ORGANIZATIONAL STRUCTURE OF BANKS

PUNJAB NATIONAL BANK

BACHELOR OF COMMERCE

Banking and Insurance

SEMESTER-V

Submitted

In partial fulfillment of the requirements

For the awards of the degree of

Bachelor of commerce - Banking and insurance

By

Valerie D’cunha

Roll no. 8208

St. Andrew’s College of Arts, Science and Commerce

Bandra West, Mumbai - 400 050

ST . ANDREW’S COLLEGE OF ARTS, SCIENCE AND COMMERCE,

BANDRA WEST , MUMBAI - 400 050

CERTIFICATE

This is to verify that Shri/ Miss VALERIE D’CUNHA of B.Com.

Banking & Insurance - Semester V (2014-2015) has successfully

completed the project on

ORGANIZATIONAL STRUCTURE OF BANKS , PUNJAB

NATIONAL BANK. Under the guidance of prof. JINAL SHAH.

Course Coordinator Principal

Project Guide / Internal Examiner

External Examiner

DECLARATION

I VALERIE D’CUNHA the student of B.Com. (Banking & Insurance) -

Semester V declare that i have completed the project on

ORGANIZATIONAL STRUCTURE OF BANKS, PUNJAB NATIONAL

BANK. The information submitted is true & original to the best of my

knowledge.

Student’s Signature

Valerie d’cunha

ROLL NO. 8208

ACKNOWLEDGEMENT

INTRODUCTION

INDEX

CHAPTER 1

DEFINITION OF ORGANIZATIONAL STRUCTUREThetypically hierarchical arrangement of lines of authority, communications, rights and duties ofanorganization. Organizational structure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management.A structure depends on the organization's objectives and strategy. In a centralized structure, the top layer of management has most of the decision making power and has tight control over departments and divisions. In a decentralized structure, the decision making power is distributed and the departments and divisions may have different degrees of independence. A company such as Proctor & Gamble that sells multiple products may organize their structure so that groups are divided according to each product and depending on geographical area as well.MEANING : Organizational structure is a system used to define a

hierarchy within an organization. It identifies each job, its function and

where it reports to within the organization. This structure is developed to

establish how an organization operates and assists an organization in

obtaining its goals to allow for future growth. The structure is illustrated

using an organizational chart.

1.1 WHY IS ORGANIZATIONAL STRUCTURE IMPORTANT ?There are a number of factors that differentiate small-business operations from large-business operations, one of which is the implementation of a formal organizational structure. Organizational structure is important for any growing company to provide guidance and clarity on specific human resources issues, such as managerial authority. Small-business owners should begin thinking about a formal structure early in the growth stage of their business.Purpose: Organizational structure provides guidance to all employees by laying out the official reporting relationships that govern the workflow of the company. A formal outline of a company's structure makes it easier to add new positions in the company, as well, providing a flexible and ready means for growth.Significance: Without a formal organizational structure, employees may

find it difficult to know who they officially report to in different

situations, and it may become unclear exactly who has the final

responsibility for what. Organizational structure improves operational

efficiency by providing clarity to employees at all levels of a company.

By paying mind to the organizational structure, departments can work

more like well-oiled machines, focusing time and energy on productive

tasks. A thoroughly outlined structure can also provide a roadmap for

internal promotions, allowing companies to create solid employee

advancement tracks for entry-level workers.

Communication:The flow of information is essential to an organization’s success. The organization structure should be designed to ensure that individuals and departments that need to coordinate their efforts have lines of communication that are built into the structure. The financial planning and analysis department might report to the Chief Financial Officer and the Senior Vice President of Marketing, because both of these members of the top management team depend on information and reports provided by financial planning.Reporting Relationships: Reporting relationships must be clear so all members of the organization understand what their responsibilities are and know to whom they are accountable. These clear relationships make it easier for managers to supervise those in lower organization levels. Each employee benefits by knowing whom they can turn to for direction or help. In addition, managers are aware of who is outside the scope of their authority, so they do not overstep their bounds and interfere with

another manager’s responsibilities.

1.2 Four Basic Elements of Organizational Structure

1 Growth And Expansion: Companies that grow rapidly are those that make the best use of their resources, including management talent. A sound organization structure ensures that the company has the right people in the right positions. The structure may suggest weak spots or deficiencies in the company’s current management team. As the company grows, the organization structure must evolve with it. Many times more layers of management are created, when one department head has too many individuals reporting to him at one time to give each employee the attention and direction needed for the employee to succeed.

