Punjab National Bank

THE NAME YOU CAN BANK UPON

SUBMITTED BY:

IMM
 ACKNOWLEDGEMENT

“Debt can not be paid in words of gratitude”

It gives me immense pleasure to express my deepest gratitude towards

our Chairman and other faculty members for providing us with the
opportunity to undertake this project, which helped me to learn so
much.

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 PREFACE

With immense pleasure and deep sense of sincerity, I had completed my

industrial training o it is must for postgraduate student to gain the
experience. A systematical practical experience is very essential to bring
confidence in a student so that he can mentally prepare in advance to face
the challenge of the real world in advance.

The purpose of training are:-

1. Developing Skills: - One can develop his own skills to perform work
effectively & efficiently.

2. Getting Exposure: - To know that what actual factory environment is.

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 TABLE OF CONTENETS

TITLE PAGE NO.

Acknowledgement
Student Declaration
Executive Summary 5
Objective of the study 7
Introduction- About PNB 8
Services studied (Offered by PNB)-ATM cum Debit Card 11
Internet Banking 13
Saving Fund A/c 19
Current A/c 21
Anupam A/c 23
Flexible Rate Deposit Scheme 25
Cash Management Services 31
Electronic Fund Transfer 33
Real Time Gross Settlement 33
Loans- Housing Loan 45
Conclusions & Recommendations 49
Bibliography 51
Feedback Form
SIP Certificate

EXECUTIVE SUMMARY

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 This report is on four different functions performed by Punjab National Bank,

The report includes information about ATM cum Debit Card, Internet Banking

and Housing Loans in North Delhi and NOIDA.

 The report also discusses the mechanism of four services mentioned above, also

briefly explains the basic requirements and necessities of the services.

 Indian Banking industry is growing faster than ever before and shows great

opportunities with untapped market in rural as well as semi urban India. PNB

with its age old name has a place in peoples mind. But with the globalization

Private Banks that came just 10- 15 years back are giving tough competition to

PNB.

 PNB is the largest nationalized bank in India while its direct competitors are State

bank of India, Bank of Baroda, Central Bank and the like. Whereas it is also

competing with other private banks like ICICI bank, HDFC Bank, Standard

Chartered Bank etc.

 Punjab National Bank to compete in services with private banks, has introduced

service of interbank money transfer system for its customers, known as Real Time

Gross Settlement (RTGS).

 The report includes a brief description about RTGS, and this system works.

RTGS is a system of transferring money from one bank to other within very short

period of maximum 2-4 hrs.

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 Marketing Department of the bank has become aggressive with the loans

department also. PNB is now contacting directly to builders of residential and

commercial complexes to provide loans to their customers.

 PNB is now come up with providing ATM cards for free to its customers so as to

make people aware of the benefits of using Debit card. Also internet banking is

also promoted by bank so as to cut short the queue in the counters of the bank.

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 OBJECTIVE OF THE STUDY

Banking industry is one of the most highly competitive industries in India where so many

banks compete with each other. There are about 500 banks in India, which makes it

difficult for player to survive in the market.

Objectives of the study were:

 The main objective of this study is to promote ATM cum Debit card, Internet

Banking, RTGS system of Punjab National Bank.

 To increase customers awareness about the banks services.

 To educate the customers as well as staff of the bank branches about RTGS

system.

 To promote and bring business for PNB through Housing loans by contacting

through big real estate developers like DLF, PARSAVNATH, RAHEJA , ATS,

MAHAGUL etc.

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 INTRODUCTION

About Punjab National Bank

Company background

Punjab National Bank (PNB) was incorporated in the year 1895. Since its humble

beginning over hundred years ago, the bank has grown in stature to become one of the

leading banking institutions in India.Punjab National Bank (PNB) is the second largest

PSU bank in India with a dominant presence in north India. It is one of the largest lenders

to the agriculture and priority sector. The bank operates through a branch network of

4,022 branches and an ATM network of 404. The bank came out with its IPO in April

2002. The bank recently formed a joint venture with Principal AMC to form the PNB

Principal AMC.

The Indian Banking sector has undergone a sea change in the past decade with the

implementation of the ongoing banking sector reforms. The sector, over the years has

become more efficient with the implementation of prudential norms for asset

classification and improved thrust on technology advancement. The Public sector banks

(PSBs) still dominate the sector with 75% of the market share of business and profits.

The new private sector banks with their technology driven business model are fast

catching up with the PSBs. The last two years has seen banks book windfall gains in

profits. With the interest rates hardening up, banks need to focus on core profit growth.

The retailisation of the banks’ balance sheet has seen banks improve their asset mix with

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home loans, auto loans and personal loans. The large presence and vast resource base

have helped PNB to build strong links with trade and industry.

Punjab National Bank In India (PNB)

Punjab National Bank with 4497 offices and the largest nationalised bank is serving its

3.5 crore customers with the following wide variety of banking services:

• Corporate banking

• Personal banking

• Industrial finance

• Agricultural finance

• Financing of trade

• International banking

Punjab National Bank has been ranked 38th amongst top 500 companies by The

Economic Times. PNB has earned 9th position among top 50 trusted brands in India.

Punjab National Bank India maintains relationship with more than 200 leading

international banks worldwide. PNB India has Rupee Drawing Arrangements with 15

exchange companies in UAE and 1 in Singapore.

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Recent Developments

Centralized Banking Solutions (CBS), an ambitious project of the bank aimed at

interconnectivity of branches, has been implemented in 1,229 service outlets covering

265 centres. Around 60% of the bank`s total business is being covered through CBS.

Further, the bank has also launched Internet Banking Services for the Retail as well as

Corporate customers. Further, the bank has commissioned a call centre for providing

prompt services to customers. Presently, the call centre deals with enquiries related to

account/services of CBS branches, debit card/ATM card and loan/deposit schemes. The

bank has also put up a well-defined complaint redressal mechanism for quick disposal of

complaints received through the Call Centre.

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Future Plans

The bank has been focusing on expanding its operations outside India and has identified

some of the emerging economies, which offer large business potential. Bank has set up

representative offices at Almaty: Kazakhstan, Shanghai: China and in London. Besides,

Bank has opened a full-fledged Branch in Kabul, Afghanistan. The bank has opened its

representative office in Dubai as well.

Punjab National Bank plans to set up a subsidiary to look after its IT-related activities.

They have attained 100 per cent branch computerization and gained expertise from the

rollout of the core banking solution (CBS) in over 1,200 branches.

PNB has implemented FINACLE, the Infosys CBS, across its branches. The bank has

plans to launch a credit card, although it currently has as many as 53,000 card members

for its international co-branded credit card that it has launched with HSBC.

The bank is planning to have as many as nine large corporate branches (LCBs)

operational. Besides adding more LCB branches in Mumbai and Delhi, the bank also

plans to have branches in Ahmedabad, Kolkata, Ludhiana, Chandigarh and Chennai.

The Bank has deployed core banking solution, treasury management solution, cheque

truncation and MICR, enterprise management system, Internet Banking, Large ATM

Network , debit card, and disaster recovery system in the recent past," PNB has over 3.5

crore customers.

