Banking Mgmt.banking on Relationship (1)

8/12/2019 Banking Mgmt.banking on Relationship (1)

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The Indian Institute Of Business Management & StudiesSubject: Banking Management. Marks: 100

Note : Both the sections are compulsory.

Section I

CAS I : BAN!IN" ON #$ATIONS%I

The birth of ABC Bank took place after the RB issue! gui!elines for the entr" of ne# pri$ate sector

banks in %anuar" 1&&'. Subse(uentl") the promoter of ABC Bank sought permission to establish a

commercial bank an! retaine! *+M,) a management consultant of international repute) to prepare the

groun!#ork for establishing a commercial bank. The Reser$e Bank of n!ia con$e"e! its appro$al in principle

to establish ABC Bank on -ebruar" 11) 1&&. Thereafter) the Bank #as incorporate! un!er The Companies

Act in September 1&&. The bank starte! its operations in /o$ember 1&&. The ABC Bank #as promote! b"

the tenth largest !e$elopment bank in the #orl!) #hich ha! a magnificent recor! of promoting #orl!class

institutions in n!ia. The promoter #as a strategic in$estor in a plethora of institutions) #hich ha!

re$olutioni2e! the n!ian financial markets.

*eeping in line #ith its polic" of le$eraging technolog" to !ri$e its business) ABC Bank !eplo"e!

-inacle) the eage banking solution from nfos"s to consoli!ate its position) meet challenges an! (uickl"

sei2e ne# business opportunities. The entire -inacle rollout #as remarkable) consi!ering the fact that it #as

implemente! across all branches in a recor! timeframe of months. -inacle pro$i!e! the critical technolog"

platform to propel the bank3s operations #ith ne# thrust an! !irection. The bank also implemente! *on!or 4

a treasur" front office soft#are from Reuters an! TMS 4 treasur" back office soft#are from S"nerg" 5ogin.

The achie$ement of these significant milestones #as consistent #ith ABC Bank3s continue! focus to create

customer an! sharehol!er $alue through !eplo"ment of superior technolog". n$estments in technolog" #ere

a part of the plan to put in place buil!ing blocks for creating the right organi2ational infrastructure. n future)

it #oul! help ABC Bank to consistentl" !eli$er superior pro!ucts) con$enient access channels an! efficient

ser$ice to its retail an! corporate customers. 5arge in$estments ha! been ma!e in backen! technolog" to

strengthen processes) s"stems an! control. This) in the long run) propelle! b" a top (ualit" management

team) clearl" set ABC Bank apart from its competitors.

ABC Bank #as a pioneer an! an inno$ator in bringing stateoftheart ser$ices to its customers. t

#as the first pri$ate bank to enter an! capture ne# markets. t #as the first n!ian Bank to pro$i!e 4 ATM

/e6t 7an information portal on ATMs89 nstant Account pening9 Talking ATMs9 ,iftCar! 7+repai! ,ift Car!89

;as"-ill 7nstant Mobile Refill Ser$ice8 4 along #ith other ser$ices. The Bank intro!uce! a SMS alert ser$ice)

#hich ga$e the customers) up!ate! information on an" transaction. The Bank ha! collaboration #ith other

organi2ations ren!ering relate! ser$ices 4nsurance) /ational Sa$ing Certificates an! +ost office Ser$ice 4

pro$i!ing a platform to interact #ith potential customers as #ell as offering other ser$ices to its e6isting

customers. t also trie! to tap potential rural market segments) #hich ha! not been e6plore! b" an" other

pri$ate bank. A ke" achie$ement for the Bank #as that it emerge! as the highest !istributor for t#o top

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Mutual -un! Schemes consistentl" in the past) thereb" !emonstrating the strength of the Bank3s !istribution

channel of T+< business. t ha! registere! huge success as a collecting bank to se$eral market +s that

conse(uentl" le$erage! the + financing business. t launche! a strategic B=B ;Commerce platform #ith

B+C5 to facilitate online pa"ments from B+C5 to its !ealers) thereb" enhancing corporate business through

ne#age technolog" an! offering Suppl" Chain -inancing Solutions. Corporate banking relationships #ereoffere! at =0 locations across the countr" an! total Banking Solutions to its corporate customers 7Anne6ure8.

The >alue Chain Management ,roup also offere! Suppl" Chain -inance Solutions to $arious

Corporates an! special pro!ucts like loan against cre!it car! recei$ables. The lifeline of ABC Bank #ere its

people) gro#ing at a $er" fast pace. The a$erage age of the emplo"ee at ABC Bank #as '1 "ears.

Appro6imatel" ?'@ of the emplo"ee strength #as in the junior management categor" 7#hich inclu!e!

trainees an! probationers8) #hile 1@ ma!e up the mi!!le le$el management. The remaining constitute!

the senior an! top management. The $arious business units comprise! of @) #hile support functions

ma!e up for 1=@) an! operations for the remaining 1'@ of the total manpo#er strength of the Bank. The

bank ha! rolle!out broa! base! grant of stock options co$ering @ of the emplo"ees to align their

interests #ith those of its sharehol!ers. The bank ha! a statsoftheart training centre at Mumbai an! e$er"

emplo"ee recei$e! on an a$erage 0 hours of training) annuall".

