Project report On System and policies Of

Punjab & Sind Bank

A project report Paper No.:xxxvII B.Com (Hons.) 2010-2011 Submitted To: MR.A.K.MALHOTRA Submitted by: ROHIT KUMAR

College Roll No. : 35 University Roll No.: Sri Guru Nanak Dev Khalsa College Dev Nagar, Delhi-110005

DECLARATION
This project is to certify that the project work entitled Banking System & Policies is based on my original work and has not been submitted or used in part or full for the award of any other degree or diploma.

ROHIT KUMAR

Certification
I here by declare that I, Rohit Kumar, have made this project report on System and policies of Punjab and Sind Bank on the basis of my understanding and knowledge about the subject with the help of my mentor.

Rohit Kumar

ACKNOWLEDGEMENT
No task is single mans effort .Any job in this world however trivial or tough cannot be accomplished without the assistance of others. An assignment puts the knowledge and experience of an individual to litmus test. There is always a sense of gratitude that one likes to express towards the persons who helped to change an effort in a success. The opportunity to express my indebtness to people who have helped me to accomplish this task. I take this opportunity to express my sincere thanks & deep gratitude to all those people who extends their whole hearted cooperation & helped me in completing this report successfully. I am extremely thankful to Mr.A.K.MALHOTRA for the keen interest, inspiring guidance, continuous encouragement, valuable suggestions and constructive criticism throughout the pursuance of this report.

ROHIT KUMAR

Learnings in Training Session

The bank PUNJAB & SIND BANK, deals in various segments of the banking system namely loans, deposits, and saving facilities to its customers. But I have keen interest and knowledge, to enter into this field in order to extend my knowledge in banking sector at its best. The first and foremost information about which I learnt was about the whole banking system i.e., How it takes place, what are the basic ingredients of banking, and what is the relation between banker and a customer, are some of the most important questions that we got to know after stepping onto the field of banking. Following is the report on the facts and information that I collected during the training session.

INTRODUCTION OF BANKING

Definition Of Bank:
Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits of money from the public, repayable on demand or otherwise and withdraw by cheque, draft or otherwise."
-Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD BANK:The origin of the word bank is shrouded in mystery. According to one view point the Italian business house carrying on crude from of banking were called banchi bancheri" According to another viewpoint banking is derived from German word "Branck" which mean heap or mound. In England, the issue of paper money by the government was referred to as a raising a bank.

ORIGIN OF BANKING :
Its origin in the simplest form can be traced to the origin of authentic history. After recognizing the benefit of money as a medium of exchange, the importance of banking was developed as it provides the safer place to store the money. This safe place ultimately evolved in to financial institutions that accepts deposits and make loans i.e., modern commercial banks.

PUNJAB & SIND BANKWHERE SERVICE IS A WAY OF LIFE..

HISTORY
It was in the year 1908, when a humble idea to uplift the poorest of poor of the land culminated in the birth of Punjab & Sind Bank with the far-sighted vision of luminaries like Bhai Vir Singh, Sir Sunder Singh Majitha and Sardar Tarlochan Singh. They enjoyed the highest respect with the people of Punjab. The bank was founded on the principle of social commitment to help the weaker section of the society in their economic endeavors to raise their standard of life. Decades have gone by, even today Punjab & Sind Bank stands committed to honor the social commitments of the founding fathers.

INTRODUCTION
Punjab & Sind Bank, established in 1908, is headquartered at New Delhi. Having more than 800 branches across the country, the bank has around 10,000 employees dedicated to the banking services and customer care. The bank offers usual banking services along with innovative banking methods including Internet and phone banking, international banking, merchant banking, hire, purchase, leasing and credit cards.