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 FINANCIAL STRUCTURE OF PUNJAB NATIONAL

BANK

PUNJAB NATIONAL BANK (AS ON JUN 2006)

FINANCIAL STRUCTURE RS ( CRORE)

MARK CAPITALISATION 10113

(JU N’ 06)

NET SALES 9584

NET PROFIT 1439

P/E RATIO 7

RETURN ON NET WORTH 17

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 SERVICES STUDIED, OFFERED BY PUNJAB NATIONAL BANK

Punjab National Bank offers number of services to its customers. Banks customer base

includes every segment of society, which includes high profile industrialists to a common

kirana wala and high-end professionals working with govt. organizations as well as

multinational private companies or a peon in any organization. Customers come from

every part of country, from rural area to metro cities.

ATM CUM DEBIT CARD

• PNB Debit card is the card issued by bank, for the account holders for effecting

Cash withdrawal, Balance enquiry and other permitted transactions through all

networked “Automated Teller Machines” (ATM), installed by PNB or other

banks displaying logo of Master Card /Maestro/ Cirrus or any other institution

which may be notified from time to time.

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 • The cardholder must maintain a Current/ Savings /Overdraft account at the branch

where application for the card is

• Submitted. The designated account may be joint accounts with ‘either or

survivor’ mandate only. The card is not issued to HUF’s, corporate bodies or to

firms.

• On issuance of card the card holder is intimated a four digit secret password

generated by computer by the name Personal Identification Number (PIN). The

user in his own interest can change PIN no. with any other four-digit number.

Under no circumstances the cardholder shall inform the PIN to any other person.

• The cardholder authorizes the bank to recover all dues arising and becoming

payable to bank as a result of use of card by cardholder through the ATM’s, from

all or any of the accounts of the cardholder are not sufficient to meet such dues,

the bank. In case the funds in accounts of the cardholder are not sufficient to meet

such dues, the bank shall be entitled to recover such dues from the cardholder/

account holder through due process of law.

Advantages of using PNB’s ATM cum Debit Cards

• Punjab National Bank is providing an additional benefit of accidental insurance to

its ATM cardholders, which is one of its kinds in the industry. The insurance

amount to Rs. 2 lacs, with no premium to be paid for the first year.

• No rental or service charge for using card as other banks charge to its customers

on yearly basis.

• There is no charge on using other banks ATM that come under MITR group.

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• Very nominal charge is debited from cardholder’s account if he uses other bank’s

ATM other than that of MITR group.

• PNB ATM cum Debit card can also be used for other purposes like, shopping,

fuel pumps etc., where card scratch machines are installed.

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 INTERNET BANKING

 PNB’s commitment to delight customers now even goes beyond banking.

Leveraging new- age IT infrastructure, the bank redefines conveniences for all

account holders, with the facility of online payment of several utility bills.

 PNB makes the process easy and convenient by bringing your bill to your

desktop. It allows you to pay your telephone, mobile, electricity, insurance and other

bills electronically at its website www.pnbindia.com. Now no need to stand in bill

payment queues or go to different collection counters / drop boxes. You can pay your

bill anytime from anywhere even on a holiday.

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What is internet banking?

Traditionally the customer’s visits the bank branch to utilize the services being provided

by the bank. Internet banking means “utilizing banking services with internet as the

medium of delivery”. In other words besides the traditional mode of banking, internet

banking is another delivery channel like- ATM, telebanking or call center.

How does internet banking works

The user can utilize these services from anywhere and any time. He will require a PC and

an internet connection to get connected to bank website through a valid user login id and

password. With login in bank server, user can utilize the services/facilities available

through the channel of delivery and gets back the desired information.

Who can avail this service?

Any individual having internet banking account with PNB, can use this service,

presently, free of cost.

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MULTIPLE BENEFITS

1. Online access- any day, any time, any where. The service is available to you

round the clock 24 hour a day, all 365 days a year. All you need is access to

internet to pay your bills.

2. No new bank account required- pay your bill through your existing bank account

with PNB. No requirement of credit or debit card to use this service.

3. City wise list of companies : Available on www.pnbindia.com

4. Receipt on payment of bill: A transaction ID (TID NO.) on payment of the bill

shall be issued online.

5. Bills of other person: bills of your spouse, children etc, can also be paid.

6. Privacy of transaction: all transaction is completely confidential.

7. Safety of transaction over internet: PNB website has been certified as secure site

by Verisign and it is protected by passwords.

8. Special offer: pay bill online and avail special offers. For detail visit the website

of utility company.

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Online Banking - Our Financial Future

With the advent of the internet, we are now afforded many luxuries that allow us to save

precious time and often a lot of money. Time-consuming tasks are now made simpler

now that we have the World Wide Web. Once such service is that of online banking.

Most of the banking institutions around the country and beyond allow us to do many of

our money transactions online instead of traveling to our local bank and waiting on

endless lines.

Online banking is a great service that our local banks offer. Gone are the days of having

to find the time to go to the bank or waiting on hold to find out about our bank history.

Most banks offer this service for free and participation is voluntary. All you need to do is

go to your bank website to see if it is offered. If it is, you just need to sign up giving your

necessary information and create a user name and password. That is all there is to it.

Why do so many people opt for this service? Most do because it is a good way to keep

your finances in order. When you sign on to your online account you have access to very

specific information regarding all of your accounts. You can see what your current and

available balances are, what transactions have posted to your account, and you can even

find out what checks have cleared your account and which have yet to. Most banks even

scan your cleared checks and you are able to see the check image right on your screen! If

you want to get copies of your statements or checks for verification purposes this is

instantaneously available to you.

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Another great thing about online banking is the ability to transfer money from one

account to another which cuts down on bouncing checks and having to call or go to the

bank. Online shoppers, sellers, and even people involved in home businesses love online

banking. This is because you are able to link your checking account with a Paypal or

Stormpay account to transfer funds. When you pay with these online accounts the money

is safer and more secure. For instance when you sign up with Paypal they will have you

verify the account with your checking or savings account. When you want to buy an item

online you pay securely with Paypal which give the option of having it withdrawn from

your account. The same thing goes with people purchasing an item online from you.

You can also transfer money to these online accounts if you wish.

There are some things that you need to be extremely careful when doing your banking

online. The main thing being security of your account. Before doing an online banking

activity you must be sure that you have some good security for your computer so that

online hackers cannot gain access to your information. Once you feel as though your

computer is quite secure, make sure that you keep your online banking id and password

safe. Do not share this information with anyone. After you access your account and do

any banking that you need to do make sure that you exit out of your account to keep it

safe and secure. These simple tips will make your online banking quick, efficient and

stress free.

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What You Should Know About Internet Banking

There is a lot you should know about Internet banking. It can save your time, money and

effort, but it is important to protect yourself from potential pitfalls. Below is information

on banking options, different types of online banking, services and advantages,

protecting your privacy, "cookies" and privacy, security, regulations that protect

consumers, and filing a complaint against a financial institution. You also have the option

of downloading a brochure

Banking Consumers' Options

• You can go to a traditional "brick and mortar" institution that has a building and

personal service representatives, but does not offer Internet banking services.

• On the other hand, you can bank at a "brick and click" financial institution that

has a physical structure, and also offers Internet banking services.

• Or you can choose a "virtual" bank or financial institution that has no public

building and exists only online.

Internet banking, and other types of online banking, offers advantages such as speed and

convenience. However, since the Internet is a public network, it presents some privacy

and security issues. Knowing the "Do's and Don'ts" of Internet banking can help make

your online banking experience more productive, safe and enjoyable.

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Some Security Tips

Dos

• Do make sure you are on the right Web site. Imposters have created Web sites with

similar names to trick unsuspecting consumers into revealing personal information.

