Report Final 1.Doc

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CHAPTER I

INTRODUCTION

1.0INTRODUCTION

Banking in India originated in the first decade of 18th century. The first banks were The

General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now

defunct. The oldest bank in existence in India is the State Bank of India, which originated in the

"The Bank of Bengal" in Calcutta in June 1806. This was one of the three presidency banks, the

other two being the Bank of Bombay and the Bank of Madras. The presidency banks were

established under charters from the British East India Company. They merged in 1925 to form

the Imperial Bank of India, which, upon India's independence, became the State Bank of India.

For many years the Presidency banks acted as quasi-central banks, as did their successors. The

Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector

from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given

broader powers.

Other Nationalized

Banks

RESERVE BANK OF INDIACentral Bank and su reme monetar authorit

Non Scheduled Banks

Foreign BanksPrivate

Sector

SBI &

Associates

Regional Rural

Banks

Urban

Cooperatives

State

Cooperatives

Scheduled Banks

Cooperativ

Public

Sector

Commerci


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1.1 Early History

The first fully Indian owned bank was the Allahabad Bank, established in 1865.

However, at the end of late-18th century, there were hardly any banks in India in the modern

sense of the term. 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 ventures, most of the banks opened in India 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 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the

1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in

Bombay in 1862; branches in Madras and Pondichery, then a French colony, followed. Calcutta

was the most active trading port in India, mainly due to the trade of the British Empire, and so

became a banking centre.

The Bank of Bengal, which later became the State Bank of India. Around the turn of the 20th

Century, the Indian economy was passing through a relative period of stability. Around five

decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure

had improved. Indians had established small banks, most of which served particular ethnic and

religious communities.

The presidency banks dominated banking in India. 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."

By the 1900s, the market expanded with the establishment of banks such as Punjab National

Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded

under private ownership. Punjab National Bank is the first Swadeshi Bank founded by the


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leaders like Lala Lajpat Rai, Sardar Dyal Singh Majithia. The Swadeshi movement in particular

inspired local businessmen and political figures to found banks of and for the Indian community.

A number of banks established then have survived to the present such as Bank of India,

Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

1.2 Nationalized banks in India

Banking System in India is dominated by nationalized banks. The nationalization of

banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major

objective behind nationalization was to spread banking infrastructure in rural areas and make

available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. Before

1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in

1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took place

in the year 1980. Seven more banks were nationalized with deposits over 200 crores.

List of Public Sector Banks in India is as follows

Allahabad Bank 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 s Vijaya 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 and Sind Bank

Punjab National Bank State Bank of Bikaner & Jaipur


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1.3Private Banks in India

All the banks in India were earlier private banks. They were founded in the pre-independence era

to cater to the banking needs of the people. But after nationalization of banks in 1969 public

sector banks came to occupy dominant role in the banking structure. Private sector banking in

India received a fillip in 1994 when Reserve Bank of India encouraged setting up of private

banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development

Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval

from the Reserve Bank of India (RBI) to set up a bank in the private sector.

Private Banks have played a major role in the development of Indian banking industry. They

have made banking more efficient and customer friendly. In the process they have jolted public

sector banks out of complacency and forced them to become more competitive.

List of Private Sector Banks in India is as follows

Bank of Rajasthan Bharat Overseas Bank Axis Bank Catholic Syrian Bank Centurion Bank of Punjab Dhanalakshmi Bank Federal Bank HDFC Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank SBI Commercial and International Bank South Indian Bank United Western Bank YES Bank


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CHAPTER II

OVERVIEW OF THE ORGANISATION

2.0 INTRODUCTION TO AXIS BANK

Axis Bank Ltd was incorporated in the year 1993 as UTI Bank Ltd which provided

corporate and retail banking products and was the first private banks to have begun operations in

1994, after the Government of India allowed new private banks to be established. The Bank was

promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India

(UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India

(GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New

India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India

Insurance Company Ltd.

The Bank as on 30th June, 2011 is capitalized to the extent of Rs. 411.88 crores with the public

holding (other than promoters and GDRs) at 52.87%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The

Bank has a very wide network of more than 1281 branches (including 169 Service

Branches/CPCs as on 31st March, 2011). The Bank has a network of over 6270 ATMs (as on

31st March, 2011) providing 24 hrs a day banking convenience to its customers. This is one of

the largest ATM networks in the country.

The Bank has strengths in both retail and corporate banking and is committed to adopting the

best industry practices internationally in order to achieve excellence.

2.1UTI to AXISIn 2007 the bank decided to have an identity of its own distinct from its parent UTI-I. Thus was

born a brand Axis - a word which connotes solidity and gives a feel of transcending

geographical boundaries. The Bank successfully rebranded itself as Axis Bank in July 07 which


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has helped it in shedding the faint perception of being a Government owned entity. This brand

makeover was very well executed, thus ensuring No slippages in the banks growth trajectory

which was evident from the 67% growth in its customer accounts to 9.9 mn during FY08 as

against 5.93 mn during FY07.

The Bank today is capitalized to the extent of Rs. 403.63 crores with the public holding (other

than promoters and GDRs) at 53.72%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The

Bank has a very wide network of more than 896 branches and Extension Counters (as on 31st

December 2009). The Bank has a network of over 4055 ATMs (as on 31st December 2009)

providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM

networks in the country.

The Bank has strengths in both retail and corporate banking and is committed to adopting the

best industry practices internationally in order to achieve excellence. Axis Bank currently has

global footprints in four countries by way of 3 branches in Singapore, Hong Kong, Dubai and 2

representative offices in Shanghai and Dubai. It has also sought permission from the Sri Lankan

Government to open a branch in Sri Lanka in the current fiscal. In these locations it offers

corporate credit and trade finance solutions, debt syndication and wealth management services toNRI population settled in these cities.

2.3 VISION, MISSION AND VALUES

2.3.1 Vision

To be the preferred brand for total financial banking for both corporate and individuals

2.3.2 Mission

Customer Service and Product Innovation tuned to diverse needs of individual and

corporate clientele. Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards. Efficiency and effectiveness

built on ethical practices.

2.3.3 Values

Customer Satisfaction through


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Providing quality service effectively and efficiently Smile, it enhances your face value" is a service quality stressed on Periodic Customer Service Audits Maximization of Stakeholder value Success through Teamwork, Integrity and People

2.3.4 VISION 2015 AND CORE VALUES

VISION 2015

To be the preferred financial solutions provider excelling in customer delivery through insight,

empowered employees and smart use of technology

CORE VALUES

Customer Centricity

Ethics

Transparency

Teamwork

Ownership

2.4 BOARD OF DIRECTORES

S.No Name Designation

1 Dr.Adarsh Kishore Chairman / Chair Person

2 Mr.S K Chakrabarti Deputy Managing Director

3 Mr.Prasad R Menon Director

4 Dr.R H Patil Director

5 Mrs.Shikha Sharma Managing Director & CEO


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2.5ORGANISATION STRUCTURE

2.5POLICIES OF AXIS BANK

2.6.1 Compensation Policy

The objective of this policy is to establish a system whereby the Bank compensates the

customer for the financial loss the customer could incur due to deficiency in service on the part

of the Bank or any act of omission or commission directly attributable to the Bank.

The policy is based on the principles of transparency and fairness in the treatment of customers.


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It is designed to compensate the customer only for the financial loss incurred by the customer

due to deficiency in the services offered by the Bank which can be measured directly and limited

to the compensation specified for the respective service as given below.

The date of receipt of complaint/notice by the Bank would be taken as day 'zero' and the

timelines mentioned would be counted from the next working day onwards.

