AProject Study ReportOn Comparative Analysis Of Fixed Deposits, Home Loan & Personal Loan Of HDFC Bank with PSUsSubmitted in partial fulfilment for theAward of degree ofMaster of Business Administration (MBA)

Submitted By: -Submitted To: -KISHAN DAUSAYADr. Manish JainMBA 2nd year (Sem. 4th)Head of DepartmentRTU Roll No. 11MAIXX611Department of Management

ARYA INSTITUTE OF ENGINEERING AND TECHNOLOGYKUKAS, JAIPUR2011-2013

PREFACEThe successful completion of this project was a unique experience for me because by visiting many place and interacting various person, I achieved a better knowledge about financial services. The experience which I gained by introduction about the deposits and loans. Then it contains findings of the research and analysis of the findings and finally conclusion. Apart from all the perceptions and the findings that I have read in annual reports of HDFC LTD about the history and current position of fixed deposits, I have done personal interviews of the customers through questionnaire. I have also put forward recommendations that will help to Bank to expand its Market.Doing this project was essential at this turning point of my career this project is being submitted which content detailed analysis of the research under taken by me.The Subject of my study was COMPARATIVE ANALYSIS OF HDFC FIXED DEPOSITS, PERSONAL LOANS AND HOME LOANS with PSUs. It Studies the various criteria of the customers, which they consider while depositing their money in fixed deposits.The report contains first of all brief

ACKNOWLEDGEMENTI express my warmest thanks & deep sense of gratitude to the individuals for their generous help in discussing the project and giving their valuable time in successful completion of this project. Time to time I got constructive suggestions, guidance and encouragement.I would like to express my deep thanks to Dr. Arvind Agarwal, President, Arya Group of Colleges and Prof. M. L. Gupta, Principal, Arya Institute of Engineering & Technology, Jaipur for extending me the opportunity of presenting the Final year project and providing all the necessary resources for this purpose.With much pride and delight I would like to express my sincere thanks to Dr. Manish Jain (Head of the department) for his excellent guidance and valuable suggestions throughout the project work. I express heartfelt thanks to Ms Padma Sharma (Project Guide) for her wonderful support and for giving me an opportunity to present project report on COMPARATIVE ANALYSIS OF HDFC FIXED DEPOSITS, PERSONAL LOANS AND HOME LOANS with PSUsI also want to give my humble regards to Ms. Gundeep (Head- Training & Placement Cell), Ms. Padma Sharma, Mr. Pramod Sharma, Ms. Nisha Goyal, Ms. Ankita Pareek , Ms. Anchal, Mr. Hitesh Tikyani and Mr. Harinder Singh for their valuable support and believe in my work. Without their sustained interest and encouragement, this work could not have been possible to reach the state of completion with satisfaction. In fact it is their real devotion to the development work, which instilled in me, the need of a passionate commitment to pursue this project.I am also grateful to all my friends for providing critical feedback and support whenever required. There are times in such projects when the clock beats you time and again and you run out of energy, you just want to finish it once and forever. Parents made me endure such times with their unfailing humour and warm wishes.I regret for any inadvertent omissions. Name of Student KISHAN DAUSAYAClass MBA IV SEM.RTU Roll No. 11MAIXX611

EXECUTIVE SUMMARYThe banking industry like many other financial services industries is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and more demanding customers ; and the changing climate has presented an unprecedented set of challenges. Topic of the project is Comparative Analysis Of Fixed Deposits, Home Loan & Personal Loan Of HDFC Bank with PSUs. The analysis of the project was based on the Information fetched from various depositors coming to the banks. For the study of fixed deposits, home loan, personal loan the primary data was collected based on a survey research, using a structured questionnaire with closed ended questions.The sample size was around 100 customers of different banks. The study was conducted using questionnaire prepared with the help of experts. Secondary data was also taken from the various annual reports, brochures of different banks and the Internet.

After analysis, findings are being presented in such a form so that it can give proper results easily understandable by layman. The project concludes with results and findings of the analysis, which I hope, will provide enough information about the factors influencing deposits coming to any bank.

INDEX

S.N.ParticularsP. No.

