PROJECT REPORT ON MEASURES TO IMPROVE THE SCENARIO OF NATIONALIZED BANKS IN INDIA AT BANK OF BARODA

SUBMITTED BY ANKIT MEHTA : 07 Emba : D (B&I) ACADEMIC YEAR: 2010 2012

SUBMITTED TO MUMBAI EDUCATIONAL TRUST MET League of Colleges | Mumbai Educational Trust MET Complex, Bandra Reclamation, Bandra (West), Mumbai - 400 050

Students Declaration

I hereby declare that this report, submitted in partial fulfillment of the requirement for the award for the eMBA Finanace (Banking & Insurance), to METs Institute of Management is my original work and not used anywhere for award of any degree or diploma or fellowship or for similar titles or prizes. I further certify that without any objection or condition I grant the rights to METs Institute of Management to publish any part of the project if they deem fit in journals/Magazines and newspapers etc without my permission.

Place : Mumbai Date : ----------------------------Signature

Name Class

: Ankit Mehta : eMBA Finance (B & I)

Roll No: 07

Certificate

This is to certify that the dissertation submitted in partial fulfillment for the award of eMBA Finance (Banking & Insurance), of METs Institute of Management is a result of the bonafide research work carried out by Mr. Ankit Mehta under my supervision and guidance. No part of this report has been submitted for award of any other degree, diploma, fellowship or other similar titles or prizes. The work has also not been published in any journals/Magazines.

Industry guide: 1) 2)

Faculty Guide : 1) 2)

Signature: ______________ ______________ Company: Bank of Baroda Designation: 1) 2)

Signature: _________________ _________________

Date:

Place:

Acknowledgement
I feel delighted to express my gratitude and response to all those distinguished personalities who have guided and inspired me for the successful completion of this report. I would like to thank Mr.Ranjit Siyodia (Branch Manager), Mr.Ashok Gamare, Mrs.Sheetal Sangodkar, Mrs.Meena Shigrekar, Mrs. Gayatri Shenoy, Mr.Dinesh Waghela, MrAshok Bhatt, Mr.Kishor Bhatt, Mr.Prakash Patole, Mr.Mahesh Pandya who guided me during this period. I express my sincere gratitude for the continuous guidance and encouragement provided to carry out the project work. I am deeply indebted to Mr. Bharat J. Vedh for introducing me and for giving me the opportunity to do my Summer Internship Project at Bank of Baroda. I have gratification in expressing my sincere thanks to Mr. Arun Patil and, Mr. Bharat J. Vedh for providing the necessary advice and support during the course of this work. My genuine gratitude to all the personnel and staff at Bank of Baroda, who in spite of their busy schedules spared their valuable time to willingly respond to my queries and helped me to gain an in-depth understanding of the processes.

INTRODUCTION

Banking means accepting for purpose of lending or investment of deposits of money from public repayable on demand or otherwise and withdraw able by cheque, drafts, order or otherwise. Banks have become such an important aspect of human life, everyday people transact with banks in various forms such as depositing funds, withdrawing money, collecting bank statements, transacting through ATM machines, payment of utility bills, DEMAT account held with the banks, borrowing money from banks in form of loans for various purposes like home loan, auto loan, traders loan, educational loan to make their life easier and simpler. Every day in some or the other way even when we are at home we can make transaction online with the help of the services provided to us by the banks such as by inserting the 14 digit number the accountholder can do shopping, buy and book tickets online, transfer funds, make payment of the bills, life has become so easy after the advancement in the technology which reaches to the ultimate customers with the help of the bank. Banks have made life so mobile for their customers that there is no need for them to come to the branch and undertake the transaction, to save time and labour banks have provided the customers with ATM card with the help of which they can withdraw money from various banks ATM machines established at various places. A customer can access to most of his/her account details from the ATM like with the help of Mini Statement the customer can have the history of his/her transaction conducted in past few days, as to how much money he/she has withdrawn or deposited, whether the cheque issued has been cleared, whether the cheque received has been cleared and deposited into the account or not and so many other services have been provided just to ensure that the customer does not face any difficulty to access towards his/her own funds.

Looking at the current scenario of banks that we are so use to the facilities provided the question which should come in mind is that what led to Banks to come into existence. The most prominent reason may be because of lack of trust among all the people with whom we are surrounded, there is a lack of trust amongst all the people who form society, people stay together but when it comes to money it is very difficult to trust someone, so this led to a rise in establishment of banks. Banks took the initiative that they will protect their money and also protect them from its unusual losses. A new era started as the banks started with its practice of collecting money as deposits and lending them to the needy people by earning interest on the amount of money lent. Banks in the beginning being government entity also brought confidence in the minds of the people and so they stared transacting as per their requirements. Banks being a government entity is a safe mode of transacting and their money is also in safe hands, in the earlier period where people use to borrow money from unauthorized people like zamindars and other money lenders the borrowers were always under immense pressure because the rate at which the money was lent was very high and nonpayment of the same will lead the lender to take over the property taken as collateral in the beginning, all such practices lead to an unfavorable and disturbed mindset of the people who needed money, thus banks came ahead to help them with this by lending them at low interest rate and also with better treatment and without any pressure which brought a bit of harmony amongst many people. Like these and many such initiatives have been taken by the bank which brought drastic change for the betterment of the people. The banking system in India is significantly different from that of other Asian nations because of the countrys unique geographic, social, and economic characteristics. India has a large population and land size, a diverse culture, and extreme disparities in income, which are marked among its regions. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country has a large reservoir of managerial and technologically advanced talents. Between about 30 and 35 percent of the population resides in metro and urban cities and the rest is spread in several semi-urban and rural centers.