2 Task Completion:A well-designed organization structure facilitates the completion of projects. Project managers can better identify the human resources available to them if the scope of each department’s responsibility -- and each team member’s capabilities--are clear. A project to develop a new product would require market research. The project manager needs to know who in the organization can provide this research, and whose permission must be obtained for the research to be done.

3 Fits Company’s Needs:Companies in different industries require different mixes of talent and a relatively greater emphasis on certain management functions. A software company often has a large development staff. Structuring the reporting relationships within the development team so creativity and productivity are maximized, and deadlines are met, is vital to that type of company’s success. Companies often have to go through a reorganization phase in which individual positions or even whole departments are repositioned on the organization chart in an effort to better utilize the company’s human resources and make the operation run more smoothly.

4 What Can Go Wrong: Poorly structured organizations find that critical deadlines are not met because there were not sufficient human resources in each department to accomplish all parts of a given task, or because it was not clear whose ultimate responsibility the project was. If individuals are not sure whom they report to, they may find they are given conflicting assignments by two or more managers above them.

CHAPTER 2

TYPES OF ORGANIZATIONAL STRUCTURES

We may categorize the arrangements of organizations into seven types of structures: (1) simple, (2) functional, (3) divisional, (4) matrix, (5) team-based, (6) network, and (7) modular.

1. The Simple Structure: For the Small Firm

 Simple Structure: The first organizational form is the simple structure. This is the form

often found in a firm’s very early, entrepreneurial stages, when the organization is apt to reflect the desires and personality of the owner or founder. An organization with a simple structure has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization. Hundreds of thousands of organizations are arranged according to a simple structure—for instance, small mom-and-pop firms running landscaping, construction, insurance sales, and similar businesses. Examples: Both Hewlett-Packard and Apple Computer began as two-man garage start-ups that later became large.

2. The Functional Structure: Grouping by Similar Work Specialties

The second organizational form is the functional structure. In a functional structure, people with similar occupational specialties are put together in formal groups. This is a quite commonplace structure, seen in all kinds of organizations, for-profit and nonprofit.

Examples: A manufacturing firm will often group people with similar work skills in a Marketing Department, others in a Production Department, others in Finance, and so on. A nonprofit educational institution might group employees according to work specialty under Faculty, Admissions, Maintenance, and so forth.

3. The Divisional Structure: Grouping by Similarity of Purpose

The third organizational form is the divisional structure. In a divisional structure, people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions.

 Product Divisions: Grouping by Similar Products or ServicesProduct divisions group activities around similar products or services. Examples: The media giant Time Warner has different divisions for magazines, movies, recordings, cable television, and so on. The Warner Bros. part of the empire alone has divisions spanning movies and television, a broadcast network, retail stores, theaters, amusement parks, and music.

Customer Divisions: Grouping by Common Customers or Clients

Customer divisions tend to group activities around common customers or clients. Examples: Ford Motor Co. has separate divisions for passenger-car dealers, for large trucking customers, and for farm products customers. A savings and loan might be structured with divisions for making consumer loans, mortgage loans, business loans, and agricultural loans.

Geographic Divisions: Grouping by Regional Location

Geographic divisions group activities around defined regional locations. Example: This arrangement is frequently used by government agencies. The Federal Reserve Bank, for instance, has 12 separate districts around the United States. The Internal Revenue Service also has several districts.

4. The Matrix Structure: A Grid of Functional & Divisional for Two Chains of Command

The fourth organizational form is the matrix structure. In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures—vertical and horizontal. The functional structure usually doesn’t change—it is the organization’s normal departments or divisions, such as Finance, Marketing, Production, and Research & Development. The divisional structure may vary—as by product, brand, customer, or geographic region.

A hypothetical example, using Ford Motor Co.: The functional structure might be the departments of Engineering, Finance, Production, and Marketing, each headed by a vice president. Thus, the reporting arrangement is vertical. The divisional structure might be by product (the new models of Taurus, Mustang, Explorer, and Expedition, for example), each headed by a project manager. This reporting arrangement is horizontal. Thus, a marketing person, say, would report to both the Vice President of Marketing and to the Project Manager for the Ford Mustang.

