Banking & Insurance

WHAT IS BANK?
A bank is a financial institution
that accepts deposits and makes loans. The
bank has a unique, characteristic balance sheet
showing long-term assets (loans) offset by
short-term liabilities (deposits). Any other
company would be insolvent with the balance
sheet of a bank. Resolving this mismatch of borrowers’ and savers’ time
horizons is the function of a bank. Bank oversight (i.e. FDIC) tries to reduce
bank failures from the inherent risk. The US bank thus faces vigorous
competition, compelling it to offer a wide range of convenient services such
as taking deposits, issuing checking and savings accounts, lending money,
cashing checks, providing wire transfers, issuing cashiers checks, debit cards
and credit cards, providing safe deposit boxes plus a network of ATMs, and
offering online banking.

Definition of bank:
According to negotiable instrument act 1881defines,
“Bank is financial institution or a person willing to accept deposits from
public repayable on demand or otherwise by cheques or draft and lend or
invest the deposits so accepted on different account.”

According to section 5(A) of Indian Banking Regulation Act ,1949

“Bank means a company which transacts the business of banking in India.”

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FEDERAL BANK

Federal Bank is one of the leading private sector banks in

India. Federal Bank has a banking history of around 70 years and its
head office located at Always near Kochi, Kerala.

Federal bank has a wide network of more than 450 offices

covering almost all major cities in the country with a major share in
the state of Kerala, God's Own Country with more than 300 branches.
At present Federal Bank has network of over 200 plus ATMs all over
India and is being expanded. Federal Bank has the largest number of
ATMs in Kerala covering almost every town. The Federal Bank's ATM
card also includes International Visa Debit Card enabling the bank's
customers to use the card at any of the over 8, 40,000 networked
ATMs round the world and pay for shopping at over 12 million retail
establishments.

The Federal Bank is having a net worth of over Rs 643

crore and a business turnover of Rs 20000 crore.

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PROCEDURE TO OPEN AN ACCOUNT

Just walk into any of the branches of the bank spread over the
length and breadth of India and submit the application along with your
personal id proof, introduction and relevant documents. The application
forms can be obtained.

Customer has to produce a proof of address and identity. Any of the

following documents are acceptable.
Identity
1. Passport

2. pan card

3. voters identity card

4. driving license

5. identity card (subject to the bank’s satisfaction)

6. Letter from a recognized public authority or public servant verifying

the identity and residence of the customer to the satisfaction of the

bank.

Address
(i) Telephone bill

(ii) Bank account statement

(iii) Letter from Any Recognized Public Authority

(iv) Electricity Bill

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FUNCTIONS OF FEDERAL BANK:

Function
s

Primary Seconda
Function ry
Function
A. Primary Functions:
These Are The Functions Which Are Compulsory For Every Bank
To Perform. These Are Also Called As The “Main Functions Of A Bank”.
1. Receiving Deposits:
Following are the types of receiving deposits:

• CURRENT DEPOSIT:

1) Current accounts are suitable for the requirements of big businessmen,

companies, institutions, public authorities whose banking transactions are
numerous on every working day.
2) The primary objective of a current account is meant for the
convenience of customers who are relieved of the task of handling cash.

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3) A current account is normally opened by businessmen for their

Convenience. Money can be deposited & withdrawn at any no of times.
Withdrawals are made by cheque only. Usually, a bank does not allow any
interest on this account.
4) The current account is opened because of two important privileges

Overdraft facilities, & other facilities like collection of cheques, transfer of

money & for other services.
5) The current account holders have to keep certain minimum balances as
per rules of the bank.

6) Current accounts are cheque operated accounts meant neither for the

purpose of earning interest nor for the purpose of savings but only for
convenience of business hence they are non-interest bearing accounts.

7) In a current account, a customer can deposit any amount of money any

number of times. He can also withdraw any amount as many times as he

wants, as long as he has funds to his credit. Generally, a higher minimum
balance as compared to savings account is required to be maintained in
current account.

8) As per RBI directive banks are not allowed to pay any interest on the

balances maintained in current accounts. However, in case of death of the

account holder his legal heirs are paid interest at the rates applicable to
savings bank deposit from the date of death till the date of settlement.

9) Because of the large number of transactions in the account and volatile

nature of balances maintained, banks usually levy certain service charges

for operating a current account.

10) A minimum initial deposit of take. 1000/- shall be required for opening a

current deposit account.