The commitments under this policy are without prejudice to any right the Bank will have in

defending its position before any Court of Law, Tribunal or forum duly constituted to adjudicate

banker-customer disputes.

The policy document covers the following aspects:

- Erroneous debiting of account

- Debits towards service charges

- Payment of cheques after acknowledgement of stop payment instructions

- Payment of interest to customers for delayed collection of instruments

- Handling of instruments lost in transit

- Funds transfers using NEFT/RTGS

- Foreign exchange services - Collection of cheques outside India denominated in foreign

currency

- Failure to execute standing instructions

- Reversal of erroneous debits arising on account of fraudulent transactions

- Violation of the Code by banks agent

- Transaction of 'at par instruments' of Cooperative Banks by Commercial Banks

2.6.2 Comprehensive Deposit Policy

One of the important functions of the Bank is to accept deposits from the public for the purpose

of lending. In fact, depositors are the major stakeholders of the Banking System. The depositors

and their interests form the key area of the regulatory framework for banking in India and this

has been enshrined in the Banking Regulation Act, 1949. The Reserve Bank of India is

empowered to issue directives / advices on interest rates on deposits and other aspects regarding

conduct of deposit accounts from time to time. With liberalization in the financial system and

deregulation of interest rates, banks are now free to formulate deposit products within the broad

guidelines issued by RBI.


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This policy document on deposits outlines the guiding principles in respect of formulation of

various deposit products offered by the Bank and terms and conditions governing the conduct of

the account. The document recognizes the rights of depositors and aims at dissemination of

information with regard to various aspects of acceptance of deposits from the members of the

public, conduct and operations of various deposits accounts, payment of interest on various

deposit accounts, closure of deposit accounts, method of disposal of deposits of deceased

depositors, etc., for the benefit of customers. It is expected that this document will impart greater

transparency in dealing with the individual customers and create awareness among customers of

their rights. The ultimate objective is that the customer will get services they are rightfully

entitled to receive without demand.

While adopting this policy, the bank reiterates its commitments to individual customers outlined

in Bankers' Fair Practice Code of Indian Banks' Association. This document is a broad

framework under which the rights of common depositors are recognized. Detailed operational

instructions on various deposit schemes and related services will be issued from time to time

2.6.3 Bankers Fair Practice Code

This is a voluntary Code, which sets standards of fair banking practices for member

banks of Indian Banks' Association to follow when they are dealing with individual customers. It

provides valuable guidance to you for your day-to-day operations. The Code applies to:

Current, Savings and all other Deposit accounts

Pension, PPF accounts etc. operated as agents of RBI/Government

Collection and Remittance services offered by the banks

Loans and Overdrafts

Foreign-exchange services

Card products

Third party products offered through our network.

2.6.4 Cheque Collection Policy

The Bank as a part of the normal banking operations undertakes collection of cheques

deposited by their customers, some of which could also be drawn on non-local bank branches.

Such cheques are called outstation cheques. In order to facilitate faster collection of outstation

cheques, the Reserve Bank of India started a special clearing styled "Speed Clearing" by


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leveraging the core banking solutions implemented in banks. To bring about public awareness on

speed clearing, we have revised the policy to reflect the features of this collection system.

Collection of cheques and other instruments payable locally at centers withinIndia and abroad

Our commitment regarding time norms for collection of instruments Policy on payment of interest in cases where the Bank fails to meet time norms

for realization of proceeds of outstation instruments

Our policy in dealing with collection instruments lost in transit

2.6AWARDS &SIGNIFICANT EVENTS


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CHAPTER III

FUNCTIONAL DEPARTMENTS

3.0 SERVICES

3.1 Retail BankingRetail banking is a key component of the banking industry. Retail banks only work with

consumers, not businesses. Retail banks allow consumers to purchase homes, cars and consumer

products by providing mortgages and loans. In this way, they provide needed liquidity to keep

the economy growing. Retail banks provide a safe place for people to deposit their money by

offering savings accounts, CDs (certificates of deposit) and other financial products. Retail banks

also provide checking accounts. All of this can be done online, which has become an important

added convenience. Retail banks primarily make money by charging higher interest rates on their

loans than they pay for deposits.

Corporate banking

Financial services specifically offered to corporations, such as cash management,

financing, underwriting, and issuing of stocks, bonds, or other instruments. Financial institutions

often maintain specific divisions for handling the needs of corporate clients, separate from

consumer or retail banking activities for individual accounts.

Retail banking Personal banking Corporate banking

Deposit schemes Accounts Accounts

Loans and advances Terms deposits Normal current a/c

Personal Loans Fixed deposits Trust/NGO savings a/c

Housing Loans Recurring deposits Services

Loan against

Property Cards

Private equity, mergers and

acquisitions

Education Loan Gold plus cards Advisory services

Car Loan Silver cards Capital market fundingLoan against Shares silver plus cards E- broking

Loan against

Security Capital Market

Treasury


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NRI Accounts NRI Deposits

NRE Savings Account

NRE Rupee

Deposit

Non-Resident (Ordinary) NRO Savings

Account

NRO Rupee

Deposit

NRI Prime Account FCNR DepositPriority AccountNR RFC Term Deposit

Portfolio Investment Scheme(PIS) Account

NRE Salary Account

Resident Foreign Currency(RFC) Account

3.2 ACCOUNT OPENING

A customers formal relationship with any bank begins with account opening. In Axis

bank, accounts of the customers are usually not opened at branches. The applications are

received, scrutinized and then forwarded to Central Processing Unit and where they are

eventually opened.

In order to prevent misuse of banking channel for perpetration of financial frauds, money

laundering, terrorism etc., Reserve Bank of India has a part of their initiatives to prevent

suspicious activities, advised banks to follow certain procedure which are known as Know Your

Customers guidelines.


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Account can be opened by

Resident Individuals Institutions/Organizations

Ordinary individuals Government department

Hindu undivided family Defense establishment

Senior citizen Trusts registered under Indian Trust Act 1882Married women Employee welfare trust

Foreign nationals

Society registered under the Societies Registration Act

1860

Minors Self help group

Illiterate persons Official liquidator

Visually challenged

persons Unregistered Trust/society

Non-Resident Indians State/Urban/District/Regional/Local area bank

Limited liability

partnership Association of persons

Products of Axis bank

Easy Access Savings

Account Demat Account

Krishi Savings Account Senior Citizen's Account

Prime Savings Account Defence Salary Account

Salary Account

Trust/NGO Savings

Account

Women's Savings Account RFC(D) Account

Priority Account - Resident Pension Savings Account

3.3KNOW YOUR CUSTOMERSKnow Your Customer - KYC enables banks to know/ understand their customers and

their financial dealings to be able to serve them better. The Reserve Bank of India (RBI) has

advised banks to follow a 'KYC guidelines', wherein certain personal information of the account-

opening prospect or the customer is obtained. The objective of doing so is to enable the Bank to

have positive identification of its customers. This is also in the interest of customers to safeguardtheir hard earned money. The KYC guidelines of RBI mandate banks to collect three proofs from

their customers. They are

1. Photograph

2. Proof of identity

3. Proof of address


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These guidelines are so important, that even an existing account may have to be closed due to

banks inability to verify the customers identity, although only branch heads will have the

authority to take such a decision. The aim of these guidelines is to:

Determine and document the true identity and basic background of all customers Obtain and document any additional customer information, commensurate with

assessment of the money laundering risk posed by customers expected use of the

bans products and services

Minimize frauds Avoid opening of accounts with fictitious names and addresses Check misappropriations Prevent money laundering

Regulatory: In terms of the guidelines issued by the Reserve Bank of India (RBI) on November

29, 2004 on Know Your Customer [KYC] Standards Anti Money Laundering [AML]

Measures, all banks are required to put in place a comprehensive policy framework covering

KYC Standards and AML Measures.

