project report bank of baroda

7/31/2019 Project Report bank of baroda

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PROJECT REPORT

ON

MEASURES TO IMPROVE THE SCENARIO OF NATIONALIZED

BANKS IN INDIA

AT

BANK OF BARODA

SUBMITTED BY

ANKIT MEHTA : 07

Emba : D (B&I)

ACADEMIC YEAR: 20102012

SUBMITTED TO

MUMBAI EDUCATIONAL TRUST

MET League of Colleges | Mumbai Educational Trust

MET Complex, Bandra Reclamation,

Bandra (West), Mumbai - 400 050


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Students Declaration

I hereby declare that this report, submitted in partial fulfillment of the requirement for the

award for the eMBA Finanace (Banking & Insurance), to METs Institute of Management is

my original work and not used anywhere for award of any degree or diploma or fellowship or

for similar titles or prizes.

I further certify that without any objection or condition I grant the rights to METs Institute of

Management to publish any part of the project if they deem fit in journals/Magazines and

newspapers etc without my permission.

Place : Mumbai

Date : -----------------------------

Signature

Name : Ankit Mehta

Class : eMBA Finance (B & I)

Roll No: 07


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Certificate

This is to certify that the dissertation submitted in partial fulfillment for the award of eMBA

Finance (Banking & Insurance), of METs Institute of Management is a result of the

bonafide research work carried out by Mr. Ankit Mehta under my supervision and guidance.

No part of this report has been submitted for award of any other degree, diploma, fellowship

or other similar titles or prizes. The work has also not been published in any

journals/Magazines.

Industry guide: Faculty Guide :

1) 1)

2) 2)

Signature: ______________ Signature: _________________

______________ _________________

Company: Bank of Baroda

Designation:

1)

2)

Date: Place:


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Acknowledgement

I feel delighted to express my gratitude and response to all those distinguished personalities

who have guided and inspired me for the successful completion of this report.

I would like to thank Mr.Ranjit Siyodia (Branch Manager), Mr.Ashok Gamare,

Mrs.Sheetal Sangodkar, Mrs.Meena Shigrekar, Mrs. Gayatri Shenoy, Mr.Dinesh

Waghela, MrAshok Bhatt, Mr.Kishor Bhatt, Mr.Prakash Patole, Mr.Mahesh Pandya

who guided me during this period. I express my sincere gratitude for the continuous guidance

and encouragement provided to carry out the project work. I am deeply indebted to Mr.

Bharat J. Vedh for introducing me and for giving me the opportunity to do my Summer

Internship Project at Bank of Baroda.

I have gratification in expressing my sincere thanks to Mr. Arun Patil and, Mr. Bharat J.

Vedh for providing the necessary advice and support during the course of this work.

My genuine gratitude to all the personnel and staff at Bank of Baroda, who in spite of their

busy schedules spared their valuable time to willingly respond to my queries and helped me

to gain an in-depth understanding of the processes.


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INTRODUCTION

Banking means accepting for purpose of lending or investment of deposits of money from

public repayable on demand or otherwise and withdraw able by cheque, drafts, order or

otherwise.

Banks have become such an important aspect of human life, everyday people transact with

banks in various forms such as depositing funds, withdrawing money, collecting bank

statements, transacting through ATM machines, payment of utility bills, DEMAT account

held with the banks, borrowing money from banks in form of loans for various purposes like

home loan, auto loan, traders loan, educational loan to make their life easier and simpler.

Every day in some or the other way even when we are at home we can make transaction

online with the help of the services provided to us by the banks such as by inserting the 14

digit number the accountholder can do shopping, buy and book tickets online, transfer funds,

make payment of the bills, life has become so easy after the advancement in the technology

which reaches to the ultimate customers with the help of the bank.

Banks have made life so mobile for their customers that there is no need for them to come to

the branch and undertake the transaction, to save time and labour banks have provided the

customers with ATM card with the help of which they can withdraw money from various

banks ATM machines established at various places. A customer can access to most of

his/her account details from the ATM like with the help of Mini Statement the customer can

have the history of his/her transaction conducted in past few days, as to how much money

he/she has withdrawn or deposited, whether the cheque issued has been cleared, whether the

cheque received has been cleared and deposited into the account or not and so many other

services have been provided just to ensure that the customer does not face any difficulty to

access towards his/her own funds.


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Looking at the current scenario of banks that we are so use to the facilities provided the

question which should come in mind is that what led to Banks to come into existence. The

most prominent reason may be because of lack of trust among all the people with whom we

are surrounded, there is a lack of trust amongst all the people who form society, people stay

together but when it comes to money it is very difficult to trust someone, so this led to a rise

in establishment of banks. Banks took the initiative that they will protect their money and

also protect them from its unusual losses. A new era started as the banks started with its

practice of collecting money as deposits and lending them to the needy people by earning

interest on the amount of money lent. Banks in the beginning being government entity also

brought confidence in the minds of the people and so they stared transacting as per their

requirements.

Banks being a government entity is a safe mode of transacting and their money is also in safe

hands, in the earlier period where people use to borrow money from unauthorized people like

zamindars and other money lenders the borrowers were always under immense pressure

because the rate at which the money was lent was very high and nonpayment of the same will

lead the lender to take over the property taken as collateral in the beginning, all such practices

lead to an unfavorable and disturbed mindset of the people who needed money, thus banks

came ahead to help them with this by lending them at low interest rate and also with better

treatment and without any pressure which brought a bit of harmony amongst many people.

Like these and many such initiatives have been taken by the bank which brought drastic

change for the betterment of the people.

The banking system in India is significantly different from that of other Asian nations

because of the countrys unique geographic, social, and economic characteristics. India has a

large population and land size, a diverse culture, and extreme disparities in income, which are

marked among its regions. There are high levels of illiteracy among a large percentage of its

population but, at the same time, the country has a large reservoir of managerial and

technologically advanced talents. Between about 30 and 35 percent of the population resides

in metro and urban cities and the rest is spread in several semi-urban and rural centers.


