Entreprenership Project - Bank

8/13/2019 Entreprenership Project - Bank

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ENTREPRENEURIAL

PROJECT

Name :- Vikrant Chauhan

Prn no. :- 11021021064Semester :- 6th

Subject :- Business Entrepreneurship


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ACKNOWLEDGEMENT

I would like to express my gratitude to Mr. Bharat Bhushan who gave me the goldenopportunity to do this Interesting project. Secondly I would like to thank my fellowclassmates who helped me to know more about the topic. I am making this project notonly for marks but also to increase my knowledge.


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DECLERATION

I, the undersigned hereby declare that the final project report submitted to my collegei.e. SYMBIOSIS CENTRE FOR MANAGEMENT STUDIES (SCMS, NOIDA) in partialfulfillment for the degree of Bachelor Of Business Administration onENTERPRENEURSHIP is a result of my own work under continuous guidance andkind co-operation of our college faculty member Mr. Bharat Bhushan.

DATE: NAME: VIKRANT CHAUHAN

PLACE: SCMS, NOIDA


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Generation and evaluation of idea

What is a bank? According to Britannica.com, a bank is:

An institution that deals in money and its substitutes and provides other financialservices. Banks accept deposits and make loans and derive a profit from thedifference in the interest rates paid and charged, respectively.

How do you start your own bank?

What if you wanted to start your own bank? Do you just rent some space, put out a sign andstarted taking deposits? Not exactly. Lets look at the steps you have to go through in order tostart your own bank. The rules and requirements vary from state to state.

INTRODUCTION

The Union Finance Minister, in his budget speech for the year 2010- 11 had announced that The Indian

banking system has emerged unscathed from the crisis. We need to ensure that the banking systemgrows in size and sophistication to meet the needs of a modern economy. Besides, there is a need toextend the geographic coverage of banks and improve access to banking services. In this context, I amhappy to inform the Honourable Members that the RBI is considering giving some additional bankinglicences to private sector players. Non Banking Financial Companies could also be considered, if theymeet the RBIs eligibility criteria.

Subsequently, in line with the above announcement, the Governor, Reserve Bank of India indicated in the Annual Policy Statement for the year 2010-11 that the Reserve Bank will prepare a discussion papermarshalling the international practices, the Indian experience as well as the extant ownership andgovernance (O&G) guidelines and place it on the Reserve Banks web site by end-July 2010 for widercomments and feedback. The Reserve Bank also noted that detailed discussions will be held with allstakeholders on the discussion paper and guidelines will be finalised based on the feedback. All

applications received in this regard would be referred to an external expert group for examination andrecommendations to the Reserve Bank for granting licenses.

The guidelines for licensing of new banks in the private sector were issued by the Reserve Bank of India(RBI) on January 22, 1993. Out of various applications received, RBI had granted licences to 10 banks.

After a review of the experience gained on the functioning of the new banks in the private sector, inconsultation with the Government, it has now been decided to revise the licensing guidelines.

The revised guidelines for entry of new banks in private sector are given below. The guidelines areindicative and any other relevant factor or circumstances would be kept in view while considering anapplication. With the issue of revised guidelines, applications pending with RBI would be treated aslapsed.

Guidelines

(i) The initial minimum paid-up capital for a new bank shall be Rs.200 crore. The initial capital will beraised to Rs.300 crore within three years of commencement of business. The overall capital structure ofthe proposed bank including the authorised capital shall be approved by the RBI.

(ii) The promoters contribution shall be a minimum of 40 per cent of the paid -up capital of thebank at any point of time. The initial capital, other than the promoters contribution, could be


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raised through public issue or private placement. In case the promoters contribution to the initialcapital is in excess of the minimum proportion of 40 per cent, they shall dilute their excessstake after one year of the banks operations. (In case divestment after one year is proposedto be spread over a period of time, this would require specific approval of the RBI). Promoterscontribution of 40% of the initial capital shall be locked in for a period of five years from the dateof licensing of the bank.

(iii) While augmenting capital to Rs.300 crore within three years of commencement of business,the promoters will have to bring in additional capital, which would be at least 40 per cent of thefresh capital raised. The remaining portion could be raised through public issue or privateplacement. The promoters contribution of a minimum of 40% of additional capital will also belocked in for a minimum period of 5 years from the date of receipt of capital by the bank.

(iv) NRI participation in the primary equity of a new bank shall be to the maximum extent of 40per cent. In the case of a foreign banking company or finance company (including multilateralinstitutions) as a technical collaborator or a co-promoter, equity participation shall be restrictedto 20 per cent within the above ceiling of 40 per cent. In cases of shortfall in foreign equitycontributions by NRIs, designated multilateral institutions would be allowed to contribute foreignequity to the extent of the shortfall in NRI contribution to the equity. The proposed bank shallobtain necessary approval of Foreign Investment Promotion Board of the Government of Indiaand Exchange Control Department of RBI.

(v) The new bank should not be promoted by a large industrial house. However, individualcompanies, directly or indirectly connected with large industrial houses may be permitted toparticipate in the equity of a new private sector bank up to a maximum of 10 per cent but will nothave controlling interest in the bank. The 10 per cent limit would apply to all inter- connectedcompanies belonging to the concerned large industrial houses. In taking a view on whether thecompanies, either as promoters or investors, belong to a large industrial house or to a companyconnected to a large industrial house, the decision of the RBI will be final.

(vi) The proposed bank shall maintain an arms length relationship with business entities in thepromoter group and the individual company/ies investing upto 10% of the equity as stipulatedabove. It shall not extend any credit facilities to the promoters and company/ies investing up to10 per cent of the equity.The relationship between business entities in the promoter group andthe proposed bank shall be of a similar nature as between two independent and unconnectedentities. In taking view on whether a company belongs to a particular Promoter Group or not, thedecision of RBI shall be final.

Other Requirements

(i) The bank shall be required to maintain a minimum capital adequacy ratio of 10 per cent on a

continuous basis from the commencement of its operations.

(ii) In order to ensure level playing field,

a) the new bank will have to observe priority sector lending target of 40 per cent of net bankcredit as applicable to other domestic banks, and

b) the new bank will be required to open 25 per cent of its branches in rural and semi-urbanareas to avoid over concentration of their branches in metropolitan areas and cities on the same


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lines as new private sector banks established under guidelines laid down by RBI in January1993,

(iii) The promoters, their group companies and the proposed bank shall accept the system ofconsolidated supervision by the Reserve Bank of India.

(iv) The new bank shall not be allowed to set up a subsidiary or mutual fund for at least threeyears from the date of commencement of business.(v) The headquarters of the proposed new bank could be in any location in India as decided bythe promoters.

(vi) The new bank shall make full use of modern infrastructural facilities in office equipments,computer, telecommunications etc. in order to provide cost-effective customer service. It shouldhave a high powered Customer Grievances Cell to handle customer complaints.

(vii) The new bank will be governed by the provisions of the Banking Regulation Act, 1949, Reserve Bankof India Act, 1934, other relevant Statutes and the Directives, Prudential regulations and otherGuidelines/Instructions issued by RBI and the regulations of SEBI regarding public issues and other

guidelines applicable to listed banking companies.

Procedure for Applications

i) In terms of Rule 11 of the Banking Regulation (Companies) Rules, 1949 applications shall besubmitted in the prescribed form (Form III). In addition, the applications should furnish a projectreport covering business potential and viability of the proposed bank, the business focus, theproduct lines, proposed regional or location spread, level of information technology capabilityand any other information that they consider relevant. The project report should give as muchconcrete details as feasible, based on adequate ground level information and avoid unrealisticor unduly ambitious projections. Applications should also be supported by detailed informationon the background of promoters, their expertise, track record of business and financial worth,

details of promoters direct and indirect interests in various companies/industries, details ofcredit/other facilities availed by the promoters/ promoter company(ies)/other Groupcompany(ies) with banks/financial institutions, and details of proposed participation by foreignbanks/NRI/OCBs.

ii) Applications for setting up new banks in the private sector, along with other details asmentioned above, should reach the following address before March 31, 2001.

The Chief General Manager-in-Charge,Department of Banking Operations and Development,Reserve Bank of India,World Trade Centre, Centre I,Cuffe Parade, Colaba,Mumbai 400 005.

