REPORT ON INTERNSHIP

CONDUCTED AT

‘DHANLAXMI BANK LTD.’

SUBMITTED BY

ARJUN P R

SEM: 4 PARTICIPANT

INTERNSHIP GUIDE

MS. NISA S.

(ASST. PROFESSOR, DEPARTMENT OF FINANCE)

T.K.M. INSTITUTE OF MANAGEMENT

MUSALIAR HILLS, KARUVELIL P.O, KOLLAM

INTRODUCTION

INTRODUCTION

OBJECTIVE OF THE INTERNSHIP

To know more about the functional as well as the managerial aspects of Dhanlaxmi

Bank Ltd.

To assist the employees in banking functions to know more about the tasks and

activities undergoing in the bank.

To know more about the banking sector in India.

SOURCES OF DATA

This report is prepared on the basis of collection of primary data as well as secondary data.

Primary data have been gathered from direct observations and conducting

unstructured interviews and discussions with department heads.

Secondary data have been collected from sources such as :-

Published documents

Brochures

Annual Reports

Websites

LIMITATIONS

The barriers that occurred during the internship are:-

The numbers of days for doing this internship were limited.

Most of the employees were busy with their work.

The bank has difficulty in disclosing certain details due to their banking norms and

regulations.

INDUSTRY PROFILE

INDUSTRY PROFILEBanking in India in the modern sense originated in the last decades of the 18th

century. The first banks were Bank of Hindustan (1770-1829) and The General Bank of India,

established 1786 and since defunct. The largest bank, and the oldest still in existence, is the

State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost

immediately became the Bank of Bengal. This was one of the three presidency banks, the

other two being the Bank of Bombay and the Bank of Madras, all three of which were

established under charters from the British East India Company. The three banks merged in

1921 to form the Imperial Bank of India, which, upon India's independence, became the

State Bank of India in 1955. For many years the presidency banks acted as quasi-central

banks, as did their successors, until the Reserve Bank of India was established in 1935.

In 1969 the Indian government nationalised all the major banks that it did not

already own and these have remained under government ownership. They are run under a

structure know as 'profit-making public sector undertaking' (PSU) and are allowed to

compete and operate as commercial banks. The Indian banking sector is made up of four

types of banks, as well as the PSUs and the state banks; they have been joined since 1990s

by new private commercial banks and a number of foreign banks.

Banking in India was generally fairly mature in terms of supply, product range and

reach-even though reach in rural India and to the poor still remains a challenge. The

government has developed initiatives to address this through the State bank of India

expanding its branch network and through the National Bank for Agriculture and Rural

Development with things like microfinance.

Today, banks have diversified their activities and are getting into new products and

services that include opportunities in credit cards, consumer finance, wealth management,

life and general insurance, investment banking, mutual funds, pension fund regulation,

stock broking services, custodian services, private equity, etc. Further, most of the leading

Indian banks are going global, setting up offices in foreign countries, by themselves or

through their subsidiaries.

Adoption of banking technology

The IT revolution has had a great impact on the Indian banking system. The use of

computers has led to the introduction of online banking in India. The use of computers in

the banking sector in India has increased many fold after the economic liberalisation of 1991

as the country's banking sector has been exposed to the world's market. Indian banks were

finding it difficult to compete with the international banks in terms of customer service,

without the use of information technology.

The RBI set up a number of committees to define and co-ordinate banking technology. These

have included:

In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose

chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major

recommendations of this committee were introducing MICR technology in all the banks in

the metropolises in India. This provided for the use of standardized cheque forms and

encoders.

In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C

Rangarajan. It emphasized that settlement operation must be computerized in the clearing

houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It

further stated that there should be National Clearing of inter-city cheques at Kolkata,

Mumbai, Delhi, Chennai and MICR should be made Operational. It also focused on

computerisation of branches and increasing connectivity among branches through

computers. It also suggested modalities for implementing on-line banking. The committee

submitted its reports in 1989 and computerisation began from 1993 with the settlement

between IBA and bank employees' associations.

In 1994, the Committee on Technology Issues relating to Payment systems, Cheque Clearing

and Securities Settlement in the Banking Industry (1994) was set up under Chairman W S

Saraf. It emphasized Electronic Funds Transfer (EFT) system, with the BANKNET

communications network as its carrier. It also said that MICR clearing should be set up in all

branches of all those banks with more than 100 branches.