Indeed, Ford Motor Co. used the matrix approach to create the Taurus and a newer version of the Mustang.

5. The Team-Based Structure: Eliminating Functional Barriers to Solve Problems

The fifth organizational form is the team-based structure. In a team-based structure, teams or work groups, either temporary or permanent, are used to improve horizontal relations and solve problems throughout the organization. When managers from different functional divisions are brought together in teams—known as cross-functional teams—to solve particular problems, the barriers between the divisions break down. The focus on narrow divisional interests yields to a common interest in solving the problems that brought them together. Yet team members still have their full-time functional work responsibilities and still formally report to their own managers above them in the functional-division hierarchy. 

6. The Network Structure: Connecting a Central Core to Outside Firms by Computer Connections

In the sixth organizational form, network structure, the organization has a central core that is linked to outside independent firms by computer connections, which are used to operate as if all were a single organization. Corporations using this structure are sometimes called virtual corporations or virtual organizations, as we mentioned in Another term used is the hollow corporation or hollow organization, in which the company retains important core processes critical to its performance (such as design or marketing) and outsources most other processes (such as human resources, warehousing, or distribution), thereby seeming to “hollow out” the organization.With a network structure, an organization can become a boundaryless organization, operating with extensive, even worldwide operations, yet its basic core can remain small, thus keeping payrolls and overhead down. The glue that holds everything together is information technology, along with strategic alliances and contractual arrangements with supplier companies.Nowadays a firm can be completely international. An example is the medical device start-up EndoStim, nominally based in St. Louis but operating everywhere.

7. The Modular Structure: Outsourcing Pieces of a Product to Outside Firms

The seventh organizational form differs from the sixth in that it is oriented around outsourcing certain pieces of a product rather than

outsourcing certain processes (such as human resources or warehousing) of an organization. In a modular structure, a firm assembles product chunks, or modules, provided by outside contractors. One article compares this form of organization to “a collection of Lego bricks that can snap together.”

CHAPTER 3

ORGANIZATIONAL STRUCTURE OF BANKS

The organizational set up of banks is not not same for all banks it varies from

bank to bank & according to the size. For eg: larger banks will have more

controlling offices.they may have a four tire administrative set-up consisting of

branches, regional offices, zonal offices & head offices. In case of smaller banks

they may not have a zonal set-up.they have only the regional offices in between

branches & head office the number of regional offices & branches also may

differ according to the size of the bank . The set up of branches of foreign banks

in India may also differ, since they do not have a registered office in India will

be as follows..

3.1 ORGANIZATIONAL SET UP OF A BANK

The officials of banks are categorize d as top managers, senior managers,

middle managers & Junior Managers (JM). The entry of the official cadre is

normally JM. They are above the operating staff. They are often the section

heads in smaller branches. JM officers can also become managers in small

branches (Scale I) after gaining sufficient experience. However, branches

headed by JM officials are not common now because even a rural branch is

opened at a higher scale. Middle managers can be a branch manager, deputy

managers in branches or administrative offices. They can head medium level

branches

categorized as scale II branches. Senior managers are normally heads the scale

III branches or become section Heads in administrative offices or larger

branches. The officials from chief managers to CMD are top management

people . Generally they are stationed in the administrative offices. However,

there are branches headed by chief managers, assistant managers, deputy

general managers & even general managers depending upon the size of the

branch measured in term of volume of business handled by it.

3.1 (i) FUNCTIONS OF HEAD OFFICE

Head office is the administrative appellate body of the Bank. Some banks have

corporate office at one center and administrative office in another place. For eg,

Bank Of Baroda is having their head office at Baroda and Corporate Office at

Mumbai. All the administrative offices are located in the head office. Generally,

head office of a bank has the following functional departments:

1 Vigilance Department:

Vigilance department is a separate department. But generally the department ia

associated with inspection department. Therefore it is better known as

inspection and vigilance department. This department institutes enquireswhen

cases of corruption, bribery etc., are charged against employees. They also

handle the frauds and submit periodic reports to RBI.

