CHAPTER 1

History of Banking in IndiaThe Beginning………………….

The English traders that came to India in the 17th century could not make much use of the indigenous bankers, owing to their ignorance of the language as well the inexperience indigenous people of the European trade. Therefore, the English Agency 1 Houses in Calcutta and Bombay began to conduct banking business, besides their commercial business, based on unlimited liability. The Europeans with aptitude of commercial pursuit, who resigned from civil and military, organized these agency houses. A type of business organisation recognizable as managing agency took form in a period from 1834 to 1847. The primary concern of these agency houses was trade, but they branched out into banking as a sideline to facilitate the operations of their main business. The English agency houses, that began to serve as bankers to the East India Company had no capital of their own, and depended on deposits for their funds. They financed movements of crops, issued paper money and established joint stock banks. Earliest of these was Hindusthan Bank, established by one of the agency houses in Calcutta in 1770. Banking in India originated in the last decades of the 18th century. The first bank in India, though conservative, was established in 1786 in Calcutta by the name of bank of Bengal. Indian banking system, over the years has gone through various phases. For ease of study and understanding it can be broken into four phases

These phases are based upon personal study and understanding and many experts may ir may not agree this chronological segmentation. Prof K.V. Bhanu Murthy 2 has also segregates the Indian banking periods into four eras. These are 1. Early historical and

formative era: 1770-1905 2. Pre-independence era: 1906-1946 3. Post independence regulated era: 1947-1993 4. Post independence deregulated era from 1993 onwards

1 A type of business organization recognizable as managing agency took form in a period from 1834 to 1847. Managing agency system came into existence when an agency house first promoted and acquired the management of a company. This system, with no counterpart in any other country functioned as an Indian substitute for a well-organized capital market and an industrial banking system of western countries. 2 Professor in Department of Commerce, Delhi School of Economics

Early Phase (1786 to 1935)

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India 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. For many years the Presidency banks acted as quasi-central banks, as did their successors. The East India Company established Bank of Bengal, Bank of Bombay and Bank of Madras as independent units and called it Presidency Banks. The three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d’Escompte de Paris opened a branch in Calcutta in 1860 and another in Bombay in 1862; branches in Madras and Pondichery, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 because

of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.

Joint Stock Banks

American Civil War played a major role in the development of banking in India. The next big thing unfolded in the early phase of banking was formation of joint stock companies, with limited liability. The American Civil War cut off the supply of American cotton to England caused an unprecedented boom in India’s cotton trade with England. The first joint stock bank was Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Shimla. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India

Stability & Growth

Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe,

"In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

Swadeshi Movement

The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. Ammembal Subba Rao Pai founded “Canara Bank Hindu Permanent Fund” in 1906. Central Bank of India was established in 1911 by Sir Sorabji Pochkhanawala and was the first commercial Indian bank completely owned and managed by Indians. In 1923, it acquired the Tata Industrial Bank. The fervor of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara (South Kanara ) district. Four nationalized banks started in this district and also a leading private sector bank. Hence, undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

Banks with Year of Start

Bank of Bengal 1809 Bank of Bombay 1840 Bank of Madras 1843 Allahabad Bank 1865 Punjab National Bank Ltd. 1894 Canara Bank 1906 Indian Bank 1907 Bank of Baroda 1908 Central Bank of India 1911 Bank of Mysore 1913

Union Bank if India 1922

Failures in Early Phase

During the first phase, the growth was very slow and banks experienced periodic failures during the Early Phase between. There were approximately 1100 banks, mostly small which failed within the early phase The first major bank failure took place in 1791, when General Bank of India was voluntarily liquidated, due to inability to earn profits following the currency difficulties in 1787. Bengal Bank failed around 1791, due to a run on it caused by emergence of difficulties of a related firm. A large number 14 of banks failed within a short time, and public confidence in banks was destroyed. The currency confusion during 1873-1893 caused trade uncertainties and also played its role in creating an atmosphere unfavorable to establishment of new banks. Due to war and uncertainty in Europe let to speculative activity, which eventually caused bank failures. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Development of banking, during this period, was mostly because very deregulated (laissez faire policy). This also played a major role in failures. The deficiency of capital made newly established banks almost wholly dependent on deposits. Keen rivalry among them to attract deposits led to luring of depositors, with rates of interest much higher than they could really afford. During 1913, Indian Companies Act 3 was passed. It contained a few sections related to joint sector banks. While this act is significant, being the first legislation related to banks, it was not adequate for regulation of banking activity. Many banks were left altogether free from regulation. The boom during the later part of World War I and after it gave another impetus to the starting of new banks. A number of banks were established, some

specially for financing industries. But from 1922, the bank failures increased once again due to economic depression

Pre Nationalization Phase (1935 to 1969)

Organized banking in India is more than two centuries old. Until 1935 all, the banks were in private sector and were set up by individuals and/or industrial houses, which collected deposits from individuals and used them for their own purposes. In the absence of any regulatory framework, these private owners of banks were at liberty to use the funds in any manner, they deemed appropriate and resultantly, the bank failures were frequent. For many years the Presidency banks acted as quasicentral banks, as did their successors. Bank of Bengal, Bank of Bombay and Bank of Madras merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. Even though consolidation in banking was building trust among the investors but a central regulatory, authority was much needed. British Government in India passed many trade and commerce laws but acted little on regulating the banking industry.

Reserve Bank of India

Another breakthrough happened in this phase, which was Reserve Bank of India. The Reserve Bank of India was set up on the recommendations Royal Commission on Indian Currency and Finance 4 also known as the Hilton-Young Commission. The commission submitted its report in the year 1926, though the bank was not set up for nine years. Reserve Bank of India (RBI) was created with the central task of maintaining monetary stability in India. The Government on December 20, 1934 issued a notification and on January 14, 1935, the RBI came into existence, though it was formally inaugurated only on April 1, 1935. Main functions of RBI were 1. Regulate the issue of banknotes 2. Maintain reserves with a view to securing monetary stability and 3. To operate the credit and currency system of the country to its advantage The Bank began its operations by

taking over from the Government the functions so far being performed by the Controller of Currency and from the Imperial Bank of India. Offices of the Banking Department were established in Calcutta, Bombay, Madras, Delhi and Rangoon. Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve Bank continued to act as the

Central Bank for Burma until Japanese Occupation of Burma and later unto April 1947. After the partition of India, the Reserve Bank served as the central bank of Pakistan up to June 1948 when the State Bank of Pakistan commenced operations.

India Wins Freedom

I think the second milestone in history of Indian banking was India becoming a sovereign republic. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy 5 . This resulted into greater involvement of the state in different segments of the economy including banking and finance. The banking sector also witnessed the benefits; Government took major steps in this Indian Banking Sector Reform after independence. First major step in this direction was nationalized of Reserve Bank in 1949. Enactment of Banking Regulation Act in 1949 6 Reserve Bank of India Scheduled Banks' Regulations, 1951. Nationalization of Imperial Bank of India in 1955, with extensive banking facilities on a large scale especially in rural and semi-urban areas. Nationalization of SBI subsidiaries in 1959 Government of India took many banking initiatives. These were aimed to provide banking coverage to all section of the society and every sector of the economy. 1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Industrial Development Bank of India Limited (IDBI) was established in 1964 by an Act of Parliament to provide credit and other facilities for the development of the fledgling

Indian industry. Some of the institutions built by IDBI are The National Stock Exchange of India (NSE), The National Securities Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India (SHCIL) IDBI BANK, as a private bank after government policy for new generation private banks. This phase of Indian banking was eventful and

was a phase of restructuring, regulation. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons.

