bank traning project report on iob bank
TRANSCRIPT
INDEX
CHAPTER CONTENT Pg.no.
1. INTRODUCTION
Origin of the word bank
Nationalisation of Banks in India
History of IOB
3
2. FUNCTIONS OF IOB 13
1
A REPORT ON IN BANK
TRAINING IN THE
INDIAN OVERSE
AS BANK
Opening of various account
Non-Resident Accounts
Honoring and Stopping cheques
Money laundering
3. SERVICES OF IOB
Automatic Teller Machine (ATM)
Internet Banking
Mobile Banking
Identification of Fake Notes
36
4. RATIO ANALYSIS 49
5. LOANS & ADVANCES
Advances-General Instruction
Retail Credit Interest Rates
60
CONCLUSION 75
BIBLIOGRAPHY 76
2
A REPORT ON IN BANK
TRAINING IN THE
INDIAN OVERSE
AS BANK
Origin & Definition of Bank:
Origin of the word bank:
Most of the authors are of the opinion that word bank has been derived from Italian word
banco or banca or French word beque, meaning a bench, other writers opine that the
origin of the word bank is the German word bank, which means a heap of anything or
joint stock fund.
Meaning and Definition of Bank:
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CHAPTER – 1
You know people earn money to meet their day-to-day expenses on food, clothing,
education of children, housing, etc. They also need money to meet future expenses on
marriage, higher education of children, house building and other social functions. These
are heavy expenses, which can be met if some money is saved out of the present income.
Saving of money is also necessary for old age and ill health when it may not be possible
for people to work and earn their living.
The necessity of saving money was felt by people even in olden days. They used to hoard
money in their homes. With this practice, savings were available for use whenever
needed, but it also involved the risk of loss by theft, robbery and other accidents. Thus,
people were in need of a place where money could be saved safely and would be
available when required. Banks are such places where people can deposit their savings
with the assurance that they will be able to withdraw money from the deposits whenever
required. People who wish to borrow money for business and other purposes can also get
loans from the banks at reasonable rate of interest.
Bank is a lawful organisation, which accepts deposits that can be withdrawn on
demand. It also lends money to individuals and business houses that need it.
Banks also render many other useful services – like collection of bills, payment of
foreign bills, safe-keeping of jewellery and other valuable items, certifying the credit-
worthiness of business, and so on.
Banks accept deposits from the general public as well as from the business community.
Anyone who saves money for future can deposit his savings in a bank. Businessmen have
income from sales out of which they have to make payment for expenses. They can keep
their earnings from sales safely deposited in banks to meet their expenses from time to
time. Banks give two assurances to the depositors –
a. Safety of deposit, and
b. Withdrawal of deposit, whenever needed
On deposits, banks give interest, which adds to the original amount of deposit. It is a
great incentive to the depositor. It promotes saving habits among the public. On the basis
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of deposits banks also grant loans and advances to farmers, traders and businessmen for
productive purposes.
Thereby banks contribute to the economic development of the country and well-being of
the people in general. Banks also charge interest on loans. The rate of interest is generally
higher than the rate of interest allowed on deposits. Banks also charge fees for the various
other services, which they render to the business community and public in general.
Interest received on loans and fees charged for services which exceed the interest allowed
on deposits are the main sources of income for banks from which they meet their
administrative expenses.
The activities carried on by banks are called banking activity. ‘Banking’ as an activity
involves acceptance of deposits and lending or investment of money. It facilitates
business activities by providing money and certain services that help in exchange of
goods and services. Therefore, banking is an important auxiliary to trade. It not only
provides money for the production of goods and services but also facilitates their
exchange between the buyer and seller.
You may be aware that there are laws which regulate the banking activities in our
country. Depositing money in banks and borrowing from banks are legal transactions.
Banks are also under the control of government. Hence they enjoy the trust and
confidence of people. Also banks depend a great deal on public confidence. Without
public confidence banks cannot survive.
Nationalisation of BanksNationalisation of Banks in India:
After independence the Government of India (GOI) adopted planned economic
development for the country (India). Accordingly, five year plans came into existence
since 1951. This economic planning basically aimed at social ownership of the means of
production. However, commercial banks were in the private sector those days. In 1950-
51 there were 430 commercial banks. The Government of India had some social
objectives of planning. These commercial banks failed helping the government in
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attaining these objectives. Thus, the government decided to nationalize 14 major
commercial banks on 19th July, 1969. All commercial banks with a deposit base over
Rs.50 crores were nationalized. It was considered that banks were controlled by business
houses and thus failed in catering to the credit needs of poor sections such as cottage
industry, village industry, farmers, craft men, etc. The second dose of nationalisation
came in April 1980 when banks were nationalized.
The following list contains a list of different types of banks in India.
Central Bank:
Reserve Bank of India (RBI)
Public Sector Banks (Nationalised banks):
State Bank of India (SBI)
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
Bank of India
Canara Bank
Central Bank of India
Corporation bank
Indian Bank
Indian overseas bank
Syndicate Bank
UCO Bank
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Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of Maharashtra
Dena Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Union Bank of India
United Bank of India
Vijaya Bank
IDBI Bank
Private Sector Banks:
HDFC Bank
ICICI Bank
Federal Bank
ING Vysya Bank
Axis Bank
Yes Bank
Bank of Rajasthan
Bharat Overseas Bank
Catholic Syrian Bank
Centurion Bank of Punjab
City Union Bank
Development Credit Bank
Dhanalakshmi Bank
Ganesh Bank of Kurundwad
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IndusInd Bank
Jammu & Kashmir Bank
Karnataka Bank Limited
Karur Vysya Bank
Kotak Mahindra Bank
Lakshmi Vilas Bank
Nainital Bank
Ratnakar Bank
SBI Commercial and International Bank
South Indian Bank
Amazing Mercantile Bank
Punjab National Bank
Rupee Bank
Saraswat Bank
Tamilnad Mercantile Bank
Thane Janata Sahakari Bank
Bassein Catholic Bank
Foreign Banks:
ABN AMRO
BNP Paribas
Citibank India
HSBC (Hongkong & Shanghai Banking Corporation)
JPMorgan Chase Bank
Bank of America
Standard Chartered Bank
Barclays Bank
Deutsche Bank
Royal Bank of Scotland
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Abu Dhabi Commercial Bank Ltd
American Express Bank
Antwerp Diamond Bank
Arab Bangladesh Bank
Bank International Indonesia
Bank of Bahrain & Kuwait
Bank of Ceylon
Bank of Nova Scotia
Bank of Tokyo Mitsubishi UFJ
Calyon Bank
ChinaTrust Commercial Bank
Cho Hung Bank
DBS Bank
Krung Thai Bank
Mashreq Bank
Mizuho Corporate Bank
Oman International Bank
Societe Generale
State Bank of Mauritius
Scotia
Taib Bank
History of IOB
How it began:
Indian Overseas Bank (IOB) was founded on February 10th 1937, by
Shri.M.Ct.M.Chidambaram Chettyar, a pioneer in many fields - Banking, Insurance and
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Industry with the twin objectives of specialising in foreign exchange business and
overseas banking.
IOB had the unique distinction of commencing business on 10th February 1937 (on the
inaugural day itself) in three branches simultaneously - at Karaikudi and Chennai in India
and Rangoon in Burma (presently Myanmar) followed by a branch in Penang. At the
dawn of Independence IOB had 38 branches in India and 7 branches abroad. Deposits
stood at Rs.6.64 Crs and Advances at Rs.3.23 Crs at that time.
Pre-nationalisation era (1947- 69):
During the period, IOB expanded its domestic activities and enlarged its international
banking operations. As early as in 1957, the Bank established a training centre which has
now grown into a Staff College at Chennai with 9 training centres all over the country.
IOB was the first Bank to venture into consumer credit. It introduced the popular
Personal Loan scheme during this period. In 1964, the Bank made a beginning in
computerisation in the areas of inter-branch reconciliation and provident fund accounts.
In 1968, IOB established a full-fledged department to cater exclusively to the needs of
the Agriculture sector.
At the time of Nationalisation (1969):
IOB was one of the 14 major banks that was nationalised in 1969. On the eve of
Nationalisation in 1969, IOB had 195 branches in India with aggregate deposits of Rs.
67.70 Crs. and advances of Rs. 44.90 Crs.
Post - Nationalisation era (1969-1992):
In 1973, IOB had to wind up its five Malaysian branches as the Banking law in Malaysia
prohibited operation of foreign Government owned banks. This led to creation of United
Asian Bank Berhad in which IOB had 16.67% of the paid up capital. In the same year
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Bharat Overseas Bank Ltd was created in India with 30% equity participation from IOB
to take over IOB’s branch at Bangkok in Thailand.
In 1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency
Banking Unit in the free trade zone in Colombo in 1979. The Bank has sponsored 3
Regional Rural Banks viz. Puri Gramya Bank, Pandyan Grama Bank, Dhenkanal Gramya
Bank. The Bank setup a separate Computer Policy and Planning Department (CPPD) to
implement the programme of computerisation, to develop software packages on its own
and to impart training to staff members in this field.
Post Reform Period - Unprecedented developments (1992 & after):
IOB entered Web site during the month of February 1997.
IOB got autonomous status during 1997-98
IOB had the distinction of being the first Bank in Banking Industry to obtain ISO 9001
Certification for its Computer Policy and Planning Department from Det Norske Verities
(DNV), Netherlands in September 1999. This Certification covers Design, Development,
Implementation and Maintenance of software developed in-house, procurement and
supply of hardware and execution of turnkey projects. IOB started STAR services in
December 1999 for speedy realization of outstation cheques. Now the Banks has 14
STARS Centre’s and one Controlling Centre for providing this service. During 1999,
IOB started tapping the potential of internet by enabling ABB card holders in Delhi to
pay their telephone bills by just logging on to MTNL web site and by authorizing the
Bank to debit towards the telephone bills. A Voluntary Retirement Scheme was
introduced in the Bank on the lines of IBA package with Boards approval. The scheme
was offered to Officers/Employees from December 15, 2000. The Bank made a
successful debut in raising capital from the public during the financial year 2000-01,
despite a subdued capital market. The issue opened on September 25, 2000 for raising
Rs.111.20 crore and was oversubscribed by 1.87 times. The issue closed on September
29, 2000 - on the earliest closing day. The allotment was made in October 2000.
