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A Report

On

ACCOUNTS AND SERVICES

OF DENA BANK

Submitted as Partial Fulfillment of the Requirement

For

Masters of Commerce

By

XXXXXXXX

Under the guidance of

Ms. XXXXXXXXX

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CERTIFICATE

This is to certify that Mr. has successfully completed the project on

Accounts & Services of Dena Bank

We appreciate the creativity, ingenuity and dedication depicted by him during the

entire project tenure. The successful completion under governing time restrains

and communication during various project phases deserve praise too.

The project was undertaken for partial course completion activity of their institute

Ms. XXXXXXXX

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DECLARATION

I hereby declare that the Project titled Account & Services of Dena Bank is an

original work carried out by me, at Dena Bank, Ambala as partial fulfillment for

the requirement of M.Com- I Further, this project has not been previously

submitted for award of any diploma or degree.

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ACKNOWLEDGEMENT

Words often fail to express ones inner feelings of gratitude and indebtedness to

ones benefactors, but then it is the only readily available medium through which

the undersigned can express his sincere thanks to all those who are associated

with the work in one way or the other

A project can never exist and thrive in solitude. Project work is never the work of

a single individual alone. It is more a combination of views, suggestions,

contributions and work involving many individuals. This project also bears the

impact of many people. Thus one of the most pleasant part of writing this report

is the opportunity to thank all those who have contributed to it.

First and foremost, I would like to thank our guide and mentor Mr. Varun

Gautam, for being the guiding and encouraging figure all through the duration of

this project. Without his cheering and invaluable insights into this project, the

project work would not have been accomplished. Discussions on subject matter,constant feedback on the effort and needed references have enriched us and made

the project work a pleasing experience.

I would also like to thank my family and friends who provided helping hand and

instilled confidence in me to complete the project timely.

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XXXXXXX

PREFACE

A healthy banking system is essential for any economy striving to achieve good

growth and yet remain stable in an increasingly global business environment.

The Indian banking system has witnessed a series of reforms in the past, like

deregulation of interest rates, dilution of government stake in PSBs, and

increased participation of private sector banks. It has also undergone rapid

changes, reflecting a number of underlying developments. This trend has

created new competitive threats as well as new opportunities.

The Indian banking industry is passing through an exciting growth phase. The

surge in the real economy, which has grown at over 8% in the past three fiscals,

has provided significant growth opportunities for the sector. The rising personal

incomes of the population have provided banks numerous opportunities for

product development and distribution innovations. Additionally, expansion of

international integration to enable Indian banks to explore global markets and

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deregulation that has induced banks to explore new business opportunities have

led to the increase in the scope and significance of the Indian banking industry.

India has a robust banking structure characterized by three major bank groups,

viz., Public Sector Banks, Private Sector Banks and Foreign Banks, and a large

network of branches. Further, prudent policies of regulation and supervision,

global standards in banking practice, pursuit of efficiency in business and

operations, coupled with a wide range of reforms in processes and procedures

have enhanced the potential for sustained growth of Indian banking. The inherent

robustness of the sector was witnessed when it posted a strong turnaround after

1993, to emerge as one of the most successful banking industries in the world.

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THE INDIAN BANKING INDUSTRY

The Indian Banking industry, which is governed by the Banking Regulation Act

of India, 1949 can be broadly classified into two major categories, non-scheduled

banks and scheduled banks. Scheduled banks comprise commercial banks and the

co-operative banks. In terms of ownership, commercial banks can be further

grouped into nationalized banks, the State Bank of India and its group banks,

regional rural banks and private sector banks (the old/ new domestic and foreign).

These banks have over 67,000 branches spread across the country.

The first phase of financial reforms resulted in the nationalization of 14 major

banks in 1969 and resulted in a shift from Class banking to Mass banking. This in

turn resulted in a significant growth in the geographical coverage of banks. Every

bank had to earmark a minimum percentage of their loan portfolio to sectors

identified as priority sectors. The manufacturing sector also grew during the

1970s in protected environs and the banking sector was a critical source. The next

wave of reforms saw the nationalization of 6 more commercial banks in 1980.

Since then the number of scheduled commercial banks increased four-fold and

the number of bank branches increased eight-fold.

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After the second phase of financial sector reforms and liberalization of the sector

in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult

to compete with the new private sector banks and the foreign banks. The new

private sector banks first made their appearance after the guidelines permitting

them were issued in January 1993. Eight new private sector banks are presently

in operation. These banks due to their late start have access to state-of-the-art

technology, which in turn helps them to save on manpower costs and provide

better services.