The countrys economic policy framework combines socialistic and capitalistic features with a heavy bias towards public sector investment. India has followed the path of growth-led exports rather than the export led growth of other Asian economies, with emphasis on selfreliance through import substitution. These features are reflected in the structure, size, and diversity of the countrys banking and financial sector. The banking system has had to serve the goals of economic policies enunciated in successive five year development plans, particularly concerning equitable income distribution, balanced regional economic growth, and the reduction and elimination of private sector monopolies in trade and industry. In order for the banking industry to serve as an instrument of state policy, it was subjected to various nationalization schemes in different phases (1955, 1969, and 1980). As a result, banking remained internationally isolated (few Indian banks had presence abroad in international financial centers) because of preoccupations with domestic priorities, especially massive branch expansion and attracting more people to the system. Moreover, the sector has been assigned the role of providing support to other economic sectors such as agriculture, small-scale industries, exports, and banking activities in the developed commercial centers (i.e., metro, urban, and a limited number of semi-urban centers). The banking systems international isolation was also due to strict branch licensing controls on foreign banks already operating in the country as well as entry restrictions facing new foreign banks. A criterion of reciprocity is required for any Indian bank to open an office abroad. These features have left the Indian banking sector with weaknesses and strengths. A big challenge facing Indian banks is how, under the current ownership structure, to attain operational efficiency suitable for modern financial intermediation. On the other hand, it has been relatively easy for the public sector banks to recapitalize, given the increases in nonperforming assets (NPAs), as their Government dominated ownership structure has reduced the conflicts of interest that private banks would face.

Nationalized banks are wholly owned by the Government, although some of them have made public issues. In contrast to the state bank group, nationalized banks are centrally governed, i.e., by their respective head offices. Thus, there is only one board for each nationalized bank and meetings are less frequent (generally, once a month). The state bank group and nationalized banks are together referred to as the public sector banks (PSBs).

List of Nationalized Banks operating in India:

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 State Bank of Bikaner & Jaipur

State Bank of Hyderabad State Bank of India (SBI) State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank IDBI Bank

OVERVIEW OF BANKING STRUCTURE IN PAST FEW YEARS

The last decade has seen many positive developments in the Indian banking sector. The policy makers, which comprise the Reserve Bank of India (RBI), Ministry of Finance and related government and financial sector regulatory entities, have made several notable efforts to improve regulation in the sector. The sector now compares favorably with banking sectors in the region on metrics like growth, profitability and non-performing assets (NPAs). A few banks have established an outstanding track record of innovation, growth and value creation. This is reflected in their market valuation. However, improved regulations, innovation, growth and value creation in the sector remain limited to a small part of it. The cost of banking intermediation in India is higher and bank penetration is far lower than in other markets. Indias banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be. While the onus for this change lies mainly with bank managements, an enabling policy and regulatory framework will also be critical to their success. The failure to respond to changing market realities has stunted the development of the financial sector in many developing countries. A weak banking structure has been unable to fuel continued growth, which has harmed the long-term health of their economies. In this white paper, we emphasize the need to act both decisively and quickly to build an enabling, rather than a limiting, banking sector in India.

GOOD PERFORMANCE, QUESTIONABLE HEALTH

Indian banks have compared favorably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index for the same period. Policy makers have made some notable changes in policy and regulation to help strengthen the sector. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial and co-operative banks. However, the cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies. While bank lending has been a significant driver of GDP growth and employment, periodic instances of the failure of some weak banks have often threatened the stability of the system. Structural weaknesses such as a fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could seriously weaken the health of the sector. Further, the inability of bank managements (with some notable exceptions) to improve capital allocation, increase the productivity of their service platforms and improve the performance ethic in their organizations could seriously affect future performance.

OPPORTUNITIES AND CHALLENGES FOR PLAYERS:

The bar for what it means to be a successful player in the sector has been raised. Four challenges must be addressed before success can be achieved. First, the market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the wholesale banking side. These require new skills in sales & marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition from foreign banks will only intensify. Fourth, given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.

ONE OF THREE SCENARIOS WILL PLAY OUT BY 2010:

The interplay between policy and regulatory interventions and management strategies will determine the performance of Indian banking over the next few years. Legislative actions will shape the regulatory stance through six key elements: 1) Industry structure and sector consolidation 2) Freedom to deploy capital 3) Regulatory coverage 4) Corporate governance 5) Labour reforms and human capital development 6) And support for creating industry utilities and service bureaus.

Management success will be determined on three fronts: 1) Fundamentally upgrading organizational capability to stay in tune with the changing market 2) Adopting value-creating M&A as an avenue for growth 3) And continually innovating to develop new business models to access untapped opportunities. Through these scenarios, we paint a picture of the events and outcomes that will be the consequence of the actions of policy makers and bank managements. These actions will have dramatically different outcomes; the costs of inaction or insufficient action will be high. Specifically, at one extreme, the sector could account for over 7.7 per cent of GDP with over Rs... 7,500 billion in market cap, while at the other it could account for just 3.3 per cent of GDP with a market cap of Rs. 2,400 billion. Banking sector intermediation, as measured by total loans as a percentage of GDP, could grow marginally from its current levels of ~30 per cent to ~45 per cent or grow significantly to over 100 per cent of GDP. In all of this, the sector could generate employment to the tune of 1.5 million compared to 0.9 million today. Availability of capital would be a key factor the banking sector will require as much as Rs. 600 billion (US$ 14 billion) in capital to fund growth in advances, non-performing loan (NPL) write offs and investments in IT and human capital up gradation to reach the highperforming scenario.