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Consequent to the public issue, the share of the Government in the Bank's capital came
down to 75%. The shares of the Bank have been listed on the Madras Stock Exchange
(Regional), Stock Exchange at Mumbai and the National Stock Exchange of India Ltd.
IOB bagged the NABARD's award for credit linking the highest number of Self Help
Groups for 2000-2001 among the Banks in Tamil Nadu.
IDRBT (Institute for Development and Research in Banking Technology) conferred the
Best Award under Banking Technology to IOB. The award was given for the innovative
use of banking applications on INFINET (Indian Financial Network) for the year 2001.
Mobile banking under SMS technology implemented in Ahmedabad and Baroda. Pilot
run of Phase I of the Internet Banking commenced covering 34 branches in 5
Metropolitan centres. IOB was one among the first to join Reserve Bank of India’s
negotiated dealing system for security dialing online. The Bank has finalised an e-
commerce strategy and has developed the necessary internet banking modules in-house.
For the first time a Total Branch Automation package developed in-house has been
customised in one of the Overseas Branches of the Bank. Most software developed in-
house. IOBNET connects Central Office with all Regional Office. The Bank has paid a
maiden dividend of 10% p.a for 2000-01, followed by 12% during 2001-02.
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13
CHAPTER – 2
OPENING OF VARIOUS ACCOUNTS
Savings Bank Account:
Savings Bank account is a form of demand deposit account, opened mainly for the
purpose of saving and not for any business purpose. Savings Bank accounts are meant to
inculcate Savings habit among the citizens while allowing them to use their funds as per
their convenience. The Savings Bank accounts are opened by the bank on proper
introduction and also after ensuring that the customer satisfies the KYC (Know Your
Customer) form.
Procedure for Opening an SB account:
Persons desiring to open a Savings Bank Account must attend the Bank, when he/she will
be furnished with a copy of rules and a form of an application to open an account.
Along with the applications, every depositor is required to furnish a CROP (Customer's
Record of Profile) Form duly filled in and signed to comply with KYC (Know Your
Customers) forms as prescribed by RBI. This form would be updated every year by the
customer.
Every deposit account opened with the Bank would carry a nomination and the
depositor(s) shall at the time of opening the account nominate an individual (not being a
minor) of his/her/their choice and submit the application along with the nomination form
(annexed to the account opening form) duly filled in and signed. Nomination in two or
more names/ proportionate nomination are not possible. The nomination can be changed
at any time by making an application by all account holders to the bank.
When an applicant is unable to write he/she will affix his/her left hand thumb impression
in the presence of a witness known to the Bank. Withdrawals for such accounts will be by
withdrawal forms only.
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Every depositor is required to give two copies of latest passport size photographs and the
specimen of his/her signature in duplicate for record. The signature must be legible and
well formed. All withdrawal forms, cheques and letters to the Bank must be signed
strictly in accordance with such specimen.
Bank will normally accept the following documents for identification and address proof:
1 Pass port
2 PAN card
3 Voters Identity Card
4 Driving Licence
5 Identity Card (Subject to Bank’s Satisfaction).
The customer is also required to submit any one of the following documents for verifying
the correct permanent address namely
1 Telephone Bill,
2 Letter from any recognized Public Authority
3 Electricity Bill
4 Ration Card
5 Letter from employer subject to satisfaction on Bank
6 Propery Tax Book/Receipt
7 Registered Lease Deed.
(Originals should be submitted with a photocopy. After perusal original will be returned
by the bank)
SB account transactions and maintenance:
1) First, cash transactions are conducted. Then any other transactions other than the
of cash nature such as, cheques will be conducted.
2) Transaction in SB is transfer of money from on account to another.
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3) And cheques clearing, Customer of the concerned bank will make payment to a
third party. For example, if a customer is from IOB, then he will pay the third
party through IOB issued cheques. The third party may have his account in some
other bank. He takes the cheque given by us to his bank and presents it to the
bank. His bank will send the cheque to IOB for clearing. If there are sufficient
amount in our account then the cheque will get cleared, otherwise, it will be back
to the bank from which the cheque was sent.
4) Minimum balance should maintain of Rs. 100/- for non-cheque operated accounts
and Rs. 500/- for cheque operated accounts in branches in rural and semi-urban
areas. It is Rs.500 for non-cheque operated account and Rs.1000 for cheque
operated account in other branches.
5) For pension accounts the minimum balance is Rs. 5/- for non-cheque operated
accounts and Rs. 250/- for cheque operated accounts
Interest rate:
Interest rate of SB is 4.00%. Interest is payable half-yearly, every January and July on the
minimum balance in the account, between the 10th and last day of the month.
No Frills Savings account:
In order to inculcate the savings habit among low-income and poor people, bank has
introduced "No Frills" SB account in rural and Semi Urban branches. The minimum
balance in the account will be Rs 5 and the maximum balance should not exceed Rs
50,000 and the total credits in the account in one year not to exceed Rs 1 lac. Cheque
Books will not be issued and cash withdrawals to be permitted only through withdrawal
slips. Number of transactions permitted are 25 per half year
Closure of SB account:
A depositor wishing to close his/her account must present the passbook in order that the
interest due on the account may be entered and a final balance struck. The amount will
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then be paid to the depositor against his/her receipt. The unused cheque forms, if any,
would be returned to the Bank, along with the ATM/Credit Card.
If a depositor wishes to close the account within three months after opening the same, a
charge of Rupee Twenty only will be made.
Current account Transactions (CC a/c):
Current Deposit Schemes are cheques operated accounts primarily meant for
businessmen, firms, companies, and public enterprises etc. that have numerous daily
banking transactions.
Current accounts are opened at the discretion of the Bank, on proper introduction.
Accounts can be opened in the names of individuals, singly or jointly, proprietary
or partnership, companies, etc. The KYC-AML norms as indicated under SB
Account are applicable while opening current accounts also.
The minimum balance to be maintained in Current Account is Rs.1000/- in rural,
semi-urban branches and Rs 2,000/ in urban and Metropolitan Branches. In the
case of Registered Tiny Sector, village and cottage industries, the minimum
balance is Rs.1000/- at all branches.
At the time of opening the account, customers/ deposits should declare the details
of credit facility with any other bank or any other branch of Indian Overseas
Branch.
Operations in current accounts are only by cheques issued by the bank.
MICR cheque books are issued (presently in all Metropolitan cities) at a cost of
Rs2.30./- per cheque leaf, payable at the time of issue of the cheque book.
The Bank undertakes, on behalf of the customers, collection of cheques, hundis,
bills, drafts, salary, pension bills, etc., in Current accounts.
Standing Instructions for remittances such as, insurance premia, subscription for
clubs, etc., will be carried out by the Bank, subject to levy of service charges in
force.
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No interest will be paid on Current accounts. Countervailing interest on Current
account balances (any benefit of interest allowed on any account in the nature of
Current account maintained with the bank by its borrower) is also prohibited.
However, interest will be paid on credit balances in current accounts in the names
of deceased individual deposits from the date of death of the deposit till the date of
payment to the legal heir(s) / representative(s), at the rate applicable for savings
bank accounts as ruling on the date of payment.
Current accounts can be transferred from one branch to another, at the request of
the account-holders.
Nomination facility is available for current accounts opened in the names of one or
more individuals.
The Bank reserves the right to close unremunerated and undesirable current
accounts, after giving notice to such account-holder(s).
Any loss of cheque leaf or cheque book should be informed to the branch
immediately furnishing the full particulars of cheque or cheques issued.
In case of return of cheque issued by the account-holder, the bank charges Rs.10/-
in the first instance and thereafter Rs.20/- for each return of cheque issued by the
account holder
Closure of Current account:
Cheque book should be submitted by the company to the bank and in case of cash
credit balance, commission will be claimed by the bank unlike in SB a/c, where no
commission will be claimed. To get signature from all dignitaries of the company
and also surrender the ATM card, if given by the bank while maintaining current
a/c. They should also pass such resolution that the company is closing its account.
In case of partnership firm while staring the firm, a clause to this effect should be
passed stating closure of the account.
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Opening of Term Deposit account:
Term deposit accounts can be opened by –
A person in his own name.
Two or more persons in their joint names payable to - both or all of them or to the
survivor(s); or either or any one or more of them or to the survivor(s).
A natural guardian on behalf of minor.
A natural guardian in the joint names of himself/herself and the minor, payable to
either or survivor.
A person in the name of any minor for whom the said person is the guardian
appointed by a Court.
A minor aged 10 years or above in his single name to be operated upon by
himself.
A Club, Association, Society, Educational Institution and other such bodies.
Trustees / Executors / Administrators / Courts.
Proprietorships, Partnerships and Limited Companies.
The depositor has to submit two passport size photographs.
Introduction of Term Deposit account:
Introduction is necessary for all deposit accounts. Such introduction may be by an
existing account holder or a respectable member of the local community known to the
Bank, who should normally call at the Bank and sign in the column specially provided for
the purpose in the account opening form. The introducer should have conducted his/her
account in a satisfactory manner for a minimum period of six months.
Acceptance of passports/postal identification cards for the purpose of introduction:
Passports/Postal identification cards are accepted as valid documents for
the purpose of identification/ introduction for opening of new Saving Bank
and Term Deposit accounts.
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The signature of the applicant and other particulars as given in the
application form and specimen signature card must agree with that recorded
in the passport/postal identification card.
Any one of the other documents like Driving Licence, Voter Identity card,
PAN card, Ration card etc., is also to be submitted for the purpose
verifying the identity and address of the customer.
The Citizens’ are requested to introduce customers who are well known to
them with regard to their address, occupation, etc., so as to avoid opening
of accounts by undesirable persons.
Addition / Deletion of Names in Term deposits:
The depositors can add or delete names in the term deposits, as detailed below:
When the deposit is in the name of a single individual, the addition may be made
at the written request of the sole depositor.
If the deposit is in the joint names of two or more persons, for adding or deleting
the name of any person, written consent of all the depositors is required. Splitting
up of joint deposits in the name of each joint account holders is also permitted
when written instruction duly signed by all the depositors’ is furnished to the
Bank.