Legal: The Prevention of Money Laundering Act, 2002 (PMLA) which came into force from

July 1, 2005 (after rules under the Act were formulated and published in the Official Gazette)

also requires Banks, Financial Institutions and Intermediaries to ensure that they follow certain

minimum standards of KYC and AML as laid down in the Act and the rules framed there

under.

When does KYC apply?

KYC will be carried out at the following stages:

Opening a new account Opening a subsequent account where documents as per current KYC standards not been

submitted while opening the initial account

Opening a Locker Facility where these documents are not available with the bank for allthe Locker facility holders

- When the bank feels it necessary to obtain additional information from existingcustomers based on conduct of the account

- When there are changes to signatories, mandate holders, beneficial owners etc


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KYC will also be carried out in respect of non-account holders approaching the bank forhigh value one-off transactions.

3.4DEMAND DRAFTS AND PAYORDER PROCESSINGCustomer requests of Demand drafts and PayOrders are processed by the dedicated bank

official at every branch of bank.

3.5 TRANSFERS

Intrabank TransferThis is the money transfer among the Axis bank accounts.


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Interbank Transfers This is the money transfers between the Axis bank accounts and the

other Bank accounts.

Real Time Gross Settlement (RTGS) System, introduced in India since March 2004, is a

system through which electronic instruments can be given by banks to transfer funds from their

account to the account of another bank. The RTGS system is maintained and operated by RBI

and provides a means of efficient and faster funds transfer among banks facilitating their

financial operations. As the name suggests, funds transfer between banks take place on a real

time basis. Therefore, money can reach the beneficiary instantaneously and the beneficiarys

bank has the responsibility to credit the Beneficiarys account within 2 hours. The minimum

amount to be remitted through RTGS is RS.2 lakhs. There is no upper ceiling for RTGS

transactions.

National Electronic Funds Transfer (NEFT) System is a nationwide funds transfer system to

facilitate transfer of funds from any bank branch to any other bank branch. The maximum

amount to be remitted through NEFT is RS.2 lakhs. There is no lower ceiling for NEFT

transactions.

Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates

collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have

a networked branch locally. As of now, outstation cheques are paid through 2 channels viz, on

collection basis or through National Clearing (Inter-city Clearing). This requires movement of

cheques from the Presentation centre (city where the cheque is presented) to Drawee centre (city

where the cheque is payable) which elongates the realization time for cheques. Speed Clearing

aims to reduce the time taken for realization of outstation cheques.

3.6 LOANS

A loan is a type ofdebt. Like all debt instruments, a loan entails the redistribution of financial

assets over time, between the lenderand the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal,

from the lender, and is obligated to pay back or repay an equal amount of money to the lender at

a later time. Typically, the money is paid back in regular installments, or partial repayments; in
http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Assethttp://en.wiktionary.org/wiki/lenderhttp://en.wiktionary.org/wiki/borrowerhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Moneyhttp://en.wiktionary.org/wiki/borrowerhttp://en.wiktionary.org/wiki/lenderhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Debt


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an annuity, each installment is the same amount. The loan is generally provided at a cost,

referred to as interest on the debt, which provides an incentive for the lender to engage in the

loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can

also place the borrower under additional restrictions known as loan covenants. Although this

article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other

institutions, issuing ofdebt contracts such as bonds is a typical source of funding.

3.6.1 TYPES OF LOAN

1. Secured loan

A secured loan is a loan in which the borrowerpledges some asset (e.g. a car or property) as

collateral for the loan.

A subsidized loan is a loan that will not gain interest before you begin to pay it. It is known to be

used at multiple colleges.

A unsubsidized loan is a loan that gains interest the day of disbursement.

A mortgage loan is a very common type of debt instrument, used by many individuals to

purchase housing. In this arrangement, the money is used to purchase the property. The financial

institution, however, is given securitya lien on the title to the house until the mortgage is

paid off in full. If the borrower defaults on the loan, the bank would have the legal right to

repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in

much the same way as a mortgage is secured by housing. The duration of the loan period isconsiderably shorteroften corresponding to the useful life of the car. There are two types of

auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a

consumer. An indirect auto loan is where a car dealership acts as an intermediary between the

bank or financial institution and the consumer.
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A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is

hedged by the lender against loss, using options or otherhedging strategies to reduce lender risk.

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on the

merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible for

a pre-settlement loan. This is considered a secured non-recourse debt due to the fact that if the

case reaches a verdict in favor of the defendant the loan is forgiven.

2. Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. Thesemay be available from financial institutions under many different guises or marketing packages:

credit card debt personal loans bankoverdrafts credit facilities or lines of credit corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the

borrower. These may or may not be regulated by law. In the United Kingdom, when applied to

individuals, these may come under the Consumer Credit Act 1974.

3. Demand loan

Demand loans are short term loans that are atypical in that they do not have fixed dates

for repayment and carry a floating interest rate which varies according to the prime rate. Theycan be "called" for repayment by the lending institution at any time. Demand loans may be

unsecured or secured.
http://en.wikipedia.org/wiki/Limited_partnershiphttp://en.wikipedia.org/wiki/Recourse_notehttp://en.wikipedia.org/wiki/Securities_lendinghttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Nonrecourse_debthttp://en.wikipedia.org/wiki/Unsecured_loanhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Overdrafthttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Consumer_Credit_Act_1974http://en.wikipedia.org/wiki/Consumer_Credit_Act_1974http://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Overdrafthttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Unsecured_loanhttp://en.wikipedia.org/wiki/Nonrecourse_debthttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Securities_lendinghttp://en.wikipedia.org/wiki/Recourse_notehttp://en.wikipedia.org/wiki/Limited_partnership


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4. Personal or commercial loan

Loans can also be subcategorized according to whether the debtor is an individual person

(consumer) or a business. Common personal loans include mortgage loans, car loans, home

equity lines of credit, credit cards, installment loans andpayday loans. The credit score of the

borrower is a major component in and underwriting and interest rates (APR) of these loans. The

monthly payments of personal loans can be decreased by selecting longer payment terms, but

overall interest paid increases as well. For car loans in the U.S., the average term was about 60

months in 2009.

Loans to businesses are similar to the above, but also include commercial mortgages and

corporate bonds. Underwriting is not based upon credit score but rathercredit rating.

Generally there are two type of lending:-

1. Retail loans- Personal Loans- Housing Loans- Loan against Property-

Education Loan- Car Loan- Loan against Shares- Loan against Security

2. Business loan

3.7DEPOSITS

3.7.1 Fixed Deposits

Term deposits, also known as Fixed deposits or Time deposits, are deposits kept for fixed

period and are repayable on expiry of the fixed period. The bank decides the rates of interest on

term deposits of various maturities from time to time by taking into account the directives of the
http://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Installment_loanhttp://en.wikipedia.org/wiki/Payday_lendinghttp://en.wikipedia.org/wiki/Credit_scorehttp://en.wikipedia.org/wiki/APRhttp://en.wikipedia.org/wiki/Commercial_mortgagehttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Credit_ratinghttp://en.wikipedia.org/wiki/Credit_ratinghttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Commercial_mortgagehttp://en.wikipedia.org/wiki/APRhttp://en.wikipedia.org/wiki/Credit_scorehttp://en.wikipedia.org/wiki/Payday_lendinghttp://en.wikipedia.org/wiki/Installment_loanhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Mortgage_loan


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Reserve Bank of India in this regard. RBI permitted banks to offer deposit schemes for senior

citizens offering higher rates

The present RBI guidelines provide discretion to banks to offer term deposits from a minimum

period of 7 days to maximum of 120 months.

