INTRODUCTION ABOUT BANKING

INTRODUCTION

A modern industrial society cannot be self-financing of

entrepreneurs. Some institutional assistance is necessary to mobilise the
savings of the community and to make it available to the entrepreneurs.
The people a large majority of whom save in small odd lots, also want an
institution which can ensure safely of their funds, together with liquidity.
Banks assure this with a further facility that the funds can be drawn back
in case of need.

From a broader social angle, banks act as a bridge between the

users of capital and those who save but cannot use the funds themselves.
The idle resources of community are thus activated and brought to
productive use.

In modern times the field of banking has widely expanded and now
covers many sectors of the economy. As the need to mobilise saving for
investment has grows, bank has developed many faces.

The banking system has capacity to add to the total supply of

money by means of credit creation. That is why Crowther has said, “The
bank is a dealer in credit and its own and other peoples.”. It is because of
an ability to manipulate credit that banks are used extensively as a tool of
monetary policy. The through channeling of funds into one or the other
direction on a priority basis or extending it to one or the other
concessional terms and conditions, influence the flow of funds and
thereby the nature of economic development.

1
 HISTORY OF BANKING SYSTEM IN INDIA

CLASSIFICATION OF BANKS :

In India, the institutions of banking has existed for a long time but

previously only individuals or family concern carried on banking. They

are called indigeneous bankers and are known as the multans, mahajans,

marwaries, or sahukars in different parts of the country. They accept

deposits which are not withdrawable by cheque. They make extensive

use of hundies for purpose of remittance and extend loans with or without

security on varying rates of interest depending on the credit, worthiness

of the borrowers. The usual classification of banks apart from indigenous

bankers is as follows :

a) Central Bank :-

It is the principal banking and monetary institution of a country and

has a monopoly of the note issue. It controls and regulates the activities

of other banks. It is usually under government ownership and

management and regulates the monitory and credit conditions in the

general interests of the economy.

b) Commercial Banks :

They accept deposit from various sources withdrawable generally

at short notice. Since there deposits are mainly for a short, they grant

2
loans and advances for a short period to meet the working capital needs

of trade and industry.

c) Industrial Banks :

They provide industrial capital by subscribing for shares and

debentures of companies. They also grant long term loans to meet the

fixed capital needs of the industry.

d) Regional Rural Bank :

These are special types of banks not like the needs particularly of

the weaker sections in rural areas because it was felt that the existing

institutions have not been able to deliver the goods.

e) Co-operative Bank :

These are organised by the people for their own collective benefit.

These encourage thrift through small savings and advance to loan to their

members at fair rates of interest. They are registered under the co-

operative societies acts.

3
 ESSENTIALS OF SOUND BANKING SYSTEM

Stability : Bank failures damage the whole economy by destroying the

general confidence of the people in such situations. Bank must therefore

maintain liquidity and refrain from riskless lending or investment. The

good sense of banks in this respect is reinforced by legislation. In India,

under the Banking Regulation Act. 1949, the Reserve Bank has been

given extensive powers of supervision, direction and regulation of

commercial banks. Insurance of deposits upto Rs. 20,000 has been

introduced so that depositors may feel secure. Training of bank staff has

been undertaken to see officers have adequate theoretical background.

Liquidity :- Liquidity means the capacity to promptly meet the

demands of depositors. This can be done only by keeping such cash or

near cash. Too much liquidity is costly, for liquid assets do not yield

much income and a bank cannot offered to ignore profitability. Bank

therefore keep in addition to cash, a large proportion to their funds in

realizable or transferable assets, which also earn income.

Flexibility : Both the deposit and credit systems should be kept so

flexible that they can meet the varying psychological requirements and

4
business needs of the customers. The policy of selective liberalization

and control is an example of flexible banking policy.

Dispersal : Banking facilities should not get concentrated in a small

region but get dispersed over the whole country to enable equitable

regional growth. Such banking can secure better deposit mobilisation

which is essential for a proper and balanced growth.

Profitability : Profitability should not be sacrificed, the responsibility to

share holders and optional business choices in raising resources and

extending credit facility within the basic farm work of security of

investment demand it.

5
 FUNCTIONS OF A BANK

The functions of a bank can be summarised as follows :

i) Receipt of Deposits

A bank receives deposits from individuals, firms and other

institutions. Deposits constitute the main resources of a bank. Such

deposits may be different types. Deposits which are withdrawlable on

demand are called demand or current deposits other are called time

deposits. Saving deposits are those from which withdrawals are restricted

as regards the amount and the period. Deposits withdrawlable after the

expiry of an agreed period are known as fixed deposit. Interest paid by

bank is different for each kind of deposit highest for fixed deposit and

lowest or even nil for current deposits.

ii) Lending of Money :

Banks lend money mainly for industrial and commercial purpose.