If the request for addition/deletion of a name is received from the survivor(s), after
the demise of one of the joint depositors, such request can be acceded to, provided
the legal heirs of the deceased and the survivor(s) give a consent letter.
Transfer of deposits accounts from one branch to another:
Current / Savings Bank / Recurring Deposits / Term Deposits are freely transferable from
one branch to another under written instructions of the customer.
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Interest rate on deposits:
The interest rate applicable to the different schemes are determined by the bank based on
market conditions, cost of funds etc. The interest rate offered are non-discriminatory and
are applicable uniformly to all depositors at all branches of the Bank
Bank is also offering floating interest rate linked to average Government Security rate for
the relevant period. Minimum deposit amount is Rs 1 lac. Minimum period of deposit is
3 years and maximum period is 10 years. Premature closure of deposit is not allowed
before completion of 3 years. The interest rate is reset twice every year in March and
September based on the link interest rate. The deposits are accepted at select branches
only due to operational convenience. Conversion from floating interest rate to fixed
interest rate is not permitted. Deposits received from the Senior Citizens under the
scheme are not eligible for additional interest of 1%.
Closure of Term deposits:
You should at the back of the receipt, which you will receive at the starting of opening
your account and at every renewal that you make if you wish to continue. In this receipt
you should mention your intention of closing the deposit and if possible also mention
where they wish to transfer this account.
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Non-Resident Accounts
Non-Resident Accounts:
Foreign Currency (Non Resident) (FCNR) accounts can be opened by non-
resident Indian and persons of Indian origin.
Accounts can be opened jointly with Resident close relatives
The accounts can be opened as Term Deposits in the following currencies:
US DOLLAR (USD)
GREAT BRITAIN POUND (GBP)
EURO (EUR)
JAPANESE YEN (JPY)
CANADIAN DOLLAR (CAD)
AUSTRALIAN DOLLAR (AUD)
The period of deposit will be 1 year to 5 years. Interest will be paid on maturity, in the
same currency of the deposit. For deposits of tenure up to one year simple interest will be
paid and for deposits of tenure beyond one year the interest will be compounded at half
yearly rests. The maturity proceed inclusive of interest is fully repatriable. Forward
contract can be booked for conversion of proceeds in to Indian Rupee, if needed.
Premature closure is allowed. However the interest payable in such cases will be one
percent below the rate applicable for the period the deposit has run. No interests allowed
on a deposit if closed prematurely before completion of one year.
Swap charges will be levied for premature closure of large deposits. Loan against such
deposits can be availed in Indian rupees upto 75% of the deposit amount and accrued
interest or Indian rupees one crore (whichever is lower) for purposes other than
investment.
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Resident Foreign Currency Account (RFC):
A Resident Foreign Currency account in India can be maintained by a Non-resident
Indian who has returned home for permanent settlement, after staying abroad for a
minimum period of one year. An RFC account can be opened without any regulatory
approval from the Reserve Bank of India. RFC accounts can be maintained in
USD/EUR/GBP/JPY/AUD/CAD in the form of Savings / Term Deposit
Credits to the account can in any of the following means:
Balances standing to the credit of NRE and FCNR accounts at the time of return.
Income from overseas assets or sales proceeds from overseas assets.
Entire amount of pension received from abroad. Balance in the account can be
remitted abroad for bonafide purposes either for yourself or your dependants. If
you decide to go abroad again you can transfer your funds to NRE/FCNR
account(s) Interest earned on RFC account is subject to tax.
Non-Resident Ordinary (NRO):
NRIs and PIO can maintain NRO account for bonafide local banking transactions
denominated in Rupees, not involving any violation of the provisions of FEMA and rules
and regulations made thereunder. (Note: Opening of accounts by individuals/entities of
Bangladesh / Pakistan nationality / ownership requires prior approval of Reserve Bank of
India)When a resident Indian becomes nonresident, the existing account in India will be
designated as NRO account. The accounts can be in the form of savings, current or term
deposits. Joint account with other NRI(s)/PIO or close resident relative is permitted.
Remittances from abroad and legitimate dues in India of the account holder can be
credited to the account. Interest income is subject to income tax.
The following debits are permitted in the account:
All local payments in rupees including payments for investments in India subject
to compliance with the relevant regulations made by the Reserve Bank.
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Remittance outside India of current income like rent, dividend, pension, interest,
etc. in India of the account holder.
Remittance up to USD One million, per financial year (April-March), for all
bonafide purposes, to the satisfaction of the bank.
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Honoring and Stopping cheques
Introduction:
Keeping in view the technological progress in payment and settlement systems and the
qualitative changes in operational systems and processes that have been undertaken by a
number of Banks, the Reserve Bank of India had, with effect from 1st November 2004
withdrawn its earlier instructions to commercial banks on (1) Immediate Credit of
Local/Outstation instruments, (2) Time Frame for collection of Local/Outstation
Instruments, and (3) Interest payment for delayed collection. The withdrawal of these
mandatory guidelines was expected to enable market forces of competition to come into
play to improve efficiencies in collection of cheques and other instruments. This
collection policy of the Bank is a reflection of our on-going efforts to provide better
service to our customers and set higher standards for performance. The policy is based on
principles of transparency and fairness in the treatment of customers. The bank is
committed to increased use of technology to provide quick collection services to its
customers. This policy document covers the following aspects:
Collection of cheques and other instruments payable locally, at centres within
India and abroad
Our commitment regarding time norms for collection of instruments
Policy on payment of interest in cases where the Bank fails to meet time norms
for realisation of proceeds of outstation instruments
Our policy on dealing with collection instruments lost in transit
Arrangements for collection:
Local Cheques
All cheques and other Negotiable Instruments payable locally would be presented
through the clearing system prevailing at the centre. Cheques deposited at branch
counters and in collection boxes within the branch premises before the specified cut-off
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time will be presented for clearing on the same day. Cheques deposited after the cut-off
time and in collection boxes outside the branch premises including off-site ATMs will be
presented in the next clearing cycle. As a policy bank would give credit to the customer’s
account on the same day clearing settlement takes place. Withdrawal of amounts as
credited would be permitted as per the Cheque return schedule of the clearinghouse.
Wherever applicable, facility of high-value clearing (same day credit) will be extended to
customers. Bank branches situated at centres where no clearing house exists, would
present local cheques on drawee banks across the counter and it would be the bank’s
endeavour to credit the proceeds at the earliest. All branches will fix up the day’s cut off
time for the inclusion of instruments for clearing, taking into account the clearing cycle
and other related factors, like distance from clearing house, communication facility, local
established practices, methodology being followed by other banks in the particular centre
etc. While arriving at the said cut off time, care would be taken to extend maximum
leverage time to the advantage of the customers. Display board will be placed in the
banking hall, indicating the cut off time limits for receipt of cheques for payment to
Government Accounts like income-tax etc and High value cheques
Outstation Cheques:
Cheques drawn on other banks at outstation centres will normally be collected through
Bank’s branches at those centres. Where the bank does not have a branch of its own, the
instrument would be directly sent for collection to the drawee bank or collected through a
correspondent bank. The bank would also use the National Clearing Services offered by
the Reserve Bank of India at centre where such collection services exist.
Cheques drawn on bank’s own branches at outstation centres will be collected using the
inter-branch arrangements in vogue. Branches which are connected through a centralised
processing arrangement and are offering anywhere banking services to its customers will
provide same day credit to its customer in respect of outstation instruments drawn on any
of its branches in the CBS network.
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Cheques payable in foreign countries
Cheques payable at foreign centres where the bank has branch operations (or banking
operations through a subsidiary, etc) will be collected through that office. The services of
correspondent banks will be utilized in country/centre, where the correspondent has
presence. Cheques drawn on foreign banks at centres where the bank or its
correspondents do not have direct presence will be sent direct to the drawee bank with
instructions to credit proceeds to the respective Nostro account of the bank maintained
with one of the correspondent banks. The day when the amount is due for credit is the
date of credit to Nostro Account plus 15 days for USD cheques and date of credit to
Nostro Account plus 21 days in case of other currencies subject to other conditions as
applicable in respective countries. The exchange rate will be the rate applicable on the
date on which the foreign currency is converted in Indian Rupees and credited to the
Customer’s account by the Bank.
Immediate credit of local/outstation cheques/instruments: Branches/Extension counters of
the Bank will consider providing immediate credit to outstation instruments which
include Demand drafts drawn on other Banks, Interest Warrants and Dividend Warrants
upto the aggregate value of Rs.15000/- tendered for collection by individual account
holders subject to satisfactory conduct of such accounts for a period not less than 6
months. Immediate credit will be provided against such collection instruments at the
specific request of the customer or as per prior arrangement. The facility of immediate
credit would also be made available in respect of local cheques at centres where no
formal clearing house exists. The facility of immediate credit will be offered on savings
Bank/Current/Cash Credit Accounts of the customers. For extending this facility there
will not be any separate stipulation of minimum balance in the account. Under this
policy, prepaid instruments like demand drafts, interest/dividend warrants shall be treated
on par with cheques. In the event of dishonour of cheques against which immediate credit
was provided, interest shall be recoverable from the customer for the period the bank
27
remained out of funds at the rate applicable for overdraft limits sanctioned for individual
customers. For the purpose this policy, a satisfactorily conducted account shall be the one
Opened at least six months earlier and complying KYC norms
Conduct of which has been satisfactory and bank has not noticed any irregular
dealings.
Where no cheques/instruments for which immediate credit were afforded returned
unpaid for financial reasons.
Where the bank has not experienced any difficulty in recovery of any amount
advanced in the past including cheques returned after giving immediate credit.
Bank shall levy normal collection charges and out of pocket expenses while
providing immediate credit against outstation instruments tendered for collection.
Exchange charges applicable for cheque purchase will not however be charged.
Purchase of local and outstation cheques: Bank may, at its discretion, purchase
local/outstation cheque tendered for collection at the specific request of the
customer or as per prior arrangement. Besides satisfactory conduct of account, the
standing of the drawer of the cheque will also be a factor considered while
purchasing the cheque.
Time frame for collection of Local/ Outstation cheques / Instruments:
For local cheques presented in clearing credit will be afforded as on the date of settlement
of funds in clearing and the account holder will be allowed to withdraw funds as per
return clearing norms in vogue. Cheques/Instruments presented in high value clearing
(with the minimum value of Rs 1 lac) shall be credited on the same day (applicable only
in areas covered by high value/same day clearing)
For cheques and other instruments sent for collection to centres within the country the
following time norms shall be applied.