• Do be "password smart." When possible, use a mix of letters and numbers for added

safety. Change your password regularly. Keep your password or PIN to yourself.

Avoid easy-to-guess passwords like first names, birthdays, anniversaries or Social

Security numbers.

• Do check bank, debit and credit card statements thoroughly every month. Keep good

records. Save information about banking transactions. Check this information for

agreement with account statements, debit card bills, and credit card bills. Look for

any errors or discrepancies.

• Do report errors, problems or complaints promptly.

• Do keep virus protection software up-to-date. Back-up key files regularly.

• Do exit the banking site immediately after completing your banking.

Don'ts

• Do not have other browser windows open at the same time you are banking online.

• Don't disclose personal information such as credit card and PAN no. unless you

know whom you are dealing with, why they want this information and how they plan

to use it.

• Don't download files sent by strangers or click on hyperlinks from people or sites you

don't know. Sometimes doing this can infect your computer with viruses that can

damage hardware or software.

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Precautions for Internet Banking

Do not reveal password(s) over phone/email etc. to any person including Bank.

Always log out properly before closing the window.

Change your password regularly. Keep your password a combination of alphabets,

special characters and numbers.

Use KEYPAD for logging when you are not using your own PC. There might be a risk of

capturing your KEY STOKES.

Don't click on website links/attachments in un-known/ suspicious emails. These links

may take you to replica of bank's website and ask for keying in your user-id &

password(s).

In case of doubt, reconfirm the PNB's website by double clicking the "padlock"

symbol/icon at the bottom right of a web page to ensure the site is running in secure

mode BEFORE you input any confidential/sensitive information.

Clicking on the "padlock" symbol/icon and on server certification symbol will display

details of the server certification in the favour of Punjab National Bank.

To ensure a safe and genuine login, always enter bank's website either through

www.netpnb.com or www.pnbindia.com

In case there is any call, Please confirm that the call is from the authorised person of the

bank.

SAVINGS FUND ACCOUNT

These accounts are designed to help the individuals (personal customers) to inculcate the

habit of saving money and to meet their future requirement of money. The amounts can

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be deposited/withdrawn from these accounts by way of cheques/withdrawal slips. It helps

the customers to keep minimum cash at home besides earning interests.

Savings Bank accounts are very popular. These accounts can be opened by eligible

person/s and certain organization/agencies (as approved by the Reserve Bank of India

(RBI).

As required by law, while opening this account, bank satisfy itself about the identity

including verification of address of a person/s seeking to open an account; to assist in

protecting the prospective customer/s, members of the public and bank, against fraud and

other misuses of the banking system.

The Bank requires a satisfactory introduction of the person/s opening the account by a

person acceptable to the Bank.

The Bank is required to obtain two recent photographs of the person/s opening the

account, as per R.B.I. directives.

The Bank is required to obtain Permanent Account Number (PAN) or General Index

Register (GIR) Number or alternatively obtain declaration in Form No.60 or 61 as per the

Income Tax Act (vide Section 139A) from the person/s opening the account.

The Bank will provide to prospective customers, details of the documents required for

identification of the person/s opening the account, in addition to a satisfactory

introduction. Documents normally accepted are the Current gas/telephone/electricity bill

or ration card or voter's identity card or driving license or passport, etc.

Cheques, dividend warrants, drawn in the name of account holder/s will only be

collected through this account. Financial instruments endorsed in favour of the account

holder/s will not be collected through savings bank account.

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 A Savings Fund account can be opened in the name of individuals, singly or jointly,

minors of the age of 10 years and above or under natural/legal guardianship or by an

illiterate/blind person.

Minimum Balance Requirements For SF Accounts As Per Category of Branch

Sl No Area CBS Branches (QAB)* Non CBS Branches
1 Rural Rs.500/- Rs.500/-
2 Semi Urban Rs.1000/- Rs.1000/-
3 Urban Rs.1000/- Rs.1000/-
4 Metropolitan Rs.1000/- Rs.1000/-
Interest @ 3.5% per annum is payable every half year.
As many as 50 withdrawals are permitted in a half year.
Account may be transferred from one branch to another branch, free of

charge.
Facility of standing instruction for regular payments like insurance premium,

rent, tax etc.

Qurterly Average Minimum Balance Requirements and Incidental Charges for

not maintaining the same for Savings Accounts in CBS Branches

Incidental Charges Per
Sl No Area Minimum QAB
Quarter
1 Rural Rs.500/- Rs.70/-
2 Semi Urban Rs.1000/- Rs.120/-
3 Urban Rs.1000/- Rs.120/-
4 Metropolitan Rs.1000/- Rs.120/-

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CURRENT ACCOUNT A Financial Lifeline for Business &
Industry

Individuals, partnership firms, private and public limited companies, HUFs /specified

associates, societies, trusts, can open Current Accounts etc.

As required by law, while opening this account, bank will satisfy itself about the identity,

including verification of address, of a person/s seeking to open an account, to assist in

protecting the prospective customer/s, members of the public and ourselves against fraud

and other misuses of the banking system.*

The Bank is required to obtain two recent photographs of the person/s opening/operating

the account, as per RBI directives.

The Bank is required to obtain Permanent Account Number (PAN) or General Index

Register (GIR) Number or alternatively obtain declaration in Form No.60 or 61 as per the

Income Tax Act (vide Section 139A) from the person/s opening the account (i.e.

including partners of Registered/Unregistered partnership as also Registered/Incorporated

bodies/companies).

The Bank will provide to prospective customers, details of the documents required for

identification of the person/s opening the account in addition to a satisfactory

introduction. Documents normally accepted are the Current gas/telephone/electricity bill

or ration card or voter's identity card or driving license or passport, etc.* Minimum

balance as stipulated from time to time will be required to be maintained.

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* Normally, no interest is paid on credit balances kept in current account. However,

subject to conditions, as applicable in our current scheme 'PNB Smart Roamer' interest is

paid on the funds swept out of the current A/C for placement as Term Deposits.

Service charges are levied for:

Ledger folio used

Cheque books issued

Non-maintenance of minimum balance

Return of cheques, etc.

* For opening special types of current accounts like for Executors, Administrators,

Trustees, Liquidators etc., the Branch Manager may be contacted who will help in

opening these type of accounts.

* As per RBI directive, the applicant (i.e. account opener) should declare in the account

opening form or separately, that he is not enjoying any credit facility with any Bank and

if he does enjoy any facility/facilities, he should declare full particulars thereof,

indicating the name of the Bank and name of the branch, wherefrom he has availed these

facilities etc.

* No limit on number of transactions in the account.

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Minimum Balance/QAB to be maintained is as under:

Non CBS
Category of Branches CBS Branches (QAB)
Branches
Rural Rs.1,000 Rs.1,000
Semi Urban Rs.3,000 Rs.3,000
Urban Rs.5,000 Rs.5,000
Metro Rs.5,000 Rs.5,000

Incidental Charges: Operative Accounts at Non-CBS Branches (Current Accounts)

for non-maintenance of Minimum Balance

Charges(per Charges(per
month) at month) at
Nature of Account
Signature/ High Other
Value Branches Branches
Current Accounts -
Rs.120/- Rs.60/-
individuals
Current Accounts - other
Rs.250/- Rs.100/-
than individuals

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 ANUPAM ACCOUNT

Bank has several Domestic Deposit Schemes designed to cater to the needs of various

segments of customers to meet customer’s specific requirement.