During the year 2000, the State Bank Of India (SBI) and its 7 associates

accounted for a 25 percent share in deposits and 28.1 percent share in credit. The

20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent

of credit during the same period. The share of foreign banks (numbering 42),

regional rural banks and other scheduled commercial banks accounted for 5.7

percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent,

3.14 percent and 12.85 percent respectively in credit during the year 2000.

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COMPANY PROFILE

Dena Bank was founded on 26th May, 1938 by the family of Devkaran

Nanjee under the name Devkaran Nanjee Banking Company Ltd.

It became a Public Ltd. Company in December 1939 and later the name was

changed to Dena Bank Ltd.

In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized

and is now a Public Sector Bank constituted under the Banking Companies

(Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of

the Banking Regulations Act 1949, in addition to the business of banking, the

Bank can undertake other business as specified in Section 6 of the Banking

Regulations Act, 1949.

Milestones

One among six Public Sector Banks selected by the World Bank for

sanctioning a loan of Rs.72.3 crores for augmentation of Tier-II Capital

under Financial Sector Developmental project in the year 1995.

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One among the few Banks to receive the World Bank loan for

technological upgradation and training.

Launched a Bond Issue of Rs.92.13 crores in November 1996.

Maiden Public Issue of Rs.180 Crores in November 1996.

Introduced Tele banking facility of selected metropolitan centers.

Dena Bank has been the first bank to introduce:

Minor Savings Scheme.

Credit card in rural India known as "DENA KRISHI SAKH PATRA"

(DKSP).

Drive-in ATM counter of Juhu, Mumbai.

Smart card at selected branches in Mumbai.

Customer rating system for rating the Bank Services.

Mission

DENA BANK will provide its

Customers - premier financial services of great value,

Staff- positive work environment and opportunity for

growth and achievement,

Shareholders - superior financial returns,

Community - economic growth

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Vision

DENA BANK will emerge as the

most preferred Bank of customer choice

In its area of operations, by its

reputation and performance

SERVICES

Core Banking Solution

Dena Bank has entered the Core Banking Era on 12th March 2007 with the

launch of core banking system at its Mahim Branch in Mumbai at the hands of

Shri V. Leeladhar, Deputy Governor, Reserve Bank of India with its Data Centre

at its own premises at Jogheshwari West, Mumbai. The Bank's Disaster Recovery

Site at Bengaluru (Bangalore) is also operational to ensure business continuity.

The Bank plans to put around 92% of its business under core banking in the next

15 quarters. In all, 850 branches out of the 1122 branches including extension

counters of the Bank are slated for coverage. All new branches of the Bank will

henceforth be opened straightaway with core banking solution.

The Bank has adopted a fully outsourced model for Core Banking operations that

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has been executed by M/S Wipro Ltd, with Finacle software support from M/S

Infosys Technologies Ltd. The entire project had been preceded by business

process reengineering. The Core Banking system comes with a host of customer

friendly services like Internet Banking, Phone Banking, Mobile Banking and

Cash Management Services besides software system for integrated Treasury

operations. A number of third party software solutions are being integrated with

Core Banking mainly with a view to address Regulatory concerns. Among others,

the Bank will be implementing, in a phased manner, solutions for Asset Liability

Management from M/s. Oracle, Anti Money Laundering solution from M/s 3i

Infotech, Integrated Treasury solution from Credence, Cash Management solution

from Cashtech, Credit Appraisal System from Sysarc and Integrated Risk

Management from SAS will ensure Basel II compliance. The Bank has

undertaken data cleaning exercise before migrating to CBS platform. Similarly,

bank will have uniform look & feel of all the branches coming under CBS. Core

banking implementation is the first but an important step the Bank has taken

towards fulfillment of its Vision statement "Dena Bank will provide its

Customers, premier financial services of great value".

The Core banking project of the bank has been guided by its Technology Advisor

Prof. N.L.Sarda of IIT, Mumbai and the consultants to the Bank, M/S Ernst &

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Young Pvt Ltd. The Bank has already trained over 60 IT Professionals to man the

project and over 170 officials for branch level operations. The Bank has also

initiated strategic exercises for developing new business models under Core

Banking Environment.

