1
INDEX CHAPTER 1.
CONTENT
Pg.no.
INTRODUCTION
3
Origin of the word bank
Nationalisation Nationalisation of Banks in India
History of IOB
2.
FUNCTIONS OF IOB
Opening of various account
Non-Resident Accounts
Honoring and Stopping cheques
Money laundering
3.
SERVICES OF IOB
Automatic Teller Machine (ATM)
Internet Banking
Mobile Banking
Identification of Fake Notes
13
36
4.
RATIO ANALYSIS
49
5.
LOANS & ADVANCES
60
Advances-General Instruction
Retail Credit Interest Rates CONCLUSION
75
BIBLIOGRAPHY
76
2
3
Origin & Definition of Bank: Origin of the word bank:
Most of the authors are of the opinion that word bank has been derived from Italian word banco or banca or French word beque, meaning a bench, other writers opine that the origin of the word bank is the German word bank, which means a heap of anything or joint stock fund.
Meaning and Definition of Bank:
You know people earn money to meet their day-to-day expenses on food, clothing, education of children, housing, etc. They also need money to meet future expenses on marriage, higher education of children, house building and other social functions. These are heavy expenses, which can be met if some money is saved out of the present income. Saving of money is also necessary for old age and ill health when it may not be possible for people to work and earn their living. The necessity of saving money was felt by b y people even in olden days. They used to hoard money in their homes. With this practice, savings were available for use whenever needed, but it also involved the risk of loss by theft, robbery and other accidents. Thus, people were in need of a place where money could be saved safely and would be available when required. Banks are such places where people can deposit their savings with the assurance that they will be able to withdraw money from the deposits whenever required. People who wish to borrow money for business and other purposes can also get loans from the banks at reasonable rate of interest. Bank is a lawful organisation, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it.
Banks also render many other useful services – like collection of bills, payment of foreign bills, safe-keeping of jewellery and other valuable items, certifying the creditworthiness of business, and so on.
4
Banks accept deposits from the general public as well as from the business community. Anyone who saves money for future f uture can deposit his savings in a bank. Businessmen have income from sales out of which they have to make payment for expenses. They can keep their earnings from sales safely deposited in banks to meet their expenses from time to time. Banks give two assurances to the depositors – a. Safety of deposit, and b. Withdrawal of deposit, whenever needed On deposits, banks give interest, which adds to the original amount of deposit. It is a great incentive to the depositor. It promotes saving habits among the public. On the basis of deposits banks also grant loans and advances to farmers, traders and businessmen for productive purposes. Thereby banks contribute to the economic development of the country and well-being of the people in general. Banks also charge interest on loans. The rate of interest is generally higher than the rate of interest allowed on deposits. Banks also charge fees for the various other services, which they render to the business community and public in general. Interest received on loans and fees charged for services which exceed the interest allowed on deposits are the main sources of income for banks from which they meet their administrative expenses.
The activities carried on by banks are called banking activity. „Banking‟ as an activity involves acceptance of deposits and lending or investment of money. It facilitates business activities by providing money and certain services that help in exchange of goods and services. Therefore, banking is an important auxiliary to trade. It not only provides money for the production of goods and services but also facilitates their exchange between the buyer and seller. You may be aware that there are laws which regulate the banking activities in our country. Depositing money in banks and borrowing from banks are legal transactions. Banks are also under the control of government. Hence they enjoy the trust and confidence of people. Also banks depend a great deal on public confidence. Without public confidence banks cannot survive. 5
Nationalisation of Banks Nationalisation of Banks in India:
After independence the Government of India (GOI) adopted planned economic development for the country (India). Accordingly, five year plans came into existence since 1951. This economic planning basically aimed at social ownership of the means of production. However, commercial banks were in the private sector those days. In 195051 there were 430 commercial banks. The Government of India had some social objectives of planning. These commercial banks failed helping the government in attaining these objectives. Thus, the government decided to nationalize 14 major commercial banks on 19th July, 1969. All commercial banks with a deposit base over Rs.50 crores were nationalized. It was considered that banks were controlled by business houses and thus failed in catering to the credit needs of poor sections such as cottage industry, village industry, farmers, craft men, etc. The second dose of nationalisation came in April 1980 when banks were nationalized. The following list contains a list of different types of banks in India. Central Bank:
Reserve Bank of India (RBI)
Public Sector Banks (Nationalised banks):
State Bank of India (SBI)
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore 6
Bank of India
Canara Bank
Central Bank of India
Corporation bank
Indian Bank
Indian overseas bank
Syndicate Bank
UCO Bank
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of Maharashtra
Dena Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Union Bank of India
United Bank of India
Vijaya Bank
IDBI Bank
Private Sector Banks:
HDFC Bank
ICICI Bank
Federal Bank
ING Vysya Bank
Axis Bank
Yes Bank
7
Bank of Rajasthan
Bharat Overseas Bank
Catholic Syrian Bank
Centurion Bank of Punjab
City Union Bank
Development Credit Bank
Dhanalakshmi Bank
Ganesh Bank of Kurundwad
IndusInd Bank
Jammu & Kashmir Bank
Karnataka Bank Limited
Karur Vysya Bank
Kotak Mahindra Bank
Lakshmi Vilas Bank
Nainital Bank
Ratnakar Bank
SBI Commercial and International Bank
South Indian Bank
Amazing Mercantile Bank
Punjab National Bank
Rupee Bank
Saraswat Bank
Tamilnad Mercantile Bank
Thane Janata Sahakari Bank
Bassein Catholic Bank
Foreign Banks:
ABN AMRO
BNP Paribas 8
Citibank India
HSBC (Hongkong & Shanghai Banking Corporation)
JPMorgan Chase Bank
Bank of America
Standard Chartered Bank
Barclays Bank
Deutsche Bank
Royal Bank of Scotland
Abu Dhabi Commercial Bank Ltd
American Express Bank
Antwerp Diamond Bank
Arab Bangladesh Bank
Bank International Indonesia
Bank of Bahrain & Kuwait
Bank of Ceylon
Bank of Nova Scotia
Bank of Tokyo Mitsubishi UFJ
Calyon Bank
ChinaTrust Commercial Bank
Cho Hung Bank
DBS Bank
Krung Thai Bank
Mashreq Bank
Mizuho Corporate Bank
Oman International Bank
Societe Generale
State Bank of Mauritius
Scotia
Taib Bank 9
History of IOB
How it began:
Indian
Overseas
Bank
(IOB)
was
founded
on
February
10th
1937,
by
Shri.M.Ct.M.Chidambaram Chettyar, a pioneer in many fields - Banking, Insurance and Industry with the twin objectives of specialising in foreign exchange business and overseas banking. IOB had the unique distinction of commencing business on 10th February 1937 (on the inaugural day itself) in three branches simultaneously - at Karaikudi and Chennai in India and Rangoon in Burma (presently Myanmar) followed by a branch in Penang. At the dawn of Independence IOB had 38 branches in India and 7 branches abroad. Deposits stood at Rs.6.64 Crs and Advances at Rs.3.23 Crs at that time. Pre-nationalisation era (1947- 69):
During the period, IOB expanded its domestic activities and enlarged its international banking operations. As early as in 1957, the Bank established a training centre which has now grown into a Staff College at Chennai with 9 training centres all over the country. IOB was the first Bank to venture into consumer credit. It introduced the popular Personal Loan scheme during this period. In 1964, the Bank made a beginning in computerisation in the areas of inter-branch reconciliation and provident fund accounts. In 1968, IOB established a full-fledged department to cater exclusively to the needs of the Agriculture sector. At the time of Nationalisation (1969):
IOB was one of the 14 major banks that was nationalised in 1969. On the eve of Nationalisation in 1969, IOB had 195 branches in India with aggregate deposits of Rs. 67.70 Crs. and advances of Rs. 44.90 Crs. 10
Post - Nationalisation era (1969-1992):
In 1973, IOB had to wind up its five Malaysian branches as the Banking law in Malaysia prohibited operation of foreign Government owned banks. This led to creation of United Asian Bank Berhad in which IOB had 16.67% of the paid up capital. In the same year Bharat Overseas Bank Ltd was created in India with 30% equity participation from IOB
to take over IOB‟s branch at Bangkok in Thailand. In 1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency Banking Unit in the free trade trade zone in Colombo in 1979. 1979. The Bank has sponsored 3 Regional Rural Banks viz. Puri Gramya Bank, Pandyan Pand yan Grama Bank, Dhenkanal Gramya Bank. The Bank setup a separate Computer Policy and Planning Department (CPPD) to implement the programme of computerisation, to develop software packages on its own and to impart training to staff members in this field. Post Reform Period - Unprecedented developments (1992 & after):
IOB entered Web site during the month of February 1997. IOB got autonomous status during 1997-98 IOB had the distinction of being the first Bank in Banking Industry to obtain ISO 9001 Certification for its Computer Policy and Planning Department from Det Norske Verities (DNV), Netherlands in September 1999. This Certification covers Design, Development, Implementation and Maintenance of software developed in-house, procurement and supply of hardware hardware and execution execution of turnkey projects. IOB started STAR services in December 1999 for speedy realization of outstation cheques. Now the Banks has 14 STARS Centre‟s and one Controlling Centre Centre for providing this service. During 1999, IOB started tapping the potential of internet by enabling ABB card holders in Delhi to pay their telephone bills by just logging on to MTNL web site and by authorizing the Bank to debit towards the telephone telephone bills.
A Voluntary Retirement Scheme was
introduced in the Bank on the lines of IBA package with Boards approval. The scheme 11
was offered to Officers/Employees Officers/Employees from December December 15, 2000.