This lending may take the form of cash credits, overdrafts, loans and

advances, or discounting of bills of exchange. Interest charged by banks

on such lending varies according to the amount and period involved,

social priority nature of security offered, the standing of the borrowers

etc.

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iii) Agency Services :

A bank renders various services to consumers, such as :

a) Collection of bills, promissory notes.

b) Collection of dividend, interest, premium etc.

c) Purchase and sale of shares and securities.

d) Acting as trustee or executor when so nominated.

e) Making regular payments such as insurance premiums.

iv) General Services :

A modern bank performs many services of general nature to the

public e.g.

a) Issue of letters of credit, travelers, cheques, bank rafts, circular

notes etc.

b) Safe keeping of valuable in safe deposit vaults.

c) Supplying trade information and statistics: conducting economic

surveys.

d) Preparation of feasibility studies, project reports etc.

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 RULES OF CO-OPERATIVE BANKS-1985
A) Period of Preservation of Records:
In terms of these rules, the period of preservation of various
records are :
(A) To be preserved for a period not less than five years preceding the
current calendar year,
i) Ledger and Registers
1. Cheque Book Register,
2. Delivery Order Registers,
3. Demand Liability Registers,
4. Demand Remittances Dispatched Registers,
5. Demand Remittances Received Registers,
6. Vault Registers
ii) Records Other than Registers
1. Telegraphic Transfer Confirmations.
2. Telegrams and Telegram Confirmations.
(B) To be preserved for a period not less than Fight year preceding the
current calendar year.
(i) Ledgers and Registers
1. All personal ledgers.
2- Loans and advances register or ledgers.
3. Call, Short or Fixed Deposit Registers or Ledgers.
4. F. D, Interest Registers.
5. Draft, TT and Mail Transfer Registers.
6. Remittance Registers.
7. Bills Registers.
8. Clearing Registers.
9. Demand Loan Liability Registers.

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 10. Draft and Mail Transfer Advices Despatched
Registers,
11. Draft and Mail Transfer Advices Received Registers,
12 Draft payable Registers,
13. Drawing Power Registers,
14. Stock Registers showing collection of dividends and interest

on securities on behalf of constituents .

15. Registers or ledger of Bank's Own Investment.
16. Branch Ledgers.
17. Overdrafts and Loan Registers.
18. Safe Custody Registers.
19. Equitable Mortgage Registers.
20. Trust Registers.
21. Clean Cash Books,

ii) Records Other Than Registers

1. Bank Cash Scrolls.
2. Bank Transfer Scrolls.
3. Remittances Schedules,
4. Paid Cheques.
5. Paying slips.
6. Vouchers relating to DDs, TTs, I'ixed Deposits. Call Deposits.
Oasli credit and other deposit and loan accounts including
vouchers relating lo payment Lo nominees.
7. Account opening nomination forms,
8. Standing Instructions regarding current account.
9. Application for TTs, DDs, MTs, and other remittances.
10. Applications for overdrafts, loans and advances,
11. Press Copy Rooks.
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B) Nomination:
In terms of the above rules, person/s who hold deposit
accounts/.sate custody accounts/safe deposit lockers in their individual
capacity and not in representative capacity may avail of the facility of
nominating a person to receive payment of deposit/to receive the articles
kept in safe custody/the contents of the safe deposit locker in the event of
his/their death.
In Respect of a joint account, ail joint account holders together can
make the nomination.
In case of the deposit in the name of a minor, the person lawful ly
entitled to act on behalf of the minor can make the nomination-

Note : The Reserve Bank of the India by its circular UDB No,
BR,32.16.04.00.9K-99 dared 28"1 June, 1999, has advised the banks to
incorporate the legend "Nomination Registered" on every pass hook or
the deposit receipt so as to enable the relatives to know from the Pass
Book Deposit Receipt the availment of nomination facility by the
deceased depositor.
The nomination can be made, cancelled or varied in the prescribed
Form. No., as follows :

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 Deposit Safe Custody Safety Locker
Account Account Sole Hirer Joint Hirer