Three scenarios can be defined to characterize these outcomes:

High performance: In this scenario, policy makers intervene only to the extent required
to ensure system stability and protection of consumer interests, leaving managements free to drive far-reaching changes. Changes in regulations and bank capabilities reduce intermediation costs leading to increased growth, innovation and productivity. Banking becomes an even greater driver of GDP growth and employment and large sections of the population gain access to quality banking products. Management is able to overhaul bank organizational structures, focus on industry consolidation and transform the banks into industry shapers. In this scenario we witness consolidation within public sector banks (PSBs) and within private sector banks. Foreign banks begin to be active in M&A, buying out some old private and newer private banks. Some M&A activity also begins to take place between private and public sector banks. As a result, foreign and new private banks grow at rates of 50 per cent, while PSBs improve their growth rate to 15 per cent. The share of the private sector banks (including through mergers with PSBs) increases to 35 per cent and that of foreign banks increases to 20 per cent of total sector assets. The share of banking sector value adds in GDP increases to over 7.7 per cent, from current levels of 2.5 per cent. Funding this dramatic growth will require as much as Rs. 600 billion in capital over the next few years.

Evolution: Policy makers adopt a pro-market stance but are cautious in liberalizing the
industry. As a result of this, some constraints still exist. Processes to create highly efficient organizations have been initiated but most banks are still not best-in-class operators. Thus, while the sector emerges as an important driver of the economy and wealth in 2010, it has still not come of age in comparison to developed markets. Significant changes are still required in policy and regulation and in capability-building measures, especially by public sector and old private sector banks. In this scenario, M&A activity is driven primarily by new private banks, which take over some old private banks and also merge among themselves. As a result, growth of these banks increases to 35 per cent. Foreign banks also grow faster at 30 per cent due to a relaxation of some regulations. The share of private sector banks increases to 30 per cent of total sector assets, from current levels of 18 per cent, while that of foreign banks increases to over 12 per cent of total assets. The share of banking sector value adds to GDP increases to over 4.7 per cent.

Stagnation: In this scenario, policy makers intervene to set restrictive conditions and
management is unable to execute the changes needed to enhance returns to shareholders and provide quality products and services to customers. As a result, growth and productivity levels are low and the banking sector is unable to support a fast-growing economy. This scenario sees limited consolidation in the sector and most banks remain sub-scale.

NEED TO CREATE A MARKET-DRIVEN BANKING SECTOR WITH ADEQUATE FOCUS ON SOCIAL DEVELOPMENT:
The term policy makers used in this document, as mentioned earlier, refers to the Ministry of Finance and the RBI and includes the other relevant government and regulatory entities for the banking sector. There is need to believe in co-ordinated effort between the various entities is required to enable positive action. This will spur on the performance of the sector. The policy makers need to make co-ordinated efforts on six fronts: Help shape a superior industry structure in a phased manner through managed consolidation and by enabling capital availability. This would create 3-4 global sized banks controlling 35-45 per cent of the market in India; 6-8 national banks controlling 20-25 per cent of the market; 4-6 foreign banks with 15-20 per cent share in the market, and the rest being specialist players (geographical or product/segment focused). Focus strongly on social development by moving away from universal directed norms to an explicit incentive-driven framework by introducing credit guarantees and market subsidies to encourage leading public sector, private and foreign players to leverage technology to innovate and profitably provide banking services to lower income and rural markets. Create a unified regulator, distinct from the central bank of the country, in a phased manner to overcome supervisory difficulties and reduce compliance costs. Improve corporate governance primarily by increasing board independence and accountability. Accelerate the creation of world class supporting infrastructure (e.g., payments, asset reconstruction companies (ARCs), credit bureaus, back-office utilities) to help the banking sector focus on core activities. Enable labour reforms, focusing on enriching human capital, to help public sector and old private banks become competitive.

NEED FOR DECISIVE ACTION BY BANK MANAGEMENTS:

Management imperatives will differ by bank. However, there will be common themes across classes of banks: PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organizational performance ethic. The last, i.e., strengthening human capital will be the single biggest challenge. Old private sector banks also have the need to fundamentally strengthen skill levels. However, even more imperative is their need to examine their participation in the Indian banking sector and their ability to remain independent in the light of the discontinuities in the sector. New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/HNI segments; actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms. Attracting, developing and retaining more leadership capacity would be a key to achieve this and would pose the biggest challenge. Foreign banks committed to making a play in India will need to adopt alternative approaches to win the race for the customer and build a value-creating customer franchise in advance of regulations potentially opening up post 2009. At the same time, they should stay in the game for potential acquisition opportunities as and when they appear in the near term. Maintaining a fundamentally long-term value-creation mindset will be their greatest challenge. The extent to which Indian policy makers and bank managements develop and execute such a clear and complementary agenda to tackle emerging discontinuities will lay the foundations for a high-performing sector in the years to come.