The Bank Bank made a
successful debut in raising capital from the public during the financial year 2000-01, despite a subdued capital market. The issue opened on September 25, 2000 for raising Rs.111.20 crore and was oversubscribed by 1.87 times. The issue closed on September 29, 2000 - on the earliest closing day. The allotment was made in October 2000. Consequent to the public issue, the share of the Government in the Bank's capital came down to 75%. The shares of the Bank have been listed on the Madras Stock Exchange (Regional), Stock Exchange at Mumbai and the National Stock Exchange of India Ltd. IOB bagged the NABARD's award for credit linking the highest number of Self Help Groups for 2000-2001 among the Banks in Tamil Nadu. IDRBT (Institute for Development and Research in Banking Technology) conferred the Best Award under Banking Technology to IOB. The award was given for the innovative use of banking applications on INFINET (Indian Financial Network) for the year 2001. Mobile banking under SMS technology implemented in Ahmedabad and Baroda. Pilot run of Phase I of the Internet Banking commenced covering 34 branches in 5 Metropolitan centres. IOB was one among the first to join Reserve Bank of India‟s negotiated dealing system for security dialing online. The Bank has finalised an ecommerce strategy and has developed the necessary internet banking modules in-house. For the first time a Total Branch Automation package developed in-house has been customised in one of the Overseas Branches of the Bank. Most software developed ininhouse. IOBNET connects connects Central Office with all Regional Regional Office. The Bank has paid a maiden dividend of 10% p.a for 2000-01, followed by 12% during 2001-02.
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13
OPENING OF VARIOUS ACCOUNTS Savings Bank Account:
Savings Bank account is a form of demand deposit account, opened mainly for the purpose of saving and not for any business purpose. Savings Bank accounts are meant to inculcate Savings habit among the citizens while allowing them to use their funds as per their convenience. The Savings Bank accounts are opened by the bank on proper introduction and also after ensuring that the customer satisfies the KYC (Know Your Customer) form. Procedure for Opening an SB account:
Persons desiring to open a Savings Bank Account must attend the Bank, when he/she will be furnished with a copy of rules and a form of an application to open an account. Along with the applications, every depositor is required to furnish a CROP (Customer's Record of Profile) Form duly filled in and signed to comply with KYC (Know Your Customers) forms as prescribed by RBI. This form would be updated every year by the customer. Every deposit account opened with the Bank would carry a nomination and the depositor(s) shall at the time of opening the account nominate an individual (not being a minor) of his/her/their choice and submit the application along with the nomination form (annexed to the account opening form) duly filled in and signed. Nomination in two or more names/ proportionate nomination are not possible. The nomination can be changed at any time by making an application by all account holders to the bank. When an applicant is unable to write he/she will affix his/her left hand thumb impression in the presence of a witness known to the Bank. Withdrawals for such accounts will be by withdrawal forms only.
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Every depositor is required to give two copies of latest passport size photographs and the specimen of his/her signature in duplicate for record. The signature must be legible and well formed. All withdrawal forms, cheques and letters to the Bank must be signed strictly in accordance with such specimen. Bank will normally accept the following documents for identification and address proof:
1 Pass port
2 PAN card
3 Voters Identity Card
4 Driving Licence
5 Identity Card (Subject to Bank‟s Satisfaction).
The customer is also required to submit any one of the following documents for verifying the correct permanent address namely
1 Telephone Bill,
2 Letter from any recognized Public Authority
3 Electricity Bill
4 Ration Card
5 Letter from employer subject to satisfaction on Bank
6 Propery Tax Book/Receipt
7 Registered Lease Deed.
(Originals should be submitted with a photocopy. After perusal original will be returned by the bank) SB account transactions and maintenance:
1) First, cash transactions are conducted. Then any other transactions other than the of cash nature such as, cheques will be conducted. 2) Transaction in SB is transfer of money from on account to another.
15
3) And cheques clearing, Customer of the concerned bank will make payment to a third party. For example, if a customer is from IOB, then he will pay the third party through IOB issued cheques. The third party may have his account in some other bank. He takes the cheque given by us to his bank and presents it to the bank. His bank will send the cheque to IOB for clearing. If there are sufficient amount in our account then the cheque will get cleared, otherwise, it will be back to the bank from which the cheque was sent. 4) Minimum balance should maintain of Rs. 100/- for non-cheque operated accounts and Rs. 500/- for cheque operated accounts in branches in rural and semi-urban areas. It is Rs.500 for non-cheque operated account and Rs.1000 for cheque operated account in other branches. 5) For pension accounts the minimum balance is Rs. 5/- for non-cheque operated accounts and Rs. 250/- for cheque operated accounts Interest rate:
Interest rate of SB is 4.00%. Interest is payable half-yearly, every January and July on the minimum balance in the account, between the 10th and last day of the month. No Frills Savings account:
In order to inculcate the savings habit among low-income and poor people, bank has introduced "No Frills" SB account in rural and Semi Urban branches. The minimum balance in the account will be Rs 5 and the maximum balance should not exceed Rs 50,000 and the total credits in the account in one year not to exceed Rs 1 lac. Cheque Books will not be issued and cash withdrawals to be permitted only through withdrawal slips. Number of transactions permitted are 25 per half year Closure of SB account:
A depositor wishing to close his/her account must present the passbook in order that the interest due on the account may be entered and a final balance struck. The amount will 16
then be paid to the depositor against his/her receipt. The unused cheque forms, if any, would be returned to the Bank, along with the ATM/Credit Card. If a depositor wishes to close the account within three months after opening the same, a charge of Rupee Twenty only will be made. Current account Transactions (CC a/c):
Current Deposit Schemes are cheques operated accounts primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions.
Current accounts are opened at the discretion of the Bank, on proper introduction. Accounts can be opened in the names of individuals, singly or jointly, proprietary or partnership, companies, etc. The KYC-AML norms as indicated under SB Account are applicable while opening current accounts also.
The minimum balance to be maintained in Current Account is Rs.1000/- in rural, semi-urban branches and Rs 2,000/ in urban and Metropolitan Branches. In the case of Registered Tiny Sector, village and cottage industries, the minimum balance is Rs.1000/- at all branches.
At the time of opening the account, customers/ deposits should declare the details of credit facility with any other bank or any other branch of Indian Overseas Branch.
Operations in current accounts are only by cheques issued by the bank.
MICR cheque books are issued (presently in all Metropolitan cities) at a cost of Rs2.30./- per cheque leaf, payable at the time of issue of the cheque book.
The Bank undertakes, on behalf of the customers, collection of cheques, hundis, bills, drafts, salary, pension bills, etc., in Current accounts.
Standing Instructions for remittances such as, insurance premia, subscription for clubs, etc., will be carried out by the Bank, subject to levy of service charges in force. 17
No interest will be paid on Current accounts. Countervailing interest on Current account balances (any benefit of interest allowed on any account in the nature of Current account maintained with the bank by its borrower) is also prohibited.
However, interest will be paid on credit balances in current accounts in the names of deceased individual deposits from the date of death of the deposit till the date of payment to the legal heir(s) / representative(s), at the rate applicable for savings bank accounts as ruling on the date of payment.
Current accounts can be transferred from one branch to another, at the request of the account-holders.
Nomination facility is available for current accounts opened in the n ames of one or more individuals.
The Bank reserves the right to close unremunerated and undesirable current accounts, after giving notice to such account-holder(s).
Any loss of cheque leaf or cheque book should be informed to the branch immediately furnishing the full particulars of cheque or cheques issued.
In case of return of cheque issued by the account-holder, the bank charges Rs.10/in the first instance and thereafter Rs.20/- for each return of cheque issued by the account holder
Closure of Current of Current account:
Cheque book should be submitted by the company to the bank and in case of cash credit balance, commission will be claimed by the bank unlike in SB a/c, where no commission will be claimed. To get signature from all dignitaries of the company and also surrender the ATM card, if given by the bank while maintaining current a/c. They should also pass such resolution that the company is closing its account.
In case of partnership firm while staring the firm, a clause to this effect should be passed stating closure of the account.
18
Opening of Term Deposit account :
Term deposit accounts can be opened by –
A person in his own name.
Two or more persons in their joint names payable to - both or all of them or to the survivor(s); or either or any one or more of them or to the survivor(s).
A natural guardian on behalf of minor.
A natural guardian in the joint names of himself/herself and the minor, payable to either or survivor.
A person in the name of any minor for whom the said person is the guardian appointed by a Court.
A minor aged 10 years or above in his single name to be operated upon by himself.
A Club, Association, Society, Educational Institution and other such bodies.
Trustees / Executors / Administrators / Courts.
Proprietorships, Partnerships and Limited Companies.
The depositor has to submit two passport p assport size photographs.
Introduction of Term Deposit account:
Introduction is necessary for all deposit accounts.
Such introduction introduction may be by an an
existing account holder or a respectable member of the local community known to the Bank, who should normally call at the Bank and sign in the column specially provided for the purpose in the account account opening form. The introducer should have conducted his/her account in a satisfactory manner for a minimum period of six months. Acceptance of passports/postal identification cards for the purpose of introduction:
Passports/Postal identification cards are accepted as valid documents for the purpose of identification/ introduction for opening of new Saving Bank and Term Deposit accounts.
19
The signature of the applicant and other particulars as given in the application form and specimen signature card must agree with that recorded in the passport/postal identification card.
Any one of the other documents like Driving Licence, Voter Identity card, PAN card, Ration card etc., is also to be submitted for the purpose verifying the identity and address of the customer.
The Citizens‟ are requested to introduce customers who are well known to them with regard to their address, occupation, etc., so as to avoid opening of accounts by undesirable persons.
Addition / Deletion of Names in Term deposits:
The depositors can add or delete names in the term deposits, as detailed below:
When the deposit is in the name of a single individual, the addition may be made at the written request of the sole depositor.
