commercial banking in india

Commercial Banking In India

OBJECTIVES

The following are the objectives of my study:

To access practical knowledge about the commercial banking in India.

To study what is the role of commercial banking in the economy.

This project is also made to know the future prospectus of commercial banking in India.

To study the differences between commercial banks and central banks.

To study the role of reserve bank of India vis-à-vis commercial banks.

To evaluate the services offered by commercial banks in India.

To study the trends in commercial banks in India.

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Commercial Banking In India

EXECUTIVE SUMMARY

The whole project icon study of commercial banking in India. This project is based on analysis determining the working of the commercial banks in the current privatized sector boost-up in banking industry.

The whole project is divided into two parts consisting of the information regarding the “banking in India” and second part will be giving the view about the “commercial banking in India”.

The project will be giving in brief the evolution of banking i.e. how the banks have evaluated and their progress. After evolution of the banking, the project further states about the function, services, policies, types, advantages & disadvantages and its investment in commercial banking in India.

The project will be continued by detailed information about credit creation policy, role of commercial banks. The project consists of questionnaire which was asked to the branch manager of ICICI Bank as a type of commercial banking in India.

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Commercial Banking In India

INDEX
SR.NO. TOPIC PAGE NO.

1. 2. 3. 4. 5. 6. 7.

Introduction Field Study Literature Review Annexure Conclusion. Research Methodology Bibliography & References.

1-28 29-41 42 43-50 51 52 53

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Commercial Banking In India

CHAPTER 1: INTRODUCTION

INTRODUCTION TO BANKS IN INDIA:
? MEANING ? DEFINITION ? FEATURES ? OBJECTIVES ? NEED & IMPORTANCE ? TYPES

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Commercial Banking In India

? MEANING:
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. The term bank is derived from the French word Bunco which means a Bench or Money exchange table. In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging.

? DEFINITION:
Oxford Dictionary defines a bank as “an establishment for custody of money, which it pays out on customer's order." The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: ? conducting current accounts for his customers, ? paying cheques drawn on him, and ? Collecting cheques for his customers.

? CHARACTERISTICS / FEATURES:

Dealing in Money: Bank is a financial institution which deals with other people's money i.e. money given by depositors. Individual / Firm / Company: A bank may be a person, firm or a company. A banking company means a company which is in the business of banking. Acceptance of Deposit:

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Commercial Banking In India A bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers. Giving Advances: A bank lends out money in the form of loans to those who require it for different purposes. Payment and Withdrawal: A bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts; it also brings bank money in circulation. This money is in the form of cheques, drafts, etc. Agency and Utility Services: A bank provides various banking facilities to its customers. They include general utility services and agency services. Profit and Service Orientation: A bank is a profit seeking institution having service oriented approach. Ever increasing Functions: Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a bank. Connecting Link: A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who are in need of money. Banking Business: A bank's main activity should be to do business of banking which should not be subsidiary to any other business. Name Identity: A bank should always add the word "bank" to its name to enable people to know that it is a bank and that it is dealing in money.

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Commercial Banking In India

? OBJECTIVES:
The following are the objectives of the banks in India: Social Welfare: It was the need of the hour to direct the funds for the needy and required sectors of the Indian economy. Sector such as agriculture, small and village industries were in need of funds for their expansion and further economic development. Controlling Private Monopolies: Prior to nationalization many banks were controlled by private business houses and corporate families. It was necessary to check these monopolies in order to ensure a smooth supply of credit to socially desirable sections. Expansion of Banking: In a large country like India the numbers of banks existing those days were certainly inadequate. It was necessary to spread banking across the country. It could be done through expanding banking network (by opening new bank branches) in the unbanked areas. Reducing Regional Imbalance: In a country like India where we have an urban-rural divide; it was necessary for banks to go in the rural areas where the banking facilities were not available. In order to reduce this regional imbalance nationalization was justified. Priority Sector Lending: In India, the agriculture sector and its allied activities were the largest contributor to the national income. Thus these were labeled as the priority sectors. But unfortunately they were deprived of their due share in the credit. Nationalization was urgently needed for catering funds to them. Developing Banking Habits: In India more than 110% population used to stay in rural areas. It was necessary to develop the banking habit among such a large population.

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Commercial Banking In India

? NEED & IMPORTANCE OF BANKS:
For the economy to function smoothly, it is important that consumers have access to credit and are sincere towards repayments. Otherwise, the entire consumer economy could collapse. Most of us take loans one time or the other to buy a car or home or even consumer durables. Some take loans for a foreign vacation or wedding. Currently borrowers pay similar interest rates irrespective of the track record – good or bad. But this is changing. Because: ? Form 1st July RBI guidelines ensure that banks will follow the base rate system to price loans. Banks will add a risk premium that will be specific to the kind of risk that the bank perceives you to carry, based on your creditworthiness (on previous history). Banks are increasingly accessing your “credit history” or your past records if you have taken loans and analyzing how disciplined you have been to pay them back on time and in full.

?

? DIFFERENT TYPES OF BANKS:-

Saving Banks

Consumers Banks

Commercial Banks

Exchange Banks

Industrial Banks / Development Banks

Co-operative Banks

Land Development Banks

Central / Federal / National Bank

Indigenous Banks

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Commercial Banking In India

EVOLUTION OF COMMERCIAL BANKS

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Commercial Banking In India

CONTENT

? INTRODUCTION ? MEANING ? DEFINITION ? CLASSIFICATION OF COMMERCIAL BANKS ? IMPORTANCE OF COMMERCIAL BANKS ? INVESTMENT OF COMMERCIAL BANKS ? LIST OF COMMERCIAL BANKS IN INDIA

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Commercial Banking In India

? INTRODUCTION:
The commercial banking industry in India started in 11186 with the establishment of the Bank of Bengal in Calcutta. The Indian Government at the time established three Presidency banks, viz., the Bank of Bengal (established in 1809), the Bank of Bombay (established in 1840) and the Bank of Madras (established in 1843). After independence, the Government of India started taking steps to encourage the spread of banking in India. In order to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank taking over the Imperial Bank of India and integrating with it, the former state-owned and state-associate banks. Accordingly, State Bank of India (SBI) was constituted in 1955. Commercial banking is the most important part of modern banking set up. These days, the function of commercial banks are confined not only to advancing loans to the public and accepting their deposits, their contribution in accelerating the rate of economic development in under-developed and developing countries like that of India is very effective. Not only is that, banking highly effective and useful in the fulfillment of various socio-economic objectives of the Government. Commercial banking in India occupies an important place in the banking set-up of the country, these days. Up to, 1969, the operation and functioning of commercial banks in India was confined only to medium and large sized towns and economically rich people. Agriculture, small scale and cottage industries and rural areas were generally neglected by these banks. With the nationalization of commercial banks in 1969, now these priority sectors have started getting attention, with the result they get more credit and more branches of these banks are being opened in rural areas also.