RURAL BANKING IN INDIA

POSITION OF RURAL AREAS:
As it is always said that India stays in villages because out of the total population stays in villages and most of the revenue of our country is generated from agriculture and other related areas, but still if we have a look at the position of rural areas they are quiet disappointing because they have been always in the neglected areas and very minimal steps have been taken in order to improve its current standing. Steps are now been taken in form PSL (Priority Sector Lending) and through Financial Inclusion because now banks have slowly realized that rural areas are the untapped areas and also are highly competent areas to achieve growth, so now steps have been taken to reach rural areas as quickly as possible because it will be very beneficial to reach first and try to make an impression and win the hearts of the people to bring in more business. For the complete growth our country it is very important to ensure rural growth simultaneously because to make the dream come true of becoming the Super Power in the next ten years will compulsorily need growth from rural areas because a country cannot develop with one its part developing in an impressive manner and the other part remaining stagnant. Traditionally rural and semi-urban areas have been looked upon as requiring help and lacking in competent management. This mindset in policy formulation, regulations, and procedures governing the rural banking system has left the rural system ailing. Liberalization of RRBsactivities has permitted them to participate in more profitable businesses. A single, strong, merged RRB setup would bring to the rural economy a well-directed banking apparatus to take care of infrastructure, export financing, and traditional businesses. Some rural areas are potential candidates for development into export centers for which modern banking facilities should be made available, instead of making the customers commute to urban centers to meet their international banking needs. Banks can offer financial solutions to the agricultural sector and put to use expertise in private equity, venture funding, and corporate finance to tap the potential of agro-based businesses in India.

People in the rural areas have always been deprived from using banks facilities and due to which there has always been exploitation observed in remote areas and it is now high time to feel the need to bring them closer to advanced bank facilities so that even they can make optimum use of the same. For changing this scenario the government hopes to bring 73,000 villages under the banking net that will lead to over five crores new bank accounts in rural areas. The intention is to cover at least 73,000 new habitations which have population of over 2,000 and will open at least five crores new accounts by March 2012. The figures pointed out that only 38 percent of the total 85,300 bank branches in India were in rural areas. Only 40 percent of Indians have access to banking facilities. Though the total number of bank branches have increased from 8,700 at the time of nationalization in 1969 to 85,300 now, rural areas have only 32,000 branches, adding directions that all public sector banks to increase their presence in rural areas. A financial inclusion campaign called "Swabhimaan" has also been launched. The campaign is aimed at encouraging people in rural areas to open bank accounts and use banking facilities. It is one of the first campaigns to make targeted and concerted efforts to ensure ease of access of organized financial system for the common people. Though India has one of the largest banking networks in the world, it is a matter of great concern that only 40 percent of people in India have access to banking services. This revolutionary campaign seeks to correct that imbalance by establishing a new medium to ensure greater availability of full spectrum of financial services and organized banking to all the citizens regardless of which part of the country they may reside.

BANK OF BARODA
Bank of Baroda started in the year 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance. It all started with a visionary Maharaja's uncanny foresight into the future of trade and enterprising in his country. On 20th July 1908, under the Companies Act of 1897, and with a paid up capital of Rs 10Lacs started the legend that has now translated into a strong, trustworthy financial body, THE BANK OF BARODA. It has been a wisely orchestrated growth, involving corporate wisdom, social pride and the vision of helping others grow, and growing itself in turn. The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank of this nature will prove a beneficial agency for lending, transmission, and deposit of money and will be a powerful factor in the development of art, industries and commerce of the State and adjoining territories." Between 1913 and 1917, as many as 87 banks failed in India. Bank of Baroda survived the crisis, mainly due to its honest and prudent leadership. This financial integrity, business prudence, caution and an abiding care and concern for the hard earned savings of hard working people, were to become the central philosophy around which business decisions would be effected. This cardinal philosophy was over years of its existence, to become its biggest asset. It ensured that the Bank survived the Great War years. It ensured survival during the Great Depression. Even while big names were dragged into the Stock Market scam and the Capital Market scam, Bank of Baroda continued its triumphant march along the best ethical practices.

Mission:
To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence.

Logo:
Bank of Barodas new logo is a unique representation of a universal symbol. It comprises dual B letterforms that hold the rays of the rising sun. It is called the Baroda Sun. The sun is an excellent representation of what bank stands for. It is the single most powerful source of light and energy its far reaching rays dispel darkness to illuminate everything they touch. Bank of Baroda seeks to be the source that will help all their stakeholders realize their goals. To their customers, bank seeks to be a one-stop, reliable partner who will help them address different financial needs. The single-colour, compelling vermillion palette has been carefully chosen, for its distinctiveness as it stands for hope and energy. Bank also recognizes that they are characterized by diversity. Banks network of branches spans geographical and cultural boundaries and rural-urban divides. Banks customers come from a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face for brand because it is a universal symbol of dynamism and optimism it is meaningful for many audiences and easily decoded by all. Banks new corporate brand identity is much more than a cosmetic change. It is a signal that the banks recognize and are prepared for new business paradigms in a globalised world. At the same time, we will always stay in touch with their heritage and enduring relationships on which the bank is founded. By adopting a symbol as simple and powerful as the Baroda Sun, they hope to communicate both.

