I.K.G.

Punjab Technical University

MBA Batch 2018 onwards
Annexure A

Guidelines for Summer training Report

Summer Training Project Report

on

“PROJECT TITLE”

Submitted to

I.K. GUJRAL PUNJAB TECHNICAL UNIVERSITY

KAPURTHALA
In partial fulfillment of the requirement for the

award of degree of

Master of Business Administration (MBA)

Submitted by Supervisor

Name of the Student Name (Company Guide)

University Roll no. Designation

Logo of the Institute

DEPARTMENT OF MANAGEMENT

NAME OF THE INSTITUTE

NAME OF THE CITY

(Batch)
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

CERTIFICATE (On a Separate Page)

*Certificate of Summer Training from Company shall be attached herewith.

STUDENT DECLARATION (On a Separate Page)

I, “ (Student Name)”, hereby declare that I have undergone my summer

training at “ (Company Name)” from (start date) to (end date). I have
completed a research project tilted “ (Project Title)” under the
guidance of Mr. /.Ms. (Name of Supervisor at Company).

Further I hereby confirm that the work presented herein is genuine and original and has not been
published elsewhere.

(Student name and Signature)

FACULTY DECLARATION (On a Separate Page)

I hereby declare that the student Mr. / Ms. of MBA (II) has undergone
his/her summer training under my periodic guidance on the Project titled
“ (Project Title)”.

Further I hereby declare that the student was periodically in touch with me during his/her training period
and the work done by student is genuine & original.

(Signature of Supervisor)

ACKNOWLEDGEMENT (On a Separate Page)

*Acknowledge the support and guidance provided to you by various persons during your Summer
Training
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

TABLE OF CONTENTS (On a Separate Page)

Certificate by Guide ii
Student Declaration iii
Faculty Declaration iv
Acknowledgment v
CHAPTER NO. CHAPTER TITLE PAGE NO.
1 Introduction to the Company
2 Introduction to the Research Problem
3 Need, Scope and Objectives of the Study
4 Research Methodology
5 Data Analysis and Interpretation
6 Findings of the Study
7 Conclusion, Suggestions & Recommendations of
the Study
References and Bibliography
Appendix
(Questionnaire, Glossary of Terms, Abbreviations, Documents, Performa,
Financial statements, etc.)

LIST OF TABLES

TABLE NO. TABLE TITLE PAGE NO.

LIST OF FIGURES

FIGURE NO. FIGURE TITLE PAGE NO.

General Guidelines for Layout and format

1. Paper Size must be A4 and margins should be maintained on all pages as follows: Left margin =
1.5” (wider for binding) Top, right & bottom margins = 1”
2. Use Times New Roman font, 12 pointsize, for text. and 14 point size for headings
3. Use 1.5 line spacingfor all text in the main body of the thesis.
4. Report should contain page numbers (1, 2, 3….) starting from Introduction Chapter. Preliminary
pages should be numbered: i., ii., iii, iv, v, vi, etc. A page number should not be shown on the inside
title page even though it is counted as i.
5. Page number should be placed at the bottom- center of page.
Imp Note:

1. Students are required to prepare two Hard Bound copies of their Summer Training report to be
submitted within 10 days of commencement of 3rd Semester
2. Questionnaires in original to be retained by the students for the final presentation.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
Guidelines on Faculty Guide-Student Interaction
1. The Student is required to be in constant touch with their Faculty Guide through email, telephone,
personal interactions etc.
2. It is mandatory for the student to provide a weekly progress report to their Faculty Guides for each
week of their summer training.
3. The Topic for the Summer Training should be chosen in consultation with their Faculty guide and
after their due approval.
4. Same topics having any sort of duplicacy shall not be acceptable.
5. Institute will be conducting surprise visits of the organization where the Student is undergoing
summer training from time to time and any students found to be irregular / not attending their
summer training then the summer training Project report of the said student shall stand cancelled .