Multi-City Cheque Facility

Dena Bank is at the forefront of Indias like premier banking institutions that are

rapidly adapting to the changing technology environment. Technologically,

Bank has been making great strides with its various IT enabled services. The

Bank has always been the first to absorb the latest banking innovations while

retaining its traditional, in an endeavor to blend time tested values-of-the-art

technology, creating a banking culture that is Value Based and innovative. All

the IT initiatives are aimed at providing customers the convenience of 24x7

Banking.

Multi City Cheque

This is a special series cheque issued to the customer by the bank.

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The Facility

The customer will get the AT PAR cheque books wherein cheques can be

drawn at par on any of the ABB branch.

These special series cheques issued by the customer to their clients will

be payable at par like local cheques in the Any Branch Banking (ABB)

centers of the Bank

Who Can Join This Facility

All Account holders of the Bank can avail this facility provided the conduct is

satisfactory and the Account has been maintained for more than 6 months with

minimum balance as per normal requirement of the branch.

Cost Of Facility

A) (i) Upto Rs 5000 /- @ Rs 15 per cheque

(ii) Rs 5001/-to Rs 10000/- @Rs 25 per cheque

(iii) Rs 10001/-to Rs 1.00 lac ( Rs 2.50 per thousand or part thereof )

(Minimum Rs 25/-)

(iv) Above Rs 1.00 lac ( Rs 2/- per thousand or part thereof

(Minimum Rs 250/- and maximum Rs 5000/-)

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B) Rs 2.50 per cheque leaf at the time of issue of MCC Cheque book .

C)MCC facility is free for Premium customersmaintaining quarterly average

balance

SB A/Cs -Rs 25000 /-

Current Accounts- Rs 1.00 lac

Benefits

Payments can be made directly without taking a demand draft or telegraphic

transfer. Payee of the cheque gets payment locally as a clearing cheque.

Dena Connect

It is Bank's information based service Dena Connect(Internet Banking) in an

effort to further facilitate our valued customers. Dena Connect(Internet banking)

is a new service from Dena Bank, which enables you to make inquiries about

your account through a personal computer by using the Internet facility with total

confidentiality and security.

1. Dena Connect(Internet Banking)

Dena Connect(Internet Banking) offers an easy, hassle free means to access

banking information by a few keystrokes on your keyboard. It means that one

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need not go to your bank to get the information about account. All he need is a

PC internet connection, login id & password obtained from the branch.

2. Benefits

Dena Connect(Internet Banking) is basically about convenience, with it,

One can know about status of various accounts held.

One can know the status of the cheque issued.

3. facility available to

Dena Connect(Internet Banking) is available to all Dena Bank account holders of

SELECTED BRANCHES who have registered for this service.

4. Dena Connect (Internet Banking) services

Balance enquiry

Mini Statement (last 10 transactions)

Cheque status query

5. Charges

This service is offered free of cost.

Any Branch Banking

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ANY BRANCH BANKING is a comprehensive network based software

product linking various branches of our Bank so that customers of the Bank can

access their accounts from any other branch of the Bank . All the customers can

avail this facility provided the scanned signature of the customer is available in

branch server .

Facilities under ABB:

Financial

1. Cash Withdrawal

2. Cash Deposit

3. Fund transfer

4. Cash Management Services through collection of Cheques.

5. Debit Clearing ( At par payment of Cheque i.e. Multi City Cheque )

Non Financial

1. Statement of account

2. Details of last 5 transaction

3. Balance enquiry

Transaction Limits

1) Cash withdrawal and Cash Deposit

Rs 25000/- for cash withdrawal and cash deposit transaction per customer per

day.

2) Fund Transfer

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Threshold limit of Rs 2 lakh per day transaction has been fixed for the purpose

of funds transfer through ABB.In case customer desires to transfer more than

the above limit ,he may be permitted based on prior approval from respective

Regional Managers and if customers wants to transfer funds of Rs 25 lakhs and

more,then respective Regional Manager should obtain clearance from

HO.Funds Dept.

Charges

1. Fund Transfer

Charges for customer are at par with prevailing TT charges.

2. Cash Management Services

The charges are @Rs 3/- over and above OBC.Charges per Rs 1000/-

Facility provided

Bank is offering this facility through more than 125 of its designated ABB

branches spread all across the country.

Dena ATM Services

Dena Bank always stands in forefront in understanding it customers need.

Dena Bank Debit cum ATM Card offers an easy and convenient way to do all

transactions and that too within a fraction of seconds.