Nomination DA1 SC 1 SL 1 SL1A

Cancellation DA 2 SC2 SL 2 SL 2
Variation DA 3 SC3 SL 3 SL 3A

Clarifications
The Reserve Bank has, in their Circular UBD.BR.6.86-87 dated lllh
August, 1986, issued the following clarifications on certain relating to the
nomination facilities:
a) Cancellation/variation of nomination on death of one of the
depositors in case of joint accounts :
Banks may allow the variation/cancellation of nomination by all
the surviving depositor (s) acting together. This is also applicable
to deposits having operating instructions "cither or survivor". In
the case of a joint deposit account, the nominee's right arises only
after the death of all the deposited
b) Nomination of more than one person in a joint deposit
c) Account :
There cannot be more than one nominee in respect of a joint
deposit account.

d) Nomination facility in respect of articles kept in safe custody

jointly :

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 Nomination facility is available only in case of individual depositor
and not in respect of persons jointly depositing articles for safe
custody.
e) Opening of sealed/closed packets at the time of return to the
nominees/surviving heirs :
Banks are not required to open scaled closed packets left with them
for safe custody or found in locker while releasing them.
f) Position of nominee or survivors, availing locker facility, on the
death of one of the joint hirers of a locker : As regards lockers
hired jointly, on the death of the hirer(s), the contents of the locker
are only allowed to be removed jointly by the nominee and
survivor(s) after an inventory in made in the prescribed manner,
g) In such a case, after such removal preceded by an inventory, the
nominee and surviving hirer(s) may still keep the entire contents
with the same bank, if they so desire, by entering into a fresh
contract of hiring a locker.
h) Nomination of a minor in respect of hired locker :
Sec,457E read with Scc.56 of the Banking Regulation Act, 1949
does not preclude a minor from being a nominee for obtaining
delivery of the contents of the locker. However bank^ have to
ensure, that when the contents of a locker are sought to be
removed' on behalf of the minor nominee, the articles are handed
over 10 a person who, in law, in competent lo receive the articles
on behalf of the minor.
i) Nomination facilities for different types of deposits:
Nomination facility is available to all types of deposits accounts
irrespective of the nomenclature used by different banks.
j) Nomination facilities for accounts in the name of sole
proprietorship concerns :
Nomination facility is intended only for individuals and not firms.
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k) Claim in respect of balance in the bank account of a deceased
pensioner:
Nomination facility is available for saving bank Account opened
for deposit of pension. However, Co-operative Societies
(Nomination) Rules, 1985. are distinct from the Arrears of Pension
(Nomination) Rules, 1983, and the nomination exercised by ilie
Pensioner under the latter rules for receipt of arrears of Pension.
will not be valid for the purpose of deposit accounts held by the
pensioners with banks, for which a separate nomination is
necessary in terms of Co-operative Societies (Nomination) Rules,
1985 in case a pensioner desires to avail on nomination facility.
l) Repayment of a deposit to a nominee before maturity of the
deposit:
A Banking company making payment to a nominee in whose
favour a valid nomination subsists on the death of the depositor(s)
gets full discharge in respect of its liability relating to the deposit in
terms of the provision of Sub-Sec,4 of Sec.45ZA of the Banking
Regulation Act, 1949. The question whether the payment to the
nominee is made on or before the due date for maturity of the term
deposits would not affect the said protection available to the
banking company. '1 he question of making payment before the
due date for maturity would be governed by the rights of the
depositor(s) and existing directives on the subject, as the nominee
gets the similar rights in respect of obtaining the premature
payment as the depositor (s) had.
m) Granting of loan to nominees of deposits of deceased :
It is clarified that granting of loan lo a nominee before the maturity
of the deposit against security o1 that deposit, does not amount lo
payment of deposit account to the nominee(s). Therefore, the bank

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 would not get a valid discharge if a loan is granted to nominee,
against the security of the deposit.

n) Nomination by Surviving depositor(s) in joint deposit account :

When one of the joint depositors dies before making a nomination
the surviving depositors) can make a valid fresh nomination.
o) Nomination in favour of Association, Societies. Trust or any other
organisation :
The Nomination Rules stipulates that nomination shall he made
only in favour of individuals. As such a nominee cannot be an
Association, Trust, Society or any other Organisation or any
Officer Bearer thereof; in his official capacity. In view thereof, any
nomination other than in favour of an individual will not be valid.

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 OBJECTIVES OF STUDY

Behind the Conduction of each and every study, their are certain
objectives has been framed up. A certain kind of methodology has been
used for it. The objectives and methodology used for the conduction of
this project is as follows,

1. To understand the overall working of the bank.

2. To see what facilities the bank is providing to its customers and to
understand the view of the customers about the working of the
bank.
3. To observe the relationship between the management and the bank
employee.
4. To observe how the bank is facing the competition which has been
created in the market by the other banks.
5. To understand the future prospects of the bank.