Preparing References/Bibliography
 While preparing the Bibliography, in case of website as a source, ensure that the date and the timing of
accessing the website is mentioned along with.
 While preparing bibliography student must adopt the following method:

Article in a Magazine

Henry, W. A., III. (1990, April 9). Making the grade in today's schools.Time, 135, 28-31.

Article in a Newspaper
Unlike other periodicals, p. or pp. precedes page numbers for a newspaper reference in APA style.
Single pages take p., e.g.., p. B2; multiple pages take pp., e.g.., pp. B2, B4 or pp. C1, C3-C4.

Schultz, S. (2005, December 28). Calls made to strengthen state energy policies. The Country Today, pp. 1A,
2A.

Basic Format for Books

Author, A. A. (Year of publication).Title of work: Capital letter also for subtitle. Location: Publisher.
Note: For "Location," you should always list the city, but you should also include the state if the city is
unfamiliar or if the city could be confused with one in another state.

Calfee, R. C., & Valencia, R. R. (1991).APA guide to preparing manuscripts for journal publication.
Washington, DC: American Psychological Association.

Government Document
National Institute of Mental Health.(1990). Clinical training in serious mental illness (DHHS Publication
No. ADM 90-1679). Washington, DC: U.S. Government Printing Office.

Report From a Private Organization

American Psychiatric Association. (2000). Practice guidelines for the treatment of patients with eating
disorders (2nd ed.). Washington, D.C.: Author.

Conference Proceedings
Schnase, J.L., &Cunnius, E.L. (Eds.). (1995). Proceedings from CSCL '95: The First International
Conference on Computer Support for Collaborative Learning. Mahwah, NJ: Erlbaum.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
Article From an Online Periodical
Author, A. A., & Author, B. B. (Date of publication).Title of article.Title of Online Periodical, volume
number(issue number if available). Retrieved month day, year, (if necessary) from
http://www.someaddress.com/full/url/

Bernstein, M. (2002).10 tips on writing the living Web.A List Apart: For People Who Make Websites, 149.
Retrieved May 2, 2006, from http://www.alistapart.com/articles/writeliving

Online Newspaper Article

Author, A. A. (Year, Month Day).Title of article.Title of Newspaper. Retrieved
http://www.someaddress.com/full/url/

Parker-Pope, T. (2008, May 6). Psychiatry handbook linked to drug industry. The New York Times.
Retrieved from http://www.nytimes.com
Electronic Books
De Huff, E.W. Taytay’s tales: Traditional Pueblo Indian tales. Retrieved from
http://digital.library.upenn.edu/women/dehuff/taytay/taytay.html

Davis, J. Familiar birdsongs of the Northwest. Available from http://www.powells.com/cgi-

bin/biblio?inkey=1-
9780931686108-0

Online Encyclopedias and Dictionaries

Feminism.(n.d.)In Encyclopædia Britannica online. Retrieved March 16, 2008, from http://
www.britannica.com
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

CHAPTER 1
INTRODUCTION
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

INTRODUCTION TO BANKING:

India cannot have a healthy economy without a sound and effective banking
system. The banking should be hassle free and able to meet the new challenges
posed by technology and other factors, both internal and external.

In the past three decades, India‟s banking system has earned several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to metropolises or cities in india. In fact, Indian banking system has
reached even to the concern of the country. This is one of the main aspects of
India‟s growth story.
The Government‟s regulation policy for banks has paid rich dividends with the
nationalization of 14 major private banks in 1969. Banking today has become
convenient and instant, with the account holder not having to wait for hours at
the bank counter for getting a draft or for withdraw money from his account.

