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Non banking services


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Non banking services

  1. 1. ACKNOWLEDGEMENT It is a matter of immense pride and pleasure to submit this project to the University of Mumbai as a part of curriculum of my banking course. I take this opportunity to present before you this project on “SELECTIVE NON BANKING SERVICES PROVIDED BY BANKS.A COMPARATIVE STUDY OF HDFC AND ICICI BANK", which is a result of co-operation, hard work and good wishes of many people. The most pleasant part of any project is to acknowledge all the people who have helped me in completing this project. I would like to thank God first and then I would like to express my heartfelt gratitude to my guide Mrs. Mahek Mansuri for her valuable suggestions and constant supervision in this project. I am greatly thankful to Mrs. Mahek Mansuri, course coordinator (B& I) for providing an opportunity to present a creative output in the form of this project. I am greatly indebted to MISS Saumia Ashwin for her valuable suggestions and guidance which was precious in accomplishment of this project. I must mention here the help of all my classmates and colleagues as well as efforts and active participation of my family members in smooth completion of this 1
  2. 2. project. Also I am thankful to Library Staff for providing me the valuable information about the various reference books related to this project. Last but not least. Thanks to all those who have helped me directly or indirectly in accomplishing this project. 2
  3. 3. DESIGN OF STUDY OBJECTIVE OF STUDY  To understand the importance and need of non-banking services.  To perceive the meaning of non- banking services.  Readers can see the article of HDFC bank. SCOPE  The readers can come to know the various types of non-banking services by banks.  The readers can come across the sample of letter of credit and bank guarantee. METHODOLOGY  Primary data is collected from HDFC and ICICI bank.  Secondary data is collected by referring books relating to banking also referred to HDFC and ICICI bank, magazines and internet. 3
  4. 4. SUMMARY Now a days commercial banks are very popular. They are business entities with profit objectives. It provides numbers of banking functions as well as numbers of other services to the public. They receive money in the form of deposits i.e. saving, current etc. they provide advances for short periods in the form of c/c, o/d, loan etc. They also give a number of agencies &general utility services to the customers. They act as agents in the collectional payments of cheque, drafts, bill of exchange etc. They also make payment on behalf of their customers eg. Electricity bills, L.I.C premiums etc.They also act as executers & administrators of their customers. They provide tremendous facilities to the customers. It is a bank which gives trade references to the customers. It provides credit facilities to the customers in foreign trade. They help in foreign exchange matters. They also issue travellers cheques, credit cards etc. it also provides safe custody service. 4
  5. 5. CHAPTER -1 INTRODUCTION TO BANKS The word bank is derived from the Italian banca, which is derived from German and means bench. Typically, a bank generates profits from transaction fees on financial services and on the interest it charges for lending. An institution which accepts deposits, makes business loans, and offers related services. Banks also allow for a variety of deposit accounts, such as current, fixed, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses. A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. The essential function of a bank is to provide services related to the storing of value and the extending of credit. The evolution of banking dates back to the earliest writing, and continues in the present where a bank is a financial institution that provides banking and other financial services. Currently the term bank is generally understood an institution that holds a banking license. Banking licenses are granted by financial supervision authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without 5
  6. 6. meeting the legal definition of a bank, a so called non-bank. Banks are a subset of the financial services industry. Definition A financial institution that is licensed to deal with money and its substitutes by accepting time and demand deposits, making loans, and investing in securities. The bank generates profits from the difference in the interest rates charged and paid. BANKING 6
  7. 7. Banking is one of the key drivers of the U.S. economy. Banking provides a safe place to save excess cash, known as deposits. It also supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase homes, cars and consumer products. Banks primarily make money by charging higher interest rates on their loans than they pay for deposits. Banking is the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit. The fundamental functions of a commercial bank during the past two centuries have been making loans, receiving deposits, and lending credit either in the form of bank notes or of "created" deposits. Banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of the Act; HISTORY OF BANKING 7
  8. 8. There are three different phases in the history of banking in India. • Pre-Nationalization Era. • Nationalization Stage. • Post Liberalization Era. 1. Pre-Nationalization Era: In India the business of banking and credit was practices even in very early times. The remittance of money through Hundies, an indigenous credit instrument, was very popular. The hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. The modern type of banking, however, was developed by the Agency Houses of Calcutta and Bombay after the establishment of Rule by the East India Company in 18th and 19th centuries. During the early part of the 19th Century, ht volume of foreign trade was relatively small. Later on as the trade expanded, the need for banks of the European type was felt and the government of the East India Company took interest in having its own bank. The government of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in 180. In 1840, the Bank of Bombay and IN 1843, the Bank of Madras was also set up. These three banks also known as “Presidency Bank”. The Presidency Banks had their branches in important trading centers but mostly lacked in uniformity in their operational policies. In 1899, the Government proposed to amalgamate these three banks in to one so that it could also function as a Central Bank, but the Presidency 8
  9. 9. Banks did not favor the idea. However, the conditions obtaining during world war period (1914-1918) emphasized the need for a unified banking institution, as a result of which the Imperial Bank was set up in1921. The Imperial Bank of India acted like a Central bank and as a banker for other banks. The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In 1949, the Banking Regulation act was passed and the RBI was nationalized and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank of India, Cooperative banks, Exchange banks and Indian Joint Stock banks. 2. Nationalization Stages: After Independence, in 1951, the All India Rural Credit survey, committee of Direction with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten others banks into a newly established bank called the State Bank of India (SBI). The Government of India accepted the recommendations of the committee and introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was passed by Parliament and got the president’s assent on 8th May 1955. The Act came into force on 1 st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of India. The main objective of establishing SBI by nationalizing the Imperial Bank of India was “to extend banking facilities on a large scale more particularly in the rural and semi-urban areas and to diverse other public purposes.” In 1959, the SBI (Subsidiary Bank) act was proposed 9