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The countrys economic policy framework combines socialistic and capitalistic features with

a heavy bias towards public sector investment. India has followed the path of growth-led

exports rather than the export led growth of other Asian economies, with emphasis on self-

reliance through import substitution.

These features are reflected in the structure, size, and diversity of the countrys banking and

financial sector. The banking system has had to serve the goals of economic policies

enunciated in successive five year development plans, particularly concerning equitable

income distribution, balanced regional economic growth, and the reduction and elimination

of private sector monopolies in trade and industry. In order for the banking industry to serveas an instrument of state policy, it was subjected to various nationalization schemes in

different phases (1955, 1969, and 1980). As a result, banking remained internationally

isolated (few Indian banks had presence abroad in international financial centers) because of

preoccupations with domestic priorities, especially massive branch expansion and attracting

more people to the system. Moreover, the sector has been assigned the role of providing

support to other economic sectors such as agriculture, small-scale industries, exports, and

banking activities in the developed commercial centers (i.e., metro, urban, and a limited

number of semi-urban centers).

The banking systems international isolation was also due to strict branch licensing controls

on foreign banks already operating in the country as well as entry restrictions facing new

foreign banks. A criterion of reciprocity is required for any Indian bank to open an office

abroad. These features have left the Indian banking sector with weaknesses and strengths. A

big challenge facing Indian banks is how, under the current ownership structure, to attain

operational efficiency suitable for modern financial intermediation. On the other hand, it has

been relatively easy for the public sector banks to recapitalize, given the increases in

nonperforming assets (NPAs), as their Government dominated ownership structure has

reduced the conflicts of interest that private banks would face.


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Nationalized banks are wholly owned by the Government, although some of them have made

public issues. In contrast to the state bank group, nationalized banks are centrally governed,

i.e., by their respective head offices. Thus, there is only one board for each nationalized bank

and meetings are less frequent (generally, once a month). The state bank group and

nationalized banks are together referred to as the public sector banks (PSBs).

List of Nationalized Banks operating in India:

Allahabad Bank State Bank of Hyderabad Andhra Bank State Bank of India (SBI) Bank of Baroda State Bank of Indore Bank of India State Bank of Mysore Bank of Maharashtra State Bank of Patiala Canara Bank State Bank of Saurashtra Central Bank of India State Bank of Travancore Corporation Bank Syndicate Bank Dena Bank UCO Bank Indian Bank Union Bank of India Indian Overseas Bank United Bank of India Oriental Bank of Commerce Vijaya Bank Punjab & Sind Bank IDBI Bank Punjab National Bank State Bank of Bikaner & Jaipur


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OVERVIEW OF BANKING STRUCTURE IN PAST FEW YEARS

The last decade has seen many positive developments in the Indian banking sector. The

policy makers, which comprise the Reserve Bank of India (RBI), Ministry of Finance and

related government and financial sector regulatory entities, have made several notable efforts

to improve regulation in the sector. The sector now compares favorably with banking sectors

in the region on metrics like growth, profitability and non-performing assets (NPAs). A few

banks have established an outstanding track record of innovation, growth and value creation.

This is reflected in their market valuation. However, improved regulations, innovation,

growth and value creation in the sector remain limited to a small part of it. The cost of

banking intermediation in India is higher and bank penetration is far lower than in other

markets. Indias banking industry must strengthen itself significantly if it has to support the

modern and vibrant economy which India aspires to be. While the onus for this change lies

mainly with bank managements, an enabling policy and regulatory framework will also be

critical to their success.

The failure to respond to changing market realities has stunted the development of the

financial sector in many developing countries. A weak banking structure has been unable to

fuel continued growth, which has harmed the long-term health of their economies. In this

white paper, we emphasize the need to act both decisively and quickly to build an enabling,

rather than a limiting, banking sector in India.


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GOOD PERFORMANCE, QUESTIONABLE HEALTH

Indian banks have compared favorably on growth, asset quality and profitability with other

regional banks over the last few years. The banking index has grown at a compounded annual

rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market

index for the same period. Policy makers have made some notable changes in policy and

regulation to help strengthen the sector. These changes include strengthening prudential

norms, enhancing the payments system and integrating regulations between commercial and

co-operative banks.

However, the cost of intermediation remains high and bank penetration is limited to only a

few customer segments and geographies. While bank lending has been a significant driver of

GDP growth and employment, periodic instances of the failure of some weak banks have

often threatened the stability of the system. Structural weaknesses such as a fragmented

industry structure, restrictions on capital availability and deployment, lack of institutional

support infrastructure, restrictive labour laws, weak corporate governance and ineffective

regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could seriously

weaken the health of the sector. Further, the inability of bank managements (with some

notable exceptions) to improve capital allocation, increase the productivity of their serviceplatforms and improve the performance ethic in their organizations could seriously affect

future performance.


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OPPORTUNITIES AND CHALLENGES FOR PLAYERS:

The bar for what it means to be a successful player in the sector has been raised. Four

challenges must be addressed before success can be achieved. First, the market is seeing

discontinuous growth driven by new products and services that include opportunities in credit

cards, consumer finance and wealth management on the retail side, and in fee-based income

and investment banking on the wholesale banking side. These require new skills in sales &

marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains

that the decade-long secular decline in interest rates provided. This will expose the weaker

banks. Third, with increased interest in India, competition from foreign banks will only

intensify. Fourth, given the demographic shifts resulting from changes in age profile and

household income, consumers will increasingly demand enhanced institutional capabilities

and service levels from banks.

ONE OF THREE SCENARIOS WILL PLAY OUT BY 2010:

The interplay between policy and regulatory interventions and management strategies will

determine the performance of Indian banking over the next few years. Legislative actions will

shape the regulatory stance through six key elements:

1) Industry structure and sector consolidation2) Freedom to deploy capital3) Regulatory coverage4) Corporate governance5)

Labour reforms and human capital development

6) And support for creating industry utilities and service bureaus.