Banks in India
In India, banks are segregated in different groups. Each group has its own
benefits and limitation in operations. Each has its own dedicated target market.
A few of them work in the rural sector only while others in both rural as well as
urban. Many banks are catering in cities banks in India can be classified into:

 Public Sector Banks

 Private Sector Bank

 Co-operative Bank

 Regional Rural Banks

 Foreign Banks

One aspect to be noted is the increasing number of foreign banks in India. The RBI has
shown certain interest to involve more foreign banks. This step has paved the way for a
few more foreign banks to start business in India.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

Pre-Independence banking
Banking in India originated in the last decades of 18th century. The first banks
were the General Bank of India which started in 1786, and the Bank of
Hindustan, both 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 British East
India
Company. For many years the Presidency banks acted as quasi-central banks, as
did their successors. The three banks merged in 1921 to form the Imperial Bank
of India, which upon India’s independence, became the State Bank of India.

Indian merchants in Calcutta establish 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 of
India. It was not the first though. That honor belongs to the 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
Simla.

When the American Civil War stopped the supply of cotton to Lancashire from
the confederate states, promoters opened banks to finance trading in Indian
cotton. With large exposure to speculative opened banks to finance trading in
Indian during that period failed. 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
20 th century.

Foreign banks too started to arrive, particularly in Calcutta in the 1860s. The
comptoired, Escompte de paris opened a branch in Calcutta in 1860, and another
in Bombay in 1862 branches in Madras and Pondicherry, then a French colony,
followed.

HSBC established itself in Bengal in 1869. Calcutta was the most active trading
port, India mainly due to the trade of British Empire, and so became a banking
center.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

The fist entirely Indian stock bank was the Iudh Commercial bank, established in
1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank,
established in Lahore in 1895, which was survived to the present and is now one
of the largest banks in India.

Around the turn of the 20 th 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 undercapitalized 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."

Reserve Bank of India

The central bank of country is the Reserve Bank of India. It was established
in April 1935 with a share capital of Rs.5crore on the basis of the
recommendations of the Hilton Young Commission. The share capital was
divided into fully paid shares of Rs.100 each, which was entirely owned by
private shareholders in the beginning. The government held shares of nominal
value of Rs.220,000. The RBI commenced operation on April 1, 1935 under the
Reserve Bank of India Act, 1934. The Bank was constituted to meet the
following requirements.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

1. Regulate the issue of currency notes.

2. Maintain reserve with a view to securing monetary stability
3. Operate the credit and currency system of the country to its advantage
4. The Reserve Bank of India, India‟s central banking authority, was
nationalized on January 1, 1949 under the terms of the Reserve Bank of
India Act, 1948
5. In 1949 the Banking Regulation Act was enacted which empowered the
Reserve bank of India “to regulate control and inspect the banks in India”.
6. The Banking Regulation Act also provided that no new bank or branch of
an existing bank could be opened without a license form the RBI, and no
two banks could have common directors.

However, despite these provisions, control and regulations, banks in

India except the State Bank of India or SBI continued to be owned and
operated by private persons. By the 1960s, the Indian economy. At the same
time, it had emerged as a large employer and a debate had ensured about the
possibility to nationalize the banking industry. Indira Gandhi, the-then Prime
Minister of India expressed the intention of the GOI in the annual conference
of the All- I n d i a congress meeting in a paper entitled “Stray thoughts on
Bank Nationalization”. The paper was
received with positive enthusiasm.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

FUNCTIONS OF RESERVE BANK OF INDIA:

Monetary authority
The Reserve Bank of India is the main monetary authority of the country and beside that the
central bank acts as the bank of the national and state governments. It formulates, implements
and monitors the monetary policy as well as it has to ensure an adequate flow of credit to
productive sectors. Objectives are maintaining price stability and ensuring adequate flow of
credit to productive sectors. The national economy depends on the public sector and the
central bank promotes an expansive monetary policy to push the private sector since the
financial market reforms of the 1990s.

The institution is also the regulator and supervisor of the financial system and prescribes
broad parameters of banking operations within which the country's banking and financial
system
functions. Objectives are to maintain public confidence in the system, protect depositors'
interest

and provide cost-effective banking services to the public. The Banking Ombudsman
Scheme has been formulated by the Reserve Bank of India (RBI) for effective
addressing of complaints by bank customers. The RBI controls the monetary supply,
monitors economic indicators like

the gross domestic product and has to decide the design of the rupee

banknotes as well as coins.

