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INDEX CHAPTER CONTENT Pg.no. 1. INTRODUCTION Origin of the word bank Nationalisation of Banks in India History of IOB 3 1 A REPORT ON IN BANK TRAINI NG IN THE INDIAN OVERSE

Bank Traning Project Report on IOB Bank

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Page 1: Bank Traning Project Report on IOB Bank

INDEX

CHAPTER CONTENT Pg.no.

1. INTRODUCTION

Origin of the word bank

Nationalisation of Banks in India

History of IOB

3

2. FUNCTIONS OF IOB 13

1

A REPORT ON IN BANK

TRAINING IN THE

INDIAN OVERSE

AS BANK

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Opening of various account

Non-Resident Accounts

Honoring and Stopping cheques

Money laundering

3. SERVICES OF IOB

Automatic Teller Machine (ATM)

Internet Banking

Mobile Banking

Identification of Fake Notes

36

4. RATIO ANALYSIS 49

5. LOANS & ADVANCES

Advances-General Instruction

Retail Credit Interest Rates

60

CONCLUSION 75

BIBLIOGRAPHY 76

2

A REPORT ON IN BANK

TRAINING IN THE

INDIAN OVERSE

AS BANK

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Origin & Definition of Bank:

Origin of the word bank:

Most of the authors are of the opinion that word bank has been derived from Italian word

banco or banca or French word beque, meaning a bench, other writers opine that the

origin of the word bank is the German word bank, which means a heap of anything or

joint stock fund.

Meaning and Definition of Bank:

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CHAPTER – 1

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You know people earn money to meet their day-to-day expenses on food, clothing,

education of children, housing, etc. They also need money to meet future expenses on

marriage, higher education of children, house building and other social functions. These

are heavy expenses, which can be met if some money is saved out of the present income.

Saving of money is also necessary for old age and ill health when it may not be possible

for people to work and earn their living.

The necessity of saving money was felt by people even in olden days. They used to hoard

money in their homes. With this practice, savings were available for use whenever

needed, but it also involved the risk of loss by theft, robbery and other accidents. Thus,

people were in need of a place where money could be saved safely and would be

available when required. Banks are such places where people can deposit their savings

with the assurance that they will be able to withdraw money from the deposits whenever

required. People who wish to borrow money for business and other purposes can also get

loans from the banks at reasonable rate of interest.

Bank is a lawful organisation, which accepts deposits that can be withdrawn on

demand. It also lends money to individuals and business houses that need it.

Banks also render many other useful services – like collection of bills, payment of

foreign bills, safe-keeping of jewellery and other valuable items, certifying the credit-

worthiness of business, and so on.

Banks accept deposits from the general public as well as from the business community.

Anyone who saves money for future can deposit his savings in a bank. Businessmen have

income from sales out of which they have to make payment for expenses. They can keep

their earnings from sales safely deposited in banks to meet their expenses from time to

time. Banks give two assurances to the depositors –

a. Safety of deposit, and

b. Withdrawal of deposit, whenever needed

On deposits, banks give interest, which adds to the original amount of deposit. It is a

great incentive to the depositor. It promotes saving habits among the public. On the basis

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of deposits banks also grant loans and advances to farmers, traders and businessmen for

productive purposes.

Thereby banks contribute to the economic development of the country and well-being of

the people in general. Banks also charge interest on loans. The rate of interest is generally

higher than the rate of interest allowed on deposits. Banks also charge fees for the various

other services, which they render to the business community and public in general.

Interest received on loans and fees charged for services which exceed the interest allowed

on deposits are the main sources of income for banks from which they meet their

administrative expenses.

The activities carried on by banks are called banking activity. ‘Banking’ as an activity

involves acceptance of deposits and lending or investment of money. It facilitates

business activities by providing money and certain services that help in exchange of

goods and services. Therefore, banking is an important auxiliary to trade. It not only

provides money for the production of goods and services but also facilitates their

exchange between the buyer and seller.

You may be aware that there are laws which regulate the banking activities in our

country. Depositing money in banks and borrowing from banks are legal transactions.

Banks are also under the control of government. Hence they enjoy the trust and

confidence of people. Also banks depend a great deal on public confidence. Without

public confidence banks cannot survive.

Nationalisation of BanksNationalisation of Banks in India:

After independence the Government of India (GOI) adopted planned economic

development for the country (India). Accordingly, five year plans came into existence

since 1951. This economic planning basically aimed at social ownership of the means of

production. However, commercial banks were in the private sector those days. In 1950-

51 there were 430 commercial banks. The Government of India had some social

objectives of planning. These commercial banks failed helping the government in

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attaining these objectives. Thus, the government decided to nationalize 14 major

commercial banks on 19th July, 1969. All commercial banks with a deposit base over

Rs.50 crores were nationalized. It was considered that banks were controlled by business

houses and thus failed in catering to the credit needs of poor sections such as cottage

industry, village industry, farmers, craft men, etc. The second dose of nationalisation

came in April 1980 when banks were nationalized.

The following list contains a list of different types of banks in India.

Central Bank:

Reserve Bank of India (RBI)

Public Sector Banks (Nationalised banks):

State Bank of India (SBI)

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Patiala

State Bank of Saurashtra

State Bank of Travancore

Bank of India

Canara Bank

Central Bank of India

Corporation bank

Indian Bank

Indian overseas bank

Syndicate Bank

UCO Bank

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Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of Maharashtra

Dena Bank

Oriental Bank of Commerce

Punjab & Sind Bank

Union Bank of India

United Bank of India

Vijaya Bank

IDBI Bank

Private Sector Banks:

HDFC Bank

ICICI Bank

Federal Bank

ING Vysya Bank

Axis Bank

Yes Bank

Bank of Rajasthan

Bharat Overseas Bank

Catholic Syrian Bank

Centurion Bank of Punjab

City Union Bank

Development Credit Bank

Dhanalakshmi Bank

Ganesh Bank of Kurundwad

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IndusInd Bank

Jammu & Kashmir Bank

Karnataka Bank Limited

Karur Vysya Bank

Kotak Mahindra Bank

Lakshmi Vilas Bank

Nainital Bank

Ratnakar Bank

SBI Commercial and International Bank

South Indian Bank

Amazing Mercantile Bank

Punjab National Bank

Rupee Bank

Saraswat Bank

Tamilnad Mercantile Bank

Thane Janata Sahakari Bank

Bassein Catholic Bank

Foreign Banks:

ABN AMRO

BNP Paribas

Citibank India

HSBC (Hongkong & Shanghai Banking Corporation)

JPMorgan Chase Bank

Bank of America

Standard Chartered Bank

Barclays Bank

Deutsche Bank

Royal Bank of Scotland

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Abu Dhabi Commercial Bank Ltd

American Express Bank

Antwerp Diamond Bank

Arab Bangladesh Bank

Bank International Indonesia

Bank of Bahrain & Kuwait

Bank of Ceylon

Bank of Nova Scotia

Bank of Tokyo Mitsubishi UFJ

Calyon Bank

ChinaTrust Commercial Bank

Cho Hung Bank

DBS Bank

Krung Thai Bank

Mashreq Bank

Mizuho Corporate Bank

Oman International Bank

Societe Generale

State Bank of Mauritius

Scotia

Taib Bank

History of IOB

How it began:

Indian Overseas Bank (IOB) was founded on February 10th 1937, by

Shri.M.Ct.M.Chidambaram Chettyar, a pioneer in many fields - Banking, Insurance and

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Industry with the twin objectives of specialising in foreign exchange business and

overseas banking.

IOB had the unique distinction of commencing business on 10th February 1937 (on the

inaugural day itself) in three branches simultaneously - at Karaikudi and Chennai in India

and Rangoon in Burma (presently Myanmar) followed by a branch in Penang. At the

dawn of Independence IOB had 38 branches in India and 7 branches abroad. Deposits

stood at Rs.6.64 Crs and Advances at Rs.3.23 Crs at that time.

