A REPORT ON

SME BANKING – CURRENT ACCOUNT DEPOSITS – DEVELOPMENT OF NEW

PRODUCTS SUGGESTIONS FOR MOBILIZATION OF CURRENT ACCOUNT DEPOSITS

BY

SHRESHTHA KOSHTA

13BSP1185

IBS BUSINESS SCHOOL

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A REPORT ON

SME BANKING – CURRENT ACCOUNT DEPOSITS – DEVELOPMENT OF NEW

PRODUCTS SUGGESTIONS FOR MOBILIZATION OF CURRENT ACCOUNT DEPOSITS

BY

SHRESHTHA KOSHTA

13BSP1185

IBS BUSINESS SCHOOL

DATE OF SUBMISSION

13/04/2013

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ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organization. I would like to extend my thanks to all of them.

I am highly indebted to Mrs. Rachel John (Credit Manager) for her guidance and constant supervision as well as for providing necessary information regarding the project and also for her support in completing the project. I would like to express my gratitude towards my parents and members of BANK OF BARODA for their kind cooperation and encouragement which help me in completion of the project.

I would like to express my special gratitude and thanks to my college IBS BUSINESS SCHOOL and Faculty for giving me such a great opportunity. I am also very much thankful to my mentor Prof. Mrs Deepika Dabke ( faculty , IBS Mumbai) for guiding me during my internship.

Last but not least my thanks and appreciation goes to the people who have willingly helped me out with their abilities in developing the project.

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TABLE OF CONTENTSAuthorisation (i) 1-2

Acknowledgement (ii) 3

Synopsis (iii)

1. Introduction 51.1 Current Deposits 51.2 Current Account 2. Advantages 53. Disadvantages 64. Types of Current Account in Bank of Baroda 64.1 Baroda Advantage Current Account4.2 Baroda Premium Current Account (BPCA) 64.3 Baroda Premium Current Account- Privilege (BPCAP) 75. Who can open a Current Account? 76. How to open a Current Account? 87. Pass book/ Statement of Account 88. Credits 89. Interest 910.Closing of an Account 911.Signature of the Depositor 1012.Nomination Facility 1013.Feature of Current Account Deposit 1014.Summary of the Internship 1215.References 13

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CURRENT ACCOUNT DEPOSITS

INTRODUCTION:CURRENT DEPOSITS: Current Account deposit refers to a deposit to a bank account or financial institution without a specific maturity date. These types of Current Deposit account do not earn any interest to the account holder however they are low cost deposits to the bank as it is available to the bank without any cost.

CURRENT ACCOUNT: “A foundation stone of business relationship’’. Current Account means a form of demand deposit maintained by business organizations for carrying out their day to day financial operations. In the current account any number of deposits and withdrawals are allowed. The customer has to maintain a minimum balance of Rs.10000/- in the account and this account does not earn any interest to the account holder. This is a low cost deposit to the bank.

ADVANTAGES:1. Current account is mainly opened by businessmen such as proprietorship

firm, partnership firms, public and private companies, trust, association of persons etc. that has a large number of daily banking transactions i.e. receipts and/ or payments.

2. It enables businessmen to carry out their business transactions properly and promptly.

3. The businessmen can withdraw from their current accounts without any limit, subject to banking cash transaction tax, if any levied by the government.

4. Current Account holder can deposit the cash from any other branch by paying a nominal charge as applicable.

5. It helps businessmen to make a direct payment to their creditors by issuing cheques, demand drafts or pay- orders, etc.

6. It enables a bank to collect money on behalf of its customers and credit the same in their customer’s current accounts.

7. It enables the current account holder to obtain overdraft facility.8. The creditors of account holder can get credit worthiness information of

the account holder through inter-bank connection.9. It facilitates the industrial progress of the country. Without its help,

businessmen would face difficulties in running their businesses.10.It has the facilities of internet banking and mobile banking to carry out

important business transactions with ease and quickly.

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11.It also provides various other advantages : deposit and withdrawal of money (cash) at any location, multi-location funds transfer, electronic fund transfer, periodical (monthly, quarterly, yearly) e-mail or download of

bank statements in various formats like ‘.XLS’, .TXT’, ‘.PDF’, etc.,

support from customer care executive.

