19
amount. In case of D/A bills, the documents to the title to goods are to be
delivered to the drawee (buyer) against acceptance of bills.

Demand Loans:

Demand loans are secured loans repayable on demand. Demand loan

is granted against marking lien on banks own fixed deposits (Not against
deposits of other banks), Assignment of Life Insurance Policies with adequate
surrender value (loan cannot be granted against policies issued under married
woman property act or beneficiary is a minor etc.), National Saving Certificates
and so on. Demand loans can be gradually liquidated over a period generally
in monthly, quarterly, half yearly instalments or lump sum payment at one shot
or it can be closed from maturity proceeds of the security offered.

Term Loans:

The nature of a term loan commitment is long term. Maximum

maturity for a term loan including moratorium is normally 10 years and in
exceptional cases 15 years. Repayment of loan is from the cash generation out
of operation of the unit/company. Term Loan appraisal must cover appraisal of
the borrower and appraisal of the project. Appraisal of the borrower must cover
integrity, standing of the borrower, Business capacity, managerial competence,
financial resources in relation to size of the project. The sources of information
for the above may be from merchant reports, bank reports, CIBIL report,
declaration received from the promoters about their assets and liabilities,
internal and external credit rating and so on. Assistance from venture capitalists
like UTI venture, ICICI ventures etc. can also be solicited. Appraisal of a
project would cover market demand for the product, competition, quality and
price sensitivity of the product, terms of sales and after sales service
arrangements envisaged by the company. Competition perception according to
minds of customer and bankers can be different. Technical feasibility like
location that is proximity to raw material, availability of infrastructure should
be favourable to the unit/company. Production process should be contemporary
and spare parts whether easily be available lest there would be stoppage of
production due to non-availability of spare parts. Issues like arrangements of
working capital finance, breakeven point of sales are to be discussed. Working
capital finance has to be decided before sanctioning of term loan to the
borrower. Regulatory Issues: As per sec1 of the banking regulation act a bank
cannot lend beyond 30% of paid up
20
capital of the company or 30% of paid up reserve of the bank whichever is
lower.

Retail Credit:

Retail credits are car loans, Consumer Durables/, Educational Loans,

Housing Loans, House improvement Loan, Professionals Personal Loans,
Clean Loans, Jewel Loan, Pensioners Loan, Credit Cards etc. KYC formalities
like verification of proof of identity and proof of address etc, are important and
first step to entertain loans under retail schemes. SB pass book or statement of
account is to be verified to match the details submitted by the applicant. In case
of employed persons, normally loan will be considered only to confirmed
employees. Employers no objection certificate/salary certificates are other
requirements for retail loans. In case of self- employed, IT return for 2-3 years
would be verified to assess the repayment capacity of the applicant. No due
certificate from existing banker, CIBIL report is the other requirement to
consider retail loans.

Leasing Finance:

A lease is a contract between the owner(lessor) and the user(lessee).

There is various type of lease viz. operating lease, finance lease etc. In terms
of lease agreement the lessor pays money to the supplier who in turn delivers
the article to the lessee. The lessee (hirer of the article) makes periodical
payment to the lessor. At the end of lease period the asset is restored to the
lessor. Commercial banks in India have been financing the activities of leasing
companies, by providing overdraft/Cash credit account/Demand loan against
fully paid new machineries or equipment by hypothecation of security. The
repayment should be from rentals of machineries/ equipment leased out. The
maximum period of repayment is five years or economic life of the equipment
whichever is lower. The bank is allowed to periodical inspection of the asset.
Lease contracts are only for productive purpose and not for consumer durables.

Hire Purchase Finance:

Hire Purchase transactions are very similar to leasing transactions.

In hire purchase agreement, at the end of the stipulated period, the hirer (lessee)
has option either to return the asset to leasing company while terminating the
agreement or purchase the asset upon terms set out in the agreement. In terms
of leasing agreement the ownership continues to remains with the leasing
company (Lessor). Since hire purchase finance takes place
21
predominantly in automobile sector, banks have started direct finance to
transport operator as the nature of advance being classified as priority sector
lending.

Bill Discounting:

When the holder of a bill wants to get the money before the due date,
he can sell the bill to a bank against a small charge, known as discounting
charges i.e., a supplier or creditor of goods discounts the incomes for sale of
goods.
Discounting charge is imposed by the bank at a fixed rate present p.a.
from the date of discounting to the date of maturity. At present in our country,
through the discounting of bills of exchange a major part of lending of money
taken place by commercial banks.
However, a clean bill carries only the personal security of the drawer
and drawee, but a documentary bill, however, accompanied by Bill of Lading,
Railway Receipt or other documents of title of goods, which provide extra
security in addition to the personal security of the drawer and drawee.
It is needless to say that if the bill is dishonoured by the drawee/drawer, the
bank naturally will recover the amount from the drawer/creditor of the bill.

Factoring:

A factor is a financial institution who takes the responsibility of

financing and collecting debts that may arise out of credit sales. It is done on a
continuous basis. Under the arrangement as soon as new bills receivables come
in they are taken by the factor and the proceeds are credited to the accounts of
the client correspondingly.
If there is no default or irregularities overdraft facility may also be
allowed in Western country, factoring is well-established.
But in our country, factoring have been set up by nationalized banks
only in four regions, viz:
(i) State Bank of India (in the West);
(ii) Canara Bank (in the south);
(iii) Punjab National Bank (in the north); and
(iv) Bank of Allahabad (in the east)
Venture Capital:

33
 Venture capital implies the financial investment to high-tech growing
companies (i.e., higher risk based) as equity capital with the expectation of a
higher rate of return which is inclusive of initial as well as development capital
for a company.
Although the concept is very old, it is not widely accepted.
Sometimes, this capital is being introduced as a result of the product of any
scientific improvement and technology and to bring it into real world situation.
It also helps the new companies to issue shares who find it difficult.

Pre- Shipment Credit:

All credit facilities sanctioned to exporters for producing /

manufacturing / processing/ packing / warehousing / shipping the goods for
exports are termed as Pre -Shipment Credit. The credit limits for preshipment
advance are considered simultaneously along with other facilities and it is
generally made a sub-limit within the overall cash credit limit sanctioned to the
borrower. The assessment of working capital requirement may be based upon
the export orders on hand with the exporter besides his capacity to meet that
commitment. The exporters, to whom this facility is allowed, will be required
to produce letters of credit/firm export orders within a reasonable period of
time. Pre-Shipment Credit limits can be extended through the running account
facility. No repayment of preshipment advance can be effected from local funds
in which case the advance will not be treated as pre-shipment advance and no
benefits of concessional rate will be available to such an advance from the date
of original advance. Quantum of advances and interest rate structure is based
on the commodity to be exported and the current PLR. Advance is granted for
a period of 180 days and if the export is not executed by that time a further
extension of 90 days can be given.