For this project both primary and secondary data were collected.
Primary data has been collected by bank manuals as well as by going
through the annual general reports of the bank.

The secondary information has been collected from the books,

management journals etc.

15
 PROFILE OF THE NANDED MERCHANTS
CO-OPERATIVE BANK LTD BRANCH OF
TARODA NANDED

The Nanded Merchants Co-operative Bank Ltd. Branch of

Taroda , started its working in Nanded 1974. The registration number of
the bank is NND/BNK 136 of 1983 dated 15.04.1974.

As per the given accounts, it shows that from last eighteen years,
the bank progressed in many issues and steps. But the analysis of the
bank on the several accounts doesn’t shows its progress. Marathwada
region is one of the most backward region in Maharashtra. That’s why
from Reserve Bank of India to government shows their doubt to open this
bank in Nanded. But from last eighteen years positive progress of bank
has fulfilled this doubt.

The success of any co-operative sector / society is depend on the

working strategy of co-operative directors boards. If we can think on the
same issue, this bank has shown a new progressive policy which is
established now, in account of director board working shows the full faith
of bank. Last Eighteen years working of directors shows the progressive
image of bank. As per law any directors of bank can take loan. But this
bank develops their own policy. None of them can’t take loan from this
bank.
On behalf of good progress bank shows their positive and
progressive attitude.

From the above figures we can come to know that as the business
of the bank get expanded its members are also increasing.

The bank employees are very hard worker, discipline politely

behave with customers. The bank arrange the seminar for customers so

16
they know what is wrong then they try to done or give best service to the
customers.

The bank is arranging the different kind of training programme for

its employees for the improvement in their efficiency. These training
programme are beneficial for bank as well as employees. In this year
bank has arrange 33 conferences. H.D.F.C. bank has given the
permission to collect the draft from the major cities.

The bank is provide best service to its customers. The bank is

providing the following facilities to its customers.

1. The bank has made such arrangements that the customers can make
direct interaction with the bank persons.

2. Whenever the customer is visiting any branch of the bank they are
provided with service like tea, coffee etc.

3. Pass books, statements can quickly get modernised through

computers.

4. All transactions are completed through computers.

Upto 1997, the bank is having only 6 branches. Now the bank is
having total 9 branches in Nanded districts. The bank is having its
branches in the following area of Nanded city.

1. Old Mondha : It is the main branch of the bank.

2. Shivaji Nagar. 3. Anandnagar.

4. New Mondha. 5. Vazirabad.

6. Shrinagar . 7. Dharmabad.

8. Taroda 9. Loha.

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 The following dignitaries says the following worlds about bank.

1. Shri Shridhar Nagnur (Rt. Officer, Central Bank of India) “An

ideal co-operative bank”. This is the one sentence description of
your bank. After hearing all information about bank i feel proud &
happy. I wish you Success and very bright future”.

2. Sou. Pratibha Rasal (District judge, Pune) “This bank appears to

have given new dimension to co-operative banks. This focus is on
human excellence. I wish the bank success”.

3. Shri Ulhas Joshi (Management Consultant, Pune) “I feel very

happy the way in which the bank has developed its business & U
wish the bank best of luck & success”.

There are total 123 employees in the bank. They have divided
category wise as follows:

1. Chief Executive Officer 01

2. Manager 12

3. Branch Officer/Officer 12

4. Account & Assistant Accountant 44

5. Clerks 100

6. Peons 52

18
 ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS OF THE BANK

The Nanded Merchants Co-operative Bank Ltd Branch at Taroda

Nanded is a co-operative bank which is managed by the board of
directors through share holders. The chairman of the bank is selected
every year among the board of directors. The board of directors are
elected through share holders for a period of 5 years.

The present Board of Directors of the bank is as follows

1. Shri. Dattaraya Mahjan Chairman

2. Shri. Ramdinji Soni Vice-Chairman

3. Shri. Gudgilla Director

4. Shri. Patil Director

5. Shri. Nathmal Purohit Director

6. Ku. Pratibha Paradkar Employee Representative

7. Shri Kishan Wananje Employee Representative

8. Shri Vijay Kulkarni Chief Executive Officer

9. Shri Madhukar Kulkarni Manager

19
COMPUTERISATION

Including its Head Office the bank is having the 3 (Nine) branches.