If the deposit is in the joint names of two or more persons, for adding or deleting the name of any person, written consent of of all the depositors is required. required. Splitting up of joint deposits in the name of each joint account holders is also permitted
when written instruction duly signed by all the depositors‟ is furnished to the Bank.
If the request for addition/deletion of a name is received from the survivor(s), after the demise of one of the joint depositors, such request can be acceded to, provided the legal heirs of the deceased and the survivor(s) s urvivor(s) give a consent letter.
Transfer of deposits accounts from one branch to another:
Current / Savings Bank / Recurring Deposits / Term Deposits are freely transferable from one branch to another under written instructions of the customer.
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Interest rate on deposits:
The interest rate applicable to the different schemes are determined by the bank based on market conditions, cost of funds etc. The interest rate offered are non-discriminatory and are applicable uniformly to all depositors at all branches of the Bank Bank is also offering floating interest rate linked to average Government Security rate for the relevant period. Minimum deposit amount is Rs 1 lac. Minimum period of deposit deposit is 3 years and maximum period is 10 years. Premature closure of deposit is not allowed before completion of 3 years. The interest rate is reset twice every year in March and September based on the link interest rate. The deposits are accepted at select branches only due to operational convenience. Conversion from floating interest rate to fixed interest rate is not permitted. Deposits received from the Senior Citizens under the scheme are not eligible for additional interest of 1%. Closure of Term deposits:
You should at the back of the receipt, which you will receive at the starting of opening your account and at every renewal that you make if you wish to continue. In this receipt you should mention your intention of closing the deposit and if possible also mention where they wish to transfer this account.
21
Non-Resident Accounts Non-Resident Accounts:
Foreign Currency (Non Resident) (FCNR) accounts can be opened by nonresident Indian and persons of Indian origin.
Accounts can be opened jointly with Resident close relatives
The accounts can be opened as Term Deposits in the following currencies:
US DOLLAR (USD)
GREAT BRITAIN POUND (GBP)
EURO (EUR)
JAPANESE YEN (JPY)
CANADIAN DOLLAR (CAD)
AUSTRALIAN DOLLAR (AUD)
The period of deposit will be 1 year to 5 years. Interest will be paid on maturity, in the same currency of the deposit. For deposits of tenure up to one year simple interest will be paid and for deposits of tenure beyond one year the interest will be compounded at half yearly rests. The maturity proceed inclusive of interest is fully repatriable. Forward contract can be booked for conversion of proceeds in to Indian Rupee, if needed. Premature closure is allowed. However the interest payable in such cases will be one percent below the rate applicable for the period the deposit has run. No interests allowed on a deposit if closed prematurely before completion of one year. Swap charges will be levied for premature closure of large deposits. Loan against such deposits can be availed in Indian rupees upto 75% of the deposit amount and accrued interest or Indian rupees one crore (whichever is lower) for purposes other than investment.
22
Resident Foreign Currency Account (RFC):
A Resident Foreign Currency account in India can be maintained by a Non-resident Indian who has returned home for permanent settlement, after staying abroad for a minimum period of one year. An RFC account can be opened without any regulatory approval from the Reserve Bank of India. RFC accounts can be maintained in USD/EUR/GBP/JPY/AUD/CAD in the form of Savings / Term Deposit Credits to the account can in any of the following means:
Balances standing to the credit of NRE and FCNR accounts at the time of return.
Income from overseas assets or sales proceeds from overseas assets.
Entire amount of pension received from abroad. Balance in the account can be remitted abroad for bonafide purposes either for yourself or your dependants. If you decide to go abroad again you can transfer your funds to NRE/FCNR account(s) Interest earned on RFC account is subject s ubject to tax.
Non-Resident Ordinary (NRO):
NRIs and PIO can maintain NRO account for bonafide local banking transactions denominated in Rupees, not involving any violation of the provisions of FEMA and rules and regulations made thereunder. (Note: Opening of accounts by individuals/entities of Bangladesh / Pakistan nationality / ownership requires prior approval of Reserve Bank of India)When a resident Indian becomes nonresident, the existing account in India will be designated as NRO account. The accounts can be in the form of savings, current or term deposits. Joint account with other NRI(s)/PIO or close resident relative is permitted. Remittances from abroad and legitimate dues in India of the account holder can be credited to the account. Interest income is subject to income tax. The following debits are permitted in the account:
All local payments in rupees including payments for investments in India subject to compliance with the relevant regulations made by the Reserve Bank. 23
Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the account holder.
Remittance up to USD One million, per financial year (April-March), for all bonafide purposes, to the satisfaction of the bank. b ank.
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Honoring and Stopping cheques Introduction:
Keeping in view the technological progress in payment and settlement systems and the qualitative changes in operational systems and processes that have been undertaken by a number of Banks, the Reserve Bank of India had, with effect from 1st November 2004 withdrawn its earlier instructions to commercial banks on (1) Immediate Credit of Local/Outstation instruments, (2) Time Frame for collection of Local/Outstation Instruments, and (3) Interest payment for delayed collection. The withdrawal of these mandatory guidelines was expected to enable market forces of competition to come into play to improve efficiencies in collection of cheques and other instruments. This collection policy of the Bank is a reflection of our on-going efforts to provide better service to our customers and set higher standards for performance. The policy is based on principles of transparency and fairness in the treatment of customers. The bank is committed to increased use of technology to provide quick collection services to its customers. This policy document covers the following aspects:
Collection of cheques and other instruments payable locally, at centres within India and abroad
Our commitment regarding time norms for collection of instruments
Policy on payment of interest in cases where the Bank fails to meet time norms for realisation of proceeds of outstation instruments
Our policy on dealing with collection instruments lost in transit
Arrangements for collection: Local Cheques
All cheques and other Negotiable Instruments payable locally would be presented through the clearing system prevailing at the centre. Cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-off 25
time will be presented for clearing on the same day. Cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATMs will be
presented in the next clearing cycle. As a policy bank would give credit to the customer‟s account on the same day clearing settlement takes place. Withdrawal of amounts as credited would be permitted as per the Cheque return schedule of the clearinghouse. Wherever applicable, facility of high-value clearing (same day credit) will be extended to customers. Bank branches situated at centres where no clearing house exists, would
present local cheques on drawee banks across the counter and it would be the bank‟s endeavour to credit the proceeds at the earliest. All branches will fix up the day‟s cut off time for the inclusion of instruments for clearing, taking into account the clearing cycle and other related factors, like distance from clearing house, communication facility, local established practices, methodology being followed by other banks in the particular centre etc. While arriving at the said cut off time, care would be taken to extend maximum leverage time to the advantage of the customers. Display board will be placed in the banking hall, indicating the cut off time limits for receipt of cheques for payment to Government Accounts like income-tax etc and High value cheques Outstation Cheques:
Cheques drawn on other banks at outstation centres will normally be collected through
Bank‟s branches at those centres. Where the bank does not have a branch of its own, the instrument would be directly sent for collection to the drawee bank or collected through a correspondent bank. The bank would also use the National Clearing Services offered by the Reserve Bank of India at centre where such collection services exist. Cheques drawn on bank ‟s ‟s own branches at outstation centres will be collected using the inter-branch arrangements in vogue. Branches which are connected through a centralised processing arrangement and are offering anywhere banking services to its customers will provide same day credit to its customer in respect of outstation instruments drawn on any of its branches in the CBS network.
26
Cheques payable in foreign countries
Cheques payable at foreign centres where the bank has branch operations (or banking operations through a subsidiary, etc) will be collected through that office. The services of correspondent banks will be utilized in country/centre, where the correspondent has presence. Cheques drawn on foreign banks at centres where the bank or its correspondents do not have direct presence will be sent direct to the drawee bank with instructions to credit proceeds to the respective Nostro account of the bank maintained with one of the correspondent banks. The day when the amount is due for credit is the date of credit to Nostro Account plus 15 days for USD cheques and date of credit to Nostro Account plus 21 days in case of other currencies subject to other conditions as applicable in respective countries. The exchange rate will be the rate applicable on the date on which the foreign currency is converted in Indian Rupees and credited to the
Customer‟s account by the Bank. Immediate credit of local/outstation local/outstation cheques/instruments: Branches/Extension counters of the Bank will consider providing immediate credit to outstation instruments which include Demand drafts drawn on other Banks, Interest Warrants and Dividend Warrants upto the aggregate value of Rs.15000/- tendered for collection by individual account holders subject to satisfactory conduct of such accounts for a period not less than 6 months. Immediate credit will be provided against such collection instruments at the specific request of the customer or as per prior arrangement. The facility of immediate credit would also be made available in respect of local cheques at centres where no formal clearing house exists. The facility of immediate credit will be offered on savings Bank/Current/Cash Credit Accounts of the customers. For extending this facility there will not be any separate stipulation of minimum balance in the account. Under this policy, prepaid instruments like demand drafts, interest/dividend warrants shall be treated on par with cheques. In the event of dishonour of cheques against which immediate credit was provided, interest shall be recoverable from the customer for the period the bank
27
remained out of funds at the rate applicable for overdraft limits sanctioned for individual customers. For the purpose this policy, a satisfactorily conducted account shall be the one
Opened at least six months earlier and complying compl ying KYC norms
Conduct of which has been satisfactory and bank has not noticed any irregular dealings.
Where no cheques/instruments for which immediate credit were afforded returned unpaid for financial reasons.
Where the bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving immediate credit. Bank shall levy normal collection charges and out of pocket expenses while providing immediate credit against outstation instruments tendered for collection. Exchange charges applicable for cheque purchase will not however be charged. Purchase of local and outstation cheques: Bank may, at its discretion, purchase local/outstation cheque tendered for collection at the specific request of the customer or as per prior arrangement. Besides satisfactory conduct of account, the standing of the drawer of the cheque will also be a factor considered while purchasing the cheque.