PRODUCTS AND SERVICES

Deposits Savings Account Recurring Deposit Fixed Deposits Current Accounts Priority Sector Loans Housing Loan Home Enhancement Loans Personal Loan Education Loan Car Loans Business Loans NRI Services Punjab & Sind Bank-ICICI Bank Credit Card Gold Card Schemes RBI Citizens' Charter including cash and deposits Locker Facilities RTGS NEFT PSB e-funds Transfer Tax Payment E-bill Payments PSB- Aviva Allianz Insurance

Loans

Other Services

REAL TIME GROSS SETTLEMENT ( RTGS)

1)The Bank offers its customers instant transfer of funds to other
banks (Inter Bank). This is made possible through Real Time Gross Settlement (RTGS) System, which is an online system set up, operated and maintained by Reserve Bank of India to enable funds settlement on real-time basis across banks in the country.

2)The RTGS service window for customer's transactions is available from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 12.00 noon on Saturdays. Customer Transaction Monday to Friday 9:00 am to16:30 hours Days Saturday Interbank Transaction 9:00 am to18:00 hours 9:00 am to14:00 9:00 am to12:00 am hours

3)Minimum / maximum amount stipulation for RTGS transactions The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions.

NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT)

1) RBI has introduced this funds transfer systems called RBI-NEFT

System. This is an Inter-bank electronic funds transfer system to facilitate an efficient, secure, economical, reliable and expeditious transfer of funds and clearing in the Banking sector in India. The account holders with the branch can use the NEFT facility which is available between all the Cities and the designated branches of Banks in India. NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon) 2)No Minimum or Maximum amount stipulation for NEFT transactions

CURRENT DEPOSITS /ACCOUNTS:

These accounts are used mainly by businessmen and are not generally used for the purpose of investment. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day. Most of the current account are firm / company accounts. Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties.

No interest is paid by banks on these accounts. On the other hand, banks charge service charges, on such accounts. REQUIREMENTS OF CURRENT ACCOUNTS: Category A is sufficient (while opening of an account) for verification of identity and residential proof. In case person is not able to provide documents from category A to establish identity and residential proof, then documents from B1 and B2 are required CATEGORY A 1. Copy of Passport/Voters ID. 2. Last 3 Months Bank Statement + Bank Signature Verification. 3. Employer Letter + Salary Slip. CATEGORY B1 1. PAN Card. 2. Driving License. 3. Bank Pass Book containing at least 3 months entries. CATEGORY B2 1. Electricity Bill, Water Bill and Mobile Bill 2. PAN intimation letter. 3. Physical Residence verification.

FIXED DEPOSITS/TERM DEPOSIT

Fixed Deposits are an agreement or contract between the customer and the bank, that the person is depositing a certain sum of money for a particular period. The period can be a minimum of 15 days and a maximum of 10 years. Actually, it denotes period of maturity or tenor. The person who is depositing the money gets interest on it. One of the main features is that, if the rate of interest of bank declines then the customer gets the same interest as per the agreement. A person can get his amount back even before the maturity period. In case of need, the depositor can ask for closing the fixed deposits by only paying a penalty of 1%.

RECURRING DEPOSITS / ACCOUNTS:

These kinds of deposits are most suitable for people who do not have lump sum amount of savings, but are ready to save a small amount every month. Normally, such deposits earn interest on the amount already deposited (through monthly installments) at the same rates as are applicable for Fixed Deposits / Term Deposits. These are best if you wish to create a fund for your child's education or marriage of your daughter or buy a car without loans. Under these types of deposits, the person has to usually deposit a fixed amount of money every month (usually a minimum of Rs, 100/- p.m.). Any default in payment within the month attracts a small penalty. However, some Banks besides offering a fixed installment RD, have also introduced a flexible / variable RD. Under these flexible RDs the person is allowed to deposit even higher amount of installments, with an upper limit fixed for the same e.g. 10 times of the minimum amount agreed upon.Such accounts are normally allowed for maturities ranging from 6 months to 120

months. A Pass book issued where the person can get the entries for all the deposits made by him / her and the interest earned. Premature withdrawal of accumulated amount permitted is usually allowed (however, penalty may be imposed for early withdrawals).These accounts can be opened in single or joint names. Nomination facility is also available.