In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other

Electronic Payments (1995) again emphasized EFT system.Total numbers of ATMs installed

in India by various banks as on end June 2012 is 99,218. The New Private Sector Banks in

India are having the largest numbers of ATMs, which is followed by off-site ATMs belonging

to SBI and its subsidiaries and then by Nationalised banks and foreign banks.

EMPLOYMENT SCENARIO IN THE BANKING SECTOR

As reported in the Economic Times, the country’s leading public sector bank, State Bank of

India has plans to recruit 25,000 employees in the year 2009. Besides, its life insurance

venture, SBI Life, has plans to hire 13,000 agents and 200 sales managers. Also, Punjab

National Bank, the country's second largest public sector lender, and Union Bank of India

have plans of hiring 5,000 people each. The financial year 2008-09 has already shown the

banking sector to be among the largest job providers in the country with over 50,000

vacancies being notified and filled up in the public sector banks alone.

MAJOR RECRUITERS OF BANKING INDUSTRY

Public Sector Banks are the major recruiters of candidates aspiring for bank jobs. These

banks are:

The State Bank of India Group (Total: 8 Banks) namely SBI (State Bank of India),

State Bank of Indore, SBBJ (...Bikaner & Jaipur), SBH (...Hyderabad), SBM (...Mysore),

SBP (...Patiala), SBS (...Saurashtra), and SBT.

Nationalised Banks (Total: 19 Banks) namely Allahabad Bank, Andhra Bank, Bank of

Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India,

Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of

Commerce, Punjab & Sind Bank, Punjab National Bank, Syndicate Bank, UCO Bank,

United Bank of India, Union Bank of India and Vijaya Bank.

Private Sector Banks (Total: 27 Banks). The major recruiters in the private sector

include the ICICI Bank, HDFC Bank, Axis Bank, Federal Bank, Centurion Bank of

Punjab, Indusind Bank, Kotak Mahindra Bank, Yes Bank, ING Vysya Bank, Bank of

Rajasthan, Karur Vysya Bank, Karnataka Bank, Jammu & Kashmir Bank, South Indian

Bank, Bharat Overseas Bank, etc. These banks conduct their own exams, but

normally follow patterns similar to those of the exams of the public sector banks.

Co-operative Banks: All major National and State Co-operative Banks and Scheduled

Urban Co-operative Banks conduct their own exams to recruit staff. Their

recruitment exams, too, are generally similar to the exams of the public sector

banks.

COMPETITION IN BANKING INDUSTRY

The liberalised policies of RBI and Govt. of India relating to Indian Banking have set the stage

for a competitive banking. In the past competitive advantages have been determined by

size, branch, distribution capability, artificial barriers to entry etc., which helped old players

in maintaining a prominent position in the industry despite their inefficiencies. The direction

of the new policy is to establish a level playing field. The creation of term money market,

changes in credit delivery mechanism, flexibility in credit assessment process, diversification

of sources of money etc. will change the factors that determine the survival, growth and

profitability in the Indian Banking.

The areas in which the competition in the industry is either prevalent or is likely to

emerge:

Price based competition

Product based competition

Quality of service based competition

Market segment based competition

Technology based competition

Skill based competition

Location based competition

Early entry strategy based competition

CHARACTERISTICS OF COMPETITION

Large no. of users and providers of banking services and none of them able to

influence the price, demand or supply in a significant manner. Free flow of

information about industry, its products, range of services, pricing etc. In other

words, a situation of near perfect competition.

Competition is demand driven now rather than supply driver which used to be there

till few years ago. There has to be innovations, differentiation and value addition.

Competition will be based more on skills or core competencies than on products.

Competition will have to be based on long term strategies and not short term goals.

Competition is not only internal i.e. with the banking system but it is intra-financial

system.

The factors on which competitive advantages will be determined are:

Strategic focus: Majority of banks will have to develop mix of products and business based

on relative strengths and competence rather than historical reasons. Every product may it

be deposit or credit or retail lending or corporate banking, must pay for itself in terms of

return on investment rather than exist to promote or subsidise other business.