Procedure for RBI decisions

i) In view of the increasing emphasis on stringent prudential norms, transparency, disclosurerequirements and modern technology, the new banks need to have strength and efficiency towork profitably in a highly competitive environment. As a number of banks are alreadyfunctioning, licences will be issued on a very selective basis to those who conform to the above


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requirements and who are likely to conform to the best international and domestic standards ofcustomer service and efficiency. Preference will however be given to promoters with expertiseof financing priority areas and in setting up banks specialising in the financing of rural and agrobased industries. The number of licences to be issued in the next three years may be restrictedto two or three of the best acceptable proposals. This number would also include permissiongranted to any NBFC for conversion into bank. {If the number of acceptable proposals of thehighest standards are more than three, this limit may be relaxed on recommendation of the

Advisory Committee (see below). In that case the period for issuing new licences may bestretched to four or five years}.

ii) At the first stage, the applications will be screened by RBI to ensure prima facie eligibility of theapplicants. Thereafter, the applications will be referred to a high-level Advisory Committee tobe set up by RBI comprising

Dr. I.G. Patel, former Governor ofReserve Bank of India

Chairman

Shri C.G. Somiah, former Comptroller and Auditor General of India

. Member

Shri Dipankar Basu, former Chairman ofState Bank of India

Member

Chief General Manager of the Department of Banking Operations and Development of RBI will bethe Secretary of the Advisory Committee.

(iii) The Committee will set up its own procedures for screening the applications. The Committeewill reserve the right to call for more information as well as have discussions with anyapplicant/s and seek clarification on any issue as required by it. The Committee will submit itsrecommendations to RBI for consideration within three months after the last date of receipt ofapplications by RBI (i.e. 30 June 2001). The decision to issue an in-principle approval forsetting up of a bank will be taken by RBI. RBIs decision will be final.

(iv) The validity of the in-principle approval issued by RBI will be one year from the date ofgranting in-principle approval and would thereafter lapse automatically.

(v) After issue of the in-principle approval for setting up of a bank in the private sector, if anyadverse features are noticed subsequently regarding the promoters or the companies/firms withwhich the promoters are associated and the group in which they have interest, the ReserveBank of India may impose additional conditions and if warranted, it may withdraw the in-principleapproval.

WHY NEW BANKS IN INDIA

It is generally accepted that greater financial system depth, stability and soundness contribute toeconomic growth. But beyond that, for growth to be truly inclusive requires broadening and deepening thereach of banking. A wider distribution and access of financial services helps both consumers andproducers raise their welfare and productivity. Such access is especially powerful for the poor as itprovides them opportunities to build savings, make investments, avail credit, and more important, insurethemselves against income shocks and emergencies.


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As of March 31, 2009, the Indian banking system comprised 27 public sector banks, 7 new private sectorbanks, 15 old private sector banks, 31 foreign banks, 86 Regional Rural Banks (RRBs), 4 Local AreaBanks (LABs), 1,721 urban co-operative banks, 31 state co-operative banks and 371 district central co-operative banks.

The average population coverage by a commercial bank branch in urban areas improved from

12,300 as on June 30, 2005 to 9,400 as on June 30, 2010 and in rural and semi urban areasfrom 17,200 as on June 30, 2005 to 15,900 as on June 30, 2010. The all India weightedaverage during the same period improved from 15,500 to 13,400.

Though the Indian financial system has made impressive strides in resource mobilization, geographicaland functional reach, financial viability, profitability and competitiveness, vast segments of the population,especially the underprivileged sections of the society, have still no access to formal banking services.

The Reserve Bank is therefore considering providing licences to a limited number of new banks. A largernumber of banks would foster greater competition, and thereby reduce costs, and improve the quality ofservice. More importantly, it would promote financial inclusion, and ultimately support inclusive economicgrowth, which is a key focus of public policy.

This discussion paper outlines past approaches, international experience, and considers the variouscosts and benefits of increasing the number of new banks as well as the pros and cons of various policyparameters in licensing new banks.

PAST APPROACH TO NEW BANKS

Reserve Banks approach

When financial sector reforms were initiated in India in the early nineties, guidelines for licensingof new banks in the private sector were issued in January 1993 and subsequently revised inJanuary 2001; the objective was to instill greater competition in the banking system to increaseproductivity and efficiency.

The revised 2001 guidelines by and large were still cautious in nature. Large industrial houseswere not permitted to promote new banks. However, individual companies, directly or indirectlyconnected with large industrial houses were permitted to own 10 percent of the equity of a bank,but without any controlling interest.

An NBFC with good track records was considered eligible to convert into a bank, provided it wasnot promoted by a large industrial house and satisfied the prescribed minimum capitalrequirements, a triple A (AAA) or its equivalent, credit rating in the previous year, capitaladequacy of not less than 12 percent and net Non Performing Assets (NPA) ratio of not morethan 5 percent.

The initial minimum paid up capital was prescribed at Rs. 200 crore to be raised to Rs.300 crorewithin three years of commencement of business.

Promoters were required to contribute a minimum of 40 percent of the paid up capital of thebank at any point of time, with a lock-in period of five years. However, if the promoter'scontribution to the initial capital was more than the minimum 40 percent, they were required todilute their excess stake after one year of the bank's operations.

Non Resident Indians (NRIs) were permitted to participate in the primary equity of a new bank to


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the maximum extent of 40 percent. However, the equity participation was restricted to 20percent within the above ceiling of 40 percent, in the case of a foreign banking company orfinance company (including multilateral institutions) acting as a technical collaborator or a co-promoter.

Banks were required to maintain an arms length relationship with business entities in thepromoter group and individual company/ies investing up to 10 percent of the equity. They couldnot extend any credit facilities to the promoters and company /ies investing up to 10 percent ofthe equity. The relationship between business entities in a promoter group and the bank had tobe of a similar nature as between two independent and unconnected entities. The shares of thebank had to be listed on a stock exchange. Capital adequacy ratio of the bank had to be 10percent on a continuous basis from the commencement of operations. Banks were obliged tomaintain up to 40 percent of their net bank credit as loans to the priority sector. Banks wereobliged to open at least 25 percent of their total number of branches in rural and semi urbancenters.

Reserve Banks experience

10 new banks were set up in the private sector after the 1993 guidelines and 2 new banks after the 2001revised guidelines. Out of these, four were promoted by financial institutions, one each by conversion ofco-operative bank and NBFC into commercial banks, and the remaining six by individual bankingprofessionals and an established media house.

Out of the four banks promoted by individuals in 1993, only one has survived with muted growth. Onebank has been compulsorily merged with a nationalized bank due to erosion of networth on account oflarge capital market exposure. The other two banks have voluntarily amalgamated with other privatesector banks over a period of 10 to 13 years due to the decisions of the majority shareholders arising outof poor governance and lack of financial strength.

Out of the remaining six banks that were licensed in 1993, one bank promoted by a mediagroup has voluntarily amalgamated itself with another private sector bank within five years ofoperations and four banks promoted by financial institutions have either merged with the parentor rebranded and achieved growth over a period of time. The bank that was converted from aCooperative bank has taken some time in aligning itself to the commercial banking and isendeavoring to stabilize itself.

The two banks licensed in the second phase have been functioning for less than 10 years andtheir transition from the settling stage has been fairly smooth. The experience of the ReserveBank over these 17 years has been that banks promoted by individuals, though bankingprofessionals, either failed or merged with other banks or had muted growth.

Only those banks that had adequate experience in broad financial sector, financial resources,trustworthy people, strong and competent managerial support could withstand the rigorousdemands of promoting and managing a bank.

The experience with small banks has not been encouraging, Out of the six Local Area Bankslicensed, only four remain. The license of one has been cancelled due to seriousmisrepresentation / concealment of facts at the time of granting of licence and another has beenmerged with a bank on account of bad governance and unfit management. Of the remainingfour, two though continuing to maintain minimum capital, liquidity and profitability, have notprogressed much. The remaining two are functioning satisfactorily but their growth has been


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restrained due to inadequacies of the small bank model.

The Local Area Bank model has inherent weakness such as unviable and uncompetitive coststructures which are a result of its small size and concentration risk. Local Area banks arerequired to confine their operations to a small area of three districts. This concentration exposesthe banks to the risk of adverse selection. Further, the size of operations and also the locationaldisadvantage of these banks act as a constraint to attracting and retaining professional staff aswell as competent management. Corporate governance standards in these banks are alsofound wanting partly because of their concentrated ownership.