SAVING DEPOSITS / ACCOUNTS:

These deposits / accounts are one of the most popular deposits for individual accounts. These accounts not only provide cheque facility but also have lot of flexibility for deposits and withdrawal of funds from the account. Most of the banks have rules for the maximum number of withdrawals in a period and the maximum amount of withdrawal, but hardly any bank enforces these. The interest on these accounts at present is regulated by Reserve Bank of India. Banks in India at present offer 3.50% p.a. interest rate on such deposits.

REQUIREMENTS OF SAVINGS ACCOUNTS: Category A is sufficient (while opening of an account) for verification of identity and residential proof. In case person is not able to provide documents from category A to establish identity and residential proof, then documents from B1 and B2 are required CATEGORY A 1. Copy of Passport/Voters ID.

2. Last 3 Months Bank Statement + Bank Signature Verification. 3. Employer Letter + Salary Slip. CATEGORY B1 1. PAN Card. 2. Driving License. 3. Bank Pass Book containing at least 3 months entries. CATEGORY B2 1. Electricity Bill, Water Bill, Mobile Bill, PAN intimation letter.

LOANS:
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same as the loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan.

TYPES OF LOANS 1. SECURED LOAN 2. UNSECURED LOAN 3. DEMAND LOAN 4. TERM LOAN

SECURED LOANS:
Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien can be placed on such purchases. The finance company or bank will hold the deed or title until the loan has been paid in full, including interest and all applicable fees. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well. Secured loans are usually the best way to obtain large amounts of money quickly. Putting your home or other property on the line is a

fairly safe guarantee that you will do everything in your power to repay the loan.

UNSECURED LOANS:
An unsecured loan is a loan obtained without collateral. A person obtaining an unsecured loan agrees to pay back the loan within a set term and signs documents attesting to such. This type of loan can also be called a signature loan. The simplest unsecured loan is a personal loan from a friend or family member, with an I.O.U. as signature of agreement to pay back the loan. This type of unsecured loan should be well considered whether one is the lender or borrower. Large amounts that remain unpaid can be detrimental to relationships with family or friends. Either the lender or borrower may be dissatisfied with the rate at which the loan is being paid, and there is little recourse but small claims court if the loan remains unpaid.

DEMAND LOANS:
Demand loans are short term loans (typically not more than 180 days) that are a typical in that they do not have fixed dates for

repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. In other words, these are the loans which are payable on demand.

TERM LOANS:
These loans are of three types. 1. Short term loans: - Upto 1 year 2. Medium term loans: - 3 to 7 years 3. Long term loans: - 7 to 20 years

CATEGORY WISE LOANS: Loans under PRIORITY SECTORS:

1. All agriculture advances. 2. Housing loans up to 20 lakhs. 3. Educational loans (Sec 80E). 4. Small Scale Industries.

Loans under NON PRIORITY SECTOR:

These loans are generally given to retail traders and small business.

DIFFERENTIAL RATE OF INTEREST

This scheme is to assist poorest of the poor so as to bring them above BPL. The eligibility criteria for allowing loan is as under: (i) Individual whose family income does not exceeds Rs. 6400/- P.A. in rural areas and Rs. 7200/- p.a. in semi urban areas (ii) Individual whose land holding does nto exceed 1 acre of irrigated and 2.5 acres of unirrigated land, (iii) SC/ST/Physically handicapped persons/indigent students (iv) Orphanages and women's home (v) State owned corporation/co-operative societies including state corporation for SC/STs (vi) Coperative societies, large and adivasis multi purpose, co-op. societies for tribal areas (LAMPS) (vii) People engaged in cottage and rural industries. Maximum loan upto Rs. 6500/- as term or working capital or both for productive purpose, in addition to advance Rs. 5000/? for purchase of artificial limbs/Braille typewriter. Rate of interest 4% p.a. simple.

CONDITIONS FOR OBTAINING LOANS

1. Application Form. 2. PAN Card. 3. Residential Proof. 4. Income Proof. 5. Project Report i.e. the purpose for which loan is required.

