CHAPTER 1.

INTRODUCTION OF PRIVATE BANKING

INTRODUCTION OF PRIVATE BANKING

FEATURES OF PRIVATE BANKING

SIGNIFICANCE OF PRIVATE BANKING

RESEARCH METHODOLOGY

BANKING RANKING

1

INTRODUCTION OF PRIVATE BANKING:

Introduction:-

Banking has become a part of day to day life. Today banks

offer easy access to common man. They carry out various functions like

accepting deposit and lending money and also other banking services. Banking

is a service industry. Banks provides financial service to people business and

industry. Banks play a vital role in the economic development of country.

Banks provides financial services to people business and

Industry. Banking has played a very important role in the economies development

of all the nations of the world. In fact, banking is the life blood Of modern

commerce. It may truly be said that modern commerce is so dependent upon

banking. Private Banking has been broadly defined as financial and related

services provided to wealthy clients, such product and services may include

deposit-taking, lending, mutual funds investing, personal trust and estate

administration, funds transfer service and establishing payable through accounts or

off shore trusts. Private banking activities, which involve, among other things,

personalized services such as money management, financial advice, and

investment services for high net worth clients, have become an increasingly

important aspect of the operations of some large, internationally active banking

organizations.

2

Definition:

The business of banking has been defined in section 5(b) of the act as follow:

“Accepting for the purpose of lending and investments of, deposits money from the

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

drafts orders or otherwise.”

Business Definition for: Private Banking:

The Indian Banking Companies Act, 1949, defines an “Accepting for the

purpose of lending and investment of deposits money from the public,

repayable on demand, order or otherwise and withdrawal by cheque or draft

order or otherwise.” AND

“A service offered by certain financial institutions to high net worth

individuals. In addition to standard banking services, it will typically include

portfolio management and advisory services on taxation, including estate

planning.”

3

FEATURES OF PRIVATE BANKING:

Dealing in money :-

The banks accept deposits from the public and advancing them as

loans to the needy people. The deposits may be of different types- current,

fixed, saving, etc. account. The deposits are accepted on various terms and

conditions.

Deposits must be withdrawals :-

The deposits made by the public can be withdrawals by cheques,

drafts or otherwise i.e. the bank issue and pay cheques. The deposits are

usually withdrawals on demand.

Dealing with credit:-

The banks are the institutions that can create credit i.e., creation of

additional money for lending. Thus, “creation of credit” is the unique feature

of banking.

4

Commercial in nature:-

Since all the banking functions are carried on with the aim of making

profit. It is regarded as commercial institution.

Nature of agent:-

The Basic function of accepting deposit and lending money as loan,

banks possesses the character of an agent because of it various agency

services.

SIGNIFICANCE OF PRIVATE BANKING:

We need banks in our day to day life. Banks scatter to the need of farmer,

businessman, trader, industrialist and common people in our society. Common

people can save money which they put into the bank for safety security and getting

some return out of it. Businessman, trader and industrialist open their accounts in

banks to carry out their transaction for receipt or payment of money through

Cheque or cash. Thus banks are inseparable part of modern Developing Society.

The present schedule of nationalized and private banking structure has been

depicted in the figure.

5

RESEARCH METHODOLOGY: I have selected two resources for my

study that is primary data and secondary data.

Data collection :-

primary data

secondary data

6

Primary data :-

The present data is collect through research from actual field of research.

The present data is collected through interviews & observation.

The present data is obtained by questionnaire.

Secondary data :-

Books

Website

Brochures

PRIVATE BANKING RANKING:

According to Euro money’s annual Private bank and wealth management rankings,

which consider assets under management, profitability, ratio of clients to

relationship managers and services offered, global private banking assets under

management are up over 128% year on year. This table displays results of one

category of the Private banking awards. Below table shows that private banking

ranking.

7

8

Rank 08 Company Rank 07

1. Citigroup 1

2. Goldman Sachs 2

3. UBS 3

4. Credit Suisse 5

5. JPMorgan 4

6. Morgan Stanley 8

7. Merrill Lynch 9

8. HSBC 6

9. Pictet & Cie 7

10. Deutsche Bank 11

CHAPTER 2

REVIEW AND LITERATURE

REVIEW OF LITERATURE FROM WEB SITE

REVIEW OF LITRATURE FROM THE NEWS PAPER

REVIEW OF LITRATURE FROM THE MAGAZINES

The objective of the study is to review the available literature on banking business

for finding out the impact of new private Sector banks on the public sector once.

9

The detailed study of bank literature provides useful framework for further

research in this direction.

REVIEW OF LITERATURE FROM THE NEWS PAPERS :-

In the news papers “The economic times” Dated 11th July 2007 gave the article.