Export Packing Credit:

Packing credit may be taken as equivalent to cash credit in domestic

business except that cash credit facility is sanctioned as a continuous/running
facility whereas packing credit advance is disbursed for a specific purpose to
enable the exporter to meet a specific export obligation. The procedure and
techniques adopted by bank are same as other advances. There payment of
packing credit advance can be only from the proceeds of the bills drawn under
the export order/L/C against which the pre-shipment advance was granted to
the exporter by the bank. Packing credit advance will be treated as a separate
loan and no running account facility will be permitted. The repayment of
packing credit account will also be required to be done on separate loan account

34
basis. Advance is granted for a period of 180 days and if the export is not
executed by that time, the export should be completed within 360 days.

NON FUND BASED BANK SERVICES

The credit facilities given by the banks where actual bank funds are
not involved are termed as 'non-fund based facilities'. These facilities are
divided in three broad categories as under:

Letter of Credit

Letter of credit is, a method of settlement of payment of a trade

transaction and is widely used to finance purchase of machinery and raw
material etc. It contains a written undertaking given by the bank on behalf of
the purchaser to the seller to make payment of a stated amount on presentation
of stipulated documents and fulfilment of all the terms and conditions
incorporated therein. All letters of credit in India relating to the foreign trade
i.e., export and import letters of credit are subject to provisions of 'Uniform
Customs & Practice for Documentary Credits' (UCPDC). The latest revision of
these provisions effective from 1st January, 1994 has been issued by
International Chamber of Commerce as its publication No. 500 of 1994. These
provisions neither have the status of law or automatic application but parties to
a letter of credit bind themselves to these provisions by specifically agreeing to
do so. These provisions have almost universal application and help to arrive at
unambiguous interpretation of various terms used in letters of credit and also
set the obligations, responsibilities and rights of various parties to a letter of
credit.

Parties to a Letter of Credit

1. Applicant/Opener. It is generally the buyer of the goods who gets the

letter of credit issued by his banker in favour of the seller. The person
on whose behalf and under whose instructions the letter of credit is
issued is known as applicant/ opener of the credit.
2. Opening bank/issuing bank. The bank issuing the letter of credit.
3. Beneficiary. The seller of goods in whose favour the letter of credit is
issued.

35
4. Advising Bank. Notification regarding issuing of letter of credit may be
directly sent to the beneficiary by the opening bank. It is, however,
customary to advise the letter of credit through sane other bank operating
at the place/country of seller. The bank which advises the letter of credit
to the beneficiary is known as advising bank.
5. Confirming Bank. A letter of credit substitutes the credit worthiness of
the buyer with that of the issuing bank. It may sometimes happen
especially in import trade that the issuing bank itself is not widely known
in the exporter's country and exporter is not prepared to rely on the L/C
opened by that bank. In such cases the opening bank may request other
bank usually in the country of exporter to add its confirmation which
amounts to an additional undertaking being given by that bank to the
beneficiary. The bank adding its confirmation is known as confirming
bank. The confirming bank has the same liabilities towards the beneficiary
as that of opening bank.
6. Negotiating Bank. The bank who negotiates the documents drawn
letter of credit and makes payment to beneficiary.
The function of advising bank, confirming bank and negotiating
bank may be undertaken by a single bank only.

Guarantees

A contract of guarantee can be defined as a contract to perform the

Promise, or discharge the liability of a third person in case of his default.
The contract of guarantee has three principal parties as under:

1) Principal debtor - the person who has to perform or discharge the

liability and for whose default Guarantee is given.
2) Principal creditor - the person to whom the guarantee is given for due
fulfilment of contract by principal debtor. Principal creditor is also
sometimes referred to as beneficiary.
3) Guarantor or Surety - the person who gives the guarantee.

This facility enables the customer to acquire goods and expand

business activity. This is usually seen when a smaller company is dealing
with a much larger entity or a government across border.
Bank provides guarantee facilities to its customers who may
require these facilities for various purpose. The guarantees may broadly be
divided in two categories as under:
1) Financial guarantees - Guarantees to discharge financial obligations to
the customers.

36
 2) Performance guarantees - Guarantees for due performance of a
contract by customers.

Co-acceptance of Bills

Co-acceptance is a means of non-fund based import finance whereby

a Bill of Exchange drawn by an Exporter on the Importer is coaccepted by a
Bank. Once the Bill of Exchange is accepted, the Bank undertakes to make
payments to the Exporter in case if the Importer fails to make the payment on
due date.
The co-acceptance by the Importers Bank acts as a guarantee for
the Exporter for timely receipt of proceeds from the Importer. For the Bank, it
is a non-fund based exposure on the Importer. It is an increasingly used form
of import finance offered by many Banks across
the world.
This form of finance is beneficial to the customers in different ways.
For an Importer, Co-acceptance is a considerably cheap option than a Letter of
Credit since the commission for LC is payable from the date of opening of the
LC whereas in case of the Co-acceptance, commission is payable only after the
shipment of goods and the documents to tile reach the Importers Bank which
is the Co-acceptor Bank.

SWOC ANALYSIS OF BANKING INDUSTRY

The accelerating shift in economic power from the developed to

emerging economies is dramatically changing the banking industry across the
world. The international banking scene has in recent years witnessed strong
trends towards globalization and consolidation of the
financial system. Stability of the financial system has become the central
challenge to bank regulators and supervisors throughout the world. The multi-
lateral initiatives leading to evolution of international standards and codes and
evaluation of adherence thereto represent resolute attempts to address this
challenge.
The Indian banking scene has witnessed progressive deregulation,
institution of prudential norm and an emulation of international supervisory
best practices. The supervisory processes have also concomitantly evolved and
have acquired a certain level of robustness and sophistication in the banking
industry.

37
 Strengths of Indian Banks

In the short-term, most developed economies experienced a

significant economic slowdown or recession in 2008-9, reducing significantly
the growth of domestic banking assets. Emerging economies such as India by
contrast tended to maintain relatively high growth rates, although some
temporaryEconomicslowdown was experienced in certain cases. In 2010, ho
wever, emergingeconomies grew strongly in general, while the recovery in
Europe in particular remained relatively weak.

High standard regulatory environment. The policy makers, which

comprise the Reserve Bank of India (RBI), Ministry of Finance and
related ornament and financial sector regulatory entities, have made
several notable efforts to improve regulation in the sector.
Bank lending has been a significant driver of GDP growth and
employment.
Presence of more number of smaller banks that would likely to be
impacted adversely.
Approximately 53000 networks of branches spread all over the country
provides easy access to entire spectrum of customers.
Diversification in their operations Banks offer an entire gamut of
services including insurance, investment banking, asset management,
private equity, foreign exchange, payment of utility bills to customers,
mobile and internet banking.
Large manpower with relevant banking skills to manage the operations.
Technological up gradation changing the way the banking is done.
Anywhere banking and anytime banking has become a reality thus
making service faster, error free and competitive.
Banks have gained financial strengths in terms of Productivity and
Profitability.

Weakness of Indian Banks

Indian commercial banks, particularly PSBs have been

witnessing the following challenges which have become bottlenecks in
achieving competitive edge over their rivals.