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Management success will be determined on three fronts:

1) Fundamentally upgrading organizational capability to stay in tune with the changingmarket

2) Adopting value-creating M&A as an avenue for growth3) And continually innovating to develop new business models to access untapped

opportunities.

Through these scenarios, we paint a picture of the events and outcomes that will be the

consequence of the actions of policy makers and bank managements. These actions will have

dramatically different outcomes; the costs of inaction or insufficient action will be high.

Specifically, at one extreme, the sector could account for over 7.7 per cent of GDP with overRs... 7,500 billion in market cap, while at the other it could account for just 3.3 per cent of

GDP with a market cap of Rs. 2,400 billion. Banking sector intermediation, as measured by

total loans as a percentage of GDP, could grow marginally from its current levels of ~30 per

cent to ~45 per cent or grow significantly to over 100 per cent of GDP. In all of this, the

sector could generate employment to the tune of 1.5 million compared to 0.9 million today.

Availability of capital would be a key factor the banking sector will require as much as Rs.

600 billion (US$ 14 billion) in capital to fund growth in advances, non-performing loan

(NPL) write offs and investments in IT and human capital up gradation to reach the high-

performing scenario.


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Three scenarios can be defined to characterize these outcomes:

High performance: In this scenario, policy makers intervene only to the extent required

to ensure system stability and protection of consumer interests, leaving managements free todrive far-reaching changes. Changes in regulations and bank capabilities reduce

intermediation costs leading to increased growth, innovation and productivity. Banking

becomes an even greater driver of GDP growth and employment and large sections of the

population gain access to quality banking products.

Management is able to overhaul bank organizational structures, focus on industry

consolidation and transform the banks into industry shapers. In this scenario we witness

consolidation within public sector banks (PSBs) and within private sector banks. Foreign

banks begin to be active in M&A, buying out some old private and newer private banks.

Some M&A activity also begins to take place between private and public sector banks. As a

result, foreign and new private banks grow at rates of 50 per cent, while PSBs improve their

growth rate to 15 per cent. The share of the private sector banks (including through mergers

with PSBs) increases to 35 per cent and that of foreign banks increases to 20 per cent of total

sector assets. The share of banking sector value adds in GDP increases to over 7.7 per cent,

from current levels of 2.5 per cent. Funding this dramatic growth will require as much as Rs.

600 billion in capital over the next few years.

Evolution: Policy makers adopt a pro-market stance but are cautious in liberalizing the

industry. As a result of this, some constraints still exist. Processes to create highly efficient

organizations have been initiated but most banks are still not best-in-class operators. Thus,

while the sector emerges as an important driver of the economy and wealth in 2010, it has

still not come of age in comparison to developed markets. Significant changes are stillrequired in policy and regulation and in capability-building measures, especially by public

sector and old private sector banks. In this scenario, M&A activity is driven primarily by new

private banks, which take over some old private banks and also merge among themselves. As

a result, growth of these banks increases to 35 per cent. Foreign banks also grow faster at 30

per cent due to a relaxation of some regulations. The share of private sector banks increases

to 30 per cent of total sector assets, from current levels of 18 per cent, while that of foreign

banks increases to over 12 per cent of total assets. The share of banking sector value adds to

GDP increases to over 4.7 per cent.


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Stagnation: In this scenario, policy makers intervene to set restrictive conditions and

management is unable to execute the changes needed to enhance returns to shareholders and

provide quality products and services to customers. As a result, growth and productivity

levels are low and the banking sector is unable to support a fast-growing economy. Thisscenario sees limited consolidation in the sector and most banks remain sub-scale.


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NEED TO CREATE A MARKET-DRIVEN BANKING SECTOR WITH

ADEQUATE FOCUS ON SOCIAL DEVELOPMENT:

The term policy makers used in this document, as mentioned earlier, refers to the Ministry

of Finance and the RBI and includes the other relevant government and regulatory entities for

the banking sector. There is need to believe in co-ordinated effort between the various entities

is required to enable positive action. This will spur on the performance of the sector. The

policy makers need to make co-ordinated efforts on six fronts:

Help shape a superior industry structure in a phased manner through managedconsolidation and by enabling capital availability. This would create 3-4 global sized

banks controlling 35-45 per cent of the market in India; 6-8 national banks controlling

20-25 per cent of the market; 4-6 foreign banks with 15-20 per cent share in the

market, and the rest being specialist players (geographical or product/segment

focused).

Focus strongly on social development by moving away from universal directednorms to an explicit incentive-driven framework by introducing credit guarantees and

market subsidies to encourage leading public sector, private and foreign players to

leverage technology to innovate and profitably provide banking services to lower

income and rural markets.

Create a unified regulator, distinct from the central bank of the country, in a phasedmanner to overcome supervisory difficulties and reduce compliance costs.

Improve corporate governance primarily by increasing board independence andaccountability.

Accelerate the creation of world class supporting infrastructure (e.g., payments, assetreconstruction companies (ARCs), credit bureaus, back-office utilities) to help thebanking sector focus on core activities.

Enable labour reforms, focusing on enriching human capital, to help public sector andold private banks become competitive.


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NEED FOR DECISIVE ACTION BY BANK MANAGEMENTS:

Management imperatives will differ by bank. However, there will be common themes across

classes of banks:

PSBs need to fundamentally strengthen institutional skill levels especially in sales andmarketing, service operations, risk management and the overall organizational

performance ethic. The last, i.e., strengthening human capital will be the single

biggest challenge.

Old private sector banks also have the need to fundamentally strengthen skill levels.However, even more imperative is their need to examine their participation in the

Indian banking sector and their ability to remain independent in the light of the

discontinuities in the sector.

New private banks could reach the next level of their growth in the Indian bankingsector by continuing to innovate and develop differentiated business models to

profitably serve segments like the rural/low income and affluent/HNI segments;

actively adopting acquisitions as a means to grow and reaching the next level of

performance in their service platforms.

Attracting, developing and retaining more leadership capacity would be a key toachieve this and would pose the biggest challenge.