1. ‘Nanded Merchants Co-op bank Ltd Old Mondha Nanded

Main Branch ’

2. Taorada Nanded

3. Anandnagar, Nanded

4. Vazirabad Nanded

5. Shrinagar Nanded.

6. Dharmabad

7. Loha.

8. Himayatnagar.

9. Tamsa.

All these branches are fully computerised branches. The

computerised main branch has been inaugurated by Shri Prakashrao
Khedkar M.L.A. of Nanded.

All the working procedure of the bank is going through computers.

So due to it, there is not a single mistake in the working procedure.

As per the instruction of R.B.I., the computer department of the

bank deeply studied ‘Y2K’ problem & successfully faced it. Due to it,
the per employee productivity has gone up to Rs. 182.10 lakhs & per
employee profit which has been received is Rs. 2.73 Lakhs.

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 WHO TAKES THE DECISIONS ?

In the bank the board of directors are taking the final decisions on
each & every matter whether it is regarding the policy matter or
distribution of dividend to share holders or appropriation of reserves. If a
decision has to be make on a particular subject & policy, then it has been
put before the meeting of Board of Directors. Then they discuss it among
themselves. before taking the final decision the opinion of CEO is taken
into consideration & then final decision has been make.

On the various subject matter Board of Director has formulated

different committees. As CEO is the part of these committees. They are
studying the proposals, the decisions which are taking it directly & the
decisions which are beyond their jurisdictions on that subject matter they
are making the certain recommendations & forward it to Board of
Directors through CEO for final decision.

The committees are formulated by Board of Directors are as

follows .

1. Recovery Committee

2. Loan Committee.

3. Audit & Inspection Committee

4. Staff Welfare Committee.

These committees are studying the matter which are related with
their work & forward if to Board of Directors for the approval.

The employees are also part of decision making process. The

employees through election nominate one or two members as employee
representative in Board of Director & through them they are taking part in
the decisions.

21
 FINANCIAL DEPARTMENT

(Meaning, Definition, Objectives)

What is Financial Management ?

The financial management is the most important branch of business

administration. One can not think of any business activities in isolation
from its financial implications. The management may accept or reject a
business proposition on the basis of its financial liabilities.

Financial management, as we take it today. is that managerial

activity which is concerned with the planning & controlling of the firms
financial resources. The finance in the modern business is the life blood
of the business economy. We can not imagine a business without finance
because it is central point of all business activities. No matter, the
business is big or small, semi govt. or no-govt., the finance function of
management is equally important for profit as well as no-profit
organisation.

Definition of Financial Management :

Financial management is that specialized function of general

management which is related to the procurement of finance & its
effective utilization for the achievement of common goal of the
organisation. It includes each & every aspect of financial activity in the
business.

22
 The financial management has been defined by the different author
as follows:

1. “Financial Management is an area of financial decision making,

harmonizing individual motives & enterprise goals”.

- Weston and Brigham

2. “Financial Management. is the operational activity of a business

that responsible for obtaining & effectively utilizing the funds
necessary for efficient operations”.

3. “Financial Management, is the application of the planning &

control functions to the finance functions.”

Howard and Upon.

From the above definitions it is clear that financial management is

that specialized activity which is responsible for obtaining & effectively
utilizing the funds for the efficient functioning of the business &
therefore it includes financial planning financial administration &
financial control.

Objective of Financial Management :

Financial Management evaluates how fund are used & procured. it

is generally agreed that the financial objective of the firm should be
minimization of owner’s economic welfare. Owner’s welfare can be
maximized. For this purpose there are two well known & widely criteria
which are discussed as follows:

(a) Profit Maximization.

(b) Wealth Maximization.

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a) Profit Maximization :

The maximization of profit is generally regarded as the main

objective of business enterprise. Each company collects its finance by
way of issue of shares. The public purchase these shares in the hope of
getting maximum profit from the company as a dividend. It is possible
only when the company’s goal is to earn maximum profits & available
resources & invest their money in such a firm & persons who have
already invested will like to sell their stocks. On the other hand, higher
profits are the barometer of its efficiency on all fronts, i.e. production,
sales & Management. A few replace the foal of “Maximization of profits
to fair profits”. The main object of the Financial Management is to
safeguard the economic interest of the persons who are directly or
indirectly concerned with the company i.e. promoters, shareholders,
creditors & employees. All such interested parties must get the
maximum return for their contributions.

b) Wealth Maximization :

The wealth maximization is universally accepted criteria for

financial decision making. The value of an asset should be viewed in
terms of benefits it can produce.

