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Study of commercial banking in India: Case of Punjab national



Commercial banks play a vital role in the economic development of a nation.

They are the most important source of institutional credit in the money market as they

provide short term loans and advances to its customers. They perform a variety of

functions and are the main source of credit which is the main input for trade and

business activity. Credit created by commercial banks is a major component of money

supply in a modern economy. Modern economies depend on the banking sector for

production, exchange and distribution.

A Commercial bank is a type of financial intermediary and a type of bank.

Commercial bank has two possible meanings:

a) It is the term used for a normal bank to distinguish it from an investment

b) Commercial banking can also refer to a bank or a division of a bank that

mostly deals with deposits and loans from corporations or large businesses, as opposed

to normal individual members of the public (retail banking).

A commercial bank is a profit seeking organization dealing in the other people’s

money, in the sense that it accepts deposits of money from the public to keep them in its

custody for safety. So also, it deals in credit, i.e., it creates credit by making advances

out of the funds received as deposits to needy people. It charges higher rate of interests

for the loans sanctioned and offers lower rate of interest for the deposits. The difference

between the two is the profit earned by the bank. Thus, a commercial bank functions as

a mobilize of saving in the economy.


The importance of a bank to modern economy, so as to enable them to develop,

can be stated as follows:

(i) The banks collect the savings of those people who can save and allocate them

to those who need it. These savings would have remained idle due to ignorance

of the people and due to the fact that they were in scattered and oddly small

quantities. But banks collect them and divide them in the portions as required by

the different investors.

(ii) Banks preserve the financial resources of the country & it is expected that

they allocate them appropriately in the suitable & desirable manner.

(iii) They make available the means for sending funds from one place to another

and do this in cheap, safe and convenient manner.

(iv) Banks arrange for payments by cheques, order or bearer, crossed and ,

which is the easiest and most convenient. Besides they also care for making such

payments as safe as possible.

(v) Banks also help their customers, in the task of preserving their precious

possessions intact and safe. To advance money, the basis of modern industry and

economy and essential for financing the developmental process, is governed by


(vii) It makes the monetary system elastic. Such elasticity is greatly desired in

the present economy, where the phase of economy goes on changing and with

such changes, demand for money is required. It is quite proper and convenient

for the government and R.B.I. to change its currency and credit policy

frequently, this is done by RBI, by changing the supply of money with the

changing needs of the public.


The Rationale of the study can be considered as follows:-

 The study includes essential core topics.

 It aims at giving a thorough grounding on the subject.

 The study is comprehensive.

 It helps to improve the research and investigation ability.

 It enables to think logically and practically.


The study includes essential core topics.

It aims at giving a thorough grounding on the subject.

It helps to improve the research and investigation ability.


The hypothesis being put forth for this study about Commercial bank

1) Commercial Banking is that awareness of Commercial banks is 100%,

2) But there are still many people who do not know about the Commercial banks

and the amenities provided by them.

3) Commercial banks are coming up with new innovative ideas and schemes for

increasing their customer base and fulfilling the needs of the general public.


The research methodology is data collection through:-

The research methodology is data collection through:-


PRIMARY SOURCES: Survey by distributing questionnaire to the people taking

sample size of 100, Interviews conducted with bankers; accumulating knowledge and

help from friends, professors, etc.

Sample of the study

The present study seeks to evaluate the financial performance of one of the top banks

based in northern India, representing the biggest nationalized bank Punjab National

Bank, PNB). This banks was purposely selected for the study, keeping in view its role

and involvement in shaping the economic conditions of northern India, specifically in

terms of advances, deposits, manpower employment, branch network etc.


Secondary Sources: Gathering data through books, journals, magazines,

websites, newspapers, etc.


Expectations from the study are that it may contribute to the real scenario of

commercial banking demand and accordingly the banks can go for new innovative

schemes. It will also specify some recommendations and based on that banks can make

suitable arrangements in a particular sector. It will also make people aware about

Commercial banking.


The present study has been classified into seven chapters.

The first Chapter presents the introduction of the study. It includes objectives

of the study, hypothesis, operational definition of concepts, methodology, collection of

data, data processing, and scheme of the report.

The second chapter deals with the concept of commercial banking &

Commercial banks in India.

The third chapter -highlights the on bank deposits & their structure.

The fourth chapter- relates with current scenario of commercial bank

The fifth chapter -deals with case study

The sixth chapter – Analysis of collected data

The last and final chapter- presents the summary of findings and suggestions

based on the study and it also includes conclusion of the study.

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