BANK OF BARODA PRESENCE: Area

Metro Urban Semi-Urban Rural Total (Indian)..A Foreign (Overseas)..B Total (Global)..(A+B)

No. of Branches
756 639 844 1172 3411 85 3496

BRANCHES Bahamas Bahrain Belgium China Fiji Islands Hong Kong Mauritius Republic of South Africa Seychelles Singapore Sultanate of Oman United Arab Emirates United Kingdom United States of America

SUBSIDIARIES Botswana Ghana Guyana Kenya New Zealand Tanzania Trinidad & Tobago Uganda

JOINT VENTURE Zambia

REPRESENTATIVE OFFICES Australia Malaysia Thailand

LEARNINGS

As per instructions my joining at Bank of Baroda, Bhayandar (west) Geeta Nagar branch was on 18th May 2011 and the branch timings are 10.00 a.m. to 04.00 p.m. The staff working at this respective branch comprises of 9 people excluding 1 security guard who is not an employee of the bank. This branch is just 3 years old but over the period of these 3 years branch has done really well in creating a good database of customers. The branch provides with different types of accounts such as Savings, Current, Recurring. On Savings account the bank provides 3.5% interest and as per new guidelines the interest is calculated on the present value held in the account on daily basis and the accumulated interest is paid at the end of every six months. Under recurring deposit account the main purpose is to develop a habit of savings among people so that they save at least some money and deposit in the bank on which they can earn the same interest which is applicable on fixed deposit, the only difference is that recurring deposit does not allow the tenure which is of some odd days like recurring does not provide to open an account for 444days, it is usually in the time frame of 5years or 6years but never in between. Bank provides the customers to open this recurring account with the starting minimum balance of Rs.50/- for people from rural areas and Rs.100/- for the people who belong to proper city. And every month depositing of minimum of Rs.50/- and 100/respectively. With the help of this facility with such low amount people can deposit their money at their comfort level and as per their earning power. Also after opening the recurring deposit account the customer can avail the facility of overdraft up to 95% of the value available in the account.

The branch to promote more and more savings have also come up with a scheme namely Yathashakti scheme under which the customer can start his account with minimum Rs.100/and then he can again deposit Rs.100/- every month and I case if he/she wishes to deposit more money than he can deposit 3times of the value introduced at the inception of the account. For example if the customer has opened the account with the initial value of Rs.1000/- then in future he can deposit only up to Rs.3000/-, the rate of interest provided on this deposit is same as the interest provided on recurring deposit. All the funds which are received in a day are called as Receipts and all the withdrawals done by the customers are called as Payments. All these transaction are recorded in a register under the respective heads and at the end of the day both the receipts and payments are tallied that there is no difference between the figures. Every day the cash in main lockers are counted the money kept in lockers at the end of the day becomes the closing balance for that day and the same balance becomes the opening balance for the next day. This is one of the most important feature which is to be carried out every day on a regular basis because it is a practice that officers from Zonal Basis can come anytime to visit the branch and even the Auditors who come for the audit at the branch desires to go through the register stating about the balance funds with the branch and tallies whether the written figures are in there in actual terms or not. The branch also provides the Fixed Deposit facility where the rate of interest varies as per the tenure of the fixed deposit. Apart from the standard rate of interest Bank of Baroda has come up for their namely Baroda Utsav deposit customers with a scheme of 444 days where they provide customers with 9.35% and on all forms of Fixed Deposit, Bank of Baroda provides 0.50% higher in addition to the standard rates to the senior citizens whose age is above 65years. Apart from this the maturity ranges from minimum 7days to maximum 10years. The interest is calculated on a daily basis on the principal amount for which the Fixed Deposit is created and the same procedure continues till the maturity period it the customer does not intends to withdraw the F.D. amount in case of need.

As the guidelines prescribed by RBI that interest earned on F.D. should not be more than Rs.10000/- in a year and if the income exceeds the limit then the income gets eligible for tax deduction. But since an F.D. is a medium of investing money so therefore to avoid deductions government has prescribed that in case the income exceeds Rs.10000/- then the customer has to fill up Form 15G and 15H to show the investment and then the interest is saved from tax being charged. Form 15G is for the people who are not more than 60 years of age and 15H is for people more than 60years of age. In case where the customer has submitted his/her PAN card details then the tax is deducted @10.30% and in case where PAN card details are not fulfilled tax is charged at 20%. Tax which is deducted when the income exceeds the limit is charged on the full value of F.D. and not the amount which has exceeded. Once the tax being deducted in case of non submission of 15G / 15H then the customer has to file a return with the documents such as the certificate that tax has been deducted on other required documents once these formalities are fulfilled the deducted amount is rolled back. Bank of Baroda has also come up with scheme called as ASBA Facility which is Application supported by Blocked Amount. This facility enables the customers during IPO/FPO/NFO, the core idea is that the customer can apply to IPO/FPO/NFO and does not have to make immediate payment. The application amount remains blocked in the investors bank account and is released in a proportionate amount and on allotment of shares. The benefits of this scheme are: 1. Simple application form no need to submit cheque 2. Continue to earn the income on the locked amount 3. No worry of refunds 4. ASBA application forms are accepted at over 1200 designated branches of BOB.

Another such added services comprises of BSIP which is Baroda Pioneer Systematic Investment Plan. BSIP is a simple and time honored investment strategy for accumulation of wealth in a disciplined manner over a long period. Under this scheme the desired customer has been given an option that they can even start by investing as low as Rs.1000/It offers the below advantages to the customers: 1. Disciplined approach: If the customer does not have an immediate access to a large amount of ready cash, he/she has the option in investing in small amounts. The can commit any amount of their choice (minimum 1000/-) to be invested every month in one of the banks schemes. This way the customer can be benefited when there is rise or fall in the market. 2. Risk and Volatile Management: Stock markets are volatile and therefore prediction is difficult. Investors can focus on their financial goals and leave the job of managing the market volatility to professional investment managers. 3. Rupee Cost Averaging: Investors get more units at low NAV. Markets performance does not matter because when the market falls you benefit by being allocated more units and when market rises, the investments are averaged out. Investors buy stock at a lesser price typically and sell them when prices are high. Timing the market is time consuming and risky. 4. Power of Compounding: Principal of compounding is applied. In earlier times when the customer use to invest the more time the investment will have to grow by compounding. The interest earned on investment also earns interest. Increases the value of the investment. Averages out concerns of timing the market and short term volatility. The bank has always been emphasizing on various other facilities which can make customers work easier and faster. Facilities such as RTGS, NEFT. These are different type of medium which are used for quick money transfer with minimum charges. The staff has always been guiding the customers to avail this facility because it is in their best interest.