Monthly Interest Certificate (MIC) provides fixed monthly income by the way of interest to the

depositor for a specified period leaving the principal amount of deposit intact. The monthly

interest installment should be credited to the Savings, Current or Recurring deposit account of

the depositor according to his/her instructions. The minimum period for which a deposit under

MIC can be accepted is 12 months.

Quarterly Interest Certificate (QIC) scheme provides fixed quarterly income by the way of

interest to the depositor for a specified period leaving the principal amount of deposit intact. The

quarterly interest installment should be credited to the Savings, Current or Recurring deposit

account of the depositor according to his/her instructions. The minimum period for which a

deposit under QIC can be accepted is 12 months.

Re-Investment Certificate (RIC) is a cumulative deposit scheme, where the interest is

compounded on quarterly basis and is paid along with the principal on maturity. The minimum

period for which the deposits under RIC can be accepted is 6 months. The maximum period is

120 months.

3.7.2 Recurring Deposits

Recurring deposits are accepted in equal monthly installments of minimum Rs 1,000 and

above in multiples of Rs 500 thereafter. Recurring Deposit accounts can be opened for a

minimum period of 12 months and in multiples of 12 months thereafter, up to a maximum of 120

months. The amount of installment once fixed, cannot be changed. Installment for any calendar

month is to be paid on or before the last working day of the month. Where there is delay in

payment of installment, one can regularize the account by paying the defaulted installment

together with a penalty (at present it is at the rate 4 % for the period of delay).Fraction of a

month will be treated as full month for the purpose of calculating the penalty.

The total amount repayable to a depositor, inclusive of interest, depends on the amount of

monthly installments and the period of deposit.


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3.7.3 Encash 24

The Encash 24 (Flexi Deposit) gives you the liquidity of a Savings Account coupled with

high earnings of a Fixed Deposit. This is achieved by creating a Fixed Deposit linked to your

Savings Account providing you the following unique facilities:

Maximum Returns: As soon as the balance in your Savings Account crosses over Rs 25,000, the

excess, in multiples of Rs 10,000 will be transferred automatically to a higher interest earning

Fixed Deposit Account. The maturity of fixed or term deposits formed as a result of transfer of

money from the Savings Bank account will be for a maximum period of 181 days and the

interest will be calculated on simple interest rate basis.

3.7.4 Tax Saver Fixed Deposit

In the Finance Bill of 2006, the government had announced Tax benefits to Bank Term Deposits

which are of over 5 year tenure u/s 80C of IT Act, 1961 vide Notification Number 203/2006 and

SO1220 (E) dated 28/07/2006.

The salient points of the scheme notification are; (a) Fixed tenure without premature withdrawal.

(b) Year is defined as a financial year. (c) Amount limited to Rs. 100 minimum and Rs. 100,000

maximum. (d) Bank will issue a Fixed Deposit Receipt that shall be the basis of claiming tax

benefit. (e) Term deposit under this scheme cannot be pledged to secure a loan.Benefits of tax break u/s 80C of IT Act Benefit Illustrator Example

Assume that a customer invests Rs 100,000 in this scheme @ 8% p.a. in fixed deposit for five

years. He will get a benefit of Rs 30,600 at 30.6 % on the eligible investment of INR 100,000

assuming that he is in Rs 2, 50000 lac to Rs 10, 0000 lac tax bracket, thus his effective

investment would be Rs 69,400. He would earn Rs 8000 (08 percent on 1 lac) as interest per

annum, which would translate to a return of 11.5 percent on the effective investment of Rs

69,400.

3.8 CUSTOMER REQUESTS

The customer can request for the following issues:

Change of Address Card damaged

Change of contact details such as Mobile no, Emailid Reactivation

Account opening related queries Card duplication


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Cheque book

New cheque book

request

Debit card Stop payment request

PIN Signature verification

FD receipt not received Update new signature

Debit card related queries Mobile alerts

Card hot listing I-Connect

Lost card E-Statement

3.9Process for the above


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LOCKER

Axis bank provides locker facility as well for the customers only at selected branches.Axisbank lockers ensure the safe keeping of customers valuables.

Lockers available in various sizes. Direct debits for locker rentals from customers account and get rid the customers of the

hassles in writing out cheques.

Extended banking hours to operate lockers. Competitive rentals.

3.10 CASH TRANSACTION GUIDELINES

Savings/Current Accounts There is no restriction limit for the amount. If the total amount

deposited by way of cash in an account in a day is Rs.50000 and above, PAN of the account

holder should be obtained if not taken on record at the time of opening the account. In case, the

account holder does not have the PAN, then form 60/61 should be obtained on the day of such

deposit.

Time DepositsAs per the IT rules, cash remittances exceeding Rs.50000 requires the account

holders PAN or form 60/61. As per banks internal rules, for opening a fixed deposit account for

amounts exceeding Rs.50000 (whether by cash or cheque), PAN or form 60/61 is to be obtained.

Cash payment should not be made by a bank to any person whose total holdings of time deposits

are Rs.20000 or more as per IT Act.

Demand draft/Pay Order/Bankers CheckAs per the IT rules, cash transaction for Rs.50000

and above per day requires the remitters PAN or form 60/61. However, RBI has permitted cash

transactions only for amounts of less than Rs.50000. In Axis bank, for an amount exceeding

Rs.20000, the remitter has to be identified. Cash transaction for Rs.50000 and above are

therefore, not permitted.

3.11 CLEARING

Clearing operations is a process in which bankers exchange the cheques (drawn on other

banks) received from their clients and settle the accounts. This is one the most important and

popular services. The exchange of cheques amongst banks and settlements of the accounts take


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place at clearing houses. The clearing houses are generally managed by RBI and in certain

centers where RBI does not have a presence; the same are managed by SBI.

The Bank as a part of the normal banking operations undertakes collection of cheques deposited

by their customers, some of which could also be drawn on non-local bank branches. Such

cheques are called outstation cheques. In order to facilitate faster collection of outstation

cheques, the Reserve Bank of India started a special clearing styled, Speed Clearing by

leveraging the core banking solutions implemented in banks

In India, as on date, there are about 1047 clearing houses. Bankers in their normal course of

business receive millions of cheques from their client from collection. Thus, collection of

cheques is one of the prime services provided by bankers. The bankers who extends the service

of collecting the funds of the cheques are known as COLLECTING BANKERS.

CLEARING speeds up collection of cheques and therefore enhances customer service, reduces

the scope for clearing related frauds, minimizes cost of collection of cheques, reduces

reconciliation problems, eliminates logistics problems etc.

3.11.1 Inward Clearing

When a particular branch receives instruments, which are on themselves and sent by

other member bank for collection are treated as Inward Clearing of that branch. This branch is

known as paying branch.

Process

Clearing house receives all the instruments from the member banks every day evening

and it has an arrangement which separates all the instruments bankwise as per MICR data and

bundles the member banks instruments. These instrument details are recorded into database and

uploaded into Clearing houses website for member banks.

Every day morning these bundled instruments are collected by the member banks which

are drawn on themselves and deposited in other banks for collection. The collected instrument

details will be downloaded from the Clearing houses website or will be obtained through floppy

drive or pen drive and brought to the service branch by the branch official.


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Once the data is downloaded from the CHs website, it will be uploaded into the in-house

software for processing. The software used in Axis bank is Finacle. The instruments above Rs.1

lakh and upto Rs.10 lakh will be processed by officials duly empowered to do so.

Within a reasonable time after the instruments are brought from the CH, it should be

ensured that all instruments as per the list received. The following cases should be detected while

handling the instruments physically.