  10. 10. On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the nationalization of 14 major scheduled Commercial Banks each having deposits worth Rs. 50 crore and above. This was a turning point in the history of commercial banking in India. Later the Government Nationalized six more commercial private sector banks with deposit liability of not less than Rs. 200 crores on 15th April 1980, viz. • Andhra Bank. • Corporation Bank. • New Bank if India. • Oriental Bank of Commerce. • Punjab and Sind Bank. • Vijaya Bank. In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every corner of the country. Later in 1975, Regional Rural Banks were set up to supplement the activities of the commercial banks and to especially meet the credit needs of the weaker sections of the rural society. Nationalization of banks paved way for retail banking and as a result there has been an alt round growth in the branch network, the deposit mobilization, credit disposals and of course employment. The first year after nationalization witnessed the total growth in the agricultural loans and the loans made to SSI by 87% and 48% respectively. The overall growth in the deposits and the advances indicates the improvement that has taken place in 10
  11. 11. the banking habits of the people in the rural and semi-urban areas where the branch network has spread. Such credit expansion enabled the banks to achieve the goals of nationalization, it was however, achieved at the coast of profitability of the banks. 3. Post-Liberalization Era—Thrust on Quality and Profitability: By the beginning of 1990, the social banking goals set for the banking industry made most of the public sector resulted in the presumption that there was no need to look at the fundamental financial strength of this bank. Consequently they remained undercapitalized. The need for restructuring the banking industry was felt greater with the initiation of the real sector reform process in 1992. The reforms have enhanced the opportunities and challenges for the real sector making them operate in a borderless global market place. However, to harness the benefits of globalization, there should be an efficient financial sector to support the structural reforms taking place in the real economy. Hence, along with the reforms of the real sector, the banking sector reformation was also addressed. In this context, the recommendations made by a high level committee on financial sector, chaired by M. Narasimham, laid the foundation for the banking sector reforms. These reforms tried to enhance the viability and efficiency of the banking sector. The Narasimham Committee suggested that there should be functional autonomy, flexibility in operations, dilution of banking strangulations, reduction in reserve requirements and adequate financial infrastructure in terms of supervision, audit and technology. CHAPTER-2 11
  12. 12. BANKING SERVICES Banks play an important role in the field of trade, commerce and industry. They promote and mobilize savings by providing safety, confidentiality and attractive rate of interest. Banks inspire confidence in people and help in creating banking habits in them. This promotes saving. Savings by individuals are made available to those who wish to invest them in developmental activities. Banks are business entities with profit objectives. It provides numbers of banking functions as well as numbers of other services to the public. They receive money in the form of deposits i.e. saving, current etc. they provide advances for short periods in the form of c/c, o/d, loan etc. They provide tremendous facilities to the customers. It is a bank which gives trade references to the customers. It provides credit facilities to the customers in foreign trade. They help in foreign exchange matters. The primary functions of the banks may be summarized as ‘Accepting of deposits’ and ‘lending of money’. ACCEPTING OF DEPOSITS Accepting deposits is one of the two major activities of the Banks. Banks are also called custodians of public money. Basically, the money is accepted as deposit for safe keeping. But since the Banks use this money to earn interest from people who need money, Banks share a part of this interest with the depositors. The quantum of interest depends upon the tenor - length of time for which the depositor wishes to keep the money with the Bank - and the ease of withdrawal. The thumb rule is, longer the tenor, higher the rate of interest and lesser the restrictions on withdrawal, lesser the interest. Exceptions, however, exist. Deposits are accepted from both resident 12
  13. 13. (domestic) or non-resident Indian customers. It is the business of the banker to accept deposits so that he can lend it to others and earn interest. Depending upon the liquidity position of the market and the size of deposit, the earnings can vary and if the size of the deposit is big enough, it is advisable to shop around and get the best rate. A bank normally accepts the following types of deposits: • Current deposit • Fixed deposit • Saving deposit • Recurring deposit LENDING MONEY Banking is essentially dealing with money. A bank has to invest funds in different ways to earn income. The bulk of income is derived from lending funds. Banks provide loans and advances to traders, industrialists against the security of some assets. They also advance loans to the people on personal security. In both the cases the banks run the risk of default in repayment. Therefore, the banks have to follow a sound lending policy. Banks in India have the responsibility of fulfilling social obligations. Banks lends money to the public in the following ways: 1. Loans and advances 3. Bill discounting 2. Cash credit 4. Overdraft 13
  14. 14. CHAPTER-3 NON-BANKING SERVICES Besides these two main functions, a bank also undertakes a variety of other activities. These activities involve services offered by banks to help the customers (account holders). Such activities include collection of cheques, dividend, warrants, etc. on behalf of customers as well as effecting transfer of funds, remittances by mail and telegram. In order to attract customers and make banking services effective, banks always make efforts to diversify their activities. Such diversification takes place by way of new service activities and schemes. These services offered by banks are generally known as agency services. These are also termed as nonbanking, general utility, and miscellaneous services. The relationship between a customer and a bank is that of a ‘Principal’ and ‘Agent’. The bank acts as an agent on behalf of the customer as principal. When any bank acts as an agent, the services rendered by it are known as agency services. Under agency services, the bank undertakes payment of subscriptions, premium on insurance, collection of cheques, dividends, etc. It acts as a trustee, executor or administrator and an ‘agent’ for buying and selling shares, stocks, debentures on behalf of the customer. General utility services refer to those non-bank services which are in the interest of general public, i.e. the society at large. Such services are called ‘non-banking services’ because they are not directly concerned with the main banking activities. These services include issue of traveller’s cheques, credit cards, drafts, circular notes, gift cheques and safe custody of valuables, like negotiable securities, jewellery, documents of title to goods, etc. The range of services offered differs from bank to bank, depending mainly on the size and type of bank, but the 14