Time frame for collection of Local/ Outstation cheques / Instruments:
For local cheques presented in clearing credit will be afforded as on the date of settlement of funds in clearing and the account holder will be allowed to withdraw funds as per return clearing norms in vogue. Cheques/Instruments presented in high value clearing (with the minimum value of Rs 1 lac) shall be credited on the same day (applicable only in areas covered by high value/same day clearing) For cheques and other instruments sent for collection to centres within the country the following time norms shall be applied.
28
Cheques presented at any of the four major Metro Centres (New Delhi, Mumbai, Kolkata and Chennai) and payable at any of the other three centres: Maximum period of 7 days.
Metro Centres and State Capitals (other than those of North Eastern States and Sikkim) Maximum period of 10 days.
In all other Centres: Maximum period of 14 days.
Cheques drawn on foreign countries: Such instruments are accepted for collection on the "best of efforts" basis. Bank may enter into specific collection arrangement with its correspondent bank for speedy collection of such instrument. Bank would
give credit to the party on credit of proceeds to the Bank‟s Nostro Account with the correspondent bank after taking into account cooling periods as applicable to the countries concerned. The above time norms are applicable irrespective of
whether cheques/instruments are drawn on the bank‟s own branches or branches of other banks. Payment of interest for delayed collection of Outstation Cheques: As part of the
compensation policy of the bank, the bank will pay interest to its customer on the amount of collection instruments in case there is delay in giving credit beyond the time period mentioned above. Such interest shall be paid without any demand from customers in all
types of accounts. There shall be no distinction between instruments drawn on the bank‟s own branches or on other banks for the purpose of payment of interest on delayed collection. Interest for delayed collection shall be paid at the following rates:
Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be in collection of outstation cheques.
Where the delay is beyond 14 days, interest will be paid at the rate applicable to for term deposits of the respective period.
29
In the case of extraordinary delay, i.e. delay exceeding 90 days, interest will be paid at the rate of 2% above the corresponding Term deposit rate.
In the event of the proceeds of Cheque under collection was to be credited to an overdraft / loan account of the customer, interest will be paid at the rate applicable to the loan account. For extraordinary delays, interest will be paid at the rate of 2% above the rate applicable to the loan account. It may be noted that interest payment as given above would be applicable only for instruments sent f or collection within India.
Cheques/Instruments lost in transit, in clearing process or at paying Bank’s Branch:
In the event a Cheque or an instrument accepted for collection is lost in transit or in the
clearing process or at the paying bank‟s branch, the bank shall immediately on coming to know of the loss, bring the same to the notice of the accountholder so that the account holder can inform the drawer to record stop payment and also take care that the cheques, if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost cheques/instruments. The bank would provide all assistance to the customer to obtain a duplicate instrument from the drawer of the Cheque. In line with the compensation policy of the bank the bank will compensate the account holder in respect of instruments lost in transit in the following way:
In case intimation regarding loss of instrument is conveyed to the customer beyond the time limit stipulated for collection (7/10/14 days as the case may be) interest will be paid for the period exceeding the stipulated collection period at the rates specified above.
In addition, bank will pay interest on the amount of the Cheque for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate Cheque/instrument and collection thereof.
The bank would also compensate the customer for any reasonable charges he/she incurs in getting duplicate Cheque/instrument upon production of receipt, in the 30
event the instrument is to be obtained from a bank/institution who would charge a fee for issue of duplicate instrument. Bank will reimburse the related charges debited in the account of the drawer (of collection/clearing cheque deposited by the customer which is lost in transit) by the drawee bank branch. Further, as a customer enhancement measure, branches shall keep a photocopy of the instrument to meet any eventuality arising out of instruments lost in transit. In the cases of discounted cheques, which are lost in transit, Bank will deal with the same as given below:
Bank will seek the consent of the beneficiary-customer for debiting his/her account towards recovery of discounted value of the cheque which is lost-intransit and interest thereon
If the Customer‟s consent is not forthcoming, Bank will not debit customer‟s account towards recovery and instead will pursue the process of obtention of duplicate cheque by rendering necessary assistance/ support to the customer. Discounted value of the cheque and the interest thereon will be collected from the customer. If the customer or the drawer is not cooperating for getting the duplicate instrument, the Bank will give prior notice to the customer and debit the account of the customer for the value paid with interest. In case the recovery is found to be difficult, necessary legal action will be initiated.
Force Majeure: The bank shall not be liable to compensate customers for delayed credit
if some unforeseen event (including but not limited to civil commotion, sabotage, lockout, strike or other labour disturbances, accident, fires, natural disasters and other
“Acts of God” war, damage to the Bank‟s facilities or of its correspondent bank(s) absence of the usual means of communication or all types of transportation, etc beyond the control of the Bank prevents it from performing its obligations with the specified service delivery parameters. 31
Charging of interest on cheques returned unpaid where instant credit was given: If a
cheque sent for collection for which immediate credit was provided by the bank is returned unpaid, the value of the cheque will be immediately debited to the account. The customer will not be charged any interest from the date immediate credit was given to the date of return of the instrument unless the bank had remained out of funds on account of withdrawal of funds. Interest where applicable would be charged on the notional overdrawn balances in the account had credit not been given initially. If the proceeds of the Cheque were credited to the Savings Bank Account and was not withdrawn, the amount so credited will not qualify for payment of interest when the Cheque is returned unpaid. If the proceeds of the Cheque were credited to an overdraft/loan account, interest shall be recovered at the rate of 2% above the interest rate applicable to the overdraft /loan from the date of credit to the date of reversal of the entry if the Cheque/instrument was returned unpaid to the extent the bank was out of funds. Stop Payment Facility:
Bank will accept stop payment instruction from you in respect of cheques issued by you. Immediately on receipt of your instructions we will give acknowledgement and take action provided these cheques cheques have not already already been cleared by us. levy charges, if any, and the same will be included in the Tariff Schedule as amended from time to time. In case a cheque has been paid after stop payment instructions are acknowledged, we will reimburse and compensate you as per the compensation co mpensation policy of the bank. Payment of cheques after Stop Payment instructions:
In case a cheque has been paid after stop payment instruction is acknowledged by the bank, the bank shall reverse the transaction and give value dated credit to protect the interest of the customer.
Any consequential financial loss loss to the customer will be
compensated as provided under para 1 above. Such debits will be reversed within 2 working days of the customer intimating the transaction to the Bank. Payment of interest for delayed collection of Outstation Cheques: 32
As part of the compensation policy of the bank, the bank will pay interest to its customer on the amount of collection instruments in case there is delay in giving credit beyond the time period mentioned above. Such interest shall be paid without any demand from customers in all types of accounts. There shall be no distinction between instruments
drawn on the bank‟s own bran ches or on other banks for the purpose of payment of interest on delayed collection. Cheques clearing process:
In the event a Cheque or an instrument accepted for collection is lost in transit or in the
clearing process or at the paying bank‟s branch, t he bank shall immediately on coming to know of the loss, bring the same to the notice of the accountholder so that the account holder can inform the drawer to record stop payment and also take care that the cheques, if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost cheques/instruments. The bank would provide all assistance to the customer to obtain a duplicate instrument from the drawer of the Cheque. In line with the compensation policy of the bank the bank will compensate the account holder in respect of instruments lost in transit in the following way:
In case intimation regarding loss of instrument is conveyed to the customer beyond the time limit stipulated for collection interest will be paid for the period exceeding the stipulated collection period at the rates specified above.
In addition, bank will pay interest on the amount of the Cheque for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate Cheque/instrument and collection thereof.
The bank would also compensate the customer for any reasonable charges he/she incurs in getting duplicate Cheque/instrument upon production of receipt, in the event the instrument is to be obtained from a bank/institution who would charge a fee for issue of duplicate instrument.
33
MONEY LAUNDERING Definition:
The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime. Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source. If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as the many others who need to avoid the kind of attention from the authorities that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws. The Money laundering process:
Money laundering is not a single act but is in fact a process that is accomplished in three basic steps. These steps can be taken at the same time in the course of a single transaction, but they can also appear in well separable s eparable forms one by one as well.
34
The steps are:
Placement;
Layering; and
Integration.
There are also common factors regarding the wide range of methods used by money launderers when they attempt to launder their criminal proceeds. Three common factors identified in laundering operations are;
The need to conceal the origin and true ownership o wnership of the proceeds;
The need to maintain control of the proceeds;
The need to change the form of the proceeds in order to shrink the huge volumes of cash generated by the initial criminal activity.
35
36
Automatic Teller Machine (ATM) Indian Overseas Bank has achieved results owing to performance. With a modest beginning of the ATM installation in Mumbai, in Feb 1997 .IOB have a total of over 700ATMs adding strength to its business.
While expanding its scope of reach in giving its customer‟s access to Any Time Money ATMs have been installed across the length and breadth of the country. ATMs are used for dispensing cash 24 hours a day. ATM cards are issued only to those individuals who are majors and holding either a Savings Bank or Current Account. These machines support transactions online and offline. The online transactions supported are:
Cash Withdrawal
Balance Inquiry
Statement Inquiry
The offline transactions supported are:
Cash Withdrawal
Deposit of Cash/Cheque
Request for Statement/Cheque Book
All types of services are chargeable at nominal rates.
The card holder should maintain the minimum balance prescribed by the Bank from time to time. Overdrawing is prohibited and the customer is bound by the action of the Bank. During the currency of the card the savings/current/deposit accounts of the card holder cannot be closed or transferred to other branches. The Bank reserves the right to terminate the ATM facility upon occurrence of any of the events, which are inconsistent
with the Bank‟s policy with regard to ATMs. 37
Our bank has arrangement with the following member banks for sharing of ATM’s. AT M’s.