? MEANING OF COMMERCIAL BANKS
Commercial Banks are like other financial institutions (e.g. money lenders, indigenous bankers, cooperative societies, agricultural and industrial credit institutions) which are in the business of lending and borrowing of money or credit. Commercial banks are an organization which normally performs certain financial transactions. It performs the twin task of accepting deposits from members of public and make advances to needy and worthy people form the society.

? DEFINITIONS OF COMMERCIAL BANKS

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Commercial Banking In India According to Prof. Sayers, "A bank is an institution whose debts are widely accepted in settlement of other people's debts to each other." According to the Indian Banking Company Act 1949, "A banking company means any company which transacts the business of banking. Banking means accepting for the purpose of lending of investment of deposits of money from the public, payable on demand or other wise and withdraw able by cheque, draft or otherwise."

? CLASSIFICATION OF COMMERCIAL BANKS
1. Scheduled banks: -Banks which have been included in the Second Schedule of RBI Act 1934. They are categorized as follows: Public Sector Banks: -are those banks in which majority of stake are held by the government. E.g. SBI, PNB, Syndicate Bank, Union Bank of India etc. o Private Sector Banks: -are those banks in which majority of stake are held by private individuals. E.g. ICICI Bank, IDBI Bank, HDFC Bank, AXIS Bank etc. o Foreign Banks: -are the banks with Head office outside the country in which they are located. E.g. Citi Bank, Standard Chartered Bank, Bank of Tokyo Ltd. etc. 2. Non-scheduled commercial banks: -Banks which are not included in the Second Schedule of RBI Act 1934.
o

? IMPORTANCE OF COMMERCIAL BANKS
? Commercial banks are the oldest and most diversified of all financial intermediaries. ? Banks are important in the money supply process. ? Banks create money by lending or buying the securities. ? Depository institutions play a key role in channeling funds from savers to borrowers. ? Commercial banks dominate among depository institutions.

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Commercial Banking In India

? INVESTMENT IN COMMERCIAL BANKS

Banks have four categories of assets: ? ? ? ? Cash in hand and balances with RBI. Assets with the banking system. Investment in government and other approved securities, and Bank credit.

Among these assets, investment in cash and government securities serves the liquidity requirements of banks and is influenced by RBI policy. Commercial bank’s investments are of three types: ? ? ? Government of India securities. Other approved securities, and Non-approved securities.

The first two types are known as SLR securities whereas the other one is NON-SLR securities.

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Commercial Banking In India

? LIST OF COMMERCIAL BANKS IN INDIA
Allahabad Bank Andhra bank Bank Of Baroda Bank Of India Bank Of Maharashtra Canara Bank Central Bank Of India China trust commercial bank Citi union bank Corporation Bank Cosmos bank Dena Bank Development credit bank ltd. Export –import bank of India Federal bank limited Global trust bank limited ICICI Bank IDBI Bank Ltd Indian Bank Indian Overseas Bank Indusland bank limited NABARD Bank Oriental Bank of Commerce Punjab And Sind Bank Punjab National Bank State Bank Of Hyderabad State Bank Of India State Bank Of Indore State Bank Of Mysore State Bank Of Patiala State Bank Of Saurashtra State Bank Of Travancore Syndicate Bank Uco Bank Union Bank Of India United Bank Of India Vijaya Bank

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Commercial Banking In India

TYPES OF COMMERCIAL BANKS

Broadly speaking, banks can be classified into commercial banks and central bank. Commercial banks are those which provide banking services for profit. The central bank has the function of controlling commercial banks and various other economic activities. There are many types of commercial banks such as deposit banks, industrial banks, savings banks, agricultural banks, exchange banks, and miscellaneous banks.

COMMERCIAL BANKS

INDUSTRIAL BANK SAVING BANK AGRICULTURA L BANK EXCHANGE BANK DEPOSIT BANK MISCELLANEOU S BANK

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Commercial Banking In India

? INDUSTRIAL BANKS:
Industries require a huge capital for a long period to buy machinery and equipment. Industrial banks help such industrialists. They provide long term loans to industries. Besides, they buy shares and debentures of companies, and enable them to have fixed capital. Sometimes, they even underwrite the debentures and shares of big industrial concerns. ?

SAVINGS BANKS:

These banks were specially established to encourage thrift among small savers and therefore, they were willing to accept small sums as deposits. They encourage savings of the poor and middle class people. In India we do not have such special institutions, but post offices perform such functions. After nationalization most of the nationalized banks accept the saving deposits.

? AGRICULTURAL BANKS:
Agriculture has its own problems and hence there are separate banks to finance it. These banks are organized on cooperative lines and therefore do not work on the principle of maximum profit for the shareholders. These banks meet the credit requirements of the farmers through term loans, viz., short, medium and long term loans. There are two types of agricultural banks: (a) Agricultural Co-operative Banks, and (b) Land Mortgage Banks.

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Commercial Banking In India

? EXCHANGE BANKS:
These banks finance mostly for the foreign trade of a country. Their main function is to discount, accept and collect foreign bills of exchange. They buy and sell foreign currency and thus help businessmen in their transactions. In India, there are some commercial banks which are branches of foreign banks. These banks facilitate for the conversion of Indian currency into foreign currency to make payments to foreign exporters. They purchase bills from exporters and sell their proceeds to importers.

? DEPOSIT BANKS:
The most important type of deposit banks is the commercial banks. They have connection with the commercial class of people. These banks accept deposits from the public and lend them to needy parties. Since their deposits are for short period only, these banks extend loans only for a short period. Ordinarily these banks lend money for a period between 3 to 6 months. They do not like to lend money for long periods or to invest their funds in any way in long term securities.

? MISCELLANEOUS BANKS:
There are certain kinds of banks which have arisen in due course to meet the specialized needs of the people. In England and America, there are investment banks whose object is to control the distribution of capital into several uses. American Trade Unions have got labor banks, where the savings of the laborers are pooled together.

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Commercial Banking In India

ADVANTAGES & DISADVANTAGES OF COMMERCIAL BANKING

ADVANTAGES:
The following are the advantages of commercial banks in India:

? INVESTMENT:For any new business to get off the ground and begin operations there must be capital available that can be used to purchase necessary equipment and property. Commercial banks make this capital available to new entrepreneurs through the great number of loans that they provide. If it wasn't for the role that commercial banks play, capital for starting a business would only be available to the very rich.