2 MIS Department:

This department coordinatesthe information system in the bank and generates

various statutory as well as inter statements and returns. The management

information system is essentialfor the efficient and effictive management of

banks. In the automatedbanking enviroment the MIS department need not wait

for the inormation flow from branches. Instead, it can draw the required data

from the data pool and generate necessary statements.

3 EDP Department:

Electronic Data Processing Department is the nerve center of mordern banking

enviroment which depends on technology to a great extent. This department

controls and monitors the hardware and software systems of branches and

administrative offices. They have trained system administrators posted at each

branch/office who coordinate this function. They also develop softwares

themselves by employing project teams as also they outsource some of the

softwares fromprofessional agencies like wipro, infosys etc. the DEP

department ios responsible for the supply of hardware and software of all

branches & for implementation of core banking solution, anywhere banking,

ATM’s etc.

4 Corporate Finance Department:

This department handles the corporate advances. The department will be

analysing credit proposal received from large corporate client and placing

before the appropriate authorities for sanction.

5 Priority & Non Priority Credit Department:

This department monitors the credit to priority sectors and give necessary

instruction to the branches. Generally, the branches are having powers to

sanction loans under the priority sector. Therefore, the deparment need not

appraise credit proposal unless such loans require clearance at higher level.

6 ORGANISATION & METHOD (O&M):

This department is charged with the responsibility of a review of banks

procedures & rules & also the forms & register’s used. The department suggests

simplification of procedures & rules as well as standardization of forms&

registers. It is continuously on the lookout to eliminate unnecessary work &

simplify the clerical routines that it can result in an increase of productivity.

Previously these functions were part of the inspection department, but in view

of the gaining importance of these functions banks have started opening

separate O&M departments.

7 INVESTMENT DEPARTMENTS:

All banks invest sizeable funds in Government & other securities to satisfy

liquidity requirements &also with a view to utilize idle funds during periods of

low demand for bank funds. Most of the loans floated by the central & state

governments are subscribed by the banks. This department takes care of

purchase & sale of securities, collection of interest on due dates, custody of

securities, lodgement of securities for borrowing from Reserve Bank of India,

state bank of India or other Banks, filing of returns of survey of investments to

RBI & a review & planning of bank’s investments.

7 ESTATE DEPARTMENT: The department looks after the acquisition and

maintenance of buildings, Furniture, office equipment, vehicles,

telephones, telex and other communication facilities. Where premises are

taken on rent, lease agreements will have to be entered into and in some

cases, alterations will have to be entered into an in some cases, alteration

will have to be effected to such buildings. The department has to pay rent

for premises taken on hire.

8

3.2 REGIONAL HEAD

For the purpose of administrative convenience, the control of branches is

decentralized. Accordingly, a set of branches are bought under a particular

region. Some banks have classified the regions geographically, like north

Kerala, south Kerala, Mumbai etc. Some other banks classified it as Region NO

1, Region NO. 2 etc . Bringing certain number of branches under each region

irrespective of their geographical locations. Banks having lesser number of

branches in a particular state may have only one region for that state looking

after all the branches in that state. For eg, Punjab National Bank has only one

regional office at Trichy to look after all the branches in the state of Tamil Nadu.

They are headed byChief Managers/Asst. General manager/Dy. General

manager’s depending on the no ofd branches coming under their span of

control. They are assisted by Asst. General manager /Chief Manager etc as the

case may be. The organizational set-up of regional offices are different for each

bank. The organizational set-up depends on thje size of the bank, volume of

buisness etc. the typical administrative set-up of aregional office is shown

under. Regional offices oversee the functions of branches and act as

intermediary betweeen the head office/Zonal Office. They also provide the

consolidated buisness position of the branches coming under their region.

Regional heads spend a specific tiome periodically at he regional offices to

attend to the grevience of customer and take initiative to redress the griveance.

3.3 ZONAL HEAD

Large banks have zonal offices which are higher than the regional offices. Each

zonal office has few regional offices under it. For eg, two regional offices of

Punjab National Bank have one Zonal Office for each state irrespective of the

number of branches. They have only one regional office in Gujrat which is

under the Ahmedabad zonal office. Similarly, there are six regional offices in

Bihar which is under Bihar Zonal Office. Some Banks have extended Corporate

Office instead of Zonal Office. For eg, Union Bank of India has five offices

headed by General Manager at Ahmedabad, Lucknow,Delhi,Mumbai & Kolkata

which at as the extended arms of corporate office. They have two zonal offices

at Pune&Bhopal. The zonal office acts as the local head office & processes

credit proposal ans sanction it, treansfers officers and staff as per thetransfer

poolicy of the bank, monitors funds management, provides customer redressal

mechanism etc. The organizational set up of zonal office is shown below.