Indian Bank - Yes Bank Limited
Bank of Maharashtra - Karnataka Bank
Dena Bank - Syndicate Bank
Union Bank of India - United Bank of India
The Bank of Rajasthan Limited - Bank of India
Services offered:
Cash withdrawals
Cash deposits
Cheque Deposits
Statement of Accounts
Cheque/DD etc.
Multilingual screens
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Internet Banking Internet Banking is the online banking service provided by Indian Overseas Bank for the benefit of customers to access and transacts their account on all 365 days. Internet Banking is the most convenient and powerful way to manage your account as it is Real Time, giving you up-to-the-second details on your account. Services of Internet Banking:
Balance Enquiry
Last Few transactions
Account Statement
Transfer money to any of your bank accounts (within and outside IOB)
Payment services:
Direct Taxes
Indirect Taxes
College Fees for the students studying stud ying at SASTRA-Tanjore
Utility bills like Insurance, mobile etc and many more.
Tamilnadu Electricity board bills
Recurring deposit installments
Loan installments
IOB Credit card dues
Register with Internet banking:
Savings/ Current account holders
Deposit / Loan account holders
Proprietary firms
Partnership companies
Limited Companies 39
Societies/Trusts
HUFs
Step to Register: Step 1:
Login to www.iobnet.co.in
Click on “Register Individual” if you are an individual or a proprietary firm
Else click on “Register Corporate”
Once registered submit the application forms and the annexure displayed to you (in case of Companies/Partnership firms/Societies/Trusts) to your branch Note down the PIN number which is to be used for all Funds transfer transactions. Your account will be activated by the branch on receipt of the application Step 2:
Login with your password Login Password & transaction PIN are different where password is used to login and PIN for funds transfer. The wrong passwords more than 3 times consecutively, will block your account. Once you‟re activated you will receive an e -mail saying that your account is activated.
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MOBILE BANKING Mobile Banking is a service that allows customers to do banking transactions on their mobile phone without making a call, using the SMS facility. Mobile Banking works on the 'Text Messaging Facility' also called the SMS that is available on mobile phones. This facility allows sending a short text message from mobile phone instead of making a phone call. All that is need to do is, to type out a short text message on mobile phone and send it out to a specific mobile mobile banking number given by the bank bank .The response response is sent as an SMS message, all in the matter of a few seconds. The following transactions are currently available across India
Balance Inquiry of all accounts linked to Customer Identification Number (maximum up to five accounts)
Following transactions transactions give information on primary primary account
Checking the last 3 transactions in your primary account for Mobile Banking
Placing a Stop Payment on a cheque
Requesting a cheque book
Requesting an Account Statement
Cheque Status inquiry
Bill Presentment
Fixed Deposit Inquiry
A Help menu, which gives you the transaction codes for the various transactions
IPIN Re-generation request
SMS Banking initiatives permit you to access your Bank accounts and carry out various banking transactions and enquire. If you have a mobile phone, you can use the SMS
41
facility and conduct the following operations using the messaging services of your service provider.
Balance Enquiry
Last Few Transactions
Cheque Paid Status
Cheque Book Request
ATM Locator
Branch Locator
Fund Transfer - Own
Fund Transfer - Third Party
Fund Transfer - Inter Bank
Credit Card Payment
Loan Service
Deposit Balance Enquiry
Movie Ticket Booking
Air Ticket Booking
Demat Service
SMS banking is one the IOB retail banking channels, which allows customers to do banking activities from their mobile phone using SMS Technology. IOB's mobile banking keeps its valued customers updated with their bank account details and enables them to request for their account information and make request to Stop Cheque or cheque the status of cheque presented. SMS alert service keeps you informed/ updated about the significant activities/ transactions taken place in your account(s). For example you can receive SMS Account Balance alerts (Daily, Weekly or Monthly) or get alert whenever any debit or credit transaction(s) happen in your account for the configurable amount. 42
SMS Pull - enquiry enable the bank's mobile banking register to check his/ her account balance or last few transactions for his/ her account(s) by just sending a message to 9551099007. For balance enquiry in account:
Format: BAL
to +919551099007 = SB+ (should be 9 digits) = CD+ (should be 9 digit's) etc. e.g.:
Original Account number: 1234
Equivalent 9-digit account: 000001234 e.g.:
BALSB000001234 to +919551099007
Visit our https://www.iobnet.mobi from your desktop browser. This will open the customer module where you can click on the "How to Register?" and download the form, fill the details and just walk in to your nearest branch or apply for the Mobile Banking service by duly filling the Mobile Banking application form in the branch. The service is available to all IOB customers with local or foreign currency accounts (Current, Saving accounts, Loan, Term Deposit or Credit Card). SMS Banking service works on all GSM mobile phones that support SMS technology. Compose a new SMS text message as per the sample messages on the SMS Banking User Guide and send it to +919551099007. You can save all the text formats you need under the "sent item" on your mobile phone for your future use. No PIN is required to enquire on accounts.
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Identification of Fake Notes Despite of skillfully forging a currency note, the genuineness cannot be achieved. The differences will be due to the Paper Ink, Human Element and above all Unavailability of the Security Measures taken by the Currency Press by the Government. The genuine notes are made of a special type of paper which is manufactured in Security Paper Mill, Hoshangabad (Madhya Pradesh).
In printing, multi-coloured impressions are used with the intaglio printing press. The forgers use various methods for making the counterfeit currency viz.
Photographic Method
Process made Forgery
Hand engraved blocks
Lithographic Process
Hand Drawn Forgery
Forged notes usually exhibit certain characteristic differences which facilitates easy identification. There are number of distinguishable features w hen compared with genuine notes.
Size: While cutting in bundles the size of the forged notes are not same, while the
size of genuine currency is fixed.
Size of Printed Design: The technique used for printing the genuine notes is
highly sophisticated. It gives each and every line in printing with cleat and sharp images. It is not possible with the counterfeit currency.
44
Watermark: In counterfeit notes, the watermark is made by using Opaque Ink,
painting with white solution, stamping a die, engraved with the picture of Mahatma Gandhi and also by applying oil, grease or wax to give the transparent image of Mahatma Gandhi.
Security Thread: In genuine notes, the security thread is incorporated into the
paper at the time of manufacture of the paper. The security thread in counterfeit notes is imitated by drawing a line by pencil or printing a line with grey ink or by using an aluminum thread while pasting two thin sheets of paper. In genuine notes over security thread one can read the word RBI and BHARAT in Hindi
Numbering: In counterfeit currency it is difficult to reproduce the same shape of
individual numbers again and again with accuracy. The alignment of figures is also difficult to maintain by the forgers. Spreading of Ink, Smaller or Bigger Number, Inadequate gaps, and Different alignments in numbers can be regarded with suspicion.
Quality of Printing: In counterfeit notes the printed lines will be broken and there
may also be smudging of Ink.
Other Techniques
Serial numbers are printed with fluorescent ink which can be seen when viewed under a ultra-violet lens.
Floral design on the left side- half the denomination of the currency will be
printed on the front side and the other half on the back side. If seen against bright light, the complete denomination appears.
45
Just below the floral print, a mark is made in Intaglio (a kind of printing where the image is slightly raised) for the visually-impaired to identify the denomination. For the Rs. 500 note, the mark is a CIRCLE, for the Rs. 100, it is a TRIANGLE and a SQUARE for the Rs. 50.
Similarly, a portrait of Mahatma Gandhi, the RBI Seal, a guarantee and promise clause, an Ashoka Pillar emblem on the left and RBI Governor's signature are all printed on Intaglio.
A band printed on the right side contains a latent image of the denomination of the banknote. The numeral appears when the currency is held horizontally at the eye level.
A wide security thread with inscriptions BHARAT in Hindi and RBI runs through the banknote. The thread fluoresces on both sides in Ultra-violet light.
46
47
48
49
RATIO ANALYSIS Meaning and definition of ratio analysis:
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables. Capital adequacy ratio:
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk, etc. In the simplest formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders. Banking regulators in most countries define and monitor CAR to protect depositors, thereby maintaining confidence in the banking system. Definition of 'Capital Adequacy Ratio - CAR':
A measure of a bank‟s capital. It is expressed as a percentage of a bank's risk weighted credit exposures.
Capital Adequacy Ratio - CAR' this ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world. Two types of capital are measured there are tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.
50
Financial assets or the financial value of assets, such as cash.
The factories, machinery and equipment owned by a business.
A term used to describe the capital adequacy of a bank. Tier I capital is core capital; this includes equity capital and disclosed reserves.
A term used to describe the capital adequacy of a bank. Tier II capital is secondary bank capital that includes items such as undisclosed reserves, general loss reserves, subordinated.
SLR (Statutory Liquidity Ratio):
Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). RBI is empowered to increase this ratio up up to 40%. Increases in SLR also res trict the bank‟s leverage position to pump more money into the economy. SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is is ratio of cash and some other approved securities to liabilities (deposits) it regulates the credit growth in India.
Some non-bankers also wrongly use SLR ratio or SLR Rate
instead of Statutory Liquidity Ratio.
Apart from keeping a portion of deposits with the RBI as cash, banks are also required to maintain a minimum percentage of deposits with them at the end of every business day, in the form of gold, cash, government bonds or other approved securities. This minimum percentage is called Statutory Liquidity Ratio. Example 51
If you deposit Rs. 100/- in bank, CRR being 6% and SLR being 8%, then bank can use 100-6-8= Rs. 84/- for giving loan or for investment purpose.