The features of the Anupam Account Deposit Scheme are as under:

1. Participation

Anupam Account Scheme may be opened in the name of individual(s), sole

proprietorship concern, partnership firm, association, trust, Ltd. Company etc. However,

Anupam Account shall not be opened in the name of minor, illiterate and blind persons.

2. Minimum Initial Deposit

Rs.10,000/- and thereafter in multiples of Rs.1000/- thereof.

3. Period of Deposit

For any period from 6 months to 120 months. Existing deposits under Multi

Benefit Deposit Scheme for Rs.10,000/- and above with unexpired term of 6

months or more are eligible for transfer to Anupam Account Scheme.

4. Overdraft Facility

Overdraft facility shall be permitted through a Current Account and a

Cheque Book will be issued to the depositor on the same day.

The margin on the amount of overdraft against the deposit is

For Public

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Maturity Period remaining at the time of granting overdraft Margin
Upto 2 years 5%
Above 2 years and upto 3 years 7.5%
Above 3 years and upto 4 years 10.0%
Above 4 years and upto 5 years 12.5%
Above 5 years 25%
5. Third Party Advance

Only depositors can avail overdraft facility against their deposits under this

scheme.

No third party advance i.e. Credit Facility / overdraft to persons other than

depositors is allowed under Anupam Account. Even the overdraft facility to

a proprietorship firm against Fixed Deposit in the name of its proprietor is

not allowed.

6. Premature withdrawal of Deposit

If any depositor desires to withdraw the deposit before maturity, Bank may

at its discretion repay the deposit with upto date quarterly compounded

interest at the rate applicable to the period for which deposit remained with

the bank

7. Facility of Further Fixed Deposit in the same Anupam Account

Further, Fixed Deposit can be accepted in the same Anupam Account on

your request and the limit in the overdraft account be increased

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accordingly against the additional deposit and it will also be endorsed in the

Receipt Form with you.

8. Renewal of Term Deposit on Maturity

Renewal of Fixed Deposit is permitted at your request, if no overdraft is

outstanding against it.

9. Withdrawal in multiples of Rs.1000/-

You may withdraw any amount before maturity anytime as well in multiples

of Rs.1000/- any time according to your convenience without breaking the

entire deposit and without losing interest on remaining part of Fixed Deposit

Receipt under the Scheme.

FLEXIBLE RATE DEPOSIT SCHEME

Flexible Rate Deposit Scheme provides a deposit product

with a Market determined interest rate linked to a Govt. Security
Paper of 10 years maturity.

The scheme provides the depositor an option to invest in

various maturities at variable rate of interest option so that he can
have a portfolio with an opportunity to match the return with the
interest rates on deposits prevalent in the market from time to time.

PURPOSE/OBJECTIVE:

Flexible Rate Deposit Scheme provides a deposit

product with a Market determined interest rate linked to six months’
average Yield to Maturity on 10 years Govt. Security Papers.
The objective of the scheme is to hedge against the interest rate
volatility by offering deposits at a flexible rates. Flexible Rate

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Schemes will be beneficial to both the Bank and Customer as the
rates will be linked to the Market/Base Rate

Launched at 50 select branches having connectivity under CBS

WHO CAN DEPOSIT (ELIGIBILITY)

The following segment of customers can subscribe to the scheme

a. An individual singly or jointly with more than one individual in the

form of 'former or survivor' or 'either or any of the survivor' or by a
natural/legal guardian on behalf of a minor child.
b. Firms, Associations and Trusts
c. Hindu Undivided Family (HUF)
d. Companies
e. All institutions

(blind and illiterate customers would not be eligible for opening

account under the Scheme)

All the formalities in regard to opening of accounts, including

introduction, as applicable in case of deposit accounts including
photograph of depositor will be applicable to the scheme, at the time
of opening of account. The existing instructions of the Bank for
obtention of Nomination, renewal of Term Deposits after due date
etc. would be applicable in this Scheme as well.

The account under the scheme will be opened with a minimum

deposit of Rs.1,00,000/- (Rupees one lakh), thereafter, in multiple of
Rs.10,000/-.

PERIOD : The period of the deposit will be 3 years to 10 years (in

completed quarters) as per option of depositor.

RATE OF INTEREST

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The Term Deposit under the Flexible Rate Deposit Scheme shall
carry interest at the rates calculated on the basis of average yield to
maturity (half-yearly) of 10 years on Govt. Security Paper to be re-set

every six months, (hereinafter called the ‘BENCHMARK RATE’.) with

indicated linkage:

Ø The ‘Benchmark Rate’ as arrived at by Bank shall be final.

Ø The Bank, in its discretion, shall have the right to change the basis
and periodicity of effecting change in the Benchmark Rate. Ordinarily,
Benchmark Rate with indicated linkages will be fixed by the bank at
the beginning of each half-year.

Ø ‘Flexible Rate’ means the net of the Benchmark rate plus/minus

indicated linkage, as might be fixed by the bank from time to time.

Ø ‘LINKAGE’ means addition/deduction in Benchmark Rate arrived at

as above. The indicated linkage may be either plus or minus to the
Benchmark Rate as decided by the Bank for the respective half-year.

With effect from 01.10.2005, the following rates of interest shall

be operative under this scheme:

Existing Flexible Rates w.e.f Revised Flexible Rates w.e.f.

Tenors 1.04.2005 to 30.09.2005(p.a) 1.10.2005 to 31.03.2006(p.a)
(%) (%)
3 - <5yrs 6.08 6.54
5 - <7yrs 6.33 6.79
7 - <10yrs 6.58 7.04

Except for the rates fixed by Treasury Division from time to time no
other differential component in the rate of interest will be applicable to
the deposits under the above scheme. The differential rates based on
the amount slabs payable on a single deposit of Rs.15 lac and above
will not be permissible on deposits under this scheme.

STAFF: Discretion to pay additional interest not exceeding one

percent on deposits of bank's staff and their exclusive associations

33
In respect of a Term Deposit account opened under the Scheme in
the name of:

a. A member or a retired member of the bank's staff, either singly or

jointly with any member or members of his/her family or

b. the spouse of a deceased member or a deceased retired member

of the Bank's staff; and

c. an Association or a fund, members of which are the members of

the bank's staff.

The bank may, at its discretion, allow additional interest at a rate not
exceeding 1% per annum over and above the rate of interest as
decided by the Bank provided that the bank shall obtain a declaration
from the depositor concerned, that the monies deposited or which
may, from time to time, be deposited into such account, shall be
monies belonging to the depositor as stated in clauses (a) to (c)
above,

PREMATURE PAYMENT

No part amount will be allowed to be withdrawn under this Scheme.

In case of depositors seeking premature withdrawal before 36

months (i.e. the minimum period of deposit undertaken) the Deposit
will earn interest rate as applicable to other term deposit schemes
and period run rate of interest would be paid.

In cases where premature withdrawal request is received after

deposit has run for minimum 36 months, the interest on Deposits will
be paid for the applicable slab rate i.e. 36 months to 60 months; 60
months to 84 months or 84 months to 120 months, with half-yearly

34
resets. In such cases, however, deposits will earn interest at
Benchmark Rate or Flexible Rate whichever is lower for the tenor of

deposit.

CONVERSION

The customers would not be allowed to convert their deposits under

Flexible Rate Deposit Scheme to any other deposit scheme.
However, the customer shall be free to opt for closure of the account
before maturity.