The experience with other small banks i.e. urban co-operative banks, and small deposit takingNBFCs is similar. Low capital base, lack of professional management, poor credit management,and diversion of funds have led to multi-faceted problems.

As such, in the interest of the depositors and the financial system as a whole, and also due to the thruston the financial inclusion, banks should be required to start with sufficient initial capital. Further, strongcapital base would also ensure that the banks withstand any adverse conditions in the financial sector aswell as the economy.

Minimum capital requirements for new banks and promoters contribution

International Experience

Internationally, the bank regulators either insist on certain initial minimum capital to be broughtby the applicant/applicants (e.g., European Union, Germany, France, United Kingdom, Japan,Canada, Hong Kong, Malaysia, Singapore) to obtain a banking license, or assess the requiredstart-up capital to be brought by the proposed bank based on the scale, nature, complexity andinherent risks of the operations as proposed in the business plan (e.g., Australia,USA).Minimum capital requirements range between USD 1.6 million (INR 8 crore) in Argentinato USD 1077.8 million (INR 5389 crore) in Singapore.

Out of the statistics available for 21 countries, four countries have minimum capitalrequirements exceeding USD 100 million (INR 470 crore) viz. Malaysia USD 618.8 million(INR 3094 crore), Kuwait USD 257.3 million (INR 1286 crore), Indonesia USD 331 million(INR 1655 crore) and Singapore USD 1077.8 million (INR 5389 crore). However, in Australiaand USA the capital requirements are prescribed on a case to case basis depending on thebusiness plan, scale, nature and complexity of operations. Further, in Hong Kong and

Argentina, minimum capital is determined in accordance with the type of financial institutionbeing established.

Indian Approach

The guidelines issued in 1993 for licensing of new banks in the private sector had prescribedRs. 100 crore as minimum capital and the 2001 guidelines raised this to Rs. 200 crore to beincreased to Rs.300 crore over three years from commencement of business. In India, as thereare only full-fledged bank licenses with no restricted licenses being given, the minimum capitalrequirement has been kept reasonably high. Taking into account the lapse of time since the lastguidelines issued in January 2001 and inflation since then, there is a case to have the minimumcapital requirement at more than Rs. 300 crore.Indian approach


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Modern banking in India started with the establishment of a limited number of banks by Britishagency houses, which were largely confined to port centres, for financing of trade in the rawmaterials needed for British industries. The Indian enterprises made significant entry intobanking business only during the early twenties, which got strengthened by the growingnationalist sentiment and the spread of the Swadeshi movement. The economic power in theIndian joint stock banks was concentrated in the hands of a few families, who managed to makethe bulk of its finance available to themselves, favoured groups and their concerns. Moreover,the bulk of the bank advances were diverted to industry, particularly to large and medium-scaleindustries and big and established business houses, while the needs of vital sectors like small-scale industry, agriculture and exports tended to be neglected. It was only due to the impact ofthe diversification and growth of Indian industry during the Second World War as also the FiveYear Plans on industrial development in the fifties that Indian banks changed their bankingpolicies and stance to a certain extent.

The banking system, being an important intermediary through which the savings of thecommunity got channelized and served as a key constituent of country's basic social andeconomic objective, the Government of India introduced a scheme of social control over banksin 1967 with the main objective of achieving a wider spread of bank credit, preventing itsmisuse, directing a larger volume of credit flow to priority sectors and making it a more effectiveinstrument of economic development.

Subsequently, in July 1969, 14 major commercial banks were nationalized, the basic objectiveof which was to ensure that credit was channeled to various priority sectors of the economy,which were hitherto neglected, and in accordance with the national planning priorities. Thenationalization of commercial banks marked a paradigm shift in the focus of banking as it soughta shift from class banking to mass banking and a thrust to branch expansion in the rural andsemi-urban areas as also stepping up of lending to the so called priority sectors. Additionalstatutory powers were conferred upon the Reserve Bank, not only with the objective ofprotecting the depositors interest, but also to ensure that particular clients or groups of clientsare not favoured in the matter of distribution of credit and whatever the character of the

shareholding, its influence is neutralized in the constitution of the board of directors and in theactual credit decision taken at different levels of bank management. To avoid problems arisingout of possible conflict of interests, such as connected lending, the 1993 and 2001 guidelines onentry of new private sector banks sought to reduce the control of functions of banks by thepromoters.

In India, the promoters have been allowed to bring in higher stake (minimum of 40 percent ofthe paid-up capital of the bank) at the time of licensing of banks with a lock-in period of 5 years.The main intention was to have a stable capital base, and strong professional management, butwithout any interference or control of management by the promoters.

The February 2005 Ownership and Governance (O & G) guidelines require promoters and other

shareholders of the banks to divest/dilute their shareholding to a level of 10 percent or below ofthe banks share capital within a sp ecified time frame. However, under exceptionalcircumstances and where the ownership is that of a financial entity, that is well established, wellregulated, widely held, publicly listed and enjoying good standing in the financial community,higher shareholding is permitted to a level of more than 10 percent up to 30 percent. A levelexceeding 30 percent is subject to higher due diligence standards prescribed in the February2004 guidelines for acknowledgement of transfer / allotment of shares in private sector banks.

Any acquisition or transfer of shares of private sector banks, taking the aggregate shareholding


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of an individual or group, either directly or indirectly to 5 percent or more of share capital,requires acknowledgement from the Reserve Bank of India which is aimed at ensuring that thesignificant shareholders are fit and proper.

Banks (including foreign banks having branch presence in India) and financial Institutions arenot permitted to acquire any fresh stake in a banks equity shares, rende ring its holding toexceed 5 percent of the investee banks equity capital. This is with a view to limit interlocking ofcapital within the banking system.

Foreign shareholding in the new banks

Indian Approach

The 2001 guidelines on entry of new banks permitted NRIs to participate in the primary equity ofa new bank to the maximum extent of 40 percent. However, the equity participation wasrestricted to 20 percent within the above ceiling of 40 percent, in the case of a foreign bankingcompany or finance company (including multilateral institutions) acting as a technicalcollaborator or a co-promoter.

Subsequently, based on the March 5, 2004 Press Note 2 of the Government of Indias (Ministryof Commerce and Industry), the aggregate foreign investment from all sources (FDI, FII, NRI) inprivate sector banks was not to exceed 74 percent of the paid-up capital of the bank, under theautomatic route. This included FDI, investment under Portfolio Investment Scheme (PIS) by FIIsand NRIs, and also included IPOs, Private Placements, GDRs/ADRs and acquisition of sharesfrom existing shareholders.

Further, the FDI policy prescribes that at all times, at least 26 percent of the paid up capital ofprivate sector bank will have to be held by residents, except for wholly-owned subsidiary of aforeign bank.

The sub caps for individual FII and NRI holding is restricted to 10 percent with the aggregatelimit for all FIIs and NRIs capped at 24 percent and 10 percent respectively, with a possibility toraise cap with the approval of the Board/General Body to 49 percent and 24 percentrespectively.

Transfer of shares under FDI from residents to non-residents requires approval of ForeignInvestment Promotion Board (FIPB) under Foreign Exchange Management Act (FEMA).

The February 3, 2004 RBI guidelines on grant of acknowledgement of transfer/allotment ofshares in private sector banks is also applicable to acquisition of shares by foreign investors, ifsuch acquisition results in any person owning or controlling 5 percent or more of the paid upcapital of the private bank.

However, the Press Notes 2, 3 & 4 issued by Government of India in February 2009 indicatethat banks with foreign shareholding of more than 50 percent would be treated as nonresidentowned banks. In the event of the foreign shareholders having the right to appoint majority ofdirectors on the Board, the bank would be treated as nonresident controlled bank.