Manager of exchange control

The central bank manages to reach the goals of the Foreign Exchange Management Act,
1999.

Objective: to facilitate external trade and payment and promote orderly development and
maintenance of foreign exchange market in India.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
Issuer of currency
The bank issues and exchanges or destroys currency and coins not fit for
circulation. The objectives are giving the public adequate supply of currency of
good quality and to provide
loans to commercial banks to maintain or improve the GDP. The basic objectives of RBI are
to
issue bank notes, to maintain the currency and credit system of the country to utilize
it in its best advantage, and to maintain the reserves. RBI maintains the economic
structure of the country so that it can achieve the objective of price stability as well
as economic development, because both objectives are diverse in themselves.

Developmental role
The central bank has to perform a wide range of promotional functions to support
national objectives and industries. The RBI faces a lot of inter-sectoral and local
inflation-related problems. Some of this problems are results of the dominant part of
the public sector.
Related functions
The RBI is also a banker to the government and performs merchant banking function for the
central and the state governments. It also acts as their banker. The National Housing
Bank (NHB) was established in 1988 to promote private real estate acquisition. The
institution maintains banking accounts of all scheduled banks, too.

There is now an international consensus about the need to focus the tasks of a central bank
upon central banking. RBI is far out of touch with such a principle, owing to the sprawling
mandate described above. The recent financial turmoil world-over, has however, vindicated
the Reserve Bank's role in maintaining financial stability in India.

Policy rates and Reserve ratios

1- Bank Rate: RBI lends to the commercial banks through its discount window to help the
banks meet depositor’s demands and reserve requirements. The interest rate the RBI charges
the banks for this purpose is called bank rate. If the RBI wants to increase the liquidity and
money supply in the market, it will decrease the bank rate and if it wants to reduce the
 the bank rate was 6%.

I.K.G. Punjab Technical University

MBA Batch 2018 onwards
2- Cash Reserve Ratio (CRR): Every commercial bank has to keep certain minimum
cash reserves with RBI. RBI can vary this rate between 3% and 15%.

RBI uses this tool to increase or decrease the reserve requirement depending on
whether it wants to affect a decrease or an increase in the money supply. An increase
in Cash Reserve Ratio (CRR) will make it mandatory on the part of the banks to hold a
large proportion of their deposits in the form of deposits with the RBI. This will
reduce the size of their deposits and they will lend less. This will in turn decrease the
money supply. The current rate is 6%.

3-Statutory
3- Liquidity Ratio (SLR): Apart from the CRR, banks are required to maintain
liquid assets in the form of gold, cash and approved securities. Higher
liquidity ratio forces commercial banks to maintain a larger proportion of them

resources in liquid form and thus reduces their capacity to grant loans and
advances, thus it is an anti-inflationary impact. A higher liquidity ratio diverts the
bank funds from loans and advances to investment in government and approved
securities.

In well-developed economies, central banks use open market operations--buying and

selling of eligible securities by central bank in the money market--to influence the
volume of cash reserves with commercial banks and thus influence the volume of loans
and advances they can make to the commercial and industrial sectors. In the open money
market, government securities are traded at market related rates of interest. The
RBI is resorting more to open market operations in the more recent years.

Generally RBI uses three kinds of selective credit controls:

1. Minimum margins for lending against specific securities.

Ceiling on the amounts of credit for certain purposes.

Discriminatory rate of interest charged on certain types of advances.

Direct credit controls in India are of three types:

1. Part of the interest rate structure i.e. on small savings and provident funds, are
 administratively set. I.K.G. Punjab Technical University
MBA Batch 2018 onwards
2. Banks are mandatorily required to keep 24% of their deposits in the form of
government securities.