REPAYMENT/RENEWAL

I. The original deposit certificate(s) duly discharged will be required to

be presented at the issuing branch. The payment will be made by
credit to the account or by way of Banker's Cheque.

ii. The depositor may renew the deposit under the scheme on
maturity. The duly discharged original deposit receipt should be
presented at the issuing branch for renewal. The deposit will stop
earning interest from the date of maturity.

TAX DEDUCTION AT SOURCE

The interest earned under the Flexible Rate Deposit Scheme will be
subject to the provision of taxation laws including Income Tax Rules
related to Tax Deduction at Source.

LOANS AND ADVANCES

The depositor may request for loans/overdraft against the security of

their deposits in accordance with the applicable guidelines as in the
case of Bank's other Fixed Deposit Receipts.

35
Recurring Deposit Scheme - EARN LARGE, SAVE SMALL

Features

Account can be opened with a minimum monthly deposit of

Rs.100/- or its multiples for a period of 6 months to 120
months in multiples of 3 months.
Interest at term deposit rates is computable on quarterly
compounded basis
The small monthly savings in the Recurring Deposit scheme
enable you to accumulate a handsome amount on maturity

Spectrum fixed deposit scheme

Terms and conditions

Initial Deposit of Rs.1000/-only, and thereafter in convenient

multiples of any amount of Rupee one
Period of Deposit: (a) Maturity Option: For any period from 15
days to 120 months-For a single Term Deposit less than Rs. 15 lac
and for any period from 7 days to 120 months-For a single Deposit
of Rs. 15 lac & above.
(b) Income Option: For any period from 6 months to 120 months.
At PAR Collection of Fixed Deposit Receipt
Payable at par at all CBS branches(premature payment, loans
andother miscellaneous matters before maturity of the FDR shall
be attended to only by the issuing branch)
Multiple options available for interest payment viz.
Monthly/Quarterly/Half-Yearly/Yearly or on maturity
For an amount of Rs. 10,000/- and above overdraft with cheque
book facility is available, to enable use of deposits. The customer
shall also be at liberty to make use of the facility through ATM-
cum-Debit Card under 'Anywhere-Anytime Banking'. It will enable
customers to have freedom to utilise their Fixed Deposits as and
when needed without even coming to the Bank. The interest is
chargeable only for the amount and period for which the overdraft
facility has been availed; The illiterate and blind persons can also

36
 open the account without exercising the option of Overdraft
Facility.
Margin and rate of interest on Loans against deposits under the
scheme shall be as per prescribed guidelines which shall be
subject to modifications from time to time
Automatic payment of LOCKER rent out of Interest proceeds
Conversion facility regarding mode of payment of interest
allowed;(provided FDR has been issued for a period of 12 months
or more and remaining period of FD is more than 6 months)
without invoking any penal provision
Premature withdrawal of Deposit without any penalty
Automatic Renewal facility is provided as per option exercised by
the depositor
Availability of premature extension

Swechha Jama Yojna / Flexi RD Scheme

Individuals can open account, singly or jointly, by a minor of

the age of 10 years and above in his name or through his
guardian.
A depositor can choose a monthly installment with a
minimum of Rs.100 or above in its multiples. However, the
subsequent monthly installment will not exceed ten times of
such core amount without any ceiling on maximum amount.
No matter, even if the monthly installment is skipped.
Deposit accepted for any period from 6 months to 120
months and interest is paid at term deposit rates on half
yearly basis.

Cash Management Services

Punjab National Bank had taken a major initiative for managing the
funds of Corporate. The services are essentially meant for pooling
your funds spread across the country at a place of your choice with
the least time delay, if not instantaneously in many cases. We shall

37
collect your receivables from your representative or your business
associates at 123 designated centers all over the country and pool
the same at the branch specified by you. The services can be custom
designed to cater to your specific needs.The Scheme offers the
following options for you;

Option I : Instant credit through our CMS to your account, pending

clearance of funds.

Option II: Credit to your account through our CMS after realizations.

Option III : You can choose Option I or II according to your client

profile and indicate to us client-wise.

A host of Daily/weekly/monthly reports and special report including

center-wise reports generated at our HUB at Delhi, can be sent you
through electronic media as per requirements of your funds
Managers.The Bank offers the above services at most competitive
rates. The charges for the services are given as under:-

(Charges in paisa/Rs. 1000)

25paisa (eg. Delhi, Mumbai

For Metro locations
Kolkata,etc.)12 centres
50 paisa (eg. Jaipur, Bhopal,Shimla
For Non-Metro locations
etc.)72 centres
90 paisa (eg. Ujjain,Dhanbad,Narnaul
For Remote locations
etc.) 39 centres

In case your turnover crosses certain assured level we offer attractive

discounts on the above charges ranging from 20% to over 66%. If
your annual turnover of collection exceeds Rs. 250 crores at Chennai
(Metro locations) the charges shall be just 06 paisa per 1000/-.

Electronic funds transfer

38
 From long time, remittance of funds within the banks i.e.
from one branch to another was completed through transfer payment
orders, telegraphic transfers or by drafts, which takes considerable
time to reach destination.

To avoid this delay, Punjab National Bank introduced a

new system called “The Inter-Bank Electronic Fund Transfer System"
which may be referred as "EFT System" under the guidance of
Reserve Bank of India.

In this system remittance can easily be made from any of

the branches of participating Bank at designated centre to any other
branch of the same or any other participating bank at the same or
any other designated centre which would facilitate remittance to
reach destination on the very next working day itself through the
system of computer and communication network.

This scheme is currently operational in Metros only; other

centre will be added shortly. Limit for individual transactions has been
increased from current limit of Rs. 5 lac to Rs. 2 crores.

Real Time Gross Settlement (RTGS)

Definition: An RTGS system is defined in this report as a gross
settlement system in which both processing and final settlement of
funds transfer instructions can take place continuously (i.e. in real
time). As it is a gross settlement system, transfers are settled
individually, that is, without netting debits against credits. As it is a
realtime settlement system, the system effects final settlement
continuously rather than periodically at prespecified times provided
that a sending bank has sufficient covering balances or credit.
Moreover, this settlement process is based on the realtime transfer of
central bank money. An RTGS system can thus be characterised as
a funds transfer system that is able to provide continuous intraday
finality for individual transfers

Payment processing: Within this broad definition, the operational

design of RTGS systems can differ widely. In particular, important

39
differences may arise in the approaches to payment processing when
the sending bank does not have sufficient covering funds in its
central bank account. One possible way of treating transfer orders in
such circumstances is for the system to reject the orders and return
them to the sending bank. The rejected transfer orders will be input
into the system again at a later time when the sending bank has
covering funds. Until that time, sending banks may keep and control
the pending transfers within their internal systems (internal queues).
Alternatively, the RTGS system may temporarily keep the transfer
orders in its central processor (system or centrally located queues)
instead of rejecting them. In this case, the pending transfers will be
released for settlement when covering funds become available on the
basis of predefined rules, agreed between the system and the
participating banks.

In many cases the transfer orders are processed and settled with the
extension of central bank credit, normally provided for a period of
less than one business day (intraday credit); in other words, the
central bank provides banks with the necessary covering funds at the
time of processing by extending such credit. The central bank could
take a range of approaches to the provision of intraday credit in terms
of (a) the amount of credit (including a zero amount), (b) the method
by which credit is extended (e.g. overdraft or repo), (c) the terms on
the credit (e.g. free or priced) and (d) the collateral requirements (if
any).

