REPORT ON INTERNSHIP
‘DHANLAXMI BANK LTD.’
ARJUN P R
SEM: 4 PARTICIPANT
MS. NISA S.
(ASST. PROFESSOR, DEPARTMENT OF FINANCE)
T.K.M. INSTITUTE OF MANAGEMENT
MUSALIAR HILLS, KARUVELIL P.O, KOLLAM
OBJECTIVE OF THE INTERNSHIP
To know more about the functional as well as the managerial aspects of Dhanlaxmi
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 :-
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.
The bank has difficulty in disclosing certain details due to their banking norms and
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
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
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
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
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
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.
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
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
Price based competition
Product based competition
Quality of service based competition
Market segment based competition
Technology based competition
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
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.
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).
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
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
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%.
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
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
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.
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.
In March, 2010, the bank launched Dhanlaxmi Bank Platinum and Gold Credit cards.
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.
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.
NATURE OF WORK
The main areas I dealt with were:-
Front Office Department
Credit Proposals Head
Credit Approvals 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
Deposits Head:-This head mainly deals in maintaining the deposits from various
customers from different branches under the zonal region.
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
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.