Post Nationalization Phase (1969 to 1990)

I think nationalization 7 of banks in India was an important phenomenon. On July 19, 1969 - the erstwhile government of India nationalized 14 major private banks. Nationalization of bank in India was not new or happening first time. From 1955 to 1960, State Bank of India and other seven subsidiaries were nationalized under the SBI Act of 1955.

List of Nationalized Banks in 1969

1)Central Bank of India 8)Indian Overseas Bank2)Bank of Maharashtra 9)Bank of Baroda3)Dena Bank 10)Union Bank4)Syndicate Bank 11)Allahabad Bank5)Punjab National Bank 12)United Bank of India6)Canara Bank 13)UCO Bank7)Indian Bank 14)Bank of India

It was not a step taken at random or because of the whims of the leadership of the time, but reflected a process of struggle and political change which had made this an important demand of the people. Nationalisation took place in two phases, with a first round in

1969 covering 14 banks followed by another in 1980 covering seven banks. Currently there are 27 nationalized commercial banks.

Reasons for Nationalization

1. The need for the nationalization was felt mainly because private commercial banks were not fulfilling the social and developmental goals of banking, which are so essential for any industrializing country. Despite the enactment of the Banking Regulation Act in 1949 and the nationalization of the largest bank, the State Bank of India, in 1955, the expansion of commercial banking had largely excluded rural areas and small-scale borrowers.

2. The developmental goals of financial intermediation were not being achieved other than for some favored large industries and established business houses. Whereas industry’s share in credit disbursed by commercial banks almost doubled between 1951 and 1968, from 34 per cent to 68 per cent, agriculture received less than 2 per cent of total credit. 3. The stated purpose of bank nationalization was to ensure that credit allocation occur in accordance with plan priorities. 4. Reduce the hold of moneylenders and make more funds available for agricultural development. Nationalization of bank was to actively involve in poverty alleviation and employment generation programs.

What is Nationalization: Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the public ownership of a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being state operated or owned by the state. The opposite of nationalization is usually privatization or de-nationalization. The motives for nationalization are political as well as economic.

Advantages of Nationalization

1. Nationalized banks had to provide 18 per cent of their net credit to the agricultural sectors. This was targeted to reduce the hold of moneylenders and make more funds available for agricultural development. This has substantially helped farmers. 2. The reach of banking widened; the entry barriers that existed for customers to bank, social

economic and political were lowered. This resulted in a massive quantitative expansion of the bank customer base as well as in the nature of services provided. Absence of concern for profitability and targeting made banks to expand rapidly in un-banked areas thereby the entire country was linked to banking activity. 3. Enhanced bank credit to the farm sector became instrumental for the success of green revolution and the increase of aggregate food grain production in north and northwest India in the 1970s and in the eastern region in the 1980s. 4. Increase in exports by small-scale manufacturers over the 1980s and 1990s, such that they accounted for around two-third of the total value of all exports, was strongly related to access to bank credit provided by priority sector norms. 5. Collection of saving: Private banks were not that good in attracting more saving. However, with nationalization banks were now backed by Government of India, which tremendously improved their credibility. This helped in more deposits, more savings hence more supply of money.

Disadvantages of Nationalization

1. State intervention to some extent distorted the banking sector. The domination of the State has had a negative effect on the contribution of the banking sector as a whole to the economy. Absence of profitability, non-realization of its potential as a business and the deterioration in service has all affected citizens. 2. The intervention by the State and excessive domination and intervention by the bureaucracy and polity into the functioning of banks has led to deterioration on economic efficiency, which runs counter to the principles of a good Government. 3. Low Profitability: When the ownership is in public sector, the employs do not work for profit and do not there performance and efficiency of the employs remains poor. Competition is necessary for development and increasing the

production. Nationalization has decreased the spirit of competition This phase of Indian banking not so happening for entry of new banks. Undoubtedly, it was a phase of expansion, consolidation and increment in many ways. The banking sector grew at a phenomenal rate, fruits of nationalization were evident, and common person was now

banking with great trust. National Bank for Agricultural and Rural Development (NABARD) was set up in 1982, as an apex institution for agricultural and rural credit, though primarily, a refinance extension institution. Board for Industrial & Financial Reconstruction(BIFR) came into existence under Sick Companies (Special Provisions) Act 1985 and started its operations wef May 15, 1987. It is meant to deal with sick companies or potential sick companies as defined under the Act. BIFR, based on a reference by the concerned sick company, takes a decision whether the company should be rehabilitated or wound up.

Modern Phase from 1991 till date

This is the phase of “New Generation” tech-savvy banks. This phase can be called as “The Reforms Phase”. Starting of the modern and current phase of Indian Banking is marked by two important events.

Narasimhan Committee

The Committee on Banking Sector Reforms Committee 8 headed by Mr. M. Narasimhan, it is also known as Narasimhan Committee. The Committee, headed by former Reserve Bank of India governor M Narasimhan, was appointed by the United Front government to review the progress in banking sector reforms. The committee submitted its recommendations to union Finance Minister Yashwant Sinha in November of 1991. The Committee was required to review the progress in the reforms in the banking sector over the past six years with and to chart a programme on Financial Sector Reforms necessary

to strengthen the India's financial system and make it internationally competitive taking into account the vast changes in the international and financial markets, technogical advances.

Some of the recommendations offered by the committee are:

1. A reduction, phased over five years in the Statutory Liquidity Ratio (SLR) to 25 percent, synchronized with the planned contraction in Fiscal Deficit.

2. A progressive reduction in the Cash Reserve Ratio (CRR).

3. Gradual deregulation of interest rates.

4. All banks to attain Capita Adequacy 8% in a phased manner.

5. Banks to make substantial provisions for bad and doubtful debts.

6. Profitable and reputed banks be permitted to raise capital from the public.

7. Instituting an Assets Reconstruction Fund to which the bad and doubtful debts of banks and Financial Institutions could be transferred at a discount.

8. Facilitating the establishment of new private banks, subject to RBI norms.

9. Banks and financial institutions to classify their assets into four broad groups, viz, Standard, Sub-standard, Doubtful and Loss.

10. RBI to be primarily responsible for the regulation of the banking system.

11. Larger role for Securities Exchange Board of India (SEBI), particularly as a market regulator rather than as a controlling authority.

Economic Liberalization in India

The second major turning point in this phase was Economic Liberalization in India. After Independence in 1947, India adhered to socialist policies. The extensive regulation was sarcastically dubbed as the "License Raj". The Government of India headed by Narasimha Rao decided to usher in several reforms that are collectively termed as liberalization in the Indian media with Manmohan Singh whom he appointed Finance Minister. Dr. Manmohan Singh, an acclaimed economist, played a central role in

implementing these reforms. New research suggests that the scope and pattern of these reforms in India's foreign investment and external trade sectors followed the Chinese experience with external economic reforms.

Reasons for the Reforms

A Balance of Payments crisis in 1991 pushed the country to near bankruptcy. In return for an IMF bailout, gold was transferred to London as collateral, the Rupee devalued and economic reforms were forced upon India. That low point was the catalyst required to transform the economy through badly needed reforms to unshackle the economy. Controls started to be dismantled, tariffs, duties and taxes progressively lowered, state monopolies broken, the economy was opened to trade and investment, private sector enterprise and competition were encouraged and globalisation was slowly embraced.