The organizational structure and functions of regional offices and zonal offices

may differ from bank to bank. Each bank may have their own systems

depending on their size, span of control etc.

3.3(I)FUNCTIONS OF A ZONAL OFFICE:

Zonal and regional offices are extended arms of the head office. Therefore,

almost all the functional departments at Head office are seen at hese offices

also. However ther are certain differences in the functions of these departments

some typical departments and their functions are mentioned below .

1 Planning Department: This department obtains the budget figures, annually

from branches and submits a consolidated statement to the head office. Where a

bank is having regional office and zonal office, the regional office consolidates

the data from branches under their jurisdiction and send a consolidated

statement to the zonal office. The zonal office consolidates the figures from the

regions under them and send a consolidated data sheet to the head office. This

department also redistributes the buisness targets alloted to them by the head

office among the branches. They alsoconduct yearly/annual quarterly/half

review meetings, evaluate the performance4 of branches and sutably advice

them for improvement. They periodically visit the branches under theircontrol

and monitors their buisness development activities as well as functioning of the

branches.

2 Personnel Department:

This department deals with all matters of relating to employees except

recruitment, selection and industrial relations. These functions are generally

conducted by head office. However, they conduct the recruitment tests,

interviews ect. On behalf of the head office. They conduct the performance

evaluation of employees. They are also empowered to transef the officers and

staff within the region/zone. This department sanctions loans to staff and

maintain the relevant files and records.

3 Credit Department:

Credit department appraises the credit proposal received from brsnches and

submit to the regional Head/Zonal Head are sanctioned to Head Office. Loans

which are under the power of the Regional/Zonal Head aresanctioned at the

Regional/Zonal office. Tose which are beyond their powers are forwarded to

Head Office with their recommendations.credit department issues the sanction

orders in respect of the loans disbursed by the branches under their control. The

credit department evaluates the measures taken by branches for reduction of

non-performing assets by giving suitable advice/guidance. They also evaluate

the performance of branches in respect of lending to priority sectors,

beneficiaries under government sponsored schemes like PMRY and submity

necessary reports to the appropriate authorities. In short, they handle all the

matters relating to credit.

4 Inspection Department:

The inspection wing of regional/zonal office conducts periodic inspection of

branches under their control as per the schedules fixed by the head office. They

also follow up the rectification of irregularities pointed out by the internal

inspection team as well as external auditors.

5 Lead Bank Division:

Wherever the bank is acting as lead bank under the lead bank scheme, there are

separate divisions in the regional/zonal office to handle the matters connected

with the lead bank scheme. This includes convening the meeting of the District

Consultative Committee, evaluating the performance of banks, coordinating

with the government agencies etc.

6 Customer Care:

Another important function of the Regional/Zonal head keeps a particular day in

a week to listen to customers and redress their grievances. They also submit

necessary report to the head office regardind disposal of customer complaints.

CHAPTER 4

ORGANIZATIONAL STRUCTURE OF BRANCHES

Branches are the last link through which the buisness is transacted. The

branches are classified on the basis of volume of buisness as well as functions.

The branches according to buisness volume are:

Scale I Branch- mostly rural branches are headed by junior officers

Scale II Branch-mostly semi-urban branches are headed by an officer in

the middle management cadre-scale II

ScaleIII Branch-mostly urban branches are headed by seniour manager in

scale III

Scale IV- mostly urban and some times metro branches are headed by an

officer in scale IV

ScaleV Branch-Large Branch- mostly metro and some times urban also

are headed by an officer in scale V

ScaleVI Branch- Exceptionally Large Branch-mostly metro branches and

specialised branches are headed by an officer in scaleVI.