ABC Bank entere! /agpur market in t#o phases. n the first phase) it starte! #ith corporate banking

an! establishe! itself as the best ser$ice pro$i!er. After#ar!s) it le$erage! its strengths b" entering into

retail banking. Although) relati$el" a late entrant in the retail banking sector) it ac(uire! eas" access in the

ne# segment !ue to its bran! image in corporate banking. n retail banking) ABC Bank opte! for selecti$e

penetration base! on t#o main factors 4 $olume of business an! cre!ibilit" of the account. This enable!

them to create greater satisfaction in the customers3 min!. nitiall") it starte! #ith the criteria of an a$erage

(uarterl" cash balance of Rs =)000 focusing on premium segment. 5ater on) to further penetrate the

market) it re!uce! the a$erage (uarterl" cash balance to Rs )000 an! segmente! the market on the basis

of nature of business) $olume an! number of transactions per month. n this phase) b" re!ucing the

minimum a$ailable balance) it tappe! other in!i$i!ual customer accounts !uring the course of its e6pansion.

ABC ha! al#a"s been particular about the specific nee!s of the customer an! maintaining

consistenc" in the (ualit" of pro!ucts an! ser$ices pro$i!e!. The bank emphasi2e! on !ealing #ith them on

a onetoone basis an! pro$i!ing tailorma!e pro!ucts. n course of penetrating this segment) ABC bank

achie$e! great success !ue to its !eep un!erstan!ing of the nee!s an! e6pectations of local customers. nthe other han!) some of the competitors #ho !ispla"e! gran! success in the beginning coul! not sustain it

because of a mismatch bet#een e6pectations of the customers an! !eli$er" of ser$ices. As promotion #as

mainl" through #or!ofmouth) the bank operate! on the philosoph" that satisfie! customers bring ne#

customers #hereas !issatisfie! customers break = e6isting customers. Therefore) the" focuse! about

maintaining (ualit" of ser$ices an! customer satisfaction. The bank #as $er" particular about re!ucing the

turnaroun! time in e6ten!ing its ser$ices to the customers. t also acte! as an in$estment consultant for

their in!i$i!ual customers.

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Apart from offering tailorma!e3 pro!ucts) the bank maintaine! a continuous personal relationship

#ith each of its e6isting customer) base! on their business potentials. The" took regular fee!backs from the

customers an! respon!e! sincerel" to their suggestions or complaints. The" use! to call up their premium

customers once a #eek) asking for their $ie#s on the ser$ices offere! b" the bank an! suggestions toimpro$e the same. To enable an impartial communication s"stem) the bank create! a !e!icate! email < for

customers3 (ueries an! complaints) #hich establishe! a !irect link bet#een them an! corporate office. The

complaints an! (ueries recei$e! from the customers #ere then for#ar!e! to the concerne! branch offices for

imme!iate re!ressal an! branch hea!s #ere aske! to confirm the same. These complaint re!ressals forme!

an important component in performance e$aluation of the branch as #ell as the concerne! emplo"ee.

;$en though a large group promote! ABC Bank) its in!epen!ent asset base #as limite!) #hich pose!

a problem to finance large organi2ations. The limite! asset base of the bank create! hur!les in the

e6pansion of its business. n $ie# of ha$ing just t#o branches) RB gui!elines !i! not permit ABC to ha$e its

o#n currenc" chest at /agpur) thereb" affecting smooth management of har! cash. The bank ha! an

insurance co$er for a gi$en amount of cash it coul! hol!. hen the cash inflo# increase! o$er the gi$en

limit) keeping a!!itional har! cash #ith the bank increase! risk. Therefore) it became necessar" to transfer it

to the right place. n the cit" of /agpur) ABC ha! onl" t#o branches) though its customer base #as $er"

large an! continuousl" increasing. The changing economic scenario #as e6pan!ing business opportunities for

the Bank. Butibori) a place '0 kms from /agpur) #as e6pecte! to be !eclare! as a Special ;conomic Done)

#hich #oul! attract more in!ustries an! accelerate the relate! business acti$ities in the region.

An increasing number of pri$ate an! foreign banks ha! begun entering /agpur. The promotional

acti$ities of these multinational banks increase! a#areness about pri$ate banking amongst the people in the

region. ABC Bank also planne! to e6pan! its ser$ices in cre!it car!s an! other $alue a!!e! ser$ices. ith

the entr" of foreign an! pri$ate banks in /agpur) the scenario #as becoming more competiti$e an! comple6.

As the ne# pla"ers trie! to grab e6perience! emplo"ees at higher salaries) the emplo"ee turno$er at ABC

Bank increase!. 5ooking at the changing business scenario) the Branch Eea!) /agpur) #as #on!ering about

the strategies an! measures to be taken for sustenance an! gro#th of the bank.

'(STIONS )O# *ISC(SSION

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1. Anal"2e the case) using ST.

Strength

-The ABC Bank was promoted by the tenth largest development bank in the world.

-ABC Bank deployed Finacle the e-age banking sol!tion "rom #n"osys to consolidate its position meet

challenges and $!ickly sei%e new b!siness opport!nities. The entire Finacle rollo!t was remarkable

considering the "act that it was implemented across all branches in a record time"rame o" & months.

-ABC Bank was a pioneer and an innovator in bringing state-o"-the-art services to its c!stomers.