Pre-nationalisation era (1947- 69):

During the period, IOB expanded its domestic activities and enlarged its international

banking operations. As early as in 1957, the Bank established a training centre which has

now grown into a Staff College at Chennai with 9 training centres all over the country.

IOB was the first Bank to venture into consumer credit. It introduced the popular

Personal Loan scheme during this period. In 1964, the Bank made a beginning in

computerisation in the areas of inter-branch reconciliation and provident fund accounts.

In 1968, IOB established a full-fledged department to cater exclusively to the needs of

the Agriculture sector.

At the time of Nationalisation (1969):

IOB was one of the 14 major banks that was nationalised in 1969. On the eve of

Nationalisation in 1969, IOB had 195 branches in India with aggregate deposits of Rs.

67.70 Crs. and advances of Rs. 44.90 Crs.

Post - Nationalisation era (1969-1992):

In 1973, IOB had to wind up its five Malaysian branches as the Banking law in Malaysia

prohibited operation of foreign Government owned banks. This led to creation of United

Asian Bank Berhad in which IOB had 16.67% of the paid up capital. In the same year

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Bharat Overseas Bank Ltd was created in India with 30% equity participation from IOB

to take over IOB’s branch at Bangkok in Thailand.

In 1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency

Banking Unit in the free trade zone in Colombo in 1979. The Bank has sponsored 3

Regional Rural Banks viz. Puri Gramya Bank, Pandyan Grama Bank, Dhenkanal Gramya

Bank. The Bank setup a separate Computer Policy and Planning Department (CPPD) to

implement the programme of computerisation, to develop software packages on its own

and to impart training to staff members in this field.

Post Reform Period - Unprecedented developments (1992 & after):

IOB entered Web site during the month of February 1997.

IOB got autonomous status during 1997-98

IOB had the distinction of being the first Bank in Banking Industry to obtain ISO 9001

Certification for its Computer Policy and Planning Department from Det Norske Verities

(DNV), Netherlands in September 1999. This Certification covers Design, Development,

Implementation and Maintenance of software developed in-house, procurement and

supply of hardware and execution of turnkey projects. IOB started STAR services in

December 1999 for speedy realization of outstation cheques. Now the Banks has 14

STARS Centre’s and one Controlling Centre for providing this service. During 1999,

IOB started tapping the potential of internet by enabling ABB card holders in Delhi to

pay their telephone bills by just logging on to MTNL web site and by authorizing the

Bank to debit towards the telephone bills. A Voluntary Retirement Scheme was

introduced in the Bank on the lines of IBA package with Boards approval. The scheme

was offered to Officers/Employees from December 15, 2000. The Bank made a

successful debut in raising capital from the public during the financial year 2000-01,

despite a subdued capital market. The issue opened on September 25, 2000 for raising

Rs.111.20 crore and was oversubscribed by 1.87 times. The issue closed on September

29, 2000 - on the earliest closing day. The allotment was made in October 2000.

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Consequent to the public issue, the share of the Government in the Bank's capital came

down to 75%. The shares of the Bank have been listed on the Madras Stock Exchange

(Regional), Stock Exchange at Mumbai and the National Stock Exchange of India Ltd.

IOB bagged the NABARD's award for credit linking the highest number of Self Help

Groups for 2000-2001 among the Banks in Tamil Nadu.

IDRBT (Institute for Development and Research in Banking Technology) conferred the

Best Award under Banking Technology to IOB. The award was given for the innovative

use of banking applications on INFINET (Indian Financial Network) for the year 2001.

Mobile banking under SMS technology implemented in Ahmedabad and Baroda. Pilot

run of Phase I of the Internet Banking commenced covering 34 branches in 5

Metropolitan centres. IOB was one among the first to join Reserve Bank of India’s

negotiated dealing system for security dialing online. The Bank has finalised an e-

commerce strategy and has developed the necessary internet banking modules in-house.

For the first time a Total Branch Automation package developed in-house has been

customised in one of the Overseas Branches of the Bank. Most software developed in-

house. IOBNET connects Central Office with all Regional Office. The Bank has paid a

maiden dividend of 10% p.a for 2000-01, followed by 12% during 2001-02.

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13

CHAPTER – 2

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OPENING OF VARIOUS ACCOUNTS

Savings Bank Account:

Savings Bank account is a form of demand deposit account, opened mainly for the

purpose of saving and not for any business purpose. Savings Bank accounts are meant to

inculcate Savings habit among the citizens while allowing them to use their funds as per

their convenience. The Savings Bank accounts are opened by the bank on proper

introduction and also after ensuring that the customer satisfies the KYC (Know Your

Customer) form.

Procedure for Opening an SB account:

Persons desiring to open a Savings Bank Account must attend the Bank, when he/she will

be furnished with a copy of rules and a form of an application to open an account.

Along with the applications, every depositor is required to furnish a CROP (Customer's

Record of Profile) Form duly filled in and signed to comply with KYC (Know Your

Customers) forms as prescribed by RBI. This form would be updated every year by the

customer.

Every deposit account opened with the Bank would carry a nomination and the

depositor(s) shall at the time of opening the account nominate an individual (not being a

minor) of his/her/their choice and submit the application along with the nomination form

(annexed to the account opening form) duly filled in and signed. Nomination in two or

more names/ proportionate nomination are not possible. The nomination can be changed

at any time by making an application by all account holders to the bank.

When an applicant is unable to write he/she will affix his/her left hand thumb impression

in the presence of a witness known to the Bank. Withdrawals for such accounts will be by

withdrawal forms only.

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Every depositor is required to give two copies of latest passport size photographs and the

specimen of his/her signature in duplicate for record. The signature must be legible and

well formed. All withdrawal forms, cheques and letters to the Bank must be signed

strictly in accordance with such specimen.

Bank will normally accept the following documents for identification and address proof:

1 Pass port

2 PAN card

3 Voters Identity Card

4 Driving Licence

5 Identity Card (Subject to Bank’s Satisfaction).

The customer is also required to submit any one of the following documents for verifying

the correct permanent address namely

1 Telephone Bill,

2 Letter from any recognized Public Authority

3 Electricity Bill

4 Ration Card

5 Letter from employer subject to satisfaction on Bank

6 Propery Tax Book/Receipt

7 Registered Lease Deed.

(Originals should be submitted with a photocopy. After perusal original will be returned

by the bank)

SB account transactions and maintenance:

1) First, cash transactions are conducted. Then any other transactions other than the

of cash nature such as, cheques will be conducted.

2) Transaction in SB is transfer of money from on account to another.

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3) And cheques clearing, Customer of the concerned bank will make payment to a

third party. For example, if a customer is from IOB, then he will pay the third

party through IOB issued cheques. The third party may have his account in some

other bank. He takes the cheque given by us to his bank and presents it to the

bank. His bank will send the cheque to IOB for clearing. If there are sufficient

amount in our account then the cheque will get cleared, otherwise, it will be back

to the bank from which the cheque was sent.

4) Minimum balance should maintain of Rs. 100/- for non-cheque operated accounts

and Rs. 500/- for cheque operated accounts in branches in rural and semi-urban

areas. It is Rs.500 for non-cheque operated account and Rs.1000 for cheque

operated account in other branches.

5) For pension accounts the minimum balance is Rs. 5/- for non-cheque operated

accounts and Rs. 250/- for cheque operated accounts

Interest rate:

Interest rate of SB is 4.00%. Interest is payable half-yearly, every January and July on the

minimum balance in the account, between the 10th and last day of the month.