1Introduction to the Industry6

2Introduction to the Organization38

3Company Profile42

4Comparative Study of FD,HL,PL74

5Research Methodology79

5.1Title of the Study80

5.3Objective of Study80

5.4Type of Research82

5.5Sample Size and method of selecting sample

82

5.6Scope of Study82

5.7Limitation of Study81

6.Facts and Findings83

7.Analysis and Interpretation86

8.SWOT99

9.Conclusion105

10.Recommendation and Suggestions

106

11.Questionnaire108

12.Bibliography111

INTRODUCTION OF INDIAN BANKING INDUSTRYBanking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865.By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.At the end of late-18th century, there were hardly any bank in India in the modern sense of the term. At the time of the American Civil War, a void was created as the supply of cotton to Lancashire stopped from the Americas. Some banks were opened at that time which functioned as entities to finance industry, including speculative trades in cotton. With large exposure to speculative ventures, most of the banks opened in India during that period could not survive and failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.The Bank of Bengal, which later became the State Bank of India.

BANKINGBanks have played a pivotal role in the process of development of the district over the years, especially after the formation of the district in 1993. Apart from dispensing credit, the Banks have also brought about social changes. The contribution of the banking sector in the field of overall development of the district is elaborated in the following paragraphs.At the beginning of the 20th century, Indian economy was passing through a relative period of stability. Around five decades have elapsed since the India's First war of Independence, and the social, industrial and other infrastructure have developed. At that time there were very small banks operated by Indians, and most of them were owned and operated by particular communities. The banking in India was controlled and dominated by the presidency banks, namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later on merged to form the Imperial Bank of India, and Imperial Bank of India, upon India's independence, was renamed the State Bank of India. There were also some exchange banks, as also a number of Indian joint stock banks. All these banks operated in different segments of the economy.The presidency banks were like the central banks and discharged most of the functions of central banks. They were established under charters from the British East India Company. The exchange banks, mostly owned by the Europeans, concentrated on financing of foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency banks, and the exchange banks. There was potential for many new banks as the economy was growing. Lord Carson had observed then in the context of Indian banking: "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments.Under these circumstances, many Indians came forward to set up banks, and many banks were set up at that time, a number of which have survived to the present such as Bank of India and Corporation Bank, Indian Bank, Bank of Baroda, and Canara Bank.Indian banking sector can be divided mainly into four broad categories namely public sector Banks, old private sector banks, new private sector banks, and foreign banks. The other categories of banks include co-operative banks and regional rural banks. Since these banks dont form a substantial chunk of the banking system, we will focus on the first four categories.BANKING SYSTEM IN INDIA

BANKS IN INDIA

FOREIGN BANKSCENTRAL BANKNATIONALISEDBANKSPRIVATE BANKS

CENTRAL BANK: RESERVE BANK OF INDIANATIONALISED BANK IN INDIAThe Banking System in India is dominated by nationalized banks. The Nationalization of Banks in India took place in 1969 by Mrs. Indira Gandhi the then Prime Minister. The major objective Behind Nationalization Banks was to spread banking Infrastructure in Rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. These Banks were State Bank of India Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank Union Bank of India

PRIVATE BANK IN INDIAAll the banks in India were earlier private banks. They were founded in the pre-independence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Axis Bank Bank of Rajasthan Catholic Syrian Bank Centurion Bank of Punjab City Union Bank Development Credit Bank Dhanalakshmi Bank Federal Bank Ganesh Bank of Kurundwad HDFC Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Limited KarurVysya Bank Kotak Mahindra Bank Lakshmi Vilas Bank Lord Krishna Bank Nainital Bank Ratnakar Bank SBI Commercial and International Bank

FOREIGN BANKS IN INDIAForeign Banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis--vis other banks. While their focused operations lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. Standard charted Bank Deutsche Bank Bank of America Citi Bank ABN Amro Bank HSBC Bank

CBS NETWORKINGCore Banking Solutions is new jargon frequently used in banking circles of India.The advancement in technology especially internet and information technology has led to new way of doing business in banking. The technologies have cut down time ,working simultaneously on different issues and increased efficiency. The platform where communication technology and information technology are merged to suit core needs of banking is known as Core Banking Solutions. Here computer software is developed to perform core operations of banking like recording of transactions, passbook maintenance, interest calculations on loans and deposits, customer records, balance of payments and withdrawal are done. This software is installed at different branches of bank and then interconnected by means of communication lines like telephones, satellite, internet etc. It allows the user (customers) to operate accounts from any branch if it has installed core banking solutions. This new platform has changed the way banks are working.