Also it saves their money spent in availing this facility because the charges are less as compared to other facilities which performs the same function. RTGS is Real Time Gross Settlement and it is used when the amount to be transferred is more than Rs. 2lacs. And NEFT is National Electronic Money Transfer and this facility is used when the amount to be transferred is less then Rs. 2lacs. The basic procedure followed in both of these functions can be well explained in the form of a diagram. But first lets take an example where the customer wants to send across funds from Bank of Baroda to some other bank. These transfers are done with the help of codes which are stated on the cheques issued to the customer. The process works in the below form:

BOB Customers Branch BOB Main Branch RBI Hub Other Banks Main Branch Other Bank Customers Branch

As shown in the above diagram the procedure begins from the branch where the customer has the account and if the customers has appropriate balance in the account the requested money is then transferred and sent to bank of Barodas main branch, from there the transaction money is forwarded to RBI where RBI acts as a hub and from there RBI forwards the funds to the main branch of that bank where the transfer is requested and in the end the main branch forwards the money to the ultimate branch. Ideally it takes 2hours maximum to complete this process. To save time and money these two medium are very useful from the point of view of a customer. Almost the same procedure is followed in case of International Transfer of funds but since this is a small branch international transfer is not undertaken at this branch but done at only authorized branches. Te only difference in carrying out the international transfer is that there is a process of carrying out the currency valuation as to what is the current value of the currency since its value keeps on fluctuating in the international market. For carrying the international transaction earlier in the absence of these mediums it was a bit time consuming since a lot of formalities had to be carried out manually and it use to take approximately 15days to complete the whole procedure apart from that regular follow up was also very necessary, but now with the help of the advanced mechanism the transfer can be carried out within 1day or maximum 2days if everything remains in order. Apart from these facilities the branch also provides loans, this is one of those areas from where bank earns most of its revenues, currently most of the income which the bank earns through loan is earned by providing the Auto loan and Home loan. But now slowly bank is also taking an initiative to help the customer with Traders Loan. The customers records here are very good and so far bank has not faced any NPAs, the branch has done really well in maintaining good relationship with the customers and also done well in relation to the investigation part before granting loan. Branch has always been on their toes in informing their customers if there are any changes in the policies of the scheme which they have availed, any changes in the rate of interest or changes in anything which might affect their interest.

The customers have also by accepting their responsibility has not troubled the branch they have always been ready to help whenever needed. So up till now its like win-win situation on both the ends the customers as well as the branch have been benefiting by the facility. To keep the work in order for the loans which are granted the branch maintains a Due date diary which consist two sections. Section 1 consists of those customers who have chosen to pay through PDC (Post Dated Cheques). Under this method the customer who has availed the loan issues certain number of cheques in the favor of the bank and directs to drop the cheque every month as EMI. The bank starts dropping cheques for payment after one month of the disbursement of the loan. The cheques are dropped and the customers account gets debited as soon as the cheque gets cleared. It is the responsibility of the bank to drop the cheques reasonable days before the due date since cheque clearing also requires certain minimum number of days, and if the cheques are not deposited as per schedule the bank can charge penalty to the customer but then since the bank has committed the mistake the penalty has to be waived. Under Section 2 customers who have given standing instructions to the bank to debit the customers saving account with the bank and take it as EMI. No cheques are issued in this form the bank simply debits the customers account the EMI which includes the principal amount and the interest amount. Once the loan is granted the loan count has to be reviewed after every one year that how it was it behaved during the last year whether the EMI were received on time, if not then what were the reasons behind delay in payment, whether the customer furnished the details on time or was there a delay what has been the track record, all these and many such things are evaluated at the end of the year. These details are maintained in the books as well as on the system so that there is always back up available. While making the review it is very important to obtain LAD (Letter of Acknowledgement of Debt), with the help of this document all the documents which were obtained while granting the loan gets renewed.

Documents such as Power of Attorney get renewed. With the help of LAD being renewed regularly in case when the borrower makes a default the bank has the right to approach legally to make the loss good. But when the LAD is not renewed then the banks right to recovery remains but the right to approach legal system is lost. In case when the loan amount is above Rs.5lacs and the borrower makes a default the whole report along with the review documents are sent to the RM when the LAD is not renewed. For the loan whose value is above Rs.5lacs such proposals are sent to the RM at the Jogeshwari branch for approval. Another area from where bank earns its revenue is from Lockers. In all the branch has got 138 lockers varies o the basis of their sizes which are arranged in the ascending order namely A,B,C,D,E,F,H,E,L. Branch charges rent in return and the rent varies as per the size i.e. Higher charges for bigger Lockers. Apart from the rent which the customer pay they are also suppose to pay service charge charged by the bank which is around 10.30%. To operate the lockers there are in all 3 keys out of which one remains with the customer, one remains bank and the remaining one remains with bank officer who handles the locker transaction. Whenever the customer desires to operate his/her locker the bank officer goes along and both the customer and the branch representative will have to insert the key together to open the locker. The bank is not entitled to know what the customer has kept in their locker, so therefore as soon as the locker has been opened the branchs representative will have to leave the customer alone so that the later can use the same. The key which remains with the bank is nothing but a MASTER KEY which they are suppose to use only during emergency cases. Currently there is a very heavy demand for lockers by the customers but due to space constraints the branch is not able to bring in more lockers. To track the details of the locker the branch maintains a register so that in case when frequent details are required it can be referred.