28
Cheques presented at any of the four major Metro Centres (New Delhi, Mumbai,
Kolkata and Chennai) and payable at any of the other three centres: Maximum
period of 7 days.
Metro Centres and State Capitals (other than those of North Eastern States and
Sikkim) Maximum period of 10 days.
In all other Centres: Maximum period of 14 days.
Cheques drawn on foreign countries: Such instruments are accepted for collection
on the "best of efforts" basis. Bank may enter into specific collection arrangement
with its correspondent bank for speedy collection of such instrument. Bank would
give credit to the party on credit of proceeds to the Bank’s Nostro Account with
the correspondent bank after taking into account cooling periods as applicable to
the countries concerned. The above time norms are applicable irrespective of
whether cheques/instruments are drawn on the bank’s own branches or branches
of other banks.
Payment of interest for delayed collection of Outstation Cheques: As part of the
compensation policy of the bank, the bank will pay interest to its customer on the amount
of collection instruments in case there is delay in giving credit beyond the time period
mentioned above. Such interest shall be paid without any demand from customers in all
types of accounts. There shall be no distinction between instruments drawn on the bank’s
own branches or on other banks for the purpose of payment of interest on delayed
collection.
Interest for delayed collection shall be paid at the following rates:
Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be
in collection of outstation cheques.
Where the delay is beyond 14 days, interest will be paid at the rate applicable to
for term deposits of the respective period.
29
In the case of extraordinary delay, i.e. delay exceeding 90 days, interest will be
paid at the rate of 2% above the corresponding Term deposit rate.
In the event of the proceeds of Cheque under collection was to be credited to an
overdraft / loan account of the customer, interest will be paid at the rate
applicable to the loan account. For extraordinary delays, interest will be paid at
the rate of 2% above the rate applicable to the loan account. It may be noted that
interest payment as given above would be applicable only for instruments sent for
collection within India.
Cheques/Instruments lost in transit, in clearing process or at paying Bank’s Branch:
In the event a Cheque or an instrument accepted for collection is lost in transit or in the
clearing process or at the paying bank’s branch, the bank shall immediately on coming to
know of the loss, bring the same to the notice of the accountholder so that the account
holder can inform the drawer to record stop payment and also take care that the cheques,
if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost
cheques/instruments. The bank would provide all assistance to the customer to obtain a
duplicate instrument from the drawer of the Cheque.
In line with the compensation policy of the bank the bank will compensate the
account holder in respect of instruments lost in transit in the following way:
In case intimation regarding loss of instrument is conveyed to the customer
beyond the time limit stipulated for collection (7/10/14 days as the case may be)
interest will be paid for the period exceeding the stipulated collection period at
the rates specified above.
In addition, bank will pay interest on the amount of the Cheque for a further
period of 15 days at Savings Bank rate to provide for likely further delay in
obtaining duplicate Cheque/instrument and collection thereof.
The bank would also compensate the customer for any reasonable charges he/she
incurs in getting duplicate Cheque/instrument upon production of receipt, in the
30
event the instrument is to be obtained from a bank/institution who would charge a
fee for issue of duplicate instrument.
Bank will reimburse the related charges debited in the account of the drawer (of
collection/clearing cheque deposited by the customer which is lost in transit) by the
drawee bank branch. Further, as a customer enhancement measure, branches shall keep a
photocopy of the instrument to meet any eventuality arising out of instruments lost in
transit.
In the cases of discounted cheques, which are lost in transit, Bank will deal with the
same as given below:
Bank will seek the consent of the beneficiary-customer for debiting his/her
account towards recovery of discounted value of the cheque which is lost-in-transit
and interest thereon
If the Customer’s consent is not forthcoming, Bank will not debit customer’s
account towards recovery and instead will pursue the process of obtention of
duplicate cheque by rendering necessary assistance/ support to the customer.
Discounted value of the cheque and the interest thereon will be collected from the
customer. If the customer or the drawer is not cooperating for getting the duplicate
instrument, the Bank will give prior notice to the customer and debit the account
of the customer for the value paid with interest. In case the recovery is found to be
difficult, necessary legal action will be initiated.
Force Majeure: The bank shall not be liable to compensate customers for delayed credit
if some unforeseen event (including but not limited to civil commotion, sabotage,
lockout, strike or other labour disturbances, accident, fires, natural disasters and other
“Acts of God” war, damage to the Bank’s facilities or of its correspondent bank(s)
absence of the usual means of communication or all types of transportation, etc beyond
the control of the Bank prevents it from performing its obligations with the specified
service delivery parameters.
31
Charging of interest on cheques returned unpaid where instant credit was given: If a
cheque sent for collection for which immediate credit was provided by the bank is
returned unpaid, the value of the cheque will be immediately debited to the account. The
customer will not be charged any interest from the date immediate credit was given to the
date of return of the instrument unless the bank had remained out of funds on account of
withdrawal of funds. Interest where applicable would be charged on the notional
overdrawn balances in the account had credit not been given initially. If the proceeds of
the Cheque were credited to the Savings Bank Account and was not withdrawn, the
amount so credited will not qualify for payment of interest when the Cheque is returned
unpaid. If the proceeds of the Cheque were credited to an overdraft/loan account, interest
shall be recovered at the rate of 2% above the interest rate applicable to the overdraft
/loan from the date of credit to the date of reversal of the entry if the Cheque/instrument
was returned unpaid to the extent the bank was out of funds.
Stop Payment Facility:
Bank will accept stop payment instruction from you in respect of cheques issued by you.
Immediately on receipt of your instructions we will give acknowledgement and take
action provided these cheques have not already been cleared by us. levy charges, if any,
and the same will be included in the Tariff Schedule as amended from time to time. In
case a cheque has been paid after stop payment instructions are acknowledged, we will
reimburse and compensate you as per the compensation policy of the bank.
Payment of cheques after Stop Payment instructions:
In case a cheque has been paid after stop payment instruction is acknowledged by the
bank, the bank shall reverse the transaction and give value dated credit to protect the
interest of the customer. Any consequential financial loss to the customer will be
compensated as provided under para 1 above. Such debits will be reversed within 2
working days of the customer intimating the transaction to the Bank.
Payment of interest for delayed collection of Outstation Cheques:
32
As part of the compensation policy of the bank, the bank will pay interest to its customer
on the amount of collection instruments in case there is delay in giving credit beyond the
time period mentioned above. Such interest shall be paid without any demand from
customers in all types of accounts. There shall be no distinction between instruments
drawn on the bank’s own branches or on other banks for the purpose of payment of
interest on delayed collection.
Cheques clearing process:
In the event a Cheque or an instrument accepted for collection is lost in transit or in the
clearing process or at the paying bank’s branch, the bank shall immediately on coming to
know of the loss, bring the same to the notice of the accountholder so that the account
holder can inform the drawer to record stop payment and also take care that the cheques,
if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost
cheques/instruments. The bank would provide all assistance to the customer to obtain a
duplicate instrument from the drawer of the Cheque.
In line with the compensation policy of the bank the bank will compensate the account
holder in respect of instruments lost in transit in the following way:
In case intimation regarding loss of instrument is conveyed to the customer
beyond the time limit stipulated for collection interest will be paid for the period
exceeding the stipulated collection period at the rates specified above.
In addition, bank will pay interest on the amount of the Cheque for a further period
of 15 days at Savings Bank rate to provide for likely further delay in obtaining
duplicate Cheque/instrument and collection thereof.
The bank would also compensate the customer for any reasonable charges he/she
incurs in getting duplicate Cheque/instrument upon production of receipt, in the
event the instrument is to be obtained from a bank/institution who would charge a
fee for issue of duplicate instrument.
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MONEY LAUNDERING
Definition:
The conversion or transfer of property, knowing that such property is derived from
serious crime, for the purpose of concealing or disguising the illicit origin of the property
or of assisting any person who is involved in committing such an offence or offences to
evade the legal consequences of his action, and the concealment or disguise of the true
nature, source, location, disposition, movement, rights with respect to, or ownership of
property, knowing that such property is derived from serious crime.
Money laundering is the process by which large amounts of illegally obtained money
(from drug trafficking, terrorist activity or other serious crimes) is given the appearance
of having originated from a legitimate source. If done successfully, it allows the criminals
to maintain control over their proceeds and ultimately to provide a legitimate cover for
their source of income.
Money laundering plays a fundamental role in facilitating the ambitions of the drug
trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as
the many others who need to avoid the kind of attention from the authorities that sudden
wealth brings from illegal activities. By engaging in this type of activity it is hoped to
place the proceeds beyond the reach of any asset forfeiture laws.
The Money laundering process:
Money laundering is not a single act but is in fact a process that is accomplished in three
basic steps. These steps can be taken at the same time in the course of a single
transaction, but they can also appear in well separable forms one by one as well.
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The steps are:-
Placement;
Layering; and
Integration.
There are also common factors regarding the wide range of methods used by money
launderers when they attempt to launder their criminal proceeds. Three common factors
identified in laundering operations are;
The need to conceal the origin and true ownership of the proceeds;
The need to maintain control of the proceeds;
The need to change the form of the proceeds in order to shrink the huge volumes
of cash generated by the initial criminal activity.
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36
CHAPTER – 3
Automatic Teller Machine (ATM)
Indian Overseas Bank has achieved results owing to performance. With a modest
beginning of the ATM installation in Mumbai, in Feb 1997 .IOB have a total of over
700ATMs adding strength to its business.
While expanding its scope of reach in giving its customer’s access to Any Time Money
ATMs have been installed across the length and breadth of the country.
ATMs are used for dispensing cash 24 hours a day. ATM cards are issued only to those
individuals who are majors and holding either a Savings Bank or Current Account.
These machines support transactions online and offline.
The online transactions supported are:
Cash Withdrawal
Balance Inquiry
Statement Inquiry
The offline transactions supported are:
Cash Withdrawal
Deposit of Cash/Cheque
Request for Statement/Cheque Book
All types of services are chargeable at nominal rates.
The card holder should maintain the minimum balance prescribed by the Bank from time
to time. Overdrawing is prohibited and the customer is bound by the action of the Bank.