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Vi e w P o i n t s

In Support

i. Industrial and business houses can be an important source of capital and can providemanagement expertise and strategic direction to banks as they have done to a broad range ofnon-banking companies and other financial companies.

ii. Large industrial and business houses have already been permitted to operate in otherfinancial services sectors, such as insurance companies, asset management companies andother non-banking finance companies including loan and leasing companies. Many of thelargest private sector companies in these segments are fully or partially owned by industrial andbusiness houses. Thus, the industrial and business houses with their presence in the abovesectors, are already competing with banks both on the assets and liabilities side.

iii. Industrial and business houses have a long history of building and nurturing new businessesin highly regulated sectors such as Telecom, Power, Automobiles, Defence, infrastructureprojects like Airports, Highways, Dams, Ports.

iv. Equity of large industrial and business houses is widely held and all are listed on the stockexchanges and are accordingly subject to Companies laws, SEBI laws and regulations ontransparency, disclosure and corporate governance.

v. An Industrial and business house with presence across various sectors would face a higherreputational risk compared to a pure individual promoter or financial services player.

vi. Strengthening banking regulation & supervision, stronger corporate governance norms, amore competitive banking market and stringent prudential regulations and disclosurerequirements could mitigate the risks of affiliations of banks with the industrial and businesshouses.

vii. Permitting industrial and business houses to own a limited number of banks should not leadto undue concentration of control of banking activities as the Indian banking system is largelycomposed of public sector and private sector banks.

II. Potential risks

Even though Industrial and business houses are already permitted in other areas of financial services,banks are special as they are highly leveraged fiduciary entities central to the monetary and paymentsystem. There are several deep rooted fears in allowing industrial and business houses to own banks.Mainly these relate to the fact that such an affiliation tends to undermine the independence and neutralityof banks as arbiters of the allocation of credit to the real sectors of economy. Conflicts of interest,concentration of economic power, likely political affiliations, potential for regulatory capture, governanceand safety net issues are the main concerns. The Japanese experience with Keiretsu, the Koreanexperience with Chaebols and the Indian experience prior to nationalization are strong reminders of thepitfalls of commercial interests promoting / controlling banks.


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Some other major factors for entry of a new bank

For well over two decades, after the nationalisation of 14 larger banks in 1969, no banks have beenallowed to be set up in the private sector. Progressively, over this period, public sector banks haveexpanded their branch network considerably and catered to the socio-economic needs of large masses ofthe population, especially the weaker section and those in the rural areas. The public sector banks now

have 91 per cent of the total bank branches and handle 85 per cent of the total banking business in thecountry. While recognising the importance and the role of public sector banks, there is increasingrecognition of the need to introduce greater competition which can lead to higher productivity andefficiency of the banking system. A stage has now been reached when new private sector banks may beallowed to be set up.

It is necessary that while permitting the entry of new private sector banks the following considerationshave to be kept in view:

(a) they sub-serve the underlying goals of financial sector reforms which are to provide competitive,efficient and low cost financial intermediation services for the society at large;

(b) they are financially viable;

(c) they should result in upgradation of technology in the banking sector;

(d) they avoid the shortcomings, such as, unfair preemption and concentration of credit, monopolisation ofeconomic power, corss holdings with industrial groups, etc., which beset the private sector banks prior tonationalisation;

(e) freedom of entry in the banking sector may have to be managed carefully and judiciously.

Based on these considerations, the Reserve Bank has formulated the following guidelines forestablishment of new banks in the private sector :-

(a) Such a bank shall be registered as a public limited company under the Companies Act, 1956.

(b) The RBI may, on merits, grant a licence under the Banking Regulation Act, 1949 for such a bank. Thebank may also be included in the Second Schedule of the Reserve Bank of India Act, 1934 at theappropriate time. The decision of the RBI in these matters shall be final.

(c) The bank will be governed by the provisions of the Banking Regulation Act, 1949 in regard to itsauthorised, subscribed and paid-up capital. The minimum paid-up capital for such a bank shall be Rs.100crores. The promoters' contribution for such a bank shall be determined by the RBI and will also besubject to other applicable regulations.

(d) The shares of the bank should be listed on stock exchanges.

(e) To avoid concentration of the headquarters of new banks in metropolitan cities and other overbankedareas, while granting a licence, preference may be given to those, the headquarters of which, areproposed to be located in a centre which does not have the headquarters of any other bank.

(f) Voting rights of an individual shareholder shall be governed by the ceiling of 1 per cent of the totalvoting rights as stipulated by Section 12 (2) of the Banking Regulation Act. However, expemption fromthis ceiling may be granted under Section 53 of the said Act, to public financial institutions.


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(g) The new bank shall not be allowed to have as a director any person who is a director of any otherbanking company, or of companies which among themselves are entitled to exercise voting rights inexcess of twenty per cent of the total voting rights of all the shareholders of the banking company, as laiddown in the Banking Regulation Act, 1949.

(h) The bank will be governed by the provisions of the Reserve Bank of India Act, 1934, the Banking

Regulation Act, 1949 and other relevant statues, in regard to its management, set-up, liquidityrequirements and the scope of its activities. The directives, instructions, guidelines and advices given bythe RBI, shall be applicable to such a bank as in the case of other banks. It would be ensured that a newbank would concentrate on core banking activities initially.

(i) Such a bank shall be subject to prudential norms in respect of banking operations, accounting policiesand other policies as are laid down by RBI. The bank will have to achieve capital adequacy of 8 per centof the risk weighted assets from the very beginning. Similarly, norms for income recognition, assetclassification and provisioning will also be applicable to it from the beginning. So will be the singleborrower and group borrowers exposure limits that will be in force from time to time.

(j) The bank shall have to observe priority sector lending targets as applicable to other domestic banks.However, in recognition of the fact that new entrants may require some time to lend to all categories of

the priority sector, some modifications in the composition of the priority sector lending may be consideredby RBI for the initial period of three years.

(k) Such a bank will also have to comply with such directions of the RBI as are applicable to existingbanks in the matter or export credit. As a facilitation of this it may be issued an authorised dealer's licenceto deal in foreign exchange, when applied for.

(l) A new bank shall not be allowed to set up a subsidiary or mutual fund for at least three years after itsestablishment. The holding of such a bank in the equity of other companies shall be governed by theexisting provisions applicable to other banks, viz. -

(i) 30 per cent of the bank's or the investee company's capital funds, whichever is less, as set out underthe Banking Regulation Act, 1949, and

(ii) 1.5 per cent of the bank's incremental deposits during a year as per RBI guidelines.

The aggregate of such investments in the subsidiaries and Mutual Fund (if and when set up) and portfolioinvestments in other companies shall not exceed 20 per cent of the bank's own paid-up capital andreserves.

(m) In regard to branch opening, it shall be governed by the existing policy that banks are free to openbranches at various centres including urban/metropolitan centres without the prior approval of the RBIonce they satisfy the capital adequacy and prudential accounting norms. However, to avoid over-concentration of their branches in metropolitan areas and cities, a new bank will be required to open ruraland semi-urban branches also, as may be laid down by RBI.

(n) Such a bank shall have to lay down its loan policy within the overall policy guidelines of RBI. Whiledoing so, it shall specifically provide prudential norms covering related party transactions.

(o) Such a bank shall make full use of modern infrastructural facilities in office equipments, computer,telecommunications, etc. in order to provide good customer service. The bank should have a highpowered customer grievances cell to handle customer complaints.

(p) Such other conditions as RBI may prescribe from time to time.


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Statement of Mission, vision and Values

Mission

To emerge as a leading group offering a comprehensive range of services and product to ourcustomers. Ensuring high standards of customer satisfaction and a society responsibleorganization .Develop into a top rate, nimble footed banking institution committed to excellencein services to its customers, enhancing stakeholders value though care and competence andfulfilling obligations to the community at large.

Vision

Attain high standards of efficiency and professionalism and core institutional valuescomparable to the best in the field.

Possess world-class standards of efficiency and professionalism rooted in the coreinstitutional values of the State Bank Group.

To be a committed, caring and responsible corporate citizen To provide a satisfying work environment with opportunities for learning, self-

development and self-actualization.