DISADVANTAGES:1. Money held in a Current Account does not earn any interest.2. Banks collect some service charges from Current Accounts.3. Current Account holders have to maintain a minimum balance of

Rs.10000/- in their account else it attracts minimum balance charges.

TYPES OF CURRENT ACCOUNT IN BANK OF BARODA:There are basically three type of Current Account in Bank of Baroda –

Baroda Advantage Current Account Baroda Premium Current Account (BPCA) Baroda Premium Current Account – Privilege (BPCAP)

1. BARODA ADVANTAGE CURRENT ACCOUNT:

Minimum Quaterly Average Balance (QAB)

Rural Rs. 1000/- Semi- Urban Rs. 1000/-Urban/Metro Rs. 10000/- for

individual as well as non-individuals

Minimum Balance Charges Rs. 500/- per quarter + service tax for not maintaining quarterly average balance

Premature Closure Charges ( if account is closed within a year)

Individuals Rs. 100/- +service tax

Others Rs. 100/- +service tax

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2. BARODA PREMIUM CURRENT ACCOUNT (BPCA)

The Baroda Premium Current Account can be opened by any business customer from individuals to partnerships and limited companies to large corporate but excluding banks and financial institutions.

Minimum Quarterly Average Balance (QAB)

Rs. 250000/-

Minimum Balance Charges Rs. 1000/- +service tax for not maintaining quarterly average balance

Premature Closure Charges ( if account is closed within a year)

Rs. 1000/- +service tax

3. BARODA PREMIUM CURRENT ACCOUNT- PRIVILIGE (BPCAP)

Minimum Quarterly Average Balance (QAB)

Rs. 75000/-

Minimum Balance Charges Rs. 600/- +service tax for not maintaining quarterly average balance

Premature Closure Charges ( if account is closed within a year)

Rs. 600/- +service tax

WHO CAN OPEN A CURRENT ACCOUNT?(i) Any person competent to contract and satisfactorily introduced to the

Bank may open an account in his/her own name. Account may be opened in the names of two or more persons and may be payable to :

Any one or more of them Any one or more of the survivors Either to anyone or more of them or the survivors jointly, or survivor ‘former or survivor’ or ‘latter or survivor’, subject to the condition that

the second named account holder will be entitled to the balance lying in the account only on the death of the former

(ii) Accounts can be opened for the sole proprietorship firms, partnership firms, private limited and public limited companies, Joint Hindu families, trusts, clubs, associates etc. satisfactorily introduced to the bank and on fulfilling laid down procedures and tendering required credentials.

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(iii) Accounts can be opened by the minors of 14 years and above, if able to read and write, in their sole names.

HOW TO OPEN A CURRENT ACCOUNT?(i) Application to open an account must be made in Bank’s prescribed

account opening form. All signatories are required to come in person to the bank to sign the account opening form. Required credentials depending upon the type of constitution of the prospective accountholder are to be submitted to the bank.

(ii) Each applicant will be required to sign a declaration to the effect that he has read and accepted Current Account Rules. A copy of the rules is displayed on the Notice Board.

(iii) A recent passport size photograph of every account holder, proprietor/ partner/ directors of the company/ office-bearers/ trustees and other officials authorized to operate upon the account, is required it be given to the bank.

(iv) The account is to be introduced by an existing current/ cash credit account holder having minimum six months old satisfactorily and actively conducted KYC Compiled account with the Bank.

PASS BOOK/STATEMENT OF ACCOUNT (i) Computer generated statement of account showing a record of all

sums paid in and all cheques drawn is issued to each account holder on monthly basis.

(ii) It should be understood that although entries may have been made to the credit of an account and such entries initialed by an officer in the pass book, should such entries be made up of cheques which have to be collected, the amount they represent is not available for drawing, until the proceeds have been realized by the Bank..

CREDITS:(Irrespective of Area) Quaterly Average Balance (QAB): Rs. 10000/- for individual as well as for non individual.

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(i) Current accounts may be opened by individuals as well as for non individual with minimum initial deposits of Rs.10000/- irrespective of Area.