? MORTGAGES
The flat price of a home is beyond the purchasing power of most people. Only through the creation of mortgages by commercial banks is the ability to purchase a house given to the average person. A mortgage involves a fixed series of annual payments to a bank over a long period of time in exchange for the bank paying the full price of the purchase in the short term.

? SAVINGS
Rather than merely keeping your money in a safe place, by placing your money in a bank account you add to your wealth as the bank pays interest on the amount. This has a further advantage for society at large: As money saved in the bank isn't merely dead capital but money that the bank is actively investing in other enterprises, it helps to grow the wealth of society overall.

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Commercial Banking In India

? PAYMENT
Commercial banks have devised a number of ways to aid clients in the payment of their debts. The first paper currency was created by commercial banks as issued credits on physical wealth, such as gold kept in bank vaults. Commercial bank customers can use checks as well as debit cards and online bill-paying services to make payments in a quick, easy way.

DISADVANTAGES:The following are the disadvantages of commercial banks in India:

LOAN APPROVALS
One disadvantage of using a large, commercial bank can easily be seen if you're trying to get a loan. Unlike a local bank, or a relatively small bank, a larger, commercial bank will have to put a loan through several different departments. Beyond that, you may have to have dozens of people sign off on a single loan. This can lead to many more people getting involved in saying yes or no to your loan, and it may lead to a lot more negotiation than you were hoping to conduct. This is especially true for a simple, relatively straightforward home or business loan.

RIGID STANDARDS
Another downside of using commercial banks is that they have very rigid standards more often than not. All banks have to follow the financial laws put forth by the U.S. government, but commercial banks may treat their own, additional rules as if they're set in stone. Again, this is most often seen in the loan process. Commercial banks, due to their size and the sheer volume of the market that they command, are often less likely to make concessions to customers. This can lead to a very "my way or the highway" attitude from a commercial bank.

SECURITY
One of the biggest concerns that a person has with their bank is whether or not their money is insured. If you put $10,000 in a savings account, you want to be sure that money will be available, regardless of what expenses your bank has to deal with. This is why the U.S. government created FDIC insurance, which insures up to $100,000 worth of money (though it's more than $200,000 until 2013) per depositor so that those depositors can have faith in the bank.

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Commercial Banking In India

DISTINGUISH BETWEEN COMMERCIAL BANK AND CENTRAL BANK

TOPIC Meaning

COMMERCIAL BANK
Commercial Banks are like other financial institutions (e.g. money lenders, indigenous bankers, cooperative societies, agricultural and industrial credit institutions) which are in the business of lending and borrowing of money or credit. According to Prof. Sayers, "A commercial bank is an institution whose debts are widely accepted in settlement of other people's debts to each other." The main function of a Commercial Bank is to accept deposits from public for the purpose of lending to industry and others.

CENTRAL BANK
A central bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets.

Definition

Oxford Dictionary defines a central bank as "an establishment for custody of money, which it pays out on customer's order."

Function

The Central Bank regulates money supply in the country. It also acts as a banker to the government and to the other banks operating in a country.

Printing Currency

of The Commercial Banks The Central Bank of India
cannot print currency notes (i.e. RBI) has the power to and make coins. print currency notes from Rs.2 and above.

Acceptance Of The Commercial Bank The Central Bank doesn?t accepts deposits from the accept any deposit from Deposit
public. the public.

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Commercial Banking In India

Provision Loans

Of The Commercial Bank The Central Bank provides
provides loans to the loans to scheduled banks industry and to the public. and financial institutions.

Ownership

Commercial Banks can be Central Bank of India owned by private and / or (RBI) is owned and Government agencies. controlled by Government of India. There are several However, there is only one Commercial Banks apex Central Bank (i.e. currently operating in RBI) in India. India. Commercial Banks do not Central Banks frames frame monetary policy of monetary policy of a the country. country.

Total Number

Framing Monetary Policy Monitory Control

Commercial Bank does not Central Bank monitors the have any control over working of all commercial Central Bank. banks.

Registration And Establishment

In India, Commercial The Central Bank of India banks are registered under (RBI) is established under the Banking Regulation RBI Act of 1934. Act of 1949.

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Commercial Banking In India

FUNCTIONS OF COMMERCIAL BANKS

INTRODUCTION PRIMARY FUNCTIONS SECONDARY FUNCTIONS CREDIT CREATION ? LIMITATIONS OF CREDIT CREATION

INTRODUCTION

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Commercial Banking In India Commercial bank being the financial institution performs diverse types of functions. It satisfies the financial needs of the sectors such as agriculture, industry, trade, communication, etc. That means they play very significant role in a process of economic social needs. The functions performed by banks are changing according to change in time and recently they are becoming customer centric and widening their functions. Generally the functions of commercial banks are divided into two categories viz. primary functions and the secondary functions. The following chart simplifies the functions of banks.

COMMERCIAL BANKS

PRIMARY FUNCTIONS

SECONDARY FUNCTIONS

Acceptance of deposits Advancing loans Creation of credit

Agency services

General utility services

Overdr aft Cash credit Discounti ng trade bills Money at calls

Term loan Consumer credit Miscellane ous advances

Clearing of cheques

Financing of foreign trade Remittance of funds

? PRIMARY FUNCTIONS:-

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Commercial Banking In India Primary banking functions of the commercial banks include: ? ? ? ? ? ? Acceptance of deposits Advancing loans Creation of credit Clearing of cheques Financing foreign trade Remittance of funds

ACCEPTANCE OF DEPOSITS:
Accepting deposits is the primary function of a commercial bank mobilizes savings of the household sector. Banks generally accept three types of deposits viz., (a) Current Deposits (b) Savings Deposits, and (c) Fixed Deposits.

Current Deposits: These deposits are also known as demand deposits. These deposits can be withdrawn at any time. Generally, no interest is allowed on current deposits, and in case, the customer is required to leave a minimum balance undrawn with the bank. Cheques are used to withdraw the amount. These deposits are kept by businessmen and industrialists who receive and make large payments through banks. The bank levies certain incidental charges on the customer for the services rendered by it. Savings Deposits: This is meant mainly for professional men and middle class people to help them deposit their small savings. It can be opened without any introduction. Money can be deposited at any time but the maximum cannot go beyond a certain limit. There is a restriction on the amount that can be withdrawn at a particular time or during a week. If the customer wishes to withdraw more than the specified amount at any one time, he has to give prior notice. Interest is allowed on the credit balance of this account. The rate of interest is greater than the rate of interest on the current deposits and less than that on fixed deposit. This system greatly encourages the habit of thrift or savings. Fixed Deposits: These deposits are also known as time deposits. These deposits cannot be withdrawn before the expiry of the period for which they are deposited or without giving a prior notice for withdrawal. If the depositor is in need of money, he has to borrow on the security of this account and pay a slightly higher rate of interest to the bank. They are

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Commercial Banking In India attracted by the payment of interest which is usually higher for longer period. Fixed deposits are liked by depositors both for their safety and as well as for their interest. In India, they are accepted between three months and ten years.