HISTORY OF BANKINGThe period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for the Indian banking. The years of the First World War were turbulent, and it took toll of many banks which simply collapsed despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed during the years 1913 to 1918 as indicated in the following table:YearsNumber of banksthat failedAuthorized capital(Rs. Lacs)Paid-up Capital(Rs. Lac)

19131227435

191442710109

191511565

1916132314

191797625

191872091

POSTINDEPENDENCEThe partition of India in 1947 had adversely impacted the economies of Punjab and West Bengal, and banking activities had remained paralyzed for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:1. In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India.2. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."3. The Banking Regulation Act also provided that no new bank or branch of an existing bank may be opened without a license from the RBI, and no two banks could have common directors.However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19th July, 1969NATIONALISATIONBy the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Actuation and Transfer of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India.After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

LIBERALISATIONIn the early 1990s the then NarasimhaRao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank(now re-named as Axis Bank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions.The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.CURRENT SITUATIONCurrently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomousBody with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M & A as, takeovers, and asset sales.In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. BANKING NETWORKThe total number of branches has gone up from 81 to 93 during the last decade to cater to the banking need of thegrowing population of the district. The number of branches of each bank operating in the district is as under.S NoName of the BanksNo. of Branches.

1.Andhra Bank2

2.Bank of Baroda4

3.Bank of India1

4.Canara Bank1

5.Indian Overseas Bank5

6.Indian Bank1

7.Punjab National Bank1

8.State Bank of India14

9.United Bank3

10.United Commercial Bank14

11.Union Bank2

12.Syndicate Bank1

13.DhenkanalGramya Bank27

14.Angul United Central Co-op.Bank12

15.CARD Bank4

16.Orissa State Co-op. Bank1

17.Orissa State Financial Corporation1

T o t a l93

Apart from a good network of Bank branches, NABARD is having its district office at Dhenkanal with operational area in Angul district also. The major activities of NABARD in the areas of Planning, Coordination, Monitoring and Development is being accomplished through preparation of Potential Linked Credit Plan as a fore runner of SAP, participation in various meetings and with an effective rapport with the officials of government, banks, NGOs etc.Under the Lead Bank Scheme evolved by Reserve Bank of India, the lead bank responsibility is shouldered by United Commercial Bank having its office at Angul. The Lead District Manager coordinates and monitors the preparation and implementation of Annual Credit Plans and various government programmes. Dhenkanal Gramya Banksponsored by Indian Overseas Bank is operating in this district.DEPOSITSThe overall deposits of the banks together has increased manifold during the last decade. The total deposits of Rs.161.45 crores at the end ofMarch, 1994 have swelled to a tune of Rs.961.99 crores by the endof financial year 2002-2003. The Commercial Banks have a lions share in the deposit portfolio having 80% of the market share followed by RRB and CCB with 11% and 9% market share respectively.

ADVANCESThe overall advances of the banks have shown an increasingtrend during the last decade. At the end of March 1994 the total outstanding advances stood at a level of Rs.62.41 crores, which has gone up to a level of Rs.390.96 croresat the end of March, 2003. The priority sector has a share of Rs.259.29 crores i.e. 66% of the total advances, of which Agriculture constitute Rs.87.93 crores i.e. 22% of the total advances.The Commercial Banks have the maximum share of 55% in the advances portfolio, followed by RRB, CCB and other financing institutions with 22%, 15% and 8% share respectively.The credit dispensed has also increased manifold during the last decade. Rs.154.99 crores of credit was dispensed during 2002-03 compared to Rs.16.02 crores dispensed during 1993-94. Under this portfolio, the share of commercial banks was also highest at Rs.85.30 crores constituting 55% of the total credit deployment followed by RRB, CCB and other financial institutions with a share of 27%, 17% & 1% respectively. The trend in credit deployment under various purposes has also undergone change by addition of new areas of financing like housing, education, consumer durable, transport etc. Nevertheless agriculture enjoys due importance. Rs. 42.95 crores has gone to this sector during 2002-03 as against Rs. 3.66 crores in 1993-94.GOVERNMENT SPONSORED PROGRAMMESIn order to fulfill social commitments, the banks in the district have come forward to extend financial assistance in respect of a plethora of government sponsored programmes so as to improve the living condition of the targetgroups through gainful employment. Some of the major programmes having the participation of banks are as under.The details of credit deployment of various banks operating in the district under the annual credit plans during the last decade are as under.(Rs.in lakes)Year/SectorsParticularsAgricultureNon-Farm sectorOther prioritySectorTotal priority sectorNon priority sectorTotal advance