Low operating size

High operating costs
Inadequate deposit mobilization efforts
High level of nonperforming assets

38
 Financial exclusion
Complex and non-responsive organizational structures
Credit to non-productive sectors like commercial estate
Poor customer service
Underutilized capacity particularly in rural areas
Unsatisfactory work culture
Feudalistic attitude of thee staff

Opportunities for Indian banks

These and a few other areas which should receive the attention of
banks seeking opportunities for sustainable growth are summarized below:

Retail banking will be immensely benefited from the Indian

demographic dividend. It is important to note that the middle class
population is expected to touch 200 million by 2020 and 475 million by
2027. This would imply mortgages would grow fast and likely to cross
Rs. 40 trillion by 2020;
Another segment that will provide huge opportunities will be the
financing of affordable housing for growing low & middle class;
Rapid accumulation of wealth in rich households will drive wealth
management to 10X size;
The Next Billion consumer segment will emerge as the largest in terms
of numbers and will accentuate the demand for low cost banking
solutions and innovative operating models, throwing up a big market of
small customers;
Branches and ATMs will need to grow 2X and 5X respectively to serve
the huge addition to bankable population. Low cost branch network with
smaller sized branches will be adopted;
Mobile banking will come of age with widespread access to internet on
mobile reaping the benefit of the high mobile density in the country;
Banks will adopt CRM and data warehousing in a major way to reduce
customer acquisition costs and improve risk management. Banks will
have to understand and adopt new technologies like, cloud computing
and invest significantly in analytics based on big data;
Margins will see downward pressure both in retail and corporate
banking, spurring banks to generate more fees and improve operating
efficiency;
Infrastructure debt will surpass Rs.45 trillion half of which will be on
banks books. It will touch the ALM limits of banks and will require a
significant upgrade of banks risk management systems.

39
Challenges for Indian Banks:

There has been considerable widening and deepening of the Indian

financial system in the recent years. The enhanced role of the Banking sector
in the Indian Economy, the increasing levels of deregulation and the increasing
levels of competition have placed numerous demands on our Banks. The
adverse consequences of malfunction of the Banking system could be more
severe than in the past. Hence, focus of RBI, the regulator & supervisor of
Indian Banking system is at ensuring greater financial stability. While
operating in this highly demanding environment, the banking system is
exposed to various risks & challenges few of them are discussed as under:

The biggest challenge is the re-structuring of the assets of some of the

banks as it would be a tedious process, since most of the banks have poor
asset quality leading to significant
Proportion of NPA. This also may lead to Mergers &Acquisitions, which
itself would be loss of capital to entire system
Huge surplus manpower, absence of good work culture, antiquated
labour laws, inflexible and inefficient labour and existence of strong
labour union.
High level of Non-Performing Assets (NPA). 6 percent of the advances
are still blocked up which is about 58000Crore.Therefore problem of non
-recognition of interest income and loan loss provisioning exists.
The house hold savings comprising financial assets are moving away
from bank deposits to more sophisticated form of financial assets such
as mutual funds, stocks and derivatives.
Asset liability mismatch
Demanding customers are ready to jump from one bank to another when
they are not satisfied with the service provided. This causes major threat
particularly to PSUs.
Competition from new players.
Competition at global level in terms of product innovation and product
mix.
Keep pace with the fast growing technology.
The current business environment demands

40
 CHAPTER 2
REVIEW OF LITERATURE

Literature reviews that Indian banking system consist of a larger

structure on of financial institutions, Commercial banks, foreign financial
institutions. These structural transformations of Indian finance system can be
divided into three parts. First, the post-independence period (1947-1968). The
Reserve bank of India, performed role as a supervisor and controller of finance
system. RBI, dominated over all the forms of finance controls in India. In this
time RBI, worked on financial stability, credit control, and regulation of
interest rates and formation banking structure. The second financial repression,
period <1969 to 1990> the movement commenced with the
nationalization of banks. This nationalization of commercial banks derives the
base for changes in finance and banking system. The result into interest rate
regulation and credit programmers deposit and banking working methods etc.

41
The third period known as financial reform and liberalization period. Started in
early 90's. In that period government of India was more likely to more
liberalized. The three committee in 1985, vagual in 1987 and the Narasimham
committee 1991. The most influential recommendations made by the
committee of Narasimham regarding liberalization, consolidation and
privatization in banking system. And the government of India started a
financial reform era with the financial sector liberalization program. The main
aims of financial liberalization program is to regulate the rates of interest, cash
reserves and performance financial system consist of financial institute stocks
exchanges and banks. It makes liberalization program enhance the importance
of banking sector and make it more efficient and competitive.
The globalization, deregularisation and privatization system
emphasized on Washington consensus. These leads country to simplistic way
of transforming system by functioning of market and state owned institution's
restructuring. The liberalization program made changes internal economy. It
restated more competitive and productive in shorter period. The liberal interest
rates and reserve limits of banks resulted into stable and sound borrowing and
lending market and monetary policy of government. The bank requires to keep
certain amount of reserves to avoid too uncertainty an future due to competitive
market another element of banking reforms is stabilization, non-performing
loan, which burdensome for banks are recapitalized and require standard
working environment one of the most effective part is alteration of state owned
banks into private sector banks. Under the government controls state owned
banks recommends to sell out its public portion to private sector and consume
the public property in other economic project which needs more funds and
these funds are taken from the privatization of state owned banks.
Under the Nationalization act 1969, the largest banks were
nationalized with the aim of increase in public deposits. The reason behind the
nationalization of banks to grow the economy and bank network expansion.
The government of India requires enhancing the economy and serving to prior
areas. In 1980, more six banks were nationalized added into public share in
banks to keep landing to priories' areas. It was material to control on banking
system and resulted into increase in priority area landing and five year plans of
Indian Government. Moreover, these turned into inefficiency in banking
system instead of providing equal distribution of funds. Addition banking
system faced problems in 1980s these are the period of unprofitability and
inefficiency and in mid 80s creates more limitations on returns and capital and
reserves. These leads banks to the unrealistic performance standards. As
mention above the 1991 Narasimham committee caters a influencing idea on
banking sector reforms which idealized on interest rate deregulation, credit

42
services and entry of new banks on Indian market private as well as foreign
banks.

CHAPTER 3
RESEARCH METHODOLOGY

The new economic policy of globalization has opened the financial

markets of India to outside world and infused competitiveness there in. The
financial sector plays a crucial role in mobilizing communitys saving and
channeling them into effective investment avenues in the country. The present
banking system in India was evolved to meet the financial needs of trade and
industry and to satisfy the institutions of the country. The world has become a
global market. The impact of globalization, privatization and liberalization has
totally changed the style of banking sector in India. Banks are essential
instruments of accelerated growth in a developing economy.
Productivity is one of the factors affecting the profitability among
others like expansion of banks operation in the areas characterized by
deployment of funds is non-profitable coupled with higher overhead expenses,
increase in sickness in industrial units, mounting of NPAs over the years etc.
Higher the productivity results in proportionately lower in the establishment

43
cost. The experience of Indian banking systems since nationalization has
brought to the forefront the immense potential of banking as a level of
economic development. Since banking, development and economic
development are closely associated with each other. It would be pertinent to
have an analytical study of the activities of the Public Sector Banks and Private
Sector Banks in the field of economic development in India. It is necessary to
examine the extent to which the banks have moved towards their goal.
Research methodology is a way to solve the research problem systematically.
It may be understood as a science of studying how research is done
scientifically.
Research Methodology includes the assumptions and values, which
is useful for interpreting data and reaching to conclusions. The present 53
analytical study is an attempt to study the productivity measurement for
selected unit of Public Sector Banks and Private Sector Banks for particular
period. The purpose of this analytical study is, thus to make an in-depth study
of what the Public Sector Banks and Private Sector Banks in India have done
during the period of last five years (2005-06 to 2009-10).