For clearing concept state owned banks are beginning to realize the need to sell

financial products to gain customer. However, they are to work their way around

restrictions embedded in the system, report. ICICI bank had only 400 odd branches

when it becomes the second largest bank. It’s retail growth was due to aggressive

retail marketing push with customers migration to ATM’s, phone banking &

internet banking & bank office process being taken number of bank employees

face the risk of becoming redundant. Banks are now turning this mass into their

sale force.

REVIEW OF LITERATURE FROM THE MAGAZINES :-

10

Promotion at Citibank Private Bank. (Peter K. Scaturro) September 2000

1. Title: CEO, the Citibank Private Bank, New York

Growth: It's already one of the world's biggest private banks, but since Scaturro

arrived, the Citibank Private Bank has gotten even bigger. In the past eight

months, it's added more than 100 bankers. In the first half of 2000, core income

was $60 million, up 27% over the same period the year before, and profits rose

accordingly.

2. In the magazine “Professional Banker (Oct 2006)” article about the Private

Banking and wealth management sector is indeed getting hot. Some of the major

international private banker’s operating in India is City Bank, UBS, HSBC, ABN

11

Ambro and Merrill Lynch , to Name few. As the private wealth around the world

is surging up and the number of High Net individuals is escalating. Private

Banking and wealth management services are gathering momentum. According

to globe consulting firm KGM. India’s economy is growing at 8% per annum

through a transformation to the next level of maturity.

REVIEW OF LITRATURE FROM WEB SITE :-

12

Article on “How will private banking benefit you?” given on web site dated

on 8 Dec 2006 on Private Banking an industry under the pressure of

continual change with the volatility of the markets now behind us, banks are

facing new challenges in providing their clients with the service they

demand. Competition remains increasing tough and scale of regulation both

nationally and internationally across the globe Private Banking India 2006

will examine all the strategies needed by astute managers to win and service

high net wealth clients, but more importantly educated them in the best

practice principals in advising their clients on how to allocate their money to

achieve superior returns.

13

CHAPTER 3

PRIVATE SECTOR BANKS – GENERATION NEXT

INTRODUCTION

PRIVATE SECTOR BANK (OLD)

PRIVATE SECTOR BANK (NEW)

14

INTRODUCTION:

Ever since the entry of private player in the banking sector, the

industry has witness the entry of nine new generation private banks. The major

difference parameter that distinguished these banks. From all the other banks in the

Indian banking industry is the level of services that is offered to the customer.

Verity, the focus has always been centered on the customer understanding his

needs, preempting him a consequently delighting him with various configuration of

benefit and wide portfolio of product and services.

These banks have generally been established by promoter of repute or

by high value domestic financial institution. The popularity of these of these banks

can be gauged by the fact that in a short span of time, these banks have gained

considerable customer confidence and consequently have shown impressive

growth rates. Today, the private banks corner almost four percents share of

deposits. Most of the banks in this category are concentrated in the high-growth

urban areas in metros (that account for approximately 70 percent of the total

banking business) with efficiency being the major focus, these banks have

leveraged on their strengths and competencies viz. management operational

efficiency and flexibility, superior product positioning and higher employee

productivity skills.

15

The private banks with their focused business and services portfolio have a

reputation of being niche players in the industry. A strategy that has allowed these

banks to concentrate on few reliable high net worth companies and individual

rather than cater to the mass market. These well-chalked out integrated strategy

plans have allowing these banks to operate 70% or their business in urban areas,

this statutory requirement has translated in to lower deposit mobilizing costs and

higher margin relative to public sectors banks.

Private banks operated on very lean and efficient structure (with minimal overhead

and low non-performing assets base) that allow them to anticipate customer

requirement better thus pre-empting any competitive posturing from their public

sector counterparts.

The success of private banks in India can be judge from that an increase number of

customers today have opted for private banks vis-a-vis nationalized banks for

saving and current deposits.

These banks were among the pioneers in IT infrastructure investment forcing many

public sector banks to follow suit. Concepts like ‘Sunday banking’, anytime

banking and flexi-banking pioneered by private banks soon become the order of

the days and customer convenience becomes the new marketing mantra.

Private sector banks were permitted to be promoted on the recommendations of

Narsimhan Committee Report-12 and during 1994 RBI had allowed setting up of

16

these banks. As a result, 9 private sector banks were established but after merger of

times bank with HDFC bank, the present no. of such banks is 8; the prominent

being HDFC bank ICICI bank, IDBI bank, UTI bank etc. RBI made significant

changes in the licensing norms for private sector banks.