1993-94Target5761322971,0054551,460

Achievement3661283758697331,602

1994-95Target4711873269842631,247

Achievement5721916101,3735971,970

1995-96Target8592557051,8193042,123

Achievement1,0242721,0652,3615442,905

1996-97Target1,1374201,1882,7453803,125

Achievement1,2353531,3482,9361,0914,027

1997-98Target1,8815311,8554,2674924,759

Achievement1,6682051,9623,8351,5115,346

1998-99Target2,1832892,0744,5451,9986,543

Achievement2,1822892,0744,5451,9986,543

1999-2000Target2,7478572,3345,9381,2387,176

Achievement2,6022672,0894,9582,5227,470

2000-2001Target2,5387192,7447,0011,7048,705

Achievement2,7824782,3915,6513,7759,426

2001-2002Target4,1268212,9487,8952,20010,095

Achievement3,3403465,4799,1655,60714,772

2002-2003Target48908954,32310,0982,94513,043

Achievement42952115,1769,6825,81715,499

RECOVERY OF BANK DUESThe recovery of bank dues has not been commensurate with the growth of loans and advances. Though in terms of absolute figures the recovery has gone up substantially, the same in percentage term has shown a moderate change and has settled at 45-50% during the last few years. The poor recovery has adversely affected the CARD bank, which has weakened the financial strength of this part of the banking structure. The liberal measures to augment recovery like One Time Settlement Scheme of RBI and the various compromise settlement schemes of respective banks have contributed in the percentage increase in recovery of bank dues.

MAJOR PLAYERS OF BANKING SECTORPRIVATE BANK IN INDIA ICICI Bank HDFC Bank IDBI Bank Indusland Bank Centurian Bank Axis Bank

PUBLIC BANKS IN INDIA State bank of India Bank of Baroda Bank of India Corporation Bank Oriental Bank of commerce State Bank of Hyderabad Dena BankFOREIGN BANKS IN INDIA Standard charted Bank Deutsche Bank Bank of America Citi Bank ABN Amero Bank HSBC BankBanks play a positive role in economic development of a country as repositories of communitys savings and as purveyors of credit. Indian Banking has aided the economic development during the last fifty years in an effective way. As recourse to this, the commercial banks opened branches in urban, semi-urban and rural areas and have introduced a number of attractive schemes to foster economic development. Banks have been playing a catalytic role in area development, backward area development, extended assistance to rural development all along helping agriculture, industry, international trade in a significant manner. In a way, commercial banks have emerged as key financial agencies for rapid economic development. By contributing to government securities, bonds and debentures of term-lending institutions in the fields of agriculture, industries and now housing, banks are also providing these institutions with an access to the common pool of savings mobilized by them, to that extent relieving them of the responsibility of directly approaching the saver. A country like India, with different regions at different stages of development, presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation and beyond. And banks have to place considerable reliance on the mobilization of deposits from the public to finance development programmes.Commercial banks provide short-term and medium-term financial assistance. The short-term credit facilities are granted for working capital requirements. The medium-term loans are for the acquisition of land, construction of factory premises and purchase of machinery and equipment. These loans are generally granted for periods ranging from five to seven years. Certain transaction, particularly those in contracts of sale of Government Departments, may require guarantees being issued in lieu of security earnest money deposits for release of advance money, supply of raw materials for processing, full payment of bills on the assurance of the performance etc. Commercial banks issue such guarantees also.The Role of Reserve Bank of India (RBI) Bankers Bank:The Reserve Bank of India (RBI) is the central bank of India, and was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. Since its inception, it has been headquartered in Mumbai. Though originally privately owned, RBI has been fully owned by the Government of India since nationalization in 1949. The current governor of RBI is Dr.Y.Venugopal Reddy (who succeeded Dr. BimalJalan on September 6, 2003). RBI has 22 regional offices across India.Main Objective:Monetary Authority Formulates, implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system Prescribes broad parameters of banking operations within which the countrys banking and financial system functions. Objective: maintain public confidence in the system, protect depositors interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective redressal of complaints by bank customers

Manager of Exchange Control Manages the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.Issuer of currency Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.Developmental role Performs a wide range of promotional functions to support national objectives.Related Functions Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks: maintains banking accounts of all scheduled banks. Owner and operator of the depository (SGL) and exchange (NDS) for government bonds.There is now an international consensus about the need to focus the tasks of a central bank upon central banking. RBI is far out of touch with such a principle, owing to the sprawling mandate described above.