Impact of Economic Liberalization on Finance & Banking

Post nationalization now Indian banking sector was unshackled, and along with the government banks a thick layer of private and foreign banks was taking shape. The first of such new generation banks to be set up was Global Trust Bank, which later amalgamated with Oriental Bank of Commerce, ICICI Bank, HDFC Bank and Axis Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights, which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new wave ushered in a

modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.

Banking Sector Reforms since 1992

The first type of reforms mainly based on Narasimhan Committee recommendations and the principals of new liberalized Indian economy. Out of the 27 public sector banks (PSBs), 26 PSBs achieved the minimum capital to risk assets ratio (CRAR) of 9 per cent by March 2000. To enable the PSBs to operate in a more competitive manner, the Government adopted a policy of providing autonomous status to these banks, subject to certain benchmarks.

The Reserve Bank advised banks in February 1999 to put in place an ALM system, effective April 1, 1999 and set up internal asset liability management committees (ALCOs) at the top management level to oversee its implementation. Banks were expected to cover at least 60 per cent of their liabilities and assets in the interim and 100 per cent of their business by April 1, 2000. Interest rate deregulation has been an important component of the reform process. The interest rates in the banking system have been largely deregulated except for certain specific classes; these are savings deposit accounts, non-resident Indian (NRI) deposits, small loans up to Rs.2 lakh and export credit. In 1994, a Board for Financial Supervision (BFS) was constituted comprising select members of the RBI Board with a variety of professional expertise to exercise 'undivided attention to supervision'. The BFS, which generally meets once a month, provides direction on a continuing basis on regulatory policies including governance issues and supervisory practices. It also provides direction on supervisory actions in specific cases. The share of the public sector banks in the aggregate assets of the banking sector has come down from 90 per cent in 1991 to around 75 per cent in 2004. The share

of wholly Government-owned public sector banks has declined from about 90 per cent to 10 per cent of aggregate assets of all scheduled commercial banks during the same period. Diversification of ownership has led to greater market accountability and improved efficiency. Current market value of the share capital of the Government in public sector banks has increased manifold and as such, what was perceived to be a bailout of public sector banks by Government seems to be turning out to be a profitable investment for the Government. A Board for Regulation and Supervision of Payment and

Settlement Systems (BPSS) has also been recently constituted to prescribe policies relating to the regulation and supervision of all types of payment and settlement systems, set standards for existing and future systems, authorize the payment and settlement systems and determine criteria for membership to these systems. Both the Houses of the Parliament have passed the Credit Information Companies (Regulation) Bill, 2004. Consolidation in the banking sector has been another feature of the reform process. This also encompassed the Development Financial Institutions (DFIs), which have been providers of long-term finance. Since 1993, twelve new private sector banks have been set up. As already mentioned, an element of private shareholding in public sector banks has been injected by enabling a reduction in the Government shareholding in public sector banks to 51 per cent. As a major step towards enhancing competition in the banking sector, foreign direct investment in the private sector banks is now allowed up to 74 per cent, subject to conformity with the guidelines issued from time to time. Currently, banking in India is generally fairly mature in terms of supply, product range and reacheven though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. Reserve Bank of India in March 2006 allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank.

Current Banking Structure

Banks in India can be categorized into Scheduled and Non-scheduled Banks

a) Scheduled Banks

Scheduled Banks in India constitute those banks, which have been included in the Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act. As on 30th June 1999, there were 300 scheduled banks in India having a total

network of 64,918 branches. The scheduled commercial banks in India comprise of State bank of India and its associates (8), nationalized banks (19), foreign banks (45), private sector banks (32), co-operative banks and regional rural banks

b) Non-Schedule Banks

on-scheduled bank in India" means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank". Banks in India can also be classified in a different way. Public Sector Banks Private Sector Banks Foreign Banks Regional Rural Banks (RRBs) The above mentioned classification overlaps with the previous one. Public Sector, Private Sector and Foreign Banks fall the category of scheduled banks. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

Structure of the organized banking

sector in India

CHAPTER-2

INTRODUCTIONBank of Maharashtra is the premier bank of Maharashtra, operating in the country of India. Registered on 16th Sept 1935 with an authorized capital of Rs 10.00 lakh and commenced business on 8th Feb 1936.

Known as a common man's bank since inception its initial help to small units has given birth to many of today's industrial houses.

After nationalization in 1969, the bank expanded rapidly. It now has 1375 branches (as of 31 March 2008) all over India. The Bank has the largest network of branches by any Public sector bank in the state of Maharashtra.

The Bank was founded by a group of visionaries led by the Late V. G. Kale and the Late D. K. Sathe and registered as a Banking Company on 16 September,1935 at Pune. Now The Chairman is SHRI NARENDRA SINGH

Today, Bank of Maharashtra has over 12 million customers across the length and breadth of the country served through 1577 branches in 23 states and 2 union territories.

As on 30.09.2011 Bank has 1564 Branches in all over India.

Total Revenue:-Rs 6,093.94 Crore(US$1.22billion)

Total Assests:- 48 billion

HISTORY

The beginning……………

Maharashtra has a long history of commercial activity since ages because of its strategic location in Indian sub continent and its large natural resources.

Maharashtra has been a progressive region and the Banking activity was also started in this region quite early. Historically speaking, the Bank of Bombay established in 1840 was the first Commercial Bank in Maharashtra. However, the first commercial bank set up in Maharashtra outside Mumbai was The Poona Bank established in 1889 at Pune followed by The Deccan Bank in 1890 and the Bombay Banking Company in

1898.Outbreak of the First World War leading to great depression took a heavy toll on banks in India. Between 1914 and 1935 as many as 380 banks failed in the country out of which 54 were based in Bombay province. The impact of these failures was felt more in Maharashtra region because certain banks known for a long time were also closed down.

The effects of great depression started fading and new enterprises began emerging with new hopes in all spheres of economy, including banking.

Need felt for an Independent Bank for Maharashtra

The Mahratta Chamber of Commerce (MCC) was established in Poona in 1934 and its Founder Secretary Shri A.R.Bhat was a great visionary.

Shri Bhat initiated for a comprehensive review of banking services available in the region through the special issue of Kesari news paper released in memory of Lokmanya Tilak within a few months of establishment of MCC. He ensured that his friend, Shri V. P.Varde, considered as a doyen of co-operative movement, wrote an article on the necessity of a separate bank for Maharashtra, thus launching a public discussion on the subject. While there was no noticeable response to the article of Shri Varde, Shri A R Bhat kept on discussing the subject with leaders in Trade and Industry.

Shri Bhat  ensured that Mahratta Chamber and its Directors took up the issue and held a Conference on Business and Industry in Poona on behalf of the MCC in February1935.  

Shri Bhat pushed the proposal for formation of a bank and succeeded in getting the following resolution adopted by the conference:

"For providing capital to the trade and industry in Maharashtra, it is essential to establish a Joint Stock commercial bank. The Mahratta Chamber is, therefore, requested to make all the necessary enquiries in that behalf and take appropriate steps for floating such a bank. The business community in Maharashtra is urged to support such an effort. "

The Swadeshi movement of the first decade of the 20th Century gave stimulus to the establishment of a number of commercial banks under Indian Management in Maharashtra.