  15. 15. acceptance of deposits from the public and lending operations form the main stay of the banking business. Non-banking services which may be divided into two categories:a) Services rendered by banks to their customers: These services are functions performed by a bank as the agent of customers. Hence, these functions are also known as ‘Agency functions’ of banks. b) Services rendered to the general public/society: These functions are essentially non-banking in nature and in addition to the main functions of a bank. Let us enumerate the agency and non-banking functions undertaken by banks on behalf of customers and for the benefit of the general public. (a) Services to Customers:(i) Accepting and discounting bills of exchange. (ii) Collecting cheques, bills, salaries, pension, dividends, Interest on investments, etc. on behalf of clients. (iii) Undertaking payment of subscriptions to clubs or other Associations, insurance premium, rents, taxes, etc (iv)Acting as an agent of customers for buying and selling Shares and debentures, National Saving Certificates (NSCs), and dealing in government securities. (v) Acting as a Correspondent or authorized representative of Customers in dealing with other banks and financial Institutions. 15
  16. 16. (vi)Acting as an ‘executor’ or ‘administrator’ under power of Attorney and carrying out the instructions of a deseased as expressed in his will. (vii) Acting as attorney. When the bank acts as an attorney, it Is generally authorized to receive dividends, interests on Securities, and to sign on behalf of customers on transfer Forms etc. for sale and purchase of securities. (viii) Arranging remittance of funds from one place to another on behalf of customers. (ix) Issuing letter of credit. (x) Issuing credit cards, circular notes and traveller’s cheque for the convenience of customers. (xi) Giving guarantee against loans raised by customers. (b) Services to the General Public:(i) Providing facility of lockers for the safe custody of Valuables. (ii) Financial assistance for the establishment of trusts, association, clubs and charitable institutions. (iii) Performing such functions as are incidental or conducive to the promotion and advancement of trade and commerce. (iv) Extending financial help to the weaker sections of society For selfemployment. (v) Issue of bank drafts, gift-cheques, banker's cheques, etc. 16
  17. 17. CHAPTER-4 TYPES OF NON BANKING SERVICES 1) SAFE DEPOSIT VAULT A bank undertakes the safe custody of the customer’s valuables and documents by providing a safe deposit vault. These are kept in specially constructed strong rooms. There are lockers available to the customer on nominal charge. There are two keys for each locker, one is given to the customer and the other remains with the Bank Manager. The locker is opened as well as close by both keys one after another. Customer can keep valuables like jewellery and important documents for safe custody. A register is maintained by the bank which all the particulars about the valuables and documents are recorded in it. Banks provide the services of safe deposit vault on hire basis to the customers. Who can get it? A locker can be assigned to any adult, firm or association, on a single or joint basis. All you need to do is fill out a simple locker application form and locker agreement, agreeing to abide by its terms and conditions, and pay the deposit and the rent. Most banks insist on some kind of financial collateral. So, they give a locker only to their existing account holders, or to those who agree to open an account (savings or current) or make a fixed deposit that covers rentals for three years and charges for breaking open the locker in case of an eventuality. 17
  18. 18. 2) LETTERS OF CREDIT A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking. A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. 18
  19. 19. The letter of credit can also be source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. In such cases the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits applies. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment was insured against loss or damage in transit. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin. 19
  20. 20. 3) COLLECTION OF CHEQUES, BILLS AND PROMISSORY NOTES: The customer deposit cheques, bills of exchange and promissory notes into their accounts with the banks. These instruments are collected by the bank on behalf of their customers and credited to their accounts. These services are provided by the banks to their customers free of charge. However, the cheques, bills and promissory notes issued on branches out of the city are collected with some nominal charges for postage etc. this is a very popular and essential service provided by the banks to their customers. 4) COLLECTION OF DIVIDEND AND INTEREST: The customer can instruct the issuing companies to pay the interest or dividend which is declared or payable from time to time to their own bank. The bank also collect such dividend or interest on behalf of their customers and credit to their respective accounts. This avoids the delay or misplacement of dividend or interest warrants. Banks may charge some nominal amount of commission for this service. 5) TELEPHONE BANKING Telephone banking is a service provided by a financial institution, which allows its customers to perform transactions over the telephone. Most telephone banking services use an automated phone answering system with phone keypad response or voice recognition capability. To guarantee security, the 20
  21. 21. customer must first authenticate through a numeric or verbal password or through security questions asked by a live representative .With the obvious exception of cash withdrawals and deposits, it offers virtually all the features of an automated teller machine: account balance information and list of latest transactions, electronic bill payments, funds transfers between a customer's accounts, etc. Usually, customers can also speak to a live representative located in a call centre or a branch, although this feature is not always guaranteed to be offered 24/7. In addition to the self-service transactions listed earlier, telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, chequebook orders, debit card replacements, change of address, etc. Banks which operate mostly or exclusively by telephone are known as phone banks. They also help modernize the user by using special technology. 6) AUTOMATED TELLER MACHINE An automated teller machine (ATM), also known as automatic banking machine (ABM), Cash Machine, or Cashpoint, is a computerized telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN). 21