PRIVATE SECTOR BANKS (OLD)

Some banks were not nationalized at the time of the first (1969) as well as second

(1980) bank nationalization, mainly because these were small sized banks and had

a regional focus. Most of these bank, even now continue to be relatively small in

size and to have a regional focus. A plus point with these banks is that they lean

heavily on service and technology and as such, they are likely to attract more

business in day to come with restructuring of the industry round the corner.

Old private sector banks:

1. Bank of Rajasthan limited

2. Bharat overseas bank limited

3. Catholic Syrian bank limited

4. City union bank limited

5. Development credit bank limited

6. Dhanlakshmi bank limited

7. Federal bank limited

17

8. Ganesh bank of kurundwad

9. Jammu & Kashmir bank limited

10.Karnataka bank limited

11.Lakshmi vilas bank limited

12.Lord Krishna bank limited

13.National bank limited

14.Ratnakar bank limited

15.Sangali bank limited

16.SBI commercial & international bank limited

17.South Indian bank limited

18.United western bank limited

18

PRIVATE SECTOR BANK (NEW)

With the introduction of economic reforms and financial sector reforms, the

Banking Regulations Act was amended in 1993 permitting new sector banks to

enter the Indian Banking sector. The amended however, prescribed certain criteria

for the establishment of new private sector banks. The major criteria are as

follows:

a) The bank should have a minimum net worth of rs.100 cores.

b) The promoters holding should be a minimum of 25% of the paid up capital.

c) Within three of the starting of the operations, the bank should offer shares to

the public (this condition was subsequently related in case of many banks

due to the poor state of the market)

The new private sector banks started their operation in 1995. The minimum

net worth requirements of Rs.100 crores and the difficulty in getting a

banking license has kept the number of new a banks limited. There are nine

new generations private banks in the country. Most of them have been

promoted by the financial institution.

19

The distinctive features of a new generations private sector banks :

a) These banks have to work to market 100% of their investment portfolios.

b) These banks were exempted from priority sector lending norms for the

first 3 years.

c) The emphasis of this bank is on services and technology, and as such,

they are in a position to challenges the foreign banks.

d) These banks are using most modern technology for maintaining a high

quality of services. This also helps each branch to sever a much wider

audience and thereby reduce the operational costs.

The ICICI banks, the HDFC banks, the Global Trust Bank, Industrial

bank, and the UTI bank are some of the major new private banks, with

technology edge and product innovation. These new private sector banks

are gaining a market share from the slower and less efficient older bank.

20

New private sector banks :

1. Bank of Punjab limited

2. Centurion bank limited ( now centurion bank of Punjab)

3. Global trust bank limited

4. HDFC bank limited

5. ICICI bank (industrial credit investment corporation of India)

6. IDBI (industrial development bank of India)

7. Indus India bank limited

8. Kotak Mahindra bank limited

9. UTI bank (now AXIS bank limited)

21

CHAPTER 4

PRESENT SCENARIO OF PRIVATE BANKS

SCENARIO OF PRIVATE BANKS.

HR ISSUES

CHANGE MANAGEMENT.

SWOT ANALYSIS.

22

SCENARIO OF PRIVATE BANKS:

Private banks are more proactive than over before in providing the

services to customers. They are guiding the society as to how to earn and spend

money thus becoming more catalytic in the society in the socioeconomic

development of our country. They are encouraging people to money in business

and real estate for their economic growth. Housing loans are offered at incredible

speed these days. Private banks are carrying out strategy weakness opportunities

and threats (SWOT) to become more profitable by bringing in structural changes ,

process changes technology upgraded & systematic changes. Procedural delays &

bureaucracy have been removed & lean staffing is practice.

Acquisition & merger are among strategy banks are adopting now a

day. They are expanding their business and looking at large market share to

achieve high return on equity & interest margin. Decision maker are identifying the

banks performing well & fixing higher target. More empowerment & facilities are

also given to such banks. In other banks too the performance level are being raised

by 7 constant monitoring & reviews. The benefits of the structural and process

changes in the private banks are as follows :

23

1) Swift response to the financial need of the customers.

2) Faster decision making

3) Improved communication networks and teleconferencing.

4) Reduce bureaucracy & lean staffing.

5) Proper management information system in place

6) Reaping more benefits from I.T. & automation

7) Electronic transfer of money

8) providing global financial services & c;ient centric operations

9) efficiency & speed of transactions improved dramatically.

24

HR ISSUES :

Organizational structure in the private banks are being charged to suit the

technological & process changes. The duties, responsibilities & the method

of doing the task are redefined. New skills are imparted to employees –

particularly computer skills, database management & software tools used in

banking operations. The ledger/ record books are giving way to the

computer base accounting & documentation system. Through there are

differences in pay across the private sector banks, the employees are well

taken care in this respect. Work environment, safety & health are given top

priority. Organizational goals are set in consultation with the employees.