3. Banks are required to lend to the priority sectors to the extent of 40% of their
advances.

Nationalization
Therereafter, her move was swift and sudden. The Government of India issued an

Ordinance and nationalized the 14 largest commercial banks with effect from the
midnight of July 19,1969. Jayaprakash Narayan, a national leader of India, described the
step as a "masterstroke of political sagacity." Within two weeks of the issue of the
ordinance, the  Parliament passed the Banking Companies

Later on, in the year 1993, the government merged New Bank of India
with Punjab National Bank. It was the only merger between nationalized banks and
resulted in the reduction of the number of nationalized banks from 20 to 19. After this,
until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the
average growth rate of the Indian economy.

Liberalization
In the early 1990s, the then Narasimha Rao government embarked on
a policy of liberalization, licensing a small number of private banks. These came
to be known as  New Generation tech-savvy banks, and included Global Trust Bank
(the first of such new generation banks to be set up), which later amalgamated with
Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and
HDFC Bank.

This move, along with the rapid growth in the economy of India,

revitalized the banking sector in India, which has seen rapid
growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up 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 74% with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this
time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of
functioning. The new
wave ushered in a modern outlook and tech-savvy methods of working for
 traditional banks.All this I.K.G.
led to Punjab Technical
the retail University
boom in India. People not just demanded
MBA Batch 2018 onwards
more from their banks but also received more.

Currently (2007), banking in India is generally fairly mature in terms of supply,

product range and reach-even 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. The Reserve
Bank of India is an autonomous body, with minimal pressure from the government.
The stated policy of the Bank on the Indian Rupee is to manage volatility but without
any fixed exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially
retail banking, mortgages and investment services are expected to be strong. One
may also expect M&As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India 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 since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks
would need to be vetted by them.

Indian banking system: Co-operative banks

Co-operative banks in this country are a part of vast and powerful structure of co-
operative institutions which are engaged in tasks of production, processing, marketing, distribution,
servicing, and banking in India. The beginning co-operative banking in this country dates to about
1904, when official efforts were made to create a new type of institution based on principles of co-
operative organization & management, which were considered to be suitable for solving the
problems peculiar to Indian conditions.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
In rural areas, as far as the agricultural and related activities are concerned, the supply
of credit was inadequate, and money lenders would exploit the poor people in rural
areas providing them loans at higher rates.

Cooperative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Definition:
A co-operative bank is a financial entity which belongs to its members, who are at
the same time the owners and the customers of their bank. Co-operative banks are often
created by persons belonging to the same local or professional community or sharing a
common interest. Co-operative banks generally provide their members with a wide
range of banking and financial services.

Initiatives towards development of co-operative banks:

1. Reorganisation of PACS‟s (a scheme by NABARD).

2. Licensing of new USB‟s liberalised.
3. National Co-operative Bank of India (NCBI) was registered in 1993.(Multi-state co-
operative Society)-it has no regulatory functions.
4. Co-operative development bank (set up by NABARD).
5. Lending and borrowing rates of all co-operative have been more or less completely
freed or deregulated.

6. Allowing all PCB‟s to undertake equipment leasing and hire-purchase financing

Establishments:

 Co-operative bank performs all the main banking functions of deposit mobilisation, supply
of credit and provision of remittance facilities.

 Co-operative Banks belong to the money market as well as to the capital market.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
 Co-operative Banks provide limited banking products and are functionally specialists in
agriculture related products. However, co-operative banks now provide housing loans also.

 UCBs provide working capital loans and term loan as well.

Functions:

 Co-operative Banks are organized and managed on the principal of co-operation, self-help,
and mutual help. They work based on “no profit no loss”. Profit maximization is not their
goal.

 Co-operative banks do banking business mainly in the agriculture and rural sector.
However, UCBs, SCBs, and CCBs operate in semi-urban, urban, and metropolitan areas also.