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• FIXED DEPOSIT (8% RATE OF INTEREST)

1) Bank fixed deposits are also known as term deposits. In a fixed
deposit account, a certain sum of money is deposited in the bank for a
specified time period with a fixed rate of interest.
2) The rate of interest for bank fixed deposits depends on the maturity
period. It is higher in case of longer maturity period. The interest can
be compounded quarterly, half-yearly or annually and varies from
bank to bank.
3) Minimum deposit amount is RS. 1000/- and there is no upper limit.

Loan / overdraft facility is available against bank fixed deposits.

4) Premature withdrawal is permissible but it involves loss of interest.
5) A fixed deposit is one, which is repayable after the expiry of a certain

period determined by the depositor. The period may be 30 days to 5

years or more.
6) The rate of interest depends upon the maturity period. Normally the

deposit is not refunded before the expiry of maturity. It is also known

as time deposit. an application form is filled up by the depositor for
opening an account stating the name, address, amount of deposit,
period of deposit, name of nominee & his/her signature. Interest is
paid as per the terms & conditions. Income tax should be deducted
from the interest paid if it is above the limit prescribed in the act.
7) A fixed deposit can be opened in the names of two or more
individuals, which is called joint account.
8) Repayment a fixed deposit is repayable on the expiry of a specified

period, chosen by the depositor to suit his purpose & to enable him to
get back the money as & when he needs it. As the date of repayment

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is determined in advance, the banker need not keep more cash

reserves against it.
9) Fixed deposits are more popular in India & constitute more than 50%

of the total bank deposits.

10) Loan / overdraft facility is available against bank fixed deposits.

• SAVINGS DEPOSITS
(3.5% INTEREST ON MONTHLY BASIS):
1. The main object of this deposit is to promote savings of people. it is
intended primarily for small savers.
2. There is a restriction on withdrawal from this deposit.

3. Minimum RS. 100 can be deposited to open this account.

4. A cheque book facility is available only with higher minimum

balance.
5. It carries low rate of interest i.e.3.5% to 4% depending upon the type
of a bank.
6. Overdraft facility is not available in this account.

7. Need of keeping cash reserves against such deposits is comparatively

larger than the fixed deposits because of the restrictions on the
number of withdrawals.

8. There has been tremendous growth of savings deposits of all

scheduled commercial banks during the last few decades due to the
growth of banking habits and facilities. Savings bank accounts are
meant to promote the habit of saving among the citizens while
allowing them to use their funds when required.

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9. The main advantage of savings bank account is its high liquidity and

safety.

10. Savings bank account can be opened in the name of an individual or

in joint names of the depositors.

11. Savings bank accounts can also be opened and operated by the minors

provided they have completed ten years of age. Accounts by Hindu

undivided families (huff) not engaged in any trading or business
activity can be opened in the name of the karta of the huff.

• RECURRING DEPOSITS: (8% QUARTERLY):

1. It is one form of savings deposits. Depositor has to open an account

with a fixed amount with a fixed maturity period and then deposit the
same amount every month with the bank. It will enable the depositor
to meet his target of expenses.
2. The amount gets accumulated together with interest.
3. Normally higher rate of interest is paid depending upon the maturity
period. The depositor gets a big amount at maturity. the rate of interest
is normally equal to that of the fixed deposit account
4. Pre-maturity withdrawals are not allowed.
5. But the depositor can get a loan on the security of the deposit to the
extent of 75% of the deposit amount and the interest of 2% over the
recurring deposit rate is charged by the bank on this loan.

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6. It is also called as cumulative deposit account. It is intended to

inculcate the habit of saving on a regular basis. An inducement is
offered in the form of higher rate of interest.
7. A recurring deposit account can be opened by any person more than

one person jointly or by a guardian in the name of a minor.

Accumulated amount with interest is paid after a month of the
payment of the last installments.
8. There is great flexibility in period of deposit with maturity ranging
from 6 months to 120 months.
9. The minimum monthly deposit varies from bank to bank. there is no
upper limit on investing.
10.Loan/overdraft facility is also available against recurring bank
deposits.
11. The deposit for rd account is paid in monthly installments and each

subsequent monthly installment has to be made before the end of the

calendar month and is equal to the first deposit. In case of default in
payment, penalty is levied for delayed deposit at the rate of RS. 1.50/-
for every RS. 100/- per month for deposits up to 5 years and RS. 2/-
per RS. 100/- in case of longer maturities.
12. In case of recurring deposit being closed before completing the

original term of the deposit, interest will be paid at the rate applicable
on the date of deposit, for the period for which the deposit has
remained with the bank. Premature withdrawal is also permissible but
penalty is levied. TDS is not applicable on recurring deposits.