The layout, sitting & ergonomics have been change in the banks due to

automation & computerization. The voluntary retirement scheme has not

yielded good result as able people utilized the scheme & got the benefit.

25

CHANGE MANAGEMENT :

The trigger of change is mainly increased computer services, cost

effectiveness, competition, innovation & flexibility. Effective change

management model covers the following contributory factors:

1) Vision: set newer goals / vision.

2) Motivation : create environment for change, overcome resistance to change

& remove the obstacle to the change management

3) Support : assess the changes, identify the key factors & know the

shareholders influence.

4) Managing the transaction : planning, top management commitment,

structural changes & technological changes.

5) Sustain the momentum : build new skills, create resources / facilities,

automation & information technology

6) Communicate new goals: business modal to the employees &

shareholders.

7) Create the vision: on par with change management.

26

8) Create new strategies: & learning methods as events dictate.

9) Banking operations: culture & compensation to be align with the strategic

goal state by the bank.

SWOT ANALYSIS :

o STRENGHT: Sheer size, speed and performance, virtual banking using

I.T., core banking solution & global presence.

o WEAKNESS : Constraints, rigid distribution network, lower market

share & HR issues.

o OPPORTUNITIES : Becoming a leader in financial services and

attracting young / new customers.

o THREATS : Entry of foreign banks and RBI’s support to this bank.

The other important parameters include lower business per

employee (BPE) and profit per employee (PPE). On the quality of service,

customer orientation and trust, the bank holds an edge over many other

banks in the country.

27

CHAPTER 5

PRODUCTS & SERVICES

DEPOSITS

LENDING

FINANCIAL & OTHER SERVICES

28

DEPOSIT:

Tapping the savings of public by means of different kinds of deposit is one of the

major functions of bank. In order to open an account in the bank, the depositor has

to furnish all his details in an application from with his specimen signature. The

account is open with a proper introduction and verification of documents.

Types of deposit:

Current Deposit: Current account are suitable for requirements of big

business man, companies, institutions, public, public authorities whose

banking transaction are numerous on every working day. The primary

objective of current account is meant for the convenience of customers who

are relive of the task of handling cash themselves & to take the risk inherent

there in.

Fixed deposit: A fixed deposit is one, which is repayable after the expiry of

a certain period determine by the depositor. A deposit is repayable on the

expiry of a specified period chosen by the depositor to suit his purpose & to

enable him to get bank the money as an when he need.

29

Saving Deposit: The main objective of this deposit is to promote savings of

people. It is intended primarily for small savers. Saving deposit are meant

for the households of the lower and middle income classes who want to save

a part of their current income to meat their future need and earn an income

from their saving.

LENDING:

Banks lend money either on personal security of the borrower or on

the security of some tangible asset. The former called unsecured loans and

later is called as secured. Unsecured loan are those for which any tangible

security is not offered by the borrower banks. Secured loans are those

which are made on the security of the tangible asset. Secured loan provide

the safety to banks. The type of security varies from place to place & from

borrower to borrower.

Loans: The banks advance a lump sum amount for a certain period, of

agreed rate of an agreed rate of interest. The entire amount is paid to the

borrower or credited to his account is credited to his account. The loan is

repaid in installment together with interest. Types of loans are as follows:

30

Cash credit: It is an arrangement by which a borrower is allowed to

borrower money up to certain limit. It is an arrangement for a long or a

medium term and the borrower need not draw the sanction amount at once.

Overdraft: Overdraft is an arrangement between a banks and its

customer by which the customer is allowed to withdraw and above his credit

balance in the current account. There is an agreed limit of an overdraft. It

may be guaranteed against the security.

Bill discounted: Banks usually grant loans to their customers by

discounting bills of exchange. The amount of the bill after deducting the

discount is credited to the account of the customer. The bank receives the

interest in the advance at the time of discounting.

31

TYPES OF LOANS

MEDIUM TERM LOANS

SHORT TERM LOANS

LONG TERM LOANS

FINANCIAL AND OTHER SERVICES :

1. Merchant Banking: Banks provide services to the businessman to

promote their business. This services include finance, management

consultancy, preparation of project report, technical consultancy,

managing public issues, underwriting them & loan syndication by

coordinating with other banks.

2. Leasing: Banks have started funding the fixed asset through leasing. It

refers to renting out of immovable property by bank to the businessman

on a specific rent for a specific period on terms, which may be mutually

agreed upon. A written agreement is made in this respect.

3. Mutual fund: Banks have floated new subsidiaries to undertake the

business of mutual funds. These subsidiaries collect funds from the

people and invest this money in the capital market and other securities

and market in order to earn income and distribute surplus to the unit

holders.