Foreign banks committed to making a play in India will need to adopt alternativeapproaches to win the race for the customer and build a value-creating customer

franchise in advance of regulations potentially opening up post 2009. At the same

time, they should stay in the game for potential acquisition opportunities as and when

they appear in the near term. Maintaining a fundamentally long-term value-creation

mindset will be their greatest challenge.

The extent to which Indian policy makers and bank managements develop andexecute such a clear and complementary agenda to tackle emerging discontinuities

will lay the foundations for a high-performing sector in the years to come.


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RURAL BANKING IN INDIA

POSITION OF RURAL AREAS:

As it is always said that India stays in villages because out of the total population stays in

villages and most of the revenue of our country is generated from agriculture and other

related areas, but still if we have a look at the position of rural areas they are quiet

disappointing because they have been always in the neglected areas and very minimal steps

have been taken in order to improve its current standing.

Steps are now been taken in form PSL (Priority Sector Lending) and through Financial

Inclusion because now banks have slowly realized that rural areas are the untapped areas and

also are highly competent areas to achieve growth, so now steps have been taken to reach

rural areas as quickly as possible because it will be very beneficial to reach first and try to

make an impression and win the hearts of the people to bring in more business. For the

complete growth our country it is very important to ensure rural growth simultaneously

because to make the dream come true of becoming the Super Power in the next ten years will

compulsorily need growth from rural areas because a country cannot develop with one its part

developing in an impressive manner and the other part remaining stagnant.

Traditionally rural and semi-urban areas have been looked upon as requiring help and lacking

in competent management. This mindset in policy formulation, regulations, and procedures

governing the rural banking system has left the rural system ailing. Liberalization of

RRBsactivities has permitted them to participate in more profitable businesses. A single,

strong, merged RRB setup would bring to the rural economy a well-directed banking

apparatus to take care of infrastructure, export financing, and traditional businesses.

Some rural areas are potential candidates for development into export centers for which

modern banking facilities should be made available, instead of making the customers

commute to urban centers to meet their international banking needs. Banks can offer financial

solutions to the agricultural sector and put to use expertise in private equity, venture funding,

and corporate finance to tap the potential of agro-based businesses in India.


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People in the rural areas have always been deprived from using banks facilities and due to

which there has always been exploitation observed in remote areas and it is now high time to

feel the need to bring them closer to advanced bank facilities so that even they can make

optimum use of the same.

For changing this scenario the government hopes to bring 73,000 villages under the banking

net that will lead to over five crores new bank accounts in rural areas. The intention is to

cover at least 73,000 new habitations which have population of over 2,000 and will open at

least five crores new accounts by March 2012.

The figures pointed out that only 38 percent of the total 85,300 bank branches in India were

in rural areas. Only 40 percent of Indians have access to banking facilities. Though the totalnumber of bank branches have increased from 8,700 at the time of nationalization in 1969 to

85,300 now, rural areas have only 32,000 branches, adding directions that all public sector

banks to increase their presence in rural areas.

A financial inclusion campaign called "Swabhimaan" has also been launched. The campaign

is aimed at encouraging people in rural areas to open bank accounts and use banking

facilities. It is one of the first campaigns to make targeted and concerted efforts to ensure ease

of access of organized financial system for the common people.

Though India has one of the largest banking networks in the world, it is a matter of great

concern that only 40 percent of people in India have access to banking services. This

revolutionary campaign seeks to correct that imbalance by establishing a new medium to

ensure greater availability of full spectrum of financial services and organized banking to all

the citizens regardless of which part of the country they may reside.


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BANK OF BARODA

Bank of Baroda started in the year 1908 from a small building in Baroda to its new hi-rise

and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial

prudence and corporate governance. It all started with a visionary Maharaja's uncanny

foresight into the future of trade and enterprising in his country. On 20th July 1908, under the

Companies Act of 1897, and with a paid up capital of Rs 10Lacs started the legend that has

now translated into a strong, trustworthy financial body, THE BANK OF BARODA. It has

been a wisely orchestrated growth, involving corporate wisdom, social pride and the vision of

helping others grow, and growing itself in turn.

The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank of

this nature will prove a beneficial agency for lending, transmission, and deposit of money and

will be a powerful factor in the development of art, industries and commerce of the State and

adjoining territories."

Between 1913 and 1917, as many as 87 banks failed in India. Bank of Baroda survived the

crisis, mainly due to its honest and prudent leadership. This financial integrity, business

prudence, caution and an abiding care and concern for the hard earned savings of hard

working people, were to become the central philosophy around which business decisions

would be effected. This cardinal philosophy was over years of its existence, to become its

biggest asset. It ensured that the Bank survived the Great War years. It ensured survival

during the Great Depression. Even while big names were dragged into the Stock Market scam

and the Capital Market scam, Bank of Baroda continued its triumphant march along the best

ethical practices.


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Mission:

To be a top ranking National Bank of International Standards committed to augmenting stake

holders' value through concern, care and competence.

Logo:

Bank of Barodas new logo is a unique representation of a universal symbol. It comprises

dual B letterforms that hold the rays of the rising sun. It is called the Baroda Sun.

The sun is an excellent representation of what bank stands for. It is the single most powerful

source of light and energyits far reaching rays dispel darkness to illuminate everything they

touch. Bank of Baroda seeks to be the source that will help all their stakeholders realize their

goals. To their customers, bank seeks to be a one-stop, reliable partner who will help them

address different financial needs.

The single-colour, compelling vermillion palette has been carefully chosen, for its

distinctiveness as it stands for hope and energy. Bank also recognizes that they are

characterized by diversity. Banks network of branches spans geographical and cultural

boundaries and rural-urban divides. Banks customers come from a wide spectrum of

industries and backgrounds. The Baroda Sun is a fitting face for brand because it is a

universal symbol of dynamism and optimismit is meaningful for many audiences and

easily decoded by all. Banks new corporate brand identity is much more than a cosmetic

change. It is a signal that the banks recognize and are prepared for new business paradigms in

a globalised world. At the same time, we will always stay in touch with their heritage and

enduring relationships on which the bank is founded. By adopting a symbol as simple and

powerful as the Baroda Sun, they hope to communicate both.