-#t was the "irst #ndian Bank to provide ' AT( )e*t +an in"ormation portal on AT(s, #nstant Acco!nt

pening Talking AT(s /i"tCard +0repaid /i"t Card, asyFill +#nstant (obile e"ill ervice, 'along with other services.

-These complaint redressals "ormed an important component in per"ormance eval!ation o" the branch

as well as the concerned employee.

Weakness

-The bank had a stats-o"-the-art training centre at (!mbai and every employee received on an average

45 ho!rs o" training ann!ally.

- The bank was very partic!lar abo!t red!cing the t!rnaro!nd time in e*tending its services to the

c!stomers. #t also acted as an investment cons!ltant "or their individ!al c!stomers.

Opportunity

The promoter o" ABC Bank so!ght permission to establish a commercial bank and retained

60(/ a management cons!ltant o" international rep!te to prepare the gro!ndwork "or

establishing a commercial bank. The eserve Bank o" #ndia conveyed its approval in principle

to establish ABC Bank on Febr!ary 11 1774.

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8arge investments had been made in back-end technology to strengthen processes systems and

control. This in the long r!n propelled by a top $!ality management team clearly set ABC

Bank apart "rom its competitors.

#t was the "irst private bank to enter and capt!re new markets

A key achievement "or the Bank was that it emerged as the highest distrib!tor "or two top

(!t!al F!nd chemes consistently in the past thereby demonstrating the strength o" the Bank9s

distrib!tion channel o" T0: b!siness.

ABC had always been partic!lar abo!t the speci"ic needs o" the c!stomer and maintaining

consistency in the $!ality o" prod!cts and services provided. Apart "rom o""ering ;tailor-made9 prod!cts the bank maintained a contin!o!s personal

relationship with each o" its e*isting c!stomer based on their b!siness potentials.

B!tibori a place 35 kms "rom )agp!r was e*pected to be declared as a pecial conomic

o" the employee strength was in the?!nior management category +which incl!ded trainees and probationers, while 14> made !pthe middle level management.

#n )agp!r by red!cing the minim!m available balance it tapped other individ!al c!stomer

acco!nts d!ring the co!rse o" its e*pansion.

#n co!rse o" penetrating this segment ABC bank achieved great s!ccess d!e to its deep

!nderstanding o" the needs and e*pectations o" local c!stomers. n the other hand some o" the

competitors who displayed grand s!ccess in the beginning co!ld not s!stain it beca!se o" a

mismatch between e*pectations o" the c!stomers and delivery o" services.

ven tho!gh a large gro!p promoted ABC Bank its independent asset base was limited which

posed a problem to "inance large organi%ations.

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#n the city o" )agp!r ABC had only two branches tho!gh its c!stomer base was very large and

contin!o!sly increasing. The changing economic scenario was e*panding b!siness

opport!nities "or the Bank.

An increasing n!mber o" private and "oreign banks had beg!n entering )agp!r

@ith the entry o" "oreign and private banks in )agp!r the scenario was becoming more

competitive and comple*.

=. Comment on the strategies use! b" the bank for penetrating the /agpur market.

ABC Bank entere! /agpur market in t#o phases. n the first phase) it starte! #ith corporate banking an!

establishe! itself as the best ser$ice pro$i!er. After#ar!s) it le$erage! its strengths b" entering into retail

banking. Although) relati$el" a late entrant in the retail banking sector) it ac(uire! eas" access in the ne#

segment !ue to its bran! image in corporate banking. n retail banking) ABC Bank opte! for selecti$e

penetration base! on t#o main factors 4 $olume of business an! cre!ibilit" of the account. This enable!

them to create greater satisfaction in the customers3 min!. nitiall") it starte! #ith the criteria of an a$erage

(uarterl" cash balance of Rs =)000 focusing on premium segment. 5ater on) to further penetrate the

market) it re!uce! the a$erage (uarterl" cash balance to Rs )000 an! segmente! the market on the basis

of nature of business) $olume an! number of transactions per month. n this phase) b" re!ucing the

minimum a$ailable balance) it tappe! other in!i$i!ual customer accounts !uring the course of its e6pansion.

'. Suggest strategies for sustenance an! gro#th of the bank in $ie# of the changing scenario of the

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Focus on non-balance-sheet-intensive products and services.To avoid r!nning a"o!l o"

to!gher capital and li$!idity re$!irements banks co!ld "oc!s on "ee-generating servicess!ch as asset management which are not a""ected by those r!les.

Expand operations in emerging markets, emphasiing retail products and services!hile establishing beachheads in !holesale markets.Altho!gh emerging market growthand competition will not be as strong in this scenario as in others most pro?ections stillcall "or s!bstantial growth. Banks sho!ld establish a wide range o" prod!cts and services"or an emerging middle class as well as b!sinesses while keeping a close eye on reg!latorychange.

"llocate resources evenly bet!een developed and emerging markets, !holesale and

retail.Altho!gh the scenario envisions a relatively benign economic environment!ne*pected change co!ld er!pt at any time making diversi"ication a wise strategy. # thinkone o" the lessons that people learned thro!gh the crisis is that i" yo! are overly

concentrated in a partic!lar geography or any one partic!lar b!siness line then thatact!ally can have a very adverse impact on yo!. #n retail banking, emphasie !ealth management.8ow interest rates will make loans

less pro"itable making "ee-generating services s!ch as asset management and "inancialadvice more appealing. #n wealth management operations banks p!t little capital at risk.@e have a world where people in many developed co!ntries have increasingly grown !pacc!stomed to "ree banking with a h!ge range o" prod!ct choice. This has made core retailbanking "or the masses operate on increasingly thin margins.