4 (i) DEPARTMENTS IN A BRANCH:

1. ADVANCES DEPARTMENT: This department deals with grants of advances. It gives publicity to the various lending schemes, identify individual borrowers, collect credit information about borrowers, process the loan applications & sanction them if it is within the limits of the branch. In other cases, the proposals are forwarded to the regional or central office as the case may be. It must also follow up regarding proper utilization of credit & subsequent recovery of advances. In the case of irregular accounts, it must report to the regional office & after obtaining necessary sanction from appropriate authority must proceed with legal action. It must also submit returns under garantee schemes to the regional office. In some branches located in rural areas there are separate departments to look after agricultural finance. Similarly branches located in urban areas may have industrial credit cell & small industries credit cell.

2. DEPOSITS DEPARTMENT: This can be sub-divided into current deposits, fixed deposits & savings deposits. This department deals with the opening of various deposit accounts after completing the necessary formalities. In the case of current & savings deposits accounts, cheque books are issued. Entries are made in the ledger on the basis of cash deposited & cheques collected. When customers present cheque’s, they are passed for payment & entries are made in pass-book or statements of account are sent. In case of fixed deposits & other allied deposits, deposit receipts are issued & interest payments are made credited to current or S.B. Account. In the case of recurring deposits, pass-book are issued & entries are made as & when payments are made.

In the current & savings accounts, as the volume of work is heavy, accounts are numbered and certain range of numbers are allotted to each other ledger clerk. The range of numbers allotted is prominently displayed on the counter at the place where the clerk sits, so that the customer can identify the ledger clerk whom he should approach for passing his cheque.

3. CASH & CLEARING: Cash department deals with receipts & payments & safe-custody of cash. The department also sends solied notes to the Reserve Bank for exchange. In the case of local cheques, deposited for collection, they are sorted bank wise & sent to the clearing house. The department is usually provided with a cash safe in the strong room & is jointly operated by the branch manager & the chief cashier.

4. REMITTANCE DEPARTMENT: This department issues demand drafts to customer & public. Then advice is sent to the drawee branch. When customers report loss of drafts, duplicate drafts are issued after ascertaining the non-payment of the original draft from the drawee branch & obtaining indemnity from the applicant.

In case of mail transfers & telegraphic transfer advice is sent to the branch either by mail or telegrams to make payment to the payee.

5. BILLS DEPARTMENT: This department deals with inland trade bills-both inward & outward. In case of inward bills, which may be D/A bills or D/P BILLS, acceptance or payment is secured from the customers. In the case of D/A bills, they are again presented for payment on the due date & the proceeds are remitted to the seller of the goods.

Similarly, in the case of outward bills, this department undertakes the responsibility of sending the bills along with the documents to the buyer of the goods either through its own branch or through the drawee’s

banker. The amount is credited to the customer on realization of the bills. In case of D/A bills, this department may discount the same, if the customer has bill discounted facility.

6. ESTABLISHMENT DEPARTMENT: This department looks after matters, premises & branch assets. It prepares the salary & overtime bills, looks after INCOME-Tax matters & submits returns to the tax authorities & the divisional or regional office in the prescribed forms. It also looks after the maintenance of branch premises, furniture & fixtures, machines & equipment. It indents stationery from the zonal office & maintains records relating to the same. Maintenance of old records & execution of standard instructions of customers are also entrusted to this department. It also looks after the security of property & intimates the divisional office regarding the cover required for branch assets

7. FOREIGN DEPARTMENT: This department performs the same functions as the one situated in the central office except for some matters like training.

There are other departments in a branch. It also includes various section some of them are as follows.

4 (ii) DEPOSIT SECTION:1. Customer fills up the relevant remittance slips and remits cash at

the cash counter.2. Cashier accepts the cash, enters the transaction in his book and

passes the slip with his signature to the officer.3. Officer verifies the slip, enters the same in his scroll book and

passes the slip to the respective sections

.4. The section clerks enter the transactions in their ledgers and hand

over the updated pass book to the customer (if pass book is presented),(current a/c section clerk enters thetransaction in the a/c of the custoimer and the term deposit section clerk hands over the term deposit receipt to the customer after getting his signature on the counter foil of the term deposit receipt.)

5. The current account section clerk enters the transaction in the account of the customer and hands over the pass book (if pass book is presented)This is a brief description of a typical trancastion that takes place in the deposit section of a bank.

4 (iii) ADVANCE SECTION:1 Customer submits the loan application to the credit officer.2 Credit officer processes the application by interviewing the customer, conducting site inspection wherever necessary and submits his recommendation note to the manager. 3 Manager sanctions the loan and sends the papers back to the credit officer. 4 Credit officer sends the paper to the loan clerk.