The MCC formed a sub-committee consisting of Sarvashri V.G.Kale, D.K.Sathe, N.G.Pawar, G.D.Apte and A.R.Bhat to work out the details.

The first meeting of the committee was held on 19 May 1935 in the conference room of the Kesari Mahratta office and besides the committee members, prominent personalities from the City like Shri Babasaheb Kamat, the then President of the MCCI, J S.Karandikar, Rajabhau Godbole, Govindrao

Pandit, Damuanna Potdar, S.R.Sardesai, Baburao Gokhale,  and  N.N. Kshirsagar among others participated in deliberations.Another meeting of the sub committee with wider public representation was followed on 27 May 1935 in the meeting hall of Kesari Mahratta office and decisions on matters like the number of Directors on the Board of the proposed bank (maximum to be 11 members), Amount of each share (to be Rs.50/-) and primary condition for becoming a Director (to hold a minimum of 500 shares) were taken.

The Bank was formally registered under the Indian Companies Act, on the auspicious day of 16 September 1935.

The memorandum & Articles of the Bank were signed by following 19 promoters (Sarvashri)

Bord Of Directors Others

1. Prof.V.G Kale 1. A.R Bhat

2. D.K Sathe 2. S.M Joshi

3. B.M Gupta 3. B.S Kamat

4. N.G Pawar 4. S.R Rajguru

5. V.T Ranade 5. R.N Abhyankar

6.V.P Varde 6. T.V Sane

7.M.R Joshi 7. D.G Bapat

8. S.G Marathe 8.G.S Marathe

9. Ragunathrao Sohoni 9. D.D Chitale

10. D.V Potdar

1969 - The Company was Incorporated on 19th July. The Bank is a Government of India undertaking and carries on all types of banking business. The Bank was brought into existence by an ordinance issued on 19th July, by the Central Government. In terms of the Ordinance, the undertaking of `The Bank of Maharashtra Ltd.' was transferred to and vested in the new bank. The ordinance was replaced by the Banking companies (Acquisition and Transfer of Undertakings) Act, 1969. The Act was declared null and void by the Supreme Court on 10th February, 1970. An Ordinance was thereupon promulgated which was latter replaced by the Banking Companies (Acquisition and Transfer of

Undertaking) Act, 1970 which was made effective retrospectively from 19th July - Under the `Lead Bank Scheme' the Bank was allotted 5

districts of Maharashtra, viz. Pune, Satara, Nasik, Aurangabad (jointly with Central Bank of India) and Thane. Surveys were carried out in these districts for the identification of growth centres.

1970 - The Bank opened 39 branches in these five `Lead Bank' districts out of the total of 47 branches opened. The Bank continued to follow the scheme in the subsequent years and another district was allotted to it. 1976 - In August, the Bank sponsored a regional rural bank under the name `The Marathwada Gramin Bank Ltd.,' Nanded. 1980 - Rs.81,30,725 capitalised from Reserve Fund.

1982 - One more Regional Rural Bank was sponsored on 7th December, Under the name Aurangabad-Jalna Gramin Bank Ltd. In the Subsequent years, another RRB under the Thane Gramin Bank was sponsored by the Bank. These three RRBs together had 312 branches as at the end of March 1994.

1984 - Rs.12 lakhs contribution by Government. 1985 - Rs.1,308 lakhs contributed by Government. 1986 - Rs.800 lakhs contributed by Government. 1988 - Rs.2,100 lakhs contributed by Government. 1991 - Rs.10,500 lakhs contributed by Government. 1992 - Rs.3,500 lakhs contributed by Government. 1993 - Rs.15,000 lakhs contributed by Government. 1996 - The bank opened two extension counters at Gogal (Goa) and Khandala (Ratnagiri) during the year

The bank introduced a new motivational scheme titled ( The Best Colleague Scheme) to encourage, recognise and motivate sincere, meritorious and helpful staff members. The Bank launched a major computerisation programme with

- the basic objective of making use of the latest developments in information

-

- technology towards betterment of customer service and improvement in housekeeping.

- Shri. V. Leeladhar, has been appointed as the Executive- Director of the Bank vide the Government of India, Ministry of

Finance, Department of Economy Affairs. 1999 - The bank introduced its telebanking service, which is the first of its kind by any of the nationalised bank in the region. - The bank has also set up a core credit monitoring cell at its headquarters in Pune to continuously assess the performance report of borrowers (above Rs. 25 lakhs), which would be provided by regional and zonal centres. 2000 - Bank of Maharashtra (BoM) is launching its new cash management product. - The Export Import Bank of India (Exim Bank) is slated to sign a Memorandum of Understanding (MoU) with Bank of Maharashtra on February 28 for providing advisory services on export finance. - BoM launched its information technology training institute, the first of its kind in banking industry in the country. - Sukomal Chandra Basu has succeeded Madan Mohan Vaish as the Chairman and Managing Director of the Company. - Bank of Maharashtra (BoM), a public sector (PSU) bank, has

- formed an equal joint venture with Magic Software, an Israeli software developer and its Indian subsidiary.

2004 -Comes out with Rs 230 crores public issue of equity shares (100,000,000 equity shares of Rs 23 each), issue oversubscribed 10.5

- times-Bajaj Auto and Bank of Maharashtra (BoM) have signed a strategic alliance to offer two-wheeler loans in India.

2005-Bank of Maharashtra has informed that Mrs. Lila F Poonawalla,

- Director resigned from the Directorship of the Bank and she stands relieved from her Directorship with effect from August 01, 2005 2006 -Bank of Maharashtra ties up with United Insurance Company 2007 - Bank of Maharashtra and Life Insurance Corporation of India have together unveiled two products, Maha Suraksha Deposit Scheme and MahaGrih Suraksha scheme. 2009 - Bank of Maharashtra has informed that in terms of guidelines of the

- RBI vide letter dated December 01, 2008, the Bank has appointed following five Chartered Accountants firms as Statutory Central Auditors (SCAs) of the Bank for the year 2008-09. 1. M/s. C R Sagdeo & Co., Nagpur 2. M/s. Shah Baheti Chandak & Co., Nagpur 3. M/s. Wahi & Gupta, New Delhi 4. M/s. V C Gautam & Co., New Delhi 5. M/s. B Chhaawchharia & Co., Kolkata The appointment M/s. B Chhawchharia & Co., Kolkata is made in place of M/s. S K Mehta & Co., whose term was completed. The other auditors are reappointed for continuing as SCAs for the year 2008-09.

MILESTONES

1936: Commenced operations on 08-02-1936 in pune

1938: Second branch of the bank was opened in 1938 at Fort, Bombay.

1940: Third branch came up at Deccan Gymkhana, Pune

1944: Status as Scheduled Bank obtained

1946: Deposits crossed Rs One crore mark Formed fully owned subsidiary,

The Maharashtra Executor & Trustee Company First branch outside

Maharashtra opened in Hubli (Mysore Starte, Now Karnataka)

1949: Expansion to AP: Hyderabad branch opened

1963: Expansion to Goa:  Panjim  Branch opened

1966: Expansion to Madhya Pradesh: Indore branch opened  Entered in

Gujarat Baroda branch opened.

1969: Nationalised alongwith 13 other Banks Entry in Delhi by opening

Karolbagh branch on 19-12-69.