(ii) All payments made in the account should be accomplished by a paying-in-slip, which is supplied free of charge to customers. Separate paying-in-slip should be used for

(a) Cash(b)Local cheques/ DWs etc. drawn on our branches(c) Local cheques/ DWs etc. drawn on other banks(d)Outstation cheques, DWs, draft etc. drawn on outstation centers where

bank has no branches, will be collected at the responsibility of the constituents and the Bank will not be liable for any act, negligence or insolvency of any agent.

(iii) Cheques etc. on clearing banks, if received after specified time will be cleared on the next working day. Local bills payable otherwise than on demand , should be sent one clear day atleast before due date. Demand bills (hundies) should be lodged not later than specified time of presentation on the same day. Hundies lodged on Saturdays will be presented on the next working day.

(iv) No cheques will be accepted for collection in newly opened accounts till the confirmation of introducer is received by the branch, in accounts where the introducer has not come in person to the branch for introducing the account.

INTERESTNo interest is payable on credit balance in current account, including those of Bank’s staff members as per RBI directives

Simple interest at the rate of Savings Bank shall be paid on credit balance of deceased individual accountholders, from the date of his/her death of payment to legal heirs.

In case of death of sole proprietor, interest will similarly be paid in the account of the sole proprietary firm.

CLOSING OF AN ACCOUNT(i) The account holder must give in writing his/her intention to close the

account. In case of partnership firm and joint account, the letter should be signed by all the partners and all the account holders, respectively.

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In case of limited companies, a board resolution authorizing closure of the account is required.

(ii) The unused cheque leaves, Debit Cards, if any, given to the depositor should be returned to the Bank.

(iii) Latest statement of the account should also be presented.(iv) Bank shall recover Rs.75/- (+ service tax) from the Individual or Rs.

100/- (+service tax) from Non-Individual if the account is closed within a year.

SIGNATURE OF THE DEPOSITOR(i) Every accountholder will be required to give specimen of his/her

signature for record in presence of an authorized officer of the Bank at the time of opening of the account.

(ii) All withdrawal instructions, cheques and letters to the Bank must be signed strictly in accordance with the specimen signature recorded at the branch.

NOMINAL FACILITYThe individual accountholder/s and Sole Proprietorship concern will have the facility to make, vary or change nominations.

FEATURES OF CURRENT ACCCOUNT DEPOSITS:The main features of Current Account are as follows:

1. Current bank accounts are operated to run a business.2. It is a non-interest bearing bank account.3. It needs a higher minimum balance to be maintained as compared to the

savings account.4. Penalty is charged if minimum balance is not maintained in the Current

Account.5. It charges interest on the short-term funds borrowed from the bank.6. It is of a continuing nature as there is no fixed period to hold Current

Account.7. It does not promote saving habits with its account holders.

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8. Banker requires KYC ( Know Your Customers) norms to be completed before opening a current account.

9. The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly.

10.There is no restriction on the number and amount of deposits.11.There is also no restriction on the number and amount of withdrawals

made, as long as the current account holder has funds in his bank account.12.Generally, bank does not pay any interest on current account. Nowadays,

some banks do pay interest on current accounts.

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SUMMARY of INTERNSHIP

1ST WEEK – During the 1st week of internship I learned the basics of banking,

work done in a Bank of Baroda, types of accounts, customer interaction last but not least understood the work place environment.

2nd WEEK- In second week I got an exposure to SME Banking, got a gist of

types of SME Loans and proposal letters and also analyzed Stock Statements.

3rd WEEK-In the start of 3rd week I learned all about Current Accounts, how to

open a current account, what all documents needed, at this time I was basically dealing with the verification of the documents and helping the customers in opening a current account. Also I got an exposure to the Savings accounts their opening and maintainance, along with this I have also get customer exposure and learned interacting customers, customer behavior and also giving customer service.

4th WEEK- Now in 4th week I am getting an in-depth knowledge of proposals

given to Bank by customers.

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REFERENCES1. http://www.deposits.org/dictionary/term/current-deposit/ 2. http://www.bankofbaroda.co.in3. http://kalyan-city.blogspot.com/2011/02/what-is-current-bank-account-

its.html4. https://in.answers.yahoo.com/question/index?

qid=20101115065921AAmLxas

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