No Frills Savings account:

In order to inculcate the savings habit among low-income and poor people, bank has

introduced "No Frills" SB account in rural and Semi Urban branches. The minimum

balance in the account will be Rs 5 and the maximum balance should not exceed Rs

50,000 and the total credits in the account in one year not to exceed Rs 1 lac. Cheque

Books will not be issued and cash withdrawals to be permitted only through withdrawal

slips. Number of transactions permitted are 25 per half year

Closure of SB account:

A depositor wishing to close his/her account must present the passbook in order that the

interest due on the account may be entered and a final balance struck. The amount will

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then be paid to the depositor against his/her receipt. The unused cheque forms, if any,

would be returned to the Bank, along with the ATM/Credit Card.

If a depositor wishes to close the account within three months after opening the same, a

charge of Rupee Twenty only will be made.

Current account Transactions (CC a/c):

Current Deposit Schemes are cheques operated accounts primarily meant for

businessmen, firms, companies, and public enterprises etc. that have numerous daily

banking transactions. 

Current accounts are opened at the discretion of the Bank, on proper introduction.

Accounts can be opened in the names of individuals, singly or jointly, proprietary

or partnership, companies, etc. The KYC-AML norms as indicated under SB

Account are applicable while opening current accounts also.

The minimum balance to be maintained in Current Account is Rs.1000/- in rural,

semi-urban branches and Rs 2,000/ in urban and Metropolitan Branches. In the

case of Registered Tiny Sector, village and cottage industries, the minimum

balance is Rs.1000/- at all branches.

At the time of opening the account, customers/ deposits should declare the details

of credit facility with any other bank or any other branch of Indian Overseas

Branch.

Operations in current accounts are only by cheques issued by the bank.

MICR cheque books are issued (presently in all Metropolitan cities) at a cost of

Rs2.30./- per cheque leaf, payable at the time of issue of the cheque book.

The Bank undertakes, on behalf of the customers, collection of cheques, hundis,

bills, drafts, salary, pension bills, etc., in Current accounts.

Standing Instructions for remittances such as, insurance premia, subscription for

clubs, etc., will be carried out by the Bank, subject to levy of service charges in

force.

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No interest will be paid on Current accounts. Countervailing interest on Current

account balances (any benefit of interest allowed on any account in the nature of

Current account maintained with the bank by its borrower) is also prohibited.

However, interest will be paid on credit balances in current accounts in the names

of deceased individual deposits from the date of death of the deposit till the date of

payment to the legal heir(s) / representative(s), at the rate applicable for savings

bank accounts as ruling on the date of payment.

Current accounts can be transferred from one branch to another, at the request of

the account-holders.

Nomination facility is available for current accounts opened in the names of one or

more individuals.

The Bank reserves the right to close unremunerated and undesirable current

accounts, after giving notice to such account-holder(s).

Any loss of cheque leaf or cheque book should be informed to the branch

immediately furnishing the full particulars of cheque or cheques issued.

In case of return of cheque issued by the account-holder, the bank charges Rs.10/-

in the first instance and thereafter Rs.20/- for each return of cheque issued by the

account holder

Closure of Current account:

Cheque book should be submitted by the company to the bank and in case of cash

credit balance, commission will be claimed by the bank unlike in SB a/c, where no

commission will be claimed. To get signature from all dignitaries of the company

and also surrender the ATM card, if given by the bank while maintaining current

a/c. They should also pass such resolution that the company is closing its account.

In case of partnership firm while staring the firm, a clause to this effect should be

passed stating closure of the account.

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Opening of Term Deposit account:

Term deposit accounts can be opened by –

A person in his own name.

Two or more persons in their joint names payable to - both or all of them or to the

survivor(s); or either or any one or more of them or to the survivor(s).

A natural guardian on behalf of minor.

A natural guardian in the joint names of himself/herself and the minor, payable to

either or survivor.

A person in the name of any minor for whom the said person is the guardian

appointed by a Court.

A minor aged 10 years or above in his single name to be operated upon by

himself.

A Club, Association, Society, Educational Institution and other such bodies.

Trustees / Executors / Administrators / Courts.

Proprietorships, Partnerships and Limited Companies.

The depositor has to submit two passport size photographs.

Introduction of Term Deposit account:

Introduction is necessary for all deposit accounts. Such introduction may be by an

existing account holder or a respectable member of the local community known to the

Bank, who should normally call at the Bank and sign in the column specially provided for

the purpose in the account opening form. The introducer should have conducted his/her

account in a satisfactory manner for a minimum period of six months.

Acceptance of passports/postal identification cards for the purpose of introduction:

Passports/Postal identification cards are accepted as valid documents for

the purpose of identification/ introduction for opening of new Saving Bank

and Term Deposit accounts.

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The signature of the applicant and other particulars as given in the

application form and specimen signature card must agree with that recorded

in the passport/postal identification card.

Any one of the other documents like Driving Licence, Voter Identity card,

PAN card, Ration card etc., is also to be submitted for the purpose

verifying the identity and address of the customer.

The Citizens’ are requested to introduce customers who are well known to

them with regard to their address, occupation, etc., so as to avoid opening

of accounts by undesirable persons.

Addition / Deletion of Names in Term deposits:

The depositors can add or delete names in the term deposits, as detailed below:

When the deposit is in the name of a single individual, the addition may be made

at the written request of the sole depositor.

If the deposit is in the joint names of two or more persons, for adding or deleting

the name of any person, written consent of all the depositors is required. Splitting

up of joint deposits in the name of each joint account holders is also permitted

when written instruction duly signed by all the depositors’ is furnished to the

Bank.

If the request for addition/deletion of a name is received from the survivor(s), after

the demise of one of the joint depositors, such request can be acceded to, provided

the legal heirs of the deceased and the survivor(s) give a consent letter.

Transfer of deposits accounts from one branch to another:

Current / Savings Bank / Recurring Deposits / Term Deposits are freely transferable from

one branch to another under written instructions of the customer.

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Interest rate on deposits:

The interest rate applicable to the different schemes are determined by the bank based on

market conditions, cost of funds etc. The interest rate offered are non-discriminatory and

are applicable uniformly to all depositors at all branches of the Bank

Bank is also offering floating interest rate linked to average Government Security rate for

the relevant period. Minimum deposit amount is Rs 1 lac. Minimum period of deposit is

3 years and maximum period is 10 years. Premature closure of deposit is not allowed

before completion of 3 years. The interest rate is reset twice every year in March and

September based on the link interest rate. The deposits are accepted at select branches

only due to operational convenience. Conversion from floating interest rate to fixed

interest rate is not permitted. Deposits received from the Senior Citizens under the

scheme are not eligible for additional interest of 1%.

Closure of Term deposits:

You should at the back of the receipt, which you will receive at the starting of opening

your account and at every renewal that you make if you wish to continue. In this receipt

you should mention your intention of closing the deposit and if possible also mention

where they wish to transfer this account.

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Non-Resident Accounts

Non-Resident Accounts:

Foreign Currency (Non Resident) (FCNR) accounts can be opened by non-

resident Indian and persons of Indian origin.

Accounts can be opened jointly with Resident close relatives

The accounts can be opened as Term Deposits in the following currencies:

US DOLLAR (USD)

GREAT BRITAIN POUND (GBP)

EURO (EUR)

JAPANESE YEN (JPY)

CANADIAN DOLLAR (CAD)

AUSTRALIAN DOLLAR (AUD)

The period of deposit will be 1 year to 5 years. Interest will be paid on maturity, in the

same currency of the deposit. For deposits of tenure up to one year simple interest will be

paid and for deposits of tenure beyond one year the interest will be compounded at half

yearly rests. The maturity proceed inclusive of interest is fully repatriable. Forward

contract can be booked for conversion of proceeds in to Indian Rupee, if needed.

Premature closure is allowed. However the interest payable in such cases will be one

percent below the rate applicable for the period the deposit has run. No interests allowed

on a deposit if closed prematurely before completion of one year.

Swap charges will be levied for premature closure of large deposits. Loan against such

deposits can be availed in Indian rupees upto 75% of the deposit amount and accrued

interest or Indian rupees one crore (whichever is lower) for purposes other than

investment.