#n !holesale banking, allocate resources e$ually bet!een developed and emerging

markets.Beca!se o" the benign conditions in this scenario economies in developedco!ntries will recover driving demand "or wholesale services. #n emerging markets

growth will have the same e""ect. #nvest heavily in in%ormation technology.ven in this relatively nonthreatening

scenario pro"it margins will be tight. Banks will need to know their c!stomers better andoperate "ront and back o""ices at peak e""iciency. #n"ormation sho!ld be gathered andanaly%ed on a worldwide basis.

&onsider rebuilding some lines o% business that shrank during the %inancial crisis. #n

this scenario it may be possible to revive the once highly pro"itable sec!riti%ationb!siness. Beca!se conditions will be better than in the other scenarios banks sho!ld beable to raise capital to "!el growth.

'ecome best in class in as many categories as possible. Strive to be !idely diversi%ied

among products and services and in domestic and emerging markets. #n a B!siness as

Ds!al environment with tight margins it will be important to be at or near the top o" allaspects o" the market as pro"it opport!nities may shi"t $!ickly and !npredictably "rom oneset o" prod!cts and services to another and "rom one part o" the world to another.

(ro! deposit-based operations, and maintain a !ide array o% retail products and

services.#n a relatively $!iet environment it can be less e*pensive to rely on deposits

than on contin!ally accessing capital markets. Attracting retail c!stomers by o""ering basic

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services will create cross-selling opport!nities like lending and wealth management.

Section II

Ans+er Any si, :

1. ;6plain bu"ers cre!it an! suppliers cre!it b" gi$ing e6amples of each t"pe of cre!it. Also e6plain #ith

a case stu!".

B!yers credit is the credit availed by an importer +b!yer, "rom overseas lenders i.e. banks and"inancial instit!tions "or payment o" his imports on d!e date. The overseas banks !s!ally lend theimporter +b!yer, based on the letter o" com"ort+a bank g!arantee, iss!ed by the importers bank.#mporters bank or B!yers Credit Cons!ltant or importer arranges b!yers credit "rom internationalbranches o" a domestic bank or international banks in "oreign co!ntries. For this service importersbank or b!yers credit cons!ltant charges a "ee called an arrangement "ee.

B!yers credit helps local importers gain access to cheaper "oreign "!nds close to 8#B rates asagainst local so!rces o" "!nding which are costly compared to 8#B rates.

The d!ration o" b!yers credit may vary "rom co!ntry to co!ntry as per the local reg!lations. For

e*ample in #ndia b!yers credit can be availed "or one year in case the import is "or trade-able goodsand "or three years i" the import is "or capital goods. very si* months the interest on b!yers creditmay get reset.

!ppliers Credit is A "inancing arrangement !nder which an e*porter e*tends credit to a "oreign

importer to "inance his p!rchase. Ds!ally the importer pays a portion o" the contract val!e in cash and

iss!es a 0romissory note or accepts a dra"t as evidence o" his obligation to pay the balance over a

period o" time. The e*porter th!s accepts a de"erred payment "rom the importer and may be able to

obtain cash payment by disco!nting or selling the dra"t or promissory notes created with his bank.

ne e*ample o" s!pplier credit can be "o!nd with the e*porting o" goods "or sale in another co!ntry.

@ith this model the entity selling the goods e*tends credit to the entity that is p!rchasing the goods

with the plan o" o""ering them "or sale at a pro"it. The s!pplier may iss!e a line o" credit to the

importer ass!ming that the client can demonstrate to the s!pplier that the importer is credit worthy.

=
http://en.wikipedia.org/wiki/Letter_of_comforthttp://en.wikipedia.org/wiki/London_Interbank_Offered_Ratehttp://en.wikipedia.org/wiki/Letter_of_comforthttp://en.wikipedia.org/wiki/London_Interbank_Offered_Rate


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&ase Study

This was what an Asian B!yer "rom an #rish *porting company stated when he convinced the*porter to sell to them on open acco!nt terms. The Asian B!yer obtained 5 days credit which was to

be calc!lated "rom the date o" the invoice. The val!e o" the order was D: 155 555 and the goodswere despatched and invoiced by the #rish *porter on the 1&th April 255.

The payment "rom Asia was d!e on the 14th G!ne 255. The payment event!ally arrived on the 21stA!g!st 255 over two months late. The delay in payment cost the *porter D: 1E55 as it res!lted inhis acco!nt being overdrawn by this amo!nt "or = days at 7> per ann!m.

o are 8etters o" Credit too *pensive HHH

The #rish *porter co!ld have insisted on receiving a con"irmed 8etter o" Credit +see glossary, thro!gh

Allied #rish Banks plc.

The "ollowing costs wo!ld have applied at that timeI

Con"irmation Fee D: J2&5Acceptance Commission +K 1.&> pa "or 5 days, D: J2&5)egotiation L 0ayment Fee D: J1&5!t o" 0ocket *penses +estimate, D: J5

Total 8etter o" Credit Cost D: JE15#nterest Cost as a res!lt o" late payment D: +J1E55,

'ene%it o% using )etter o% &redit *S+

The 8etter o" Credit looks e*pensive beca!se the costs are very visible and are linked to eachtransaction. The bene"its on the other hand are intangible.