  22. 22. Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing US Dollars), the money will be converted at a wholesale exchange rate. Thus, ATMs often provide the best possible exchange rate for foreign travelers and are heavily used for this purpose as well. ATMs are known by various other names including Automated Transaction Machine, automated banking machine, cashpoint (in Britain), money machine, bank machine, cash machine, hole-in-the-wall, MAC Machine (in the Philadelphia area), Bankomat (in various countries in Europe and Russia), Multibanco (after a registered trade mark, in Portugal), and All Time Money in India. 22
  23. 23. CASH WITHDRAWALS FROM ATM 7) EXECUTION OF STANDING ORDERS: A customer can give standing instruction in writing to his banker to pay rent, telephone bills, loan installments or any other payments out of his account. Such orders are normally in respect of insurance premium, subscriptions to club and societies and some other recurring payments. Normally, no charges are levied on these services. Some banks may charge nominal amounts as service charges. 8) REMITTANCE OF FUNDS: Banks provide the services of transfer to money/funds from place to place. They have network of branches throughout the country. It is a safe, convenient simple and economical method to transfer of funds. The following are the important methods of transfer of funds from place to place: a) Mail Transfer: Banks provide the service of sending money to the post i.e. mail transfer to any person at any place where the bank has branchand the person receiving the amount has an account in other branch of the same bank. The sender should fill up a form giving the details like name of beneficiary, his account number, the name of the 23
  24. 24. branch and the amount of transfer. The bank charges the commission to cover the cost of postal services. b) Telegraphic Transfer: If the customer wants to send the money urgently, he can request the banker for telegraphic transfer, on payment of nominal charge to cover the telegram charges. However the facility of telegraphic transfer is available at selected branches only. The cost of telegraphic transfer is higher than the cost of mail transfer. However, the money is transferred quickly. c) Bank drafts A bank draft is an order from one branch to another branch of the same bank to pay a specified sum of money to a person named therein or to his order. A draft is always payable on demand. Banks issue drafts at the request of the customers on their branches at the place of destination for remitting money from one place to another place. Any person who wants to remit money has to purchase a draft from the bank by paying the amount in advance to the bank. The purchaser of the draft then sends the draft to the payee’s plase of residence by post or courier for the purpose of encashment at the drawee branch of the bank. The bank issuing the draft charges some commission for rendering this service. The amount of commission depends upon the amount of the draft. The purchaser need not be a customer of the bank. The bank draft is like a bill of exchange payable on demand. Incase the draft is lost by a purchaser he has to report to the issuing banker for loss of the draft without any endorsement, the banker may safely reuse to pay the amount of the draft. The 24
  25. 25. bank should take all the precautions and payment of the draft should be made only when the banker is fully satisfied about the valid title of the holder. The banker should take an indemnity bond and then issue a duplicate draft to the purchaser. The draft may be cancelled by the bank if it is not delivered to the payee. 9) INTERNET BANKING Internet banking is the easiest way to carry out banking transactions in today's hectic schedule. Internet banking is used widely by masses, and has numerous benefits to offer. Nowadays, all banks provide online banking facility to their customers as an added advantage. Gone are the days, when one had to transact with a bank which was only in his local limits. Online banking has opened the doors for all customers, to operate beyond boundaries. Nowadays, people are so busy in their work lives, that they don't even have time to go to the bank for conducting their banking transactions. Internet banking enables people to carry out most of their banking transactions using a safe website, which is operated by their respective banks. It provides many features and functions to their customers, and enables them to view their account balance, transfer money from their account to another account (be it in their respective bank or any other bank), view their account summary, etc. In this procedure, many financial transactions can be carried out by simply utilizing a computer with an Internet connection. The necessary things that a person needs for using online banking are, an active bank account with balance in it for transactions, debit or a credit card number, customer's user ID, bank account number, the Internet banking PIN number, and a PC with access to the web. People 25
  26. 26. using Internet banking are certainly benefited by the online services their respective banks are providing them with. The primary reason why it is so famous and mostly used is that, customers are allowed to bank at non-working hours. Banks create their banking interfaces and websites in a viewable and user-friendly manner, which enable customers to conduct their financial transactions with ease. If they are stuck in any process while performing their online transactions, banks have another helpful facility that is 'phone banking', wherein customers can call the banks toll-free number and get assistance in completing their transactions. Electronic bill payment, viewing and downloading financial records, and money transfers are some of the general transactions which the customers generally carry out. All online banking services, provided by some banks, are free of cost. When a customer views the bank's website, there are many options available, but to execute those transactions, he would obligatorily need to log into his virtual account. Without logging in, he won't be allowed to carry out any kind of the transactions. Initially, when he opens an account with the bank, the bank gives a welcome kit which contains important documents that include the checkbook; a document on which the customer's user ID, online banking password, phone banking password, and account number is embedded. The kit also contains some other confidential data, the credit or debit card, and the card details. The website will prompt the user to enter the necessary details like the Internet banking password and account number, and then will display his account information. In this stage, he can carry out all functions that are available on the website. With regards to the password authentication and encryption, high security is maintained, as there is a chance of hackers getting unauthorized access to the 26
  27. 27. customer's account and performing malpractices. However, banks keep their online security systems up-to-date to prevent such scenarios. Moreover, banks also suggest their customers to keep on changing passwords periodically. They also implement some security measures like using unique login IDs, transaction codes, using two passwords, security tokens which generate automatically changing passwords, etc. 10) DEBIT CARD A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card. In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date. Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a cheque guarantee card. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase. The debit card has limited popularity in India as the merchant is charged for each transaction. The debit card therefore is mostly used for ATM transactions. Most of 27