During the currency of the card the savings/current/deposit accounts of the card holder
cannot be closed or transferred to other branches. The Bank reserves the right to
terminate the ATM facility upon occurrence of any of the events, which are inconsistent
with the Bank’s policy with regard to ATMs.
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Our bank has arrangement with the following member banks for sharing of ATM’s.
Indian Bank - Yes Bank Limited
Bank of Maharashtra - Karnataka Bank
Dena Bank - Syndicate Bank
Union Bank of India - United Bank of India
The Bank of Rajasthan Limited - Bank of India
Services offered:
Cash withdrawals
Cash deposits
Cheque Deposits
Statement of Accounts
Cheque/DD etc.
Multilingual screens
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Internet Banking
Internet Banking is the online banking service provided by Indian Overseas Bank for the
benefit of customers to access and transacts their account on all 365 days.
Internet Banking is the most convenient and powerful way to manage your account as it
is Real Time, giving you up-to-the-second details on your account.
Services of Internet Banking:
Balance Enquiry
Last Few transactions
Account Statement
Transfer money to any of your bank accounts (within and outside IOB)
Payment services:
Direct Taxes
Indirect Taxes
College Fees for the students studying at SASTRA-Tanjore
Utility bills like Insurance, mobile etc and many more.
Tamilnadu Electricity board bills
Recurring deposit installments
Loan installments
IOB Credit card dues
Register with Internet banking:
Savings/ Current account holders
Deposit / Loan account holders
Proprietary firms
Partnership companies
Limited Companies
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Societies/Trusts
HUFs
Step to Register:
Step 1:
Login to www.iobnet.co.in
Click on “Register Individual” if you are an individual or a proprietary firm
Else click on “Register Corporate”
Once registered submit the application forms and the annexure displayed to you (in case
of Companies/Partnership firms/Societies/Trusts) to your branch
Note down the PIN number which is to be used for all Funds transfer transactions. Your
account will be activated by the branch on receipt of the application
Step 2:
Login with your password
Login Password & transaction PIN are different where password is used to login and PIN
for funds transfer. The wrong passwords more than 3 times consecutively, will block
your account. Once you’re activated you will receive an e-mail saying that your account
is activated.
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MOBILE BANKING
Mobile Banking is a service that allows customers to do banking transactions on their
mobile phone without making a call, using the SMS facility.
Mobile Banking works on the 'Text Messaging Facility' also called the SMS that is
available on mobile phones. This facility allows sending a short text message from
mobile phone instead of making a phone call.
All that is need to do is, to type out a short text message on mobile phone and send it out
to a specific mobile banking number given by the bank .The response is sent as an SMS
message, all in the matter of a few seconds.
The following transactions are currently available across India -
Balance Inquiry of all accounts linked to Customer Identification Number
(maximum up to five accounts)
Following transactions give information on primary account
Checking the last 3 transactions in your primary account for Mobile Banking
Placing a Stop Payment on a cheque
Requesting a cheque book
Requesting an Account Statement
Cheque Status inquiry
Bill Presentment
Fixed Deposit Inquiry
A Help menu, which gives you the transaction codes for the various transactions
IPIN Re-generation request
SMS Banking initiatives permit you to access your Bank accounts and carry out various
banking transactions and enquire. If you have a mobile phone, you can use the SMS
41
facility and conduct the following operations using the messaging services of your
service provider.
Balance Enquiry
Last Few Transactions
Cheque Paid Status
Cheque Book Request
ATM Locator
Branch Locator
Fund Transfer - Own
Fund Transfer - Third Party
Fund Transfer - Inter Bank
Credit Card Payment
Loan Service
Deposit Balance Enquiry
Movie Ticket Booking
Air Ticket Booking
Demat Service
SMS banking is one the IOB retail banking channels, which allows customers to do
banking activities from their mobile phone using SMS Technology. IOB's mobile
banking keeps its valued customers updated with their bank account details and enables
them to request for their account information and make request to Stop Cheque or cheque
the status of cheque presented.
SMS alert service keeps you informed/ updated about the significant activities/
transactions taken place in your account(s). For example you can receive SMS Account
Balance alerts (Daily, Weekly or Monthly) or get alert whenever any debit or credit
transaction(s) happen in your account for the configurable amount.
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SMS Pull - enquiry enable the bank's mobile banking register to check his/ her account
balance or last few transactions for his/ her account(s) by just sending a message to
9551099007.
For balance enquiry in account:
Format: BAL<space><Account Nickname> to +919551099007
<Account Nickname> = SB+<Your Account Number> (should be 9 digits)
<Account Nickname> = CD+<Your Account Number> (should be 9 digit's) etc.
e.g.: Original Account number: 1234
Equivalent 9-digit account: 000001234
e.g.: BAL<space>SB000001234 to +919551099007
Visit our https://www.iobnet.mobi from your desktop browser. This will open the
customer module where you can click on the "How to Register?" and download the form,
fill the details and just walk in to your nearest branch or apply for the Mobile Banking
service by duly filling the Mobile Banking application form in the branch.
The service is available to all IOB customers with local or foreign currency accounts
(Current, Saving accounts, Loan, Term Deposit or Credit Card).
SMS Banking service works on all GSM mobile phones that support SMS technology.
Compose a new SMS text message as per the sample messages on the SMS Banking User
Guide and send it to +919551099007.
You can save all the text formats you need under the "sent item" on your mobile phone
for your future use. No PIN is required to enquire on accounts.
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Identification of Fake Notes
Despite of skillfully forging a currency note, the genuineness cannot be achieved. The
differences will be due to the Paper Ink, Human Element and above all Unavailability of
the Security Measures taken by the Currency Press by the Government. The genuine
notes are made of a special type of paper which is manufactured in Security Paper Mill,
Hoshangabad (Madhya Pradesh).
In printing, multi-coloured impressions are used with the intaglio printing press. The
forgers use various methods for making the counterfeit currency viz.
Photographic Method
Process made Forgery
Hand engraved blocks
Lithographic Process
Hand Drawn Forgery
Forged notes usually exhibit certain characteristic differences which facilitates easy
identification. There are number of distinguishable features when compared with genuine
notes.
Size: While cutting in bundles the size of the forged notes are not same, while the
size of genuine currency is fixed.
Size of Printed Design: The technique used for printing the genuine notes is
highly sophisticated. It gives each and every line in printing with cleat and sharp
images. It is not possible with the counterfeit currency.
Watermark: In counterfeit notes, the watermark is made by using Opaque Ink,
painting with white solution, stamping a die, engraved with the picture of
44
Mahatma Gandhi and also by applying oil, grease or wax to give the transparent
image of Mahatma Gandhi.
Security Thread: In genuine notes, the security thread is incorporated into the
paper at the time of manufacture of the paper. The security thread in counterfeit
notes is imitated by drawing a line by pencil or printing a line with grey ink or by
using an aluminum thread while pasting two thin sheets of paper. In genuine notes
over security thread one can read the word RBI and BHARAT in Hindi
Numbering: In counterfeit currency it is difficult to reproduce the same shape of
individual numbers again and again with accuracy. The alignment of figures is
also difficult to maintain by the forgers. Spreading of Ink, Smaller or Bigger
Number, Inadequate gaps, and Different alignments in numbers can be regarded
with suspicion.
Quality of Printing: In counterfeit notes the printed lines will be broken and there
may also be smudging of Ink.
Other Techniques
Serial numbers are printed with fluorescent ink which can be seen when viewed
under a ultra-violet lens.
Floral design on the left side- half the denomination of the currency will be
printed on the front side and the other half on the back side. If seen against bright
light, the complete denomination appears.
Just below the floral print, a mark is made in Intaglio (a kind of printing where the
image is slightly raised) for the visually-impaired to identify the denomination.
45
For the Rs. 500 note, the mark is a CIRCLE, for the Rs. 100, it is a TRIANGLE
and a SQUARE for the Rs. 50.
Similarly, a portrait of Mahatma Gandhi, the RBI Seal, a guarantee and promise
clause, an Ashoka Pillar emblem on the left and RBI Governor's signature are all
printed on Intaglio.
A band printed on the right side contains a latent image of the denomination of the
banknote. The numeral appears when the currency is held horizontally at the eye
level.
A wide security thread with inscriptions BHARAT in Hindi and RBI runs through
the banknote. The thread fluoresces on both sides in Ultra-violet light.
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47
48
49
CHAPTER – 4
RATIO ANALYSIS
Meaning and definition of ratio analysis:
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic
use of ratio to interpret the financial statements so that the strength and weaknesses of a
firm as well as its historical performance and current financial condition can be
determined. The term ratio refers to the numerical or quantitative relationship between
two variables.
Capital adequacy ratio:
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time
liabilities and other risks such as credit risk, operational risk, etc. In the simplest
formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's
depositors and other lenders. Banking regulators in most countries define and
monitor CAR to protect depositors, thereby maintaining confidence in the banking
system.
Definition of 'Capital Adequacy Ratio - CAR':
A measure of a bank’s capital. It is expressed as a percentage of a bank's risk weighted
credit exposures.
Capital Adequacy Ratio - CAR' this ratio is used to protect depositors and promote the
stability and efficiency of financial systems around the world. Two types of capital are
measured there are tier one capital, which can absorb losses without a bank being
required to cease trading, and tier two capital, which can absorb losses in the event of a
winding-up and so provides a lesser degree of protection to depositors.
50
Financial assets or the financial value of assets, such as cash.
The factories, machinery and equipment owned by a business.
A term used to describe the capital adequacy of a bank. Tier I capital is core
capital; this includes equity capital and disclosed reserves.
A term used to describe the capital adequacy of a bank. Tier II capital is secondary bank
capital that includes items such as undisclosed reserves, general loss reserves,
subordinated.
SLR (Statutory Liquidity Ratio):
Every bank is required to maintain at the close of business every day, a minimum
proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash,
gold and un-encumbered approved securities. The ratio of liquid assets to demand and
time liabilities is known as Statutory Liquidity Ratio (SLR). RBI is empowered to
increase this ratio up to 40%. Increases in SLR also restrict the bank’s leverage position
to pump more money into the economy.