Statutory Liquidity Ratio (SLR)
24%(w.e.f. 18/12/2010)
Decreased from 25% which was continuing since 07/11/2009
Cash Reserve Ratio (CRR):
The Reserve Bank of India (Amendment) Bill, 2006 has been enacted and has come into force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the Reserve Bank, having regard to the needs of securing the monetary stability in the country, RBI can prescribe Cash Reserve Ratio (CRR) for scheduled banks without any floor rate or ceiling rate [Before the enactment of this amendment, in terms of
Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled banks between 3 per cent and 20 per cent of total of their demand and time liabilities]. RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of the economy from time to time. Increase in CRR means that banks have fewer funds available and money is sucked out of circulation. Thus we can say that this serves duel purposes i.e.(a) ensures that a portion of bank deposits deposits is kept with RBI and is totally risk-free, (b) enables RBI to control liquidity in the system, and thereby, inflation inflation by tying the hands of the banks banks in lending money. money. Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks don’t hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivalent to holding cash with RBI. This minimum ratio (that is the
52
part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, when a bank’s deposits increase by Rs100, and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6 with RBI and Bank will be able to use only Rs 94 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system. Some non-bankers also wrongly use CRR Ratio or CRR Rate instead of Cash Reserve Ratio).
Banks are required to maintain a percentage of their deposits as cash, meaning that if you deposit Rs. 100/- in your bank, then bank can‟t use the entire Rs. 100/ - for lending or investment purpose. They have to maintain a portion of the deposit as cash and can use only the remaining amount for lending/investment. This minimum percentage which is determined by the central bank is known as Cash Reserve Ratio. So if CRR is 6% then it means for every Rs. 100/- deposited in bank, it has to maintain a minimum of Rs. 6/- as cash. However banks do not keep this cash with them, but are required to deposit it with the central bank, so that it can help them with cash at the time of need. Decreased from Cash Reserve Ratio (CRR)
4.75% (w.e.f 10/03/2012) -
5.50%which was
announced on 24/01/2012
continuing since 24/01/2012
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Indian Overseas Bank: Ratio Analysis Mar ' 11
Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
14.55
14.26
12.70
11.96
13.27
68.05
67.72
66.81
66.06
64.13
11.62
14.31
14.57
13.83
12.92
94.65
94.80
94.53
94.59
93.98
5.34
5.19
5.46
5.40
6.01
7.91
9.69
9.73
9.13
8.28
7.05
8.95
9.04
8.75
6.95
Cost of Funds Ratio
4.79
5.90
6.34
5.83
4.56
Net Profit Margin
8.04
6.14
11.87
13.94
16.18
13.12
11.10
21.16
25.31
25.97
13.13
11.13
22.31
25.35
26.04
Capital Adequacy Ratio
EARNINGS RATIOS
Income from Fund Advances as a % of Op Income Operating Income as a % of Working Funds Fund based income as a % of Op Income Fee based income as a % of Op Income
PROFITABLITY RATIOS
Yield on Fund Advances Break-Even Yield Ratio
Adjusted Return On Net Worth Reported Return On Net Worth
BORROWING
54
RATIOS
Borrowings from RBI as % to Total
19.37
0.00
0.00
0.00
8.63
0.00
0.00
0.00
0.00
0.00
46.46
68.35
47.13
66.24
36.72
65.83
68.35
47.13
66.24
45.35
34.16
31.64
52.86
33.75
54.64
8.12
8.67
8.12
10.67
9.91
22.07
23.87
22.13
22.78
24.94
69.79
67.45
69.74
66.54
65.14
96.66
95.16
95.32
95.86
96.56
3.33
4.83
4.67
4.13
3.43
5.95
5.55
5.58
4.44
3.26
Borrowings Borrowings from other banks as a % to Total Borrowings Borrowings from others as a % to Total Borrowings Borrowings within India as a % to Total Borrowings Borrowings from outside India as a % to Total Borrowings
DEPOSIT RATIOS
Demand Deposit of Total Deposits Saving Deposit of Total Deposits Time Deposit of Total Deposits Deposits within India as % to Total Deposits Deposits Outside India as % to Total Deposits PER BRANCH RATIOS
Operating Income Per Branch
55
Operating Profit Per Branch Net Profit Per Branch Personnel Expenses Per Branch Administrative Expenses Per Branch Financial Expenses Per Branch Borrowings Per Branch Deposits Per Branch
0.74
0.47
0.99
0.81
0.68
0.49
0.35
0.64
0.64
0.54
0.80
0.85
0.65
0.50
0.50
0.80
0.74
0.46
0.30
0.32
3.61
3.48
3.47
2.81
1.76
8.86
4.41
3.35
3.37
1.55
66.50
54.42
51.24
44.78
36.90
5,073,758.60
4,765,322.86
4,304,598.61
3,375,362.50
2,548,981.69
627,277.14
403,234.87
762,536.12
619,576.28
531,146.68
418,137.91
297,216.46
496,030.14
484,882.05
421,627.43
679,441.50
730,974.63
501,772.24
383,494.06
390,204.43
56,672,422.97
46,685,787.54
39,498,121.91
34,051,681.03
28,808,689.87
43,640,434.52
33,290,041.17
29,544,037.80
24,399,872.40
19,722,679.69
PER EMPLOYEE RATIOS
(Rs. in Units) Operating Income Per Employee Operating Profit Per Employee Net Profit Per Employee Personnel Expenses Per Employee Deposits Per Employee Fund Advances Per Employee
Key Financial Ratios of Indian Overseas Bank
56
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
Investment Valuation Ratios
Face Value
10.00
10.00
10.00
10.00
10.00
Dividend Per Share
5.00
3.50
4.50
3.50
3.00
Operating Profit Per Share (Rs)
25.98
17.57
35.48
28.16
23.26
Net Operating Profit Per Share (Rs)
210.13
207.58
200.27
153.43
111.64
Free Reserves Per Share (Rs)
60.38
45.21
42.83
42 .79
34.32
Bonus in Equity Capital
--
--
--
--
--
Interest Spread
3.89
4.69
4.29
4.26
4.79
Adjusted Cash Margin (%)
8.82
7.10
12.16
14.79
17.12
Net Profit Margin
8.04
6.14
11.87
13.94
16.18
Return on Long Term Fund (%)
116.16
126.87
145.71
146.37
119.88
Return on Net Worth (%)
13.13
11.13
22.31
25.35
29.11
Adjusted Return on Net Worth (%)
13.12
11.10
21.16
25.31
25.97
Return on Assets Excluding Revaluations
131.96
116.54
109.06
87.05
71.08
Return on Assets Including Revaluations
150.71
138.12
131.26
89.15
73.24
Interest Income / Total Funds
8.46
9.06
9.85
9.09
8.60
Net Interest Income / Total Funds
3.32
3.39
3.74
3.34
3.98
Profitability Ratios
Management Efficiency Ratios
57
Non-Interest Income / Total Funds
0.21
0.16
0.23
0.29
0.21
Interest Expended / Total Funds
5.13
5.67
6.11
5.75
4.63
Operating Expense / Total Funds
2.28
2.62
1.99
1.67
2.18
Profit Before Provisions / Total Funds
1.19
0.84
1.89
1.88
1.92
Net Profit / Total Funds
0.70
0.57
1.20
1.31
1.43
Loans Turnover
0.14
0.15
0.16
0.16
0.15
Total Income / Capital Employed (%)
8.67
9.21
10.08
9.38
8.82
Interest Expended / Capital Employed (%) 5.13
5.67
6.11
5.75
4.63
Total Assets Turnover Ratios
0.08
0.09
0.10
0.09
0.09
Asset Turnover Ratio
5.13
4.60
4.64
7.58
6.08
Interest Expended / Interest Earned
65.23
69.08
70.24
66.37
56.09
Other Income / Total Income
2.42
1.72
2.30
3.08
2.39
Operating Expense / Total Income
26.28
28.45
19.76
17.81
24.77
Selling Distribution Cost Composition
0.17
0.31
0.24
0.14
0.22
Capital Adequacy Ratio
14.55
14.26
12.70
11.96
13.27
Advances / Loans Funds (%)
78.66
69.78
75.89
74.45
76.58
Credit Deposit Ratio
74.54
72.96
73.36
70.22
68.60
Investment Deposit Ratio
33.69
32.65
32.36
34.27
35.99
Cash Deposit Ratio
6.90
6.45
8.17
9.02
6.51
Profit And Loss Account Ratios
Balance Sheet Ratios
Debt Coverage Ratios
58
Total Debt to Owners Fund
17.79
17.45
16.85
17.78
17.75
Financial Charges Coverage Ratio
0.24
0.16
0.32
0.34
1.43
Financial Charges Coverage Ratio Post Tax 1.15
1.12
1.21
1.24
1.33
Leverage Ratios
Current Ratio
0.03
0.03
0.02
0.02
0.02
Quick Ratio
25.94
23.61
11.46
11.32
8.07
Dividend Payout Ratio Net Profit
33.52
31.55
21.63
16.96
18.96
Dividend Payout Ratio Cash Profit
30.53
27.24
20.10
15.96
17.87
Earning Retention Ratio
66.45
68.38
77.19
83.02
81.00
Cash Earning Retention Ratio
69.44
72.70
78.89
84.02
82.09
Adjusted Cash Flow Times
123.44
135.59
73.71
66.09
64.41
Cash Flow Indicator Ratios
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
Earnings Per Share
17.33
12.98
24.34
22.07
18.51
Book Value
131.96
116.54
109.06
87.05
71.08
59
60
VARIOUS TYPES OF LOANS Advance-General Instruction:
IOB Bank has large number of credit schemes to suit to the requirements of individual customers. Thus, loans and advances are extended against pledge of bank deposits receipts, Life Insurance Policies, fully paid shares and debentures, National Savings Certificates. Kisan Vikas Patras, Indira Vikas Patras, Unit Trust of India Certificates, etc. IOB Bank also extends loans against pledge of Jewels to Agriculturists and others. Normally 25% margin is maintained for all the advances. However, in specific cases like advances against National Savings Certificates, Kisan Vikas and Indira In dira Vikas Patras, higher margin is stipulated as these instruments are not encashable on demand but can be encashed only on the date of maturity. The rate of interest is fixed by Bank from f rom time to time. IOB Bank also extends finance to the Farmers for cultivation of crops, minor irrigation, land development, farm mechanisation, Horticulture and plantation and allied activities like diary, poultry, goat and sheep rearing, fishery, prawn culture, piggery, seri-culture and for construction of bio-gas plants. Credit facilities are also extended for construction and repair of houses under SUBHA GRUHA SCHEME, purchase of new and old cars under PUSHPAKA SCHEME, payment of taxes under TAX SULABH SCHEME and credit assistance for stock brokers / share brokers under SOWMITRA SCHEME. Credit facilities are also extended under HOME DECORSCHEME for purchase of furnishing etc, under CLEAN LOAN & PERSONAL LOAN schemes to salaried persons for personal expenses & purchase of consumer durable respectively, SAHAYIKA for purpose of meeting social commitment, EASY TRADE FINANCE scheme for hassle free finance for trading activities etc. Loans are extended to Small Scale Industries, Tiny Sector and ancillary units. Credit facilities are also extended to Women entrepreneurs, weaker section, rural artisans, 61