@hat bene"it wo!ld the con"irmed 8etter o" Credit have provided to the *porterH

A /!arantee o" payment on the d!e date "rom Allied #rish Banks. +0rovided the terms and conditionso" the 8etter o" Credit were complied with,.

)o risk o" non-payment as a res!lt o" problems with the b!yer or the Asian economy.

A de"initive date "or the receipt o" "!nds partic!larly important "or devising proper c!rrency hedgingstrategies.

The opport!nity to receive the payment in advance o" the d!e date thro!gh non-reco!rse disco!nting o"the receivable.

Concl!sion

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0lease note that this case has not acco!nted "or the costs the #rish *porter inc!rred in chasing the debtwith the Asian b!yer. #n addition i" the *porter had sold his "oreign c!rrency receivable on a "orwardbasis to his bank "or the original d!e date they may have inc!rred a "!rther cost in cancelling orrearranging the "orward contract.

8etters o" Credit altho!gh appearing e*pensive do provide real and tangible bene"its to companies. #nthis case the #rish e*porter only lost DJ 1E55. " co!rse i" the Asian b!yer had not paid at all theywo!ld have lost the whole DJ 155555.

=. hat is correspon!ent bankingF ;6plain briefl" the ser$ices offere! b" correspon!ent bankingF

;6plain briefl" the ser$ices offere! b" correspon!ent banks to the banks ha$ing account relationship

#ith themF ,i$e some e6amplesF

A "inancial instit!tion that provides services on behal" o" another e$!al or !ne$!al "inancial instit!tion. A correspondent

bank can cond!ct b!siness transactions accept deposits and gather doc!ments on behal" o" the other "inancial instit!tion.

Correspondent banks are more likely to be !sed to cond!ct b!siness in "oreign co!ntries and act as a domestic banks agent

abroad.

Wide range of services can be settled through a correspondent banking relationship, including:

payments, including telegraphic or electronic transfers and drafts

foreign exchange, including wholesale note clearances

payable through and nested accounts

cash letters and collections

managed investments and mortgage schemes

custodian account arrangements

trade finance transactions

syndicated loans.

Service offered to other banks

o Collection o" bills both :oc!mentary and Clean.

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AdvisingLcon"irming o" 8LCs opened by banks

:isco!nting o" Bills drawn !nder 8LCs

(aintenance o" "oreign c!rrency acco!nts

(aintenance o" !pee acco!nts in #ndia

(aking "oreign c!rrency paymentsLremittance on behal" o" c!stomers o" banks.

'. ;6plain in brief) the role of Reser$e bank of n!ia in n!ian ;6change control. ;6plain the role of

;GM bank in promotion e6ports) an! !escribe briefl" facilities gi$en b" ;GM bankF ,i$e e6amples.

The eserve Bank o" #ndia is the controller o" e*chage i.e. it has the power to in"l!ence the vol!me o"

credit created by banks in #ndia. #t can do so thro!gh changing the Bank rate or thro!gh open market

operations. According to the Banking eg!lation Act o" 1747 the eserve Bank o" #ndia can ask any

partic!lar bank or the whole banking system not to lend to partic!lar gro!ps or persons on the basis o"

certain types o" sec!rities. ince 17& selective controls o" credit are increasingly being !sed by the

eserve Bank.

The eserve Bank o" #ndia is armed with many more powers to control the #ndian money market.

very bank has to get a licence "rom the eserve Bank o" #ndia to do banking b!siness within #ndia

the licence can be cancelled by the eserve Bank o" certain stip!lated conditions are not "!l"illed.

very bank will have to get the permission o" the eserve Bank be"ore it can open a new branch. ach

sched!led bank m!st send a weekly ret!rn to the eserve Bank showing in detail its assets and

liabilities. This power o" the Bank to call "or in"ormation is also intended to give it e""ective control o"

the credit system. The eserve Bank has also the power to inspect the acco!nts o" any commercialbank.

As s!pereme banking a!thority in the co!ntry the eserve Bank o" #ndia there"ore has the "ollowing

powersI

+a, #t holds the cash reserves o" all the sched!led banks.

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+b, #t controls the credit operations o" banks thro!gh $!antitative and $!alitative controls.

+c, #t controls the banking system thro!gh the system o" licensing inspection and calling "orin"ormation.

+d, #t acts as the lender o" the last resort by providing redisco!nt "acilities to sched!led banks.

Export-#mport 'ank o% #ndiais the premier e*port"inance instit!tion o" the co!ntry established in

17=2 !nder the *port-#mport Bank o" #ndia Act 17=1.

/overnment o" #ndia la!nched the instit!tion with a mandate not ?!st to enhance e*ports "rom #ndia

b!t to integrate the co!ntry9s "oreign trade andinvestmentwith the overalleconomic growth. ince its

inception *im Bank o" #ndia has been both a catalyst and a key player in the promotion o" cross

border trade and investment. Commencing operations as a p!rveyor o" e*port credit like other *port

Credit Agenciesin the world *im Bank o" #ndia has over the period evolved into an instit!tion that

plays a ma?or role in partnering #ndian ind!stries partic!larly the mall and (edi!m nterprises in

theirglobalisatione""orts thro!gh a wide range o" prod!cts and services o""ered at all stages o" the

b!siness cycle starting "rom import o" technology and e*portprod!ct developmentto e*port

prod!ctione*port marketing pre-shipment and post-shipment and overseas investment.