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BANK OF BARODA PRESENCE:

Area No. of Branches

Metro 756Urban 639

Semi-Urban 844

Rural 1172

Total (Indian)..A 3411

Foreign (Overseas)..B 85

Total (Global)..(A+B) 3496

BRANCHES

Bahamas

Bahrain

Belgium

China

Fiji Islands

Hong Kong

Mauritius

Republic of

South Africa

Seychelles

Singapore

Sultanate of

Oman

United Arab

Emirates

United Kingdom

United States of

America

SUBSIDIARIES

Botswana

Ghana

Guyana

Kenya

New Zealand

Tanzania

Trinidad &

Tobago

Uganda

JOINT VENTURE

Zambia

REPRESENTATIVE

OFFICES

Australia

Malaysia

Thailand


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LEARNINGS

As per instructions my joining at Bank of Baroda, Bhayandar (west) Geeta Nagar branch was

on 18th May 2011 and the branch timings are 10.00 a.m. to 04.00 p.m. The staff working at

this respective branch comprises of 9 people excluding 1 security guard who is not an

employee of the bank. This branch is just 3 years old but over the period of these 3 years

branch has done really well in creating a good database of customers.

The branch provides with different types of accounts such as Savings, Current, Recurring. On

Savings account the bank provides 3.5% interest and as per new guidelines the interest iscalculated on the present value held in the account on daily basis and the accumulated interest

is paid at the end of every six months.

Under recurring deposit account the main purpose is to develop a habit of savings among

people so that they save at least some money and deposit in the bank on which they can earn

the same interest which is applicable on fixed deposit, the only difference is that recurring

deposit does not allow the tenure which is of some odd days like recurring does not provide

to open an account for 444days, it is usually in the time frame of 5years or 6years but never

in between. Bank provides the customers to open this recurring account with the starting

minimum balance of Rs.50/- for people from rural areas and Rs.100/- for the people who

belong to proper city. And every month depositing of minimum of Rs.50/- and 100/-

respectively. With the help of this facility with such low amount people can deposit their

money at their comfort level and as per their earning power. Also after opening the recurring

deposit account the customer can avail the facility of overdraft up to 95% of the value

available in the account.


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The branch to promote more and more savings have also come up with a scheme namely

Yathashakti scheme under which the customer can start his account with minimum Rs.100/-

and then he can again deposit Rs.100/- every month and I case if he/she wishes to deposit

more money than he can deposit 3times of the value introduced at the inception of the

account. For example if the customer has opened the account with the initial value of

Rs.1000/- then in future he can deposit only up to Rs.3000/-, the rate of interest provided on

this deposit is same as the interest provided on recurring deposit.

All the funds which are received in a day are called as Receipts and all the withdrawals done

by the customers are called as Payments. All these transaction are recorded in a register under

the respective heads and at the end of the day both the receipts and payments are tallied that

there is no difference between the figures. Every day the cash in main lockers are counted the

money kept in lockers at the end of the day becomes the closing balance for that day and the

same balance becomes the opening balance for the next day. This is one of the most

important feature which is to be carried out every day on a regular basis because it is a

practice that officers from Zonal Basis can come anytime to visit the branch and even the

Auditors who come for the audit at the branch desires to go through the register stating about

the balance funds with the branch and tallies whether the written figures are in there in actual

terms or not.

The branch also provides the Fixed Deposit facility where the rate of interest varies as per

the tenure of the fixed deposit. Apart from the standard rate of interest Bank of Baroda has

come up for their namely Baroda Utsav deposit customers with a scheme of 444 days where

they provide customers with 9.35% and on all forms of Fixed Deposit, Bank of Baroda

provides 0.50% higher in addition to the standard rates to the senior citizens whose age is

above 65years. Apart from this the maturity ranges from minimum 7days to maximum

10years. The interest is calculated on a daily basis on the principal amount for which the

Fixed Deposit is created and the same procedure continues till the maturity period it the

customer does not intends to withdraw the F.D. amount in case of need.


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As the guidelines prescribed by RBI that interest earned on F.D. should not be more than

Rs.10000/- in a year and if the income exceeds the limit then the income gets eligible for tax

deduction. But since an F.D. is a medium of investing money so therefore to avoid deductions

government has prescribed that in case the income exceeds Rs.10000/- then the customer has

to fill up Form 15G and 15H to show the investment and then the interest is saved from tax

being charged. Form 15G is for the people who are not more than 60 years of age and 15H is

for people more than 60years of age. In case where the customer has submitted his/her PAN

card details then the tax is deducted @10.30% and in case where PAN card details are not

fulfilled tax is charged at 20%. Tax which is deducted when the income exceeds the limit is

charged on the full value of F.D. and not the amount which has exceeded. Once the tax being

deducted in case of non submission of 15G / 15H then the customer has to file a return with

the documents such as the certificate that tax has been deducted on other required documents

once these formalities are fulfilled the deducted amount is rolled back.

Bank of Baroda has also come up with scheme called as ASBA Facility which is Application

supported by Blocked Amount. This facility enables the customers during IPO/FPO/NFO, the

core idea is that the customer can apply to IPO/FPO/NFO and does not have to make

immediate payment. The application amount remains blocked in the investors bank account

and is released in a proportionate amount and on allotment of shares. The benefits of this

scheme are:

1. Simple application formno need to submit cheque2. Continue to earn the income on the locked amount3. No worry of refunds4. ASBA application forms are accepted at over 1200 designated branches of BOB.