  28. 28. the banks issue VISA debit cards, while some banks (like SBI and Citibank India) issue Maestro cards. The debit card transactions are routed through the VISA or MasterCard networks rather than directly via the issuing bank. 11) BANK GUARANTEES Bank Guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. It is customary for the bank in normal course of Business, to issue and execute guarantees in favour of third parties on behalf of the customers. The Bank guarantees are governed by various provisions as contained in the Indian Contract Act, 1872. The commercial transactions, banks customers are sometimes required to give a bank guarantee. This is mostly as an alternate to keep cash as a security deposit. The 3rd party who seeks the guarantee, not being aware of the customer’s financial standing prefers a bank guarantee. In turn the bank, which very well understands the financial standing of the customer, undertakes the guarantee of the customer’s financial commitments or performance 28
  29. 29. of the contracts by him. The bank charges commission for this service, which depends on the security available and financial stability of the customer. Contract of guarantee: Section 126 of the Indian Contract Act, 1872, defines a “Contract of guarantee” is a contract perform the promise, or discharge the liability (enforceable at law) of a third person in case of his default. In a contract of guarantee given by bank there are three parties. One surely i.e. the bank issuing the guarantee, second is the participal debtor i.e. the bank’s customer, one whose behalf the guarantee is issued and third is the creditor i.e. the beneficiary of the guarantee i.e. to whom the guarantee is issued 12) ONLINE BANKING Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. • FEATURES Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific. The common features fall broadly into several categories • Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer... and applications... apply for a loan, new account, etc.) • Electronic bill presentment and payment - EBPP 29
  30. 30. • Funds transfer between a customer's own checking and savings accounts, or to another customer's account • Investment purchase or sale • Loan applications and transactions, such as repayments of enrollments • Non-transactional (e.g., online statements, check links, cobrowsing, chat) • Bank statements • Financial Institution Administration – • Support of multiple users having varying levels of authority • Wire transfer . 13) CORE BANKING Core Banking is normally defined as the business conducted by a banking institution with its retail and small business customers. Many banks treat the retail customers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the Corporate Banking division of the institution. Core banking basically is depositing and lending of money. Nowadays, most banks use core banking applications to support their operations where CORE stands for "Centralized Online Real-time Exchange". This basically means that all the bank's branches access applications from centralized datacenters. 30
  31. 31. This means that the deposits made are reflected immediately on the bank's servers and the customer can withdraw the deposited money from any of the bank's branches throughout the world. These applications now also have the capability to address the needs of corporate customers, providing a comprehensive banking solution. A few decades ago it used to take at least a day for a transaction to reflect in the account because each branch had their local servers, and the data from the server in each branch was sent in a batch to the servers in the datacenter only at the end of the day . Normal core banking functions will include deposit accounts, loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking, and branches. Core Banking Solutions Core Banking solutions are banking applications on a platform enabling a phased, strategic approach that lets people improve operations, reduce costs, and prepare for growth. Implementing a modular, component-based enterprise solution ensures strong integration with your existing technologies. An overall service-orientedarchitecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoid the potential disruption to business caused by replacing entire systems. Core Banking Solutions is new jargon frequently used in banking circles.The advancement in technology, especially internet and information technology has led to new ways of doing business in banking. These technologies have cut down time, working simultaneously on different issues and increasing efficiency. The platform where communication technology and information technology are merged to suit 31
  32. 32. core needs of banking is known as Core Banking Solutions. Here, computer software is developed to perform core operations of banking like recording of transactions, passbook maintenance, interest calculations on loans and deposits, customer records, balance of payments and withdrawal. This software is installed at different branches of bank and then interconnected by means of communication lines like telephones, satellite, internet etc. It allows the user (customers) to operate accounts from any branch if it has installed core banking solutions. This new platform has changed the way banks are working. 14) CREDIT CARDS A credit card is an instrument of payment. It is a source of revolving credit. The cards are plastic cards issued by the banks to their customer; card number and expiry date are printed on the plastic cards. Some banks also use the photographs of the customer on the credit cards. The card holder can buy goods or services from various merchant establishments where such arrangements exits. The card issuing bank makes the payment to the supplier or seller. The outstanding amount on account of use of the credit card is payable by the card holder to the bank over a 32
  33. 33. specific period which carries a fixed amount of interest. A debit card is a payment card used to obtain cash, goods and services automatically debiting the payments to the card holder’s bank account instantly, in which credit balance exits. 15) MERCHANT BANKING Banks are also providing various services relating to capital market and finance to companies which are known as Merchant Banking services. It also includes arranging funds from outside the country. Merchant Banking is organization in which underwrites securities for companies, advises in various activities. Any person who is engaged in the business of issue management either by making arrangements regarding selling buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory services in relation to issue management is known as a merchant banker. No person is allowed to carry out any activity as a Merchant Banker unless he holds a certificate granted by SEBI. The following services are offered by the merchant bankers: 1. Project consulting. 2. Loan syndication. 3. Technology tie-ups. 4. Mutual funds. 5. Portfolio management. 6. Bought out deals. 7. Raising funds from capital market. 33
  34. 34. 8. Rehabilitation of sick units. 9. Mergers and acquisitions For this purpose banks have create separate merchant banking divisions and appoint experienced managers to carry out these functions. Banks have funds with them which are mobilized through deposits and borrowing or other ways and deploy these funds. They also have the expertise and access to various sources of funds as per needs of client. CHAPTER-5 HDFC BANK INTRODUCTION HDFC Bank Ltd. is a major Indian financial services company based in Mumbai, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion. For the fiscal year 34