OBJECTIVES OF THE STUDY:

To evaluate the overall productivity and profitability of Public Sector

Banks and Private Sector Banks.
To evaluate the financial performance of Public Sector Banks and
Private Sector Banks under study.
To evaluate labour productivity of Public Sector Banks and Private
Sector Banks.
To evaluate branch productivity of Public Sector Banks and Private
Sector Banks.
To evaluate capital productivity of Public Sector Banks and Private
Sector Banks.
To evaluate the profitability of Public Sector Banks and Private Sector
Banks.
To suggest the remedial measures for overall development of Public
Sector Banks and Private Sector Banks.

44
 CHAPTER 4
CORPORATION BANK

INTRODUCTION

Corporation Bank is one of the oldest Banking Institutions in the

Dakshina Kannada district of Karnataka and one of the oldest banks in India.
As the saying goes on A thousand mile journey starts with small step. A step
was taken by Shri Khan Bahadur Haji Abdullha Haji Kasim Saheb Bahadur, a
businessman of Udupi way back on the 12th of March 1906 with a group of
philanthropist founded the Canara Banking Corporation of Udupi Limited.

A handful of people representing the various interests decide to

promote the Canara Banking Corporation of Udupi Limited. Eleven persons
who included 4 pleaders, 2educationist, 1 insurance agent and 1 retired sub
magistrate where the first signatories of the Articles of Association and
Memorandum of Association of the bank who had in all 111 shares.

45
 The need to start this bank was felt because there was no such facility
at Udupi, an important trading centre next to Manglore in Dakshin Kannada
district. The indigenous banking was largely in the hands of few rich private
individuals and something had to be done to provide relief to the common man
from the clutches of the money lenders who held fully swey. What inspired the
founding fathers was the fervor of swadeshism, for promoting the bank, the
founder president made an appeal saying, the primary object in forming the
Corporation Bank is not only to cultivate habit of thrifts amongst all classes
of people, without distinction of the cast or creed, but also habit of co-operation
amongst all classes. This is swadeshism, pure and simple and every lover of
the country is expected to come forward and co-operate in achieving the end in
view. It was called through co-operation of all, shorn of distinction of caste and
creed The Canara Banking Corporation Limited as the institution was called
then, started functioning as a Nidhi with a humble beginning. The initial
capital was Rs 5000.

HISTORY
Corporation Bank, the oldest banking institution in the erstwhile
undivided South Canara District of the Madras Presidency and one of the oldest
banks in India, was founded in 12 March 1906 in the Temple Town of Udupi,
by a small group of philanthropists led by Khan Bahadur Haji Abdulla Haji
Kasim Saheb Bahadur. The need to start this bank was felt because there was
no such facility at Udupi, an important trading centre next to Mangalore in
South Canara district. The indigenous banking was largely in the hands of a
few rich private individuals and something had to be done to provide relief to
the common man from the clutches of the money lenders who held full sway.
The first branch of a modern bank established in the district was the Bank of
Madras, one of the three Presidency Banks, which set up its office in Mangalore
in 1868 largely to cater to the business needs of a few British firms dealing in
export of plantation products. Its agent used to visit Udupi once a fortnight or
so, to do banking. Money remittances had to be made only through postal
medium.

To overcome these drawbacks and also to provide banking facilities

for Udupi in particular and the district in general, a cosmopolitan group of
philanthropists led by Haji Abdulla Saheb made a bold venture to start this
institution. What inspired the founding fathers was the fervour of
Swadeshism.For promoting the bank, the founder president made an appeal

46
saying, The primary object in forming corporation is not only to cultive
habits of thrift amongst all classes of people, without distinction of caste or
creed, but also habits of cooperation amongst all classes. This is swadeshism,
pure and simple and every lover of the country is expected to come forward
and cooperate in achieving the end in view. They rightly defined Swadeshism
as institution-building to aid economic activity through co-operation of all,
shorn of distinction of caste and creed. The Canara Banking Corporation
(Udupi) Limited, as the institution was called then, started functioning as a
Nidhi with a humble beginning. The initial capital was Rs.5000/- and at the end
of the first day, its resources stood at "38 rupees 13 annas and 2 pies.
The setting up of the Canara Banking Corporation Ltd. seems to have
given a fillip to co-operative banking and also to regular banking elsewhere in
the district. Between 1909 and 1917, six co-operative banks came into being
and during the decade immediately after the first world war (1914-18) South
Canara gave birth to as many as eight banks. It is to the credit of this bank that
despite two world wars, economic depression and stiff competition, the bank
not only quite survived, but also made satisfactory progress.
Having been started at Udupi, the bank first branched out by opening
a branch at Kundapur in 1923. The second branch of the bank was opened in
Mangalore at car street in 1926. The bank stepped into Kodagu district in 1934
by opening its seventh branch in Madikeri. In 1937 the Bank was included in
the second schedule of Reserve Bank of India, 1934. In 1939, the banks name
changed from Canara Banking Corporation(Udupi) Ltd. To Canara Banking
Corporation Ltd. The Bank graduated into a regional bank in
1945 when the total number of its branches stood at 28. In 1961, it took over
Bank of Citizens of Belgaum. In the same year, the banks administration
office shifted from Udupi to Mangalore.
The second change in the name of the bank occurred in 1972, from
Canara Banking Corporation Ltd. to
Corporation Bank Limited. The bank was nationalised in 1980 along with 5
other private sector banks. After nationalisation, the pace of growth of the bank
accelerated and it made all-round progress. Started as a common mans bank,
it changed with the times to meet the aspirations of the people but never
swerved from its motto- Sarve Janah Sukhino Bhavantu meaning Prosperity
for All.
It endeavoured and succeeded in striking a right balance between
traditional values and innovative approach, personalised service and
professional outlook and commercial consideration and public concen. One of
the unique achievements of the bank is that it has been paying dividend

47
continuouslyfor the last 98 years since its inception. To day, with the most
modern technology-driven products and services and nationwide branches &
ATMs, Corporation Bank stands tall among the public sector banks in India
and is hailed as one among the wellmanaged public sector banks with excellent
track record in all the key parameters of banking. The bank has the second
largest ATM network in the public sector.