 The State Co-operative Banks (SCBs), Central Cooperative Banks (CCBs) and
Urban Co- operative Banks (UCBs) can normally extend housing loans up to Rs 1
lakh to an individual.

 The scheduled UCBs, however, can lend up to Rs 3 lakh for housing purposes. The
UCBs can provide advances against shares and debentures.

Cooperative banks in India finance rural areas under:

 Farming

 Cattle

 Milk

 Hatchery

 Personal finance

Cooperative banks in India finance urban areas under:

 Self-employment
 Small scale units I.K.G. Punjab Technical University
MBA Batch 2018 onwards

 Home finance

 Consumer finance

 Personal finance

Some facts about Cooperative banks in India

 Some cooperative banks in India are more forward than many of the state and private
sector banks.

 According to NAFCUB the total deposits & lending of Cooperative Banks in India is
much more than Old Private Sector Banks & also the New Private Sector Banks.

 This exponential growth of Cooperative Banks in India is attributed mainly to their

much better local reach, personal interaction with customers, and their ability to catch the
nerve of the local clientele.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

CHAPTER - 2
PROFILE OF BANK

Objectives of Central Banks

The main objective of a central bank is to ensure financial stability. Depending on the country, central banks
might have other objectives such as controlling inflation, unemployment, interest rates, or exchange rates.
However, all these objectives are in line with the main objective of ensuring financial stability.

Roles of Central Banks

 I.K.G. Punjab Technical University
MBA Batch 2018 onwards
To ensure financial stability, central banks execute the roles discussed below.

1. Currency Regulation - Central banks have the monopoly of issuing notes, and these notes issued
by central banks act as legal tender of money. Each central bank has an issue department that issues
coins and notes to commercial banks. Even though the government manufactures these notes and
coins, they are circulated by the central bank. Therefore, the money put in circulation must be
monitored to ensure that there is just the right amount in circulation.

2. Control of Commercial Banks - All commercial banks are obligated to prepare and submit a
report of their undertaking to the central bank after a given period of time. These statistics are
important in decision-making in the finance sector. The central bank can influence the activities of
commercial banks through its monetary policies.

3. Banker, Fiscal Agent, and Adviser to the Government - The central bank receives
deposits on behalf of the government from sources such as income tax and foreign aid. It also makes
payments on behalf of the government. Moreover, the central bank advises the government on
economic and monetary matters such as inflation and deficit financing. The government also gets
short-term loans from the central bank.

4. Controller of Credit - The control of credit is realized through the use of the monetary policy.
The central bank controls the credit creation power of commercial banks to curb inflationary and
deflationary pressures on the economy.

5. Custodian of Cash Reserves of Commercial Banks - The law requires that commercial
banks keep a particular percentage of reserves in the central bank. It is on this basis that the central
bank transfers money from one bank to another to facilitate the clearance of cheques. A central bank
is, therefore, a bank to commercial banks.

6. Lender of Last Resort - Commercial banks normally borrow from discount houses. However,
during times of financial problems, they can seek funds from the central bank by borrowing at the
market rate instead of the bank rates given by discount houses.

VARIOUS DEPOSITS, LOAN AND

 I.K.G. Punjab Technical University
ADVANCES OF CENTRAL BANK: MBA Batch 2018 onwards

There is not much difference between the functions of a commercial bank and a co-
operative bank. But in the case of commercial banks, they function with a profit
motive, while a co- operative bank services the society in order to improve the
condition of the downtrodden, so we find in the structure of the co-operative banks,
banks serving rural urban and city population with different types of branches. The
business of an urban co-operative bank in primary to provide non-from sector loans
to the cottage and small-scale industries.

The following are the main function of the Central banks:

Central bank is regarded as an apex financial institution in the banking system. It is considered as an
integral part of the economic and financial system of a nation. The central bank functions as an
independent authority and is responsible for controlling, regulating and stabilising the monetary and banking
structure of the country.