5 The customer executes loan documents and hands them to the loan clerk.6 Loan clerk enters the details in the loan register, perperes the debit slip ans sends it togetherwith the loan document to the officer for signing and sendind the slip to the cash section.in the case of disbursing the loan directly to the supplier, the loan clerk will debit the margin amount from the savings bank account of the customer, prepare the demand draft for the full cost of the equipmentto be purchased and send it to the cashier for the effecting payment. In case of demand draft he signs it and sends it to the loanclerk for either handing over to the customer or sending it directto the suplier.

4 (iv) OTHER SERVICES:In case of other services like purchasing of demand draft and depositing a cheque for collection:1 The customer remits the cash together with the demand draft applicationfrom the cash counter and gets the counterfoil. If the amount of demand draft is to be debited

into his account, he tenders the application together with the cheque for the amount of Ddplus commission at the respective deposit section. He deposits the cheque for collection at the collection sectionand gets the counterfoil. 2 The cashier after recording the transaction in the cash book sends the voucher to the officer.If the amount of the customer, the deposit section sends the voucher to the officer.3 The officer signs the voucher and sends it to the remittance section.4 Remittance section prepares the DD, gets the signature of the officer and hands it over to the customer under acknowledgement.

CHAPTER 5

HISTORY OF PUNJAB NATIONAL BANK

Punjab under the British especially after annexation in 1849 witnessed a period of rapid development giving rise to a new educated class fired with a desire for freedom from the yoke of slavery. Amongst the cherished desires of this new class was also an overriding ambition to start a Swadeshi Bank with Indian Capital and management representing all sections of the Indian community. The idea was first mooted by Rai Mool Raj of Arya Samaj who, as reported by Lala Lajpat Rai, had long cherished the idea that Indians should have a national bank of their own. He felt keenly "the fact that the Indian capital was being used to run English banks and companies, the profits accruing from which went entirely to the Britishers whilst Indians had to contend themselves with a small interest on their own capital".At the instance of Rai Mool Raj, Lala Lajpat Rai sent round a circular to selected friends insisting on an Indian Joint stock Bank as the first special step in constructive Swadeshi. Lala Harkrishan Lal who had returned from England with ideas regarding commerce and industry, was eager to give them practical shape.'PNB was born on May 19, 1894. The founding board was drawn from different parts of India professing different faiths and a varied back-ground with, however, the common objective of providing country with a truly national bank which would further the economic interest of the country.The Bank opened for business on 12 April, 1895. The first Board of 7 Directors comprised of Sardar Dayal Singh Majithia, who was also the founder of Dayal Singh College and the Tribune; Lala Lalchand one of the founders of DAV College and President of its Management Society; Kali Prosanna Roy, eminent Bengali pleader who was also the Chairman of the Reception committee of the Indian National Congress at its Lahore session in 1900; Lala Harkishan Lal who became widely known as the first industrialist of Punjab; EC Jessawala, a well known Parsi merchant and partner of Jamshedji & Co. of Lahore; Lala Prabhu Dayal, a leading Rais, merchant and philanthropist of Multan; Bakshi Jaishi Ram, an eminent Civil Lawyer of Lahore; and Lala Dholan Dass, a great banker, merchant and Rais of Amritsar. Thus a Bengali, Parsi, a Sikh and a few Hindus joined hands in a purely national and cosmopolitan spirit to found this Bank which opened its doors to the public on 12th of April 1895. They went about it with a Missionary Zeal. Sh. Dayal Singh Majithia was the first Chairman, Lala Harkishan Lal, the first secretary to the Board and Shri Bulaki Ram Shastri Barrister at Lahore, was appointed Manager.A Maiden Dividend of 4% was declared after only 7 months of operation. Lala Lajpat Rai was the first to open an account with the bank which was housed in the building opposite the Arya Samaj Mandir in Anarkali in Lahore. His younger brother joined the Bank as a Manager. Authorised total capital of the Bank was Rs. 2 lakhs, the working capital was Rs. 20000. It had total staff strength of nine and the total monthly salary amounted to Rs. 320.