*im Bank is managed by a Board o" :irectors which has representatives "rom the /overnmenteserve Bank o" #ndia*port Credit /!arantee Corporation o" #ndia a "inancial instit!tionp!blicsectorbanks and the b!siness comm!nity.

The Banks "!nctions are segmented into several operating gro!ps incl!dingI

Corporate Banking /ro!p which handles a variety o" "inancing programmes "or *port

riented Dnits+Ds, #mporters and overseas investment by #ndian companies.

0ro?ect Finance L Trade Finance /ro!p handles the entire range o" e*port credit services s!ch as

s!ppliers credit pre-shipment Agri B!siness /ro!p to spearhead the initiative to promote ands!pport Agri-e*ports. The /ro!p handles pro?ects and e*port transactions in the agric!lt!ralsector "or "inancing.

mall and (edi!m nterpriseI The gro!p handles credit proposals "rom (s !nder vario!s

lending programmes o" the Bank.

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http://en.wikipedia.org/wiki/Exporthttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Export_credit_agencyhttp://en.wikipedia.org/wiki/Export_credit_agencyhttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Product_developmenthttp://en.wikipedia.org/wiki/Export_marketinghttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Export_Credit_Guarantee_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Export-orientedhttp://en.wikipedia.org/wiki/Export-orientedhttp://en.wikipedia.org/wiki/Importerhttp://en.wikipedia.org/wiki/Agricultural_sectorhttp://en.wikipedia.org/wiki/Agricultural_sectorhttp://en.wikipedia.org/wiki/Exporthttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Export_credit_agencyhttp://en.wikipedia.org/wiki/Export_credit_agencyhttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Product_developmenthttp://en.wikipedia.org/wiki/Export_marketinghttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Export_Credit_Guarantee_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Export-orientedhttp://en.wikipedia.org/wiki/Export-orientedhttp://en.wikipedia.org/wiki/Importerhttp://en.wikipedia.org/wiki/Agricultural_sectorhttp://en.wikipedia.org/wiki/Agricultural_sector


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*port ervices /ro!p o""ers variety o" advisory and val!e-added in"ormation services aimed

at investment promotion.

*port (arketing ervices Bank o""ers assistance to #ndian companies to enable them

establish theirprod!ctsin overseas markets. The idea behind this service is to promote #ndian

e*port. *port (arketing ervices covers wide range o" e*port oriented companies andorgani%ations. ( gro!p also covers 0ro?ect e*ports and *port o" ervices.

Besides these the !pport ervices gro!ps which incl!deI esearch M 0lanning Treas!ry and

Acco!nts 8oan Administration #nternal A!dit (anagement #n"ormation ervices #n"ormationTechnology 8egal N!man eso!rces (anagement and Corporate Comm!nications.

. The organi2ational career is a responsibilit" of the organi2ation an! the in!i$i!ual.


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marketplace where competition is not limited to technology prod!cts and market share b!t has

penetrated into the domain o" h!man capital as well.

. ;6plain the general architecture of an integrate! banking s"stem. Eo# is it usefulF ;6plain #ith

e6amples.

To achieve tighter integration many banks are implementing component-based architect!re. @hilecomponent-based architect!re leverages a banks core system integrated components are wrappedaro!nd the core. The most pop!lar component-based architect!re and the hottest b!%%word in theind!stry is A or service-oriented architect!re. The strategy is a services layer or inter"ace thatenables companies to leverage data and transaction capabilities o" e*isting systems across anenterprise thro!gh re!sable services. As companies wrap A inter"aces aro!nd legacy systems

they o"ten !se @eb-based "ront ends to access data on e*isting back ends helping to moderni%elegacy systems and a!tomate man!al processes. OBanks have a need and desire to get all contentwithin core systems and deliver in"ormation across the distrib!tion channels they have. pen @eb-based A inter"aces are speeding !p implementation times and lowering the barrier to entry "ordeveloping rob!st well-layered applications Ores!lting in the promise o" greater cross-systeminteroperability than was generally seen in the pastO .

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Nowever e*perts warn that A may not be a silver b!llet. O@hile the promise o" A is very realsome companies tend to get carried away and try to apply it across systems -- even in areas itdoesnt need to beO As the ind!stry eval!ates its options the key is to adopt sol!tions that providemore "le*ibility while !pholding sec!rity and data integrity. B!t regardless o" the con"ig!ration themessage is clearI Banks will need to trade in aging in"le*ible systems in order to meet c!stomer

e*pectations and "ederal reg!lations in a global marketplace. OOThe core banking systems thats!ccess"!lly adapt to these changes will likely s!rvive as the core banking plat"orms o" the ne*tseveral decades.O

(se

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?. hat !o "ou un!erstan! b" MCRF Eo# !oes it help in clearing of instructionsF ;6plain the fiel!

structure of MCR che(ue.