Values

Honesty Discipline Faith Devotion Responsibility Workmanship Profession Ability Punctuality Target Achievement Coordination Excellence in customer service

Integrity Confidentiality


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Business plan containing following points :-

Business and industry profile MAAV bank has many deposit schemes tailored to suit theneeds of its customers, both individuals and organisations. Credit/Advances/Loan Schemesspecifically designed for its customers. Also offers various novel services to customers, both

individuals and organisations. The Bank's own training establishment, MAAV bank Management Academy for Growth & Excellence (IMAGE) was established. MAAV bank has launched ascheme called Cash Management Services' in the year 2013 for speedy collection of outstationcheques. The Bank entered into a strategic tie-up with HDFC Standard Life Insurance CompanyLtd., the first in the private sector to receive the Certificate of Registration for foray into LifeInsurance business for distribution of latter's insurance products. The Bank with the InsuranceCompany signed a Memorandum of understanding in February of the year 2012. The Bank intwo branches implemented the Core Banking Solution in December of the year 2013. The Banksigned an agreement with Export Credit Guarantee Corporation of India to distribute the latter'scredit insurance packages for exporters and also in the same year the Bank joined hands withTimes of Money for remittance solution. The last year MMAV Bank entered into strategicalliance with Mahindra & Mahindra Limited and TAFE Limited for pushing up tractor usage

among farmers. MAAV bank launched Ind on-line Doorstep Banking to deliver Banking andFinancial Services at the doorsteps of the common man. The Bank signed an agreement withIndian Railway Catering and Tourism Corporation Limited (IRCTC) for offering train ticketbooking services through IRCTC website http://www.irctc.co.in.

Business strategy - Our business strategy emphasizes the following :

Increase our market share in Indias expanding banking and financial servicesindustry by following a disciplined growth strategy focusing on quality and not onquantity and delivering high quality customer service.

Leverage our technology platform and open scalable systems to deliver moreproducts to more customers and to control operating costs.

Maintain our current high standards for asset quality through disciplined credit riskmanagement.

Develop innovative products and services that attract our targeted customers andaddress inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce our cost of funds.

Focus on high earnings growth with low volatility.


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Description of products and services The products and services are as follows :

Savings fund account Current account Fixes deposits schemes

Capital gain account scheme -1988 Doorstep banking services Cards Nomination facilities Deceased claim cases Centralized banking solutions View your loan application

Payments/Transfer

Funds Transfer

Intra-Bank Transfer RTGS/NEFT Credit Card (VISA) IMPS Payments NRI eZ Trade Funds Transfer

E Deposits

E-TDR/e-STDR

E-TDR/e-STDR under Income Tax Savings Scheme SBI Flexi Deposit E-Annuity Deposit Scheme E- Recurring Deposits

Other banking facilities

Social banking Msme banking Agricultural banking Corporate banking International banking/ NRI Financial services
https://www.onlinesbi.com/personal/fund_transfer.htmlhttps://www.onlinesbi.com/personal/fund_transfer.htmlhttps://www.onlinesbi.com/personal/neft_rtgs_faq.htmlhttps://www.onlinesbi.com/personal/neft_rtgs_faq.htmlhttps://www.onlinesbi.com/personal/visa_faq.htmlhttps://www.onlinesbi.com/personal/visa_faq.htmlhttps://www.onlinesbi.com/sbijava/imps_faq.htmlhttps://www.onlinesbi.com/sbijava/imps_faq.htmlhttp://www.sbicapsec.com/http://www.sbicapsec.com/https://www.onlinesbi.com/personal/etdr_estdr_faq.htmlhttps://www.onlinesbi.com/personal/etdr_estdr_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_etdr_itss_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_etdr_itss_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_Flexi_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_Flexi_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_eAnnuity_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_eAnnuity_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_eAnnuity_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_e-RD_Flexi_faq.htmlhttps://www.onlinesbi.com/sbijava/osbi_etdr_itss_faq.htmlhttps://www.onlinesbi.com/personal/etdr_estdr_faq.htmlhttp://www.sbicapsec.com/https://www.onlinesbi.com/sbijava/imps_faq.htmlhttps://www.onlinesbi.com/personal/visa_faq.htmlhttps://www.onlinesbi.com/personal/neft_rtgs_faq.htmlhttps://www.onlinesbi.com/personal/fund_transfer.html


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Marketing strategy-

Target marketing and customer acquisition Share of wallet Channel strategy and management Relationship management and database marketing Product development & innovation Credit approval

Competitor analysis The are a lot of competitors in the market, some of the big an smallcompetitors are IDBI bank, ICICI bank, HDFC bank, AXIS bank, citizen corporation bank, DENAban, VIJAYA bank, OBC bank, PnB bank, Indian overseas bank etc..

Management team A good banker requires a well-organized mind with an eye for detail.Good verbal and written communication skills help in effective interaction with the clients as wellas the staff. His work includes maintenance of records which requires accuracy and efficiency.The person should have mathematical skills. Employees joining as officers should be able tolead, motivate and manage the bank staff. Integrity and honesty play a major role in all dealingsrelated to money, staff and clients.

Operational plan - MAAV provides a range of banking products through its network of branches inIndia and overseas, including products aimed at non-resident Indians (NRIs). It offers e-commerce faciltyto its every customer, so that they dont need to visit the branch everytime.

Financial plan with projections and growth plans - The MAAV bank develops and applies advancedtechnology to the efficient and convenient delivery of banking and related financial services. The bankprovides:

Self-Service Banking in-branch and off-branch ATMs and 24-hour Phone Banking. Trade and Corporate Banking services with real-time access to a centralized information

database Instantaneous inter-city transactions through online connections between all branches A state-of-the-art treasury dealing system A sophisticated card system supporting debit and credit cards, domestic and international VISA,

MasterCard, and co-branded cards A dedicated acquiring system for both MasterCard and Visa transactions online@maav, MAAV internet banking service, provides customers with an integrated and

secure platform to access their accounts. Internet Payment Gateway handles credit card transactions on the internet

Global aspects of business MAAV bank offers foreign services to common as well as NRIperson. These services are offered through third party applications such as a LORO accountetc. The bank is still in process of acquiring the technology to deal directly with foreigncustomers which would also be cost effective in future.
http://en.wikipedia.org/wiki/Non-resident_Indianhttp://en.wikipedia.org/wiki/Non-resident_Indian


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LEGAL FORM OF THE BUSINESS

Introduction

These Terms and Conditions contain important information which you should read carefully asthey explain our obligations to you and your obligations to us as a customer of MAAV bank .

The Terms and Conditions are divided into two Parts. The first Part called " General Termsand Conditions " sets out the general terms and conditions which apply to any Accountyou hold with us. The second Part called " Specific Terms and Conditions "contains Account specific information which relates to particular Accounts which you havewith us or services which you use.

Part 1: General Terms and Conditions

Opening an Account

Accounts can be opened by individuals, partnership firms, companies,charitable organisations, trusts or any other organisations formed within thelegal framework.

Our application form for the Account for which you are applying will contain theeligibility criteria for opening thatAccount. You should read the applicationcarefully to ensure that you are eligible. The information contained in theapplication form, including that filled in by you, forms part of our contract.If you have any queries please contact us on 0000 000 000.

If you are an individual, you may be able to register with us to receive interestgross. Otherwise interest will be paid net of income tax at the prescribed rate.Interest on Accounts is subject to deduction of tax at the rate specified by HMRevenue and Customs, unless we have received a completed HM Revenue andCustoms Form R85.

The agreement between us relating to the Account is made up of these Termsand Conditions and includes any other special conditions (such as interestrates, notice periods and charges) whether on our Website or in paper form.Please see sections 8.2, 8.3 and 17 for details of when we may make changesto these Terms and Conditions or your Account.

Proof of your identity and address When you open an Account with us, we need to obtain sufficient proof

of your identity and address to enable us to satisfy our legal obligations andprotect you, the public and us against fraud and misuse of the banking system.Please note that in some instances we may need to ask you to send in furtherinformation or documents or askyou to visit your local Branch. From time totime we may also need to update the proof of identity and address weholdfor you or make any other enquiries necessary.

We will not open an Account if you do not satisfy our requirements in relation toestablishing your identity under relevant Anti-Money Laundering legislation and


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in the event that we do refuse under this section 3.2 to open anAccount, we willrefund any monies received to you without interest or charge, providedthat we are permitted to do so under applicable Anti-Money Launderinglegislation.

You may have more than one Account with us and these Terms andConditions will apply to each Account unless you are otherwise notified.

Joint Accounts Anyone who is eligible to open an Account with us may be accepted by us to

open a joint Account . We are not able to treat the tax status of each of the joint Account holders

differently for the purposes of applying interest, so unless you are all eligible toreceive interest gross we will pay interest net of tax. For further details pleasesee section 8.7 below.