SLR stands for Statutory Liquidity Ratio. This term is used by bankers and
indicates the minimum percentage of deposits that the bank has to maintain in form
of gold, cash or other approved securities. Thus, we can say that it is ratio of cash
and some other approved securities to liabilities (deposits) it regulates the credit
growth in India. Some non-bankers also wrongly use SLR ratio or SLR Rate
instead of Statutory Liquidity Ratio.
Apart from keeping a portion of deposits with the RBI as cash, banks are also required to
maintain a minimum percentage of deposits with them at the end of every business day,
in the form of gold, cash, government bonds or other approved securities. This minimum
percentage is called Statutory Liquidity Ratio.
Example
51
If you deposit Rs. 100/- in bank, CRR being 6% and SLR being 8%, then bank can use
100-6-8= Rs. 84/- for giving loan or for investment purpose.
Statutory Liquidity Ratio
(SLR)
24%(w.e.f.
18/12/2010)
Decreased from 25%
which was continuing
since 07/11/2009
Cash Reserve Ratio (CRR):
The Reserve Bank of India (Amendment) Bill, 2006 has been enacted and has come into
force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the
Reserve Bank, having regard to the needs of securing the monetary stability in the
country, RBI can prescribe Cash Reserve Ratio (CRR) for scheduled banks without
any floor rate or ceiling rate [Before the enactment of this amendment, in terms of
Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled
banks between 3 per cent and 20 per cent of total of their demand and time liabilities].
RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of
the economy from time to time. Increase in CRR means that banks have fewer funds
available and money is sucked out of circulation. Thus we can say that this serves duel
purposes i.e.(a) ensures that a portion of bank deposits is kept with RBI and is totally
risk-free, (b) enables RBI to control liquidity in the system, and thereby, inflation by
tying the hands of the banks in lending money.
Banks in India are required to hold a certain proportion of their deposits in the
form of cash. However, actually Banks don’t hold these as cash with themselves,
but deposit such case with Reserve Bank of India (RBI) / currency chests, which is
considered as equivalent to holding cash with RBI. This minimum ratio (that is the
52
part of the total deposits to be held as cash) is stipulated by the RBI and is known as
the CRR or Cash Reserve Ratio. Thus, when a bank’s deposits increase by Rs100,
and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6
with RBI and Bank will be able to use only Rs 94 for investments and lending /
credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that
banks will be able to use for lending and investment. This power of RBI to reduce
the lendable amount by increasing the CRR makes it an instrument in the hands of
a central bank through which it can control the amount that banks lend. Thus, it is
a tool used by RBI to control liquidity in the banking system. Some non-bankers
also wrongly use CRR Ratio or CRR Rate instead of Cash Reserve Ratio).
Banks are required to maintain a percentage of their deposits as cash, meaning that if you
deposit Rs. 100/- in your bank, then bank can’t use the entire Rs. 100/- for lending or
investment purpose. They have to maintain a portion of the deposit as cash and can use
only the remaining amount for lending/investment. This minimum percentage which is
determined by the central bank is known as Cash Reserve Ratio.
So if CRR is 6% then it means for every Rs. 100/- deposited in bank, it has to maintain a
minimum of Rs. 6/- as cash. However banks do not keep this cash with them, but are
required to deposit it with the central bank, so that it can help them with cash at the time
of need.
Cash Reserve Ratio (CRR)
4.75% (w.e.f 10/03/2012)
-announced on
24/01/2012
Decreased from
5.50%which was
continuing since
24/01/2012
53
Indian Overseas Bank: Ratio Analysis
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Capital Adequacy Ratio
14.55 14.26 12.70 11.96 13.27
EARNINGS RATIOS
Income from Fund Advances as a % of Op Income
68.05 67.72 66.81 66.06 64.13
Operating Income as a % of Working Funds
11.62 14.31 14.57 13.83 12.92
Fund based income as a % of Op Income
94.65 94.80 94.53 94.59 93.98
Fee based income as a % of Op Income
5.34 5.19 5.46 5.40 6.01
PROFITABLITY RATIOS
Yield on Fund Advances
7.91 9.69 9.73 9.13 8.28
Break-Even Yield Ratio
7.05 8.95 9.04 8.75 6.95
Cost of Funds Ratio 4.79 5.90 6.34 5.83 4.56
Net Profit Margin 8.04 6.14 11.87 13.94 16.18
Adjusted Return On Net Worth
13.12 11.10 21.16 25.31 25.97
Reported Return On Net Worth
13.13 11.13 22.31 25.35 26.04
54
BORROWING RATIOS
Borrowings from RBI as % to Total Borrowings
19.37 0.00 0.00 0.00 8.63
Borrowings from other banks as a % to Total Borrowings
0.00 0.00 0.00 0.00 0.00
Borrowings from others as a % to Total Borrowings
46.46 68.35 47.13 66.24 36.72
Borrowings within India as a % to Total Borrowings
65.83 68.35 47.13 66.24 45.35
Borrowings from outside India as a % to Total Borrowings
34.16 31.64 52.86 33.75 54.64
DEPOSIT RATIOS
Demand Deposit of Total Deposits
8.12 8.67 8.12 10.67 9.91
Saving Deposit of Total Deposits
22.07 23.87 22.13 22.78 24.94
Time Deposit of Total Deposits
69.79 67.45 69.74 66.54 65.14
Deposits within India as % to Total Deposits
96.66 95.16 95.32 95.86 96.56
Deposits Outside India as % to Total Deposits
3.33 4.83 4.67 4.13 3.43
PER BRANCH RATIOS
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Operating Income Per Branch
5.95 5.55 5.58 4.44 3.26
Operating Profit Per Branch
0.74 0.47 0.99 0.81 0.68
Net Profit Per Branch
0.49 0.35 0.64 0.64 0.54
Personnel Expenses Per Branch
0.80 0.85 0.65 0.50 0.50
Administrative Expenses Per Branch
0.80 0.74 0.46 0.30 0.32
Financial Expenses Per Branch
3.61 3.48 3.47 2.81 1.76
Borrowings Per Branch
8.86 4.41 3.35 3.37 1.55
Deposits Per Branch 66.50 54.42 51.24 44.78 36.90
PER EMPLOYEE RATIOS
(Rs. in Units)
Operating Income Per Employee
5,073,758.60 4,765,322.86 4,304,598.61 3,375,362.50 2,548,981.69
Operating Profit Per Employee
627,277.14 403,234.87 762,536.12 619,576.28 531,146.68
Net Profit Per Employee
418,137.91 297,216.46 496,030.14 484,882.05 421,627.43
Personnel Expenses Per Employee
679,441.50 730,974.63 501,772.24 383,494.06 390,204.43
Deposits Per Employee
56,672,422.97
46,685,787.54
39,498,121.91
34,051,681.03
28,808,689.87
Fund Advances Per Employee
43,640,434.52
33,290,041.17
29,544,037.80
24,399,872.40
19,722,679.69
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Key Financial Ratios of Indian Overseas Bank
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 5.00 3.50 4.50 3.50 3.00
Operating Profit Per Share (Rs) 25.98 17.57 35.48 28.16 23.26
Net Operating Profit Per Share (Rs) 210.13 207.58 200.27 153.43 111.64
Free Reserves Per Share (Rs) 60.38 45.21 42.83 42.79 34.32
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Interest Spread 3.89 4.69 4.29 4.26 4.79
Adjusted Cash Margin (%) 8.82 7.10 12.16 14.79 17.12
Net Profit Margin 8.04 6.14 11.87 13.94 16.18
Return on Long Term Fund (%) 116.16 126.87 145.71 146.37 119.88
Return on Net Worth (%) 13.13 11.13 22.31 25.35 29.11
Adjusted Return on Net Worth (%) 13.12 11.10 21.16 25.31 25.97
Return on Assets Excluding Revaluations 131.96 116.54 109.06 87.05 71.08
Return on Assets Including Revaluations 150.71 138.12 131.26 89.15 73.24
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Management Efficiency Ratios
Interest Income / Total Funds 8.46 9.06 9.85 9.09 8.60
Net Interest Income / Total Funds 3.32 3.39 3.74 3.34 3.98
Non-Interest Income / Total Funds 0.21 0.16 0.23 0.29 0.21
Interest Expended / Total Funds 5.13 5.67 6.11 5.75 4.63
Operating Expense / Total Funds 2.28 2.62 1.99 1.67 2.18
Profit Before Provisions / Total Funds 1.19 0.84 1.89 1.88 1.92
Net Profit / Total Funds 0.70 0.57 1.20 1.31 1.43
Loans Turnover 0.14 0.15 0.16 0.16 0.15
Total Income / Capital Employed (%) 8.67 9.21 10.08 9.38 8.82
Interest Expended / Capital Employed (%) 5.13 5.67 6.11 5.75 4.63
Total Assets Turnover Ratios 0.08 0.09 0.10 0.09 0.09
Asset Turnover Ratio 5.13 4.60 4.64 7.58 6.08
Profit And Loss Account Ratios
Interest Expended / Interest Earned 65.23 69.08 70.24 66.37 56.09
Other Income / Total Income 2.42 1.72 2.30 3.08 2.39
Operating Expense / Total Income 26.28 28.45 19.76 17.81 24.77
Selling Distribution Cost Composition 0.17 0.31 0.24 0.14 0.22
Balance Sheet Ratios
Capital Adequacy Ratio 14.55 14.26 12.70 11.96 13.27
Advances / Loans Funds (%) 78.66 69.78 75.89 74.45 76.58
Debt Coverage Ratios
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Credit Deposit Ratio 74.54 72.96 73.36 70.22 68.60
Investment Deposit Ratio 33.69 32.65 32.36 34.27 35.99
Cash Deposit Ratio 6.90 6.45 8.17 9.02 6.51
Total Debt to Owners Fund 17.79 17.45 16.85 17.78 17.75
Financial Charges Coverage Ratio 0.24 0.16 0.32 0.34 1.43
Financial Charges Coverage Ratio Post Tax 1.15 1.12 1.21 1.24 1.33
Leverage Ratios
Current Ratio 0.03 0.03 0.02 0.02 0.02
Quick Ratio 25.94 23.61 11.46 11.32 8.07
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 33.52 31.55 21.63 16.96 18.96
Dividend Payout Ratio Cash Profit 30.53 27.24 20.10 15.96 17.87
Earning Retention Ratio 66.45 68.38 77.19 83.02 81.00
Cash Earning Retention Ratio 69.44 72.70 78.89 84.02 82.09
Adjusted Cash Flow Times 123.44 135.59 73.71 66.09 64.41
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
Earnings Per Share 17.33 12.98 24.34 22.07 18.51
Book Value 131.96 116.54 109.06 87.05 71.08
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60
CHAPTER – 5
LOANS
VARIOUS TYPES OF LOANS
Advance-General Instruction:
IOB Bank has large number of credit schemes to suit to the requirements of individual
customers. Thus, loans and advances are extended against pledge of bank deposits
receipts, Life Insurance Policies, fully paid shares and debentures, National Savings
Certificates.