Wealth maximization means maximizing the net present value of a

course of action. The net present value of a course of action the difference
between the gross present value of the benefit of action & the amount of
the investment required to achieve those benefits. The gross benefits
value of course of action is the fund out by discounting or capitalizing it
benefits at a rate which reflects their timing & Uncertainty.

24
 The objective of wealth maximization helps to resolve trouble
some problems, attached with the flow of benefits. There are the
consideration of time value of money & the problem of handling
uncertainty of expected benefits. These problems can be handled by
selecting an appropriate discounting rate & issuing this rate expected
flow of future benefits in terms of cash flow. In investment & financial
decision, it is the cash flow which is important & not the profits.

In short, the wealth maximization objective is consistent with the

objective of maximizing to owner economic welfare i.e. their wealth.

25
 FINANCIAL PARAMETERS

1. Deposits :

The deposits which the bank has raised are as follows:

====================================================

Sr.No. Year Rs. (In lakhs)

====================================================

1. 2001 1097.65

2. 2002 1405.09

3. 2003 2188.72

4. 2004 3038.58

5. 2005 3852.63

6. 2006 3032.68

7. 2007 4012.22

8. 2008 4321.22

====================================================

The graph showing (See Graph No.1) the constant increase in

deposits & it is because the bank is giving the complete return to the

customer.

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2. Loans

The loans which the bank has distributed in last 5 years are as

follow.

====================================================
Sr. No. Year Rs. (In lakhs)
====================================================
1. 2001 722.23

2. 2002 967.72

3. 2003 1342.46

4. 2004 1700.81

5. 2005 2495.25

6. 2006 2880.32

7. 2007 3921.20

8. 2008 4012.22

====================================================

The graph showing (See Graph No.2) the constant increase in

distribution of loans.

The loan scheme which the bank is having it is really very

attractive in nature. The bank is giving 1% interest rate concession to

those persons who are repaying their loan installments regularly.

27
3. Investment :

The investment which the bank is having in last 5 years is as

follows :

====================================================
Sr. No. Year Rs. (In lakhs)
====================================================
1. 2001 440.25

2. 2002 560.58

3. 2003 945.00

4. 2004 1389.98

5. 2005 1382.12

6. 2006 1412.03

7. 2007 1493.12

8. 2008 2132.23

====================================================

The graph showing (See graph No. 3)the constant increases in

investment.

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4. Recovered Share Capital:

Recover share capital which the bank has recover in the last 5 years

is as follows:

====================================================

Sr. No. Year Rs. (In lakhs)

====================================================

1. 2001 34.48

2. 2002 45.97

3. 2003 62.46

4. 2004 78.43

5. 2005 108.08

6. 2006 120.23

7. 2007 148.38

8. 2008 215.22

====================================================

29
 TYPES OF DEPOSITS

Specific Schemes:

The deposits schemes which the bank is having it is really very

attractive in nature. It is giving the complete return to the customers, the

money they deposited on the bank under the various deposits schemes for

the various & specific period. The rate of interest which the bank is

charging on the deposits is as follows:

1. Fixed Deposits Schemes :

30 days to 90 days - 6.0%

91 days to 180 days - 7.0%

181 days to 12 months - 8.0%

13 months to 24 months - 9.50%

36 months to 66 months - 9.0%

67 months and above - 9.0%

2. Recurring Deposits Schemes :

30 Months 2300 1,01,471.40

39 Months 2100 1,02,093.60

48 Months 1600 1,00,816.00

57 Months 1300 1,02,505.00

66 Months 1100 1,05,913.00

120 Months 500 1,15,350.00

NO TDS applicable for recurring deposit schemes.

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3. Cash Certificate Schemes :

36 Months 68130.00 1,00,000.00

48 Months 59950.00 1,00,000.00

60 Months 52570.00 1,00,000.00

66 Months 49480.00 1,00,000.00

4. Saving Bank Account :

In it the bank offers 3.50% interest rate in saving bank Account.

5. Current Account :

Professionals, individual businessman can get benefit of 0.50%

interest while operating their business with the bank.

31
 TYPES OF LENDING
The loan schemes which the bank is offering to its customers are as
follows:

1. Loan up to Rs. 2 lakhs 15.00%

2. Loan up to Rs. 5 lakhs 15.00%

3. Loan up to Rs. 5,00,0001 & above 15.00%

4. The loan which the bank is giving for the purpose of T.V.
Fridge, Vehicle. 14.00%

5. The loan upto Rs. 2 lakhs which has been given for the
purpose of house loans, constructions (10 years). 15.00%

The bank is giving 1% interest rate concession to those persons

who are repaying their loans installments regularly.