Each joint Account holder is responsible for complying with these Terms andConditions . If one of you breaks any of the terms of your agreement with uswe are able to take action against any or all of you .

If we find out that any one of you is declared bankrupt, we may put a hold onthe joint Account and refuse to pay out any amount from it until we receiveinstructions from the Account holder who has not become bankrupt and theperson appointed to handle the bankrupt person's assets.

We will send statements to each of the Account holders, but you can opt out ofreceiving more than one statement, in which case we will send the statementrelating to your Account to the first named Account holder,unless you otherwise advise us . If you opt out of receiving more than onestatement then a notice to the first named Account holder/theone Account holder counts as a notice to all of you .

Unless you have previously given us instructions to the contrary, we areentitled to accept the authority of any joint Account holder to give instructions onbehalf of all other Account holders relating to the Account until it is cancelledby any such other joint Account holders, or treated by us as cancelled asdescribed in section 15 or by operation of law.

If any one of the joint Account holders tells us of a dispute betweenthem, we may treat this as notice of cancellation of the authority of any single

joint Account holder. If we do, any further transactions will need the authority ofall the joint Account holders.

In the event of the death of any joint Account holder, then subject to anyrights we or a third party may have, any money in the Account will be at thedisposal of the survivor(s).

We may make information about a joint Account available to any other joint Account holder by telephone, letter, e-mail or over the internetif you subscribe to internet banking on our Website .

Interest When you have money in your Account, you will be eligible for credit

interest. We will work this out on the amount actually in your Account at closeof business each Working Day. You start earning interest on your

Account from the day that cash funds are added to your Account. For intereston cheques that have not yet cleared, see condition 7.6.3 above. Interest iscalculated on a daily basis according to our interest rate schedule available


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fromyour local Branch or our website (www.MAAV bank.com). We creditinterest in accordance with these Terms and Conditions and our interest rateschedule.

We may without notice change your interest rate at any time with immediateeffect for any of the following reasons:

where your Account is linked to an external reference rate (a publically available ratewhich we do not set, for example, the Bank of England Base Rate ), to reflect changes inthis reference rate; and/or for any reason if the change benefits you .

We will provide you with 2 months' written notice if we change interest rates for any ofthe following reasons:

if there is a change in relevant law, regulation, code of practice or to reflect arecommendation, requirement or decision of any applicable court, ombudsman, regulatoror similar body; to reflect changes or expected changes in the costs we pay to othersand/or changes in inflation, or the costs of the services or facilities we provideto reflect any change in interest rates charged by other UK competing banks or financialinstitutions; to reflect any changes in money market interest rates or the cost to us ofmoney we lend; to reflect any reorganisation of our business by it being acquired by orby our acquiring another bank or organisation (so that customers with similar productscan be treated in the same way); to ensure we maintain financial strength and thecompetitiveness of our business generally; and/or to reflect any eventbeyond our reasonable control.

Any change we make to interest rates will be proportionate to thecircumstances giving rise to the change. Changes to interest rates will not bemade in accordance with conditions 8.2 and 8.3 if we have agreed a fixedrate of interest with you that applies to your Account .

If you do not accept the proposed change(s) to your interest rate as set outin section 8.3, you must let us know in writing before the change(s) takeeffect. You have the right to terminate the contract as a result of changesreferred to in section 8.3 without any cost or charge to you . If you wish tochange or close your Account due to notice of a reduction inrates, you must notify us within the 2 month period. If you do notnotify us , we will consider that you have accepted the change.

Information about our current interest rates, for savings and currentaccounts, is available on our Website , by telephoning us and by asking anymember of our staff at any of our Branches . When we change the interestrate on your Account the old rate will also be available to help you comparerates.

We will pay you interest after deduction of tax at the applicable rate.If you are eligible and have completed, signed and returned to us the correctform from HM Revenue and Customs then we will pay you interest gross.Please note if you are joint Account holders then we will always pay interestnet of tax unless all of you are eligible for interest gross (for which you wouldeach have to provide a form as outlined above).

Details of interest chargeable for overdraft Accounts agreed by us will beexplained in the facility letter issued to you for such Accounts .

Payments out of your Account


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the Account, the currency conversion would be done at our prevailing exchangerate applying on the day of the conversion. Wepublish the indicative exchangerate for rupees on our Website and the exchange rate is publishedin yourStatement of Account.

Payments made out of your Account are based on the information providedby you. In case the information provided by you is incorrect we will makereasonable efforts to recover the funds involved in the payment transaction andmay charge you for any reasonable costs incurred in recovering your funds.

We no longer accept standing orders for outward payments fromdeposit Accounts.

Any outward payment request received after the Cut-Off Time will be consideredto have been received on the next Working Day.

For security reasons, we may contact you by telephone or by email to seekconfirmation of a payment request received through a messenger, by post or byfax.

You must notify us of any loss suffered by you on any Account or anyunauthorised or incorrectly executed payment transactions as soonas you become aware of them but not later than 13 months from the date ofdebit in the Account, otherwise we shall not be liable to you. However, thiscondition shall not apply if we fail to provideyou with the information of thepayment in line with section 20.1 of these Terms and Conditions.

For payments involving currency conversion, the rate we will apply will be therate on offer on that day. The rate is made available to you at our Branches orover the telephone. If a payment is made involving foreign currency and thepayment is returned, we will reconvert the returned payment to the originalcurrency at our prevailing exchange rate and credit your Account. We shall notbe liable for any loss in exchange on account of the conversion.

Transaction Processing Time The processing time for payments into and out of your Account may be more than thetime set out in sections 7 and 9 due to the following reasons:

defective request or insufficient, incomplete or incorrect details in your instructionsto us ;if your instructions in any way give rise to suspicion in which case the matterwould be investigated before any decision is taken regarding application of funds;to comply with our legal or regulatory obligations; order by a competent court;order or stipulation by any other law enforcing body; and/or business disruption onaccount of natural calamity, riot, war, terrorist activity, industrial action, equipment failureor any such event which is beyond our control.In the above circumstances, we will not be liable for any delay or loss suffered bythe Account holders(s), provided that we have acted reasonably, including where

lawful notifying you of the refusal or delay in making the payment and the reasons whyat the earliest opportunity and, in the event that payment details are incorrect becauseof an error by you or a third party we will help you investigate.

Right of Set Off We may use any Account/s held by you with us which are in credit to reduce or repayany amount you may owe to us in other Account/s held by you in the same name. Inthe process we may appropriate fixed deposit/s held by you with us for a certain periodalong with the interest payable by us . In cases where the credit balances are in a


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different currency than the balances owed to us , then the currency conversion would bedone at our prevailing market rate.If you hold a joint Account , and another Account holder onthis Account owes us money in relation to another Account held with us in his/hername, we can exercise our right of set off on the Account you hold jointly withthis Account holder.

Cheques you issue 12.1 If your Account has a cheque facility and you issue a cheque on your Account , it

will normally be deducted from your Account two Working Days after the recipientpays it into their Account . For example, a cheque paid in on a Monday willnormally be deducted from your Account on a Wednesday. More time may beneeded for a cheque paid into a building society account or any bank outsideEngland and Wales, or any account held at a non-clearing bank.

Charges 1 When you open your Account , we will give you details of our Tariff of

Charges for the day to day running of your Account . You can also find out aboutthese charges by contacting your Account holding Branch or by looking at ourWebsite .

2 If we increase any of these charges or introduce a new charge, we will give you atleast two months' notice before the changes take effect. We will tell you the chargefor any other service or product before we provide it to you , and at any timeshould you request it. Before we deduct charges for standard Account servicesfrom your Account , we will give you at least 14 calendar days notice of howmuch we will deduct.

3 If any sum due and payable by you is not paid on the due date, you will be liable topay the interest (both after, as well as before, any judgment) on such sum at such arate or rates as we will provide to you from time to time from the date the paymentis due up to the date of payment.

4 Payments from your Account will be made in accordance with the notice periodapplying to your Account . You choose this notice period when you open your

Account . For example, if your Account is on 90 calendar days' notice, you willneed to allow 90 calendar days from the day we receive your instructionsbefore we make the payment. You can give notice for a withdrawal by telephone orfax. However, we will only carry out the withdrawal if we have received confirmationof your request in writing (which also notes the date of your original call or fax)before the date you want the payment to be made.