In India, the Reserve Bank of India is regarded as the central bank. It was set up in 1935. Central banks
are responsible for maintaining the financial stability and economic sovereignty of the country.

The functions of a central bank can be discussed as follows:

1. Currency regulator or bank of issue

2. Bank to the government

3. Custodian of Cash reserves

4. Custodian of International currency

5. Lender of last resort
6. Clearing house for transfer and settlement
7. Controller of credit
8. Protecting depositors’ interests

The above-mentioned functions will be discussed in detail in the following lines.

 I.K.G. Punjab Technical University
Currency regulator or bank of issue:  Central banks possess the exclusive right to manufacture notes
MBA Batch 2018 onwards
in an economy. All the central banks across the world are involved in issuing notes to the economy.
This is one of the most important functions of the central bank in an economy and due to this the central bank
is also known as the bank of issue.
Earlier all the banks were allowed to publish their own notes which resulted in a disorganised economy. To
avoid this situation the government around the world authorised the central banks to function as the issuer of
currency, which resulted in uniformity in circulation and balanced supply of money in the economy.

Bank to the government: One of the important functions of the central bank is to act as the bank to the
government. The central bank accepts deposits and issues funds to the government. It is also involved in
making and receiving payments for the government. Central banks also offer short term loans to the
government in order to recover from bad phases in the economy.
In addition to being the bank to the government, it acts as an advisor and agent of the government by
providing advice to the government in areas of economic policy, capital market, money market and loans
from the government.
In addition to that, the central bank is instrumental in formulation of monetary and fiscal policies that help in
regulation of money in the market and controlling inflation.

Custodian of Cash reserves: It is a practice of the commercial banks of a country to keep a part of their
cash balances in the form of deposits with the central bank. The commercial banks can draw that balance
when the requirement for cash is high and pay back the same when there is less requirement of cash.
It is for this reason that the central bank is regarded as the banker’s bank. Central bank also plays an important
role in the credit creation policy of commercial banks.

Custodian of International currency: An important function of the central bank is to maintain a

minimum balance of foreign currency. The purpose of maintaining such a balance is to manage sudden or
emergency requirements of foreign reserves and also to overcome any adverse deficits of balance of
payments.

Lender of last resort: The central bank acts as a lender of last resort by providing money to its member
banks in times of cash crunch. It performs this function by providing loans against securities, treasury bills
and also by rediscounting bills.
This is regarded as one of the most crucial functions of the central bank wherein it helps in protecting the
financial structure of the economy from collapsing.

Clearing house for transfer and settlement: Central bank acts as a clearing house of the commercial
banks and helps in settling of mutual indebtedness of the commercial banks. In a clearing house, the
representatives of different banks meet and settle the interbank payments.
 I.K.G. Punjab Technical University
Controller of credit: Central banks also function as the controller of credit in the economy. It happens
MBA Batch 2018 onwards
that commercial banks create a lot of credit in the economy that increases the inflation.
The central bank controls the way credit creation by commercial banks is done by engaging in open market
operations or bringing about a change in the CRR to control the process of credit creation by commercial
banks.

Protecting depositors’ interests: Central bank also needs to keep an eye on the functioning of the
commercial banks in order to protect the interests of depositors.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

CHAPTER-3
INTERNSHIP DESCRIPTION
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

INTERNSHIP DESCRIPTION:

RECEIVING DEPOSITS:
An important function of both as co-operative banks and commercial
banks is to attract deposits from the public. Those who have cash balances but
who want to keep them in safe place, deposits the same with the bank. The
commercial bank not only protects the but also provides the depositors with a
convenient method for transferring funds through the use of cheques. It
accepts deposits from every class and from every class and of the specific
periods, these deposits are liked by depositors both for their safety as well as for
the interest they bring to them. The Uthiramerur co-operative bank mobilized the
following deposits schemes.