1974: Deposit base crossed Rs. 100 Crore mark.

1976: Marathwada Grameena Bank, first RRB established on  26-08-1976.

1978: New Head Office building inaugurated by Hon'ble Prime Minister of India

Shri. Morarji Desai  Deposits crossed the figure of Rs.500 Crores.

1979: “Mahabank Agricultural Research and Rural Development

Foundation”,

 registered as a public trust, was established for undertaking research

& extension work & to providemore extensive services to farmers

1985: 500th branch in Maharashtra state was opened at the hands of the then

Prime Minister, Mrs Indira Gandhi at Nariman Point, Mumbai. First Advanced Ledger Posting Machine (ALPM) was installed at the

branch. Golden Jubilee Year Celebrations launched at the hands of

Dr. manmohan Singh, Governor Reserve Bank Of india.

1986: Thane Grameena Bank sponsored

1987: The 1000th branch of the Bank was inaugurated at Indira vasahat,

Bibwewadi, Pune at the auspicious hands of Dr.Shankar Dayal

Sharma,the

Honourable Vice President of India.

1991: "Mahabank Farmer Credit Card " was launched Entered in to Domestic 

Credit Card Business Main Frame Computer installed Became member

Of the SWIFT

1995: Diamond Jubilee Celebrations - Dr C Rangarajan the RBI Governor

was

the Chief Guest Deposits crossed Rs 5000 crore Mark.

1996: Moved into “A” category from the earlier “C” category. Autonomy

obtained

2000: Deposits crossed Rs 10000 crore mark

2004: Public Issue of Shares – 24% owned by Public Listed in BSE and NSE

2005: Bancassurance and Mutual Fund distribution business started

2006: Crossed total business level of Rs.50,000 Crore Branch CBS Project

started

2009: Entered in to 75th year of dedicated service to the Nation Adopted 75

underdeveloped villages for integrated overall Development.

2010: 100% CBS of branches achieved Total Business crossed Rs One lakh

crore

Opened 76 branches in the Platinum Year taking the total to 1506

COMPETITORS

Top Performing Public Sector Bankds

State Bank of India

Punjab National Bank

Andhra Bank

Allahabad Bank

Dena Bank

Central Bank

Bank of India

Top Performing Privat Sector Banks

HDFC Bank

ICICI Bank

AXIS Bank

Kotak Mahindra Bank

Top Performing Foreign Banks

Citibank

Standard Chartered

HSBC Bank

ABN AMRO Bank

American Express

Competition with other Bank

Name Last Price Market Cap.(Rs. cr.)

Net InterestIncome

Net Profit Total Assets

SBI 2,100.65 140,963.03 106,521.45 11,707.29 1,335,519.24

Bank of Baroda 669.60 27,613.45 29,673.72 5,006.96 447,321.46

PNB 749.45 25,419.75 36,428.03 4,884.20 458,194.01

Bank of India 334.50 19,217.69 28,480.67 2,677.52 384,535.47

Canara Bank 404.50 17,919.35 30,850.62 3,282.72 374,160.20

IDBI Bank 88.60 11,326.70 23,369.93 2,031.61 253,376.80

Union Bank 202.15 11,129.35 21,144.28 1,787.13 235,984.44

Indian Bank 170.20 7,314.69 12,231.32 1,746.97 141,419.20

IOB 89.25 7,113.21 17,897.08 1,050.13 219,648.17

Allahabad Bank 140.70 7,035.37 15,523.28 1,866.79 182,934.57

Oriental Bank 236.50 6,900.15 15,814.88 1,141.56 178,130.17

Andhra Bank 114.40 6,401.60 11,338.73 1,344.67 108,900.73

Syndicate Bank 100.10 6,025.52 15,268.35 1,313.39 156,538.79

Corporation Ban 405.70 6,009.60 13,017.78 1,506.04 163,560.42

Central Bank 78.10 5,749.06 19,149.50 533.04 229,799.74

UCO Bank 73.45 4,882.31 14,632.37 1,108.67 180,498.41

Dena Bank 96.35 3,372.81 6,794.13 803.14 87,387.93

Bank of Mah 48.80 2,877.21 7,213.96 430.83 88,017.38

Vijaya Bank 57.70 2,859.26 7,988.12 580.99 95,764.00

State B Bikaner 368.80 2,581.60 6,291.36 652.03 72,528.15

State Bnk Tr 495.50 2,477.50 6,828.76 510.46 85,949.33

State Bnk My 512.90 2,400.36 5,078.44 369.15 60,403.58

United Bank 61.45 2,218.34 7,961.09 632.53 102,010.39

Punjab & Sind 68.35 1,600.81 6,474.50 451.28 72,905.27

UTI - Gold 2,869.30 398.32 - - -

SWOT ANALYSIS BANK OF MAHARASHTRA

STRENGTH:

1. Public sector undertaking. Thus, has gout. Backing2. In this area for more than 75 years. Thus, expertise in this filed.3. Very high investments in SLR securities4. High connectivity to common man in some parts of the country5. Over 1500 branches in 23 states & 2 union territories

WEAKNESS:1. Risk averse2. Low profitability3. Increasing NPAs

OPPORTUNITY:1. Rural Areas2. Increasing Non-SLR investments to increase profits3. Making their credit cards profitable

THREATS:1. Competitors2. New bank licenses3. Dis-investments by the government

BOARD OF DIRECTORS

 

     

Shri. V. P. Bhardwaj Ms. Kamala Rajan Shri. A. K. Pandit

     

Dr. D. S. Patel Dr. S. U. Deshpande Shri. S. D. Dhanak

     

 

Dr. Naresh Kumar Shri. Ramesh C. Agrawal

CHAPTER-3

PROJECT INTRODUCTION

As a part of curriculum the students of MBA have to undergo Summer Internship Program (SIP). Wherein a student gets the knowledge about practical life, how the work is done in companies, how to get acquainted with working conditions and other many such things, etc. the main aim behind this program is that students get some experience with which he could get assistance while searching the job. This program is generally provided by a company and it lasts for at least two months. Students as per their specializations could apply for SIP and get the opportunity to work in a company, which the college suggests.

As a management student I also have to undergo SIP. I got the opportunity to complete this program in BANK OF MAHARASTRA., for two months. BOM is one of the leading BANKS in banking sector in India. First of the two months was devoted to training. Our training started with the session of information about bank product and sales and - what is the meaning of the concepts, importance of sales and marketing was taught. The second part was about open an account- why we open an account in bank, about the banking sector- as avenue for investment, how banking sector is Better Avenue for investment. The next session was about detailed knowledge about banking sector- how to sell these products in market. The last session was about the practical knowledge about how to get appointment of customers and how to convince them to take the product. In the second month we have sell the products directly in the market, procedure of selling the products etc.

MEANING OF “WHOLESALE BANKING OPERATIONS”

The Wholesale Banking contains products sold to large and middle market commercial companies, as well as to consumers on a wholesale basis. This includes lending, treasury management, mutual funds, asset-based lending, commercial real estate, corporate and institutional trust services, and investment banking through Wells Fargo Securities. The company also owns Baring ton Associates, a middle market investment bank. Wells Fargo historically has avoided large corporate loans as stand-alone products, instead requiring that borrowers purchase other products along with loans—which the bank sees as a loss leader. One area that is very profitable to Wells, however, is asset-based lending: lending to large companies using assets as collateral that are not normally used in other loans. This can be compared to subprime lending, but on a corporate level. The main brand name for this activity is "Wells Fargo Foothill," and is regularly marketed in tombstone ads in the Wall Street Journal. Wells Fargo also owns Eastdil Secured, which is described as a "real estate investment bank" but is essentially one of the largest commercial real estate brokers for very large transactions (such as the purchase and sale of large Class-A office buildings in central business districts throughout the United States).