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Resident Foreign Currency Account (RFC):

A Resident Foreign Currency account in India can be maintained by a Non-resident

Indian who has returned home for permanent settlement, after staying abroad for a

minimum period of one year. An RFC account can be opened without any regulatory

approval from the Reserve Bank of India. RFC accounts can be maintained in

USD/EUR/GBP/JPY/AUD/CAD in the form of Savings / Term Deposit

Credits to the account can in any of the following means:

Balances standing to the credit of NRE and FCNR accounts at the time of return.

Income from overseas assets or sales proceeds from overseas assets.

Entire amount of pension received from abroad. Balance in the account can be

remitted abroad for bonafide purposes either for yourself or your dependants. If

you decide to go abroad again you can transfer your funds to NRE/FCNR

account(s) Interest earned on RFC account is subject to tax.

Non-Resident Ordinary (NRO):

NRIs and PIO can maintain NRO account for bonafide local banking transactions

denominated in Rupees, not involving any violation of the provisions of FEMA and rules

and regulations made thereunder. (Note: Opening of accounts by individuals/entities of

Bangladesh / Pakistan nationality / ownership requires prior approval of Reserve Bank of

India)When a resident Indian becomes nonresident, the existing account in India will be

designated as NRO account. The accounts can be in the form of savings, current or term

deposits. Joint account with other NRI(s)/PIO or close resident relative is permitted.

Remittances from abroad and legitimate dues in India of the account holder can be

credited to the account. Interest income is subject to income tax.

The following debits are permitted in the account:

All local payments in rupees including payments for investments in India subject

to compliance with the relevant regulations made by the Reserve Bank.

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Remittance outside India of current income like rent, dividend, pension, interest,

etc. in India of the account holder.

Remittance up to USD One million, per financial year (April-March), for all

bonafide purposes, to the satisfaction of the bank.

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Honoring and Stopping cheques

Introduction:

Keeping in view the technological progress in payment and settlement systems and the

qualitative changes in operational systems and processes that have been undertaken by a

number of Banks, the Reserve Bank of India had, with effect from 1st November 2004

withdrawn its earlier instructions to commercial banks on (1) Immediate Credit of

Local/Outstation instruments, (2) Time Frame for collection of Local/Outstation

Instruments, and (3) Interest payment for delayed collection. The withdrawal of these

mandatory guidelines was expected to enable market forces of competition to come into

play to improve efficiencies in collection of cheques and other instruments. This

collection policy of the Bank is a reflection of our on-going efforts to provide better

service to our customers and set higher standards for performance. The policy is based on

principles of transparency and fairness in the treatment of customers. The bank is

committed to increased use of technology to provide quick collection services to its

customers. This policy document covers the following aspects:

Collection of cheques and other instruments payable locally, at centres within

India 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 realisation of proceeds of outstation instruments

Our policy on dealing with collection instruments lost in transit

Arrangements for collection:

Local Cheques

All cheques and other Negotiable Instruments payable locally would be presented

through the clearing system prevailing at the centre. Cheques deposited at branch

counters and in collection boxes within the branch premises before the specified cut-off

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time will be presented for clearing on the same day. Cheques deposited after the cut-off

time and in collection boxes outside the branch premises including off-site ATMs will be

presented in the next clearing cycle. As a policy bank would give credit to the customer’s

account on the same day clearing settlement takes place. Withdrawal of amounts as

credited would be permitted as per the Cheque return schedule of the clearinghouse.

Wherever applicable, facility of high-value clearing (same day credit) will be extended to

customers. Bank branches situated at centres where no clearing house exists, would

present local cheques on drawee banks across the counter and it would be the bank’s

endeavour to credit the proceeds at the earliest. All branches will fix up the day’s cut off

time for the inclusion of instruments for clearing, taking into account the clearing cycle

and other related factors, like distance from clearing house, communication facility, local

established practices, methodology being followed by other banks in the particular centre

etc. While arriving at the said cut off time, care would be taken to extend maximum

leverage time to the advantage of the customers. Display board will be placed in the

banking hall, indicating the cut off time limits for receipt of cheques for payment to

Government Accounts like income-tax etc and High value cheques

Outstation Cheques:

Cheques drawn on other banks at outstation centres will normally be collected through

Bank’s branches at those centres. Where the bank does not have a branch of its own, the

instrument would be directly sent for collection to the drawee bank or collected through a

correspondent bank. The bank would also use the National Clearing Services offered by

the Reserve Bank of India at centre where such collection services exist.

Cheques drawn on bank’s own branches at outstation centres will be collected using the

inter-branch arrangements in vogue. Branches which are connected through a centralised

processing arrangement and are offering anywhere banking services to its customers will

provide same day credit to its customer in respect of outstation instruments drawn on any

of its branches in the CBS network.

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Cheques payable in foreign countries

Cheques payable at foreign centres where the bank has branch operations (or banking

operations through a subsidiary, etc) will be collected through that office. The services of

correspondent banks will be utilized in country/centre, where the correspondent has

presence. Cheques drawn on foreign banks at centres where the bank or its

correspondents do not have direct presence will be sent direct to the drawee bank with

instructions to credit proceeds to the respective Nostro account of the bank maintained

with one of the correspondent banks. The day when the amount is due for credit is the

date of credit to Nostro Account plus 15 days for USD cheques and date of credit to

Nostro Account plus 21 days in case of other currencies subject to other conditions as

applicable in respective countries. The exchange rate will be the rate applicable on the

date on which the foreign currency is converted in Indian Rupees and credited to the

Customer’s account by the Bank.

Immediate credit of local/outstation cheques/instruments: Branches/Extension counters of

the Bank will consider providing immediate credit to outstation instruments which

include Demand drafts drawn on other Banks, Interest Warrants and Dividend Warrants

upto the aggregate value of Rs.15000/- tendered for collection by individual account

holders subject to satisfactory conduct of such accounts for a period not less than 6

months. Immediate credit will be provided against such collection instruments at the

specific request of the customer or as per prior arrangement. The facility of immediate

credit would also be made available in respect of local cheques at centres where no

formal clearing house exists. The facility of immediate credit will be offered on savings

Bank/Current/Cash Credit Accounts of the customers. For extending this facility there

will not be any separate stipulation of minimum balance in the account. Under this

policy, prepaid instruments like demand drafts, interest/dividend warrants shall be treated

on par with cheques. In the event of dishonour of cheques against which immediate credit

was provided, interest shall be recoverable from the customer for the period the bank

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remained out of funds at the rate applicable for overdraft limits sanctioned for individual

customers. For the purpose this policy, a satisfactorily conducted account shall be the one

Opened at least six months earlier and complying KYC norms

Conduct of which has been satisfactory and bank has not noticed any irregular

dealings.

Where no cheques/instruments for which immediate credit were afforded returned

unpaid for financial reasons.

Where the bank has not experienced any difficulty in recovery of any amount

advanced in the past including cheques returned after giving immediate credit.

Bank shall levy normal collection charges and out of pocket expenses while

providing immediate credit against outstation instruments tendered for collection.

Exchange charges applicable for cheque purchase will not however be charged.

Purchase of local and outstation cheques: Bank may, at its discretion, purchase

local/outstation cheque tendered for collection at the specific request of the

customer or as per prior arrangement. Besides satisfactory conduct of account, the

standing of the drawer of the cheque will also be a factor considered while

purchasing the cheque.

Time frame for collection of Local/ Outstation cheques / Instruments:

For local cheques presented in clearing credit will be afforded as on the date of settlement

of funds in clearing and the account holder will be allowed to withdraw funds as per

return clearing norms in vogue. Cheques/Instruments presented in high value clearing

(with the minimum value of Rs 1 lac) shall be credited on the same day (applicable only

in areas covered by high value/same day clearing)

For cheques and other instruments sent for collection to centres within the country the

following time norms shall be applied.