In addition to its traditional central functions, the Reserve bank has certain non-monetary functions of the nature of supervision of banks and promotion of sound banking in India. The RBI is authorized to carry out periodical inspections of the banks and to call for returns and necessary information from them.The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation.With economic growth assuming a new urgency since Independence, the range of the Reserve Banks functions have steadily widened. The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilize savings, and to provide industrial finance as well as agricultural finance.The Bank has developed the co-operative credit movement to encourage saving, to eliminate money-lenders from the villages and to route its short term credit to agriculture. The RBI has set up the Agricultural Refinance and Development Corporation to provide long-term finance to farmers.The Co-operative bank has a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of co-operative banks. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc.According to NAFCUB the total deposits &lendings of Co-operative Banks is much more than Old Private Sector Banks & also the New Private Sector Banks.Though registered under the Co-operative Societies Act of the Respective States (where formed originally) the banking related activities of the co-operative banks are also regulated by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.(a) Short term lending oriented co-operative Banks within this category there are three sub categories of banks viz state co-operative banks, District co-operative banks and Primary Agricultural co-operative societies.Features of Cooperative Banks They function with the rule of one member, one vote. Function on no profit, no loss basis. Co-operative banks, as a principle, do not pursue the goal of profit maximization. Co-operative bank performs all the main banking functions of deposit mobilization, supply of credit and provision of remittance facilities.Co-operative Banks provide limited banking products and are functionally specialists in agriculture related products. However, co-operative banks now provide housing loans also.The State Co-operative Banks (SCBs), Central Co-operative Banks (CCBs) and Urban Co-operative Banks (UCBs) can normally extend housing loans uptoRs 1 lakh to an individual. The scheduled UCBs, however, can lend uptoRs 3 lakh for housing purposes. The urban and non-agricultural business of these banks has grown over the years. The co-operative banks demonstrate a shift from rural to urban, while the commercial banks, from urban to rural. They get financial and other help from the Reserve Bank of India NABARD, central government and state governments. For commercial banks, the Reserve Bank of India is lender of last resort, but co-operative banks it is the lender of first resort which provides financial resources in the form of contribution to the initial capital (through state government), working capital, refinance. Primary agricultural credit societies provide short term and medium term loans.The sources of their funds (resources) are (a) central and state government, (b) the Reserve Bank of India and NABARD, (c) other co-operative institutions, (d) ownership funds and, (e) deposits or debenture issues.Inter-bank deposits, borrowings, and credit from a significant part of assets and liabilities of co-operative banks. Some co-operative banks are scheduled banks, while others are non-scheduled banks.Co-operative Banks are subject to CRR and liquidity requirements as other scheduled and non-scheduled banks are. Since 1966 the lending and deposit rate of commercial banks have been directly regulated by the Reserve Bank of India.Although the main aim of the co-operative bank is to provide cheaper credit to their members and not to maximize profits, they may access the money market to improve their income so as to remain viable.Broad Classification of Products in a bank: Retail Banking. Treasury Operations.Retail Banking: Loans, Cash Credit and Overdraft Remittances Receiving all kinds of bonds valuable for safe keepingTrade Finance: Drawing, accepting, discounting, buying, selling, collecting of bills of exchange, promissory notes, drafts, bill of lading and other securities. Buying and selling of bullion. Foreign exchange Purchasing and selling of bonds and securities on behalf of constituents.Apart from the above-mentioned functions of the bank, the bank provides a whole lot of other services like investment counseling for individuals, short-term funds management and portfolio management for individuals and companies.

Some of common available banking products are explained below:A credit card is nothing but a very small card containing a means of identification, such as a signature and a small photo.These bills are assembled in the bank and the amount is paid to the bank by the card holder totally or by installments. The bank charges the customer a small amount for these services. The card holder need not have to carry money/cash with him when he travels or goes for purchasing. The major players in the Credit Card market are the foreign banks and some big public sector banks like SBI and Bank of Baroda.2)Debit Cards: Debit Card is a prepaid or pay now card with some stored value. Debit Cards quickly debit or subtract money from ones savings account,or if one were taking out cash. To get a debit card along with a Personal Identification Number (PIN). The customer never overspread because the amount spent is debited immediately from the customers account. So, for the debit card to work, one must already have the money in the account to cover the transaction. Debit Card holder need not carry a bulky checkbook or large sums of cash when he/she goes at for shopping. The major limitation of Debit Card is that currently only some 3000-4000 shops country wide accepts it. Also, a person cant operate it in case the telephone lines are down.The ATMs are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement information. To transfer money to and from accounts. To order cash.

