Internship report @ dhanlaxmi bank ltd


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Internship report @ dhanlaxmi bank ltd

  3. 3. INTRODUCTION OBJECTIVE OF THE INTERNSHIP To know more about the functional as well as the managerial aspects of Dhanlaxmi Bank Ltd. To assist the employees in banking functions to know more about the tasks and activities undergoing in the bank. To know more about the banking sector in India. SOURCES OF DATA This report is prepared on the basis of collection of primary data as well as secondary data. Primary data have been gathered from direct observations and conducting unstructured interviews and discussions with department heads. Secondary data have been collected from sources such as :-  Published documents  Brochures  Annual Reports  Websites LIMITATIONS The barriers that occurred during the internship are:- The numbers of days for doing this internship were limited. Most of the employees were busy with their work.
  4. 4. The bank has difficulty in disclosing certain details due to their banking norms and regulations. INDUSTRY PROFILE
  5. 5. INDUSTRY PROFILE Banking in India in the modern sense originated in the last decades of the 18th century. The first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since defunct. The largest bank, and the oldest still in existence, is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955. For many years the presidency banks acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935. In 1969 the Indian government nationalised all the major banks that it did not already own and these have remained under government ownership. They are run under a structure know as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate as commercial banks. The Indian banking sector is made up of four types of banks, as well as the PSUs and the state banks; they have been joined since 1990s by new private commercial banks and a number of foreign banks. Banking in India was generally fairly mature in terms of supply, product range and reach-even though reach in rural India and to the poor still remains a challenge. The government has developed initiatives to address this through the State bank of India expanding its branch network and through the National Bank for Agriculture and Rural Development with things like microfinance. Today, banks have diversified their activities and are getting into new products and services that include opportunities in credit cards, consumer finance, wealth management, life and general insurance, investment banking, mutual funds, pension fund regulation, stock broking services, custodian services, private equity, etc. Further, most of the leading
  6. 6. Indian banks are going global, setting up offices in foreign countries, by themselves or through their subsidiaries. Adoption of banking technology The IT revolution has had a great impact on the Indian banking system. The use of computers has led to the introduction of online banking in India. The use of computers in the banking sector in India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. Indian banks were finding it difficult to compete with the international banks in terms of customer service, without the use of information technology. The RBI set up a number of committees to define and co-ordinate banking technology. These have included: In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee were introducing MICR technology in all the banks in the metropolises in India. This provided for the use of standardized cheque forms and encoders. In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C Rangarajan. It emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further stated that there should be National Clearing of inter-city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be made Operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing on-line banking. The committee submitted its reports in 1989 and computerisation began from 1993 with the settlement between IBA and bank employees' associations. In 1994, the Committee on Technology Issues relating to Payment systems, Cheque Clearing and Securities Settlement in the Banking Industry (1994) was set up under Chairman W S
  7. 7. Saraf. It emphasized Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all those banks with more than 100 branches. In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other Electronic Payments (1995) again emphasized EFT system.Total numbers of ATMs installed in India by various banks as on end June 2012 is 99,218. The New Private Sector Banks in India are having the largest numbers of ATMs, which is followed by off-site ATMs belonging to SBI and its subsidiaries and then by Nationalised banks and foreign banks. EMPLOYMENT SCENARIO IN THE BANKING SECTOR As reported in the Economic Times, the country’s leading public sector bank, State Bank of India has plans to recruit 25,000 employees in the year 2009. Besides, its life insurance venture, SBI Life, has plans to hire 13,000 agents and 200 sales managers. Also, Punjab National Bank, the country's second largest public sector lender, and Union Bank of India have plans of hiring 5,000 people each. The financial year 2008-09 has already shown the banking sector to be among the largest job providers in the country with over 50,000 vacancies being notified and filled up in the public sector banks alone. MAJOR RECRUITERS OF BANKING INDUSTRY Public Sector Banks are the major recruiters of candidates aspiring for bank jobs. These banks are:  The State Bank of India Group (Total: 8 Banks) namely SBI (State Bank of India), State Bank of Indore, SBBJ (...Bikaner & Jaipur), SBH (...Hyderabad), SBM (...Mysore), SBP (...Patiala), SBS (...Saurashtra), and SBT.  Nationalised Banks (Total: 19 Banks) namely Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab & Sind Bank, Punjab National Bank, Syndicate Bank, UCO Bank, United Bank of India, Union Bank of India and Vijaya Bank.