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Cheques presented at any of the four major Metro Centres (New Delhi, Mumbai,

Kolkata and Chennai) and payable at any of the other three centres: Maximum

period of 7 days.

Metro Centres and State Capitals (other than those of North Eastern States and

Sikkim) Maximum period of 10 days.

In all other Centres: Maximum period of 14 days.

Cheques drawn on foreign countries: Such instruments are accepted for collection

on the "best of efforts" basis. Bank may enter into specific collection arrangement

with its correspondent bank for speedy collection of such instrument. Bank would

give credit to the party on credit of proceeds to the Bank’s Nostro Account with

the correspondent bank after taking into account cooling periods as applicable to

the countries concerned. The above time norms are applicable irrespective of

whether cheques/instruments are drawn on the bank’s own branches or branches

of other banks.

Payment of interest for delayed collection of Outstation Cheques: As part of the

compensation policy of the bank, the bank will pay interest to its customer on the amount

of collection instruments in case there is delay in giving credit beyond the time period

mentioned above. Such interest shall be paid without any demand from customers in all

types of accounts. There shall be no distinction between instruments drawn on the bank’s

own branches or on other banks for the purpose of payment of interest on delayed

collection.

Interest for delayed collection shall be paid at the following rates:

Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be

in collection of outstation cheques.

Where the delay is beyond 14 days, interest will be paid at the rate applicable to

for term deposits of the respective period.

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In the case of extraordinary delay, i.e. delay exceeding 90 days, interest will be

paid at the rate of 2% above the corresponding Term deposit rate.

In the event of the proceeds of Cheque under collection was to be credited to an

overdraft / loan account of the customer, interest will be paid at the rate

applicable to the loan account. For extraordinary delays, interest will be paid at

the rate of 2% above the rate applicable to the loan account. It may be noted that

interest payment as given above would be applicable only for instruments sent for

collection within India.

Cheques/Instruments lost in transit, in clearing process or at paying Bank’s Branch:

In the event a Cheque or an instrument accepted for collection is lost in transit or in the

clearing process or at the paying bank’s branch, the bank shall immediately on coming to

know of the loss, bring the same to the notice of the accountholder so that the account

holder can inform the drawer to record stop payment and also take care that the cheques,

if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost

cheques/instruments. The bank would provide all assistance to the customer to obtain a

duplicate instrument from the drawer of the Cheque.

In line with the compensation policy of the bank the bank will compensate the

account holder in respect of instruments lost in transit in the following way:

In case intimation regarding loss of instrument is conveyed to the customer

beyond the time limit stipulated for collection (7/10/14 days as the case may be)

interest will be paid for the period exceeding the stipulated collection period at

the rates specified above.

In addition, bank will pay interest on the amount of the Cheque for a further

period of 15 days at Savings Bank rate to provide for likely further delay in

obtaining duplicate Cheque/instrument and collection thereof.

The bank would also compensate the customer for any reasonable charges he/she

incurs in getting duplicate Cheque/instrument upon production of receipt, in the

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event the instrument is to be obtained from a bank/institution who would charge a

fee for issue of duplicate instrument.

Bank will reimburse the related charges debited in the account of the drawer (of

collection/clearing cheque deposited by the customer which is lost in transit) by the

drawee bank branch. Further, as a customer enhancement measure, branches shall keep a

photocopy of the instrument to meet any eventuality arising out of instruments lost in

transit.

In the cases of discounted cheques, which are lost in transit, Bank will deal with the

same as given below:

Bank will seek the consent of the beneficiary-customer for debiting his/her

account towards recovery of discounted value of the cheque which is lost-in-transit

and interest thereon

If the Customer’s consent is not forthcoming, Bank will not debit customer’s

account towards recovery and instead will pursue the process of obtention of

duplicate cheque by rendering necessary assistance/ support to the customer.

Discounted value of the cheque and the interest thereon will be collected from the

customer. If the customer or the drawer is not cooperating for getting the duplicate

instrument, the Bank will give prior notice to the customer and debit the account

of the customer for the value paid with interest. In case the recovery is found to be

difficult, necessary legal action will be initiated.

Force Majeure: The bank shall not be liable to compensate customers for delayed credit

if some unforeseen event (including but not limited to civil commotion, sabotage,

lockout, strike or other labour disturbances, accident, fires, natural disasters and other

“Acts of God” war, damage to the Bank’s facilities or of its correspondent bank(s)

absence of the usual means of communication or all types of transportation, etc beyond

the control of the Bank prevents it from performing its obligations with the specified

service delivery parameters.

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Charging of interest on cheques returned unpaid where instant credit was given: If a

cheque sent for collection for which immediate credit was provided by the bank is

returned unpaid, the value of the cheque will be immediately debited to the account. The

customer will not be charged any interest from the date immediate credit was given to the

date of return of the instrument unless the bank had remained out of funds on account of

withdrawal of funds. Interest where applicable would be charged on the notional

overdrawn balances in the account had credit not been given initially. If the proceeds of

the Cheque were credited to the Savings Bank Account and was not withdrawn, the

amount so credited will not qualify for payment of interest when the Cheque is returned

unpaid. If the proceeds of the Cheque were credited to an overdraft/loan account, interest

shall be recovered at the rate of 2% above the interest rate applicable to the overdraft

/loan from the date of credit to the date of reversal of the entry if the Cheque/instrument

was returned unpaid to the extent the bank was out of funds.

Stop Payment Facility:

Bank will accept stop payment instruction from you in respect of cheques issued by you.

Immediately on receipt of your instructions we will give acknowledgement and take

action provided these cheques have not already been cleared by us. levy charges, if any,

and the same will be included in the Tariff Schedule as amended from time to time. In

case a cheque has been paid after stop payment instructions are acknowledged, we will

reimburse and compensate you as per the compensation policy of the bank.

Payment of cheques after Stop Payment instructions:

In case a cheque has been paid after stop payment instruction is acknowledged by the

bank, the bank shall reverse the transaction and give value dated credit to protect the

interest of the customer. Any consequential financial loss to the customer will be

compensated as provided under para 1 above. Such debits will be reversed within 2

working days of the customer intimating the transaction to the Bank.

Payment of interest for delayed collection of Outstation Cheques:

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As part of the compensation policy of the bank, the bank will pay interest to its customer

on the amount of collection instruments in case there is delay in giving credit beyond the

time period mentioned above. Such interest shall be paid without any demand from

customers in all types of accounts. There shall be no distinction between instruments

drawn on the bank’s own branches or on other banks for the purpose of payment of

interest on delayed collection.

Cheques clearing process:

In the event a Cheque or an instrument accepted for collection is lost in transit or in the

clearing process or at the paying bank’s branch, the bank shall immediately on coming to

know of the loss, bring the same to the notice of the accountholder so that the account

holder can inform the drawer to record stop payment and also take care that the cheques,

if any, issued by him/her are not dishonoured due to non-credit of the amount of the lost

cheques/instruments. The bank would provide all assistance to the customer to obtain a

duplicate instrument from the drawer of the Cheque.

In line with the compensation policy of the bank the bank will compensate the account

holder in respect of instruments lost in transit in the following way:

In case intimation regarding loss of instrument is conveyed to the customer

beyond the time limit stipulated for collection interest will be paid for the period

exceeding the stipulated collection period at the rates specified above.

In addition, bank will pay interest on the amount of the Cheque for a further period

of 15 days at Savings Bank rate to provide for likely further delay in obtaining

duplicate Cheque/instrument and collection thereof.

The bank would also compensate the customer for any reasonable charges he/she

incurs in getting duplicate Cheque/instrument upon production of receipt, in the

event the instrument is to be obtained from a bank/institution who would charge a

fee for issue of duplicate instrument.