  35. 35. 2008-09, the bank has reported net profit of 2,244.9 crore (US$ 487.14 million), up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at 19,622.8 crore (US$ 4.26 billion) in 2008-09. HDFC Bank started its operations in India in the year 1994. This new generation tech-savvy bank was promoted by a leading housing finance company of the country – the Housing Development Finance Corporation Limited or HDFC. HDFC offers a number of banking products and services to its clients. The loan services of this bank are highly appreciated by the customers. HDFC Bank is currently having 753 branches and 1,716 ATMs across 320 cities of India. All the branches of this bank operate on the online real-time basis. HDFC is also famous for offering innovative financial products and services to the individuals, trusts, corporates, partnerships, mutual funds, financial institutions and insurance companies. HISTORY HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies. Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private 35
  36. 36. banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances of about Rs.89,000 crore. The balance sheet size of the combined entity is more than Rs. 1,63,000 crore. BUSINESS FOCUS HDFC Bank deals with three key business segments - Wholesale Banking Services, Retail Banking Services, Treasury. It has entered the banking consortia of over 50 corporates for providing working capital finance, trade services, corporate finance and merchant banking. It is also providing sophisticated product structures in areas of foreign exchange and derivatives, money markets and debt trading and equity research. 1. WHOLESALE BANKING SERVICES The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporates to small & mid-sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. HDFC Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. 36
  37. 37. It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. 2. RETAIL BANKING SERVICES The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by worldclass service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million. The Bank is also one of the leading players in the “merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc. 3. TREASURY Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in 37
  38. 38. government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio. DISTRIBUTION NETWORK HDFC Bank is headquartered in Mumbai. The Bank has an network of 1,725 branches spread in 771 cities across India. All branches are linked on an online real-time basis. Customers in over 500 locations are also serviced through Telephone Banking. The Bank has a presence in all major industrial and commercial centres across the country. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and active member base. The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholder PRODUCTS&SERVICES 1) PERSONAL BANKING • Savings Accounts • Salary Accounts • Current Accounts • Fixed Deposits • Demat Account 38
  39. 39. • Safe Deposit Lockers • Loans • Credit Cards • Debit Cards • Prepaid Cards • Investments & Insurance • Forex Services • Payment Services • Net Banking • InstaAlerts • MobileBanking • InstaQuery • ATM • Phone Banking 2) NRI BANKING • Rupee Savings Accounts • Rupee Current Accounts • Rupee Fixed Deposits • Foreign Currency Deposits 39
  40. 40. • Accounts for Returning Indians • Quickremit (North America, UK, Europe, Southeast Asia) • IndiaLink (Middle East, Africa) • Cheque Lockbox • Telegraphic / Wire Transfer • Funds Transfer through Cheques / DDs / TCs • Mutual Funds • Private Banking • Portfolio Investment Schemes • Loans • Payment Services • NetBanking • InstaAlerts • Mobile Banking • InstaQuery • ATM • Phone Banking 40
  41. 41. CHAPTER-6 ICICI BANK INTRODUCTION ICICI Bank( Industrial Credit and Investment Corporation of India) is a major banking and financial services organization in India. It is the second largest bank in India and the largest private sector bank in India by market capitalization. The bank also has a network of 2,016 branches (as on 31 March 2010) and about 5,219 ATMs in India and presence in 18 countries, as well as some 24 million customers (at the end of July 2007). ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialization subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. (These data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India.[4] ICICI Bank's shares are listed on the stock exchanges at BSE, NSE, Kolkata and Vadodara ; its ADRs trade on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives offices in 19 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK ,offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. 41
  42. 42. HISTORY In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. In 1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. In 2001, ICICI acquired Bank of Madura . Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank ( 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international expansion by opening representative offices in New York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa. In 2005, ICICI 42
  43. 43. acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong. In 2006, ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, ICICI also received permission from the government of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. In 2008, The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt. In 2009, ICICI made huge changes in its organisation like elimination of loss making department and restreching outsourced staff or renegotiate their charges in consequent to the recession. In addition to this, ICICI adopted a massive approach aims for cost control and cost cutting. In consequent of it, compesation to staff was not increased and no bonus declared for 2008-09. On 23 May ICICI Bank announced merger with Bank of Rajasthan with it through share-swap in a non-cash deal that values the Bank of Rajasthan at about Rs 3,000 crore. Each 118 shares of Bank of Rajasthan will be converted into 25 shares of ICICI. It is said that this merger will also expand ICICI Bank's branch network by 25% 43
  44. 44. PRODUCTS AND SERVICES 1) PERSONAL BANKING • Deposits • Loans • Cards • Investments / Insurance • Demat Services • Wealth Management 2) NRI BANKING • Money Transfer • Bank Accounts • Investments • Property Solutions • Insurance • Loans 3) BUSINESS BANKING • Corporate Net Banking • Cash Management • Trade Services 44
  45. 45. • SME Services • Online Taxes • Custodial Service ANNEXURES ANNEXURE-1 SAMPLE LETTER OF CREDIT Name and Address of Bank Date: __________________ Irrevocable letter of Credit No. ______________ Beneficiary: Exporter Commodity Credit Corporation Account Party: Name of Address of Exporter Gentlemen: We hereby open our irrevocable credit in your favor for the sum or sums not to exceed a total of _______________dollars ($__________), to be made available by your request for payment at sight upon the presentation of your draft accompanied by the following statement: This Letter of Credit is valid until _____________________/3, provided, however, that this Letter of Credit will be automatically extended without amendment for _________________/4 from the present or any future expiration date thereof, unless at least thirty (30) days prior to any such expiration date the Issuing Bank provides written notice to the Commodity Credit Corporation at the U.S. Department of Agriculture, 14th and Independence Avenue, S.W., Stop 1025, Washington, D.C. 20250-1025, of its election not to renew this Letter of Credit for such additional ______________________/5 period. The notice required hereunder will be deemed to have been given when received by you. 45