ADVANCING LOANS:
The second primary function of a commercial bank is to make loans and advances to all types of persons, particularly to businessmen and entrepreneurs. Loans are made against personal security, gold and silver, stocks of goods and other assets. The most common way of lending is by: ? Overdraft Facilities: In this case, the depositor in a current account is allowed to draw over and above his account up to a previously agreed limit. Suppose a businessman has only Rs. 30,000/in his current account in a bank but requires Rs. 60,000/- to meet his expenses. He may approach his bank and borrow the additional amount of Rs. 30,000/-. The bank allows the customer to overdraw his account through cheques. The bank, however, charges interest only on the amount overdrawn from the account. This type of loan is very popular with the Indian businessmen.
? Cash Credit:

Under this account, the bank gives loans to the borrowers against certain security. But the entire loan is not given at one particular time, instead the amount is credited into his account in the bank; but under emergency cash will be given. The borrower is required to pay interest only on the amount of credit availed to him. He will be allowed to withdraw small sums of money according to his requirements through cheques, but he cannot exceed the credit limit allowed to him. Besides, the bank can also give specified loan to a person, for a firm against some collateral security. The bank can recall such loans at its option. ? Discounting Bills of Exchange: This is another type of lending which is very popular with the modern banks. The holder of a bill can get it discounted by the bank, when he is in need of money. After deducting its commission, the bank for a bank, they provide a very liquid asset which can be quickly turned into cash. The commercial banks can rediscount the discounted bills with the central banks when they are in need of money. These bills are safe and secured bills. When the bill matures the bank can secure its payment from the party which had accepted the bill.

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Commercial Banking In India ? Money at Call: Bank also grant loans for a very short period, generally not exceeding 7 days to the borrowers, usually dealers or brokers in stock exchange markets against collateral securities like stock or equity shares, debentures, etc., offered by them. Such advances are repayable immediately at short notice hence; they are described as money at call or call money. ? Term Loans: Banks give term loans to traders, industrialists and now to agriculturists also against some collateral securities. Term loans are so-called because their maturity period varies between 1 to 10 years. Term loans; as such provide intermediate or working capital funds to the borrowers. Sometimes, two or more banks may jointly provide large term loans to the borrower against a common security. Such loans are called participation loans or consortium finance. ? Consumer Credit: Banks also grant credit to households in a limited amount to buy some durable consumer goods such as television sets, refrigerators, etc., or to meet some personal needs like payment of hospital bills etc. Such consumer credit is made in a lump sum and is repayable in installments in a short time. Under the 20-point programme, the scope of consumer credit has been extended to cover expenses on marriage, funeral etc., as well. ? Miscellaneous Advances: Among other forms of bank advances there are packing credits given to exporters for a short duration, export bills purchased/discounted, import finance-advances against import bills, finance to the self-employed, credit to the public sector, and credit to the cooperative sector and above all, credit to the weaker sections of the community at concessional rates.

CREATION OF CREDIT:
A unique function of the bank is to create credit. Banks supply money to traders and manufacturers. They also create or manufacture money. Bank deposits are regarded as money. They are as good as cash. The reason is they can be used for the purchase of goods and services and also in payment of debts. When a bank grants a loan to its customer, it does not pay cash. It simply credits the account of the borrower. He can withdraw the amount whenever he wants by a cheque. In this case, bank has created a deposit without receiving cash. That is, banks are said to have created credit. Sayers says “banks are not merely purveyors of money, but also in an important sense, manufacturers of money.”

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Commercial Banking In India ? Promote the Use of Cheques: The commercial banks render an important service by providing to their customers a cheap medium of exchange like cheques. It is found much more convenient to settle debts through cheques rather than through the use of cash. The cheque is the most developed type of credit instrument in the money market. ? Financing Internal and Foreign Trade: The bank finances internal and foreign trade through discounting of exchange bills. Sometimes, the bank gives short-term loans to traders on the security of commercial papers. This discounting business greatly facilitates the movement of internal and external trade. ? Remittance of Funds: Commercial banks, on account of their network of branches throughout the country, also provide facilities to remit funds from one place to another for their customers by issuing bank drafts, mail transfers or telegraphic transfers on nominal commission charges. As compared to the postal money orders or other instruments, bank drafts have proved to be a much cheaper mode of transferring money and have helped the business community considerably.

? SECONDARY FUNCTIONS
Secondary banking functions of the commercial banks include: ? ? Agency Services General Utility Services

AGENCY SERVICES:
Banks also perform certain agency functions for and on behalf of their customers. The agency services are of immense value to the people at large. The various agency services rendered by banks are as follows: Collection and Payment of Credit Instruments:Banks collect and pay various credit instruments like cheques, bills of exchange, promissory notes etc., on behalf of their customers. Purchase and Sale of Securities:Banks purchase and sell various securities like shares, stocks, bonds, debentures on behalf of their customers.

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Commercial Banking In India Collection of Dividends on Shares:Banks collect dividends and interest on shares and debentures of their customers and credit them to their accounts. Acts as Correspondent: Sometimes banks act as representative and correspondents of their customers. They get passports, traveler?s tickets and even secure air and sea passages for their customers. Income-tax Consultancy: Banks may also employ income tax experts to prepare income tax returns for their customers and to help them to get refund of income tax. Execution of Standing Orders: Banks execute the standing instructions of their customers for making various periodic payments. They pay subscriptions, rents, insurance premium etc., on behalf of their customers. Acts as Trustee and Executor: Banks preserve the „Wills? of their customers and execute them after their death.

GENERAL UTILITY SERVICES:
In addition to agency services, the modern banks provide many general utility services for the community as given. ? Locker Facility: Bank provides locker facility to their customers. The customers can keep their valuables, such as gold and silver ornaments, important documents; shares and debentures in these lockers for safe custody. ? Traveler’s Cheques and Credit Cards: Banks issue traveler?s cheques to help their customers to travel without the fear of theft or loss of money. With this facility, the customers need not take the risk of carrying cash with them during their travels. ? Letter of Credit: Letters of credit are issued by the banks to their customers certifying their credit worthiness. Letters of credit are very useful in foreign trade. ? Collection of Statistics:Banks collect statistics giving important information relating to trade, commerce, industries, money and banking. They also publish valuable journals and bulletins containing articles on economic and financial matters. ?