110 YEARS OF BANKING

Corporation Bank completed 110 years of existence on 12 March

2015. On the occasion of the 107th Foundation Day celebrations held at TMA
Pai Hall, in Mangalore, five eminent personalities who made contributions to
society were honoured by the Bank. They were B.M. Hegde, physician; B.
Ramana Rao, cardiologist; Ela Bhatt, social entrepreneur and founder of
SEWA; B. R. Shetty, entrepreneur, and Kadri Gopalnath, saxophonist.
A new application for internet banking on the iPad was launched on
this occasion. A new caller tune for the Bank's mobile/landline phones was also
inaugurated in the application.
The Centenary celebrations were launched by V. Leeladhar, Deputy
Governor of the Reserve Bank of India, with the Bank's Foundation Day lecture
on 12 March 2005.
As a part of the Bank's centenary celebrations, a number of
programmes and projects were planned and executed. As a first step, the Bank
launched, at Yeshwantpur - Malur in Kolar District on 13 March 2005, the Corp
Kissan Card - a debit card tied in with VISA international - to enable farmers
make timely purchases for agricultural operations. A modern public library was
dedicated to the citizens of Mangalore in DK District, the birthplace of the
Bank by P. Chidambaram, Union Finance Minister on 2 March 2006. The
library building also houses a numismatic museum and a multi-purpose hall for
intellectual activities. The Bank has also set up libraries in 25 villages and
awarded scholarships to 100 meritorious students of those villages, for the
pursuit of their higher education. Such libraries will be set up in 75 more
villages in a phased manner. Corporation Bank - A Corporate Journey, the
history of the Bank and Haji Abdullah Saheb a biography of the Bank's founder
were published on the occasion of the Bank's Centenary Celebrations.

48
AWARDS

Corporation Bank received the winner award jointly with Indian Bank for
Cheque Truncation System under the mid-sized category. The bank also
received two runner-up awards for National Financial Switch for its
performance in acquirer transactions and Immediate Payment Service
(IMPS).
Corporation Bank is ranked First under "National Awards for Excellence in
MSE Lending" and Second under "National Awards for Excellence in
Lending to Micro Enterprises" for the year 2012-13 under Public Sector
Banks from Ministry of Micro, Small and Medium Enterprises.
Corporation Bank has won the IBA Banking Technology Award 2012-13
for "Best Use of Mobility Technology in Banking". Shri S R Bansal,
Chairman & Managing Director of the Bank received the award at the
function held at Mumbai on 27 January 2014.
For its impressive lending to SME sector, the Bank has been awarded an "
SKOCH ACHIEVERS AWARD" by SKOCH, Delhi, on 22.3.2014.
National Award for Assistance to Exporters from the President of India
(197677)
Gem & Jewellery Export Promotion Council Award successively for 5
years from 1981 to 1985
Shiromani Award 1992 for Banking from Union Minister for Commerce
Best Bank Award for Excellence in Banking Technology from Institute for
Development & Research in Banking
Technology (IDRBT), Hyderabad (2001)
Best Bank Award for Innovative Usage and Application on INFINET
(Indian Financial Network) from Institute for Development and Research in
Banking Technology (IDRBT), Hyderabad (2002)
Best Bank Award for Delivery Channels from Institute for Development
and Research in Banking Technology (IDRBT), Hyderabad (2003)
Runner-up Awards in the "Best Online and Multi-channel Banking Team"
and "Outstanding achiever of the year-corporate" categories in recognition
of outstanding achievement in Banking Technology for 2004, instituted
under the aegis of Indian Banks Association and Trade Fairs & Conferences
International.
Best PSU Bank of the year by Bloom berg
UTV Financial Leadership Award 2011

49
 Best Nationalised Bank by Financial Express (Source: Self Advertisement
in Hindustan Times, Delhi, Front Page, 2 April 2011)

CORPORATE VISION
To evolve into a strong, sound and globally competitive financial
system, providing integrated services to customers to customers from all
segments, leveraging on technology and human resources, adopting the best
accounting and ethical practices and fulfilling corporate and social
responsibilities towards all stake holders.

CORPORATE MISSION

To become a provider of World-Class financial services.

To meet customer expectations trough innovation and technological
initiatives.
To emerge as a role model with distinct culture identity, ethical values and
good corporate governance.
To enhance shareholders wealth by sustained, profitable and financially
sound growth with prudent risk management systems.
To fulfil national and social obligation as responsible corporate citizen.
To create environment, intellectually satisfying and professionally
rewarding to the employees.

INFRASTRUCTURE

Corporation bank is the fast expanding National Bank with over 1800
service outlets across the nation in 23 States and 2 Union territories. We are
present in all most all100 top centres in the country. We have a large presence
in major Metros in India
Delhi over 150 outlets
Mumbai over 140 outlets
Bangalore over 170 outlets
Chennai over 50 outlets
Hyderabad over 40 outlets

50
 To serve esteemed customers with Convenience banking, Corporation
bank strong network of over 1032 ATMs across the country. Corporation bank
is excited at the growing opportunities for business by meeting the customer
expectations exceedingly well, expanding the footprints and reaching our brand
to new destinations.
The branch of Corporation Bank in Sagar was established in the year
1936. Now it has a main branch in heart of Sagar town and a branch at APMC
yard to serve there can at merchants and growers. The main branch has staff
strength of 13 out of which 1manager, 3 officers, 6 clerks, 2 attainder and 1
part-time attainder.

WORK FLOW MODEL OF CREDIT DIVISION CORPORATION

BANK
The following is the process of credit divisions:

Credit Proposal From The Borrower This is the first step wherein the
proposal is received from the borrower for the loan, the borrow must either
be a customer or must be introduced by a certain customers, etc. he must
apply to the bank as to the loan, the reason for taking loan, etc. the amount
of the loan that the applies for must also be stated in advance.

Proposal Sent To The Sanctioning Authority The proposal is sent to the

sanctioning authority for evaluation of the proposal because the final amount
can only be sanctioned with the affirma tion from thesanctioning authority.
This is the department that will finally sanction the amount so it will see to
it that the bank has adequate funds for lending.

Know Your Customer This step is very much important because the viability
of the customer can only be assessed in this step. The customer is assessed
regarding his financial feasibility and his ability to repay the loan amount
along with the interest. The customer can be assessed on the basis of his
previous dealings with the bank. Information about it can also be sought from
the person who introduced the customer to the bank.

General Discussion There is a general discussion as to granting of loans.

Depending upon the amount the proposal is sent to the zonal office, regional

51
office and the head office. If the loan amount is reasonably much it involves
discussion with the AGM, DGM and the board. Discussion with these people
is required because their expertise and opinion can play a major role here.

Communication Of The Terms And Conditions The term and conditions as

to the proposal is communicated to the borrower as regards to the loan
amount that can be granted, the interest rate applicable for the type of loan,
the terms as regards to the payment of installments, the interest rate charged-
whether it is simple or compounded. The borrower must confirm his
agreement to the terms and conditions.

Database is created regarding the proposal A database is created regarding

the loan proposal the loan amount, the interest rate, the borrowers name,
his credentials, his income statement, etc. it must all the information that is
required to grant the loan. The entire flow of the proposal must be in writing.

Appraisal Of The Proposal The proposal is property and carefully appraised

so that finally no wrong decision is taken.

Risk meeting A high level risk meeting is conducted as to the proposal; legal
opinion is also sought sometimes regarding the proposal if the appraisal was
not satisfactory. This risk meeting will decide whether the loan amount can
be financed with two promote banks jointly so that the risk burden can be
shared amongst the borrowers.