  46. 46. This letter of Credit is issued subject to the Uniform Customs and Practice for Documentary Credits, 2007 Revision, International Chamber of Commerce Publication No. 600 (Name of Bank) By: _______________________ 46
  47. 47. ANNEXURE-2 SAMPLE BANK LETTER OF GUARANTEE First Capitol Auction 50 Solano Avenue Vallejo, CA 94590 RE: ______(Bidder's Name)______ Dear Sirs: This letter will serve as your notification that ______(Bank Name)______ will irrevocably honor and guarantee payment of any check(s) written by ______(Customer's Name)______ up to the amount of ______(Amount Guaranteed)______ and drawn on account number: ______(Customer's Account Number)______. This guarantee is for the purpose of our customer purchasing vehicles or other property in connection with the auction to be held at 50 Solano Ave., Vallejo, CA 94590. This letter of guarantee is good until ______(At least 15 days)______. If further information is required, please feel free to contanct this office. Sincerely, ______(Bank Officer's Signature and Title)______ ______(Customer's Signature)______ 47
  48. 48. ANNEXURE-3 ARTICLE JEWELLERY WORTH RS54 LAKH STOLEN FROM BANK LOCKER Khar Police and the HDFC Bank management were baffled when they came to know that gold and diamond-studded ornaments, worth Rs 54 lakh, had been stolen from a bank customer’s safe deposit vault. The news came into light when a First Information Report (FIR) was lodged at Khar police station on Saturday by Ms N Agarwal of Bandra. She stated that earlier in the day she had gone to HDFC Bank, Pali Hill Branch, where she had a safe deposit vault (No 48). On opening it, she discovered that several of her ornaments kept in the vault were missing. She immediately informed the bank authorities; then lodged a complaint with the police. Five diamond-studded necklaces, 16 pairs of earrings, three gold necklaces with gold pendants, seven diamond-studded bangles, a gold set, bracelet and rings were found stolen from the locker. Khar police were trying to find out how the high-security vault was breached. 48
  49. 49. “Prima facie, it seems that the ornaments were taken out of the locker by using duplicate keys. We asked the complainant whether she had ever given the keys to the vault to someone for duplication; she said no. Investigations are on into the matter. We will be conducting a detailed inquiry,” Additional Commissioner of Police (West) Archana Tyagi told DNA. Neeraj Jha, head of corporate communications, HDFC Bank, said it was impossible that such a breach of security would happen. “Security at our bank is on a par with the international standards. This kind of incident has never happened before. The bank too will initiate an investigation into the case…. As I do not have details of the complaint lodged with the police, it will be difficult to comment any further on this issue,” he said. 49
  50. 50. ANNEXURE-4 QUESTIONER 1. What transactions can one perform using my ATM / Debit card? 2. Are there any charges if i use other bank ATM? 3. What benefits customer gets by using Net banking? 4. What are the measures that customer can take to ensure greater security in case of net banking? 5. How to pay credit card bills online? 6. Which types of credit cards are available in your bank? 7. What are the charges applicable for safe deposit vault and do the charges on safe deposit vault depend on its size? 8. Do we need to deposit some amount before taking locker on rent? 9. In which foreign currency your bank issue bank draft? 10. what are the charges for issuing bank draft? 50
  51. 51. FINDINGS 1) HDFC BANK You can perform the following transactions at our ATMs across the country: • Cash Withdrawals • View Account Balance • Request a mini-statement • Request for a Mini-Statement • Change your ATM PIN • Request for a Cheque Book • Request for an Account Statement (for the period from the date of the 'Last Statement' to the date on which request has been made.) • Funds Transfer within accounts linked to the same card • Pay your HDFC Bank Credit Card Bills • Refill your Prepaid Mobile • Deposit Cheque or Cash • Request for your Net Banking Password 51
  52. 52. ICICI BANK • Cash withdrawal up to Rs. 25,000/- per day from your account • Check your ledger balance and available balance • Print out your Mini Statement which displays your last 8 transactions and the current balance • Deposit Cash / Cheques • Transfer funds from one account to another linked account in the same branch. • Change the Personal Identification Number (PIN) of your ATM or Debit card • Pay bills, make donations to temples / trusts, buy internet packs, • Request for a chequebook • Mobile prepaid card recharge • Internet Packs (ATN - Any Time Net). • Mutual Funds Transactions. 52
  53. 53. • Bill Payments • Flexi Top Up • Calling Cards. 2) HDFC BANK Yes there are charges applicable if one uses other bank ATM. The first 5 transactions are free and than from sixth transaction the charge is 20rs. Per transaction. ICICI BANK Yes there are charges applicable if one uses other bank ATM. The first 5 transactions are free and than from sixth transaction the charge is 18rs. Per transaction. 3) HDFC BANK Benefits customer gets by using Net Banking are:Queries Check your Balance See your Statement Inquire about cheque status Ask for a Statement Ask for a Cheque Book 53
  54. 54. Inquire about your Fixed Deposit Inquire about your TDS details See your Demat Account Update your profile View HDFC bank Credit card bills View your Mutual funds portfolio Transactions Stop a Cheque Pay your Bills Ask for a Demand Draft Transfer funds between your accounts Transfer funds to a third party Request for a new Fixed Deposit Shop Online Pay HDFC Bank Credit Card Dues Buy and sell Mutual Funds. ICICI BANK Account Information eCheques (Online Funds Transfer) Bill Payment Communication with your Account Manager Customize Disclaimer 54
  55. 55. Requests and intimations • Cheque-book • Stop payment instruction • Quantum Optima - value added savings account • Opening a fixed deposit • Opening a recurring deposit • Intimate us for loss of your ATM card • Register ONLINE for phone banking and mobile commerce • Cheque Status • Online application for a Debit Card etc. 4) HDFC BANK The measures that customer can take to ensure greater security in case of net banking are: You should log-out from the NetBanking when leaving your PC.  Always change your password continuously, choose "strong" 6 to 8 digit passwords (alphanumeric) and change them regularly; avoid obvious 55