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MONEY LAUNDERING

Definition:

The conversion or transfer of property, knowing that such property is derived from

serious crime, for the purpose of concealing or disguising the illicit origin of the property

or of assisting any person who is involved in committing such an offence or offences to

evade the legal consequences of his action, and the concealment or disguise of the true

nature, source, location, disposition, movement, rights with respect to, or ownership of

property, knowing that such property is derived from serious crime.

Money laundering is the process by which large amounts of illegally obtained money

(from drug trafficking, terrorist activity or other serious crimes) is given the appearance

of having originated from a legitimate source. If done successfully, it allows the criminals

to maintain control over their proceeds and ultimately to provide a legitimate cover for

their source of income.

Money laundering plays a fundamental role in facilitating the ambitions of the drug

trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as

the many others who need to avoid the kind of attention from the authorities that sudden

wealth brings from illegal activities. By engaging in this type of activity it is hoped to

place the proceeds beyond the reach of any asset forfeiture laws.

The Money laundering process:

Money laundering is not a single act but is in fact a process that is accomplished in three

basic steps. These steps can be taken at the same time in the course of a single

transaction, but they can also appear in well separable forms one by one as well.

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The steps are:-

Placement;

Layering; and

Integration.

There are also common factors regarding the wide range of methods used by money

launderers when they attempt to launder their criminal proceeds. Three common factors

identified in laundering operations are;

The need to conceal the origin and true ownership of the proceeds;

The need to maintain control of the proceeds;

The need to change the form of the proceeds in order to shrink the huge volumes

of cash generated by the initial criminal activity.

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36

CHAPTER – 3

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Automatic Teller Machine (ATM)

Indian Overseas Bank has achieved results owing to performance. With a modest

beginning of the ATM installation in Mumbai, in Feb 1997 .IOB have a total of over

700ATMs adding strength to its business.

While expanding its scope of reach in giving its customer’s access to Any Time Money

ATMs have been installed across the length and breadth of the country.

ATMs are used for dispensing cash 24 hours a day. ATM cards are issued only to those

individuals who are majors and holding either a Savings Bank or Current Account.

These machines support transactions online and offline.

The online transactions supported are:

Cash Withdrawal

Balance Inquiry

Statement Inquiry

The offline transactions supported are:

Cash Withdrawal

Deposit of Cash/Cheque

Request for Statement/Cheque Book

All types of services are chargeable at nominal rates.

The card holder should maintain the minimum balance prescribed by the Bank from time

to time. Overdrawing is prohibited and the customer is bound by the action of the Bank.

During the currency of the card the savings/current/deposit accounts of the card holder

cannot be closed or transferred to other branches. The Bank reserves the right to

terminate the ATM facility upon occurrence of any of the events, which are inconsistent

with the Bank’s policy with regard to ATMs.

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Our bank has arrangement with the following member banks for sharing of ATM’s.

Indian Bank - Yes Bank Limited

Bank of Maharashtra - Karnataka Bank

Dena Bank - Syndicate Bank

Union Bank of India - United Bank of India

The Bank of Rajasthan Limited - Bank of India

Services offered:

Cash withdrawals

Cash deposits

Cheque Deposits

Statement of Accounts

Cheque/DD etc.

Multilingual screens

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Internet Banking

Internet Banking is the online banking service provided by Indian Overseas Bank for the

benefit of customers to access and transacts their account on all 365 days.

Internet Banking is the most convenient and powerful way to manage your account as it

is Real Time, giving you up-to-the-second details on your account.

Services of Internet Banking:

Balance Enquiry

Last Few transactions

Account Statement

Transfer money to any of your bank accounts (within and outside IOB)

Payment services:

Direct Taxes

Indirect Taxes

College Fees for the students studying at SASTRA-Tanjore

Utility bills like Insurance, mobile etc and many more.

Tamilnadu Electricity board bills

Recurring deposit installments

Loan installments

IOB Credit card dues

Register with Internet banking:

Savings/ Current account holders

Deposit / Loan account holders

Proprietary firms

Partnership companies

Limited Companies

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Societies/Trusts

HUFs

Step to Register:

Step 1:

Login to www.iobnet.co.in

Click on “Register Individual” if you are an individual or a proprietary firm

Else click on “Register Corporate”

Once registered submit the application forms and the annexure displayed to you (in case

of Companies/Partnership firms/Societies/Trusts) to your branch

Note down the PIN number which is to be used for all Funds transfer transactions. Your

account will be activated by the branch on receipt of the application

Step 2:

Login with your password

Login Password & transaction PIN are different where password is used to login and PIN

for funds transfer. The wrong passwords more than 3 times consecutively, will block

your account. Once you’re activated you will receive an e-mail saying that your account

is activated.

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MOBILE BANKING

Mobile Banking is a service that allows customers to do banking transactions on their

mobile phone without making a call, using the SMS facility.

Mobile Banking works on the 'Text Messaging Facility' also called the SMS that is

available on mobile phones. This facility allows sending a short text message from

mobile phone instead of making a phone call.

All that is need to do is, to type out a short text message on mobile phone and send it out

to a specific mobile banking number given by the bank .The response is sent as an SMS

message, all in the matter of a few seconds.

The following transactions are currently available across India -

Balance Inquiry of all accounts linked to Customer Identification Number

(maximum up to five accounts)

Following transactions give information on primary account

Checking the last 3 transactions in your primary account for Mobile Banking

Placing a Stop Payment on a cheque

Requesting a cheque book

Requesting an Account Statement

Cheque Status inquiry

Bill Presentment

Fixed Deposit Inquiry

A Help menu, which gives you the transaction codes for the various transactions

IPIN Re-generation request 

SMS Banking initiatives permit you to access your Bank accounts and carry out various

banking transactions and enquire. If you have a mobile phone, you can use the SMS

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facility and conduct the following operations using the messaging services of your

service provider.

Balance Enquiry

Last Few Transactions

Cheque Paid Status

Cheque Book Request

ATM Locator

Branch Locator

Fund Transfer - Own

Fund Transfer - Third Party

Fund Transfer - Inter Bank

Credit Card Payment

Loan Service

Deposit Balance Enquiry

Movie Ticket Booking

Air Ticket Booking

Demat Service

SMS banking is one the IOB retail banking channels, which allows customers to do

banking activities from their mobile phone using SMS Technology. IOB's mobile

banking keeps its valued customers updated with their bank account details and enables

them to request for their account information and make request to Stop Cheque or cheque

the status of cheque presented.

SMS alert service keeps you informed/ updated about the significant activities/

transactions taken place in your account(s). For example you can receive SMS Account

Balance alerts (Daily, Weekly or Monthly) or get alert whenever any debit or credit

transaction(s) happen in your account for the configurable amount.

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SMS Pull - enquiry enable the bank's mobile banking register to check his/ her account

balance or last few transactions for his/ her account(s) by just sending a message to

9551099007.

For balance enquiry in account:

Format: BAL<space><Account Nickname> to +919551099007

<Account Nickname> = SB+<Your Account Number> (should be 9 digits)

<Account Nickname> = CD+<Your Account Number> (should be 9 digit's) etc.

e.g.: Original Account number: 1234

Equivalent 9-digit account: 000001234

e.g.: BAL<space>SB000001234 to +919551099007

Visit our https://www.iobnet.mobi from your desktop browser. This will open the

customer module where you can click on the "How to Register?" and download the form,

fill the details and just walk in to your nearest branch or apply for the Mobile Banking

service by duly filling the Mobile Banking application form in the branch.

The service is available to all IOB customers with local or foreign currency accounts

(Current, Saving accounts, Loan, Term Deposit or Credit Card).

SMS Banking service works on all GSM mobile phones that support SMS technology.

Compose a new SMS text message as per the sample messages on the SMS Banking User

Guide and send it to +919551099007.

You can save all the text formats you need under the "sent item" on your mobile phone

for your future use. No PIN is required to enquire on accounts.