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Presently they have more than 270 ATMs all across India.

Dena Debit cum ATM Card is like Bank Account in your pocket.

Dena Debit Card gives the freedom to access your savings or current account at

any VISA accredited POS Terminals (Merchant Establishment), ATM, Cash tree

group, Cashnet group , Corporation Bank and SBI & its associates.

Features:-

One can link multiple accounts at different branches of Dena Bank to a single

Debit cum ATM Card. The Account number of Debit cum ATM Card issuing

branches will be the Primary account number and account at other Cards issuing

branches link to the same card will be the Secondary account.

One can do the following transactions:-

Cash Withdrawal:-

Withdraw up to Rs. 20,000/- per day subject to the balance in account.

Cash/Cheque Deposit:-

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One can deposit up to 30 notes at a time in the ATM machine. One can also

deposit your cheque in the ATM.

Balance Enquiry:-

One can check balance of account.

Mini Statement:-

One can get Mini statement of transactions.

PIN Change:-

One can change Personal Identification Number (PIN).

Value Added Services Through ATM

Mobile Recharge through ATM

Mobile Post Paid BillPayment

Fund Transfer

Dena IndiaRemit

Dena Bank brings a unique new service. Send money to family anywhere in

India from the US, UKand Europe.

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Dena IndiaRemit is a completely web-enabled remittance service supported

by superior technology, state-of-the-art operations and a highly professional team

to offer complete peace-of-mind.

Dena m-Banking

Dena Bankis pleased to announce the launch of Mobile Banking Services in an

effort to further facilitate its valued customers. Mobile Banking is a new service

from Dena Bank, which enables to make inquiries about account through his

mobile phone by using the SMS facility with total confidentiality and security

Dena m-banking offers an easy, hassle-free means to access banking information

at the touch of a button 24 hours a day, 7 days a week. That means one will be

able to access your account better - anytime, anywhere, with just mobile phone.

Now one will not have to go to your bank for any enquiries and transactional

information. But one can get the required information by using SMS from your

mobile phones. This time saving activity is another service being offered by Dena

Bank to facilitate their customers.

Dena m-banking is available to all Dena Bank account holders in Selected

Branches who are registered for the m-banking facility.

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m-banking is absolutely free of cost *.

*Normal SMS charges, as charged by the Mobile service provider.

Simply by sending an SMS from your mobile phone, you can receive updated

information of your account:

Description Service Code

Balance Enquiry * BQ (A/c type ) (A/c Scheme) (A/c no)

Mini Statement (last 3 txns) ** MS (A/c type) (A/c Scheme) (A/c no)

Cheque status *** CS (A/c type) (A/c Scheme) (A/c no)

*For balance inquiry in Saving Bank A/c 11111

send SMS as BQ SB GEN 11111

**For Mini Statement for Saving Bank A/c 11111

send SMS as MS SB GEN 11111

***For Cheque status of cheque no XXXXX in Saving Bank A/c 11111

send SMS as CS SB GEN 11111 XXXXX

A/c type: SB (Saving Bank), CA (Current A/c), CC (Cash Credit), OD (Over

Draft)

A/c Scheme: Gen (General)

So, now no need to worry about your Account status anymore. Take the benefit

of this financial solution right now and have access to your accounts anytime

from anywhere.

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Premium Savings Account Scheme

SALIENT FEATURES :

Minimum Balance: Quarterly average balance of Rs. 25,000/-

Concessions offered

Free cheque books facility

1. Free remittance within the Dena Bank MBB network

2. Free of commission Demand Drafts/ MT/ Pay Orders up to an aggregate

amount of Rs. 10,000/- per month

OR

Free collection of outstation cheques up to Rs. 10,000/ per month on the

centres where we have branches. Actual Postage & out of pocket expenses

shall be borne by the accountholder. Where we have no branch, only our

commission will be waived. The account holder has to bear the commission of

the Agent bank in addition to postage & out of pocket expenses.

4. One free Debit Card- as per scheme ( whenever applicable)with Insurance

cover of Rs. 2 lac in case of accidental death.