Internet banking 1 If you have indicated that you would like us to provide internet banking services, the following terms and conditions

apply for those Accounts on which we offer internet banking.2 This section 21 sets out the rules which apply to your internet access to your Account(s) , and explains our

obligations you , and your obligations to us , when operating these Accounts .

3 We offer internet banking facilities to all Account holders. Please log on t ohttps://www.onlineMAAVbankglobal.com/64GB/web/Index.htm and download a registration form for individual Accounts and CorporateRegistration form for company/business Accounts . The completed registration form should be sent tothe Branch Manager where you have your Account .

4 You will then be sent your User ID, password and transaction password for internet banking. 'Net Banking'enables you to do the following:
https://www.onlinesbiglobal.com/64GB/web/Index.htmhttps://www.onlinesbiglobal.com/64GB/web/Index.htmhttps://www.onlinesbiglobal.com/64GB/web/Index.htmhttps://www.onlinesbiglobal.com/64GB/web/Index.htmhttps://www.onlinesbiglobal.com/64GB/web/Index.htmhttps://www.onlinesbiglobal.com/64GB/web/Index.htm


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view your Account on line; transfer funds between Accounts; make payments; pay bills; remittances; order drafts; request cheque books; and deal with other related enquiries.

5 We may add further services from time to time to our 'Net Banking' offering.

6 Use of websites 6.1 You can access your Accounts through the Website after you receive and confirm receipt

to us of the User ID and password sent to you by us . You must change the password providedby us at the time of first logging into internet banking on our Website .

6.2 Our internet banking service is available in respect of all the Accounts you hold with us ,6.3 All requests received from you are logged and transmitted to your local Branch for their

fulfilment. The requests become effective from the time these are recorded/registered at therespective Branch .

6.4 When using our Websites , the terms of use applicable to the relevant Website will apply.

7 Availability of internet banking services .7.1 We work hard to make sure our internet banking services are available at the times you w

use them. However, we cannot and do not guarantee their availability, nor that access to, anduse of, our Websites will be uninterrupted or error free. From time to time we may need tosuspend provision of the internet banking services for repair, maintenance or upgrade purposes.

7.2 We will not, in any event, have any liability to you if we are prevented from, or delayed in,providing any internet banking services due to the failure of any telecommunication link or otherequipment or infrastructure not owned or controlled exclusively by us and/or any acts oromissions of third party telecommunications or internet service providers.

8 Instructions

8.1 For the purposes of this section 21 and the web requirements, you agree to provide:written confirmation of your request to make a withdrawal from your Account ; andall other instructions in relation to the operation of your Account in writing (unless we have madeother specific and documented arrangements), you can comply with these requirements byproviding us with the relevant details using your authenticated security details on our Website .

8.2 However, please pay careful attention to the security notice set out in thefollowing section and comply with it.

Part 2: Specific Account Terms and ConditionsDebit Card Terms and Conditions

These are our terms and conditions for use of the card with your current Account . Please readthem carefully and keep them in a safe place.Introduction

1 Your agreement with us is contained in:


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these card conditions;the application form for the card/Account application signed by you; andOur General Terms and Conditions and any other Terms and Conditions which

apply to your Account.

Issuing a card

1 We will only send you a card if you ask for one or to replace a card you alreadyhave. We issue the following types of card:

MasterCard and unembossed Debit Card.2 For security purposes we will ask you to contact us upon receipt of any new or

replacement card you receive from us before you can use it.3 We will issue you with a Personal Identification Number (PIN). We will send your PIN

number separately from your card for security purposes. We will not reveal your PINto anyone but you . You can use your PIN with your card for withdrawing money andusing other services available from self-service machines. You will also needyour PIN to be sure that you can pay for goods and services at the premises of aretailer or other supplier with a chip and PIN card.

4 You must sign your card as soon as you receive it and follow any reasonableinstructions that we give about using cards and keeping them safe.

5 You can change your PIN. We tell you how to change your PINwhen we issue your PIN.

6 You must not use your card after the end of the month it expires or after we haveasked you to return it to us or told you that its use is suspended.

7 You authorise us to deduct from your Account the amount of any transaction carriedout using your card with or without use of your PIN or using your debit card details,whether or not you have given or authorised such instructions. You will only beresponsible for transactions which have not been made or authorised by you as setout in section 10 below.

8 You have the right to cancel your use of the card at any time by sending us written

notice in accordance with section 15 of our General Terms andConditions . You must also return the card cut into 4 pieces, making sure you cutthrough the magnetic strip.

Making payments using your card 1 Mastercard can be used to pay for goods and services where you see the appropriate

Mastercard logo, the Channel Islands and the Isle of Man or the Mastercard logoabroad. A "cash back" service may also sometimes be available.

2 You may use your debit card to make payment for goods and services through avariety of channels such as the internet, telephone, television and mailorder. You must not disclose your PIN when using any of these channels. We stronglyrecommend the use of "secure payment" sites and software when sending your card

details over the internet. When using your card to make payment over the telephoneor by mail order you may be asked for additional identification.

3 Your card will be enabled for the Mastercard Secure Code by default. This code isused to confirm your transactions over the internet by the organisations that participatein Mastercard Secure Code (to prevent fraud). To get your code, you will have tovisit our website (https://acs.onlineMAAVbank.com/MAAVbank/enrollment/enrollwelcome.jsp) and give your card number and mobile number.Details of the procedure are provided in sections 14.4 and 14.5 below.

4 We will not be responsible if a retailer or other supplier refuses to accept your card or
http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)http://%28https/acs.onlineMAAVbank.com/MAAV%20bank/enrollment/enrollwelcome.jsp)


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if you cannot use your card to make a payment.5 You can only use the card or the card number for transactions if you have enough

money in your Account .

Payments and your Account 1 All transactions, cash withdrawals and transfers will be shown on your

Account statement.2 You cannot stop a debit card payment but a retailer or supplier may make a

refund. We will credit your Account when we receive their instructions but will not beresponsible for any delay in receiving their instructions.

3 We may refuse to authorise a payment if we consider that your card or Account hasbeen or is likely to be misused or for fraud prevention purposes. We may refer anauthorisation request back to the retailer for more information if we consider thisnecessary to help us to prevent card misuse. This may result in you being asked toproduce additional identification. This may also be done on a random basis for fraudprevention purposes.

Charges 6.1 We may charge for use by you of the card at the rate set out in our Tariff of

Charges . Please also see section 11 below about how we may change our chargeswhich apply. You authorise us to deduct all such charges from your Account .

Security 1 You must do all that you can to keep the card safe and your PIN secret at all

times. You must keep the card separate from any cheques.2 You must never allow anyone else to use your card, PIN or other security information.3 You must never write down or record your PIN or other security information.

4 You must only reveal the card number to make a transaction, to report loss or theft ofthe card or if we allow you to do so.

5 We will never contact you to ask you for your security information such as your PIN,passwords or the 3 digit number on the reverse of your card. You should notreveal your security information to anyone else.

Changing the terms of this agreement 1 We may change the terms of this agreement including our charges and other changes

needed if we add extra functions to the card at any time. We will tell you about anychanges and when they come into effect by advertising in the press or puttingmessages in your statements or sending you a separate written notice as set outin our General Terms and Conditions ornotifying you on our website www.MAAVbank.com .

2 Any change to the terms of this agreement which is made to reflect a change ofapplicable law or regulation will take effect immediately or otherwise as we maytell you . We will give you at least two months' notice of any other changes. If you wishyou may stop using the card and there will be no extra charge payable.

3 We may introduce new charges for use of the card or change our existing charges.When you use the card our latest charges will apply. You should make surethat you have checked the latest charges, details of which are available
http://www.maavbank.com/http://www.maavbank.com/http://www.maavbank.com/http://www.maavbank.com/


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Pricing Strategy

If your organisation is like most, strategic pricing is often hard to manage becausethere is an incomplete knowledge of all the disparate activities and how to coordinatethem. In many businesses, each function Finance, Marketing, Sales and Operations

works with a different set of data to make pricing decisions. Different functions alsooften define goals and reward performance using different metrics, which can be inconflict with each other

The Potentials of Strategic Pricing

Effective pricing management can help you increase profitability by improving the wayyou analyse, set and deliver prices, including enforcing pricing policies. The benefitscan be realised in both good times and bad. The tools and discipline of pricing andprofitability management can help address the immediate issues presented duringeconomic instability, as well as help position a company for long-term profitablegrowth. A comprehensive pricing strategy is made of multiple layers which create afoundation for price setting:

The foundation of Strategic Pricing is Value Creation, or determining what the bestvalue for the customer is.