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Another such added services comprises of BSIP which is Baroda Pioneer Systematic

Investment Plan. BSIP is a simple and time honored investment strategy for accumulation of

wealth in a disciplined manner over a long period. Under this scheme the desired customer

has been given an option that they can even start by investing as low as Rs.1000/-

It offers the below advantages to the customers:

1. Disciplined approach: If the customer does not have an immediate access to a largeamount of ready cash, he/she has the option in investing in small amounts. The can

commit any amount of their choice (minimum 1000/-) to be invested every month in

one of the banks schemes. This way the customer can be benefited when there is rise

or fall in the market.2. Risk and Volatile Management: Stock markets are volatile and therefore prediction

is difficult. Investors can focus on their financial goals and leave the job of managing

the market volatility to professional investment managers.

3. Rupee Cost Averaging: Investors get more units at low NAV. Markets performancedoes not matter because when the market falls you benefit by being allocated more

units and when market rises, the investments are averaged out. Investors buy stock at

a lesser price typically and sell them when prices are high. Timing the market is time

consuming and risky.

4. Power of Compounding: Principal of compounding is applied. In earlier times whenthe customer use to invest the more time the investment will have to grow by

compounding. The interest earned on investment also earns interest. Increases the

value of the investment. Averages out concerns of timing the market and short term

volatility.

The bank has always been emphasizing on various other facilities which can make

customers work easier and faster. Facilities such as RTGS, NEFT. These are different type

of medium which are used for quick money transfer with minimum charges. The staff has

always been guiding the customers to avail this facility because it is in their best interest.


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Also it saves their money spent in availing this facility because the charges are less as

compared to other facilities which performs the same function.

RTGS is Real Time Gross Settlement and it is used when the amount to be transferred is

more than Rs. 2lacs. And NEFT is National Electronic Money Transfer and this facility is

used when the amount to be transferred is less then Rs. 2lacs. The basic procedure followed

in both of these functions can be well explained in the form of a diagram. But first lets take

an example where the customer wants to send across funds from Bank of Baroda to some

other bank. These transfers are done with the help of codes which are stated on the cheques

issued to the customer. The process works in the below form:

BOB Customers Branch

BOB Main Branch

RBI Hub

Other Banks Main Branch

Other Bank Customers Branch


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As shown in the above diagram the procedure begins from the branch where the customer has

the account and if the customers has appropriate balance in the account the requested money

is then transferred and sent to bank of Barodas main branch, from there the transaction

money is forwarded to RBI where RBI acts as a hub and from there RBI forwards the funds

to the main branch of that bank where the transfer is requested and in the end the main branch

forwards the money to the ultimate branch. Ideally it takes 2hours maximum to complete this

process. To save time and money these two medium are very useful from the point of view of

a customer.

Almost the same procedure is followed in case of International Transfer of funds but since

this is a small branch international transfer is not undertaken at this branch but done at only

authorized branches. Te only difference in carrying out the international transfer is that there

is a process of carrying out the currency valuation as to what is the current value of the

currency since its value keeps on fluctuating in the international market. For carrying the

international transaction earlier in the absence of these mediums it was a bit time consuming

since a lot of formalities had to be carried out manually and it use to take approximately

15days to complete the whole procedure apart from that regular follow up was also very

necessary, but now with the help of the advanced mechanism the transfer can be carried out

within 1day or maximum 2days if everything remains in order.

Apart from these facilities the branch also provides loans, this is one of those areas from

where bank earns most of its revenues, currently most of the income which the bank earns

through loan is earned by providing the Auto loan and Home loan. But now slowly bank is

also taking an initiative to help the customer with Traders Loan. The customers records here

are very good and so far bank has not faced any NPAs, the branch has done really well in

maintaining good relationship with the customers and also done well in relation to the

investigation part before granting loan. Branch has always been on their toes in informing

their customers if there are any changes in the policies of the scheme which they have

availed, any changes in the rate of interest or changes in anything which might affect their

interest.


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The customers have also by accepting their responsibility has not troubled the branch they

have always been ready to help whenever needed. So up till now its like win-win situation

on both the ends the customers as well as the branch have been benefiting by the facility.

To keep the work in order for the loans which are granted the branch maintains a Due date

diary which consist two sections. Section 1 consists of those customers who have chosen to

pay through PDC (Post Dated Cheques). Under this method the customer who has availed the

loan issues certain number of cheques in the favor of the bank and directs to drop the cheque

every month as EMI. The bank starts dropping cheques for payment after one month of the

disbursement of the loan.

The cheques are dropped and the customers account gets debited as soon as the cheque getscleared. It is the responsibility of the bank to drop the cheques reasonable days before the due

date since cheque clearing also requires certain minimum number of days, and if the cheques

are not deposited as per schedule the bank can charge penalty to the customer but then since

the bank has committed the mistake the penalty has to be waived.

Under Section 2 customers who have given standing instructions to the bank to debit the

customers saving account with the bank and take it as EMI. No cheques are issued in this

form the bank simply debits the customers account the EMI which includes the principal

amount and the interest amount.

Once the loan is granted the loan count has to be reviewed after every one year that how it

was it behaved during the last year whether the EMI were received on time, if not then what

were the reasons behind delay in payment, whether the customer furnished the details on time

or was there a delay what has been the track record, all these and many such things are

evaluated at the end of the year. These details are maintained in the books as well as on thesystem so that there is always back up available. While making the review it is very

important to obtain LAD (Letter of Acknowledgement of Debt), with the help of this

document all the documents which were obtained while granting the loan gets renewed.


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Documents such as Power of Attorney get renewed. With the help of LAD being renewed

regularly in case when the borrower makes a default the bank has the right to approach

legally to make the loss good. But when the LAD is not renewed then the banks right to

recovery remains but the right to approach legal system is lost.

In case when the loan amount is above Rs.5lacs and the borrower makes a default the whole

report along with the review documents are sent to the RM when the LAD is not renewed.

For the loan whose value is above Rs.5lacs such proposals are sent to the RM at the

Jogeshwari branch for approval.

Another area from where bank earns its revenue is from Lockers. In all the branch has got

138 lockers varies o the basis of their sizes which are arranged in the ascending order namelyA,B,C,D,E,F,H,E,L. Branch charges rent in return and the rent varies as per the size i.e.