The wholesale banking operations consist of the following transactions:

1. Opening of Account

2. Issue of Check book

3. International Debit / Credit Card

4. Issue of Demand Draft (DD)

5. Net banking

6. e-mail statement

7. phone banking

8. Bill pay

9. Passbook

10.Quarterly Account Statement

11.Loan Facility

DEFINITIONS OF BANKING A bank is a financial institution licensed by a government. Its

primary activity is to lend money. Many other financial activities were allowed over time. For example banks are important players in financial markets and offer financial services such as investment funds.

Banking can also be defined as engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit.

Transacting business with a bank; depositing or withdrawing funds or requesting a loan.

Bank - a supply or stock held in reserve for future use (especially in emergencies)

CHAPTER 3

PROJECT RESEARCH

Bank of Maharashtra Products and ServicesBank of Maharashtra brings a complete range of banking services and products for all kind of customers. The bank is a pioneer in social banking and it has about 38% of the branches in rural India. Depository services as well as Demat facilities are also made available in about 131 branches. The following are some of the best banking products and services offered by the bank.

Deposit Schemes Savings Deposits Term Deposits Recurring Deposit Scheme Monthly Interest Deposit Scheme Current Deposits Current Account Scheme Educational Loans Personal Loans Mahabank Vehicle Loan Scheme Housing Finance Scheme Loans for Corporates Loans for Individuals Loans for Agriculturists Loans for Entrepreneurs Loans for Professionals ATM Services Credit Card

Demat Services NEFT Distribution of Mutual Funds Mahabill Pay Mahabank Insta Remit Scheme EMI Calculator Capital Market Application Inward Remittance Non Residence Ordinary Account Non Residence External Account Internet Banking Mobile Banking, etc.

Bank of Maharashtra Recruitment

From time to time, Bank of Maharashtra conducts several recruitment exams to fill up a number of jobs and vacancies made available with the bank. The bank offers some of the best reputable careers sought by a large number of job seekers in the country. In 2009, the bank organizes several recruitment programs for job openings of Network Engineers, Agriculture Officers, Law Officers, Specialist Officers and Security Officers. The written exam of the recruitment was held on 23rd August 2009 for which, the results can be availed from the official website of the bank.

Bank of Maharashtra Internet Banking

A wide range of convenient services are made available through the Internet Banking facility offered by the bank. The following are some services that you can obtain by registering for online banking service.

Account Balance Enquiry Cheque Status Enquiry ePayment of Taxes Cheque Book Queries Transaction History Statement of Account Mini Statement Account details for all types of accounts

Existing users can provide their user ID and password to login to their account while new customers are first required to enroll for net banking before enjoying the hassle free services. The bank also provides friendly customer care representatives who are committed to solve every kind of grievances faced by the customers. Customers can talk with the bank representatives through several contact numbers and toll free numbers available on the bank website. 

Bank of Maharashtra Head Office Address: Bank of MaharashtraHead Office, 'Lokmangal',1501, Shivajinagar Pune-411005Phone No: 020 - 25532731, 733, 734, 735, 736020 - 25532728020 - 25514501 - 12020 - 25513781

Savings Deposits

Mahabank – Yuva Yojana Mahabank Lok Bachat Yojana Mahabank – Swasthya Yojana NRI Ordinary Account NRI External Account

Current Deposits

Current Account Scheme Mahabank – Pearl & Sapphire

Term Deposits

Mahabank – Sulabh Jama Yojana Monthly Interest Deposit Scheme Mahabank – Sheetal Jama Yojana Mahabank – Trust Deposit Scheme FCNR Account Cumulative Deposit Scheme (CDR) Quarterly Interest Deposit Scheme Mixie Deposit Scheme Mahasaraswati Scheme

Loans Educational Loans

Loans for Corporates Loans for Exporters Loans for Professionals Loans for Agriculturists Loans for Individuals Housing Finance Scheme Mahabank Platinum Housing Loans: Festive Offer Mahabank Adhar Scheme Mahabank Gold Card Scheme for Exporters Mahabank Salary Gain Scheme Mahabank Vehicle Loan Scheme Mahabank Renewable Energy Equipments Mahabank Realty Finance Personal Loans Mahabank Solar Home Systems Mahabank Consumer Loan Scheme

Other Services

ATM Services

Demat Services Bancassurance Credit Card Mahabill Pay Mahabank Insta Remit Scheme NEFT

Customer service in Banking Operations

Cheque Drop Box Facility

RBI's Committee on Procedures and Performance Audit on Public Services has recommended that both the drop box facility and the facility for acknowledgement of the cheques at the regular collection counters should be available to customers and no branch should refuse to give an acknowledgement if the customer tenders the cheques at the counters.

Issue of Cheque Books: The Committee has observed that some banks do not allow depositors to collect their cheque book at the branch but insist on dispatching the cheque book by courier to the depositor. Further, it is stated by the Committee that the depositor is forced to sign a declaration that a despatch by the courier is at the depositor's risk and consequence and that the depositor shall not hold the bank liable in any manner whatsoever in respect of such despatch of cheque book. Committee has observed this as an unfair practice and advised banks to refrain from obtaining such undertakings from depositors. Banks should also ensure that cheque books are delivered over the counters on request to the depositors or his authorizedrepresentative

Statement of Accounts / Pass Books: The Committee has noted that banks invariably show the entries in depositor’s passbooks / statement of accounts as "By Clearing" or "By Cheque". Further, in the case of Electronic Clearing System (ECS) and RBI Electronic Funds Transfer (RBIEFTR) banks invariably do not provide any details even though brief particulars of

the remittance are provided to the receiving bank. In some cases

computerized entries use sophisticated codes which just cannot be deciphered. With a view to avoiding inconvenience to depositors, banks are advised to avoid such inscrutable entries in passbooks statements of account and ensure that brief, intelligible particulars are invariably entered in passbook statements of account.Banks may also ensure that they adhere to the monthly periodicity prescribed by us while sending statement of accounts.Traditional banking activities: Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit a credit account to increase its balance, and you debit a debit account to increase its balance. This also means you debit your savings account every time you deposit money into it (and the account is normally in deficit), while you credit your credit card account every time you spend money from it (and the account is normally in credit).However, if you read your bank statement, it will say the opposite—that you credit your account when you deposit money, and you debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance. The reason for this is that the bank, and not you, has produced the bank statement. Your savings might be your assets, but the bank's liability, so they are credit accounts (which should have a positive balance). Conversely, your loans are your liabilities but the bank's assets, so they are debit accounts (which should have a also have a positive balance).Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder—which is traditionally what most people are used to seeing.

Economic functions

1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in

the case of banknotes, or by drawing a cheque that the payee may bank or cash.

2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economies on reserves held for

3. settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.

4. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men

5. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.

6. Maturity Transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising

7. replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).

Banking channels

Banks offer many different channels to access their banking and other

services:

A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers.

ATM is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.

Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world.

This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.

Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website.