  56. 56. passwords (names of family members, pets, favourite musician etc), and don't tell anyone else your passwords.  You should not write a password down on any paper which may be easily accessible to anyone.  Put in a power-on password in your machine so that nobody else can switch on your machine.  Have a screensaver password so that when you are away from your workstation nobody else can access it.  If you think someone knows your password go online and change it immediately  If you are using the Internet in a public place (e.g. a Cyber Cafe) do not leave the PC unattended, and ensure that no-one is watching what you type  Logoff from Net Banking upon completion of your session. Use the Log-out button to Log out so that the session closes and don't shut the window to Log off. This will prevent the viewing of previous pages of your online session via your PC.  You should consider running a Personal Firewall, which will prevent unauthorized persons from accessing your computer and guard against the introduction of malicious programs onto your PC ICICI BANK • You need to enter your Internet Banking User id and password each time you access your internet banking account. Since your access is protected by 56
  57. 57. this password it is very important that you protect your password, by making it known ONLY to you. • The system prompts you to change the password on first time login. We recommend that you change both login and transaction password. • Your password should be atleast 8 characters long. Passwords are case sensitive. • Do not use your date of birth, telephone number, address, your name or the name of a friend or relative in your password. • Your internet banking account is locked in case you enter wrong user id and password 3 times. • Passwords are case sensitive. • Change your password regularly. • Ensure that you are not observed while entering the password. • Never leave your computer unattended while you are logged in to ICICI • Always logoff from Internet Banking upon completion of your session. Use the Logout button for closing the session. It is preferable not to shut the window to log off. • Disable the option on browsers for storing user names and passwords. You can refer to the help section available on your browser for instructions 5) HDFC BANK 57
  58. 58. You can pay your monthly HDFC credit card bills online through the following category:  ATMs:-The HDFC bank holders can go to HDFC ATM at anytime to transfer the bill amount from your savings or even you can transfer the current account to the credit card account.  NET BANKING:-This is similar to ATM but in this case you can transfer the bill amount or current account to your credit card through online.  VISA MONEY TRANSFER:-VISA Credit Card members can transfer their funds from any Visa debit card within India through HDFC Bank's Net Banking facility according to their convenience.  STANDING INSTRUCTIONS:-If the people have an account with HDFC Bank then you can automatically debit your bank account with either the minimum amount due or total amount due on your credit card. Your account with HDFC Bank should be a single account or a joint account with any other bank.  NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT): • This is used to transfer funds from any other bank account to make your card payments in HDFC bank. Then your Credit will reflect within one day. So, in order to know how to pay HDFC Credit Card Bills online you need to, • You need to stop writing cheque. • The credit is dependent on NEFT settlement schedule. 58
  59. 59.  DROP BOX: You can also drop the local cheque with the HDFC Bank Card account followed by your 16-digit card number. It can be dropped in any of drop boxes located in ATMs and branches in your city. The HDFC Bank has an extensive network of 750 branches and 1600 ATMs across India.  BY CASH: You people can also pay by cash at the nearest HDFC bank. ICICI BANK You can pay your monthly HDFC credit card bills online through the following category:  NET BANKING: This is similar to ATM but in this case you can transfer the bill amount or current account to your credit card through online.  VISA MONEY TRANSFER: VISA Credit Card members can transfer their funds from any Visa debit card within India through HDFC Bank's Net Banking facility according to their convenience.  STANDING INSTRUCTIONS: 59
  60. 60. If the people have an account with HDFC Bank then you can automatically debit your bank account with either the minimum amount due or total amount due on your credit card. Your account with HDFC Bank should be a single account or a joint account with any other bank.  NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT): This is used to transfer funds from any other bank account to make your card payments in HDFC bank. Then your Credit will reflect within one day. 6) HDFC BANK Following are the types of credit cards available in HDFC bank • Classic card, • Special benefit card, • Premium cards • Commercial cards ICICI BANK Following are the types of credit cards available in ICICI bank • premium cards, • classic cards, 60
  61. 61. • value for money cards, • co-branded cards, • affinity cards • EMI cards 7) HDFC BANK Yes, the charges applicable for safe deposit vault depend on its size and the rentals vary from minimum 1,000 to maximum 9,000 rs. p.a. depending upon its size. ICICI BANK Yes, the charges applicable for safe deposit vault depend on its size and the rentals vary from minimum 1,525 to maximum 10,545 rs. p.a. depending upon its size. 8) HDFC BANK NO, we need not need to deposit any amount before taking locker on rent. ICICI BANK 61
  62. 62. Yes, we need to deposit some amount before taking locker on rent i.e. it ranges from 15,000 to 1,00,000 rs. Depending on its locker size. 9) HDFC BANK HDFC Bank offers the Foreign Currency Demand Draft in the following currencies: • USD • GBP • CAD • Euro • Miscellaneous currencies. ICICI BANK ICICI Bank offers the Foreign Currency Demand Draft in the following currencies: • USD • GBP • SGD • EURO • CAD • AUD. 10) HDFC BANK The charges for making foreign currency demand drafts are Rs 200 for an account holder and Rs300 for non account holder. 62
  63. 63. ICICI BANK The charges for making foreign currency demand drafts are Rs 200 for an account holder as well as for non account holder. CONCLUSION Banks promote saving habit among people and inspire confidence in the general public. Banks perform variety of functions. Apart from the two main functions of mobilizing deposits and ‘lending’, a bank renders various services to the business community and general public. These services offered by bank to customers are generally known as agency services. These are termed ‘non-banking’ services, when rendered to the general public. Agency Services include payment of subscription, insurance premium, collection of cheques and dividends, buying and selling shares and debentures on behalf of customers. Non-banking services are rendered in the interest of general public. Some of these services are: issue of Traveller’s cheques, gift-cheques, Bank drafts, circular notes and safe custody of valuable articles and documents in bank lockers, etc. Commercial banks have proved to be very useful to the society in general and to trade and industry in particular. The usefulness of the service functions of banks to trade and industry and their significance to the general public are wide-ranging in 63
  64. 64. nature and variety. Banks offer attractive rates of interest on savings of customers and thus create the habit of thrift and savings in many people. They are very useful in facilitating foreign trade activities. Besides acting as ‘agent’, referee, trustee, ‘executor’ and administrator banks render numerous other services like providing locker facilities, payment of taxes, insurance premium, issuing drafts, arranging remittances, etc. BIBLIOGRAPHY  Book-Principles and practices of banking and insurance. - (S.Y. banking and insurance) Webliography     64