Higher charges for bigger Lockers. Apart from the rent which the customer pay they are also

suppose to pay service charge charged by the bank which is around 10.30%. To operate the

lockers there are in all 3 keys out of which one remains with the customer, one remains bank

and the remaining one remains with bank officer who handles the locker transaction.

Whenever the customer desires to operate his/her locker the bank officer goes along and both

the customer and the branch representative will have to insert the key together to open the

locker.

The bank is not entitled to know what the customer has kept in their locker, so therefore as

soon as the locker has been opened the branchs representative will have to leave the

customer alone so that the later can use the same. The key which remains with the bank is

nothing but a MASTER KEY which they are suppose to use only during emergency cases.

Currently there is a very heavy demand for lockers by the customers but due to space

constraints the branch is not able to bring in more lockers. To track the details of the locker

the branch maintains a register so that in case when frequent details are required it can be

referred.


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The register contains details such as:

1. DATE2. M.L. No. And R.R. No3. NAME OF THE LOCKER HOLDER4. ADDRESS5. PERIOD6. RENT7. DUE DATE8. INITIALS9. RENEWED AND SURRENDERED10.INITIALS

To bring more business and spread more awareness the Branch Manager usually goes to meet

the clients to make them understand different types policies and schemes which the bank

provides so that more and more customers can open their account and the branch can expand

their business. The areas which can be concentrated are like schools, colleges, people

working at fire brigade all of them can open their account, the agencies who regulate the local

business can also open their account which are big customers bringing in more cash reserves

which can be lent to the people who approach for loans and in return the bank can earn

interest on the same. For all the expenses like the printing and stationary expenses, electricity

bill, telephone bill, security guards compensation and such other expenses which incurs the

branch maintains a register where in all these details are written to track the overall

expenditure.


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RECOMMENDATIONS

Technological advancement:

For every organization it is very important to have an advanced technology backing your

employees so that the work can be done faster and can be done in the most efficient manner.

With the help of the latest technology it gives the employees a helping hand and comes out to

be very useful in cases where the work load is very high and the available people to complete

the assigned tasks are comparatively low, in such cases if the organization is able to

compensate the low work force with advanced technology then it is helpful for both the

employees as well as the organization.

Many nationalized banks use software called FINACLE and the usual work is carried on with

the help of the same designed software, and it is actually more than sufficient to undertake

duties performed at the bank such as making cash receipt entry, making payment, issuing

Demand draft, Issuing Fixed deposit certificate, account holders transaction details, pass book

printing, transfer of money, the loan which are sanctioned to the customers all the details

related to it such as the amount for the EMI, if there are any changes in the interest rate then

what will be the revised EMI and such related details can easily inserted and referred whenrequired.

But then Finale acts core software on which the whole staff works so if in case there is some

problem with the server the whole work gets stand still which is not a good sign for such an

esteemed bank, so in such a case bank should take some serious steps to ensure that there is

no as such problem with regards to the server issues and even if any such problem occurs

then there should be some reliable alternative available with them which they can use during

adverse situation, and also the alternative is important because the frequency of customers

visiting the branch is always high, and the customers visit the branch even for those issues

which they can also solve on their own but due to lack of awareness they regularly visit the

branch and if the branch is facing such operational issues it can also lead to arguments

amongst the customers and the staff because sometimes it becomes very difficult to make the

customers understand why the same problem arises again and again so in keeping all these

things in mind a proper software should be developed so that the same can be used in case of

critical situation so that the work remains unhampered.


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Along with this some major steps should be taken in order to make the core software so

efficient that regular problems can be avoided.

Apart from Finacle there are some other softwares which are very useful in day to day

workings such as Microsoft Office, which can help in many ways such as drafting letters,

diagrams, maintaining excel reports, preparing power point presentation, making diagrams

and such other activities which can make work easier and also this software is very safe to

use, most recommended, and very small in size easy to use and can really improve the

efficiency.


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Work Force:

In all forms of organization the work force majorly decides about the success of the

organization, because the more efficient work force one has got more are the chances it has

got to reach the top so it is very important for the organization to choose the work force

carefully and should use the talent and skills of the available employees at their optimum

capacity and should make sure that the employee are doing what they do the best.

With respect to nationalized branches the staff members should be very polite and humble to

the customers and above all they should always have intentions to help the customer in the

best possible manner and which is best suited to them without being selfish. All the staff

members should be well equipped with basic knowledge through which they can help the

customers which they usually come across and almost everyday. It is very important for

branches to maintain a good customer base and putting in efforts to increase it everyday and

the figures should show the same, the staff should be very polite with the customers because

a better treatment would make people prefer the place most where they get respect and better

facility.

But the problem also arises when there is absenteeism in the staff which leads to increase in

the work load on the other employees and things are somehow managed where some or the

other person takes up the responsibility of taking care of extra work but it also increases the

pressure on that respective employee because then he/she has to take care of two different

types of work at the same time. In case when there is high absenteeism it tends to increase the

problems because it makes things unstable, and with the increasing customer database every

day the banks really needs more people who can help them which will reduce unnecessary

pressure and will help in appropriate allotment of work.

Appointing new officers will give a helping hand to the branch people which will allow the

superior officers to give more time to important matters and can also think about ways how

they can attract more and more customers to increase business. Appointing an officer will

reduce burden from higher officials.


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Infra structure:

Infra structure though does not seems that important but even it has got its own importance,

the structure of the bank, how well built it is, its interiors, the sitting space and many other

things attract the customers a lot because say for example if a customer enters the branch for

the first time and as soon he/she enters and sees everything unorganized, walls leaking, dirty

floor what impression would the customer carries and there is very less possibility that he/she

would open its account with the bank because its not just about opening an account but its

all about building relationship.

Building relationship with not only with the people who are working there but also the

customer is building the relationship with the place where they have to come very often. So

the structure of the branch is very important from the customers and increasing the business

point of view, bank has to think from both the perspective so that both are benefited.