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Identification of Fake Notes

Despite of skillfully forging a currency note, the genuineness cannot be achieved. The

differences will be due to the Paper Ink, Human Element and above all Unavailability of

the Security Measures taken by the Currency Press by the Government. The genuine

notes are made of a special type of paper which is manufactured in Security Paper Mill,

Hoshangabad (Madhya Pradesh).

    In printing, multi-coloured impressions are used with the intaglio printing press. The

forgers use various methods for making the counterfeit currency viz.

Photographic Method

Process made Forgery

Hand engraved blocks

Lithographic Process

Hand Drawn Forgery

    Forged notes usually exhibit certain characteristic differences which facilitates easy

identification. There are number of distinguishable features when compared with genuine

notes.

Size: While cutting in bundles the size of the forged notes are not same, while the

size of genuine currency is fixed.

Size of Printed Design: The technique used for printing the genuine notes is

highly sophisticated. It gives each and every line in printing with cleat and sharp

images. It is not possible with the counterfeit currency.

Watermark: In counterfeit notes, the watermark is made by using Opaque Ink,

painting with white solution, stamping a die, engraved with the picture of

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Mahatma Gandhi and also by applying oil, grease or wax to give the transparent

image of Mahatma Gandhi.

Security Thread: In genuine notes, the security thread is incorporated into the

paper at the time of manufacture of the paper. The security thread in counterfeit

notes is imitated by drawing a line by pencil or printing a line with grey ink or by

using an aluminum thread while pasting two thin sheets of paper. In genuine notes

over security thread one can read the word RBI and BHARAT in Hindi

Numbering: In counterfeit currency it is difficult to reproduce the same shape of

individual numbers again and again with accuracy. The alignment of figures is

also difficult to maintain by the forgers. Spreading of Ink, Smaller or Bigger

Number, Inadequate gaps, and Different alignments in numbers can be regarded

with suspicion.

Quality of Printing: In counterfeit notes the printed lines will be broken and there

may also be smudging of Ink.

Other Techniques

Serial numbers are printed with fluorescent ink which can be seen when viewed

under a ultra-violet lens.

Floral design on the left side- half the denomination of the currency will be

printed on the front side and the other half on the back side. If seen against bright

light, the complete denomination appears.

Just below the floral print, a mark is made in Intaglio (a kind of printing where the

image is slightly raised) for the visually-impaired to identify the denomination.

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For the Rs. 500 note, the mark is a CIRCLE, for the Rs. 100, it is a TRIANGLE

and a SQUARE for the Rs. 50.

Similarly, a portrait of Mahatma Gandhi, the RBI Seal, a guarantee and promise

clause, an Ashoka Pillar emblem on the left and RBI Governor's signature are all

printed on Intaglio.

A band printed on the right side contains a latent image of the denomination of the

banknote. The numeral appears when the currency is held horizontally at the eye

level.

A wide security thread with inscriptions BHARAT in Hindi and RBI runs through

the banknote. The thread fluoresces on both sides in Ultra-violet light.

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49

CHAPTER – 4

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RATIO ANALYSIS

Meaning and definition of ratio analysis:

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic

use of ratio to interpret the financial statements so that the strength and weaknesses of a

firm as well as its historical performance and current financial condition can be

determined. The term ratio refers to the numerical or quantitative relationship between

two variables.

Capital adequacy ratio:

Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time

liabilities and other risks such as credit risk, operational risk, etc. In the simplest

formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's

depositors and other lenders. Banking regulators in most countries define and

monitor CAR to protect depositors, thereby maintaining confidence in the banking

system.

Definition of 'Capital Adequacy Ratio - CAR':

A measure of a bank’s capital. It is expressed as a percentage of a bank's risk weighted

credit exposures. 

Capital Adequacy Ratio - CAR' this ratio is used to protect depositors and promote the

stability and efficiency of financial systems around the world. Two types of capital are

measured there are tier one capital, which can absorb losses without a bank being

required to cease trading, and tier two capital, which can absorb losses in the event of a

winding-up and so provides a lesser degree of protection to depositors.

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Financial assets or the financial value of assets, such as cash.

The factories, machinery and equipment owned by a business.

A term used to describe the capital adequacy of a bank. Tier I capital is core

capital; this includes equity capital and disclosed reserves.

A term used to describe the capital adequacy of a bank. Tier II capital is secondary bank

capital that includes items such as undisclosed reserves, general loss reserves,

subordinated.

SLR (Statutory Liquidity Ratio):

Every bank is required to maintain at the close of business every day, a minimum

proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash,

gold and un-encumbered approved securities. The ratio of liquid assets to demand and

time liabilities is known as Statutory Liquidity Ratio (SLR).  RBI is empowered to

increase this ratio up to 40%.  Increases in SLR also restrict the bank’s leverage position

to pump more money into the economy.

SLR stands for Statutory Liquidity Ratio. This term is used by bankers and

indicates the minimum percentage of deposits that the bank has to maintain in form

of gold, cash or other approved securities.  Thus, we can say that it is ratio of cash

and some other approved securities to liabilities (deposits) it regulates the credit

growth in India.   Some non-bankers also wrongly use SLR ratio or SLR Rate

instead of Statutory Liquidity Ratio.

Apart from keeping a portion of deposits with the RBI as cash, banks are also required to

maintain a minimum percentage of deposits with them at the end of every business day,

in the form of gold, cash, government bonds or other approved securities. This minimum

percentage is called Statutory Liquidity Ratio.

Example

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If you deposit Rs. 100/- in bank, CRR being 6% and SLR being 8%, then bank can use

100-6-8= Rs. 84/- for giving loan or for investment purpose.

Statutory Liquidity Ratio

(SLR)

24%(w.e.f.

18/12/2010)

Decreased from 25%

which was continuing

since 07/11/2009

Cash Reserve Ratio (CRR):

The Reserve Bank of India (Amendment) Bill, 2006 has been enacted and has come into

force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the

Reserve Bank, having regard to the needs of securing the monetary stability in the

country, RBI can prescribe Cash Reserve Ratio (CRR) for scheduled banks without

any floor rate or ceiling rate [Before the enactment of this amendment, in terms of

Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled

banks between 3 per cent and 20 per cent of total of their demand and time liabilities].

RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of

the economy from time to time. Increase in CRR means that banks have fewer funds

available and money is sucked out of circulation. Thus we can say that this serves duel

purposes i.e.(a)  ensures that a portion of bank deposits is kept with RBI and is totally

risk-free, (b) enables RBI to  control liquidity in the system, and thereby, inflation by

tying the  hands of the banks in lending money.

Banks in India are required to hold a certain proportion of their deposits in the

form of cash.  However, actually Banks don’t hold these as cash with themselves,

but deposit such case with Reserve Bank of India (RBI) / currency chests, which is

considered as equivalent to holding cash with RBI. This minimum ratio (that is the

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part of the total deposits to be held as cash) is stipulated by the RBI and is known as

the CRR or Cash Reserve Ratio.  Thus, when a bank’s deposits increase by Rs100,

and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6

with RBI and Bank will be able to use only Rs 94 for investments and lending /

credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that

banks will be able to use for lending and investment.  This power of RBI to reduce

the lendable amount by increasing the CRR makes it an instrument in the hands of

a central bank through which it can control the amount that banks lend.  Thus, it is

a tool used by RBI to control liquidity in the banking system.  Some non-bankers

also wrongly use CRR Ratio or CRR Rate instead of Cash Reserve Ratio).

Banks are required to maintain a percentage of their deposits as cash, meaning that if you

deposit Rs. 100/- in your bank, then bank can’t use the entire Rs. 100/- for lending or

investment purpose. They have to maintain a portion of the deposit as cash and can use

only the remaining amount for lending/investment. This minimum percentage which is

determined by the central bank is known as Cash Reserve Ratio.