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Commercial Banking In India ? Acting Referee:Banks may act as referees with respect to the financial standing, business reputation and respectability of customers. ? Underwriting Securities:Banks underwrite the shares and debentures issued by the Government, public or private companies. ? Gift Cheques:Some banks issue cheques of various denominations to be used on auspicious occasions. ? Accepting Bills of Exchange on Behalf of Customers:Sometimes, banks accept bills of exchange, internal as well as foreign, on behalf of their customers. It enables customers to import goods.
? Merchant Banking:Some commercial banks have opened merchant banking

divisions to provide merchant banking services.

CREDIT CREATION
Banks create credit by creating cheque money or deposit money which on account of its free acceptability circulates like legal tender money. This increases or decreases money in circulation without increase or decrease in currency or legal tender money. An important function performed by the commercial banks is the creation of credit. The process of banking must be considered in terms of monetary flows, that is, continuous depositing and withdrawal of cash from the bank. It is only this activity which has enabled the bank to manufacture money. Therefore the banks are not only the purveyors of money but manufacturers of money.

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Commercial Banking In India ? LIMITATIONS OF CREDIT CREATION Commercial Banks though have the power to create credit, their powers are not unlimited. Certain points affect the process of credit creation. They are termed as limitations to credit creation by commercial banks.

1. Amount of Deposit The most important factor which decides credit creation is the amount of deposits made by the depositors. Higher is the amount of deposits; greater is the supply of credit and vice versa. 2. Cash Reserve Ratio (CRR) There exists an indirect relationship between Credit Creation and Cash Reserve Ratio (CRR). Higher is the Cash Reserve Ratio (CRR) more will be the reserves to be maintained and less credit will be created by banks. The CRR is fixed by the RBI in India. It ranges between 3% to 15%. 3. Banking Habits of People If the banking habits of the people are well-developed, then all their transactions would be through banks, and this will lead to expansion of credit and vice-versa. 4. Supply of Securities

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Commercial Banking In India Loans are sanctioned on the basis of the securities provided to the banks. If securities are available then the credit creation will be more and vice-versa. 5. Willingness of people to borrow Commercial banks may have enough money to lend. Customers should be willing to borrow from the banks to facilitate credit creation. If they are willing to borrow, then the credit created by banks will be less. 6. Monetary Policy of Central Bank While credit is created by commercial banks, it is controlled by the Central Bank. Credit control is one important function of the central bank. Central Bank uses various methods of Credit Control from time to time and thus influences the banks to expand or contract credit. 11. External Drain External Drain refers to withdrawal of cash from the banking system by the public. It lowers the reserves of the banks and limits the credit creation. 8. Uniform Policy If all the commercial banks follow a uniform policy related to CRR, then credit creation would be smooth. If some banks follow liberal and others follow a conservative one, then credit creation would be affected.

CHAPTER 2: FIELD STUDY

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SERVICES & POLICIES OFFERED BY COMMERCIAL BANKS

? INTRODUCTION

? TYPES OF SERVICES:

PRIMARY SERVICES SECONDARY SERVICES: MODERN TECHNOLOGY: ? ? ? ? ? Technology Mobile Banking Internet Banking Electronic Banking INTRODUCTION
Commercial banks provide a variety of important products and services. In contrast to investment banks, which deal primarily with the securities markets,

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Commercial Banking In India commercial banks accept a variety of deposit types, make various kinds loans and provide other services including checking and savings accounts, credit cards, ATM networks, safe deposit boxes, and custodial and trustee services.

PRIMARY SERVICES:Commercial banks also provide other services to businesses and consumers for which they earn various fees. These include investment advisory services, corporate finance consulting, custodial services for estates and trusts, safekeeping of securities and other valuable items, and money transfer services. Some of the different services available from commercial banks to its customers are: ? ? ? ? ? ? ? ? Checking/Current account Savings accounts Internet/Mobile Banking ATM Cards Check Books Deposit Accounts Loans Credit Cards etc.

A bank cannot survive without performing the following non-banking activities: Banks help their customers to make utility payments with ease. They perform merchant banking for their customers. They provide factoring services to their clients. They manage mutual funds and minimize investment risks. They issue gift cheques to the people. They conduct feasibility study and submit the feasibility report. They facilitate the share transactions by maintaining demat accounts. They offer credit and debit cards facility. They also offer leasing services. They give hire-purchase services to owners of various goods. They are now allowed to offer insurance services. They provide funds (capital) for starting new ventures.

PRIMARY SERVICES:MODERN TECHNOLOGICAL SERVICES

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Commercial Banking In India ? Technology Banks in India have started using technology in a proactive manner. The huge number of bank customers and their myriad needs are being met in increasingly sophisticated ways. In a number of areas, the foreign banks and the new private sector banks have been the first movers in the application of technology, but public sector banks are also catching up. One major advantage that Indian banks have is the availability of major IT companies in India who are the world leaders in IT applications. ? Mobile Banking Some banks have started offering mobile banking and tele-banking to customers. The expansion in the use and geographical reach of mobile phones has created new opportunities for banks to use this mode for banking transactions and also provide an opportunity to extend banking facilities to the hitherto excluded sections of the society. With ICICI Bank Mobile Banking, you can have following access through your mobile:? ? ? ? ? ? Check your account balance Transfer funds 24 x 7 Pay your bills Book bus and flight tickets Recharge your prepaid mobile or DTH connection

Our Mobile Banking services work with almost all types of handsets and help you access your ICICI Bank account easily and securely.

? Internet Banking Through its website, a bank may offer its customers online access to account information and payment and fund transfer facilities. The range of services offered differs from bank to bank depending mainly on the type and size of the bank.

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Commercial Banking In India Internet banking is changing the banking industry and affecting banking relationships in a major way. The services provided through internet banking are: Money manager Fund transfer Bills payment Quick pay Receive funds Prepaid mobile recharge ? Electronic Banking Electronic banking services provided by commercial banks include:? ? ? ? ? ? ? The maintenance and expansion of 24-hour ATM networks. Wire transfers. Banking websites that allow consumers and business to obtain account information. Open new accounts. Order checks. Transfer funds between accounts. Bill payments.

? POLICIES OF COMMERCIAL BANKS IN INDIA
INVESTMENT POLICY

The financial position of a commercial bank is reflected in its balance sheet. The balance sheet is a statement of the assets and liabilities of the bank. The assets of the bank are distributed in accordance with certain guiding principles. These principles underline the investment policy of the bank. They are discussed below:

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? Liquidity:
In the context of the balance sheet of a bank the term liquidity has two interpretations. First, it refers to the ability of the bank to honor the claims of the depositors. Second, it connotes the ability of the bank to convert its non-cash assets into cash easily and without loss. It is a well-known fact that a bank deals in funds belonging to the public. Hence, the bank should always be on its guard in handling these funds. The bank should always have enough cash to meet the demands of the depositors. In fact, the success of a bank depends to a considerable extent upon the degree of confidence it can instill in the minds of its depositors. If the depositors lose confidence in the integrity of their bank, the very existence of the bank will be at stake. So, the bank should always be prepared to meet the claims of the depositors by having enough cash. Among the various items on the assets side of the balance sheet, cash on hand represents the most liquid asset. Next comes cash with other banks and the central bank. The order of liquidity goes on descending. Liquidity also means the ability of the bank to convert its non-cash assets into cash easily and without loss. The bank cannot have all its assets in the form of cash because each is an idle asset which does not fetch any return to the bank. So some of the assets of the bank, money at call and short notice, bills discounted, etc. could be made liquid easily and without loss.