All the things in the branch should be kept in such a manner that all the required things are in

place and under the reach when required. The structure formation should be done

systematically in such a way that the customers should be restricted up to a certain limit and

does not give them access to roam around the whole branch because it is risky to both the

customers and for the branch workings. Banks are one of the most risky places to work and

any carelessness can lead to trouble. If the customer is given access to whole branch it can

lead to loss of information, confidential data, atm cards, debit cards, credit cards with their

pins can be stolen which can turn out as very huge problem for the bank and then any one can

be suspect for the loss.

The same can happen with the customer as well, say for example if the customer

unknowingly entered a cabin where he should not be and all of a sudden there is a loss of

confidential data then the customer will surely become a suspect even if he has not done

anything. So it is very important to plan things really well so that such unnecessary troubles

can be avoided beforehand. Proper formation also ensures safety within the branch. Apart

from this the most sensitive thing is Cash, because while collecting cash and making payment

if any customer gets an access to banks cash reserves then it can be very devastating.

Lockers and so many sensitive things are always present on the branches which are to be

taken care of.


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Therefore if the branches can adopt systematic approach towards working it can be very

useful. All the counters where maximum number of customers appears should be brought out

as front office and verification work, system entry which can be done without the presence of

the customers can be shifted towards the back side.

And another important thing is giving the customer access to the branch allows them to enter

completely into the branch and through which customers with cruel intentions can have

access to all the security triggers and also can undertake other fraudulent activities.

Efforts should be made that the customers should be kept at the front office and try to help

them there itself and until and unless they do not have genuine reason to go in like operating

lockers etc they should not be allowed to move inside the branch. All the other facilities like

providing with water, helping with their doubts should be entertained outside and care should

be taken with each and every branch.


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Training and Development:

Training and Development plays a very important role in success of every organization

because it is the labour force of every organization whose has got the key behind achieving

pre-decided goals or leading the organization towards failures. It is always said that the

selection procedure should be carefully done because one wrong selection of an employee

can lead to disaster. The reason being, once the employee has been recruited company spends

a lot of money behind the employee, expenses such as training, conducting induction

programme, and other such related expenses. Therefore selecting one wrong person can lead

to loss of funds and loss of time.

Every company frames the goals and targets after taking into consideration their labour force

and if the labour force itself is not efficient then how the organization will achieve its

objectives. It is usually seen in case of many banks that staff working in their respective

banks has got knowledge only about their own work and when the situation arises such as

absenteeism, sickness the other existing staff members have to back the employee and

complete his/her pending work, for this it is very important that the employees are well

versed with all types of works being performed by all the staff members it makes work easy

during adverse situation and keeps the bank prepared to adapt themselves as per the situation.

Sharing knowledge with everyone is good exercise it should be done in such a way that the

staff members should enjoy it and it such exercises should not come on them as a burden.

Once in a month such initiatives should be taken in form of quizzes, short power point

presentations. In such a manner that learning is done in form of enjoyment which at the end

creates an efficient labour force having at least basic knowledge about everything.

Training programmes should be conducted at training centres after regular duration of time so

that people get to know each other and they can share their views and opinion on different

aspects which can help them in future. At the end it is necessary that the employee takes

training and development programmes seriously and make the most use of it because it will

also help them in their own overall development and also their own growth with the

organization.


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With respect to banks, there is always a need for specialized people, who have gained some

special skills in certain areas through education or from some special courses or through

experience. To illustrate as an example in all the branches the functions are carried on with

the help of various software which is installed in different machines, now it is very important

to have a person who is specialized in I.T. sector in a branch so that he/she can handle such

equipments, tackle different problems, can sort out problems with the technical team, keeps

the system and machines updated as per the need and also help other staff members with the

same. It also helps the branch to stay I touch with the most advanced technologies available

in the market and select the best which can be useful to them in their everyday workings. Out

of all the available software choose the best which will serve them the best.


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Awareness about the services:

With modernization in almost all the sectors even banks have indulged themselves in various

facilities apart from the traditional ones like accepting deposits and lending them. Now the

banks are adopting various types of facilities such as paying utility bills, shares trading,

payments of taxes, using advanced methods of transferring money such as RTGS, NEFT, and

then depositing money in the account which is specifically opened for the payment of shares

applied, well in this case the customer who desire to buy shares of any company can apply

and deposit the share value money with the bank. Till the time the company does not issue

shares to him/her the customer can earn money on the money deposited with the bank and

then can when the company allots the shares the bank makes the payment as and when it is

due, all these facilities are so well framed that the customer is always at a very good position

but the point is how many customer are aware about such schemes, because till the time there

are not aware they will not be able to avail the services.

Banks after every certain period of time make efforts to come with such innovative services

for the customer but it is also important that customers are aware about the same. Proper

methods should be adopted in order to make people educated so that they can use the services

to the core and derive maximum benefit out of it. The banks should take steps such assending circulars to the customers at their residence, distribute pamphlets, display hoardings

where the frequency of people is very high, then at the branch level where the customers visit

the most, the bank authorities should set up suitable advertisement boards and on such places

where the customer somehow get an eye and they can go through the manual understand the

concept and use the services because it is always believed that EYE LEVEL IS BUY

LEVEL.

It should also be note that the language used in hoardings, boards, pamphlets and other

advertisement methods should be easy to understand by everyone, should be under the reach

of everyone, all the reference material should be framed in English, Hindi and in the local

language. Use of technical language should be avoided because as and when the customer

finds it difficult to understand he/she stops reading and that is where a customer is lost.

Language should be easy, simple and basic.


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Bank authorities should also take steps such as training the staff at the branches in relation to

all the services which they provide so that if the customer has any doubt in understand things

there should always be a bank representative to clear his/her doubts politely make their

concept clear.

One things is what every customer expects is good service and personal attention, if these

two things are delivered to the customer then the customer becomes loyal to the bank forever

and even the bank will have the family members, relatives, friends because word of mouth is

the best form of advertisement. It is very important to show concern towards the customer

that even bank is also interested in providing services and wants the customer to benefit from

it.