1)Current Deposits

2) Fixed Deposits

3) Saving Deposits

4) Recurring Deposits

5) Safety locker Deposits

I. Current deposits
It is also known as current account are those which can be withdrawn
by the deposits as many times as needed by means of cheques. The bank’s
deposits pay interest on current deposits but infect makes as small charges on
the customer with the current account. It may be created in two ways either
by the depositors converting cash into a demand deposit with a bank or by
borrowing from a bank and using the amount with if this type of deposits is
used by businessman. Companies, Institution etc., current deposit shall be
opened for sum of rupees not less than Rs.1000/- a credit balance of
Rs.1000/- shall always be maintained. All account is to be opened with
proper introduction; current deposits charged at the rate of interest are not
given.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

II. Fixed Deposits

Fixed Deposits are a kind of high-interest-yielding deposit offered by banks

in  India. In India, bank accounts can be broadly categorized into 2 types :

1 . Demand deposits, which are repayable by the bank to the customer on

demand-They offer high liquidity but correspondingly low or no interest. Includes
the Savings Accounts and Current Accounts.
2. Term deposits, which are repayable after expiry of the term, that is, on maturity. In
return for the low liquidity (ease of withdrawing money), they offer higher rates of
interest than the demand deposits.

The longest permissible term for FDs is 10 years. Generally, the longer the term of
deposit, higher is the rate of interest but a bank may offer lower rate of interest for a
longer period if it expects interest rates, at which RBI lends to banks ("repo rates"), to
dip in the future.

While banks can refuse to repay FDs before the expiry of the deposit, banks do not
generally refuse premature withdrawal. In such cases, interest will be paid at the rate
applicable to the term for which the deposit has remained with the bank. For example,
a deposit is made for 5 years at 8 %, but is withdrawn after 2 years. If the rate
applicable on the date of deposit for 2 years is 5 per cent, the interest will be paid at 5
per cent. Banks can levy a penalty for premature withdrawal.

Customers can avail loans against FDs up to 80 to 90 per cent of the value of deposits.
The rate of interest on the loan could be 1 to 2 per cent over the rate offered on the
deposit.

In case the customer defaults in repaying the loan, the bank can adjust his FD against
the loan.

III. Saving Deposits

Saving deposits account refers to the type of bank account which is opened by the
people in order to save a part of their income. The rate of interest is quite nominal in
saving deposits account.
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

IV Recurring Deposits

Under this some fixed amount periodically deposits which

accumulates at compound rate of interest. This accumulated balance is
paid after the expiry of the fixed period. If payment is delay with in
certain period fund will be collected Rs.1. for every amount Rs.100/-. A
recurring deposits account may be opened by a person in his name or in
the name of two or more persons and can be payable to all or to any one
of them or to the survivors. The rate of interest allowed on 9%.

V. Safety locker Deposits

Locker are to be let out only to the persons who are known to the
bank very well and long standing customers. The application and
other from supplied by the bank are to be filled up without any
omission. Rent to be collected for every calendar year well in
advance.

The following table indicated various deposits of UCB Ltd.

We are infer from the above table No.3.2 the various deposits
position of UCB Ltd. From 2005-06 to 2007-08. The total deposits of
the bank for the study period amounting is Rs.1484.1111 lakhs Rs.
1951.12 Lakhs and 2226.65 lakhs in the year 2005-06 2006- 07, and
2007-08 respectively. During the year 2007-08 the bankers more
concentrate to deposits compared with previous year 2005-06 and
2006-2007.

Finally the safety locker deposits shown trend in the study period
from 0.81% to 0.03% due to the customers to invest their money in to
commercial banks deposit schemes.

The urban banker awareness is not reach to the public in the reasons for
decreasing trend of deposits otherwise the fixed deposits saving
deposits and recurring deposits is good. 
 I.K.G. Punjab Technical University
MBA Batch 2018 onwards

CHAPTER 4
ANALYSIS AND LEARNING PROCESS
I.K.G. Punjab Technical University
MBA Batch 2018 onwards