To the Customers Service is quick and efficient Wider flexibility in place and time of withdrawals.To Banks Crowding at bank counters considerably reduced. Relieves bank employees to focus a more analytical and innovative work.ATMs can be installed anywhere like Airports, Railway Stations, Petrol Pumps, Big Business arcades, markets, etc. Hence, it gives easy access to the customers, for obtaining cash. The ICICI has launched ATM Services to its customers in all the Metropolitan Cities in India. By the end of 1990 Indian Private Banks and public sector banks have come up with their own ATM Network in the form of SWADHAN.4) E-Cheques: The chequing system uses the network services to issue and process payment that emulates real world chequing. A typical electronic cheque transaction takes place in the following manner: The consumer selects the goods and purchases them by sending an e-cheque to the merchant. The merchant electronically forwards the e-cheque to its bank. The clearing house jointly works with the consumers bank clears the cheque and transfers the money to the merchants banks. The consumers bank updates the consumers account with the withdrawal information.(5) Electronic Funds Transfer (EFT): Many modern banks have computerised their cheque handling process with computer networks and other electronic equipments. This system facilitates speedier transfer of funds electronically from any branch to any other branch. Funds transfer within the same city is also permitted. The scheme has been in operation since February 7, 1996, in India. The payment office directs the computer to credit an employees account with the persons pay. Telebanking is extensively user friendly and effective in nature. Facility to stop payment on request. One can easily know about the cheque status. Information with regard to foreign exchange rates. D-Mat Account related services.

This is a very flexible way of transacting banking business.7) Internet Banking: Internet banking involves use of internet for delivery of banking products and services. With internet banking is now no longer confirmed to the branches where one has to approach the branch in person, to withdraw cash or deposits a cheque or request a statement of accounts. In internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time.Benefits of Internet Banking: Increase convenience for customers, since they can conduct many banking transaction 24 hours a day. Improve customer access. Easy online application for all accounts, including personal loans and mortgagesFinancial Transaction on the Internet:Automatic Payments: Utility companies, loans payments, and other businesses use on automatic payment system with bills paid through direct withdrawal from a bank account.Stored Value Cards: Prepaid cards for telephone service, transit fares, highway tolls, laundry service, library fees and school lunches.Cyber Banking: It refers to banking through online services. Banks with web site Cyber branches allowed customers to check balances, pay bills, transfer funds, and apply for loans on the Internet.In January 1998 SEBI (Securities and Exchange Board of India) initiated DEMAT ACCOUNTANCY System to regulate and to improve stock investing. As on date, to trade on shares it has become compulsory to have a share demat account and all trades take place through demat.One needs to open a Demat Account with any of the branches of the bank. The rest will be taken care by the bank and the customer will receive credit of shares as soon as it is confirmed by the Company/Register and Transfer Agent.1) If the investor wants to sell his shares, he has to place an order with his broker and give a Delivery Instruction to his DP (Depository Participant). 3) If one wants to buy shares, he has to inform his broker about his Depository Account Number so that the shares bought by him are credited in to his account.

Banking covers so many services that it is difficult to define it. However, these basic services have always been recognized as the hallmark of the genuine banker. These are The collection of his cheques drawn on other banksThere are other various types of banking services like:2) Deposits Saving Account, Current Account, etc.4) Foreign Services Providing foreign currency, travelers cheques, etc.6) Savings Fixed deposits, etc.8) Status Debit Cards, Credit Cards, etc.Customer Services in Commercial Banks: Customer service can occur on site (as when an onstage employee helps a customer or answers a question) or it can occur over the phone or the Internet.Banking being a service industry, a lot depends on efficient and prompt customer service. Why is Customer Service Important? The increased importance of customer service: With changing customer expectations, competitors are seeing customer service as a competitive weapon with which they differentiate their products and services. The customer is the kingpim in growth organizations like commercial banks. Only those institutions which work according to his dictates will flourish. Customer responsiveness must be quick and also competent. Speed, performance and cost wll be the new values mantra for success.i. Submission of statement of A/Cs to customersiii. Teller system efficiency.v. Intermediate Credit for institution cheques/land bills.vii. Advance for Debit/credit to accounts. Punctuality of staff.