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2. Granting loans:

• HOUSING LOANS (RATE OF INTEREST 9.75%)

Purpose

• Purchase/Construction of House/flat

• Reimbursement of cost of house/flat already constructed/purchased

• Purchase of land and with house

• Purchase of land for subsequent construction of house

Eligibility

• Residents – Age preferably below 55

• Non-Residents – Age on maturity of the loan must be 55 or below.

• Proof of income

Loan Amount

• Up to 85% of project cost.

• Cost of stamp duty, registration charges etc. considered

• Additional amenities such as, compound wall, landscaping, water tank

etc. considered as part of project cost.

• Maximum – Rs.3 Crores

Period

• Residents – Up to 20 years

• Non-residents – Up to 15 years

• Security - Housing loan property

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• PERSONAL LOAN :( RATE OF INTEREST 16.25%)

Purpose

• All personal purposes

Eligibility

• Individuals Residents & Non-Residents

Loan amount

• 6 times of monthly salary or 50% of annual income Maximum Rs.2

Lacs

Period

• Upto 60 months

Interest

• The interest rate of personal loan is 16.25%

Security

• Co-obligant/Collateral security

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• MORTAGE LOAN (RATE OF INTEREST 16%)

Purpose

• All personal purposes

 Eligibility
• Individuals Residents & Non-Residents

Loan amount

• Up to 50% of annual salary or 50% of annual income

• Maximum Loan – Rs.1.50 Crores

Period

• Up to 60 Months

Interest

• Interest rate is 16%

Security

• Collateral security valued 200% of the loan amount

• EDUCATIONAL LOAN:(FEDERAL VIDYA

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LOAN)

(RATE OF INTEREST 11.50%-14%)

Purpose

• Higher Studies in India & Abroad

Eligibility

• Students of Indian Nationality , Residents & Non-Residents

Loan Amount

• Up to Rs. 25 Lakhs

Period

• Maximum 11 years

Interest

• Up to Rs.4 Lakhs – 11.50%

• Above Rs.4 Lakhs – 14%

Security

• Co-obligant/Collateral Security

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• GOLD LOANS :( RATE OF INTEREST 12%)

Purpose

• Business/Personal/Agriculture

Eligibility

• Individuals, Small Business concerns

Loan Amount

• Up to Rs.75 Lacs

• 75% to 90% of the Gold market value

• Per gram rate – Upto Rs.525/-

Period

• 3 months to 12 months

Interest

• Rate of interest is 12%

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 Banking & Insurance

• SUBH YATRA LOAN :(RATE OF INTEREST 16%)

The prime object of this scheme is to extend loan to individual /
family members who wish to travel abroad.

Eligibility:

• Resident individuals having adequate income to repay the loan

Quantum and Period:

• Individuals - Minimum Rs.0.50 Lakh and maximum Rs.1.50 Lakh

• Group - (Family members) Minimum Rs.0.50 Lakh and maximum Rs.

3 Lakh - Period is 12 months to 33 months with 3 months cushion
period

Security:

• Primary : Nil

• Collateral - can be in the form of land and buildings, gold ornaments,

deposit receipts, NSC, LIC Policy etc.

Interest Rate:

• The interest rate is 16%

Mode of Repayment:

• Repayable in equal monthly installments

Method of operation:

• At present the scheme is made operative only in selected branches.

The passenger wishing to avail of the tour package can approach our
branch with details of the package provided by travel agency

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• CONSUMER LOAN :(RATE OF INTEREST 16.25%)

Purpose

• To purchase consumer items - Including Bikes/Scooters etc.

Eligibility Individuals

• Loan amount 10 times monthly salary or 60% of annual income

• Maximum loan – Rs. 1 Lakh

Period

• Up to 60 months

Security

• Co-obligant/Collateral security

Special offers for

• Honda GenX – Marketed by Honda Siel Power Products Ltd.

• LG PC – Marketed by LG Electronics

• Orchid PC – Marketed by Team Frontline (P) Limited

• Photon Solar Equipments – Marketed by Life way Marketing

Company

• PCS Desktop -Marketed by PCS Industries Ltd

• Sunrise Solar Water Heating Systems - Bangalore.

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 Banking & Insurance

B. Secondary Functions:
Following are the secondary functions of federal
bank:
• AGENCY FUNCTIONS:
Banks perform certain functions on behalf of their customers.
The banks acts as an agent while performing these services for their
account holders. Federal bank performs following agency functions:

a. Collection:
Commercial banks collect cheque, bills, promissory notes,
dividend, and interest, rent on behalf of their customers. For these
services banks normally charge a nominal amount.
b. Payments:
The bank can also make payments on behalf of their customers
like paying insurance premium, rent, taxes, electricity and telephone
bills, etc. a commission is normally charged for such services.
c.Demat account:
One can open demat account in federal bank and can do buying
and selling of shares.
d.E-banking:
Through e-banking, a customer can operate his bank account
through internet. He can make payments of various bills; he can even
transfer money from one place to another.
e.Income tax consultant:
Commercial banks act as representative or executor of their
clients. It procures tickets and passports of their customers.