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5. Free Tele Banking facility( whenever applicable)

Premium Current Account Scheme

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SALIENT FEATURES :

Minimum Balance: Quarterly average balance of Rs. 1,00,000/

Concessions offered

1. Free cheque books facility

2. Free remittance within the Dena Bank MBB network- whenever applicable

3. Free of commission Demand Drafts/ MT/ Pay Orders up to an aggregate

amount of Rs. 1.00 lac per month

OR

Free collection of outstation cheques up to Rs. 50,000/ per month on the

centres where we have branches. Actual Postage & out of pocket expenses

shall be borne by the accountholder. Where we have no branch, only our

commission will be waived. The account holder has to bear the commission of

the agent bank in addition to postage & out of pocket expenses.

4. One free Debit Card with Insurance cover of Rs. 1 lac in case of accidental

death.

5. Free Tele Banking facility( whenever applicable)

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Dena Jeevan SB Account

"Dena Jeevan SB Account" provides the value addition of life insurance for its

Savings deposit account holders, who can now avail of life insurance cover

through their account. The insurance cover is available under a One Year

Renewable Term Insurance Plan of Life Insurance Corporation of India [LIC],

for whom Dena Bank is a Corporate Agent.

The Savings Deposit account holders of the Bank between 18 and 59 years of

age, who opt to become members under the scheme, would be eligible for an

insurance cover of Rs.1,00,000/- ( Rupees One lac only ) on life, at very low

premium. The amount of annual premium depends on the age of the optee. The

salient features of the scheme ( which is a part of our Savings Deposit

Scheme) are given below:

Life cover of Rs. 1 lac.

Life insurance cover upto 60 years of age.

Very low premium.

No medical tests required. A simple declaration of good health will

suffice.

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Insurance cover commences immediately on signing the Consent-cum-

Authorisation Letter and debit of premium to the account. The customer

does not have to wait for the policy document.

Simple payment mechanism : the premium can be debited to customers

account and standing instructions can be given for renewal. Thus there is

no possibility of lapse of cover.

Income Tax benefit is available. Effectively, the premium cost is lower.

Nomination facility is available.

Simple claim settlement process.

The insurance cover is provided under the Group Insurance Scheme of

LIC, the premier life insurance company in the country having sovereign

guarantee.

Such One Year Renewable Term Insurance Plan is not available off the

shelf for individuals.

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A number of banks focusing on the retail segment. Many of them are also

entering the new vistas of Insurance. Banks with their phenomenal reach and a

regular interface with the retail investor are the best placed to enter into the

insurance sector. Banks in India have been allowed to provide fee-based

insurance services without risk participation, invest in an insurance company for

providing infrastructure and services support and set up of a separate joint-

venture insurance company with risk participation.

Aggregate Performance of the Banking Industry

Aggregate deposits of scheduled commercial banks increased at a compounded

annual average growth rate (Cagr) of 17.8 percent during 1969-99, while bank

credit expanded at a Cagr of 16.3 percent per annum. Banks investments in

government and other approved securities recorded a Cagr of 18.8 percent per

annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP)

growth of only 6.0 percent as against the previous years 6.4 percent. The WPI

Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in

FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6

percent a year ago.

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The growth in aggregate deposits of the scheduled commercial banks at 15.4

percent in FY01 percent was lower than that of 19.3 percent in the previous year,

while the growth in credit by SCBs slowed down to 15.6 percent in FY01 against

23 percent a year ago.

The industrial slowdown also affected the earnings of listed banks. The net profits

of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001.

Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped

to 4.56 percent in the fourth quarter of 2000-2001.

On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill

the norms, it was a feat achieved with its own share of difficulties. The CAR,

which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year

2004 based on the Basle Committee recommendations. Any bank that wishes to

grow its assets needs to also shore up its capital at the same time so that its capital

as a percentage of the risk-weighted assets is maintained at the stipulated rate.

While the IPO route was a much-fancied one in the early 90s, the current

scenario doesnt look too attractive for bank majors.

Consequently, banks have been forced to explore other avenues to shore up their

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capital base. While some are wooing foreign partners to add to the capital others

are employing the M& A route. Many are also going in for right issues at prices

considerably lower than the market prices to woo the investors.

Interest Rate Scene

The two years, post the East Asian crises in 1997-98 saw a climb in the global

interest rates. It was only in the later half of FY01 that the US Fed cut interest

rates. India has however remained more or less insulated. The past 2 years in our

country was characterized by a mounting intention of the Reserve Bank Of India

(RBI) to steadily reduce interest rates resulting in a narrowing differential

between global and domestic rates.