Kisan Vikas Patras, Indira Vikas Patras, Unit Trust of India Certificates, etc. IOB Bank
also extends loans against pledge of Jewels to Agriculturists and others. Normally 25%
margin is maintained for all the advances. However, in specific cases like advances
against National Savings Certificates, Kisan Vikas and Indira Vikas Patras, higher margin
is stipulated as these instruments are not encashable on demand but can be encashed only
on the date of maturity. The rate of interest is fixed by Bank from time to time.
IOB Bank also extends finance to the Farmers for cultivation of crops, minor irrigation,
land development, farm mechanisation, Horticulture and plantation and allied activities
like diary, poultry, goat and sheep rearing, fishery, prawn culture, piggery, seri-culture
and for construction of bio-gas plants. Credit facilities are also extended for construction
and repair of houses under SUBHA GRUHA SCHEME, purchase of new and old cars
under PUSHPAKA SCHEME, payment of taxes under TAX SULABH SCHEME and
credit assistance for stock brokers / share brokers under SOWMITRA SCHEME. Credit
facilities are also extended under HOME DECORSCHEME for purchase of furnishing
etc, under CLEAN LOAN & PERSONAL LOAN schemes to salaried persons for
personal expenses & purchase of consumer durable respectively, SAHAYIKA for
purpose of meeting social commitment, EASY TRADE FINANCE scheme for hassle
free finance for trading activities etc.
Loans are extended to Small Scale Industries, Tiny Sector and ancillary units. Credit
facilities are also extended to Women entrepreneurs, weaker section, rural artisans,
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village and cottage industries and Transport operators, Retail Traders, professional and
self-employed and business enterprises. Loans are also extended to bright and deserving
students for higher education. Credit facilities are also extended for various Government
Sponsored Schemes like IRDP, PMRY, and Scheme for Urban Micro-Enterprises and
Self-Employment scheme for educated, unemployed youth. Loans are extended at a
differential rate of interest to the citizens belonging to weaker section of the society,
Scheduled Caste and Scheduled Tribes and Physically handicapped person.
Loans against LIC Policies:
Credit facilities are extended against pledge of Life Insurance Policies, preferably
endowment policies upto 90% of the surrender value. No advance is granted against a
policy, which stands assigned to a minor. The policy should not contain any special
conditions, which restricts its assignability. Citizens' have to produce the latest premium
paid receipt as a proof that the premia has been paid upto date and that the policy is in
force. Loan is sanctioned after the policy is assigned in favour of the bank and
registration of such assignment with LIC. Loans are also extended against insurance
policies of private insurance companies recognised by IRDA.
Loan against National Savings Certificates, Indira Vikas Patras and Kisan Vikas
Patras:
Citizens can also avail loan against their National Savings Certificates, Indira Vikas
Patras and Kisan Vikas Patras upto 50% of the invested amount by pledging the
certificates / bonds with the Bank. The respective Post Offices are also to record the
pledge in Bank's favors. Margin and rate of interest are fixed by Bank from time to time.
Agricultural Loans:
Short-term loans are sanctioned for raising crops, for cultivation of traditional plantations
like tea, coffee, rubber and, etc. Loan facility is also available for dairy development,
poultry farming, purchase of electric motor / oil engine with pumpsets, purchase of
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tractors, trailers and other agricultural implements and also for development of irrigation,
for reclamation and land development.
Loan under scheme of Urban Micro Enterprises:
This scheme is introduced to encourage self-employment for the urban unemployed
citizens. To be eligible to avail this loan the family income of the citizen should not
exceed Rs.11, 850/- per year. He /she should have continuously lived in the area for the
last three years. He should either possess a Ration card or his/her name should be
mentioned in the ration card of his family. He/she should not be a borrower of any other
bank.
Prime Minister's Rozgar Yojana (PMRY)
The objective of the scheme is to provide employment for more than a million persons by
setting up of 7 lakh micro enterprises by the educated unemployment youth who are
matriculates. Preference is given for women entrepreneurs. The person should be
between 18 and 35 years old having permanent residence of the area for atleast 3 years.
Family income of the beneficiary should not be above Rs.24, 000/- per year. Loans are
extended upto Rs.95, 000/- under this scheme.
Margin on advances and rate of interest, security norms and income criteria are subject to
the guidelines issued by Reserve Bank of India from time to time. It is expected that the
applicants should not be defaulters to any financial institution including Cooperative
Societies and Land Development Banks. Crops, Livestock, Machinery purchased from
the bank loans are to be insured as per guidelines issued by Government of India/Reserve
Bank of India, from time to time.
Subha Gruha (Housing Loan Scheme):
Eligibility: Individuals/group of individuals/members of cooperative societies. The
individuals should have regular monthly income from employment, business, profession,
agriculture. In the case of employed persons three years continued service is necessary
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and for self-employed, professionals, business people three years standing in their
respective field is necessary. The applicant should not be more than 55 years of age.
Purpose: The loan is granted for purchase/construction of new flat/house or for purchase
of old house/flat not exceeding 15 years. The loan is also granted for extension of the
existing house/flat. Higher quantum may be considered for High Net Worth individuals.
Quantum: Maximum quantum of loan is Rs 50 lacs. The loan is however restricted to
80% of the cost of purchase/construction and also the repaying capacity of the applicant
is taken into account while fixing the quantum of loan. Higher quantum may be
considered for high net worth individuals.
Security: The property purchased/constructed should be mortgaged to the bank.
Interest rate: Two types of interest rate namely fixed and floating interest rate are
permitted. Bank retains the right to convert the fixed rate to floating rate after three years
Repayment: The maximum repayment period is 20 years in equated monthly
instalments. Loan to be closed before the applicant attains 65 years. Fixed interest rates
are repayable within 10 years. Repayment holiday period of 18 months for construction
and 3 months for purchase is granted. 36 post dated cheques to be obtained. Pre closure
of loan attracts levy of charges of 1%.
Clean Loan
Eligibility: Employees in Government, Public Sector Undertakings, reputed private
enterprises, firms, companies etc. and confirmed in service. The take home pay, after
deduction of the proposed loan installment should be more than 50% of the gross pay.
LIC agents are also eligible to apply for the loan subject to conditions.
Purpose: For any purpose including any social / financial commitment.
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Ten times of salary or Rs.10.00 lac whichever is lower, if your employer
undertakes to deduct the loan installment from salary and remit to us or the salary
is routed through the loan granting branch.
For others, it is 5 times of salary or Rs.1.00 lakh whichever is lower.
For LIC agents, the maximum loan is up to 10 times average monthly
commission or Rs.5.00 lakh whichever is lower.
Repayment: In a maximum of 60 months in case the loan is for 10 month salary and 36
months in case the loan is for 5 months’ salary.
Security: Two, third party personal guarantee, the salary of each guarantor being at least
equal to that of the borrower.
Other Conditions:
1. The employee should have a S.B. account in the branch from where the loan is
proposed to be availed.
2. Salary of the employee should be routed through the S.B. account at the branch where
the loan is sanctioned.
3. Undertaking letter from the employer undertaking to deduct from salary, loan
installment every month and remit to bank to be produced.
4. Letter from the employer, undertaking to recover the dues from the terminal benefits of
the employee in case of death, retirement or resignation to be produced.
Documents Required: Application form, Salary certificate of applicant and guarantor
with deduction particulars, undertaking letter from employer to deduct monthly
installment and recover the dues from terminal benefit in case of necessity.
Processing Fee: One time processing fee of Rs. 204/- per lakh or part there of (subject to
change).
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Home Improvement Scheme
Loan granted for repair/renovation of existing house(s) in the name of borrower, e.g.
painting, building a compound wall, flooring/tiling, replacement of doors/windows,
wiring etc. The loan can be availed by individuals (salaried, business people,
professionals) owning at least a flat/house in his/her name. The applicant must be
confirmed in service in a reputed organisation. Take home pay should be more than 50%
of the gross salary after taking into account the instalment for the loan under reference.
Should have balance of service equal to or more than the repayment period.
Professionals/business people should be in the line of activity for a minimum period of 3
years and should be an Income Tax assessee.
Quantum: The minimum loan is Rs.25,000 and the maximum limit is Rs.5.00 lacs.
Margin: Immovable property =50% of market value
Repayment: In maximum 120 equated monthly instalments with a holiday of 3 months.
36 post dated cheques to be obtained
Security: Either equitable mortgage of the house/flat, which is under renovation/repair
and the land or any other immovable property in the name of the borrower and
unencumbered with a market value twice that of the loan amount.
HOMEDECOR SCHEME:
Loan is granted for furnishing the house with drawing room furniture, kitchen
equipments, bath tubs, air conditioners, cupboards etc. The scheme aims at a package to
furnish the entire house. Individuals in employment in reputed organisations and put in a
minimum of 3 years confirmed service, business people who are in the business for
atleast three years who have a house/flat in their name or in the name of spouse can
apply.
Quantum: Loan amount depends on the monthly income:
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Amount of Monthly Income Maximum Loan amount:
Rs.20,000/ and above 1.00 lac
Rs.10,000 to Rs.20,000 75,000/
Rs.10,000 and below 50,000/
Security: Hypothecation of the items purchased. Mortgage of the house if available and
third party guarantee worth for the loan amount.
Margin: 25% of the cost kept as term deposit till the loan is closed.
Repayment: Repayable in 60 equated monthly instalments. 36 Post dated cheques to be
obtained
Liquirent: Loan granted against the rent receivable for the unexpired period of the lease.
Owners of property let out to reputed companies, banks including our bank and to owners
of officers’ quarters are eligible to apply. A firm lease agreement is required. The rent
payable should be free of any encumbrance. If the rent is partly charged, the balance
should be sufficient to cover the loan instalment. Property is not subject to dispute or plan
violation.