village and cottage industries and Transport operators, Retail Traders, professional and self-employed and business enterprises. Loans are also extended to bright and deserving students for higher education. Credit facilities are also extended for various Government Sponsored Schemes like IRDP, PMRY, and Scheme for Urban Micro-Enterprises and Self-Employment scheme for educated, unemployed youth. Loans are extended at a differential rate of interest to the citizens belonging to weaker section of the society, Scheduled Caste and Scheduled Tribes and Physically handicapped person. Loans against LIC Policies:
Credit facilities are extended against pledge of Life Insurance Policies, preferably endowment policies upto 90% of the surrender value. No advance is granted against a policy, which stands assigned to a minor. The policy should not contain any special conditions, which restricts its assignability. Citizens' have to produce the latest premium paid receipt as a proof that the premia has been paid upto date and that the policy is in force. Loan is sanctioned after the policy is assigned in favour of the bank and registration of such assignment with LIC. Loans are also extended against insurance policies of private insurance companies recognised by IRDA. Loan against National Savings Certificates, Indira Vikas Patras and Kisan Vikas Patras:
Citizens can also avail loan against their National Savings Certificates, Indira Vikas Patras and Kisan Vikas Patras upto 50% of the invested amount by pledging the certificates / bonds with the Bank. The respective Post Offices are also to record the pledge in Bank's favors. Margin and rate of interest are fixed by b y Bank from time to time. Agricultural Loans:
Short-term loans are sanctioned for raising crops, for cultivation of traditional plantations like tea, coffee, rubber and, etc. Loan facility is also available for dairy development, poultry farming, purchase of electric motor / oil engine with pumpsets, purchase of 62
tractors, trailers and other agricultural implements and also for development of irrigation, for reclamation and land development. Loan under scheme of Urban Micro Enterprises:
This scheme is introduced to encourage self-employment for the urban unemployed citizens. To be eligible to avail this loan the family income of the citizen should not exceed Rs.11, 850/- per year. He /she should have continuously lived in the area for the last three years. He should either possess a Ration card or his/her name should be mentioned in the ration card of his family. He/she should not be a borrower of any other bank. Prime Minister's Rozgar Yojana (PMRY)
The objective of the scheme is to provide employment for more than a million persons by by setting up of 7 lakh micro enterprises by the educated unemployment youth who are matriculates. Preference is given for women entrepreneurs. The person should be between 18 and 35 years old having permanent residence of the area for atleast 3 years. Family income of the beneficiary should not be above Rs.24, 000/- per year. Loans are extended upto Rs.95, 000/- under this scheme. Margin on advances and rate of interest, security norms and income criteria are subject to the guidelines issued by Reserve Bank of India from time to time. It is expected that the applicants should not be defaulters to any financial institution including Cooperative Societies and Land Development Banks. Crops, Livestock, Machinery purchased from the bank loans are to be insured as per guidelines issued by Government of India/Reserve Bank of India, from time to time. Subha Gruha (Housing Loan Scheme): Eligibility: Individuals/group of individuals/members of cooperative societies. The
individuals should have regular monthly income from employment, business, profession, agriculture. In the case of employed persons three years continued service is necessary 63
and for self-employed, professionals, business people three years standing in their respective field is necessary. The applicant should not be more than 55 years of age. Purpose: The loan is granted for purchase/construction of new flat/house or for purchase
of old house/flat not exceeding 15 years. The loan is also granted for extension of the existing house/flat. Higher quantum may be considered for High Net Worth individuals. Quantum: Maximum quantum of loan is Rs 50 lacs. The loan is however restricted to
80% of the cost of purchase/construction and also the repaying capacity of the applicant is taken into account while fixing the quantum of loan. Higher quantum may be considered for high net worth individuals. Security: The property purchased/constructed should be mortgaged to the bank. Interest rate: Two types of interest rate namely fixed and floating interest rate are
permitted. Bank retains the right to convert the fixed rate to floating rate after three years Repayment: The maximum repayment period is 20 years in equated monthly
instalments. Loan to be closed before the applicant attains 65 years. Fixed interest rates are repayable within 10 years. Repayment holiday period of 18 months for construction and 3 months for purchase is granted. 36 post dated cheques to be obtained. Pre closure of loan attracts levy of charges of 1%. Clean Loan Eligibility: Employees in Government, Public Sector Undertakings, reputed private
enterprises, firms, companies etc. and confirmed in service. The take home pay, after deduction of the proposed loan installment should be more than 50% of the gross pay. LIC agents are also eligible to apply for f or the loan subject to conditions. Purpose: For any purpose including any social / financial commitment.
64
Ten times of salary or Rs.10.00 lac whichever is lower, if your employer undertakes to deduct the loan installment from salary and remit to us or the salary is routed through the loan granting branch.
For others, it is 5 times of salary or Rs.1.00 lakh whichever is lower.
For LIC agents, the maximum loan is up to 10 times average monthly commission or Rs.5.00 lakh whichever is lower.
Repayment: In a maximum of 60 months in case the loan is for 10 month salary and 36
months in case the loan is for 5 months‟ salary. Security: Two, third party personal guarantee, the salary of each guarantor being at least
equal to that of the borrower. Other Conditions:
1. The employee should have a S.B. account in the branch from where the loan is proposed to be availed. 2. Salary of the employee should be routed through the S.B. account at the branch where the loan is sanctioned. 3. Undertaking letter from the employer undertaking to deduct from salary, loan installment every month and remit to bank to be produced. 4. Letter from the employer, undertaking to recover the dues from the terminal benefits of the employee in case of death, retirement or resignation to be produced. Documents Required: Application form, Salary certificate of applicant and guarantor
with deduction particulars, undertaking letter from employer to deduct monthly installment and recover the dues from terminal benefit in case of necessity. Processing Fee: One time processing fee of Rs. 204/- per lakh or part there of (subject to
change).
65
Home Improvement Scheme Loan granted for repair/renovation of existing house(s) in the name of borrower, e.g. painting, building a compound wall, flooring/tiling, replacement of doors/windows, wiring etc. The loan can be availed by individuals (salaried, business people, professionals) owning at least a flat/house in his/her name. The applicant must be confirmed in service in a reputed organisation. Take home pay should be more than 50% of the gross salary after taking into account the instalment for the loan under reference. Should have balance of service equal to or more than the repayment period. Professionals/business people should be in the line of activity for a minimum period of 3 years and should be an Income Tax assessee. Quantum: The minimum loan is Rs.25,000 and the maximum limit is Rs.5.00 lacs. Margin: Immovable property =50% of market value Repayment: In maximum 120 equated monthly instalments with a holiday of 3 months.
36 post dated cheques to be obtained Security: Either equitable mortgage of the house/flat, which is under renovation/repair
and the land or any other immovable property in the name of the borrower and unencumbered with a market value twice that of the loan amount. HOMEDECOR SCHEME:
Loan is granted for furnishing the house with drawing room furniture, kitchen equipments, bath tubs, air conditioners, cupboards etc. The scheme aims at a package to furnish the entire house. Individuals in employment in reputed organisations and put in a minimum of 3 years confirmed service, business people who are in the business for atleast three years who have a house/flat in their name or in the name of spouse can apply. Quantum: Loan amount depends on the monthly income:
66
Amount of Monthly Income Maximum Loan amount:
Rs.20,000/ and above 1.00 lac Rs.10,000 to Rs.20,000 75,000/ Rs.10,000 and below 50,000/ Security: Hypothecation of the items purchased. Mortgage of the house if available and
third party guarantee worth for the loan amount. Margin: 25% of the cost kept as term deposit till the loan is closed. Repayment: Repayable in 60 equated monthly instalments. 36 Post dated cheques to be
obtained Liquirent: Loan granted against the rent receivable for the unexpired period of the lease.