These possibilities of payment processing (i.e. rejected, centrally

queued, settled with central bank credit) are not necessarily mutually
exclusive. For example, when the provision of central bank credit is
constrained in some way, the transfer orders for which the sending
bank could/would not obtain central bank credit will be rejected or
centrally queued.

40
Intraday liquidity requirements: Provided that there are no legal
problems with regard to settlement finality, the only structural
impediment to continuous intraday finality is any liquidity constraint a
sending bank may face during the day. A liquidity constraint in an
RTGS environment has two basic characteristics, namely that it is a
continuous constraint for settling funds transfers and that intraday
liquidity requirements must be funded by central bank money; banks
must therefore have sufficient balances in their central bank accounts
throughout the processing day.

Intraday liquidity requirements raise important issues for both the

central bank and the private sector. Central banks, for their part, face
a choice as to whether or not to provide banks with intraday liquidity
and, if so, what form that provision will take (e.g. by what
mechanisms and on what terms the credit will be provided, and how
any resulting exposures will be managed).

From the perspective of individual banks, intraday liquidity

requirements may lead to concern about the associated costs. Such
"liquidity costs" may include direct funding costs (interest paid or any
other explicit monetary costs such as charges/fees on central bank
credit), opportunity costs of maintaining funds in central bank
accounts (e.g. interest forgone), or opportunity costs of tying up
collateral or securities in obtaining central bank credit. Furthermore,
banks may have to be actively involved in the management of their
payment flows in order to use intraday liquidity effectively. This could
require investment in the internal systems that they use to control
payment flows, as well as entailing running costs.

The intraday liquidity requirements under a particular RTGS system

depend critically on (a) the structure of financial markets and systems
(e.g. the adequacy of private sector sources of liquidity, the amount
of collateral/securities available, reserve requirement regimes) and
(b) the central bank's policy regarding the provision of intraday credit.
The means by which intraday liquidity is provided can significantly
affect the extent to which immediate, or at least very timely, final

41
settlement occurs, and, ultimately, it can influence the balance
between the potential benefits and costs of RTGS

RTGS is a large value funds transfer system whereby financial

intermediaries can settle interbank transfers for their own account as
well as for their customers. The system effects final settlement of
interbank funds transfers on a continuous, transaction- by-transaction
basis throughout the processing day.

The system went ‘live’ on March 26 with State Bank of India, HDFC
Bank, Standard Chartered Bank, and Saraswat Co-operative bank.
The Reserve Bank of India has made 120 scheduled commercial
banks and primary dealers to become part of the real time gross
settlement system (RTGS). ICICI Bank, IndusInd Bank, BNP Paribas,
Bank of Baroda, Bank of India, Canara Bank, Central Bank of India,
Corporation Bank, Union Bank of India and Punjab National Bank are
the names added in the list with some more banks likely to join very
shortly.

Banks could use balances maintained under the cash reserve ratio
(CRR) instead of the intra-day liquidity (IDL) to be supplied by the
central bank for meeting any eventuality arising out of the real time
gross settlement (RTGS). The RBI has fixed the IDL limit for banks to
three times their net owned fund (NOF).

The IDL will be charged at Rs 25 per transaction entered into by the

bank on the RTGS platform. The marketable securities and treasury
bills will have to be placed as collateral with a margin of 5%.
However, the apex bank will also impose severe penalties if the IDL
is not paid back at the end of the day.

42
 Interbank Payment And Settlement Mechanisms
1. Key design concepts in interbank funds transfer systems

Interbank funds transfer systems are arrangements through which

funds transfers are made between banks for their own account or on
behalf of their customers. Of such systems, largevalue funds transfer
systems are usually distinguished from retail funds transfer systems
that handle a large volume of payments of relatively low value in such
forms as cheques, giro credit transfers, automated clearing house
transactions and electronic funds transfers at the point of sale. The
average size of transfers through largevalue funds transfer systems
is substantial and the transfers are typically more timecritical, not
least because many of the payments are in settlement of financial
market transactions. The report focuses on these largevalue
systems.

The processing of funds transfers involves two key elements. The

first of these is the transfer of information between the payer and
payee banks. A funds transfer is initiated by the transmission of a
payment order or message requesting the transfer of funds to the
payee. In principle, the payment messages may be credit transfers or
debit transfers, although in practice virtually all modern largevalue
funds transfer systems are credit transfer systems in which both
payment messages and funds move from the bank of the payer (the
sending bank) to the bank of the payee (the receiving bank). The
payment messages are processed according to predefined rules and
operating procedures. Processing may include procedures such as
identification, reconciliation and confirmation of payment messages.
The transmission and processing of payment messages in largevalue
funds transfer systems is typically automated (i.e. electronic).

The second key element is settlement - that is, the actual transfer of funds
between the payer's bank and the payee's bank. Settlement discharges the
obligation of the payer bank to the payee bank in respect of the transfer.
Settlement that is irrevocable and unconditional is described as final
settlement. In general, the settlement of interbank funds transfers can be
based on the transfer of balances on the books of a central bank (i.e. central
bank money) or commercial banks (i.e. commercial bank money). In

43
practice, settlement in the vast majority of largevalue funds transfer systems
takes place in central bank funds. Although the rules and operating
procedures of a system and the legal environment generally may allow for
differing concepts of finality, it is typically understood that, where
settlement is made by the transfer of central bank money, final settlement
occurs when the final (i.e. irrevocable and unconditional) transfer of value
has been recorded on the books of the central bank. The report focuses on
the settlement finality of the central bank transfers in this sense.

Settlement characteristics and the types of interbank funds

transfer system:

Interbank funds transfer systems can be classified in several ways.

Among other things, differences in the way settlement takes place
provide a useful framework for the discussions in the later sections of
this report. A common distinction in this respect is to divide systems
into net settlement systems and gross settlement systems. In a net
settlement system, the settlement of funds transfers occurs on a net
basis according to the rules and procedures of the system. A
participating bank's net position is calculated, on either a bilateral or a
multilateral basis, as the sum of the value of all the transfers it has
received up to a particular point in time minus the sum of the value of
all the transfers it has sent. The net position at the settlement time,
which can be a net credit or debit position, is called the net
settlement position. Net settlement systems for largevalue funds
transfers in the G10 countries are now primarily multilateral (rather
than bilateral) net settlement systems in which each (settling)
participant settles its multilateral net settlement position. In a gross
settlement system, on the other hand, the settlement of funds occurs
on a transactionbytransaction basis, that is, without netting debits
against credits.