Final discussion A final discussion is undertaken among all the appraisers

and only if the proposal seems to be feasible and viable to the bank in the
future the proposal is accepted or else it is rejected.

Final decision a final decision is taken in the final discussion and it is

communicated to the borrower. He must comply with all the terms and
conditions and must submit the document as required by the bank.

52
 CHAPTER 5
PRODUCTS AND SERVICES

BANKS CUSTOMER ORIENTATION:

The Financial Sector Reforms, coupled with the economic depression
at the turn of the century, truly changed the face of the PSBs in India. From a
time when the customer had to wait on the Bankers mercy for any kind of
transaction, especially to procure loans, we see a time of loan melas,
searching for and waiting on the customers whims and fancies, any time
banking, all time banking, extended working hours, etc. They have
brought back the Kingship to the customers, a term which seemed to have
been relegated to the walls of the bank in the early days of nationalisation.
Except for a short spell after nationalisation, the Corporation bank was noted

53
for its customer orientation, especially prior to nationalisation. In the new
century it is seen making concerted efforts to improve its customer orientation.
The following is a report of its customer orientation in the new era under
four major heads, i.e. Products, Technology, Service Environment

Banks Customer Orientation through Products and

services Offers:

Personal Products

Deposit products

1.Corp Pragathi Account: The account can be opened with an initial

deposit of Rs 10/- and will provide the account holder the basic
banking facilities. No penalty will be levied even if the balance in
the account drops below Rs 10.

2.Centenary Year Gold coin: It is 8gm Centenary Year Gold coin of

999.9 purity, 24 carat. This gold coin is available at Corp Bank
branches in select cities across India to individuals or retailers at a
competitive price.

3.Saving Bank: Corp Bank SB account holder will get the facilities
like any Branch banking. Corp power cheque, Corp convenience
card, Corp junior account, Corp senior account.

4. Kshemanidhi Cash Certificates: KCC is a money multiplier

deposit. It is a reinvestment Term Deposit scheme that can be
opened for a period ranging from 6 months to 10 years. The rate
of interest depends on the period of deposit.

5. Money Flex: The flexible term deposit- it allows the customer

to withdraw money whenever he/she wants. The deposit can be
made for a period ranging from 6 to 120 months. The minimum
deposit is Rs 5000.

6. Fixed Deposit: The deposit can be made for period ranging from
15 days to 10 years. The rate interest depends on the period of
deposit.

54
 7. Corp Classic: It is an innovative technology-based account that
combines the hi-liquidity of a savings bank account and the
highreturns of a Terms deposit. The account works simply by
fixing by fixing your savings from a savings bank account to a
term deposit and vice versa.

8. Recurring Deposit: Best suit to the salaried class, the customer

can save a fixed sum every month for a period ranging from 12
months to 120 months.

9. Janatha Deposit: This deposit is for a period from 1 to 5. Our

collection agent will call at customers place to collect your
savings at regular intervals even daily.
10. Corp 4 in 1 Account (variants of currents accounts): A
product wherein the customer has the option to open any one of
4 types of current accounts and enjoy graded concession in
various service charges based on quarterly average balance
maintained in the account.

11.Corp Junior and Senior Account: These are ATM based accounts
for children and parents. Sometimes parents may be in a different
city and their children may be studying somewhere else. To facilitate
them to access funds without
resorting to transfer of funds from centre to centre, corp senior or
corp junior accounts are opened in their own ATM/Debit cards.

12. Corp Elite Account: A premium saving account with free adds on
facilities.

Loans Products

1. Corp Site Purchase Loan: To finance the application money

(initial deposit) payable to local development authority for allotment
of residual site/plot. Eligible applicants are Salaried individuals
confirmed in service. Non-salaried class engaged in business,
professional and self-employed persons who are it assesses and
having minimum of 2 years satisfactory dealings with the bank.
Maximum loan amount is Rs. 1 lakh or initial deposit payable

55
 whichever is less, but should not exceed 12 times of monthly take
home pay in case of salaried persons.

2. Corp IPO Scheme: To provide finance to general public to

subscribe to IPO/ Public Issues/ Rights/ ESOP of reputed corporate
approve by the bank from time to time. Individuals (such as salaried
persons, professionals, businessmen, pensioners etc.) either
individually in their own names or jointly with others, with
sufficient income to service the loan.

3. Corp Byte Computer Loan: Students (Indian Nationals) of

colleges / University / Educational institutions pursuing their
courses in India. Loan is for pursuing professional courses only.
Purpose to finance purchase of personal
Computers/Laptops/Notebooks/Palmtops/ PDAs / Tablet PCs etc.,
including other peripheralaccessories like pointers/
printers/scanners/ digital stylus/ external AC converters /UPS etc.,
essential for professional studies.

4. Corp Home Housing Loan: Through this scheme, one could

build/acquire/extend/repair a house/flat of their own. Loans up to
Rs. 500 lakh available depending upon the purpose, at rates as given
below. Any individual, satisfying normal borrower standards and
with sufficient repaying capacity is eligible. One can repay net
within 25 years, in convenient installments that will not exceed 50%
of their salary/income.

5. Corp Rental: The Scheme envisages financing the owner of the

commercial properties against future rent receivables for the
unexpired period of lease specified in the lease agreement.

6. Corp Vidya Educational Loan: For higher education in India

/aboard. Applicant should be an Indian National and secured
admission to professional/ technical courses through
Entrance test/ Merit based selection process in India or aboard.

7.Corp Cash Demat- Share Loan: Individuals who have been properly
introduced to the Bank If the shares are in joint names, the loan
account should be in joint names. Purpose to provide liquidity to
investors against shares to meet contingencies and personal needs or

56
 for subscribing to the Rights /New Issues of shares / Debentures/
Bonds or for purchases in the secondary market.

8. Corp Mortgage Loan against Security: To meet personal /

domestic expenses & business requirement. Individuals in the age
group of 18-65 years owing residual/ commercial property land
and/or building) and who are Income Tax Assesses. In addition to
Individuals, Proprietorship concerns, Partnership Firms &
Companies may be considered for financing under the scheme,
provided they are IT assesses. NRIs also may be financed under the
scheme.
9. Corp Doctor Plus Equipment finance for Medical
Professionals: To finance brand new Electro Medical & other
sophisticated equipments including Air Conditioners, Ambulance,
generators, personal computers and accessories with related software
and UPS etc. In the case of setting up of clinics, purchase of furniture
& fixtures, furnishing, Air conditioning, Electrification may also be
financed. Any Registered Medical Practitioner in the age group of 25
to 60 years with a minimum experience of one year is eligible.
10. Corp Personal: To meet any genuine personal expenses relating to
family functions, education, travel, medical etc. permanent
employees of Central/ State Government offices, profit making
public sector undertakings and public limited companies, schools,
colleges, Universities and Research Institutions, Pensioners drawing
pension through our bank and individuals with income other than
salary/ pension are eligible.
Registered medical practitioners, practicing
advocates, chartered accountants, company secretaries, consulting
engineers and architects, etc. individually/ jointly or as a
partnership firm, having an established practice with a minimum
experience of three years, im the age group of 25 to 65 years. The
applicant should be an Income Tax Assessee with a minimum
annual gross income of Rs.1.50 lakh.
11. Corp Vyapar: To meet short term working capital facilities. Traders
engaged mainly in buying and selling of goods/ commodities either
on retail or wholesales basis. Individual/ sole proprietors/ partnership
firm/ HUF/ joint stock company or any other entity engaged in
trading/ business activity for a period of one year prior to seeking
sanction loan.