Adaptability: Size alone is not sufficient and adaptability to new products, processes,

technology, markets and customer needs will be more crucial.

Cost competitiveness: Competitive pressure would lead to declining margins. Lower cost

operators will have obvious advantage. Lean and wean organisations are the likely winners.

Productivity: Cost efficiency would be supported by the ability to work smartly and

capability to handle volumes and changing processes efficiently will be very crucial.

Technology: Adopting, assimilating and implementing appropriate technology will

significantly influence competitive strengths. Technology affects cost, productivity and

people. The necessity and utility of the branch net works will have to be seen in the context

of power and reach of technology.

People: The quality of people will often support an organisation in an environment where

differentiation based on product, pricing and delivery methods will be negligible.

Risk management: The ability to grow and expand would depend on quality of risk., which

will determine access to funds as well as the freedom to price products competitively.

Attitudinal changes: Perhaps the more important than all the other factors is the

requirement of flexible mind-set to understand, appreciate and anticipate the changes in

the market place. A large part of the banking industry has for long been conditioned to think

in a directed manner in an environment where innovation was virtually prohibited.

COMPETITIVE STRENGTHS OF BANKS

PSBs: Bank network, market coverage, product differentiation, technology absorption,

knowledge of local environment, expertise in niche segment (weakness are poor HRD

policies, delayed decision making, poor risk management systems)

Old Private Banks: Knowledge of local environment, personalized service, speedy decisions,

reasonable branch net work, technology absorption (weakness - poor risk management

systems, poor product innovations)

Foreign and new private Banks: Automation and technology, product innovation, strong

risk management system, speedy decision making, personalised service, progressive HRD

policies, expertise in niche market (weakness - branch net work and poor coverage).

COMPANY PROFILE

COMPANY PROFILE

Dhanlaxmi Bank was incorporated on 14th November 1927 by a group of enterprising

entrepreneurs at Thrissur, the cultural capital of Kerala with a Capital of Rs.11,000/- and had

only 7 employees. It became a Scheduled Commercial Bank in the year 1977. It has today

attained national stature with 181 branches and 26 Extension Counters spread over the

States of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Delhi and

West Bengal. The Bank serviced a business of Rs. 4223 crores as on 31.03.06 comprising

deposits of Rs.2533 crores and advances of Rs.1690 crores. As at the end of March 2006, the

Capital Adequacy Ratio of the Bank was 9.75% well above the mandatory requirement of

9%. The Bank made a net profit of Rs.9.51 crores for the year ended 31st March 2006.

Between 1927 to 1937, its services were localised in Thrissur. In 1937, it extended its service

to Ernakulam and Palghat by opening branches there. By 1947, DBL's deposits generated

stood at Rs 31 lac. In 1962, it took over three banks -- Lakshmi Prasad Bank, Radhakrishna

Bank and Parli Bank. Subsequently, it further expanded its network throughout Kerala, and

then in Tamilnadu, Andhra Pradesh and Karnataka in 1978. With this, DBL's operations

covered the entire southern India apart from its strong presence in Kerala. The period

covering 1985-90 saw the bank opening up its first branch outside southern India, in

Bombay. It started dealing in other segments of banking such as bills discounting, letter of

credit, etc. Two prominent religious trusts -- Sabarimala and Guruvayoor Devasom Board,

are among its host of clients. In 1993, the bank obtained restricted foreign exchange licence,

to maintain rupee accounts of non-residents. DBL also ventured into new areas such as

consumer banking, corporate banking and merchant banking. In Mar.'96, DBL came out with

a public issue of 80 lac equity shares of Rs 10 each for cash at a premium of Rs 40 per share

aggregating Rs 40 cr, to strengthen the capital base for meeting statutory capital adequacy

norms and to obtain the listing of shares on the stock exchanges. There was a restructure of

the capital of the bank during 2000-01, by conversion of partly paid shares to fully paid

shares on a pro-rata basis.This has resulted in the reduction of subscribed and paid up

capital of the bank from Rs.14.66 crores to Rs.13.74 crores. The reduction of Rs.0.92 crores

representing premium was transferred to Share Premium Account. To Comply with the

stipulation of RBI to increase the networth to a minimum of Rs.100 crores,DBL went for a