LBNRListed But Not Received RBNLReceived But Not Listed NDOUNot Drawn On Us

The UV lamp checking of the instruments above the threshold limit as per compliance

must be done by the concerned official for detection of any physical or chemical alteration. The

official processing the instrument should put his signature as having processed the instrument

and cancel the signature of the customer. All passed cheques should be defaced with an edible

pencil before bundling and storage.

The following accounts are to be used for Inward clearing accounting

a. Inward Clearing Settlement AccountTo debit the entire amount that is passedb. Clearing AccountTo park LBNR or Excess claim casesc. Clearing Cheque Returned AccountTo park the amount of returned chequesd. Clearing Difference AccountTo park RBNL or Short claim casese. Clearing House Account To credit the amount which submitted for collection to CH

and to debit the amount of those instruments that are passed

Once the instrument details are entered into the software, it will be verified and posted by

the bank officials who are empowered to do so. The amount will be debited from the customers

account against the cheque issued by them to their customers.

The presented cheques might get returned in following cases

Insufficient amount in the account


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Signature mismatch Damaged instruments Details changed in the instrument but not approved by the customers signature

3.11.2 Inward Returns

Clearing returns (inward) consists of those instruments which are presented by collectingbank to other banks for payment but it has been returned and unpaid by them due to

specified reason through the clearing house.

All returned cheques should be enclosed with system generated return memos. Locallyprinted or handmade return memos should not be enclosed. The physical returns along

with the schedule and floppy, if any, should be delivered to the CH by the bank officials

only. Similarly the inward returns along the data should be brought from the CH by the

officials only.

3.11.3 Outward Clearing

When a particular branch receives instruments drawn on the other bank within theclearing zone and sends those instruments for collection through the clearing arrangement

is considered as Outward Clearing for that particular branch. This branch is known as

collecting branch.

Process

The instruments are received from the customer at branches. All received instrumentsshould be affixed with bank special crossing stamp as soon as received from the

customers. An outsourced agency collects the instruments along with excel sheet giving

details of instruments from the branches at appointed hours and delivers to the service

branch. Alternatively, the runner boys of the branches deliver the outward instruments

along with pay-in slips to the service branch at fixed intervals.

The outward instruments must be sent by the branches in locked boxes where one key ofthe lock is held at the branch and another is at the service branch. The box is to be opened

at service branch by service branch officials only.


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All instruments crossing the threshold limit should be checked through the UV lamp. Incase of discrepant instrument matter should be taken up with the depositor immediately

by the collecting branch and such instruments should not be presented in outward

clearing. All the instruments of high value (above Rs.1 lakh) should be checked by a

designated official and should be subjected to double scrutiny if it is in favour of

individual customers.

Power encoding machine with requisite software should be used to encode the chequesseamlessly by importing data from Finacle to avoid encoding errors. The data entry,

encoding, preparation of presentable batches etc, are done at the Service branch premises.

Once the outward batches are prepared, they are lodged by the service branch to the

Clearing House.

The following accounts are to be used for Outward Clearing accounting

Outward Clearing Settlement Account -To credit the entire amount of the instrumentsthat are received for collection

Clearing House Account - To credit the amount which submitted for collection to CH andto debit the amount of those instruments that are passed

3.11.4 Outward Returns

Clearing returns (outward) include those cheques that are presented to the paying bank by

other banks but we have to return them unpaid to the collecting banks due to various reasons.

Outward returns are received from the Clearing House with return memo attached. Along

with the returns, data and relevant statements should be brought from the CH by the bank

official. The schedules and patties as submitted by the presenting bank should be carefully

checked for an missing instruments. The returns are processed in Finacle as inward clearinginstruments. The details of the instrument like account number, amount, and reason why it is

returned are entered into the software. And same will be verified by the branch official.

A schedule of returned instruments branch-wise is to be prepared giving details of the

cheques and should be handed over to the runner boy of the concerned branch and they will


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dispatch the instruments to the concerned customers as soon as possible. If the outward cheques

returned with technical reasons such as wrong encoding, wrong delivery, wrong listing,

inadequate or incorrect stamping etc, it should not be returned to the customers. These cheques

should be represented after due corrections.

3.11.5 Electronic Clearing System

ECS is a mode of electronic funds transfer from one bank account to another bank

account using the services of Clearing house. This is normally for bulk transfers from one

account to many accounts or vice-versa. This can be used both for making payments like

distribution of dividend, interest, salary, pension etc. by institutions or for collection of amounts

for purpose such as payments to utility companies like telephone, electricity, or charges such as

house tax, water tax, etc or for loan installments of financial institutions/banks or regular

investments of persons. There are two types of ECS called ECS Credit and ECS Debit. ECS

Credit is used for affording credit to large number of beneficiaries by raising a single debit to an

account, such as dividend, interest or salary payment. ECS Debit is used for raising debits to a

number of accounts of consumers/account holders for crediting a particular institution.

3.12 CASH MANAGEMENT SERVICES

Axis bank offers a wide range of collection and payment services to meet corporates

complex cash management needs. Payments received from companys vendors and made to its

suppliers are efficiently processed to optimize cash flow position and to ensure the effective

management of business operating funds. Under cash management services, Axis offer corporate

and institutional clients customized solutions towards collection, payments and remittance

services allowing them to minimize the gap between collections and remittances, thereby

improving their cash flows.

What is Cash Management Services?

A hybrid system of collections and remittances at faster pace with certain value additions Effective and efficient mode of managing the Collections and Receivables


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Objectives of CMS

To attract and retain Customers by offering customized products and services To adapt to the changing business environment To provide additional value added facilities to customers To create niche market segments and stay ahead of competition To make the process involved in collections and remittances efficient and effective

Advantages of CMS

For Corporates

Improved liquidity through faster access to funds Assured funds in the Pooling account Reduced borrowings and lower interest payments Deployment of funds is easier by reduction in accounts maintained with banks for

efficient requirements

Lower operational costs Greater ease in accounting and reconciliation through client specific MIS, including MIS

through web Single window query

For the Bank

Client acquisition by offering CMS as an entry strategy Fee as well as Float based income Cross selling of other banking products Developing overall relationships Monitoring of Cash inflows of the Corporate where bank has a Credit exposure Balancing of mismatches at the Branch level from the CMS funds


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3.13 GOVERNMENT BUSINESS

Axis bank is the first private sector to be authorized by the Reserve Bank of India and

Government of India for collecting Taxes on behalf of State Government with authorization of

the bank for collection of commercial taxes in the twin cities of Hyderabad and Secunderabad for

Government of Andhra Pradesh since July 2001. Axis bank is authorized as an agency bank of

RBI commencing with October 1, 2003. The authorization means that the bank can undertake the

following business on behalf of Central Government and State Governments:

Collection of Direct Taxes on behalf of Central Board of Direct Taxes Collection of Indirect Taxes on behalf of Central Board of Excise and Customs Disbursement of Central Government Pensions Expenditure related payments of Central Government Ministries or Departments, State

Government business including collection of State Taxes based on the recommendation

of individual States

3.14FOREIGN EXCHANGE

International trade in commodities and services necessitates a method of conversion of

value of commodities and services of one country in terms of purchasing power in another

country. The mechanism by which such conversion takes place is one of the meanings ofForeign Exchange. Foreign exchange is the method of conversion of one currency into another.

The foreign currency in such conversion is treated as a commodity and the home currency as the

purchasing power.

1. Vostro Account - Account held by a foreign bank in a domestic bank is called Vostroaccount. For example UBS of Switzerland opening an account in AXIS BANK in India, this

is Vostro account for AXIS BANK in India.