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 Banking & Insurance

• GENERAL UTILITY FUNCTIONS:

a. Transfer of funds:
Banks arrange transfer of funds cheaply and safely
from one place to another. Transfer can be in following forms
demand draft, mail transfer, telegraphic transfer, traveler’s cheque.
b. Foreign trade:
Banks also deal in foreign trade. They issue letter of
credit and provide guarantees to foreign traders for their soundness
of their customers.
c. Locker facility:
Banks provide safe deposit lockers to the customers
so that they can deposit their valuables like jewelers, shares and
other documents.
d. Underwriting:
This facility is provided to joint stock companies
and to government if they want to raise funds. The banks guarantee
the purchase of certain proportion of shares, if not sold in the
market.
e. Guarantor:
Federal bank offers a guarantee of payment on behalf
of importer to facilitate imports with deferred payments.

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 Banking & Insurance

• MOBILE ALERTS:
Now track transactions in your account, as it happens,
across the world. Information are money and this is especially true when it
comes to your banking needs. Thanks to fed alert, you now have timely
information at your fingertips. This alert message service from federal bank
sends important information on your account to you through your mobile
phone irrespective of your mobile service provider. The service is available
across the globe in more than 150 countries & in different networks like
CDMA, TDMA & GSM.

• EMAIL ALERTS:
Being updated on your account details is as easy as
accessing your mailbox. Register with us your email ID and start receiving
alerts right on your desk, wherever you are. You have the freedom to select
the periodicity also and receive daily, weekly or monthly updates on
following:
1 All transactions in account
2 Deposit renewal due dates
3 Loan installment due dates
4 Cheque book issue
5 Standing instruction failure

Register your email ID with your branch today itself & start receiving alerts
in your mail box.

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 Banking & Insurance

• FED E-PAY:
We are proud to tell you about the unique bill
payment system in India. The fed e-pay system where you can pay your land
& mobile phone bills from your phone itself or you have the freedom to tell
us to pay your bills as and when due.
Imagine how difficult it is to make a phone bill
payment. You need to take a copy of your bill, you need to remember the
due dates & of course the long wait in the collection centers. Forget all these
things, just register your phone details in your branch & from the next month
onwards your bill payment is the easiest thing in the world.
Visit your branch with a copy of your bill. Ask for
fed e-pay and forget about your bill payments.

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FACILITIES PROVIDED

• ATM FACILITY

All our ATMs are connected to the VISA network.

This means that VISA cards (Debit or Credit) issued
by any bank can be used at Federal Bank ATM
network for cash withdrawal or balance enquiry. You
can access banking facilities through our network of
interconnected ATMs spread across the country.

You can access various banking services at any of

our ATMs irrespective of the Branch where your account is maintained.
Apart from the normal features like cash withdrawal and remittance, you can
deposit cheques, transfer funds and even make payments to third party
accounts at any time you want. Our new any where clearing makes it
possible for faster credit of the out station instruments deposited in the
ATMs.

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 Banking & Insurance

Debit Card?

• Your money remains in the account till you spend it and you continue
to earn interest on it. Details of individual transaction will reflect in your
Bank passbook. Debit information can be forwarded to your mobile phone
as SMS automatically through Fed Alert. You can also access your bank
accounts while you are traveling overseas. No more travelers’ cheques
required.

From time to time, there may be special offers due to which you may
get discounts/ on purchases at shopping malls, restaurants, supermarkets etc
if you pay through your debit card.

Because it feels good to be debt free !

With Just One Card, you can pay in any way, any where
and at any time.

The new VISA Electron Gold and Silver International

Debit Cards gives you instant access to your money
wherever you are, at any time you require. Best of all, you wont need to
have notes to carry , bills to handle, interest to pay,...You can use your own
source of funds while making purchases and there is no income requirement
to apply for this card.

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 Banking & Insurance

• CENTRALISED TELEBNKING –

BANKING THROUGH PHONE

The centralized Telebanking service introduced in the Bank

brings a world of banking convenience to the customers. Through the
Telebanking System, customers can access their Bank Accounts over the
telephone on a 24X7 basis. The telephone number to be dialed is 0484 –
2630925. Bank’s toll free number 1600-425-11-99 will be provided for this
facility in course of time. The facility is secure as the customer is given a
unique identification number to access his bank account through the
telephone. The voice response system prompts the customer to dial the digits
that will help him/ her meet his requirement of placing instructions or
retrieving account information. This value added service is offered
absolutely free. Registration is mandatory for Telebanking.