Mobile banking is a method of using one's mobile phone to conduct

simple banking transactions by remotely linking into a banking network.

Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a videoconference enabled bank branch

Types of investment banks

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise

corporations on capital market activities such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies

Mortgage Banking

Mortgage banking deals primarily with originating mortgage loans and servicing them. Read more about it here as well as about what a career in

mortgage banking involves. Mortgage banking is meant for a single purpose, to service the real estate finance industry. Mortgage banking deals specifically

with originating mortgage loans as well as servicing them. Mortgage banks are state-licensed entities from which consumers can get mortgage loans directly. Usually, mortgage banks avail funds from the Federal National Mortgage Association, or FNMA, also known as Fannie Mae, the Federal Home Loan Mortgage Corporation, or FHLMC, also known as Freddie Mac, or any other large companies that service mortgages, which are related to the secondary mortgage market. Here are a few pointers about the nitty-gritty of mortgage banking.

Mortgage Banks Specialize in Mortgage Loans: Unlike a savings bank that is federally chartered, in general mortgage banks specialize in only

providing mortgage loans. Hence, customers do not deposit their money in these banks. As has been mentioned above, the secondary wholesale market is their primary source of funds. Freddie Mac and Fannie Mae are examples of the lenders in the secondary market.

Mortgage Banks Differ in Size: While some mortgage banks can be nationwide, others can originate a volume of loan that can exceed that of a commercial bank that is nationwide. Many of these mortgage banks utilize specialty servicers like Real Time Resolutions to carry out tasks like fraud detection work and repurchase.

Mortgage Banks have Two Sources of Revenue: The two main

sources of income are from loan servicing fees (if they are into loan sevicing0, and fees from loan origination. Mortgage bankers, by and large, are choosing

not to service the loans they have originated. That is because they are entitled to earn a service-released premium by selling them soon after the mortgage loans are closed and funded. The investor in the secondary market that purchases the loan has the ability of earning revenue for providing servicing of the loan every month the borrower keeps the loan.

Different Banking Laws Apply to Mortgage Banks: Mortgage banks usually operate under banking laws that are quite different, according to the state they operate in. You will need to check each individual state’s financial department or state banking in order to get list of mortgage bankers in each

state. While federal laws apply to the operation of a federal bank, in terms of consumer protection, usually consumers have additional rights, which are applicable according to each state.

Mortgage Bankers can be More Competitive: Since they only specialize in lending and do not have to subsidize any of the losses that other departments may have incurred, as in regular banking, mortgage bankers have the ability of being really competitive when lending for mortgage. However, they usually do not have the advantage of accessing adjustable rate mortgages that are low cost, which federal banks are typically associated with, and federal money access.

A Career in Mortgage Banking: Professionals in mortgage banking in the job market today need to have a college degree in business or finance, or some specific experience or training related to the field. Skills in good customer service, an inherent ability with numbers, and computer skills are also

essential requirements for mortgage banking jobs. A mortgage banking professional’s job involves reviewing credit scores, determining the kind of loan that is most beneficial for the customer and guiding them through the process of application as well as closing. The loan officer has to be very organized and detail oriented, and need to be able to handle the large amounts of paperwork and reporting that are required for getting loans approved, up to the closing. A mortgage banking professional also has to have thorough know-how about the regulations associated with federal mortgage as well as the various types.

KYC (KNOW YOUR CUSTOMER)

As per KYC guideline the RBI has advised banks to follow KYC guidelines of RBI mandates banks to collect three proofs from their customers they are 1 Photograph2 Proof of Identity3 Proof of address

Accordingly, BOM has framed its KYC procedure according to which, a photograph and documentary proof of personal identification and address proof are required t be provided.The account Opening form Provides the nature of documents required / procedure to be followed for opening a new account. You may also log in to our website www.bankofmaharashtra.in for such information which is displayed product-wise.

CHAPTER 4

TRAINING CONCEPT

SAVING ACCOUNT INFORMATION

Definition: A deposit account at a bank or savings and loan which pays interest, but cannot be withdrawn by check writing.

Types of Saving Account in Bank Of Maharashtra

Mahabank – Yuva Yojana Mahabank Lok Bachat Yojana Mahabank – Swasthya Yojana NRI Ordinary Account NRI External Account Mahabank –Saving Deposit Account

1) Mahabank – Yuva Yojana

New Scheme for Students :

With a view to making children develop the habit of banking and also to make them our future customers, we have introduced suitable scheme for kids / children / students.

Age Limit :

10 years and above

Type of deposits :

Savings/RD/FD

Saving deposits :

The account will be opened and operated. In the name of child simply by accepting deposit of Rs.10/- Only.Account to be operated by him/her. There will be no minimum balance criteria applicable to this account. No Cheque book will be issued to this account. However, minimum balance criteria will be made applicable after the age of 18 and when cheques book will be issued..

Other benefits :

Free transfer of funds from parent’s account Under deposit Schemes for intercity for course fee, educational fee, hostel fee etc,. Free standing instruction for transfer of money from parent’s account in the same branch. Free standing instruction for transfer of money from Child’s account to RD account in the same branch. Free ATM debit card with specified spending Limit. Facility for free service for payment of utility bills like mobile phones wherever

Mahabank Lok Bachat Yojana

Purpose :

To enable people belonging to “bottom of the pyramid” (Low income group) to open an account with the Bank.

Who can open these account :

Any individual who falls in the category of below poverty line (BPL) can singly / jointly open the account. The joint account holder should also belong to BPL category. Minors from BPL family are also eligible to open an account.In case the customer is unable to give any documentary proof of identity & address, to the satisfaction of the bank, the account can be opened with the introduction from existing account holder who has been subjected to full KYC procedure & having satisfactory operations in the account over six months. Subject to condition that balance in all accounts taken together should not exceed Rs. 50000/- & credit summation Rs. 1 lakh during the year.

Initial amount:

Account can be opened with any amount. It can be as low as Rs. 1/- (Rs. One only).

Other important criteria :

Minimum balance criterion is not applicable to this scheme. So no service charges to be debited for want of minimum balance.

One chequebook of 10 pages allowed free of cost.

Collection of third party cheques is not permitted.

Collection of outstation cheques, issuance of DD/MT/TT¬ permissible at normal charges.

Debit Card / ATM Card facility not available for the scheme.

Rate of Interest :

As applicable for normal savings bank accounts.

All other criteria applicable to regular savings bank accounts would apply to this scheme too.

Relaxed KYC norms are applicable to this scheme.

3) Mahabank – Swasthya Yojana

Eligibility :

All individuals in the age group of 5 yrs. to 65 years.

Deposit :

Initial Deposit as applicable to Savings Bank Deposit A/c.

Eligibility for Insurance Cover :

Primary account holders, spouse, children and dependant parents.

Age Limit :

5 years to 65 years without medical examination.

Children between 3 months and 5 years can be covered provided one or both parents are covered concurrently.

Upper age limit upto 80 years only on renewals.

What is Covered :

Minimum Rs. 50,000 and in multiples of Rs. 50,000, Maximum Rs. 5 lacs.

Sum Assured :

Various hospitalization expenses for medical / surgical treatment arising out of any disease / illness / accident including pre-hospitalization expenses for specified period. Optional-Personal Accident (death only) is also covered.

Policy Period :

12 months

Risk to commence from date of D.D. / P.O.

Nomination :

Facility is available.