2. Nostro Account - Account held by a particular domestic bank in a foreign bank is calledNostro account. Here in the above example given in Vostro account the same account is a

nostro account for UBS Switzerland, or if AXIS BANK India opens an account in UBS

Switzerland then that account is a Nostro account for AXIS BANK India. Nostro accounts


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are usually in the currency of the foreign country. This allows for easy cash management

because currency doesn't need to be converted.

3. Loro Account - An account held by a domestic bank in itself on behalf of a foreign bank.The latter in turn would view this account as a nostro account.(Generally not in practice)

4. SWIFT: An SWIFT consists of a one-page document containing the name and code of theoriginating bank, the date and time, the address and code of the receiving bank, the name

and internal code of the officer initiating the transmission, the names and numbers of the

accounts involved in the transfer, a description of the asset being transferred, the MT

category of the transmission, and acceptable, standardized phrases as described above.

5. Direct Import Bill: In direct import bill, supplier supplies the goods and importer receivesthe goods and also all required document subsequently. After receiving the goods and

documents payment is made by the importer. It is a safest method transaction as there is no

risk involved in it.

3.14.1 Various BUYING and SELLING rates

As all purchase/sale transactions are not alike, there are different buying and selling rates. The

principle involved is that an instrument/ transaction involving little expense (work / effort) and

risk will be more valuable i.e. it will command a better price for the seller than an instrument

costing more to collect and involving greater risk. Different rates are:

TT selling rate TT buying rate Bill selling rate Bill buying rate

Apart from the above rates, banks usually quote the following rates:

Travelers cheques selling rate Foreign currency note selling rate Clean cheques buying rate Travelers cheques buying rate Foreign currency note buying rate


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3.14.2 Procedure Of Various Forex Transactions

1. Import (Advance Remittance) Application form of the bank and A1 form is to be filled along with performa invoice

should be given

IEC (Import Export Code) should be given to the bank for the first transaction andfurther when the code is identified then it is taken as default IEC code of the

respective customer

Then payment is to be done by the Bank on the basis of Performa invoiceNote: If below 500000 INR then Bill Sell Rate is taken from the card rate keeping a

margin and if above 500000 INR then Treasury decides the rate.

2. Import (Direct Remittance) Application form of the bank and A1 form is to be filled by the customer IEC (Import Export Code) should be given to the bank for the first transaction and

further when the code is identified then it is taken as default IEC code of the

respective customer

Customer has to give the Bill of Entry, Packing List, Commercial invoice and Bill ofLading to the bank

Then payment is to be done by the Bank on the basis of above details

3. Export (Export Collection) Exporter gives the Bill to the Bank and then lodgement is done Bank sends the bill to the beneficiary bank Now the Beneficiary Bank will collect all the details from the customer and sends

back the credit to the Bank And when the SWIFT comes then customers a/c is credited i.e. it is realized

4. Export (Inward Remittance) SWIFT related to the transaction comes to the Bank


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Then amount, beneficiary bank and other details given in a SWIFT is matched withthe details given by the Head Office about the debit / credit statement in the Nostro

Account

If there is an amount less than 500000 INR then TT Buy rate and if above thantreasury rate is applied

Then the rate is verified by the TFC and the transaction is done which meanscustomer a/c is credited

5. Selling Of Currencies Application form of the bank along with A2 form should be filled in by the customer

and he should be an account holder in the bank

The customer has to submit a copy of his passport and visa along with confirm airticket and if the customer is NRE then only passport

According to customer need he is given the currencies which is according to CCYSell rate keeping a margin and then the respective amount is debited from customers

a/c

6. Issuance Of Letter Of Credit Application is given by the customer with all the terms and conditions along with the

insurance contract in case of FOB (Free on Board)

On the basis of these documents LC (letter of credit) is opened and supplier is givenintimation about this.

As per the contract, the beneficiary bank presents the document to importers bankalong with the bill of lading, packing list, declaration certificate and all other

necessary documents

Then importers bank gives an intimation to its importer after receiving thedocuments and then lodgment is done

The importer arranges for the fund and payment has to be done within the due date.

3.14.3 NRI Services

Steps Involved In Sending Money

Step 1: Customer registers on Axis Remit site giving basic KYC (Know yourcustomer) information. It must be noted that the information provided by


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customer is cross-checked and the customer id will be disabled later if the KYC

check turns negative.

Step 2: Remitter Customer registers one or more beneficiaries for receivingremittances. This can be the remitter himself or his friends/relatives. The only

condition is that the beneficiary should have a proper Bank account with a Bank

in India.

Step 3: Remitter initiates a remittance transaction in Axis Remit by mentioningthe beneficiary & amount. Thereafter he/she uses the electronic clearance service

in his country to park money in our designated Nostro Account, the details of

which are conveyed to him at Axis Remit site. Such electronic transfer of funds

can either be a push transaction (where customer pushes i.e. originates the transfer

of funds, as in Power Transfer module of I-connect) or a pull transaction (where

the Bank pulls money from the customer accountas in ECS debits).

Step 4: Remitter revisits Axis Remit site after completing the transfer (only in thecase of CIP (Push) transactions) and keys in the net-transfer reference number in

the appropriate module.

Step 5: At the back-end, the service provider (TOML) matches the customerfurnished information with Credits in Axis bank Nostro Account and releases

payments to beneficiaries. The credits to beneficiaries are passed on by way of

account credit (for Axis Bank customers) and NEFT / Demand Draft (for non-

Axis Bank beneficiaries).

3.15 CREDIT

Credit facilities can be fund based or non fund based. The fund based limits are those

where outlay of the banks fund is involved. Such limits are also known as borrowing limits. Non

fund based limits are those where the bank has to meet the commitment/promise made by a

borrower and endorsed by the bank, only if the borrower fails to honor it. Main types of facilities


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under fund based limits and non fund based limits and the related guidelines for granting

advances against them are discussed below in brief.

3.15.1 Fund Based

Find based limits are generally granted by way of overdrafts, cash credit, Demand Loans,

working capital term loans, bills purchased/ Discounted and terms loans.

a. Overdraft and Cash credit - In overdraft/cash credit, the borrower is allowed to carryout debit and credit transactions up to a limit. These are more operative accounts and

have cheque book facility .The term overdraft is generally used for continuing limits

granted against the security of term deposits and other financial securities ,occasional

overdrawing/debits in current accounts and also for continuing limits granted for

personal purposes.Cash Credit is generally used for continuing limits granted for

working capital requirement of commercial establishments. Cash credit/overdraft limits

are repayable on demand.

b. Demand Loans/Loans - As the name suggests, are repayable on demand. They are alsoat times referred to as loans. Though technically repayable on demand, a repayment of

the loan in installments spread over a period up to 3 years or so is generally stipulated.

Composite loans given for working capital and for fixed assets as also the loans for fixed

assets where repayment period is stipulated up to 3 years granted by way of demand

loans.

c. Bills Purchased /discount are normally meant for financing working capitalrequirements in the post-scale part of the operating cycle of a unit. The facilities are for

purchasing/discounting bills drawn by the customer for goods sold.

d. Export Credit is mainly a short term working capital facility extended to an exporterfor execution of an export order from the date of receipt of such order till the date of

realization of the export proceeds. Mainly the finance is given in the form of pre/post

shipment facilities . Preshipment facilities are extended against export orders and post

shipment facilities are exdended against export orders and post shipment faciliteies are

extended by way of bill discounting and bill purchase.