? Profitability:
A commercial bank by definition is a profit hunting institution. The bank has to earn profit to earn income to pay salaries to the staff, interest to the depositors, dividend to the shareholders and to meet the day-to-day expenditure. Since cash is the least profitable asset to the bank, there is no point in keeping all the assets in the form of cash on hand. The bank has got to earn income. Hence, some of the items on the assets side are profit yielding assets. They include money at call and short notice, bills discounted, investments, loans and advances, etc. Loans and advances, though the least liquid asset, constitute the most profitable asset to the bank. Much of the income

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Commercial Banking In India of the bank accrues by way of interest charged on loans and advances. But, the bank has to be highly discreet while advancing loans.

? Safety or Security:
Apart from liquidity and profitability, the bank should look to the principle of safety of its funds also for its smooth working. While advancing loans, it is necessary that the bank should consider the three „C?s of credit character, capacity and the collateral of the borrower. The bank cannot afford to invest its funds recklessly without considering the principle of safety. The loans and investments made by the bank should be adequately secured. For this purpose, the bank should always insist on security of the borrower. Of late, somehow or other the banks have not been paying adequate importance to safety, particularly in India.

? Diversity:
The bank should invest its funds in such a way as to secure for itself an adequate and permanent return. And while investing its funds, the bank should not keep all its eggs in the same basket. Diversification of investment is necessary to avoid the dangerous consequences of investing in one or two channels. If the bank invest its funds in different types of securities or makes loans and advances to different objectives and enterprises, it shall ensure for itself a regular flow of income.

? Salability of Securities:
Further, the bank should invest its funds in such types of securities as can be easily marketed at a time of emergency. The bank cannot afford to invest its funds in very long term securities or those securities which are unsalable. It is necessary for the bank to invest its funds in government or in first class securities or in debentures of reputed firms. It should also advance loans against stocks which can be easily sold.

? Stability in the Value of Investments:
The bank should invest its funds in those stocks and securities the prices of which are more or less stable. The bank cannot afford to invest its funds in securities, the prices of which are subject to frequent fluctuations.

? Principles of Tax-Exemption of Investments:
Finally, the investment policy of a bank should be based on the principle of tax exemption of investments. The bank should invest in those government securities which are exempted from income and other taxes. This will help the bank to increase its profits. Of late, there has been a controversy regarding the relative importance of

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Commercial Banking In India the various principles influencing the investment policy of a bank particularly between liquidity and profitability. It is interesting to examine this controversy. LENDING POLICY

Types of Lending
A. Fund based (Current & Fixed Assets) ? Overdrafts ? Cash Credits ? Bills Finance – Demand or Usance Bills ? Demand Loans ? 5.Term Loans ? Other Loans - Car Loans, Consumer Durables, Educational Loans, Housing Loans, Professionals Personal Loans, Credit Cards and so on… B. Non-Fund based (Fee based) ? Issue of Guarantees ? Issue of Letters of Credit ? Deferred Payments Guarantees ? C. Others ? Lease Finance Hire Purchase Finance

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ROLE OF RESERVE BANK OF INDIA VIS-À-VIS COMMERCIAL BANKS

INTRODUCTION

INITIATIVES TAKEN BY THE RBI

RBI PENALIZE 19 COMMERCIAL BANKS

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Commercial Banking In India

INTRODUCTION
The Reserve Bank of India (RBI) is the central bank of the country. It was established on April 1, 1935 under the Reserve Bank of India Act, 1934, which provides the statutory basis for its functioning. When the RBI was established, it took over the functions of currency issue from the Government of India and the power of credit control from the then Imperial Bank of India. As the central bank of the country, the RBI performs a wide range of functions; particularly, it: ? ? ? ? ? ? ? Acts as the currency authority Controls money supply and credit Manages foreign exchange Serves as a banker to the government Builds up and strengthens the country's financial infrastructure Acts as the banker of banks Supervises banks

As regards the commercial banks, the RBI's role mainly relates to the last two points stated above.

INITIATIVES TAKEN BY THE RBI
The Lead Bank Scheme introduced by the RBI in 1969 is the earliest attempt by the RBI to foster financial inclusion. Under the scheme, designated banks are made key instruments for local development and entrusted with the responsibility of identifying growth centers, assessing deposit potential and credit gaps and evolving a coordinated approach for credit deployment in each district, in concert with other banks and other agencies. As at March 2009, there were 26 banks, mostly in the public sector, which have been assigned lead responsibility in 622 districts of the country. The RBI's recent measures to promote financial inclusion includes: advising banks to open 'no frills' accounts, introduction of Business Correspondent (BC)/ Business Facilitator (BF) model and adoption of Information and Communication Technology (ICT) solutions for achieving greater outreach.

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RBI PENALIZE 19 COMMERCIAL BANKS
Srinagar, May 1: Reserve Bank of India has imposed penalty on 19 commercial banks. A notification by the Central Bank said in the exercise of the power vested with it under the provision of section 47(A)1(b) READ with section 46( 4)(i) of the banking regulation act 1949, rbi has imposed penalties on 19 commercial banks. Some of the banks on whom penalties charged were ICICI Bank, HDFC Bank, PNB Paribas, YES Bank, etc. “the penalties have been imposed for contravention of various instructions issued by Reserve Bank in respect of derivatives such as, failure to carry out due diligence in regards to suitability of products, selling derivatives products to users not having risk management policies and not verifying the underlying/adequacy of underlying and eligible limits under past performance route”, it said. The banks have been imposed penalties of 5 lakhs to rs.15 lakhs. While the ICICI Banks, HDFC Banks, YES Banks have been imposed the penalties of 15 lakhs, whereas PNB Paribas Bank has been imposed penalty of 10 lakhs.

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COMMERCIAL BANKS AND ITS IMPACT ON ECONOMIC DEVELOPMENT

Commercial banks are considered not merely as dealers in money but also the leaders in economic development. They are not only the store houses of the country?s wealth but also the reservoirs of resources necessary for economic development. They play an important role in the economic development of a country. A well-developed banking system is essential for the economic development of a country. The “Industrial Revolution” in Europe in the 19th century would not have been possible without a sound system of commercial banking. In case of developing countries like India, the commercial banks are considered to be the backbone of the economy.