The first branch outside Lahore was opened in Rawalpindi in 1900. The Bank made slow, but steady progress in the first decade of its existence. Lala Lajpat Rai joined the Board of Directors soon after. in 1913, the banking industry in India was hit by a severe crisis following the failure of the Peoples Bank of India founded by Lala Harkishan Lal. As many as 78 banks failed during this crisis. Punjab National Bank survived. Mr. JH Maynard, the then financial Commissioner, Punjab, remarked...."Your Bank survived...no doubt due to good management". It spoke volumes for the measure of confidence reposed by the public in the Bank's management.The years 1926 to 1936 were turbulent and loss ridden ones for the banking industry the world over. The 1929 Wall Street crash plunged the world into a severe economic crisis.It was during this period that the Jalianwala Bagh Committee account was opened in the Bank, which in the decade that followed, was operated by Mahatma Gandhi and Pandit Jawaharlal Nehru. The five years from 1941 to 1946 were ones of unprecedented growth. From a modest base of 71, the number of branches increased to 278. Deposits grew from Rs. 10 crores to Rs. 62 crores. On March 31, 1947, the Bank officials decided to leave Lahore and transfer the registered office of the Bank to Delhi and permission for transfer was obtained from the Lahore High Court on June 20, 1947.PNB was then housed in the precincts of Sreeniwas in the salubrious Civil Lines, Delhi. Many a staff member fell victim to the widespread riots in the discharge of their duties. The conditions deteriorated further. The Bank was forced to close 92 offices in West Pakistan constituting 33 percent of the total number and having 40% of the total deposits. The Bank, however, continued to maintain a few caretaker branches.The Bank then embarked on its task of rehabilitating the displaced account holders. The migrants from Pakistan were repaid their deposits based upon whatever evidence they could produce. Such gestures cemented their trusts in the bank and PNB became a symbol of Trust and a name you can bank upon. Surplus staff posed a big problem. Fast expansion became a priority. The policy paid rich dividends by opening up an era of phenomenal growth.In 1951, the Bank took over the assets and liabilities of Bharat Bank Ltd. and became the second largest bank in the private sector. In 1962, it amalgamated the Indo-Commercial Bank with it. From its dwindled deposits of Rs. 43 crores in 1949 it rose to cross the Rs. 355 crores mark by the July 1969. Its number of offices had increased to 569 and advances from Rs. 19 crores in 1949 to Rs. 243 crores by July 1969 when it was nationalised.Since inception in 1895, PNB has always been a "People's bank" serving millions of people throughout the country and also had the proud distinction of serving great national leaders like Sarvshri Jawahar Lal Nehru, Gobind Ballabh Pant, Lal Bahadur Shastri, Rafi Ahmed Kidwai, Smt. Indira Gandhi etc. amongst other who banked with us.

CHAPTER 6PUNJAB KESHARI LALA LAJPAT RAI

(SALUTING THE FOUNDER OF THE BANK)

(1865-1928)

Lala Lajpat Rai and PNBLalaji was keenly concerned with the fact that though Indian capital was being used to run English Banks and companies, the profits went entirely to the British, while Indians had to contend themselves with a small interest on their capital. He echoed this sentiment in one of his writing while concurring with Rai Mul Raj of Arya Samaj who had long cherished the idea that Indians should have a National Bank of their own. At the instance of Rai Mul Raj, Lala Lajpat Rai sent a circular to selected friends insisting on an Indian joint stock Bank as the first step in constructive Swadeshi and the response was satisfactoryAfter filing and registering the memorandum and Articles of Association on 19 May, 1894, the bank was incorporated under Act VI of the 1882 Indian Companies Act. The prospectus of the bank was published in the Tribune, and the Urdu Akhbar-e-Am and Paisa Akhbar. On 23rd May, 1894, the founders met at the Lahore residence of Sh. Dyal Singh Majithia, the first Chairman of PNB, and resolved to go ahead with the scheme. They decided to hire a house in the famous Anarkali Bazar of Lahore opposite the post office and near well known stores of Rama Brothers.On 12th April 1895, the Bank opened for business, a day before the great Punjab festival of Baishakhi. The essence of the Bank’s culture was clear at this first meeting itself. The fourteen original shareholders and seven directors took only a modest number of shares; the control of the Bank was to lie with the large, dispersed shareholders, a purely professional approach that was as uncommon then as it is today.