The register contains details such as: 1. DATE 2. M.L. No. And R.R. No 3. NAME OF THE LOCKER HOLDER 4. ADDRESS 5. PERIOD 6. RENT 7. DUE DATE 8. INITIALS 9. RENEWED AND SURRENDERED 10. INITIALS To bring more business and spread more awareness the Branch Manager usually goes to meet the clients to make them understand different types policies and schemes which the bank provides so that more and more customers can open their account and the branch can expand their business. The areas which can be concentrated are like schools, colleges, people working at fire brigade all of them can open their account, the agencies who regulate the local business can also open their account which are big customers bringing in more cash reserves which can be lent to the people who approach for loans and in return the bank can earn interest on the same. For all the expenses like the printing and stationary expenses, electricity bill, telephone bill, security guards compensation and such other expenses which incurs the branch maintains a register where in all these details are written to track the overall expenditure.

RECOMMENDATIONS
Technological advancement:
For every organization it is very important to have an advanced technology backing your employees so that the work can be done faster and can be done in the most efficient manner. With the help of the latest technology it gives the employees a helping hand and comes out to be very useful in cases where the work load is very high and the available people to complete the assigned tasks are comparatively low, in such cases if the organization is able to compensate the low work force with advanced technology then it is helpful for both the employees as well as the organization. Many nationalized banks use software called FINACLE and the usual work is carried on with the help of the same designed software, and it is actually more than sufficient to undertake duties performed at the bank such as making cash receipt entry, making payment, issuing Demand draft, Issuing Fixed deposit certificate, account holders transaction details, pass book printing, transfer of money, the loan which are sanctioned to the customers all the details related to it such as the amount for the EMI, if there are any changes in the interest rate then what will be the revised EMI and such related details can easily inserted and referred when required. But then Finale acts core software on which the whole staff works so if in case there is some problem with the server the whole work gets stand still which is not a good sign for such an esteemed bank, so in such a case bank should take some serious steps to ensure that there is no as such problem with regards to the server issues and even if any such problem occurs then there should be some reliable alternative available with them which they can use during adverse situation, and also the alternative is important because the frequency of customers visiting the branch is always high, and the customers visit the branch even for those issues which they can also solve on their own but due to lack of awareness they regularly visit the branch and if the branch is facing such operational issues it can also lead to arguments amongst the customers and the staff because sometimes it becomes very difficult to make the customers understand why the same problem arises again and again so in keeping all these things in mind a proper software should be developed so that the same can be used in case of critical situation so that the work remains unhampered.

Along with this some major steps should be taken in order to make the core software so efficient that regular problems can be avoided. Apart from Finacle there are some other softwares which are very useful in day to day workings such as Microsoft Office, which can help in many ways such as drafting letters, diagrams, maintaining excel reports, preparing power point presentation, making diagrams and such other activities which can make work easier and also this software is very safe to use, most recommended, and very small in size easy to use and can really improve the efficiency.

Work Force:
In all forms of organization the work force majorly decides about the success of the organization, because the more efficient work force one has got more are the chances it has got to reach the top so it is very important for the organization to choose the work force carefully and should use the talent and skills of the available employees at their optimum capacity and should make sure that the employee are doing what they do the best. With respect to nationalized branches the staff members should be very polite and humble to the customers and above all they should always have intentions to help the customer in the best possible manner and which is best suited to them without being selfish. All the staff members should be well equipped with basic knowledge through which they can help the customers which they usually come across and almost everyday. It is very important for branches to maintain a good customer base and putting in efforts to increase it everyday and the figures should show the same, the staff should be very polite with the customers because a better treatment would make people prefer the place most where they get respect and better facility. But the problem also arises when there is absenteeism in the staff which leads to increase in the work load on the other employees and things are somehow managed where some or the other person takes up the responsibility of taking care of extra work but it also increases the pressure on that respective employee because then he/she has to take care of two different types of work at the same time. In case when there is high absenteeism it tends to increase the problems because it makes things unstable, and with the increasing customer database every day the banks really needs more people who can help them which will reduce unnecessary pressure and will help in appropriate allotment of work. Appointing new officers will give a helping hand to the branch people which will allow the superior officers to give more time to important matters and can also think about ways how they can attract more and more customers to increase business. Appointing an officer will reduce burden from higher officials.

Infra structure:
Infra structure though does not seems that important but even it has got its own importance, the structure of the bank, how well built it is, its interiors, the sitting space and many other things attract the customers a lot because say for example if a customer enters the branch for the first time and as soon he/she enters and sees everything unorganized, walls leaking, dirty floor what impression would the customer carries and there is very less possibility that he/she would open its account with the bank because its not just about opening an account but its all about building relationship. Building relationship with not only with the people who are working there but also the customer is building the relationship with the place where they have to come very often. So the structure of the branch is very important from the customers and increasing the business point of view, bank has to think from both the perspective so that both are benefited. All the things in the branch should be kept in such a manner that all the required things are in place and under the reach when required. The structure formation should be done systematically in such a way that the customers should be restricted up to a certain limit and does not give them access to roam around the whole branch because it is risky to both the customers and for the branch workings. Banks are one of the most risky places to work and any carelessness can lead to trouble. If the customer is given access to whole branch it can lead to loss of information, confidential data, atm cards, debit cards, credit cards with their pins can be stolen which can turn out as very huge problem for the bank and then any one can be suspect for the loss. The same can happen with the customer as well, say for example if the customer unknowingly entered a cabin where he should not be and all of a sudden there is a loss of confidential data then the customer will surely become a suspect even if he has not done anything. So it is very important to plan things really well so that such unnecessary troubles can be avoided beforehand. Proper formation also ensures safety within the branch. Apart from this the most sensitive thing is Cash, because while collecting cash and making payment if any customer gets an access to banks cash reserves then it can be very devastating. Lockers and so many sensitive things are always present on the branches which are to be taken care of.