The bank is offering following loan facilities -

1. Instant Demand Loan against our own term deposit receipts.

2. Loans for working capital requirements of SSI units.

3. Personal loan for purchase of consumer durables.

4. Loans against personal guarantees.

5. Trade loans for business concern.

6. Bills/ Cheques discounting facility.

7. Terms loans for purchase of plant & machinery for industrial

unit.

8. Demands loans available on all Government securities such

as National saving certificates, LIC policy, Kisan viks Patra
etc. & other Govt. securities.

9. Term loans facilities for house repairing & purchase of ready

built house.

32
 MARKETING DEPARTMENT

MARKETING STRATEGY
The marketing strategy which has been applied by the bank is
publishing its advertisement. In the news papers such as Sakal, Tarun
Bharat.

The bank is also heavily relay upon word by mouth publicity as

well as mouth to mouth publicity. The bank has created a goodwill in the
minds of customers by providing best qualitative service. Due to it, the
customer is also doing publicity of the bank. From it, the bank is also
getting a lot of business.

As the bank has achieved the status of having maximum number of

branches is one city. The bank is also using it heavily as a part of its
marketing strategy.

Regarding the marketing strategy the bank is following the below

mentioned principles:

1. Customer service is team work.

2. Customer service is ego management.

3. Customer service is proper communication.

4. Customer service counter service.

5. Customer service is listening.

As part of marketing strategy regarding customer service, the bank

is following the below mentioned commandments:

1. Render service with a smile

2. Cultivate positive approach attitude & outlook in respect of

customer problem.

33
3. Extend service with courtesy, speed & accuracy.

4. Give help & guidance as & when required by customer.

5. Understand the national & corporate goals & priorities as

well as area of emphasis.

6. Hardwork, integrity & devotion of duty.

34
 HUMAN RESOURCE DEPARTMENT
GENERAL WORKING CONDITIONS OF THE BANK
A) Employee-Year Wise
The year wise employees who are working in the bank is as
follows.
====================================================
YEAR NO. OF EMPLOYEES
====================================================
2000-01 73
2001-02 92
2002-03 94
2003-04 96
2004-05 123
2005-06 137
2006-07 156
2007-08 169
====================================================
There are total 236 employees working in the bank.

B) Staff Salary & Allowances :

From 1st April 1999 to 31st March 2000.

Staff Salary 55,12,328.50

Anoriyam Charges 12,000.00

Life Insurance 5,90,985.00

Conveyance Allowance 10,850.00

Other Allowances 7,940.00

=============
61,34,103.50
=============

35
 The staff salary & allowances from April 1999 to March 2000 is
Rs. 61,34,103.50

C)House Rent Allowance : 5 % of Basic + D.A. (P.m.)

D) Power & Duties of the Chief Executive Officer :

The CEO shall be selected & appointed by the Board of Directors

of the bank in accordance with the Requirement Rules framed under the
provision of Byelaw No. 36 (XXiX). The termination of services of the
CEO shall be in accordance with the service rules framed by the Board of
Directors under the provisions of Byelaw No. 36.

The powers & Duties of the CEO who is responsible to the Board
of Directors shall be as Under :

1. The chief Executive Officer is taking his decision on the merit

basis.

2. To take action on the resolution & decision taken by the General

body & Board of Directors.

3. To convene the meeting of general body, Board of Directors, Sub-

committees & to attend & cause the record & minutes of all
meetings in the minutes books & to sign the same along with the
chairmen of the meeting.

4. To conduct correspondence on behalf of the bank.

5. To receive applications for loans & advances & to place the same
for consideration before the Board of Director /Sub-committee
together with a detailed report containing his specific comments /
recommendations.

6. To arrange to accept deposits of all types & to arrange for issue of

receipts, statements & pass books.

7. To allot work amongst the bank’s staff and supervise their work.

36
8. To seek orders from staff, sub-committee or the board of directors
for the appointment of staff, subordinate to him with in the
sanctioned strength. On from time to time.

9. To incur expenditure within approved budget up to the limits laid

down by the board of directors.

10. To issue orders of transfer of staff whenever & wherever

necessary.

11. To exercise such other powers & discharges such other duties as
may be delegated or entrusted to him by the board of directors or
by the chairman.

