Banking Assignment Term 3

Name: Kunal Baghel (P301313CMG442)

NU MBA F&B Batch - 7
Submitted To: Mr. Gopalakrishnan.A

Case 1 : (Universal Bank Durgapur)

Situation analysis:
The Case is about the branch in Durgapur where most of the accounts maintained by the
branch are of Nonresident clients.
Main issue of the case is about the attempts made to open benami NR savings accounts
to send remittances in them.
One of the requests that have been observed by the branch, is of a client who has visited
the bank & wishes to open an NRO account & also given required documents.
the bank also got verbal communication from an existing client that the same customer
is faking his identity & recently have gone abroad on his Tourist Visa for 15 days
There is severe competition between banks to capture the sizable deposits made through
these NR saving accounts.
The branch manager calls a meeting to discuss the case and discuss the possibility of
fraud and to ensure it doesnt affect the business of the branch.
Action Points:
The bank shouldnt believe any verbal communication received from any individual
unless it is verified by the bank.
The manager should focus to educate the employees on the KYC norms & ensure it is
followed diligently as the benami transactions always has a flip side & the bank may be
penalized in future by the governing authorities (RBI, Income Tax)
Check the documents provided by the client which can be Visa , work permit, Permanent
residency etc. It should be according to the circulars issued by bank as well as by RBI.
Enquire the purpose of visit abroad and check if client has some past relationship and
reputation with bank.
For every NRI Account Opening, the branch officials must ensure the client residence
visit, which includes:
o Client Residence verification
o Verification from at least 2 known neighbors
o Original Documents at sight verification
o On site Current Residence status verification etc

Case 2: Chandigarh Branch crossed draft

Situation analysis:
The Chandigarh branch which has been excellent in customer service in the past.
Branch Received a received a request from an existing client Mr. Swarna Kumar from

Delhi , On his visit to Chandigarh for payment of a crossed Draft amounting INR 415/The DD was supposed to be made payable at Delhi as per the request. However, the
Dehradun branch erroneously made Payable to Chandigarh instead of Delhi.
He is also ready to provide the Voter ID card as ID proof.
Hence a note is placed before the branch manager to make the payment of the draft as the
amount is small.

Action Points:
The Branch manager should first enquire about the relationship of the customer with the
Delhi branch and how valuable is the customer to the bank.
Accordingly he can either send the cheque for clearing by taking the necessary ID proof
or pay by cash by way of draft purchase.
Another way the payment can be done is by way of Draft purchase which can be done by
verification of the signature on the draft from the issuing branch.
The cash payment can't be done directly as it is crossed draft which has been issued by
the Dehradun branch
The other way we can make the payment is by calling the Delhi branch/ Dehradun branch
& confirm the genuineness & can also confirm by the person who has signed the DD

Case 3: Client Ram Lal

Situation Analysis:

The case talks about a client Ram Lal who is holding a savings
account with the bank. Ram Lal has received a Dividend Warrant for
the investments made in units of UTI in the name of his minor son
Somnath.
However, on the dividend warrant of INR 1450/- the account no which
is mentioned is of the father Ram Lal.
This case clearly pertains to the name mismatch with the account
number.
The amount being very small the customer requests the Bank to credit
his savings account with the same.

Action Points :

The bank can't credit the account with the account as there is a mismatch in account
number and the name on the dividend warrant .

The Bank can advise the customer to open a new account in the name of his son's name
and then get the dividend warrant changed accordingly for the payment of funds.
In addition along with the KYC documents of the Father & son while opening the Kide
Account, We will ask him to fur Depending on the relationship with customer the bank
can credit his account with the small amount if he is an extremely valued customer and
has a long relationship with the bank by taking necessary permissions from the hierarchy
of the bank in order to maintain the relationship the original investment proof for
verification , & indemnity for depositing the same for clearing.

Case 4: M/s Dharma Cables Working Capital Case

Situation Analysis :
M/s Dharma Cables is sanctioned a working capital limit of Rs10 lacs.
The Account has conducted satisfactorily for 4 to 5 years but subsequently due to
problems, the firm started incurring losses and shut down its operations.
The present outstanding is Rs 17 lacs which includes un-serviced interest and penal
interest of Rs 4.50 lacs & 0.76 lacs respectively.
The firm has incurred cash losses of 7 lacs and the primary security i.e. stock are also not
available due to which the book value of the debt has become irrecoverable.
In order to settle the dues the borrower comes forward with a onetime settlement of Rs. 5
lacs. The collateral security i.e the shops are also in dispute with the tenants and hence
their current value has come down to 3 lacs (30% of the initial value)
Action Points:
We first need to introspect the root cause analysis of the loan being
bad enabling us to know the flaw in system & can improve in future
(i,e) why the drawing power of the borrower was not calculated
periodically on the value of stocks.
We in banking cannot be complacent & should always be on our toes
for the credit we have furnished, it does not mean if the same is
performing well for good 5 years it cannot go bad.
We are in the industry where we cannot believe on assumptions &
have to believe only on our data and should always probe the
customer & also the necessary inspections, audit should be complied
stringently.
As per the case it is also very evident that the loan should have been
tagged NPA a long back once we were not getting the required interest
paid for 90 days.
In context to the above post our root cause analysis , we must be able
to calculate the receivable value of the company. Therefore we may
get the fair idea to what else we may recover from the borrower.
We can also check the guarantor who was initially involved at the time
of credit and can analyses the amount we may recover from him.
If we talk about calculating the collateral security, the same was being

taken as
100 % of the credit. (which has been fine as per my
understanding).However, we should have ensured to inspect the
collateral on regular basis, to avoid such circumstances.
Therefore looking at the financials of the firm & the available value of
securities , it is not advisable to go ahead with the proposal. The loan
should be closed by getting the maximum amount realized with proper
negotiation.
To conclude the last thing we must keep in mind is to recover at least
our principal amount of 11.76 lacs leaving our interest component &
should also not continue the loan post payments.

Case 5: Universal Bank- Rampur Branch (Fraud involving deposit accounts)

Situation Analysis:
The Regional Manager of UP Mr Tyagi has observed a few frauds happening in the
branch which has also resulted in a few police investigations for certain accounts and
transactions which has led to a poor image of the bank in the town of Rampur.
Hence Mr. Srivastava is posted as the new branch manager for the Rampur branch. He
finds that there are various procedural aspects are not being complied with by the branch
according to the KYC norms.
Action Points:
Mr. Srivastava should conduct a meeting of the staff as they have agreed to on a sunday
to provide them thorough training regarding the KYC norms laid down by the RBI
He should also point the recurring errors which have been found by him and correct them
asap.