4. Money transfer: Banks are helping business and society for money from

place to place or person to person. For this purpose, demand draft, pay

orders, telegraphic transfer, mail transfer, credit cards etc. types are used.

32

5. Factoring: In this case, bank undertake to collect and manage clients

deposit and finance the clients by either lending against account

receivable or purchasing or discounting them outright for a charge that is

called as discount.

6. Housing Finance: The banks by their subsidiaries undertake housing

finance as a specialized business. Now a days all the banks are permitted

to provide housing finance to people. The provide housing finance to the

people and other related services at reasonable rate of interest.

7. Credit Card: Banks have been offering credit cards to their customers.

They have link up with international banking network. The credit card

holder are given 30 to 40 days credit at certain rate of interest.

8. Portfolio Management: The banks usually extends services for

managing surplus fund of their corporate customer either directly or

through merchant bankers. It involves helping their client in investing

their funds in a manner that balances the liquidity, safety & minimum

aid.

33

9. Interest banking: Another path-breaking innovation in the private

banking sector in recent times is the emergence of internet banking. A

customer can access his account anywhere even from the comfort of his

computer in the house with the added benefit of the funds transfer

facility. Internet banking is estimated to be even more cost effective for

banks as compared to ATMs. Internet banking also provides the

customers with value-added services like payment of insurance

premiums, payment of utility bills, booking of railways tickets etc.

10.Core banking solution: The concept of being a customer of a single

branch of single branch was expanded to become a customer of the entire

bank by interconnecting the network of branches online under core

banking solution. These solution are enabling the ideology of anywhere

banking.

34

11.Mobile banking: Mobile phones are also now becoming new instrument

for customers to access their bank accounts. Such has been the power of

technology.

Private banking service providers are focusing on redefining their

products to fight commoditization & differentiating their product line by

tailoring them to provide holistic solution to suit clients need, sometimes

even from a multigenerational perspective. Most private banking services

focus on the following four key areas:

35

CHAPTER 6

CHALLENGES OF PRIVATE BANK

HUMAN RESOURCE MANAGEMENT

TECHNOLOGY

RISK MANAGEMENT

MANAGEMENT OF NPA

NEED TO RESTORE CONFIDENCE

36

The changes affecting the banking sector in the wake of globalization and

opening up of the economy in the early nineties have provoked much reflection on

way to strengthen the banking system. A conference of the chief executives of the

banks has identified a number of priorities to make the banking sound and vibrant

to play a crucial role in the accelerated development of the economy. The banking

sector reforms, implemented since1991 have brought in a near total metamorphosis

of the sector and made banks serious about the risk-return trade-off on one hand

and maximization of the shareholders value, on the other.

Maximizing the shareholders value has, in fact, assumed paramount

importance, particularly for the banks, which have gone public, because banks are

now accountable to millions of their shareholders rather than as their shareholder.

Private banks are more sensitized about money matters and are very sophisticated

demanding a multitude of products and alternative investment propositions. In the

context, the private banks face a multitude of challenges such knowing the client,

client acquisition and retention amidst competition, issues related to open

architecture, shortage of skills, a changing tax and regulatory regime.

37

HUMAN RESOURCE MANAGEMENT:

At present the human resource policies in banks are mainly guided by

concept of permanent employment and its necessary concomitants of

creating career paths, terminal benefits etc. for the employee. In this fast

changing world of worker mobility both horizontally and vertically and

value system, the banks will need the freedom not only to hire the right

talent at market related compensation but also shed surplus manpower.

TECHNOLOGY:

The banks have a challenging task ahead to remain competitive in an

environment of ever-advancing technology level in banking. They will need

new banking solution to replace their existing legacy system and to network

their branches.

RISK MANAGEMENT AND REGULATORY IMPLEMENTATIONS:

To reach the international standards of capital adequacy risk management

and accounting practices, the right talent at appropriate level of management

needs to be including laterally and the banks should have the necessary

freedom to do so.

38

MANAGEMENT OF NPA:

There are several impediments including statutory, legal and political in the

recovery of bank loans and advances. Therefore, restructuring of

borrowable accounts be left to individual bank decision subject to full

transparency. The only the banks can better function as business

organizations in pursuit of excellence and sound financial performance.

NEED TO RESTORE CONFIDENCE:

The private banking face the one more challenge in their growth is to restore

the confidence of the public.

39

CHAPTER 7

CASE STUDY

PRIVATE BANK CREDIT RISK MANAGEMENT POLICY

WITH BANGLADESH BANK - DHAKA BANK LIMITED.

ICICI BANK.

40

PRIVATE BANK CREDIT RISK MANAGEMENT POLICY WITH

BANGLADESH BANK - DHAKA BANK LIMITED.