57
 12. Corp Mitra: To meet personal/ domestic expenses/ contingencies.
All the confirmed employees/ executives/ officials of the LIC of
India, LIC housing finance ltd, LIC mutual funds and other insurance
companies under public sector and their subsidiaries whose salary is
routed through our Bank

13. Corp consumer: To finance purchase of consumer durables such as

Refrigerator, Cooking range, Food
processor,Grinder,Television,Electronic Audio System, Washin g
Machine, Acs, Microwave Oven, Lap Top / PCs including
accessories, Mobile Phone, Multi Media Kits, UPS, Digital Camera,
Generators, Hand Video Camera and furniture, YO-Bike, Electric
Bike, Solar heating Solar electricity systems.

14. Corp Vehicle Loan: Individuals (professionals / Businessmen/

Salaried class and others) sole proprietors, partnership firms, HUFs,
companies trusts/ Institutions are eligible. For purchase two/ three/
four wheelers/ heavy road/ water transport vehicles/ for personal
transport/ commercial purpose.

15. Home Loan + Insurance: Corp bank in association with the life
insurance corporation of India gives life insurance cover to the
housing loan taken by the customers. Maximum term assure under
the scheme will be 3 years.

Corporate Products

1. Corp Fast: Corp fast is an innovative solution which facilities speedy

realization of outstation cheques and instruments using latest
communication technology.

2. Project Finance: Corp Bank also finances the financial requirements

for certain projects on the basis of economic a technical feasibility of
the project.

3. Corp Rental: This facility helps the customer to encash the rent
receivable from the commercial properties.

58
 4. Forex: Corp Bank also offers Forex services to its customers.

5. Working capital: Corp Bank also provides the short term financial
facility to finance the working capital requirements.

6. Term Finance: The bank extends term loans for capital investment
being made by the clients on account of expansion of existing
enterprises for establishment of a new enterprise

NRI Schemes

1. Corp Express Money: The bank has entered into a tie up with UAE
Exchange Centre LLC for facilitating global money transfers into
India from Gulf region. With a view to facilitating the NRIs in the
Gulf and Middle East to transfer their earnings back home swiftly.

2. NRI Loans: Corp bank is granting loans in rupees to NRIs against

security of shares, immovable property in
India corp. It also provides housing loans to NRIs.

3. Forex Facility for Residents: Indian residents can get foreign

exchange assistance from Corporation bank for study in abroad,
foreign travel, purchase of air tickets and investments.

4. Corp Quick Remit: an online remittance service for the NRIs based
in USA and Canada which provides them a means to transfer funds
to India quickly, securely, conveniently and in a cost-effective
manner through Automated Clearing House(ACH) network in USA.

InternetBanking

1. Corp-E-cheque: It is an innovative product developed by Corp bank

by combining the power of Corp net the banks Internet Banking
Services with EFT scheme.
2. Corp Net: In the area of collection and payment services Corp bank
has a leadership presence in the country and caters exclusively to the
cash management requirements of the corporate.

59
3. Corp e-rail: facilitating booking of railway tickets through interest by
customers of the bank.

4. Corp Reach: the remote access facility that enables you to bank from
the comfort of your home or even your work place.

5. Online Railway Reservation: The Bank has entered into a tie up with
the Indian railway catering and tourism corporation for online booking
of railway tickets.

6. Fast Collection Services: CorpNet for CAPS has three major

modules and provision for users to enter in to the system for making
use of the same. Also there is a provision for Exit for the users. Please
use Exit always for secured logging out of CorpNet for CAPS. The
options available in the top frame of CorpNet for CAPS are:
Accounts, Payments, Services, Help and Exit.

7. CorpClear Services: CorpBank solution to collect Outstation

Cheques (UCC) in a faster and smoother manner wherein Corporate
can deposit the outstation cheques in any of 22 CAPS Branches of
Corp Bank. The credits shall be afforded on fixed process flow basis
(Such as day1, Day 4, Day 8 etc.) as per the agreement between the
Bank and the customer apart from on collection basis. An MIS
providing location wise cheque wise information of such collection
across country will be sent through various delivery channels such as
Email/Internet banking /hard copy through couriers etc. and total
amount of credit will also be informed to the nominated officials of
the company through SMS Banking. MIS on Outstanding cheques and
realized cheque will also be provided at regular intervals as required
by the customers.

8. RTGS/NEFT Collection Services: An unique product from CAPS

wherein corporate customer can receive collection from their business
partners through RTGS/NEFT without having to open an account with
Corp Bank. The product envisages consolidating the collections
received through RTGS/NEFT along with cheque collections and

60
 crediting to customer as per their choice. a detailed MIS which
provides break up of such credit such as location name and dealer
details are provided to the customer.

9. CorpPay: CorpPay enable corporate customers to purchase Demand

Drafts in Bulk for effecting Payments such as salary, Interest
Payments etc. The feature of the product includes printing of
counterfoil along with DD for easier dispatch of DDs to beneficiary
by customers. The CAPS Branches are capable of printing large
number of such DDs in a single day.

10. CorpBullet: An RTGS based payment solution wherein corporate can

make bulk payment across 40000 RTGS enabled Bank branches
through RTGS. A feature of file upload for effecting bulk payments
also has been built into the product.

11. CorpRemit/Direct Credit: Corporate customer can make payment of

their statutory dues / supply payments instantly by availing
CorpRemit/Direct Credit services of Corp bank. The customer can
provide details of payment along with funding. The Payment shall be
effected on the same day by directly crediting to beneficiary's account
if the beneficiary is maintaining the account with any Branch of
CorpBank or by delivering the local Payorder at the destination
location.

12. SpeedCash: SpeedCash envisages remittance of upto Rs.50000/-

across CorpBank Branches where the payment shall be made in Cash
to the beneficiary after taking proof of identification of the
beneficiary. The remittance shall be effected on the same day. The
facility is suitable to corporate who wants to remit petty cash to their
representatives stationed at various locations across country.

13. Payment gateway: Corporate customers selling their product on web

can avail this services wherein retail customers of corporation bank
can buy the products online and make payment by debiting their
account at CorpBank online. This product enables corporates to offer

61
 their product online to the strong retail customers of corporation bank
their by giving strong potential segment for their product.

14.BulkPay: An online payment solution, wherein corporate customers

can upload a single file for effecting Bulk payments through any mode
such as RTGS/NEFT/Direct Credit etc. in a prespecified format using
Corp Bank's Internet banking User ID and Password. The Payments
will be effected according to the mode of payments and status can be
viewed / downloaded from Internet banking by the customers

15. Corp iPay: An online payment solution, wherein corporate

customers can upload a single file for effecting bulk payments to the
beneficiaries having account with any of CorpBank Branches, in a
pre-specified format using Corp Bank's Internet banking User ID and
Password. The Payments will be effected online upon authorization
and status can be viewed / downloaded from Internet banking by the
customers.