3.15.2 Working Capital Funding

The Working capital funding requirements for clients are partly met out of the short term

funding provided by banks, the balance being funded out of long-term sources of the client. The


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fund based working capital funding limits for each client are determined based on the following

standard procedures:

Computation of Maximum Permissible Banking Finance (MPBF) under the secondMethod of lending,

Assessed Bank Finance under the cash Flow budgeting method or Nayak CommitteeMethod.

The primary security for working capital limits is normally hypothecation of the current

assets of the company. Funding requirements in excess of the assessed limits are met out of the

long- term sources of the client. Term loans extended by bank toward extending long-term funds

to working capital requirements of client are classified as.

3.15.3 Working Capital Term Loans

Term Loans: Term Loans are generally granted for acquisition of Fixed Assets. They are

repayable by specified number of installments spread over a period of 3 to 5 years or some times

more. Normally a term loan which is repayable up to a period 3 to5 years, is called Medium term

loan. Where the repayment is longer than 5 years, is called Medium term loan. Where the

repayment is longer than 5 years, it is called long term loan.

Term loans are mainly granted for acquisition of capital assets. The loans are not repayable on demand, but only in installments ranging over a period of

time. The repayment of the loan is generally out of the future earning of the borrowers business The primary security is normally the charge on the fixed assets of the company.

3.15.4 NonFunded based Limits

The two main types of non fund based facilities are letter of credit and Bank Guarantees

the details of which are given as follows.

a. Letter of Credit (LC) is an arrangement where a bank, acting on the request of thecustomer ( importer/opener of letter of credit), gives and undertaking to a third party (

exporter/beneficiary of the letter of credit) that on his submitting the shipping documents

( drafts, invoices, insurance policy bill of lading), the bank will meet the traders

commitment. In International trade, given the fact that the local trader might not be

known to the foreign supplier, such assurance from a bank facilitates the business.


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b. Bank Guarantees - Issuing guarantees on behalf of customers is major non-fund basedbusiness of banks. A guarantee is a contract to perform the promises or discharge the

liability of a third person in case of his/her default. It constitutes a contingent liability that

arises in the event of default by the customer.

3.15.5 Credit Products from Offshore branches at Singapore/Hongkong/Dubai

During the last one year AXIS bank has opened three offshore branches at Singapore,

Hongkong and Dubai. With these overseas banking units it is now possible for AXIS Bank to

offer seamless services to its Indian corporate clientele. Some of the opportunities are elicited as

below.

a. Acquisition Funding - A number of Indian Corporate are interested in raising money ininternational capital markets to fund acquisition. The overseas branches makes it possible

for finance firms interested in acquisition of overseas companies or starting off new joint

ventures or subsidiaries.

b. External Commercial Borrowing (ECBs) - External commercial borrowing refer tocommercial loans, in the form of bank loans, securities instruments (e.g. floating rate

notes and fixed rate bonds)] availed from non-resident lenders with minimum average

maturity for 3 years. Indian corporate willing to raise international capital can adopt this

route. ECBs can be used to fund capital expenditures.

c. Credit Linked Note (CLNs) - A security with an embedded credit default swap allowingthe issuer to transfer a specific credit risk t credit investors, CLNs being structure

securities, the principal and better understanding of Indian corporate is in good position

to undertake them as reference assets. Coupled with FCCBs these offer a win-win

proposition for banks as well as investors. FCCBs can be used to fund capacity

expansion, repaying debt, acquisition funding.

d. Credit Derivative - Credit Derivatives are privately held bilateral contracts where thecredit, risk is transferred without the transfer of ownership for a pre-agreed amount or

fee. Various types of credit derivatives are plain CDs, First-to-default CLN, Basket CLN,

CDOs etc. the overseas branches cater to their demand.

e. Trade FinanceThe offshore branches also offer products in Buyers Credit and SellerCredit. Indian importer with requirement for import finance can be catered to without


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any hassles. The International syndication of loans, trade finance can be catered to

without any hassles. The international syndication of loans, trade fiancne advisory and

offering agency services for loans syndication is also been explored through these

branches.

3.15.6 Structure Of Credit Department

Corporate Credit Business Unit has been split into three separate segments

Large Corporate segment to manage relationships with corporate havingturnover exceeding Rs.500 crores or those with aggregate exposure exceeding Rs.100

crores. This segment is headed by President (Credit). Relationships in LC segment are

allocated on the basis of industry sectors and handled by groups led by sectoral

Relationship Managers (SRMs). The SRMs are supported by Relationship Managers

(RMs) / Assistant Relationship Managers (ARMs) and Credit Analysis. Certain locations,

which as yet do not have critical mass of sectorbased relationships, are covered by

RMs/Assistant relationship mangers (ARMs) and credit analysts. Certain locations,

which as yet do not have critical mass of sector-based relationships, are covered by

RMS/ARMs on geographical basis, with support from sectoral groups.

Mid-Corporate segment to manage relations of corporate with net turnoverexceeding Rs.125 crores and up to Rs.500 crores, and aggregate exposure with the Bankabove Rs.25 crores and up to Rs.100 crores. New clients with the cost of the project

exceeding Rs.50 crores will be treated a part of MC/LC segment even if the turnover of

such clients is less than Rs.125 crores and/or the Bankss exposure to such clients is

below Rs.25crores.

This segment is divided into three groups, one for Western and Eastern Zones ,onfor Southern Zone and another for Northern Zone. All the groups are headed by SVPs

operating from Mumbai, Chennai and New Delhi respectively. Relationship function in

the segment is performed y RMs, Supported by Credit Analyst led by Credit Officers in

respect of Credit appraisal. The allocation of corporate amount the RMs/Credit

Officers and Analyst is aligned on the aligned on the basis of industry sector to extent

possible. The Heads of Mid-Corporate segment report to the president (Credit)


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Both the LC and MC segments are supported by Special Assets cell inidentifying/monitoring stressed assets and undertaking related worked in this area.

Both the Sectoral and Geography-based teams for Large Corporate are assisted byclient service teams at the concerned centers, consisting of identified product specialists

in treasury, trade finance and Business banking products.

In addition, RMs have been identified in Capital Markets department who will beattached to various corporate along with the SRMs/RMs for marketing Capital market

products. In other words, there will be a dual coverage model for large corporate

consisting of corporate banking RMs and Capital market RMs.

RMs operating in Mid-Corporate segment is supported by a pool of product by apool of product specialists in treasury, trade finance, business banking and capital market

products at the respective centers. The organization structure of the department together

with the sectoral distributions is depicted below.

3.15.7Credit selection

With a view to having a consistent and transparent credit selection process, the following

criteria are followed while selecting clients:

Acceptable internal credit rating Reasonable pricing Opportunities for boosting return on capital from ancillary business Significant probability of credit rating enhancement in the medium term Good cash flows, rather than mere security backing Satisfactory quality of management in terms of past track record of performance,

competence, integrity and corporate governance practices

Sustainability of business model in the long term, especially in a past-WTO and tradeliberalization regime characterized by lower import duties

Market leadership within the segment

Likely leadership in the emerging business Acceptable underlying security and credit enhancement measures


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3.15.8 Credit Appraisal Process

A detailed assessment of the credit request based on the various parameters of appraisal is

carried out to understand the company, the business, the industry, the viability of funding the

company etc. Credit assessment is the quite essential part, as it leads to making a business

decision as to sanction credit facilities to the company or otherwise. The appraisal process

involves the following:

Management AnalysisIt involves analyzing past performance record, code of ethics,vision, strategic and operational competence, innovativeness and team building and

success plan.

Industry AnalysisWhile funding a business it is essential to analyze the performanceof the industry that it function in. this involves analyzing the outlook. Also, the global

competitiveness of the industry is examined in view of falling tariff barriers.