Income Tax Rebate :

Available u/s. 80 D of IT Act.

4) NRI Ordinary Account:

You can open Rupee Checking Accounts, namely Rupee Savings Account or Rupee Current Account and Rupee Fixed Deposit Accounts. This account will be maintained in Indian Rupees.

Non-Resident Indians and Persons of Indian Origin can open this type of account.

When you become non-resident, the Rupee accounts held by you prior to your becoming non-resident get designated as Non-Resident Ordinary accounts. These accounts are for Non-Resident Indians who need an account to credit local dues like rent from property etc.

Types of Accounts:

All types of accounts can be opened under the scheme such as Current, Savings, Recurring and Term Deposit.

Joint accounts:

The account can be opened jointly with other Non-Resident Indians, or Resident in India.

Account Opening:

The account can be opened by the following funds:

Remittance from abroad,

Proceeds of Foreign Currency/notes/travellers cheques during the temporary visit of the account holder,

Proceeds of Drafts/personal cheques,

Transfer from existing FCNR/NRE accounts of same person and

Funds from local sources representing bonafide transactions in Rupees.

The funds held in these accounts are non-repatriable except in the following cases:

Upto US$30,000/-per academic year to meet expenses in connection with education of their children,

Upto US$1,00,000 to meet the medical expenses abroad of the account holder or his family members,

Upto US$1,00,000 per year representing sale proceeds of immovable properties held by them for a period of not less than 10 years,

Current income such as rent, dividend, pension, interest etc., net of applicable taxes.

Permitted Credits:

Proceeds of remittances received from outside India through normal banking channel or foreign currency notes tendered by the account holder during his temporary visit to India or transfers or legitimate dues in India of the account holder.

Permitted Debits:

All local payments in Rupees including payments for investments, subject to compliance with RBI regulations

Remittance outside India of current income in India net of applicable taxes.

Interest Rates:

Interest Rates on these accounts are the same as domestic rates.

Income Tax:

Interest earned on these deposits shall be subject to at source deduction of Income tax at prevailing rates.

Training in Wholesale Banking Operations

CORPORATESCorporate Banking reflects BOM strengths in providing our corporate clients in India, a wide array of commercial, transactional and electronic banking products. We achieve this through innovative product development and a well-integrated approach to relationship management.

Funded Services: Working Capital Finance, Bill Discounting Export Credit, Short Term Finance, Structured Finance, Term Lending

Non Funded Services: Letter of Credit, Collection of Documents Bank Guarantees

Value Added Services: Syndication Services, Real Time Gross Settlement, Cash Management Services, Corporate Salary Accounts, Reimbursement Account, Bankers to Right/Public Issue Forex Desk, Money Market Desk, Derivatives Desk, Employees Trusts, Cash Surplus Corporates, Tax Collection

Internet Banking: Supply Chain Management, Corporate Internet Banking, Payment Gateway Services

SMALL AND MEDIUM ENTERPRISES:

At BOM we understand how much of hard work goes into establishing a successful SME. We also understand that your business is anything but "small" and as demanding as ever. And as your business expands and enters new territories and markets, you need to keep pace with the growing requests that come in, which may lead to purchasing new, or updating existing plant and equipment, or employing new staff to cope with the demand. That's why we at BOM have assembled products, services, resources and expert advice to help ensure

that your business excels.

Solutions are designed to meet your varying needs. The following links will help you identify your individual needs.

Funded Services: Funded Services from BOM are meant to directly bolster the day-to-day working of a small and a medium business enterprise. From working capital finance to credit substitutes; from export credit to construction equipment loan - we cater to virtually every business requirement of an SME. Click on the services below that best define your needs

Non-Funded Services: Under Non-Funded services BOM offers solutions that act as a catalyst to propel your business. Imagine a situation where you have a letter of credit and need finance against the same or you have a tender and you need to equip yourself with a guarantee in order to go ahead. This is exactly where we can help you so that you don't face any roadblocks when it comes to your business. The following are the services that will precisely tell you what we can do Business Accounts, Letters of Credit, Collection of Documents, Guarantees, Cash Management Services,

Money Market Desk, Derivatives Desk, Services to Cash Surplus Corporate, Services to Employee Trusts, Bankers to Rights/Public Issue, Tax Collection

Specialized Services: BOM is one of the most trusted entities when it comes to specialized services like selling of precious metals to customers.

Under specialized services you can also avail customized control of your value chain through our internet banking platform.

Value Added Services: There is a plethora of services that we offer under value added services. There's corporate salary account which ensures smooth payment methods to your staff. You can avail an assortment of credit cards and debit cards from our merchant services.

The following are the highlights of this service: Real Time Gross Settlement, Reimbursement Account, Custody Services, Corporate Salary Accounts, Merchant Services, SBI Gold Business Credit Card

Internet Banking: Internet banking is a revolutionary service under the banking sector and BOM is a forerunner in providing you with this service. We provide state-of-the-art payment gateway services to industries and companies in order to ease transaction processing. This in turn enhances the credibility of your business and makes banking extremely cost-efficient.

GOVERNMENT SECTOR: BOM acts as an active medium between the government and the customers by means of various services. These services include :

Tax Collection wherein customers can directly pay their taxes like Direct taxes, Indirect taxes and Sales Tax collections at their local BOM.

E-Ticketing - Helps the customer by providing him a direct access to book a Railway Ticket online and get it home delivered

Opening of L/C's is done by the bank on behalf of Government of India, Mints and Presses, thus facilitating imports for the Government.

Collection of levies and taxes on behalf of Municipal Corporations i.e. Kalyan -Dombivli Municipal Corporation, is undertaken by the Bank.

Disbursement of Pension to retired Employees of Central Govt and Defence is directly done by Axis Bank along with the disbursement of pension to the members of EPFO (Employees Provident Fund Organisation)

Electronic Collection of fees on behalf of DGFT is done by the bank too

Ministry of Corporate Affairs - Collection of ROC fees

for the Ministry through authorised Branches and Net Banking.

Collection of Property Tax through Selected Branches on behalf of Municipal Corporation of Delhi

CHAPTER-5

FINDINGS

1. Bank is having 1577 branches all over the country.

2. The number of branches should be increased.

SUGGESTIONS

1. Number of Branches should be increased covering a wider area in

various states.

2. A wide publicity to be given about the organization and its

products through various means of communications to keep

growth moments.

3. More number of training and educational programmes should be

included in Banks schedule.

4. Developing a learning culture through continuous learning

process.

CONCLUSION

My experience with Bank of Maharashtra is outstanding. While working in BOM I found that this bank has developed manifold in short period of time due to facilities and services provided to their customer and this growth rate can be keep it up if they start to go in semi-urban areas. In last couple of years they have opened new many branches and they should open many more. The working staff are very co-operative in nature and due to that the bank will also get good benefit. Bank of Maharashtra has provided their customer Net-banking

facilities and due to that transactions are done fast. Charges at BOM are on lower side when we compare it with other Banks.

BIBLIOGRAPHY

SR. NO. REFERENCE

1 - A New Beginning : The Turnaround Story Of Indian Bank

2 - Bank Marketing : Concepts And Applications

3 Banking And Finance

4 Banking Developments in India

5 Basics of Banking

6 Bank leaflet and Boucher

7 Internet

www.bankofmaharashtra

www.google.in

www.monycontrol.in

Wikipedia