Right Issue of capital to the tune of Rs.27,47,50,500 (1,83,16,700 equity shares of Rs.10/- at

a premium of Rs.5). The ratio for the rights issue were 4 equity shares for every 3 shares

held and the issue were oversubscribed. The Bank is techno savvy and has deployed

technology widely as an instrument for enhancing the quality of customer service. It has

introduced Centralised Banking Solution (CBS) on the Flexcube Platform for extending

Anywhere/Anytime banking to its clientele through multiple delivery channels. The Bank has

deployed CBS in 150 branches covering nearly 95% of total business. The Bank has set-up a

state-of-the-art DATA CENTRE in Bangalore, to keep the networked system operational 24

hours a day and 7 days a week. The Bank lays stress on customizing services and

personalizing relations. It has introduced in November 2005 an International Debit Card with

tie-up with M/s Visa International. In another customer-friendly move, the Bank has joined

CASHNET, the first independent nation-wide shared ATM network in India and the National

Financial Switch (ATM network) of the IDRBT, promoted by Reserve Bank of India. By joining

Cash net and NFS, our customers have been provided access to more than 14,000 ATMs in

the country. The Bank has installed 63 networked ATMs thus far at centres of high banking

activity. The Bank has introduced tele-banking in 50 branches and Internet banking in 84

branches. It has also put in place a Cash Management System (CMS) that provides speedier

cheque collection through 59 branches. The Bank has put in place Real Time Gross

Settlement (RTGS) System to facilitate large value inter-bank payments and settlements in

real time on-line mode on a transaction-by-transaction basis. It is in the process of

extending RTGS to customer transactions. The Bank has ventured into both life and non-life

insurance. It is selling life insurance products of M/s. MetLife India, a renowned global

player in this segment and non-life insurance products of M/s. Iffco Tokio, as their corporate

agent. The Bank is also a depository participant of NSDL (National Security Depository

Limited) offering Demat services through selected branches. With a view to making available

value-added services to the NRIs, the Bank has set up NRI Boutiques (Relationship Centres)

at 8 locations in the State of Kerala. The Bank has also plans to open specialized NRI

branches with accent on quality of service and thrust on specialisation at potential locations.

As at the end of March 2006, the Bank had rupee drawing arrangements with 7 Exchange

Houses in the Middle East. The Bank's Industrial Finance Branch at Kochi and Corporate

Office, Trichur have been accredited with certification under ISO 9001-2000. On the socio-

economic front, the Bank is a leading player in dispensation of Micro Credit among Kerala-

based Private Sector Banks. As at the end of March 2006, the outstanding under micro

credit were Rs.55.63 crores. This involvement is part of the Bank's objective to act as

catalysts for the economic prosperity of the country. The Bank has recognized micro finance

intervention as an effective tool for poverty alleviation and has streamlined the linkage

between the Bank and Self Help Groups through 100 branches. The Priority sector advances

of the Bank as at 31st March 2006 constituting 43.84% of net bank credit well above the RBI

benchmark of 40%.

BUSINESS OVERVIEW

Dhanlaxmi Bank has reported a 11.8 per cent rise in net profit at INR26.06 crores in the 12

months ended 31 March 2011, against INR23.3 crores, a growth of 11.8 per cent. Total

income rose to INR1,053.19 crores from INR625.56 crore. The financial year 2011 was a year

for consolidation for the Bank. On all parameters, including important ones such as business

growth, net interest margin and NPA control, it was a good year. Net interest margin for the

year was around 2.7 per cent.The bank's loan-book witnessed a sharp growth largely on

account of a greater thrust on the retail segment and diversification across regions, the

release said. The bank's total income increased from INR 182.4 crores in the quarter ended

31 March 2010 to INR342.2 crores, recording a growth of 87.6 per cent. Non-interest

income rose from INR31.9 to INR46.1 crores as a result of a focused thrust on fee-based

business.

Dhanlaxmi Bank has deployed technology widely. It has introduced Centralised Banking

Solution (CBS) on the Flexcube platform at all its branches for extending

anywhere/anytime/anyhow banking to its clientele through multiple delivery channels. The

bank has set up a data centre in Bangalore, to keep the networked system operational

round the clock. A disaster recovery centre is also operational at Thrissur for meeting

various contingencies.