Owners of property let out to reputed companies, banks including our bank and to owners of officers‟ quarters are eligible to apply. A firm lease agreement is required. The rent payable should be free of any encumbrance. If the rent is partly charged, the balance should be sufficient to cover the loan instalment. Property is not subject to dispute or plan violation. Quantum: 75% of the net rent receivable for the unexpired lease period after deducting
the rental advance and "Tax Deductible at source. Maximum loan is equivalent to 84
months‟ rent. Repayment: Loan is repayable in a maximum of 84 equated monthly instalments not
exceeding the lease period. Security: For loan upto Rs.2.00 lacs the rent receivable charged to the bank. For loan
above Rs.2.00 lacs, in addition to charging the rent receivable the property under lease or any other property(market value 150%) is to be mortgaged or security such as Bank Deposit, NSC, KVP, IVP,LIC, UNIS etc. to be offered. off ered. 67
Pushpaka:
Eligibility of the applicant: Individuals in confirmed service in reputed Organisations, Professionals, self-employed persons and business people. Salaried individual should have atleast 50% of take home pay. Professionals, self-employed and business people must be in the the line of business business for atleast three years. years. Total income should not be less than Rs 5000 for two wheeler loan and Rs 8000 for car loans. Firms/Companies are also eligible Purpose: Loan is granted for purchase of new car of any make and also for used cars.
(Not older than 5 years) Quantum: The maximum loan is 90% of the cost of the new car or 75% of the market
value of the used car. In the case of used car the maximum loan amount is Rs.5.00 lacs. Two wheelers 90% of the cost or 10 times of monthly salary or Rs 60000/ whichever is less Repayment: The Loan is repayable in 60 equated monthly instalments for new car and
36 monthly instalments for used car. For two wheelers 60 equated monthly instalments. 12 Post dated cheques to be submitted. Security: The vehicle is to be hypothecated to the bank and the RC book and insurance
for the vehicle should indicate the name of the bank as financiers. Vidya Jyothi with Suraksha Educational Loan Scheme:
Eligibility of the applicant: Students of Indian National secured admission in professional/technical course/foreign university/institution Scheme and services: Loan is granted for study in graduation/post-graduation/professional courses/diploma course in recognised institution/university in India and abroad. Need-based request for tuition fee, hostel fee, cost of books, examination fee, and air fares (in the case of study abroad) are provided for the entire duration of the course.
68
Quantum: The maximum loan amount is Rs.7.50 lacs for study in India and Rs.15.00
lacs for study abroad. Margin: Upto 4 lacs Nil. More than Rs 4 lacs studies within India 5%, abroad 15%. Security: Upto 4 lacs Nil.. More than Rs 4 lacs to Rs 7.50 lacs, Third Party Guarantee..
More than Rs 7.50 lacs, Collateral Security of suitable value or co-obligation of parents/guardian/third
party
alongwith
assignment
of
future
income
of
the
student.Land/Buildings/Govt Securities/ PS Bonds/ Units/KVP, NSC, Gold, Shares/ Bank Deposits. Assignment of LIC policy in the name of the student beneficiary for the amount of the loan. Repayment: The loan is repayable in 60 to 84 equated monthly instalments from the
sixth month from the date of employment or after 12 months after completion of the course whichever is earlier. Life cover for parent and student is available on payment of full premium for the entire period. Personal Loan to Citizens:
Any citizen who is a customer of our Bank and who is permanently employed in Government Department / Public Sector undertaking and reputed organisations, can avail Personal Loans to purchase of new consumer durables like radio, refrigerator, television, washing machine, etc. Normally Bank extends loan upto 90 % of the cost of the article or 5 times of the salary of the employee whichever is lower. The loan component and the margin money from the customers are directly paid to the dealer with instructions to deliver the article to the customer. Pensioners’ Loan Scheme: Eligibility: Central/State Govt/ Defence Pensioner/Pilot pensioner/EB/PSU /Family
Pensioners. Purpose: To meet household expenses. 69
Quantum: Maximum loan amount is 10 times monthly pension or Rs 1 lacs whichever is
less for those not exceeding 65 years of age, for those who are over 65 years, the maximum loan is Rs 50,000. Repayment: Upto 65 years 48, EMI, Over 65 years 24 EMI. Shubh Yatra: Eligibility: Individuals not more than 70 years of age. In case of seeking employment
abroad, the maximum age should not be more than 40 years. Minimum Household income should be Rs 1.20 lacs per annum (employees of reputed organisations) Purpose: Tourism (both domestic and foreign travel), medical treatment and
employment abroad Quantum: Maximum loan amount is 12 times gross monthly household income.
Minimum Rs 10000 and maximum Rs 10 1 0 lacs Repayment: 36 EMI with a holiday period of 3 months Security: Salary to be routed through us. Upto loan of Rs 1 lac, third party guarantee.
Above Rs 1 lac, Security by way of NSC, IVP, KVP, LIC etc. Margin: 25% for foreign travel and nil margin for domestic travel Consumption Loans-Sahayika: Eligibility: Individual, confirmed permanent employee of a reputed organisation or a
professional or self-employed or businessperson with three years standing in the field of activity, can apply for the loan. For salaried person the take home pay is at least 40% of the gross salary after taking into account the installment for the present loan. Purpose: For meeting social financial commitments such as marriage in the family,
education of children, medical treatment etc. The loan can be availed for any financial commitment with in the ambit of law. Bank will w ill not verify the purpose declared. 70
Maximum loan:
Maximum loan amount is Rs.3 lakh. The loan amount, however,
depends on the value of the security offered and repaying capacity. For professionals, self-employed and business persons, the maximum loan is restricted to total annual income of previous year, as declared in the I.T. return or assessment order but not exceeding Rs.3 lakh. Margin: 50% on immovable property; 25% on securities such as NSC, KVP, IVP, ULIP
etc; 10% on Life policies (surrender value) of LIC of India and other private insurance companies. Repayment: Repayable in Equated Monthly Installments up to a maximum period of 48
months. Shorter repayment period is also permitted. Security: Immovable property or Liquid securities like NSC, IVP,KVP, ULIP, UNITS
etc. or Life policies of LIC of India and other private insurance insurance companies approved by IRDA Documents:
Application indicting the purpose for which the loan is required, amount of loan required and the repayment period
Proof of employment and income
Proof of standing in the field of activity for Professionals, self-employed and business people
Income tax assessment order or return with ITO acknowledgement for Professionals etc.
Details of the security offered and copies of the documents
Commercial Cash Credit against Jewellery:
The “Commercial Cash Credit against Jewellery” from Indian Overseas Bank is a package designed for assisting commercial activities in the country. Business needs for 71
running a commercial activity can be met by availing finance under this product in the form of cash credit or over draft with cheque book facility, against the value of jewels for investment in commercial activities. bus iness activities like small Eligibility: Individuals who own jewels, engaged in business business/trade/professional and self-employed etc. Amount of loan : Minimum finance under the scheme will be Rs.50,000/- and the
maximum will be Rs. 10 lacs. lacs. The limit should not exceed exceed the advance value at any point of time. For limits up to Rs.3 lakhs , the quantum of finance will be the advance value multiplied
by the net weight of the jewels or Rs.3 lakhs whichever is lower. For limits exceeding Rs. 3 lakhs, quantum of finance will be the Advance value
multiplied by the net weight of the jewels or 20% of the projected turn over whichever is lower, subject to a maximum of Rs. 10 lakh. Rate of Interest: Interest will be a) For loans up to Rs. 3 lacs 12% b) For loans above 3
lacs - 12.50% (fixed) for Cash Credit/overdraft (subject to change). Margin: No margin. Security: Fully secured by pledge of gold jewellery with fineness of 20 ct to 22 ct.
reviewed every year. year. Repayment: Cash Credit is to be renewed / reviewed
72
Rate of interest Retail Credit Interest Rates Sl.
Name of Scheme
Floating Interest Rate % p.a.
No.
1
Effective date
Pushpaka - Loan for purchase Up to 3 Years - 13.25
01.08.2011
of new and used cars and new >3 to 5 Years - 13.75 2-wheelers 2
Sahayika - Loan to meet 14.50
01.08.2011
social financial commitments 3
Sanjeevini - Loan to medical 13.75
01.08.2011
practitioners for setting up nursing homes/hospitals and for purchase of equipments 4
Pensioners' Loan Scheme - 14.75
01.08.2011
loan to pensioners for meeting immediate emergency needs 5
Home
Décor
-
loan
for 13.50
01.08.2011
Liquirent - loan against future 15.75
01.08.2011
furnishing your home. 6
rent receivables 7
Akshay - loan against life 14.50 policies of LIC and private insurers approved by IRDA
73
01.08.2011
8
Vidya
jyothi
-
loan
for
01.08.2011
pursuing higher education 12.75 up to Rs.4 lac >Rs 4 lac
14.00
and up to Rs. 7.5 13.75
Lacs Above Rs.7.5 lacs 9
Clean
Loan
employees
of
loan
to 15.75
01.08.2011
reputed
organisations
to
meet personal expenditure 10
Easy Trade Finance - Hassle Working Capital : 13.75 free working capital finance Term Loan : 14.25 and term loan to retail traders
Housing Loans (for purchase/construction/repair/renovation )
Floating rates (based on Base Rate) w.e.f. 16.08.2011 Payment Options
Interest rates % p.a.
Repayment *
Up to 5 years
> 5 to 10 yrs
>10 to 20 yrs
Up to Rs.30 lakh
11.00 11.00
11.25
11.50
Over 30 lakh
11.25
11.50
11.75
Loan Amount
74
01.08.2011
CONCLUSION I hereby conclude that I have learnt a vast thing through my in bank training. Before going for the In Bank Training, I had only a small and theoretical knowledge on the part on working of the bank. After taking up my training, I learnt many things like:
How to open an account viz., Current account, recurring deposit account, savings bank account etc.
The verification of various loan documents.
How to draw a demand draft.
How to pledge the jewellery for loan.
So, last but not the least, with the help of this In Bank Training, I was able to gain more knowledge on the part of practical, and in bank training helps me to complete my project successfully.
75
Bibliography Books:
Banking law & practice: 1) Dr. Nirmala Nir mala Prasad 2) C. Jeevanantham Law of banking
: Dr.S.R. Myneni
Money and banking
: K.P.M. Sundhram
Websites:
www.IOB.in WWW.RBI.in
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