Therefore if the branches can adopt systematic approach towards working it can be very useful. All the counters where maximum number of customers appears should be brought out as front office and verification work, system entry which can be done without the presence of the customers can be shifted towards the back side. And another important thing is giving the customer access to the branch allows them to enter completely into the branch and through which customers with cruel intentions can have access to all the security triggers and also can undertake other fraudulent activities. Efforts should be made that the customers should be kept at the front office and try to help them there itself and until and unless they do not have genuine reason to go in like operating lockers etc they should not be allowed to move inside the branch. All the other facilities like providing with water, helping with their doubts should be entertained outside and care should be taken with each and every branch.

Training and Development:

Training and Development plays a very important role in success of every organization because it is the labour force of every organization whose has got the key behind achieving pre-decided goals or leading the organization towards failures. It is always said that the selection procedure should be carefully done because one wrong selection of an employee can lead to disaster. The reason being, once the employee has been recruited company spends a lot of money behind the employee, expenses such as training, conducting induction programme, and other such related expenses. Therefore selecting one wrong person can lead to loss of funds and loss of time. Every company frames the goals and targets after taking into consideration their labour force and if the labour force itself is not efficient then how the organization will achieve its objectives. It is usually seen in case of many banks that staff working in their respective banks has got knowledge only about their own work and when the situation arises such as absenteeism, sickness the other existing staff members have to back the employee and complete his/her pending work, for this it is very important that the employees are well versed with all types of works being performed by all the staff members it makes work easy during adverse situation and keeps the bank prepared to adapt themselves as per the situation. Sharing knowledge with everyone is good exercise it should be done in such a way that the staff members should enjoy it and it such exercises should not come on them as a burden. Once in a month such initiatives should be taken in form of quizzes, short power point presentations. In such a manner that learning is done in form of enjoyment which at the end creates an efficient labour force having at least basic knowledge about everything. Training programmes should be conducted at training centres after regular duration of time so that people get to know each other and they can share their views and opinion on different aspects which can help them in future. At the end it is necessary that the employee takes training and development programmes seriously and make the most use of it because it will also help them in their own overall development and also their own growth with the organization.

With respect to banks, there is always a need for specialized people, who have gained some special skills in certain areas through education or from some special courses or through experience. To illustrate as an example in all the branches the functions are carried on with the help of various software which is installed in different machines, now it is very important to have a person who is specialized in I.T. sector in a branch so that he/she can handle such equipments, tackle different problems, can sort out problems with the technical team, keeps the system and machines updated as per the need and also help other staff members with the same. It also helps the branch to stay I touch with the most advanced technologies available in the market and select the best which can be useful to them in their everyday workings. Out of all the available software choose the best which will serve them the best.

Awareness about the services:

With modernization in almost all the sectors even banks have indulged themselves in various facilities apart from the traditional ones like accepting deposits and lending them. Now the banks are adopting various types of facilities such as paying utility bills, shares trading, payments of taxes, using advanced methods of transferring money such as RTGS, NEFT, and then depositing money in the account which is specifically opened for the payment of shares applied, well in this case the customer who desire to buy shares of any company can apply and deposit the share value money with the bank. Till the time the company does not issue shares to him/her the customer can earn money on the money deposited with the bank and then can when the company allots the shares the bank makes the payment as and when it is due, all these facilities are so well framed that the customer is always at a very good position but the point is how many customer are aware about such schemes, because till the time there are not aware they will not be able to avail the services. Banks after every certain period of time make efforts to come with such innovative services for the customer but it is also important that customers are aware about the same. Proper methods should be adopted in order to make people educated so that they can use the services to the core and derive maximum benefit out of it. The banks should take steps such as sending circulars to the customers at their residence, distribute pamphlets, display hoardings where the frequency of people is very high, then at the branch level where the customers visit the most, the bank authorities should set up suitable advertisement boards and on such places where the customer somehow get an eye and they can go through the manual understand the concept and use the services because it is always believed that EYE LEVEL IS BUY LEVEL. It should also be note that the language used in hoardings, boards, pamphlets and other advertisement methods should be easy to understand by everyone, should be under the reach of everyone, all the reference material should be framed in English, Hindi and in the local language. Use of technical language should be avoided because as and when the customer finds it difficult to understand he/she stops reading and that is where a customer is lost. Language should be easy, simple and basic.

Bank authorities should also take steps such as training the staff at the branches in relation to all the services which they provide so that if the customer has any doubt in understand things there should always be a bank representative to clear his/her doubts politely make their concept clear. One things is what every customer expects is good service and personal attention, if these two things are delivered to the customer then the customer becomes loyal to the bank forever and even the bank will have the family members, relatives, friends because word of mouth is the best form of advertisement. It is very important to show concern towards the customer that even bank is also interested in providing services and wants the customer to benefit from it.