  8. 8.  Private Sector Banks (Total: 27 Banks). The major recruiters in the private sector include the ICICI Bank, HDFC Bank, Axis Bank, Federal Bank, Centurion Bank of Punjab, Indusind Bank, Kotak Mahindra Bank, Yes Bank, ING Vysya Bank, Bank of Rajasthan, Karur Vysya Bank, Karnataka Bank, Jammu & Kashmir Bank, South Indian Bank, Bharat Overseas Bank, etc. These banks conduct their own exams, but normally follow patterns similar to those of the exams of the public sector banks.  Co-operative Banks: All major National and State Co-operative Banks and Scheduled Urban Co-operative Banks conduct their own exams to recruit staff. Their recruitment exams, too, are generally similar to the exams of the public sector banks. COMPETITION IN BANKING INDUSTRY The liberalised policies of RBI and Govt. of India relating to Indian Banking have set the stage for a competitive banking. In the past competitive advantages have been determined by size, branch, distribution capability, artificial barriers to entry etc., which helped old players in maintaining a prominent position in the industry despite their inefficiencies. The direction of the new policy is to establish a level playing field. The creation of term money market, changes in credit delivery mechanism, flexibility in credit assessment process, diversification of sources of money etc. will change the factors that determine the survival, growth and profitability in the Indian Banking. The areas in which the competition in the industry is either prevalent or is likely to emerge:  Price based competition  Product based competition  Quality of service based competition  Market segment based competition  Technology based competition
  9. 9.  Skill based competition  Location based competition  Early entry strategy based competition CHARACTERISTICS OF COMPETITION Large no. of users and providers of banking services and none of them able to influence the price, demand or supply in a significant manner. Free flow of information about industry, its products, range of services, pricing etc. In other words, a situation of near perfect competition. Competition is demand driven now rather than supply driver which used to be there till few years ago. There has to be innovations, differentiation and value addition. Competition will be based more on skills or core competencies than on products. Competition will have to be based on long term strategies and not short term goals. Competition is not only internal i.e. with the banking system but it is intra-financial system. The factors on which competitive advantages will be determined are: Strategic focus: Majority of banks will have to develop mix of products and business based on relative strengths and competence rather than historical reasons. Every product may it be deposit or credit or retail lending or corporate banking, must pay for itself in terms of return on investment rather than exist to promote or subsidise other business. Adaptability: Size alone is not sufficient and adaptability to new products, processes, technology, markets and customer needs will be more crucial. Cost competitiveness: Competitive pressure would lead to declining margins. Lower cost operators will have obvious advantage. Lean and wean organisations are the likely winners. Productivity: Cost efficiency would be supported by the ability to work smartly and capability to handle volumes and changing processes efficiently will be very crucial.
  10. 10. Technology: Adopting, assimilating and implementing appropriate technology will significantly influence competitive strengths. Technology affects cost, productivity and people. The necessity and utility of the branch net works will have to be seen in the context of power and reach of technology. People: The quality of people will often support an organisation in an environment where differentiation based on product, pricing and delivery methods will be negligible. Risk management: The ability to grow and expand would depend on quality of risk., which will determine access to funds as well as the freedom to price products competitively. Attitudinal changes: Perhaps the more important than all the other factors is the requirement of flexible mind-set to understand, appreciate and anticipate the changes in the market place. A large part of the banking industry has for long been conditioned to think in a directed manner in an environment where innovation was virtually prohibited. COMPETITIVE STRENGTHS OF BANKS PSBs: Bank network, market coverage, product differentiation, technology absorption, knowledge of local environment, expertise in niche segment (weakness are poor HRD policies, delayed decision making, poor risk management systems) Old Private Banks: Knowledge of local environment, personalized service, speedy decisions, reasonable branch net work, technology absorption (weakness - poor risk management systems, poor product innovations) Foreign and new private Banks: Automation and technology, product innovation, strong risk management system, speedy decision making, personalised service, progressive HRD policies, expertise in niche market (weakness - branch net work and poor coverage).