Background

Last year Bangladesh Bank undertook a project to review the global best practices

in the banking sector and examines in the possibility of introducing these in the

banking industry of Bangladesh. Four 'Focus Groups' were formed with

participation from Nationalized Commercial Banks, Private Commercial Banks &

Foreign Banks with representatives from the Bangladesh Bank as team

coordinators to look into the practices of the best performing banks both at home

and abroad. These focus groups identified and selected five core risk areas and

produce a document that would be a basic risk management model for each of the

five 'core' risk areas of banking. The five core risk areas are as follows-

7.1 Credit Risks;

7.2 Asset and Liability/Balance Sheet Risks;

7.3 Foreign Exchange Risks;

7.4 Internal Control and Compliance Risks; and

7.5 Money Laundering Risks.

41

Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the

commercial banks of Bangladesh to put in place an effective risk management

system by December,2003.

Bangladesh Bank’s suggested best practices guideline for managing credit risk and

Dhaka Bank Limited existing credit policy.

Objective

The study has been undertaken with the following objectives:

1. To analysis the pros and cons of the conventional ideas about credit

operation of a Bank.

2. To have better orientation on credit management activities specially credit

policy and practices, credit appraisal, credit-processing steps, credit

management, financing in various sector and recovery, loan classification

method and practices of DHAKA Bank Limited (DBL).

3. To compare the existing credit policy of Dhaka bank limited with that of

best practices guideline given by Bangladesh Bank, the central bank of

Bangladesh.

4. To identify and suggest scopes of improvement in credit management of

DBL.

42

5. To get an overall idea about the performance of DHAKA Bank Ltd.

6. To fulfill the requirement of the internship program under MBA program.

Scope

The study would focus on the following areas of DHAKA Bank Limited. Credit

appraisal system of DHAKA Bank Limited Procedure for different credit facilities.

Portfolio (of Loan or advances) management of DHAKA Bank Limited.

Organization structures and responsibilities of management. Each of the above

areas would be critically analyzed in order to determine the efficiency of DBL’s

Credit appraisal and Management system.

Limitation

The report will only consider credit risks of Dhaka Bank limited. It will not

cover Asset and liability/ balance sheet risk. Foreign Exchange Risk

 Internal control And compliance risk Money laundering Risk

43

Report Organization: - This report is divided in four sections.

The following section is the organization part.

1. This section will give an overview of Dhaka Bank Limited.

2. Credit management policy and practice of DBL is critically analyzed followed

by Bangladesh Bank’s.

3. Best practice guideline for credit management.

4. deals with findings and recommendations.

44

ICICI BANK:

At ICICI Bank, we care about all your needs. Along with Deposit products and

Loan offerings, ICICI Bank assists you to manage your finances by providing

various investment options ranging from ICICI Bank Tax Saving Bonds to Equity

Investments through Initial Public Offers and Investment in Pure Gold. ICICI Bank

facilitates following investment products:

ICICI Bank Tax Saving Bonds

Government of India Bonds

Investment in Mutual Funds

Initial Public Offers by Corporate

Investment in "Pure Gold"

Foreign Exchange Services

Senior Citizens Savings Scheme, 2004

You can invest in above products through any of our branches. For select products

ICICI Bank also provides the ease of investing through electronic channels like

ATMs and Internet. ICICI Bank offers wide variety of Deposit Products to suit

your requirements. Convenience of networked branches/ ATMs and facility of E-

channels like Internet and Mobile Banking,

45

MRTPC warns ICICI bank to stop selling unsolicited policies

New Delhi: ICICI Bank seems to hog the limelight in banking sector for all the

wrong reasons. First, it was the atrocities committed by the bank's recovery agents,

which led to a man's suicide and now for selling unsolicited insurance policy to

customers, which has earned it the wrath of authorities.

Monopolies and Restrictive Trade Practices Commission (MRTPC), the anti-trust

body of Government of India, has warned the ICICI Bank to refrain from selling

unsolicited policies to its credit card holders.

A complaint was filed by Mr. Leeladhar Pant, an ICICI Bank customer, who was

also a credit card holder from the same bank in this regard. Mr. Pant received a

group death insurance policy from ICICI Bank for which he never applied. The

bank further told him to shell out a sum of Rs 460 for the ICICI Lombard policy.

Repeated requests were made by Mr. Pant to remove this cover, since he never

opted for it but the bank didn't listen and asked him to pay Rs. 13,000 for the said

policy. Bank debited the amount from his account. With a little option left, Pant

approached MRTPC requesting it to ask the bank to cancel the policy and refund

the amount debited from his account.