THE CLEARING SYSTEM

The process by which cheque exchanged between the collecting and paying bank and the ensuing financial settlement is called clearing. The exchange among banks of cheques, drafts, notes and the settlement of consequent differences. All members are the members of clearing house and it is represented by the RBI. All banks

participate in it and make transactions. RBI is the agent of the clearing house. The clearing house is headed by a President, who is the officer in charge of the bank managing the clearing house. The President is assisted by a standing committee, comprising of a few representatives of member banks to help him resolve the urgent problems. The instruments presented at clearing house are: 1. Cheques 2. Drafts It takes 3 days to clear. Cheques are sent to clearing house, when clearing comes, we debit the impress clearing and it is credited to various accounts. This system is known as ELECTRONIC CLEARING SYSTEM.

TYPES OF CLEARING:
1. Inward Clearing 2. Outward Clearing

INWARD CLEARING: - Cheques are received by the bank from the customers, debited to their accounts and ultimately sent to the clearing house to clear. Inward clearing is a banking term .Each bank uses one common clearing house. e.g. XYZ bank customer wants to give the cheque to ABC bank customer, so ABC customer will deposit that cheque into his bank, then ABC bank will send that cheque to clearing house for clearing then clearing house will send that check to xyz bank for customer sign verification, XYZ bank do the sign verification and it will debit cheque amount from that customer account so that it will be a inward for XYZ bank and outward for ABC bank.

OUTWARD CLEARING:-

It refers to the instruments that are deposited by customers, drawn on other bank that needs to be presented at clearing. In other words, we sent the cheques of the customers to the respective banks and credited it e.g. Assume Mr A with an account at the ABC bank issues a check for Mr X with an account at the XYZ bank. The check's data go into XYZ's computer system, and the sum is added to Mr X' account. Next the check is sent to bank ABC. This part of the compensating is called Outward Clearing.

REASONS FOR FAILURE OF CLEARING:

1. No money in account. 2. Account since closed or transferred. 3. No such account. 4. Account description does not tally. 5. Insufficient balance. 6. Payment stopped under the order of the court.

Conclusion
I have learnt there broadly two function: 1. Entry in cash book. 2. Operate saving system.

Entry in cash book

Entry in cash book of bank as similar as to accounting system. In which I have entered: 1. Name of the person who comes to draw/deposits the amount. 2. Nature of account in which the amount drawn/deposited e.g. loan, saving A/c, current A/c etc. 3. Unique Account number. Besides this I checked the voucher whether it is filled correctly or not. At the end of working hours, totals both the sides of cash book were to be matched

Work on Saving system

Commonly, there is particular software according to that I recorded the transaction In computer .There are some particular keys thereby I performed following function:
a)

01- To entered Cash Receipt/deposit of cheque

If deposit cheque has not cleared then for cancelling the cheque , there is press key 09 and for this bank charge Rs.30 and to debit this transaction , there is key 06 02- To entered Credit Clearing or through pen drive which automatically transfer Clearing data in system. 03- Credit transfer. It is performed when amount is to be credited in account. 04 - To entered Cash payment/payment through cheque. 05 - To entered Debit Clearing.

b)

c)

d)

e)

f)

06 Debit transfer.

Besides these major functions, I have performed some micro function e.g.: a) Print the passbook. b) Print the ledger format of account. I have shown my full interest to learn all the bank procedures during my training session. Before that I just used to study from books and learn about banking but In the bank I actually knew what is banking and how it is to be done. I considered my training as my first step in the practical life which will be helpful in my future. I learnt there many practical aspects about banking which I can apply in my life too.

BIBLIOGRAPHY

1. WWW.ANSWERS.COM 2. WWW.DOCSTOC.COM 3. WWW.PSBINDIA.COM 4.

www.psbindia.com/ccharterphp.php

5. www.psbindia.com/rtgs.php 6. http://www.allbankingsolutions.com/dep1.htm http://www.deal4loans.com/car-loans.php

List of Select Abbreviations

1) 2) 3) 4) 5) 6)

EFT :- Electronic Funds Transfer CRR :- Cash Reserve Ratio SLR :- Statutory Liquidity Ratio ECS :- Electronic Clearing Service DRI :- Differential Rate of Interest ATM :- Automated Teller Machine