  12. 12. COMPANY PROFILE Dhanlaxmi Bank was incorporated on 14th November 1927 by a group of enterprising entrepreneurs at Thrissur, the cultural capital of Kerala with a Capital of Rs.11,000/- and had only 7 employees. It became a Scheduled Commercial Bank in the year 1977. It has today attained national stature with 181 branches and 26 Extension Counters spread over the States of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Delhi and West Bengal. The Bank serviced a business of Rs. 4223 crores as on 31.03.06 comprising deposits of Rs.2533 crores and advances of Rs.1690 crores. As at the end of March 2006, the Capital Adequacy Ratio of the Bank was 9.75% well above the mandatory requirement of 9%. The Bank made a net profit of Rs.9.51 crores for the year ended 31st March 2006. Between 1927 to 1937, its services were localised in Thrissur. In 1937, it extended its service to Ernakulam and Palghat by opening branches there. By 1947, DBL's deposits generated stood at Rs 31 lac. In 1962, it took over three banks -- Lakshmi Prasad Bank, Radhakrishna Bank and Parli Bank. Subsequently, it further expanded its network throughout Kerala, and then in Tamilnadu, Andhra Pradesh and Karnataka in 1978. With this, DBL's operations covered the entire southern India apart from its strong presence in Kerala. The period covering 1985-90 saw the bank opening up its first branch outside southern India, in Bombay. It started dealing in other segments of banking such as bills discounting, letter of credit, etc. Two prominent religious trusts -- Sabarimala and Guruvayoor Devasom Board, are among its host of clients. In 1993, the bank obtained restricted foreign exchange licence, to maintain rupee accounts of non-residents. DBL also ventured into new areas such as consumer banking, corporate banking and merchant banking. In Mar.'96, DBL came out with a public issue of 80 lac equity shares of Rs 10 each for cash at a premium of Rs 40 per share aggregating Rs 40 cr, to strengthen the capital base for meeting statutory capital adequacy norms and to obtain the listing of shares on the stock exchanges. There was a restructure of the capital of the bank during 2000-01, by conversion of partly paid shares to fully paid shares on a pro-rata basis.This has resulted in the reduction of subscribed and paid up
  13. 13. capital of the bank from Rs.14.66 crores to Rs.13.74 crores. The reduction of Rs.0.92 crores representing premium was transferred to Share Premium Account. To Comply with the stipulation of RBI to increase the networth to a minimum of Rs.100 crores,DBL went for a Right Issue of capital to the tune of Rs.27,47,50,500 (1,83,16,700 equity shares of Rs.10/- at a premium of Rs.5). The ratio for the rights issue were 4 equity shares for every 3 shares held and the issue were oversubscribed. The Bank is techno savvy and has deployed technology widely as an instrument for enhancing the quality of customer service. It has introduced Centralised Banking Solution (CBS) on the Flexcube Platform for extending Anywhere/Anytime banking to its clientele through multiple delivery channels. The Bank has deployed CBS in 150 branches covering nearly 95% of total business. The Bank has set-up a state-of-the-art DATA CENTRE in Bangalore, to keep the networked system operational 24 hours a day and 7 days a week. The Bank lays stress on customizing services and personalizing relations. It has introduced in November 2005 an International Debit Card with tie-up with M/s Visa International. In another customer-friendly move, the Bank has joined CASHNET, the first independent nation-wide shared ATM network in India and the National Financial Switch (ATM network) of the IDRBT, promoted by Reserve Bank of India. By joining Cash net and NFS, our customers have been provided access to more than 14,000 ATMs in the country. The Bank has installed 63 networked ATMs thus far at centres of high banking activity. The Bank has introduced tele-banking in 50 branches and Internet banking in 84 branches. It has also put in place a Cash Management System (CMS) that provides speedier cheque collection through 59 branches. The Bank has put in place Real Time Gross Settlement (RTGS) System to facilitate large value inter-bank payments and settlements in real time on-line mode on a transaction-by-transaction basis. It is in the process of extending RTGS to customer transactions. The Bank has ventured into both life and non-life insurance. It is selling life insurance products of M/s. MetLife India, a renowned global player in this segment and non-life insurance products of M/s. Iffco Tokio, as their corporate agent. The Bank is also a depository participant of NSDL (National Security Depository Limited) offering Demat services through selected branches. With a view to making available value-added services to the NRIs, the Bank has set up NRI Boutiques (Relationship Centres) at 8 locations in the State of Kerala. The Bank has also plans to open specialized NRI branches with accent on quality of service and thrust on specialisation at potential locations. As at the end of March 2006, the Bank had rupee drawing arrangements with 7 Exchange
  14. 14. Houses in the Middle East. The Bank's Industrial Finance Branch at Kochi and Corporate Office, Trichur have been accredited with certification under ISO 9001-2000. On the socio- economic front, the Bank is a leading player in dispensation of Micro Credit among Kerala- based Private Sector Banks. As at the end of March 2006, the outstanding under micro credit were Rs.55.63 crores. This involvement is part of the Bank's objective to act as catalysts for the economic prosperity of the country. The Bank has recognized micro finance intervention as an effective tool for poverty alleviation and has streamlined the linkage between the Bank and Self Help Groups through 100 branches. The Priority sector advances of the Bank as at 31st March 2006 constituting 43.84% of net bank credit well above the RBI benchmark of 40%. BUSINESS OVERVIEW Dhanlaxmi Bank has reported a 11.8 per cent rise in net profit at INR26.06 crores in the 12 