Information technology (IT) A wonderful creation of man-brought

significance shifts in our day to day life. Indian software professional
made significant strides in the information technology industry USA.
Employees of Rourkela steel plant turned the loss-making unit into a
profit making company. similarly, employees of TISCO, acquired core
competencies for their company, which was affected by dumping of steel
from china. Most of the public sector companies like hindustan machine
tools ltd., (HMT), and HINDUSTAN cables Ltd. (HCL) become sick.
Thus the people make or mar an organization. How to induce the people
to make an organization but to mar it? Every company or organization is
deeply interested in having an answer to this question. The answer to this
question centered on the following areas :-
1. Getting the people whom can make an organisation.
2. Enabling those people to acquire required capabilities to make a
successful organisation.
3. Motivating them to contribute their resources continuously for
running the organization successfully.

37
 We need to known an important concept i.e. human resource.
People with required skills to make an organization are generally referred
to as human resource.

Features of Human Resource Management

Features of human resource management include :

1. Human resources management is concerned with employee both as
individuals and as group in attaining goals. Concerned with
behaviours emotional and social aspects of personnel.
2. It is condemned with the development of Human resources i.e.
knowledge capability, skills potentialities and attaining and
achieving employee goals, including job satisfaction.
3. Human resource management covers all levels (low, middle and
top) and categories (unskilled, skilled, technical, professional,
clerical and managerial) of employees, it covers both organized
and unorganized employees.
4. It applies to the employees in all types of organizations in the
world (industry trade service, commerce, comic and social
religious political and government department). Thus, it is
common in all types if organisations.
5. Human resource management is a continuous and never ending
process.
6. It aims at attaining the goals of organization, individual and society
in an integrated approach.
7. Organization goals may include survival, growth, and development
in addition to profitability, productivity innovation excellence etc.

38
Functions of HRM
The functions of HRM can be broadly classified into two
categories, viz.,
i) Managerial functions.
ii) Operative Functions.

Functions of HRM

Managerial Functions Operative Functions

Planning Employment
Organizing Human Resource
Development
Direction Compensation
Controlling Human Relation
Industrial Relations
Recent trends in HRM

39
 CONCLUSION

From the above we can conclude that,

1) The working procedure which has been existed in the bank is really
nice in the nature. The staff which is working in the bank is very co-
operative in natures and they are working at their best level and providing
best kind of services to its customers. As the employees are taking part in
the decision making process so they are not having any complaint with
the management.

2) As the bank is providing the loans to its employees on the discount

basis for the purpose of house construction, vehicle purchase and
computer purchase. So the employees are feeling good about the bank.
The bank is providing group insurance facilities to its employees.

3) The bank is conducting many social activities and helping the

needy ones. The bank is facing the tremendous challenge in terms of the
service, quality managing service, competition from other firms and
customer satisfaction. The management of the bank is liking to accept
the challenge for the process of learning and relearning.

40
 SUGGESTIONS

1. The powers of the branch managers regarding the limit of

distribution of loans should be increase from 25000 to 50000. So
that it will be helpful from the point of view of the bank to expand
its area in terms of loan distribution.
2. The bank is now develop its own web site which will provide the
details about the total system as well s the functioning of the bank.
3. The details about the interest rates on savings, deposits, and loans
as well as the information about various loans schemes, deposits
schemes as well as about the branches of the bank should also be
provided on the web site.
4. The marketing practices should be made more wide
geographically.
5. Regarding its marketing the bank should follow the following
slogans.
i) Our customers are very best friend.
ii) The essence of our marketing is to create customers and to
give them the excellent services which has been available
with us.
iii) Our bank is customer oriented bank, we adjust our selves to
the customers not the customers to our selves.
iv) Complaints of our customers are suggestions for us.
v) Business of our bank exists only for the purpose of creating
more and more customers.

41
 BIBLIOGRAPHY

1. Development Banking

Vasant Desai.

2. The Banking Law & Practice

H.C. Sarkar.

3. Annual General Reports of Nanded Merchants Co-operative

bank Ltd Branch at Taroda.

42
 INDEX
Sr No. Contents Page No.
1 Introduction about banking 01
2 History of Banking System in India 02
3 Rules of Co-operative Banks 1985 08
4 Objective of Study 15
5 Profile of Nanded Merchants Co-op Bank Ltd, 16

Branch of Taroda
6 Organizational Structure 19
7 Who Takes The Decisions? 21
8 Financial Department 22
9 Marketing Department 33
10 Human Resource Department 35
11 Conclusion 40
12 Suggestions 41
13 Bibliography 42

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