46

Acting on the matter a MRTPC bench headed by Justice O.P. Dwivedi, passed a

cease and desist order and classified the act by the bank as an unfair trade practice

to promote its interests.

"The practice of issuing Lombard policy in the name of the complainant without

his request or consent would clearly amount to adopting an unfair trade practice by

the bank to promote its business. Accordingly, we direct the respondent to 'cease

and desist' from adopting the same in future," it added.

An important organ of the Department of Company Affairs is the Monopolies and

Restrictive Trade Practices Commission (MRTP Commission) a quasi-judicial

body. The main function of the MRTP Commission is to enquire into and take

appropriate action in respect of unfair trade practices and restrictive trade practices.

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ICICI Insurance Policies:

ICICI insurance policy helps you find the assurance of a financial security in times

of absolute need. ICICI insurance policies provide you the peace of mind that

comes as a free gift with any insurance plan or scheme.

ICICI insurance policies cover:

Health Insurance

Overseas Travel Insurance

Student Medical Insurance

Vehicle (Car or Two-Wheeler) Insurance

Home Insurance

Life Insurance

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CHAPTER 8

PRIMARY DATA ANALYSIS

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INTRODUCTION:

The most easy and popular way of collecting data is with the help

questionnaire and taking interviews.

Questionnaire Means a list of questions which is drawn in systematic way

for the purpose of collection data:

The questionnaire is the outline, of what information is required in the

project content by which the data can be drawn efficiently. The discussion with

professionals or experts, give very valuable idea about how the questionnaire

should be framed and as to the phrasing of the questions.

Interview that take personally is not so easy. Thus, interviewer should have

that much skill which makes him / her to give a proper answer of the questions.

The person whom you are interviewing is having a limited time to answering to

your questions and having many other work to do, and attending there clients.

I have done the project by sampling method.

For gaining a knowledge regarding my project and completion of it

efficiently, I had an interview with few banks.

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Result No. of customers %

Yes 23 77

No 07 23

1. Do you have account in any Private Bank?

Explanation: From the above table & diagram, it can be concludes that 77%

people prefer to open an account in the private banks because private banks

provide more products & services. The services provided by them can give

economic benefit to the customers & it is less time consuming but 23% customers

do not have account in private bank.

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2. Do you think the emergence of private bank change the scenario of banking system?

Result No. of customers %

Yes 20 67

No 07 23Can’t say 03 10

Explanation: From the above table & diagram, it can be concludes that 67% of

respondent think that emergence of private banks will change the scenario of

banking system &remaining 23% respondents think that their will be no effect of

emergence of private bank on banking sector.10% of respond can’t say on this.

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3. Do you think the private banks are in the better position to attract customers?

Result No. of customers %

Yes 23 76

No 02 17Can’t say 05 7

Explanation: From the above table and diagram, it can be conclude that 76% of

respondents think that private banks are in the better position to attract the

customer and 17% of respondent think that they will not attract the customer in the

better position. 7% respondents can’t anything.

4. Are you satisfied with services provided by private banks?

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Result No. of customers %

Yes 26 87

No 04 13

Explanation: From the above table and diagram, it can be conclude that 87% of

respondents are satisfied with services provided by the private banks and 13% of

respondents are not satisfied with the service provided by the private banks.

5. Do you think the no. of private bank should be increased?

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Result No. of customers %

Yes 21 70

No 06 20Can’t say 03 10

Explanation: From the above table and diagram, it can be conclude that 70% of

respondents think that no. of private bank should increase and 20% of respondent

think that the no. of private banks should not increase. 10% of respondents have

not given any opinion on it.

6. Whether private banks are more competitive than public banks?

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Result No. of customers %

Yes 20 67

No 03 23Depends 07 10

Explanation: From the above table and diagram, it can be conclude that 67% of

respondents think that private banks are more competitive than public banks and

23% of respondents think that private banks are not competitive than public banks.

10% of respondents think it can be depends.

7. Do you think small private bank should be merge with big private to form big

private bank?

Result No. of customers %

56

Yes 22 73

No 03 17Can’t say 05 10

Explanation: From the above table and diagram, it can be conclude that 73% of

respondents think that small private banks should be merge with big private to

form big private banks and 17% of respondents think small private banks should

not merge with big private to form big private banks. 10% of respondents have not

given any opinion.

8. Do you think that private bank should merge with public banks?

Result No. of customers %

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Yes 19 61

No 05 23Can’t say 07 16

Explanation: From the above table and diagram, it can be conclude that 61% of

respondents are in favour of merger of private and public banks and 23% of

respondents are not in favour of merger of private and public banks. 16% of

respondents don’t have any opinion on this.