Interbank funds transfer systems can also be classified according to

the timing (and frequency) of settlement. Systems can in principle be
grouped into two types, designatedtime (or deferred) settlement
systems and realtime (or continuous) settlement systems, depending
on whether they settle at prespecified points in time or on a
continuous basis. In this report, these two types are more narrowly
defined in terms of the timing of final settlement. One type of system

44
is thus a designatedtime (or deferred) settlement system, in which
final settlement occurs at one or more discrete, prespecified
settlement times during the processing day. Designatedtime
settlement systems in which final settlement takes place only once, at
the end of the processing day, are called endofday settlement
systems. Currently, net settlement systems for largevalue transfers
are typically endofday net settlement systems that settle the net
settlement positions by means of transfers of central bank money
from net debtors to net creditors. In some countries, there are
systems in which the final settlement of transfers occurs at the end of
the processing day without netting the credit and debit positions - on
a transactionbytransaction basis or on the basis of the aggregate
credit and aggregate debit position of each bank. Such systems are
often called endofday gross settlement systems. On the other hand,
a realtime (or continuous) settlement system is defined as a system
that can effect final settlement on a continuous basis during the
processing day. RTGS systems, as defined below, fall into this
category. Table 2 summarises the main possibilities.
Table 2
Types of large value funds transfer system

Settlement
Gross Net
characteristics

Designated time Designated time gross Designated time net

(deferred) settlement settlement (DNS)

Realtime gross
Continuous (realtime) (not applicable)*
settlement (RTGS)

* By definition, netting involves the accumulation of a number of transactions so that credits can be
netted against debits and this is incompatible with genuinely continuous settlement.

It is worth stressing here that the distinction between different

systems such as RTGS and designated time net settlement (DNS)
systems concerns the form of settlement, not the form of
transmission

45
and processing. Like RTGS systems, many net settlement systems
transmit and process payment messages in real time on a
transaction-by-transaction basis, but they settle, by definition, on a
net basis at discrete intervals.

An important concept that is often used in connection with the timing

of finality is intraday finality or an intraday final transfer capability.
The Noël Report defined this concept as the ability to initiate - and to
receive timely confirmation of - transfers between accounts at the
central bank that become final within a brief period of time. The Study
Group believes that this definition is useful and in practice is sufficient
when discussing the "intraday" nature of finality relative to endofday
finality. However, the Group also recognised that the phrase "within a
brief period of time" is not a precise one. Therefore, care needs to be
taken when considering the extent to which systems in which final
settlements occur at discrete but very frequent intervals of time
during the day can provide some form of intraday finality similar to
systems involving continuous settlement (i.e. realtime intraday
finality).

In describing the settlement characteristics of net settlement

systems, the concept of certainty of settlement is sometimes used.
This concept is not related to the timing of final settlement per se but,
as described in the Noël Report, refers to the certainty that the
system will be able to effect final settlement when the netting cycle
and the associated settlement procedures have been completed.
Certainty of settlement relates to a multilateral netting system's ability
to meet Lamfalussy Standard IV, namely that such systems should,
at a minimum, be capable of ensuring the timely completion of daily
settlements in the event of an inability to settle by the participant with
the largest single net debit position. Multilateral net settlement
systems that are secured in compliance with all the Lamfalussy
standards, including Standard IV, and that can therefore assure
settlement in the event of any single participant failure are often
called Lamfalussycompliant systems. Stronger forms of certainty of
settlement arise when a net settlement system is capable of ensuring
settlement in the event of more than one participant failing. These
systems are often called Lamfalussyplus systems. A particular

46
category of Lamfalussyplus systems concerns those that can assure
settlement in all circumstances, that is, regardless of how many
participants fail.

Central bank systems and private sector systems: Interbank

funds transfer systems are sometimes classified according to
whether they are central bank systems or private sector systems.
The distinction typically depends on who owns and operates the
systems (rather than on the identity of the settlement agent). At
present, it is possible to identify two "typical" types of large value
funds transfer system: (a) central bank systems owned and operated
by the central bank (or its affiliated entities) in which the central bank
also provides settlement, and (b) private sector systems owned and
operated by a private sector group (e.g. a banking association or
clearing house), where the main operational role of the central bank
is to act as the settlement agent. In the G10 countries, for example,
RTGS systems often belong to the former category and many DNS
systems belong to the latter. Nonetheless, a number of DNS systems
are owned and operated by the central bank, while in some cases
RTGS systems are owned and operated by a private sector group.
Moreover, there are several DNS and RTGS systems in which
ownership and operation are shared between the private sector and
the central bank.

TIME OF DELIVERY SETTLEMENT

The risk implications of the timing of delivery of information about

funds transfers preceding the timing of settlement have become
increasingly important as various types of largevalue funds transfer
system have come to operate on the basis of realtime processing
(i.e. information is transmitted to receiving banks in real time), while
settlement may be delayed (either because the system is a DNS
system or because, in an RTGS system, liquidity constraints may
delay settlement at least temporarily).

The second type of lag, sometimes referred to as asynchronous

settlement, is the largest source of principal risk in the settlement of

47
foreign exchange and securities transactions, or, more generally, in
exchangeforvalue systems. This is the risk that the seller of an asset
could deliver but not receive payment or that the buyer of an asset
could make payment but not receive delivery, which could entail a
loss equal to the full principal value of the assets involved. The DVP
Report concluded that a delivery versus payment system, which
ensures that the delivery occurs if and only if payment occurs, would
provide a mechanism for eliminating such principal risk. Since the
payment leg in an exchange for value system is supported by
interbank funds transfer systems, the settlement characteristics of
interbank funds transfer systems as described above have an
important influence on how a DVP mechanism could be constructed
for an exchange for value system.

The design of RTGS systems: concluding remarks

As the above analysis has shown, the concept of RTGS is

straightforward but the systems themselves can take many different
forms. These differences partly reflect the fact that circumstances
vary from country to country, so that arrangements that are
appropriate for one country may not be relevant for another. In many
cases a pragmatic approach has been adopted to certain design
features. Finally, as mentioned earlier, RTGS systems are on the
whole a relatively recent concept and thus there has often been little
operational experience on which to base comparisons between
different options.

Given these factors, while it may be difficult to draw any universally

applicable conclusions about the merits of particular features of
RTGS systems, it might be useful to set out the key criteria that are
likely to be used when choosing between different options. RTGS
systems can be categorised according to three main considerations,
namely (a) whether the central bank provides intraday credit to
participants in the system and, if so, on what terms, (b) the message
flow structure and (c) the facilities, if any, available for queuing.
Although there are many other ways in which systems differ, these
three areas seem to capture the most important aspects.

48
Whether intraday credit is provided or not may depend partly on
whether interbank funds transfer systems are seen simply as
mechanisms that enable settlement to take place, in which case it
may be decided that no specific liquidity facilities will be provided, or
whether the provision of intraday liquidity is seen as being a
straightforward extension of a central bank's existing role as a
provider of liquidity to the banking system.

The decision to extend intraday credit may also reflect a view that
intraday credit is necessary to enable the system to function
smoothly. Where credit is provided, there are variations in the terms
set (e.g. whether the credit has to be collateralised and what fee or
interest rate, if any, is charged), reflecting a number of important
considerations. For example, central banks differ in the way they
prefer to manage any risks associated with providing credit.

Moreover, in some systems a key consideration may be a desire to

keep the cost to banks of obtaining intraday liquidity as low as
possible, while in other systems this may be less critical or a positive
cost may be seen as a useful way of encouraging banks to
economise on their use of any central bank liquidity facility.

As far as the message flow structure is concerned, the key choice is

often between the V-shaped and Y-shaped structures, and an
important consideration here is the role of the central bank relative to
the private sector in the day today operation of the system: for some,
the attraction of the Y architecture is that it enables a distinction to be
drawn between the central bank's core role as settlement agent and
the rest of the system processing, which can be a separate, private
sector function. Whether this is an issue typically depends in part on
the nature of the arrangements in place before RTGS was introduced
(i.e. the extent to which the central bank was involved in the daytoday
operation of the previous non RTGS system) and thus on what has
come to be regarded as normal or desirable in the market concerned.
Other relevant factors may include potential risks associated with the
message flow (which is why the T-shaped structure has been
criticised) and the design of the existing system (in those cases

49
where the new RTGS system is being adapted from a previous
system and thus where particular architectures, such as the Lshaped
structure, may be used).