The RBI has been affecting bank rate and CRR cuts at regular intervals to

improve liquidity and reduce rates. The only exception was in July 2000 when

the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee

against the dollar. The steady fall in the interest rates resulted in squeezed

margins for the banks in general.

Governmental Policy

After the first phase and second phase of financial reforms, in the 1980s

commercial banks began to function in a highly regulated environment, with

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administered interest rate structure, quantitative restrictions on credit flows, high

reserve requirements and reservation of a significant proportion of lendable

resources for the priority and the government sectors. The restrictive regulatory

norms led to the credit rationing for the private sector and the interest rate

controls led to the unproductive use of credit and low levels of investment and

growth. The resultant financial repression led to decline in productivity and

efficiency and erosion of profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was felt.

This was worked out mainly with the help of the recommendations of the

Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The

resultant financial sector reforms called for interest rate flexibility for banks,

reduction in reserve requirements, and a number of structural measures. Interest

rates have thus been steadily deregulated in the past few years with banks being

free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking

products. Credit market reforms included introduction of new instruments of

credit, changes in the credit delivery system and integration of functional roles of

diverse players, such as, banks, financial institutions and non-banking financial

companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up,

PSBs were allowed to access the markets to shore up their Cars.

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Implications Of Some Recent Policy Measures

The allowing of PSBs to shed manpower and dilution of equity are moves that

will lend greater autonomy to the industry. In order to lend more depth to the

capital markets the RBI had in November 2000 also changed the capital market

exposure norms from 5 percent of banks incremental deposits of the previous

year to 5 percent of the banks total domestic credit in the previous year. But this

move did not have the desired effect, as in, while most banks kept away almost

completely from the capital markets, a few private sector banks went overboard

and exceeded limits and indulged in dubious stock market deals. The chances of

seeing banks making a comeback to the stock markets are therefore quite unlikely

in the near future.

The move to increase Foreign Direct Investment FDI limits to 49 percent from 20

percent during the first quarter of this fiscal came as a welcome announcement to

foreign players wanting to get a foot hold in the Indian Markets by investing in

willing Indian partners who are starved of networth to meet CAR norms. Ceiling

for FII investment in companies was also increased from 24.0 percent to 49.0

percent and have been included within the ambit of FDI investment.

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The abolishment of interest tax of 2.0 percent in budget 2001-02 will help banks

pass on the benefit to the borrowers on new loans leading to reduced costs and

easier lending rates. Banks will also benefit on the existing loans wherever the

interest tax cost element has already been built into the terms of the loan. The

reduction of interest rates on various small savings schemes from 11 percent to

9.5 percent in Budget 2001-02 was a much awaited move for the banking

industry and in keeping with the reducing interest rate scenario, however the

small investor is not very happy with the move.

Some of the not so good measures however like reducing the limit for tax

deducted at source (TDS) on interest income from deposits to Rs 2,500 from the

earlier level of Rs 10,000, in Budget 2001-02, had met with disapproval from the

banking fraternity who feared that the move would prove counterproductive and

lead to increased fragmentation of deposits, increased volumes and transaction

costs. The limit was thankfully partially restored to Rs 5000 at the time of passing

the Finance Bill in the Parliament.

April 2001-Credit Policy Implications

The rationalization of export credit norms in will bestow greater operational

flexibility on banks, and also reduce the borrowing costs for exporters. Thus this

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move could trigger exports growth in the future. Banks can also hope to earn

increased revenue with the interest paid by RBI on CRR balances being increased

from 4.0 percent to 6.0 percent.

The stock market scam brought out the unholy nexus between the Cooperative

banks and stockbrokers. In order to usher in greater prudence in their operations,

the RBI has barred Urban Cooperative Banks from financing the stock market

operations and is also in the process of setting up of a new apex supervisory body

for them. Meanwhile the foreign banks have a bone to pick with the RBI. The

RBI had announced that forex loans are not to be calculated as a part of Tier-1

Capital for drawing up exposure limits to companies effective 1 April 2002. This

will force foreign banks either to infuse fresh capital to maintain the capital

adequacy ratio (CAR) or pare their asset base. Further, the RBI has also sought to

keep foreign competition away from the nascent net banking segment in India by

allowing only Indian banks with a local physical presence, to offer Internet

banking

Crystal Gazing

On the macro economic front, GDP is expected to grow by 6.0 to 6.5 percent

while the projected expansion in broad money (M3) for 2001-02 is about 14.5

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percent. Credit and deposits are both expected to grow by 15-16 percent in FY02.