9. According to you what is the future of private banks in India?

Result No. of customers %

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Very good 03 10Good 08 27Average 13 43Bad 04 13Very bad 02 07

Explanation: From the above table and diagram, it can be conclude that 10% of

respondents think that future of private bank is very good, 27% of respondents

thinks that future of private bank is good. Most of the respondents think that the

future of private bank is on average. 13% of respondents think that future of

private bank is bad, 7% respondents think that future of private banks is very bad.

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CHAPTER 9

FINDING AND CONCLUSION

From the detail, studies of private sector banks in India & by analyzing the primary

data it can be conclude that:

1. Most of the people prefer to open an account in the private banks.

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2. The services provided by private banks can give economic benefit to the

customers & it is less time consuming.

3. The emergence of private sector banks will change the scenario of banking

system because they can always focus to understand the need of the

customers, using technology to integrate operation across the all branches,

preference of the customer toward the product & services.

4. Private banks provide the wide range of services to their customer & they

take care of all the banking & investment need of customer.

5. private banks open their branches in various places to satisfy their customer

needs. Banking services are provided to the customer through “Advisory

team” which consist of expert & professional people in financial &

investment services.

6. There is huge requirement of private banks in India & number of number of

private banks should increase to expand & spread the banking business at

international level & make it global.

7. Today in market there is huge competition & private banks are capable to

face this competitions by providing customers oriented, expert & advisory

services to their customers.

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8. Small private banks should be merge with big private banks to form big

private banks because their capacity & capability of providing services to the

customer is increase & expand its capital base .

9. private banks should be merge with public banks because it will increase

profitability of banks & to give fight to foreign & world bank. It also helps

for economic development.

10.private banks performance in future is good because in a short span of time,

these banks have gained considerable customer confidence & consequently

have shown impressive growth rates.

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CHAPTER 10

SUGGESTION AND RECOMMENDATION

O Private Banks should have to restore the confidence of the public to retain

the existing customer and to attract new customer.

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O Private banks must increase excellence and sound financial performance and

adopt new innovative policies, which help to reduce the problem of NPA.

O To reach the international standard of capital adequacy, risk management

and accounting practices, the right talent of appropriate level of management

private bank should increase their performance level and arrange training

programs to their employees.

O They will need new banking solution to replace their existing legacy system

and to network their branches.

O In this fast changing world of worker mobility – both horizontally and

vertically and value system, the banks will need the freedom not only to hire

the right talent at market related compensation but also to shed surplus man

power.

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CHAPTER 11

APPENDICES

ANNEXURE

ANNEXURE I : BIBLIOGRAPHY

ANNEXURE II : QUESTIONNAIRES

65

APPEXURE I

BIBLIOGRAPHY

Many drops make a shower which wise in my studies. I have combine many topics

like drops & then my shower of project has completed. In this small journey of

making project, the sources of my secondary data collection are:

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BOOKS :

1. Principle of banking & insurance.

2. Fundamentals of Indian financial system.

3. Banking - Theory & practices

4. The banking sector – coming challenges

5. Banking and finance

MAGAZINES :

1. Professional bankers:

o May 2007

o June 2007

o Oct 2006

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2. Business times

WEB SITE :

o www.Google.com.

o www.Yahoo.com.

o www.Altavista.com.

o www.ans .com.

NEWS PAPERS :

o The times of India

o The business today

o Economic times

BULLETIN :

o Reserve bank of India bulletin

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APPEXURE II – QUESTIONNAIRES

69

1. Name of the customer ___________

2. Do you have account in any private bank?

Ans: Yes No

3. Name of the bank in which you have the account?

_________

4. Do you think the emergence of private bank change the scenario of banking system?

Ans: Yes No can’t say

5. Do you think the private bank is in the better position to attract customers?

Ans: Yes No can’t say

6. Are you satisfied with services provided by them?

Ans: Yes No can’t say

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7. Do you think the number of private banks shall be increase?

Ans: Yes No can’t say

8. Whether private banks are more competitive than public banks?

Ans: Yes No can’t say

9. Do you think that private banks should merge with public bank?

Ans: Yes No can’t say

10.Whether private banks are more competitive than Public Banks?

Ans: Yes No Depends

11.Do you think that RBI issued guidelines for the setting of new private sectors

banks?

Ans: Yes No can’t say

12.According to you what is the future of private banks in India?

Ans: Very good

Good

Average

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Bad

Very Bad

CHAPTER 12

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RECOMMENDATION FOR FUTURE

RESEARCH

The researcher who wants to do future studies relating to the project

“private Banking in India" can select topics from the list given below:

Overall study of private banks.

Supervisory & regulatory aspect for private bank.

Study on foreign aspect for private banks.

Study on mergers & acquisitions of private banks.

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