Approaches to queuing may depend importantly on views about the

relative roles of the private sector and the central bank, the central
bank's policies regarding the granting of intraday credit and the
extent to which banks can obtain liquidity easily from their own
sources. If, as noted above, an interbank funds transfer system is
seen as being simply a settlement mechanism, then it may also be
that no centralised queue management facilities are provided beyond
basic FIFO processing. Or the balance between centralised and
decentralised queue management may depend on the extent to
which banks see such management as a competitive issue rather
than one on which they want a standard approach to be adopted.
Consideration of the balance to be struck between risk, cost and
liquidity may also determine whether queued incoming transfers are
transparent or not. More generally, queue management may be an
area where the relative novelty of RTGS systems is particularly
relevant: key policy considerations apart, differences in queue
management techniques may simply reflect the fact that so far there
is not enough experience to judge how desirable the different
methods are.

50
 LOANS
Punjab National Bank Housing Loan

Any individual can avail Punjab National Bank Housing Loan for any
of the following purpose:

• For construction of house.

• For purchase of house/ flat.
• For purchase of house/ flat from the original allottee, i.e. on
First Power of Attorney basis.
• For carrying out repairs/ renovation/ additions/ alterations in the
existing house.

Approximately 80% of the cost of project is sanctioned by PNB

Housing Finance, subject to a maximum of Rs. 50 lac. In case of
carrying out repairs/ renovation/ additions/ alterations in the existing
house, the ceiling is Rs. 5 lac. The loan is available for a period of 5
years to 20 years or before the borrowers attain the age of 65.

Interest of Punjab National Bank Home Loan is charged on reducing

balance and the amount to be sanctioned depends upon the repaying
capability of the borrower.

The following securities are required by the cell of PNB Housing

Loan:

• Mortgage of property for which finance is being given.

• In case of purchase of house flat from housing board/ society

where mortgage cannot be created immediately, a tripartite
agreement shall be executed amongst the housing
board/society, borrower and the Bank.

• In case of purchase of house/ flat on first power of attorney,

additional security by way of mortgage of some other property
or pledge of Bank's Fixed Deposit Receipt/ LIC policy/ Govt.
securities has to be provided.

51
 • Suitable third party guarantee acceptable to the Bank which
may include guarantee from family members/ other relatives.

Housing Loan

Extent of loan

Individual

• For construction/purchase of house/ flat: 80% of the cost of

construction of house or purchase of house/ flat.
• For carrying out repairs/ renovation/ additions/ alterations: 80%
of the estimated cost subject to maximum of Rs. 20lacs.
• Loan upto Rs.10 Lacs for purchase of Land/Plot.
• Loan is available maximum upto Rs.2 Lacs for furnishing.

Security
• Mortgage of property for which finance is being given.
• In case of purchase of house/ flat from housing board/ society
where mortgage cannot be created immediately, a tripartite
agreement shall be executed amongst the housing board/
society, borrower and the Bank.
• In case of purchase of house/ flat on first power of attorney,
additional security equal to 125% of the loan amount by way of
mortgage of some other property or pledge of bank's FDR/ LIC
policy/ Govt. Securities, NSCs, KVPs, IVPs, / PSU Bonds etc.
has to be provided.

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 • Suitable third party guarantee acceptable to the Bank which
may include guarantee from family members/ other relatives.

Rate of Interest

RATE OF INTEREST UNDER FIXED OPTION :

Rate of Interest @ percent p.a.

TENOR
Effective from
For loans repayable in/upto Existing
01.05.2006
i) Upto 5 years 9.25 9.75
ii) Above 5 & upto 10 years 10.25 10.75
iii) Above 10 years & upto 20 years 10.50 11.00
iv) Above 20 years & upto 25 years 11.00 11.50

Low Interest rate for employees of the following organisations

1 Gas Authority of India Ltd. (GAIL)

2 Bharat Heavy Electrical Ltd. (BHEL)
3 National Thermal Power Corporation (NTPC)
4 Oil & Natural Gas Commission (ONGC)
5 Oil India Ltd. (OIL)
6 Container Corporation of India
7 Bharat Electronics Ltd. (BEL)
8 Mahanagar Telephone Nigam Ltd. (MTNL)
9 Bharat Sanchar Nigam Ltd. (BSNL)
10 Bharat Earth Movers
11 Indo Burma Petroleum (IBP)
12 Dredging Corporation of India Ltd.
13 Neyveli Lignite Ltd.
14 Air India
15 Indian Airlines
16 MRPL
17 Kudermukh Iron Ore Ltd.
18 Coal india Ltd.
19 Inderprastha Gas Ltd. (JV of BPCL / GAIL)
20 Maruti Udyog Ltd.
21 Indian Oil Corporation
22 Engineers India Ltd.
23 Shipping Corporation of India

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Option for Fixed or Floating Rate of Interest exercised by the
borrower will not be allowed to be changed for a minimum
period of 3 years, where after any change would be at the
discretion of the Sanctioning Authority.

Repayment

Loan is to be repaid in equated monthly installments within a period

of 25 years or before the borrower attains the age of 65 years.

Disbursement

For outright purchase of house/ flat, the loan amount will be

paid in lumpsum to the vendor.
For house/ flat under construction, the loan amount will be
disbursed in stages as per progress of construction/ demand
by selling agency.

CONCLUSION AND RECOMMENDATION

For ATM:

• Awareness among the customers in rural or semi urban areas

is low, they need to be educated.
• Bank should look for installing more ATM at market places, at
least every branch must have one.

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 • Old and outdated machines should be updated or replaced, as
most of the private banks provide the facility of depositing cash
and cheques.
• Should provide telephones inside the ATM centre, so that
customer can directly contact the branch for technical
assistance or some unexpected problem.
• Regular Checkups should be scheduled for ATMs.

For Internet Banking:

• Employees and Customers should be made aware about the

details of using internet banking.
• ID and secret PIN should be provided to customers within
minimum time, not as of now it takes around 7 to 10 days.
• PNB should link customer’s D-mat account with savings fund
and current account.
• Customers should be educated about the benefits of using
internet banking.

For RTGS:

• At least two to four Employees should be made completely

informed at each branch to handle RTGS.
• Customer must be made aware about the RTGS and its
benefits.

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 • Charges at PNB is lowest in the industry which can help to get
advantage as compared to private banks.
• Bank’s advertisement can include message about RTGS
system which will make customers aware about the service.

For Loans:

• It is good for bank that it is making tie-ups with residential and

commercial builders, but it also need to appoint sales persons
at different locations.
• Bank can go for appointing DSAs (Direct Sales Associates),
who can increase the sale of loans largely.
• Schemes are better than any other bank but aggressive
marketing is required to compete with marketing strategies of
private banks.

BIBLIOGRAPHY

WEBSITES
1) www.pnbindia.com

2) www.pnb.net

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3) www.indiainfoline.com

4) www.downtoearth.com

5) Search Engine www.google.com

NEWSPAPERS AND MEGAZINES

1) BUSINESS LINE
2) TIMES OF INDIA
3) BUSINESS WORLD
4) ECONOMIC TIMES

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