Business Model Analysis The analysis involves evaluation of the sustainability,scalability and robustness of the business model of the company through an assessment

of configuration of elements comprising the companys goals, strategies, processes,

technologies and structure that enable the company to create value for the customers and

compete successfully in the market place.

Competitive Analysis This involves evaluating the competitive positioning of thecompany with respect to the key success factors of the industry and identifying thedistinct competitive advantages available with the company and assessment of its overall

competitive strategy.

Financial Analysis In financial analysis, the companys past and projected financialsare analyzed to ascertain the companys ability to meet its debt obligation. Trends in key

financial parameters are studied and detailed cash flow analysis is carried out to gauge

the extent of financial flexibility the company enjoys and the margin of safety available

for lenders. Sensitivity analysis is carried out to ascertain the ability of the company to

withstand adverse business developments.

Risk AnalysisEvery business faces certain inherent internal and external risks. First ofall the risks inherent to the industry are identified and then the risk factors resulting from

the business model of the company. It is also important to understand the risk mitigants

which companys competitive business allows it.


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Credit Rating It is the process of determining the credit worthiness of the borrower.The credit rating of the company refers to both the external rating and also the internal

rating carried out based on various qualitative and quantitative parameters. The credit

rating is an objective tool that aims at minimizing credit risk that could arise from

individual borrowers or the entire portfolio. Rating is assigned based on the ability of the

borrower to repay the debt and his willingness to do so. This is determined with respect

to the financial performance of the company, the business dynamics of the company and

the quality of management. The credit scoring of the company determines the sanctioning

authority and the pricing applicable to the exposure. Ratings profile of the credit portfolio

serves as a quantitative estimate of portfolio quality and yield.

3.15.9 Risk Management Department

Risk is a separate department for managing credit risks, market risks and operational

risks. All the proposals prepared by the Credit Department are sent to Risk for independent risk

assessment of proposals before these are put up to the sanctioning authority. Risk Department

also works towards:

Identifying concentration in the portfolio Identify problem credit exposures prior to their becoming NPAs as thrown out by Credit

Audit reports and take up with the originating department for suitable exit from such

exposures.3.15.10 Credit Sanction Process

With Risk Department inputs the proposals are put up for sanctioning to the appropriate

authority depending on the exposure and credit rating of the company. The present committee

structure and respective sanctioning authority is summarized as follows:

Committee Members

Sanctioning Authority (Rs.

In Crores)

Central Office Credit

Committee

President (Credit) and Senior

VP (Risk)

25 < Exposures


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VP (Risk)

Senior Management

Committee

Managing Director,

Executive Director (Credit),

President (Credit) and Senior

VP (Risk)

75 < Exposures < 100

Committee of Directors Select the members of Board

of Directors, with MD as

Chairman of the Committee

Exposures > 100

3.15.11 Corporate Banking Operations Department

Subsequent to sanctioning by the Sanctioning Authority, the branch where the loan is to

be parked is advised to contact the client and initiate the documentation process. The Branches

carry out entire documentation including security creation, signing of loan agreement etc. The

facility is disbursed subsequent to compliance of all the stipulated terms of sanction.

The role of CBO is as follows:

Execution of documentation as per terms of sanction Completion of post-sanction formalities Receipt of stock statements, calculation, updating and monitoring of Documentation

process

Making disbursements within Documentation process Updating monitoring tool to capture account contact Monitoring insurance coverage Reporting irregularities Flagging of exceptions or variations from terms and conditions to RMs for frther action Opening of inland LCs, issue of inland guarantees / handling of inward and outward bills

and chequesVarious facilities are taken up for periodic reviews by both Branches and the Central Office

depending upon the risk rating of the account in order to effectively monitor the overall portfolio.

An exhaustive credit monitoring tool has been developed for this purpose. The tool is integrated

with the existing Credit Rating tool, which enables online availability of the information on the

latest position of the account


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3.16 Marketing Department

3.16.1 Marketing Objectives

Axis Bank wants to achieve following marketing objectives by the end of the year 2011.

To get the market capitalization 500 Crore To get the 200 Crore retail investment. To get 125 Crore Corporate investments. To get the 175 Crore Capital investments.

Bankers Identify Near-Team and Long Term Concerns

3.16.2 REBRANDING

Has retained the burgundy color, but has changed the logo. Spend around Rs50 Crore in the re-branding exercise. Had hired advertising firm O&M.

MARKETING CONCEPTS Its application to Banking, When we apply marketing to the

banking industry, the bank marketing strategy can be said to include the following

i) A very clear definition of target customers.

ii) The development of a marketing mix to satisfy customers at a profit for the bank.

1991 2015

Maintaining profitability

Credit Portfolio Management

Service Quality

Regional Economy

Cost Management / Expense reduction

Declining Earnings/ more failures

Market / customer focus

Capital adequacy

Stock market valueIndustry Overcapacity

Service quality

Maintaining profitability

Market / customer focus

Operations/systems/technology

Credit portfolio management

Productivity improvement

Investment to stay competitive

Stock market value

Asset/liability managementElectronic Banking


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iii) Planning for each of the source markets & each of the use markets (A Bank needs to be

doubly marketorientedit has to attract funds as well as were of funds & services.

iv) Organization & Administration.

3.16.3 BANK MARKETINGWe define bank marketing as follows: Bank marketing is the aggregate of functions,

directed at providing services to satisfy customers financial (and other related) needs and wants,

more effectively and efficiently that the competitors keeping in view the organizational

objectives of the bank. Bank marketing activity. This aggregate of functions is the sum total of

all individual activities consisting of an integrated effort to discover, create, arouse and satisfy

customer needs. This means, without exception, that each individual working in the bank is a

marketing person who contributes to the total satisfaction to customers and the bank should

ultimately develop customer orientation among all the personnel of the bank. Different banks

offer different benefits by offering various schemes which can take care of the wants of the

customers. Marketing helps in achieving the organizational objectives of the bank. Indian banks

have duel organizational objective commercial objective to make profit and social objective

which is a developmental role, particularly in the rural area. Marketing concept is essentially

about the following few thing which contribute towards banks success:

1) The bank cannot exist without the customers.

2) The purpose of the bank is to create, win, and keep a customer.

3) The customer is and should be the central focus of everything the banks does.

4) It is also a way of organizing the bank. The starting point for organizational design should be

the customer and the bank should ensure that the services are performed and delivered in the

most effective way. Service facilities also should be designed forcustomers convenience.

5) Ultimate aim of a bank is to deliver total satisfaction to the customer.

6) Customer satisfaction is affected by the performance of all the personal of the bank.

All the techniques and strategies of marketing are used so that ultimately they induce the

people to do business with a particular bank. Marketing is an organizational philosophy. This

philosophy demands the satisfaction of customers needs as the pre-requisite for the existence and

survival of the bank. The first and most important step in applying the marketing concept is to


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have a whole hearted commitment to customer orientation by all the employees. Marketing is an

attitude of mind. This means that the central focus of all the activities of a bank is customer.

Marketing is not a separate function for banks. The marketing function in Indian Bank is

required to be integrated with operation. Marketing is much more than just advertising and

promotion; it is a basic part of total business operation. What is required for the bank is the

market orientation and customer consciousness among all the personal of the bank. For

developing marketing philosophy and marketing culture, a bank may require a marketing

coordinator or integrator at the head office reporting directly to the Chief Executive for effective

coordination of different functions, such as marketed research, training, public relations,

advertising, and business development, to ensure customer satisfaction. The Executive Director

is the most suitable person to do this coordination work effectively in the Indian public sector

banks, though ultimately the Chief Executive is responsible for the total marketing function.

Hence, the total marketing function involves the following:

a) Market research

ident

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