The next step is to establish the Price Structure. The pricing of a product should matchthe delivered value and cost to serve.

Once the Price Structure has been determined, marketing can develop the Price &Value Communication to the customer.

The Pricing Process must be able to stand up to aggressive customers andcompetitors it should rather influence the expectations and not react to them.

Marketing

Identifying the customers financial needs and wants. Develop appropriate banking products and services to meet customers needs. Determine the prices for the products/services developed. Advertise and promote the product to existing and potential customer of

financial services. Set up suitable distribution channels and bank branches. Forecasting and research of future market needs.

Challenges of bank marketing

Technology

Marketing by private sector banks and foreign banks is more effective than publicsector banks because these banks are IT oriented. Private sector banks and foreign


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banks are attracting more customers by providing e-services. Thus, technology hasbecome a challenge before the public sector banks.

Untrained Staff

Often it happens that when a prospective customer approaches the branch, theemployees seem to have very little knowledge about the scheme. This reflects an uglypicture of our banks image. Ban ks are not losing one prospective customer but 10more customers who would be touch of this man. Attitude of the employees towardscustomers is also not very well. Thus, it is a need of time to reorient the staff.

Rural Marketing

This is a big challenge before the Indian banks to enhance rural marketing to increasetheir customers. Banks should open their branches not only in the urban and semi-urban areas but also in the rural areas.

Trust of Customers

Marketing can be enhanced only by increasing the customers. Customers can beincreased or attracted only by winning the trust of the customers.

Customer Awareness

Customer awareness is also a challenge before the banks. Bank can market theirproducts and services by giving the proper knowledge about the product to customeror by awarding the customer about the products. Bank should literate the customers.

Promotion

The basic promotion a can do is through providing low interest rate for limited time,cash back on shopping through debit/credit cards, attractive offers/discounts onvarious shopping sites, can provide promo code to its customers so that they can usethem to avail benefits etc.

Intellectual property rights

All present and future rights in and to trade secrets, patents, copyright, trademarks,service marks, know-how and other proprietary rights of any type arising at law,

including rights in and to all applications and registrations relating to this website(including but not limited to all data contained on this website relating to you and yourassociated customer (Data), information, text, look and feel, material, graphics,software and advertisements) (the Intellectual Property Rights) shall, as between youand us, at all times be and remain the sole and exclusive property of MAAV MerchantServices. You assign upon creation all Intellectual Property Rights to us.

The MAAV Merchant Services trademark and logo are registered trademarks of


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MAAV Bank Limited and used under licence by MAAV Merchant Services PrivateLimited. The FIRST DATA name, logo and related trademarks and service marks areowned by First Data Corporation and are registered and used in the United States of

America and many foreign countries. You agree not to display or use in any mannerthe MAAV Merchant Services or FIRST DATA names, trademarks or service marksand logos contained in this website without the express prior written consent of MAAVMerchant Services or First Data Corporation respectively.

You do not acquire any rights or licences in or to the Intellectual Property Rights, thiswebsite and materials contained within this website other than the limited right to usethis website in accordance with the Terms of Use.

You agree to protect the Intellectual Property Rights of MAAV Merchant Services andall others having rights in this website during and after the term of this agreement andto comply with all reasonable written requests made by MAAV Merchant Services or

its suppliers of content (including Data) (Content), equipment or otherwise to prote cttheir and others contractual, statutory and common law rights in this website

Succession plan The MAAV Group has prepared a succession plan for top-level executives of itssubsidiaries.

Sources said that this is a contingency plan, in the event of an exit of the presentheads of its two subsidiaries MAAV Prudential and MAAV Ventures. At present, Mr. Ais managing director & chief executive officer (CEO) of MAAV Prudential Life

Insurance, while Mr. B is managing director and CEO of MAAV Ventures. According to sources familiar with the developments, Mr. V, MAAV Executive Director,will replace Mr. A in case he moves out. Mr. S, executive director, is the likelycandidate to replace Mr. B.

Mr. V joined the bank in 2000 with over 10 years experience in A2Z ltd. He has beenresponsible for setting up consumer finance business, which was a separate companycalled MAAV Personal Finance Services. The company later merged with MAAV . Atpresent, he is heading the retail banking, SME banking and rural banking divisions.

Mr. S , who joined the erstwhile MAAV s project finance business in 1994, has been in -charge of their international business. Earlier, he was the managing director and CEOof PB ltd. Currently, he is responsible for corporate and investment banking,government banking and international banking divisions.

Senior executives in MAAV said that they have a policy whereby succession plans arethere from the deputy general manager level. In response to an e-mail from BusinessStandard, the bank said that it does not respond to speculation. Sources also said that
http://www.business-standard.com/search?type=news&q=Icici+Prudential+And+Icici+Ventureshttp://www.business-standard.com/search?type=news&q=Icici+Prudential+And+Icici+Ventures


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in a continuation with the succession plan, the likely replacements for Mr. V and Mr. Son the board of MAAV could be Mr. C, senior general manager and global head ofSME banking division and Mr. D, senior general manager, customer service andphone banking.

As part of the top deck reshuffle, MAAV Prudential Executive Director N is moving tothe bank as its CFO, while Mr. Mad, who was earlier an Executive Director at MAAV ,has been appointed the CEO of MAAV Securities.

Recommendations

RECOMMENDATIONS OF EXPERT COMMITTEES AND LESSONS FROM THE GLOBALCRISIS

High Level Investment Commission

The February 2006 report of The High Level Investment Commission, constituted bythe Government of India in December 2004 with the objective of enhancing bothforeign and domestic investment levels in India, has, among other things,recommended permitting ownership in Indian banks of up to 15 percent by Indiancorporates, and also to increase limits of holdings by any one foreign bank up to 15percent in private banks.

High Level Committee on Fuller Capital Account Convertibility

The July 2006 report of The High Level Committee on Fuller Capital AccountConvertibility, constituted by the Reserve Bank of India in March 2006 under thechairmanship of Shri S. S. Tarapore, has recommended that RBI should evolve

policies to allow, on a case by case basis, industrial houses to have a stake in Indianbanks or promote new banks. The policy may also encourage non-banking financecompanies to convert into banks. It has also recommended that after exploring theseavenues until 2009, foreign banks may be allowed to enhance their presence in thebanking system.

Committee on Financial Sector Reforms

The September 2008 report of The High Level Committee on Financial SectorReforms, constituted by the Government of India in August 2007 under thechairmanship of Dr. Raghuram G. Rajan, has recommended allowing more entry toprivate well-governed deposit-taking small finance banks with stipulation of higher

capital adequacy norms, a strict prohibition on related party transactions, and lowerallowable concentration norms (loans as a share of capital that can be made to oneparty). Such measures would also increase financial inclusion by reaching out topoorer households and local small and medium enterprises.


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Lessons from the recent global financial crisis

A constellation of regulatory practices, accounting rules and incentives magnified thecredit boom ahead of the recent global financial crisis. The same factors acceleratedthe downturn in markets and intensified the crisis. Macroeconomic stability andfinancial stability were generally treated as separate and unrelated constructs with theformer focusing on preserving low and stable inflation, while the latter dealing with thefirm-level supervision of the formal banking sector. In this process, not only was thegrowing shadow financial sector ignored, but also factors such as theinterconnectedness within the complex financial system, especially between banksand the financial institutions, the systemic risk arising out of too-big-to-fail entities andsystem-wide liquidity needs.

Though the epicentre of the crisis lay in the sub-prime mortgage market in the US, itwas transmitted rapidly throughout the globe, destabilizing financial markets andbanking systems. The crisis eventually impacted the broader macro-economy,affecting economic growth and employment throughout the world.

The magnitude of this crisis has clearly signaled the need for major overhaul of the globalfinancial regulatory architecture, the importance and need for improving quality and level ofcapital, risk management and governance standards, having strong domestic (indigenous)banks, avoiding large and complex banking structures as well as strengthening bankstransparency and disclosures.

Entreprenership Project - Bank

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