Name change

The bank has also changed its name from Dhanalakshmi Bank to ‘Dhanlaxmi’ Bank, which

will have a new corporate identity. FITCH, a leading international branding and design

consultancy had designed the new identity for the bank.

Partnerships

The bank is a depository participant of NSDL (National Security Depository Limited) offering

Demat services through select branches. Bank is offering online trading in association with

Destimoney securities. It has partnered AGS Infotech for installation of ATMs. It offers VISA-

branded debit and credit cards to customers. It is also offering insurance services through

Bajaj Allianz Life Insurance company as their Bankassurance partner.

Credit cards

In March, 2010, the bank launched Dhanlaxmi Bank Platinum and Gold Credit cards.

COMMON TERMINOLOGIES

Credit Proposal is one of the main steps in credit processing, which include all the

track records (if the customer was lending or borrowing with any financial institution

or not, and checking his credit rating) and information of the customer.

Credit evaluation and approval is the process a business or an individual must go

through to become eligible for a loan over an extended period. It also refers to the

process banks undertake when evaluating a request for credit. Granting credit

approval depends on the willingness of the banks to lend money in the current

economy and that same lender's assessment of the ability and willingness of the

borrower to return the money—plus interest—in a timely fashion. A history of

trustworthiness, a moral character, and expectations of continued performance

demonstrate a debtor's ability to pay.

Credit Report: - A record or file to a prospective lender or employer on the credit

standing of a prospective borrower, used to help determine credit worthiness.

Credit Application: - A form to be completed by an applicant for a credit account,

giving sufficient details (residence, employment, income, and existing debt) to allow

the seller to establish the applicant's creditworthiness. Sometimes, an application fee

is charged to cover the cost of loan processing.

Electronic Banking: - A service that allows an account holder to obtain account

information and manage certain banking transactions through a personal computer

via the financial institution's Web site on the Internet. (This is also known as Internet

or online banking.)

Electronic Fund Transfer: - The transfer of money between accounts by consumer

electronic systems-such as automated teller machines (ATMs) and electronic

payment of bills-rather than by check or cash. (Wire transfers, checks, drafts, and

paper instruments do not fall into this category.)

Line of Credit: - A pre-approved loan authorization with a specific borrowing limit

based on creditworthiness. A line of credit allows borrowers to obtain a number of

loans without re-applying each time as long as the total of borrowed funds does not

exceed the credit limit.

Direct Deposit is one method your employer or a government agency might choose

to give you your pay checks or benefits checks. With direct deposit, your pay checks

or benefits checks are electronically transferred and directly deposited into your

account. The amount of money is immediately available. Some banks will not charge

the monthly fees if direct deposit is used.

Balance Transfer:-The process of moving an outstanding balance from one credit

card to another. This is usually done to obtain a lower interest rate on the outstanding

balance. Transfers are sometimes subjected to a Balance Transfer Fee.

Joint Account: - An account owned by two or more persons. Either party can conduct

transactions separately or together as set forth in the deposit account contract.

NATURE OF WORK

NATURE OF WORK

The main areas I dealt with were:-

Front Office Department

Credit Proposals Head

Credit Approvals Head

Deposits Head

Front Office Department: - In the front office department I was mainly assisting the

head in dealing with the customers regarding their queries. I was assigned to redirect

them to different heads according to the type of assistance customers required.

Credit Proposals Head: - In the credit proposals Head I was assisting the employee in

collecting the proposals from various branches from the zonal regions.

Credit Approvals Head: - Under the credit approvals head I was assisting the

employee in dealing with the credit proposals approved. In this section it mainly

deals in approving the proposals based on a number of the norms and conditions of

the bank.

Deposits Head:-This head mainly deals in maintaining the deposits from various

customers from different branches under the zonal region.

LEARNING SUMMARIZATION

From this internship I was able to know a lot about the banking sector. I was able to know

the activities and tasks that a bank undergoes during its working hours. It also helped me in

understanding about different departments and their functions and what an employee do

during their working hours. I also got an opportunity to see what all activities are doing in

each departments and I was permitted to do some tasks in some of the departments. I also

got familiar with various banking terminologies used in the bank. I was also able to

communicate with some of the account holders of Dhanlaxmi bank and everyone were

satisfied with the services offered by the bank.