Quantum: 75% of the net rent receivable for the unexpired lease period after deducting
the rental advance and "Tax Deductible at source. Maximum loan is equivalent to 84
months’ rent.
Repayment: Loan is repayable in a maximum of 84 equated monthly instalments not
exceeding the lease period.
Security: For loan upto Rs.2.00 lacs the rent receivable charged to the bank. For loan
above Rs.2.00 lacs, in addition to charging the rent receivable the property under lease or
any other property(market value 150%) is to be mortgaged or security such as Bank
Deposit, NSC, KVP, IVP,LIC, UNIS etc. to be offered.
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Pushpaka:
Eligibility of the applicant: Individuals in confirmed service in reputed Organisations,
Professionals, self-employed persons and business people. Salaried individual should
have atleast 50% of take home pay. Professionals, self-employed and business people
must be in the line of business for atleast three years. Total income should not be less
than Rs 5000 for two wheeler loan and Rs 8000 for car loans. Firms/Companies are also
eligible
Purpose: Loan is granted for purchase of new car of any make and also for used cars.
(Not older than 5 years)
Quantum: The maximum loan is 90% of the cost of the new car or 75% of the market
value of the used car. In the case of used car the maximum loan amount is Rs.5.00 lacs.
Two wheelers 90% of the cost or 10 times of monthly salary or Rs 60000/ whichever is
less
Repayment: The Loan is repayable in 60 equated monthly instalments for new car and
36 monthly instalments for used car. For two wheelers 60 equated monthly instalments.
12 Post dated cheques to be submitted.
Security: The vehicle is to be hypothecated to the bank and the RC book and insurance
for the vehicle should indicate the name of the bank as financiers.
Vidya Jyothi with Suraksha Educational Loan Scheme:
Eligibility of the applicant: Students of Indian National secured admission in
professional/technical course/foreign university/institution Scheme and services: Loan is
granted for study in graduation/post-graduation/professional courses/diploma course in
recognised institution/university in India and abroad. Need-based request for tuition fee,
hostel fee, cost of books, examination fee, and air fares (in the case of study abroad) are
provided for the entire duration of the course.
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Quantum: The maximum loan amount is Rs.7.50 lacs for study in India and Rs.15.00
lacs for study abroad.
Margin: Upto 4 lacs Nil. More than Rs 4 lacs studies within India 5%, abroad 15%.
Security: Upto 4 lacs Nil.. More than Rs 4 lacs to Rs 7.50 lacs, Third Party Guarantee..
More than Rs 7.50 lacs, Collateral Security of suitable value or co-obligation of
parents/guardian/third party alongwith assignment of future income of the
student.Land/Buildings/Govt Securities/ PS Bonds/ Units/KVP, NSC, Gold, Shares/ Bank
Deposits. Assignment of LIC policy in the name of the student beneficiary for the amount
of the loan.
Repayment: The loan is repayable in 60 to 84 equated monthly instalments from the
sixth month from the date of employment or after 12 months after completion of the
course whichever is earlier. Life cover for parent and student is available on payment of
full premium for the entire period.
Personal Loan to Citizens:
Any citizen who is a customer of our Bank and who is permanently employed in
Government Department / Public Sector undertaking and reputed organisations, can avail
Personal Loans to purchase of new consumer durables like radio, refrigerator, television,
washing machine, etc. Normally Bank extends loan upto 90 % of the cost of the article or
5 times of the salary of the employee whichever is lower. The loan component and the
margin money from the customers are directly paid to the dealer with instructions to
deliver the article to the customer.
Pensioners’ Loan Scheme:
Eligibility: Central/State Govt/ Defence Pensioner/Pilot pensioner/EB/PSU /Family
Pensioners.
Purpose: To meet household expenses.
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Quantum: Maximum loan amount is 10 times monthly pension or Rs 1 lacs whichever is
less for those not exceeding 65 years of age, for those who are over 65 years, the
maximum loan is Rs 50,000.
Repayment: Upto 65 years 48, EMI, Over 65 years 24 EMI.
Shubh Yatra:
Eligibility: Individuals not more than 70 years of age. In case of seeking employment
abroad, the maximum age should not be more than 40 years. Minimum Household
income should be Rs 1.20 lacs per annum (employees of reputed organisations)
Purpose: Tourism (both domestic and foreign travel), medical treatment and
employment abroad
Quantum: Maximum loan amount is 12 times gross monthly household income.
Minimum Rs 10000 and maximum Rs 10 lacs
Repayment: 36 EMI with a holiday period of 3 months
Security: Salary to be routed through us. Upto loan of Rs 1 lac, third party guarantee.
Above Rs 1 lac, Security by way of NSC, IVP, KVP, LIC etc.
Margin: 25% for foreign travel and nil margin for domestic travel
Consumption Loans-Sahayika:
Eligibility: Individual, confirmed permanent employee of a reputed organisation or a
professional or self-employed or businessperson with three years standing in the field of
activity, can apply for the loan. For salaried person the take home pay is at least 40% of
the gross salary after taking into account the installment for the present loan.
Purpose: For meeting social financial commitments such as marriage in the family,
education of children, medical treatment etc. The loan can be availed for any financial
commitment with in the ambit of law. Bank will not verify the purpose declared.
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Maximum loan: Maximum loan amount is Rs.3 lakh. The loan amount, however,
depends on the value of the security offered and repaying capacity. For professionals,
self-employed and business persons, the maximum loan is restricted to total annual
income of previous year, as declared in the I.T. return or assessment order but not
exceeding Rs.3 lakh.
Margin: 50% on immovable property; 25% on securities such as NSC, KVP, IVP, ULIP
etc; 10% on Life policies (surrender value) of LIC of India and other private insurance
companies.
Repayment: Repayable in Equated Monthly Installments up to a maximum period of 48
months. Shorter repayment period is also permitted.
Security: Immovable property or Liquid securities like NSC, IVP,KVP, ULIP, UNITS
etc. or Life policies of LIC of India and other private insurance companies approved by
IRDA
Documents:
Application indicting the purpose for which the loan is required, amount of loan
required and the repayment period
Proof of employment and income
Proof of standing in the field of activity for Professionals, self-employed and
business people
Income tax assessment order or return with ITO acknowledgement for
Professionals etc.
Details of the security offered and copies of the documents
Commercial Cash Credit against Jewellery:
The “Commercial Cash Credit against Jewellery” from Indian Overseas Bank is a
package designed for assisting commercial activities in the country. Business needs for
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running a commercial activity can be met by availing finance under this product in the
form of cash credit or over draft with cheque book facility, against the value of jewels for
investment in commercial activities.
Eligibility: Individuals who own jewels, engaged in business activities like small
business/trade/professional and self-employed etc.
Amount of loan: Minimum finance under the scheme will be Rs.50,000/- and the
maximum will be Rs. 10 lacs. The limit should not exceed the advance value at any point
of time.
For limits up to Rs.3 lakhs, the quantum of finance will be the advance value multiplied
by the net weight of the jewels or Rs.3 lakhs whichever is lower.
For limits exceeding Rs. 3 lakhs, quantum of finance will be the Advance value
multiplied by the net weight of the jewels or 20% of the projected turn over whichever is
lower, subject to a maximum of Rs. 10 lakh.
Rate of Interest: Interest will be a) For loans up to Rs. 3 lacs 12% b) For loans above 3
lacs - 12.50% (fixed) for Cash Credit/overdraft (subject to change).
Margin: No margin.
Security: Fully secured by pledge of gold jewellery with fineness of 20 ct to 22 ct.
Repayment: Cash Credit is to be renewed / reviewed every year.
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Rate of interest
Retail Credit Interest Rates
Sl.
No.
Name of Scheme Floating Interest Rate % p.a. Effective
date
1 Pushpaka - Loan for purchase
of new and used cars and new
2-wheelers
Up to 3 Years - 13.25
>3 to 5 Years - 13.75
01.08.2011
2 Sahayika - Loan to meet
social financial commitments
14.50 01.08.2011
3 Sanjeevini - Loan to medical
practitioners for setting up
nursing homes/hospitals and
for purchase of equipments
13.75 01.08.2011
4 Pensioners' Loan Scheme -
loan to pensioners for meeting
immediate emergency needs
14.75 01.08.2011
5 Home Décor - loan for
furnishing your home.
13.50 01.08.2011
6 Liquirent - loan against future
rent receivables
15.75 01.08.2011
7 Akshay - loan against life
policies of LIC and private
insurers approved by IRDA
14.50 01.08.2011
8 Vidya jyothi - loan for
pursuing higher education
01.08.2011
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up to Rs.4 lac
>Rs 4 lac and up to Rs. 7.5
Lacs
Above Rs.7.5 lacs
12.75
14.00
13.75
9 Clean Loan - loan to
employees of reputed
organisations to meet
personal expenditure
15.75 01.08.2011
10 Easy Trade Finance - Hassle
free working capital finance
and term loan to retail traders
Working Capital : 13.75
Term Loan : 14.25
01.08.2011
Housing Loans (for purchase/construction/repair/renovation)
Floating rates (based on Base Rate) w.e.f. 16.08.2011
Payment Options Interest rates % p.a.
Repayment * Up to 5 years > 5 to 10 yrs >10 to 20 yrs
Loan Amount
Up to Rs.30 lakh 11.00 11.25 11.50
Over 30 lakh 11.25 11.50 11.75
CONCLUSION
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I hereby conclude that I have learnt a vast thing through my in bank training. Before
going for the In Bank Training, I had only a small and theoretical knowledge on the part
on working of the bank. After taking up my training, I learnt many things like:
How to open an account viz., Current account, recurring deposit account, savings bank
account etc.
The verification of various loan documents.
How to draw a demand draft.
How to pledge the jewellery for loan.
So, last but not the least, with the help of this In Bank Training, I was able to gain more
knowledge on the part of practical, and in bank training helps me to complete my project
successfully.
Bibliography
Books:
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Banking law & practice: 1) Dr. Nirmala Prasad
2) C. Jeevanantham
Law of banking : Dr.S.R. Myneni
Money and banking : K.P.M. Sundhram
Websites:
www.IOB.in
WWW.RBI.in
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