(agnetic ink character recognition or (#C is a character recognition technology !sed primarily by

the banking ind!stry to "acilitate the processing and clearance o" che$!es and other doc!ments. The(#C encoding called the (#C line is located at the bottom o" a che$!e or other vo!cher andtypically incl!des the doc!ment type indicatorbank codebank acco!nt n!mber che$!e n!mber andthe amo!nt pl!s some control indicator. The technology allows (#C readers to scan and read thein"ormation directly into a data collection device. Dnlike barcodesor similar technologies (#Ccharacters can be easily read by h!mans. The (#C -13B "ont has been adopted as the internationalstandard in#1554I177& b!t the C(C-E "ont is widely !sed in !rope.

(#C characters are printed on a doc!ment in either o" the (#C "onts. The ink !sed in the printing isa magnetic ink or toner !s!ally containing iron o*ide. The (#C te*t is passed be"ore a (#C reader.

The ink in the plane o" the paper is "irst magneti%ed. Then the characters are passed over a (#C readhead a device similar to the playback head o" a tape recorder. As each character passes over the head itprod!ces a !ni$!e wave"ormthat can be easily identi"ied by the system.

The !se o" (#C allows the characters to be read reliably even i" they have been overprinted orobsc!red by other marks s!ch as cancellation stamps and signat!re. The error rate "or the magneticscanning o" a typical che$!e is smaller than with optical character recognitionsystems. For wellprinted (#C doc!ments the Ocant readO rate is !s!ally less than 1> while the s!bstit!tion rate+misread rate, is in the order o" 1 per 155555 characters.

(#C Code 8ine tr!ct!re

The code line occ!rring in the ead Band is divided into "ive "ields with distinct delimiters separatingeach "ield the details o" which are as !nderI

i. Che$!e serial n!mber o"six numeric digitspreceded and "ollowed by a delimiter. The alpha-n!meric pre"i* to the serial n!mber normally !sed by banks sho!ld be printed o!tside the code line inclose pro*imity ?!st above the read band in normal ink.

LLLLLLLLLLLLLLLLLLL LLLLLLLLLLLLLLLLLLLL

As on date the che$!e serial n!mbers sho!ld be si* n!meric digits only.

i.e "rom 555551 to 777777

o "ar there has been no need to increase the "ield "rom si* n!meric digits to seven n!meric digits.

#t is observed that rgani%ations tend to open new acco!nts depending on the acco!nting systems attheir end.

Nence a #P :#/#T 8#(#T is "ine.

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#t is be noted that "or #nternet Banking transactions as well as b!lk !ploads che$!e n!mber is notmandatory.

Nence a banking acco!nt can be debited by way o" che$!e or witho!t a che$!e also.

Nowever many banks as a sec!rity meas!re insist on a che$!e lea" "or branch level transactions.

&. ;6plain ho# a !igital signature is generate!F ;6plain its use #ith e6amples.

A digital signat!re relies on hashing and p!blic key cryptography. @hen yo! sign data yo! hash thedata and encrypt the res!lts with yo!r private key. The encrypted hash val!e is called a digital

signat!re.

#" yo! change the original data a di""erent digital signat!re will be generated.

To !se a 06A key to sign a "ile write a program or change this program *ampleI igning a "ile withyo!r Cryptographic Coprocessor.

Qeri"ying a digital signat!re

Qeri"ying a digital signat!re is the opposite o" signing data. Qeri"ying a signat!re will tell yo! i" thesigned data has changed or not. @hen a digital signat!re is veri"ied the signat!re is decrypted !sing

the p!blic key to prod!ce the original hash val!e. The data that was signed is hashed. #" the two hashval!es match then the signat!re has been veri"ied. To do this write a program or change this *ampleIQeri"ying a digital signat!re with yo!r Cryptographic Coprocessor.

10. Eo# can n!ian banks use legal recognition of !igital signature for !e$elopment of business.

#t is against this backgro!nd the /overnment o" #ndia enacted its #n"ormation Technology Act 2555with the ob?ectives as "ollows stated in the pre"ace to the Act itsel".

to provide legal recognition "or transactions carried o!t by means o" electronic data interchange andother means o" electronic comm!nication commonly re"erred to as Oelectronic commerceO whichinvolve the !se o" alternatives to paper-based methods o" comm!nication and storage o" in"ormationto "acilitate electronic "iling o" doc!ments with the /overnment agencies and "!rther to amend the#ndian 0enal Code the #ndian vidence Act 1=E2 the Bankers Books vidence Act 1=71 and theeserve Bank o" #ndia Act 1734 and "or matters connected therewith or incidental thereto.

1E
http://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcsignfiletxt.htm#signfiletxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcsignfiletxt.htm#signfiletxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcverfilesigtxt.htm#verfilesigtxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcverfilesigtxt.htm#verfilesigtxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcsignfiletxt.htm#signfiletxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcsignfiletxt.htm#signfiletxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcverfilesigtxt.htm#verfilesigtxthttp://publib.boulder.ibm.com/infocenter/iseries/v5r3/topic/rzajc/rzajcverfilesigtxt.htm#verfilesigtxt


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The #n"ormation Technology Act 2555 was th!s passed as the Act )o.21 o" 2555 got 0resident assenton 7 G!ne and was made e""ective "rom 1E ctober 2555.