India's foreign exchange reserves should reach US$50.0 billion in FY02 and the

Indian rupee should hold steady.

The interest rates are likely to remain stable this fiscal based on an expected

downward trend in inflation rate, sluggish pace of non-oil imports and likelihood

of declining global interest rates. The domestic banking industry is forecasted to

witness a higher degree of mergers and acquisitions in the future. Banks are likely

to opt for the universal banking approach with a stronger retail approach.

Technology and superior customer service will continue to be the imperatives for

success in this industry.

Public Sector banks that imbibe new concepts in banking, turn tech savvy, leaner

and meaner post VRS and obtain more autonomy by keeping governmental stake

to the minimum can succeed in effectively taking on the private sector banks by

virtue of their sheer size. Weaker PSU banks are unlikely to survive in the long

run. Consequently, they are likely to be either acquired by stronger players or will

be forced to look out for other strategies to infuse greater capital and optimize

their operations.

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Foreign banks are likely to succeed in their niche markets and be the innovators

in terms of technology introduction in the domestic scenario. The outlook for the

private sector banks indeed looks to be more promising vis--vis other banks.

While their focused operations, lower but more productive employee force etc

will stand them good, possible acquisitions of PSU banks will definitely give

them the much needed scale of operations and access to lower cost of funds.

These banks will continue to be the early technology adopters in the industry,

thus increasing their efficiencies. Also, they have been amongst the first movers

in the lucrative insurance segment. Already, banks such as Icici Bank and Hdfc

Bank have forged alliances with Prudential Life and Standard Life respectively.

This is one segment that is likely to witness a greater deal of action in the future.

In the near term, the low interest rate scenario is likely to affect the spreads of

majors. This is likely to result in a greater focus on better asset-liability

management procedures. Consequently, only banks that strive hard to increase

their share of fee-based revenues are likely to do better in the future.

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RESEARCH METHODOLOGY

INTRODUCTION

This focuses on the methodology & the techniques used for the collection,

classification & tabulation of data. It sheds light on the research problem, the

objective of study & its limitations. The manner in which the data is collected,

classified, tabulated so as to reach the conclusive results. Research methodology

may include not only the research methods but also considers the logic behind the

methods used in the context of study & explains why only a particular method &

techniques has been used so that research lend themselves to proper evaluation.

Therefore to design a research problem it is necessary to design a research

methodology as the same may differ from problem to problem.

RESEARCH DESIGN

It is the conceptual structure within which the research is conducted. Its function

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COLLECTION OF DATA

After the research problem has been defined and the research task has been

chalked out, the task of data collection begins. Data can be collected from either

the primary or secondary sources. In this study although the data was collected

mainly through primary sources, it was supplemented by secondary sources.

i) Primary Data

The primary data are those which are collected afresh and for the first time, and

thus happen to be original in character. For the collection of primary data, the

respondents were contacted personally and the tool for gathering the data was the

questionnaire.

COLLECTION OF

DATA

PRIMARY DATA SECONDARY

DATA

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ii) Secondary Data

The secondary data, on the other hand, are those which have already been collected

by someone else and which have already been passed through the statistical

process. Here, secondary data was collected through;

a) Co. Brochures

b) Product Manuals

c) Training Hand Book

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STUDY LIMITATIONS

The study is based on the data collected through banks website, brochures

available with the company and the analysis of the sector published by

various sources.

The data although could not be fake but as the data was not collected by the

researcher himself, a scope of doubt remains.

As the Banking Sector is changing at a very rapid case, Basel-II reforms are

going to be implemented soon.

I could not study the consumer views about the bank as the time was

limited.

Services of other banks couldnt be compared to that of Dena bank

The biggest limitation of the study is that I was not able to get the primary

data, the data was not collected at all as the data could have been collected

from small sample only so it would not have been advisable to generalize

the data collected.

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The data provided by the company talked about the features available to its

customers but no comparison was made with other banks

FUTURE OF BANKING

REFORMING the financial sector is central to second-generation reforms. This

covers three important segments -- banking, insurance and the capital market.

Some reform has already taken place in the capital market, though strengthening

the institutional mechanism to prevent unethical practices is receiving the

Government's attention. The latest to be opened up for private investment,

including foreign direct investment, is the insurance sector.