16. PDC HUB: Corporation Bank has setup exclusive PDC factory at
Chennai for collecting large volume of Post-dated cheques. The setup
is equipped with all the necessary infrastructure and logistics to
effectively collect post-dated cheques. The facility will be helpful to
the financial companies, Asset Management Companies etc. who
receives large number of post-dated cheques.

OtherServices

1. Online Railway Reservation: The Bank has entered into a tie up

with the Indian railway catering and tourism corporation for online
booking of railway tickets.

2. Corp Mediclaim: This is a group medical claim insurance offered

by the Corp Bank to its account holders. This product has been
devised to meet the medical insurance needs of banks customer.

62
3. Corp Junior: It enables parents whose children are studying away
from them to remit money at periodic intervals in a hassle free
manner.

4. Corp Mobile Recharge: Electronic Recharge of pre-

pad mobile phones is a facility which customers having prepaid mobile
phones to electronically recharge their mobile phones cards by debiting
their account through Corp bank ATMs or through SMS from their
mobile phones.

5. Corp Bullet RTGS Facility: It is a remittance facility, which

enables customerto transfer funds to anybody anywh
ere within India. The facility works on the Real Time Gross Settlement
(RTGS) platform developed by the RBI.

6. Corp Power cheque Multi city cheque Facility: Multi city cheque
is a facility wherein the customer can issue cheques drawn at the base
branch and payable at selected remote centres. This cheques will
thus, be treated as local cheques in the remote centre selected by the
customer.

7. ATM s: with the accelerated thrust for ATM network, in tune with
changes and customer preferences, the Bank has optionalised and the
total number of ATMs to 1032 across the country. The Bank has
accelerated its technology drive during the year by offering several
innovative tailor made products and services with the ultimate
objective of delivering value to customers

8. Corp Kisan Card: Facility for operating comprehensive credit

limits fixed for farmers through the Banks ATMs.

9. Corp Companion: any branch banking facility by which our

customers of core connected branches can operate their account from
over 366 crores branches of the Bank spread over 133 centres.

10. Corp Smart: a combi card combining an electronic purse and ATM
card.

11. Corp Convenience: (corp banks international debit card) corp

convenience gives the flexibility to pay for purchase at over 24
million outlets in India and other 240countries. It can be used at

63
 shops, restaurants, travel agencies, hostels and quick cash
withdrawals at Corp Bank ATMs or ATMs that display the VISA
logo worldwide.

12. Corp Payroll: a unique payroll account for disbursal of staff salaries
with special benefits to employees.

13. Corp Karsuvidya: a loan facility for meeting income tax

obligations.

14. Corp Vault: locker facility for safety, security, reliability, to keep
your jewellers, important documents like deeds, wills and any other
valuable items.

15. Corp Dial (telebanking facility): it is a specially designed

telebanking facility to take care of ones every banking information
need at their doorstep. One need notcome to Bank, he can access
every information by just dialing a telephonenumber.

16. Corp Jeevan Raksha (Life Insurance Cover): it is a hassle free

life insurance cover of Rs 10 lakh with lowest premium for special
account holders. In case of an accident, the insurance cover is
doubled. LIC offers a group life insurance scheme namely Corp
Jeevan Raksha to Corp Bank for its deposit holders. The scheme
offers pure term insurance cover under one-year renewal term
assurance plan. The scheme covers risk of death only.

Corporation Bank Debit Cards

Corporation Bank offers 3 different kinds of debit cards for the
enhanced convenience of customers. They can choose the cards that suits their
needs the best. They have been listed below.

Classic Card
For every financial transaction that you make, Corporation
Banks classic debit card gives you immense convenience and security.
Shop anywhere, anytime, pay your bills, re-fuel your vehicle, book
tickets online, pay for your purchases made online, transfer funds or

64
 withdraw cash as per your needs with this card. Cardholders also enjoy
the facility to access additional 4 secondary accounts (apart from
primary account). These accounts can be accessed only through
Corporation Bank ATMs. The secondary account can be at any
Corporation Bank branch.

Platinum Card
Enjoy the freedom of using your Platinum Debit Card
internationally (to pay for purchases and withdraw cash), enhanced
transaction and cash withdrawal limits, and get immediate access to
your account from any part of the world. The card also entitles you to
get exclusive benefits and privileges, shop anytime (online or offline),
pay your bills, re-fuel your vehicle, book tickets online, transfer funds or
withdraw cash at ATMs. Cardholders are also provided with Zero lost
card liability cover. In case your Platinum Debit Card is lost or stolen,
this cover protects you from any loss of money that might result out of
fraudulent transaction using your card. Please make sure that you
intimate the bank as soon as your card gets stolen/lost.
Signature Card
Corporation Banks Signature Debit Card has been especially
designed to complement the lifestyle needs of cardholders, opening up
a world of luxury and privileges to them. The card comes with a host of
privileges like free lounge access to cardholders, higher daily
transaction limits (cash withdrawal and online purchase), and free air
accident insurance of Rs. 50,00,000. Customers also enjoy exclusive
benefits on dining, entertainment, travel, lifestyle and blockbuster
weekends exclusive discounts.

CorpKiran-CSR Unit

Corporate Social Responsibility [CSR] generally refers to activities

undertaken by Institutions towards its commitment for ethical values,
community and concern for environment. Keeping this objective in view,
Corporation Bank has set up an Association and has named it as Corp Kiran,
a name suggested by its own staff members. The Association will be managed
by women in the Bank for undertaking CSR activities at all Zonal/Circle
Headquarters & Head Office.

65
 The target group for all the activities shall be persons from weaker
sections of the society. The Association would enlist support of Banks
employees / ex-employees, their family members, NGOs, SHGs, State
Governments, District Administration, local bodies etc. in project execution.

Conclusion

Banking systems have been with us for as long as people have been
using money. Banks and other financial institutions provide security for
individuals, businesses and governments, a like.
In general, what banks do is pretty easy to figure out. For the average
person banks accept deposits, make loans, provide a safe place for money and
valuables, and act as payment agents between merchants and banks. Banks are
quite important to the economy and are involved in such economic activities as
issuing money, settling payments, credit intermediation, maturity
transformation and money creation in the form of fractional reserve banking.
To make money, banks use deposits and whole sale deposits, share equity and
fees and interest from debt, loans and consumer lending, such as credit cards
and bank fees.
In addition to fees and loans, banks are also involved in various other
types of lending and operations including, buy/hold securities, non-interest
income, insurance and leasing and payment treasury
services.
History has proven banks to be vulnerable to many risks, however, including
credit, liquidity, market, operating, interesting rate and legal risks. Many global
crises have been the result of such vulnerabilities and this has led to the strict
regulation of state and national banks.

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 BIBLIOGRAPHY

www.wikipedia.com
www.corpbank.com
www.corpbanknet.com
www.bankbazaar.com
www.scribd.com
www.slideshare.net
www.projectworld.blogspot.in
www.yourarticlelibrary.com
www.deal4loans.com

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