The Act essentially deals with the "ollowing iss!esIR 8egal ecognition o" lectronic :oc!ments

R 8egal ecognition o" :igital ignat!resR ""enses and ContraventionsR G!stice :ispensation ystems "or cyber crimes.

Amendment Act 255=I Being the "irst legislation in the nation on technology comp!ters andecommerce and e-comm!nication the Act was the s!b?ect o" e*tensive debates elaborate reviews anddetailed criticisms with one arm o" the ind!stry critici%ing some sections o" the Act to be draconianand other stating it is too dil!ted and lenient. There were some conspic!o!s omissions too res!lting inthe investigators relying more and more on the time-tested +one and hal" cent!ry-old, #ndian 0enalCode even in technology based cases with the #.T. Act also being re"erred in the process and thereliance more on #0C rather on the #TA.

11. hat is market segmentationF h" is it important to a!$ertisersF Eo# is it useful for banking.

(arket segmentation is amarketing strategy that involves dividing a broadtarget marketinto s!bsetso"cons!merswho have common needs and then designing and implementing strategies to target theirneeds and desires !sing media channels and other to!ch-points that best allow to reach them.

(arket segments allow companies to createprod!ct di""erentiationstrategies to target them.

#n the present marketing system market segmentation is a normal r!le and not an e*ception. #t enablescompanies to e*ploit marketing opport!nities "!lly by !sing the available reso!rces and also enables

them to "ace market competition with con"idence. #t enhances marketing e""iciency o" the "irm in each

segment selected. )o segmentation means absence o" market penetration. #n short market

segmentation is an important aspect o" modem marketing management. #t is a m!st "or s!rvival and

growth in the present competitive marketing. #t "acilitates the preparation o" separate marketing

programmes "or meeting the needs o" di""erent gro!ps o" b!yers. ight markets "or the right prod!cts

can be provided thro!gh market segmentation.

#n brie" market segmentation is important not only "or creating cons!mers b!t also "or satis"ying them.

(arket segmentation helps matching o" market opport!nities to the reso!rces o" the corporations andenables them to "ace market competition e""ectively. #t raises marketing e""iciency thro!gh proper

ad?!stment o" marketing mi* "or each market segment. (arket segmentation is one important element

o" modem marketing management. egmentation gives precise answer to the $!estion OTo whom

sho!ld we sell o!t prod!cts and what sho!ld we sell to themHO

(arket segmentation is a common marketing practice that means breaking down a larger target marketinto smaller more manageable market segments to improve marketing e""iciency sales and service.everal common segmentation strategies e*ist. @hile small banks o"ten service local geographic areas

1=
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and demographics segmentation is o"ten sensible banks can o"ten best de"ine market segments basedon prod!ct bene"its when they o""er m!ltiple types o" prod!cts.

Standard 'anking

ne o" the largest common bene"it segments o""ered by a bank is "or its standard checking and savingsbanking prod!cts. (any banks promote these basic prod!cts on their website home pages. Nistoricallystandard checking and standard savings acco!nts were sold separately. Nowever many banks haveattempted to bolster relationships with their standard banking c!stomers by developing packageswhereby c!stomers get added val!e by combining a checking and savings acco!nt and o"ten betterinterest rates with a!tomatic checking-to-savings trans"ers. Banks o"ten target cons!mers in thissegment thro!gh traditional media like radio television newspapers and maga%ines.

/igh-end Savings

Nigh-end savings is typically a step !p "rom the standard checking and savings c!stomer. Nigh-end

savings prod!cts may incl!de higher dollar val!e money market and savings acco!nts certi"icates o"deposits and other long-term savings prod!cts intended to derive great monetary val!e "rom c!stomers.These prod!cts are sometimes marketed thro!gh traditional means b!t they are also o"ten marketed toe*isting standard c!stomers who may have interest in moving !p in savings val!e at some point.

)oans

For many banks loans are a h!ge segment o" banking operations. Nome loans and a!to loans make !pa signi"icant portion o" bank lending b!t e$!ity loans st!dent loans and personal loans are alsocommon. 8oan prod!cts are typically advertised separately "rom the banks other prod!cts. Banks maypromote home loans thro!gh local real estate p!blications or reso!rces. A!to loan o""ers make sense in

car-related media. Banks also cross promote by marketing loan prod!cts to e*isting banking c!stomersand even o""ering better rates with b!ndled prod!cts.

#nvestment

A "ast-growing segment in traditional banks is in the investment prod!ct sector. Traditionallyindivid!al investors have had to set !p separate investment acco!nts with niche investment banks. @iththe evol!tion o" the #nternet in the early 21st cent!ry and many more people managing their own stockbond and other investments traditional banks have e*panded signi"icantly into this sector. Againbanks can market investment sol!tions to e*isting c!stomers with b!ndled bene"its. They can alsoadvertise thro!gh local media b!t they may deliver more targeted messages thro!gh investment-

related p!blications.

&ommercial 0roducts

Banks segment c!stomers into two general categories be"ore breaking down those markets into prod!ctbene"itsI cons!mers and b!sinesses. ome companies "oc!s entirely on cons!mer prod!cts others doonly commercial banking. Nowever many traditional banks market to both types and o""er prod!cts insimilar areas "or b!sinesses beca!se o" their normally larger si%e and scope regarding moneymanagement.

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Documents

Banking Mgmt.banking on Relationship (1)