How to use the facility?

• Dial the telephone number 0484-2630925

• The message” Welcome to Federal Bank’s Telebanking Services” can
be heard.
• Now the system will ask to press the * key.
• After pressing the * key, it will ask to press 1 for account balance or 2
for cheque book request.
• If the customer enters 1, the message will be” Press 1 for SB, 2 for
CA, 3 for ODCC or 4 for SBNRE”.
• Press the relevant number for account type.
• Now the system will ask to enter the account number.

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• After entering the account number, the system will give a voice
confirmation of the account number.
• It will now ask to press 1 to confirm or press 2 to redial the account
number.
• Now the system will prompt for PIN (Personal Identification
Number).
• Enter the PIN and wait for the response

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 Banking & Insurance

• MOBILE BANKING

BANKING ON WIRELESS

Get real-time banking information on your handset.

Just register your mobile number with us, Choose
alerts and set limits that you require and relax. You
will receive automated alerts on the transactions in
your account instantly, anywhere in the world. What is more, it is flexible
and can be personalized to your needs. In addition you can also "PULL"
account information at your convenience!

Register now and get into the world of convenience

through the unique Mobile Alert service of Federal Bank which is
comprehensive and flexible.

A Mobile Banking service enables a customer to get

information whenever he wants by sending an SMS in the specified format.
Also he will get Mobile Alerts for transaction happening in his account. He
can restrict the Alerts to desired transactions only. The service is available to
customers all over the world.

Please register mobile phone number with your

branch to avail of this service. When registration is done for Mobile
banking, preset Alerts will be enabled automatically to the customer. For
availing Mobile Banking facilities, the customer has to indicate a four-digit

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access code number, which will act as a password to ensure privacy and
security.

The Mobile Banking facility is available to SB, SBNRE,

SBONR, CA and ODCC customers.

FACILITIES AVAILABLE

• View Account Balance

• Mini Statement
• Change four-digit access code / PIN.
• Mobile Phone Number change
• Discontinue / Re enable alerts
• Options for changing the amount for sending the alerts.
• Account Statement Request
• Cheque Book Request
• Help about the available options.

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HOW TO ACCESS THE ACCOUNT INFORMATION?

To access account information, please take the Messages

Option from the Menu on his mobile and send an SMS message in the
following format to our mobile phone number 919895088888. Assuming
that the selected password is 1234 the SMS message to be sent for accessing
the following are

• To access current balance: BAL followed by the 4-digit access code.

i.e. BAL1234

• To get the last five transactions in the account: TXN followed by 4-

digit access code .i.e. TXN1234

• To change access code: PIN followed by 4-digit access code and then
the new 4-digit access code. eg. PIN12346789 (where 6789 is the new
access code selected by the customer).

You will receive the requested information on the Mobile

instantly.

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• ANYWHERE BANKING

Anywhere Banking is a highly secure

and convenient system for online, real-time
inter branch transactions across the Bank.

Facilities Presently Offered

• Cash Remittance

• Your business associates or partners can remit money to

your account through any of our branches instantly. This facility is
extended to Savings, Current, Loan and Overdraft Accounts.

• Cash Withdrawal

• You can withdraw cash if the amount is less than

RS. 50,000 through your AWB cheque from any of our
branches. Please remember to register your account at your
branch to avail this facility.

• Funds Transfer

• You can transfer funds from one account to

another, up to RS. 2 crore per day. You can conveniently use
this facility to reach funds in less than 10 seconds to your
children for remitting examination fee, hostel fee etc or for
similar needs.
•

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• Balance / Passbook Enquiry

• Know the balance in your account from any of

your branches. Check details of transactions and get a mini
statement of the account.

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OVERVIEW
The Challenge

One of the main challenges on the way to growth for Federal

Bank's management team was to choose between a packaged cores banking
solution or to continue with its proprietary system. The bank envisaged
aggressive plans for growth – both organic and inorganic, and the team
ultimately felt that the existing proprietary system was not capable of
meeting requirements due to its rigidity.

The Solution

After a rigorous selection process, Federal Bank decided to

adopt innovative technology by procuring. Finacle universal banking
solution from Infosys to fuel its retail core banking transformation initiative.

The Benefit

Finacle core banking solution has greatly benefited Federal

Bank customers and staff. Bank has been able to translate a substantial
number of general customers to regular and frequent customers. Around
60% of customers (as per a customer survey conducted by the bank) have
noticed a marked improvement in the usefulness and convenience of the
features of the new banking system.

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