Commercial banks can contribute to a country’s economic development in the following ways:

Provision of Finance and Credit:
Commercial banks are a very important source of finance and credit for industry and trade. Credit is a pillar of development. Credit lubricates all commerce and trade. Banks become the nerve Centre of all commerce and trade. Banks are instruments for developing internal as well as external trade.

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Monetization of Economy:
An underdeveloped economy is characterized by the existence of a large nonmonetized sector. The existence of this non-monetized sector is a hindrance in the economic development of the country. The banks, by opening branches in rural and backward areas can promote the process of monetization (conversion of debt into money) in the economy.

Innovations:
Innovations are an essential prerequisite for economic development. These innovations are mostly financed by bank credit in the developed countries. But in underdeveloped countries, entrepreneurs hesitate to invest in new ventures and undertake innovations largely due to lack of funds. Facilities of bank loans enable the entrepreneurs to step up their investment on innovational activities, adopt new methods of production and increase productive capacity of the economy.

Implementation of Monetary Policy:
Economic development needs an appropriate monetary policy. But a well-developed banking is a necessary pre-condition for the effective implementation of the monetary policy. Control and regulation of credit by the monetary authority is not possible without the active co-operation of the banking system in the country.

Encouragement to Right Type of Industries:
Banks generally provide financial resources to the right type of industries to secure the necessary material, machines and other inputs. In this way they influence the nature and volume of industrial production.

Development of Agriculture:
Underdeveloped economies are primarily agricultural economies. Majority of the population in these economies live in rural areas. Therefore, economic development in these economies requires the development of agriculture and small scale industries in rural areas. So far banks in underdeveloped countries have been paying more attention to trade and commerce and have almost neglected agriculture and industry.

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Commercial Banking In India Banks must provide loans to agriculture for development and modernization of agriculture. In recent years, the State Bank of India and other commercial banks are granting short term, medium-term and long-term loans to agriculture and small-scale industries.

Regional Development:
Banks can also play an important role in achieving balanced development in different regions of the country. They transfer surplus capital from the developed regions to the less developed regions, where it is scarce and most needed. This reallocation of funds between regions will promote economic development in underdeveloped areas of the country.

Promote Industrial Development:
Industrial development needs finance. In some countries, commercial banks encouraged industrial development by granting long-term loans also. Loan or credit is a pillar to development. In underdeveloped countries like India, commercial banks are granting short-term and medium-term loans to industries. They are also underwriting the issue of shares and debentures by industrial concerns. This helps industrial concerns to secure adequate capital for their establishment, expansion and modernization.

Promote Commercial Virtues:
The businessmen are more afraid of a banker than a preacher. The businessmen should have certain business qualities like industry, forethought, honesty and punctuality. These qualities are called “commercial virtues” which are essential for rapid economic progress. The banker is in a better position to promote commercial virtues. Banks are called “public conservators of commercial virtues.”

Fulfillment of Socio-economic Objectives:
In recent years, commercial banks, particularly in developing countries, have been called upon to help achieve certain socio-economic objectives laid down by the state. For example, nationalized bank in India have framed special innovative schemes of credit to help small agriculturists, self-employed persons and retailers through loans and advances at concessional rates of interest. Banking is thus used to achieve the national policy objectives of reducing inequalities of income and wealth, removal of poverty and elimination of unemployment in the country.

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CHAPTER 3: LITERATURE REVIEW BOOKS: The 2007-2012 Outlook for Commercial Banking in India. The 2007-2012 Outlook for Non-Interest Commercial Banking in India.
Authorhilip M. Parker Publisher: ICON Group International, Inc. (September 25, 2006). Description: Information taken from these books were related to the introduction of commercial banks & its various types and services.

Public Sector Commercial Banking in India.
Author:Farhat Husain Publisher: Deep & Deep Publications; First Edition (1986) Description: Information taken from these books were related to the various types of banking in India, and its emergence.

State In Relation To Commercial Banking in the Developing Economy of India
Author:Amar Chand Gorelal Sharma Publisher:Sterling Publishers (1968) Description:Information taken from these books were related to the growth of commercial banks in economic development.

CHAPTER 4:ANNEXURE 45

Commercial Banking In India

? ICICI BANK CASE STUDY

HISTORY:ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab National Bank and HDFC Bank.

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? Loans provided by ICICI Banks:-

ICICI Bank offers wide variety of Loans Products to suit your requirements. Coupled with convenience of networked branches/ ATMs and facility of E-channels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our loan product and provide your details online and our representative will contact you for getting loans. Different types of loans provided by ICICI Bank:

Home Loans Personal Loans Car Loans Commercial Vehicle Loans Loans Against Securities
? Home Loans

The No. 1 Home Loans Provider in the country, ICICI Bank Home Loans offers some unbeatable benefits to its customers - Doorstep Service, Simplified Documentation and Guidance throughout the Process. It's really easy! ? Personal Loans

If you're looking for a personal loan that's easy to get, your search ends here. ICICI Bank Personal Loans are easy to get and absolutely hassle free. With minimum documentation you can now secure a loan for an amount up to Rs. 15 lakhs.

?

Car Loans

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Commercial Banking In India

The most preferred financier for car loans in the country. Network of more than 1000 channel partners in over 200 locations. Tie-ups with all leading automobile manufacturers to ensure the best deals. Flexible schemes & quick processing. Hassle free application process on the click of a mouse. ? Commercial Vehicle Loans

We have extended products like funding of new vehicles, finance on used vehicles, top up on existing loans, working capital loans & other banking products. ? Loans against Securities

You don?t have to sell your securities. All you have to do is pledge your securities in favor of ICICI Bank. We will then grant you an overdraft facility up to a value determined on the basis of the securities pledged by you.

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Article on ICICI Bank

?ICICI Bank follow SBI; revise FD rates by up to 0.5 pc

MUMBAI: Private sector banks like ICICI Bank and HDFC Bank on Wednesday reduced interest rates on fixed deposits by at least 50 basis point. The reduction in deposit rates comes at a time when the economy is slowing down and credit pick up is slack. One basis point is equal to one hundredth of a percentage. Last week, State Bank of India had reduced interest rate on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates. ICICI Bank has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier. In the shorter tenure ranging between seven days to 45 days, however, the bank has increased rate by 50-75 basis points. A reduction in statutory reserve ratio, the amount of funds to be held in government bonds, by a percentage point is also help the banks lend Rs 15,000 crore more to corporate or retail customers. Deposits grew 14.1% year on year against RBI's projection of 16%. Pratip Chaudari, chairman State Bank of India had said, “As of now, we are surplus in deposit for SBI,"" said Chaudhuri. ""The challenge is more on pushing credit."" Also, the cut in SLR is providing some comfort. This is helping banks in meeting the credit demand, which is climbing marginally. Recent RBI data shows that credit has grown 16.7% year on year. We could see the private players now reduce lending rates to get competitive as many public sector banks like State Bank of India and Andhra Bank have cut rates on select retail products,'' said a banking analyst with a domestic brokerage. ICICI Bank is also doing this to maintain a healthy margin of over 3%,'' he added.