On a rough reckoning, commercial bank deposits account for 25 per cent of GDP

and credit extended by banks may be 15 per cent of GDP. This leaves out

transactions by industrial financial institutions, non-banking financial companies,

cooperative banks, deposits in public provident funds treasury payments some of

which may be agency functions of the banks. Thus, regular bank credit

transactions alone account for a substantial percentage of GDP by way of

servicing economic activities.

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The banking sector has been undergoing reforms for over a decade now based

largely on the report of the Narasimham Committee on Bank Reforms.

Considerable progress has been made in the gradual reduction of non-performing

assets of banks which stood at alarming 12-15 per cent six or seven years ago. It

is now around 7 per cent on net basis.

It is increasingly evident that the economy offers opportunities but no security!

Therefore, the future will belong to those who develop good internal controls,

checks and balances and a sound market strategy

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FINDINGS & SUGGESTIONS

The private sector bank is now being looked as an inspiration for others.

The bank has been building key strengths over the years and has been largely

hidden behind the more glamorous and bigger banks.

It offers a proper balance; it has strong presence in retail (24% of advances),

SME (17%), agriculture (8%) and a large corporate segment (51%), and so is not

as vulnerable as some other fast growing banks are. Even its deposit book has a

high portion (45.5%) of low cost savings and current accounts (CASA) and this

bodes well.

Net interest income for the bank grew by 72.9% in the second quarter, over the

previous year, to touch Rs 341 crore.

An increase in demand deposits and also overall business growth meant that the

net interest margin grew to 3.28%, from 2.98%, one of the best amongst Indian

banks.

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The huge rise in other income is something disturbing. Trading income grew by

339% to touch Rs 103 crore. But then the second quarter has seen an overall spurt

in trading income for corporates, especially banks. An equally strong growth in

fee income, which rose by 69%, on a y-o-y basis to touch Rs 288 crore, is

encouraging and once again strengthens the balance.

All these initiatives will enable the bank to further strengthen its fee income. And

while all this is happening, the bank has been prudent in its non-performing

assets management.

The gross NPA as a portion of gross customer assets declined to 0.95%, from

1.22% recorded in the second quarter of the previous year.

The Bank has account for every class and need of customers and the services

offered are among the best in industry.

In the sheltered days of banking, when customers could be freely charged, banks

concerned themselves with only `revenue' which was equal to cost plus profit.

Post-reforms, when the cost of services became nearly equal across banks and

cost-control was key to higher profits, the focus of banks shifted to `profit', which

was equal to revenue minus cost. The bank should be customer oriented also.

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In the future, as domestic and international competition hots up, banks should

have to shift their focus to `cost' which will be determined by revenue minus

profit.

In other words, cost-control in tandem with efficient use of resources and

increase in productivity will determine the winners and laggards in the future

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CONCLUSION

Modern Banks of today are technologically more advanced and professional

in their services. The Dena Bank has from the very beginning benefited

from the technological innovations like computers and internet with an

option to spread its business with the use of ATMs which are much

economical to the Institutions, in comparison to operating a full fledged

Branch. Also, from day one, Dena Bank has been choosy about its

customers and have always judged them according to their financial

standing. Drafts, cheque books, money transfers, withdrawals , etc.

have different charges and conditions for different types of customers

thereby catering to all types of customers. From a small time

businessman to an industrial tycoon all can bank upon the Institution

for guidance and benefits, which these so called private and foreign

financial institutions have learnt as business acumen.

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I understand that with the changing times, the Bank is going through

teething problems in its endeavour to cater to its clientele with most

sophisticated financial system that would ensure prosperity and

convenience to all its account holders irrespective of his/her portfolio.

Connecting Branches that are spread out all over the country with its

roots from small villages to high terrains, is just not something that any

foreign or private Bank would dare think of. Private Banks are taking

over other Banks, who fail to perform and forced into liquidation, just

to benefit from its network that is already established.

Banking scenario is changing drastically and Bank too has the vision to

surge ahead. The staff of today are imparted training in customer

relationships, portfolio management, risk management, technical and

software knowhow, etc. Management trainees are being directly

recruited, trained and challenges put forth to them. Similarly existing

staff are being upgraded with modern knowhow and promoted to

higher ranks with better incentives and challenges

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BIBLIOGRAPHY

Reference Books:

C.R. Kothari Research Methodology.

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Web sites:

www.google.com

www.denabank.com

Magazines & Newspapers

Business Today

The Times of India

The Hindustan times

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