months ended 31 March 2011, against INR23.3 crores, a growth of 11.8 per cent. Total income rose to INR1,053.19 crores from INR625.56 crore. The financial year 2011 was a year for consolidation for the Bank. On all parameters, including important ones such as business growth, net interest margin and NPA control, it was a good year. Net interest margin for the year was around 2.7 per cent.The bank's loan-book witnessed a sharp growth largely on account of a greater thrust on the retail segment and diversification across regions, the release said. The bank's total income increased from INR 182.4 crores in the quarter ended 31 March 2010 to INR342.2 crores, recording a growth of 87.6 per cent. Non-interest income rose from INR31.9 to INR46.1 crores as a result of a focused thrust on fee-based business. Dhanlaxmi Bank has deployed technology widely. It has introduced Centralised Banking Solution (CBS) on the Flexcube platform at all its branches for extending anywhere/anytime/anyhow banking to its clientele through multiple delivery channels. The bank has set up a data centre in Bangalore, to keep the networked system operational round the clock. A disaster recovery centre is also operational at Thrissur for meeting various contingencies. Name change
  15. 15. The bank has also changed its name from Dhanalakshmi Bank to ‘Dhanlaxmi’ Bank, which will have a new corporate identity. FITCH, a leading international branding and design consultancy had designed the new identity for the bank. Partnerships The bank is a depository participant of NSDL (National Security Depository Limited) offering Demat services through select branches. Bank is offering online trading in association with Destimoney securities. It has partnered AGS Infotech for installation of ATMs. It offers VISA- branded debit and credit cards to customers. It is also offering insurance services through Bajaj Allianz Life Insurance company as their Bankassurance partner. Credit cards In March, 2010, the bank launched Dhanlaxmi Bank Platinum and Gold Credit cards. COMMON TERMINOLOGIES Credit Proposal is one of the main steps in credit processing, which include all the track records (if the customer was lending or borrowing with any financial institution or not, and checking his credit rating) and information of the customer. Credit evaluation and approval is the process a business or an individual must go through to become eligible for a loan over an extended period. It also refers to the process banks undertake when evaluating a request for credit. Granting credit approval depends on the willingness of the banks to lend money in the current economy and that same lender's assessment of the ability and willingness of the borrower to return the money—plus interest—in a timely fashion. A history of trustworthiness, a moral character, and expectations of continued performance demonstrate a debtor's ability to pay. Credit Report: - A record or file to a prospective lender or employer on the credit standing of a prospective borrower, used to help determine credit worthiness.
  16. 16. Credit Application: - A form to be completed by an applicant for a credit account, giving sufficient details (residence, employment, income, and existing debt) to allow the seller to establish the applicant's creditworthiness. Sometimes, an application fee is charged to cover the cost of loan processing. Electronic Banking: - A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's Web site on the Internet. (This is also known as Internet or online banking.) Electronic Fund Transfer: - The transfer of money between accounts by consumer electronic systems-such as automated teller machines (ATMs) and electronic payment of bills-rather than by check or cash. (Wire transfers, checks, drafts, and paper instruments do not fall into this category.) Line of Credit: - A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit. Direct Deposit is one method your employer or a government agency might choose to give you your pay checks or benefits checks. With direct deposit, your pay checks or benefits checks are electronically transferred and directly deposited into your account. The amount of money is immediately available. Some banks will not charge the monthly fees if direct deposit is used. Balance Transfer:-The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee. Joint Account: - An account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract.
  17. 17. NATURE OF WORK
  18. 18. NATURE OF WORK The main areas I dealt with were:- Front Office Department Credit Proposals Head Credit Approvals Head Deposits Head  Front Office Department: - In the front office department I was mainly assisting the head in dealing with the customers regarding their queries. I was assigned to redirect them to different heads according to the type of assistance customers required.  Credit Proposals Head: - In the credit proposals Head I was assisting the employee in collecting the proposals from various branches from the zonal regions.  Credit Approvals Head: - Under the credit approvals head I was assisting the employee in dealing with the credit proposals approved. In this section it mainly deals in approving the proposals based on a number of the norms and conditions of the bank.  Deposits Head:-This head mainly deals in maintaining the deposits from various customers from different branches under the zonal region. LEARNING SUMMARIZATION From this internship I was able to know a lot about the banking sector. I was able to know the activities and tasks that a bank undergoes during its working hours. It also helped me in understanding about different departments and their functions and what an employee do during their working hours. I also got an opportunity to see what all activities are doing in each departments and I was permitted to do some tasks in some of the departments. I also
  19. 19. got familiar with various banking terminologies used in the bank. I was also able to communicate with some of the account holders of Dhanlaxmi bank and everyone were satisfied with the services offered by the bank.