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Questions Asked To the Branch Manager of ICICI Bank

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Commercial Banking In India What is the Balance that is required for ICICI Savings Account? ANS: -ICICI Savings account requires an Average Monthly Balance of Rs. 75,000 in a combination of savings account/ current account and fixed deposits including a minimum monthly balance of Rs. 25,000 in the savings account / current account or Smart Money facility with a minimum fixed deposit of Rs. 200,000. However, a "No Frills" Account can be opened with Zero balance.

What is the Average Monthly Balance (AMB) required to be maintained in the case of an icici Savings Account? How is the AMB calculated? ANS: -The minimum AMB required to be maintained for ICICI Savings Account is Rs. 75,000. The AMB is calculated by adding the end of day balances for each day in the month and dividing it by the number of days in that month.

Is there a charge for non-maintenance of Average Monthly Balance (AMB)? ANS: -There is a charge levied for non-maintenance of AMB. The charge is Rs. 250+ per month. You may please refer to our tariff on www.icici.co.in for further details on applicable charges.

Do I need to give an advance notice for withdrawal of cash beyond a limit from a branch? ANS: -Prior notice (normally 24 hours) is to be given to the branch from where the cash withdrawal is to be made for an amount greater than Rs.1, 00,000.

How can I earn higher returns on funds in my Current / Savings Account? ANS:-Currently, as per RBI regulations you earn interest at 4.00% p.a. (paid half yearly) on your Savings Account balances and NIL interest on your Current Account balances. However, if you choose, the moment your savings cross the required balance amount, the excess amount will get transferred to a Fixed Deposit, thereby earning you a higher rate of interest.

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Commercial Banking In India Can I access my account when I am out of town / travelling in India? ANS:-Yes, you can check both the balances in your account as well as your transaction history at any of our branches or ATMs. Moreover you can also apply for our Internet Banking or Phone Banking facility which will give you access to your account balances and other services anytime, anywhere.

Can I withdraw cash in any other city where I do not have a Current / Savings Account? ANS:-It is possible to withdraw cash using the debit card at any ICICI or non ICICI VISA ATM in India or overseas (a transaction fee is applicable for withdrawals from non-ICICI ATMs in India and from any ATM overseas).

What if I need foreign exchange for my current account transactions? ANS:-In respect of any other current account transaction please approach the branch with: A letter detailing and self-certifying the details of remittance and the beneficiary to whom it is being made. Supporting document detailing the nature of the transaction, value and beneficiary Complete the following forms given to you by the branch:
?

Application in Form A2 signed by the remitter ? FEMA declaration ? Draft or Telegraphic transfer application form Once the Bank is satisfied with the nature of the transaction the Bank will be able to effect the remittance as required. While most transactions would be processed by the bank on the basis of the above, there could be situations that could call for supplementary information or reference to Reserve Bank. The Branch staff will guide you on this when they are contacted.

Can I use my International credit/debit card to meet my expenses? ANS:-Your International/debit card can be put to good use on various occasions:

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Commercial Banking In India
? ? ?

While you are on holiday outside India to meet your expenses. When you are outside India to purchase an item of import. When you are in India, to make a payment in foreign exchange for purchase of books and other items through Internet.

Q.10 I am having a Saving Bank / Current account with ICICI. I want to register for Online ICICI now. What do I do? ANS:-By visiting the branch we can request for internet banking password. After 8 days we can access our account online. It passes through 3 channels: ? Branch ? Phone-banking ? Internet banking What is the present CRR & SLR in ICICI BANK? ANS:-CRR-4.5% & SLR-23%.

What is impact of IT development on commercial banks? ANS:-As it is in need to adopt supervision technology, it develops the transaction of banks faster. It is also convenient to customers, staff as well as experts.

How much % of loan is given against asset? ANS:-Maximum 85% of asset value is given by ICICI Bank.

Is the prime lending rate same for all types of loan? ANS:-It depends on the loan taken by the borrower.

How the NPA’s are managed? ANS:-The NPA?s are managed by experts. It?s not branch activity; it?s conducted by divisional head office. The managed activities of overall bank?s NPAs are under RBI guidelines.

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CHAPTER 5: CONCLUSION

My study concludes that commercial banks form the most important part of financial intermediaries. It accepts deposits from the general public and extends loans to the households, firms and the government. Banks form a significant part of the infrastructure essential for breaking vicious circle of poverty and promoting economic growth. A commercial bank is a bank that operates with a profit earning goal i.e. a business bank while a non-commercial bank is a financial institution that operates with the aim of alleviating…banking on the development of bank-customer relationship in the value creation process. Banks are financial institutions that can make or break economy. Unsupervised and uncontrolled behavior from banks can spell doom to the economy and for the customers as well. Banks are the regular banks that provide basic banking facilities to its customers. I also conclude that I had done my field study on ICICI Bank as a commercial bank in India & collected many information related to its services, relations with customers and many more aspects. ICICI Bank provides a great customer service. They treat well to their customers, be it a new or the older ones. They provide all types of facilities under one roof. My family being a member of ICICI Bank is very much satisfied by the care they provide. I have visited ICICI Bank as my one of the “COMMERCIAL BANKS IN INDIA” and asked certain questions to the employees over there.

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CHAPTER 6: RESEARCH METHODOLOGY

The data of my research is collected by following two ways: 1. PRIMARY DATA 2. SECONDARY DATA

? PRIMARY DATA:
? ? Interview of banks personnel. Collection of brochures from banks.

? SECONDARY DATA:
Various websites. ? www.commercialbank.com ? www.indian bank.com ? www.rbi.com

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CHAPTER 7: BIBLIOGRAPHY &REFERENCES

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WEBLIOGRAPHY:? ? ? ? ? www.Scribd.Com www.Slideshare.Net www.indian.bank.com www.commercialbank.com www.rbi .com

BOOKS& REFERENCES:? ? ? ? ? ? banking theory , law and practices (Dr.Premkumar Srivastav) Banking Regulation Act, 1949. The Reserve Bank of India Act, 1934. Annual Report of the Reserve Bank of India for the Year 2011-12. Theory & practices of banking. Financial markets & services.

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