So if CRR is 6% then it means for every Rs. 100/- deposited in bank, it has to maintain a

minimum of Rs. 6/- as cash. However banks do not keep this cash with them, but are

required to deposit it with the central bank, so that it can help them with cash at the time

of need.

Cash Reserve Ratio (CRR)

4.75% (w.e.f 10/03/2012)

-announced on

24/01/2012

Decreased from

5.50%which was

continuing since

24/01/2012

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Indian Overseas Bank: Ratio Analysis

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Capital Adequacy Ratio

14.55 14.26 12.70 11.96 13.27

EARNINGS RATIOS

Income from Fund Advances as a % of Op Income

68.05 67.72 66.81 66.06 64.13

Operating Income as a % of Working Funds

11.62 14.31 14.57 13.83 12.92

Fund based income as a % of Op Income

94.65 94.80 94.53 94.59 93.98

Fee based income as a % of Op Income

5.34 5.19 5.46 5.40 6.01

PROFITABLITY RATIOS

Yield on Fund Advances

7.91 9.69 9.73 9.13 8.28

Break-Even Yield Ratio

7.05 8.95 9.04 8.75 6.95

Cost of Funds Ratio 4.79 5.90 6.34 5.83 4.56

Net Profit Margin 8.04 6.14 11.87 13.94 16.18

Adjusted Return On Net Worth

13.12 11.10 21.16 25.31 25.97

Reported Return On Net Worth

13.13 11.13 22.31 25.35 26.04

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BORROWING RATIOS

Borrowings from RBI as % to Total Borrowings

19.37 0.00 0.00 0.00 8.63

Borrowings from other banks as a % to Total Borrowings

0.00 0.00 0.00 0.00 0.00

Borrowings from others as a % to Total Borrowings

46.46 68.35 47.13 66.24 36.72

Borrowings within India as a % to Total Borrowings

65.83 68.35 47.13 66.24 45.35

Borrowings from outside India as a % to Total Borrowings

34.16 31.64 52.86 33.75 54.64

DEPOSIT RATIOS

Demand Deposit of Total Deposits

8.12 8.67 8.12 10.67 9.91

Saving Deposit of Total Deposits

22.07 23.87 22.13 22.78 24.94

Time Deposit of Total Deposits

69.79 67.45 69.74 66.54 65.14

Deposits within India as % to Total Deposits

96.66 95.16 95.32 95.86 96.56

Deposits Outside India as % to Total Deposits

3.33 4.83 4.67 4.13 3.43

PER BRANCH RATIOS

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Operating Income Per Branch

5.95 5.55 5.58 4.44 3.26

Operating Profit Per Branch

0.74 0.47 0.99 0.81 0.68

Net Profit Per Branch

0.49 0.35 0.64 0.64 0.54

Personnel Expenses Per Branch

0.80 0.85 0.65 0.50 0.50

Administrative Expenses Per Branch

0.80 0.74 0.46 0.30 0.32

Financial Expenses Per Branch

3.61 3.48 3.47 2.81 1.76

Borrowings Per Branch

8.86 4.41 3.35 3.37 1.55

Deposits Per Branch 66.50 54.42 51.24 44.78 36.90

PER EMPLOYEE RATIOS

(Rs. in Units)

Operating Income Per Employee

5,073,758.60 4,765,322.86 4,304,598.61 3,375,362.50 2,548,981.69

Operating Profit Per Employee

627,277.14 403,234.87 762,536.12 619,576.28 531,146.68

Net Profit Per Employee

418,137.91 297,216.46 496,030.14 484,882.05 421,627.43

Personnel Expenses Per Employee

679,441.50 730,974.63 501,772.24 383,494.06 390,204.43

Deposits Per Employee

56,672,422.97

46,685,787.54

39,498,121.91

34,051,681.03

28,808,689.87

Fund Advances Per Employee

43,640,434.52

33,290,041.17

29,544,037.80

24,399,872.40

19,722,679.69

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Key Financial Ratios of Indian Overseas Bank

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 5.00 3.50 4.50 3.50 3.00

Operating Profit Per Share (Rs) 25.98 17.57 35.48 28.16 23.26

Net Operating Profit Per Share (Rs) 210.13 207.58 200.27 153.43 111.64

Free Reserves Per Share (Rs) 60.38 45.21 42.83 42.79 34.32

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Interest Spread 3.89 4.69 4.29 4.26 4.79

Adjusted Cash Margin (%) 8.82 7.10 12.16 14.79 17.12

Net Profit Margin 8.04 6.14 11.87 13.94 16.18

Return on Long Term Fund (%) 116.16 126.87 145.71 146.37 119.88

Return on Net Worth (%) 13.13 11.13 22.31 25.35 29.11

Adjusted Return on Net Worth (%) 13.12 11.10 21.16 25.31 25.97

Return on Assets Excluding Revaluations 131.96 116.54 109.06 87.05 71.08

Return on Assets Including Revaluations 150.71 138.12 131.26 89.15 73.24

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Management Efficiency Ratios

Interest Income / Total Funds 8.46 9.06 9.85 9.09 8.60

Net Interest Income / Total Funds 3.32 3.39 3.74 3.34 3.98

Non-Interest Income / Total Funds 0.21 0.16 0.23 0.29 0.21

Interest Expended / Total Funds 5.13 5.67 6.11 5.75 4.63

Operating Expense / Total Funds 2.28 2.62 1.99 1.67 2.18

Profit Before Provisions / Total Funds 1.19 0.84 1.89 1.88 1.92

Net Profit / Total Funds 0.70 0.57 1.20 1.31 1.43

Loans Turnover 0.14 0.15 0.16 0.16 0.15

Total Income / Capital Employed (%) 8.67 9.21 10.08 9.38 8.82

Interest Expended / Capital Employed (%) 5.13 5.67 6.11 5.75 4.63

Total Assets Turnover Ratios 0.08 0.09 0.10 0.09 0.09

Asset Turnover Ratio 5.13 4.60 4.64 7.58 6.08

Profit And Loss Account Ratios

Interest Expended / Interest Earned 65.23 69.08 70.24 66.37 56.09

Other Income / Total Income 2.42 1.72 2.30 3.08 2.39

Operating Expense / Total Income 26.28 28.45 19.76 17.81 24.77

Selling Distribution Cost Composition 0.17 0.31 0.24 0.14 0.22

Balance Sheet Ratios

Capital Adequacy Ratio 14.55 14.26 12.70 11.96 13.27

Advances / Loans Funds (%) 78.66 69.78 75.89 74.45 76.58

Debt Coverage Ratios

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Credit Deposit Ratio 74.54 72.96 73.36 70.22 68.60

Investment Deposit Ratio 33.69 32.65 32.36 34.27 35.99

Cash Deposit Ratio 6.90 6.45 8.17 9.02 6.51

Total Debt to Owners Fund 17.79 17.45 16.85 17.78 17.75

Financial Charges Coverage Ratio 0.24 0.16 0.32 0.34 1.43

Financial Charges Coverage Ratio Post Tax 1.15 1.12 1.21 1.24 1.33

Leverage Ratios

Current Ratio 0.03 0.03 0.02 0.02 0.02

Quick Ratio 25.94 23.61 11.46 11.32 8.07

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 33.52 31.55 21.63 16.96 18.96

Dividend Payout Ratio Cash Profit 30.53 27.24 20.10 15.96 17.87

Earning Retention Ratio 66.45 68.38 77.19 83.02 81.00

Cash Earning Retention Ratio 69.44 72.70 78.89 84.02 82.09

Adjusted Cash Flow Times 123.44 135.59 73.71 66.09 64.41

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Earnings Per Share 17.33 12.98 24.34 22.07 18.51

Book Value 131.96 116.54 109.06 87.05 71.08

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60

CHAPTER – 5

LOANS

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VARIOUS TYPES OF LOANS

Advance-General Instruction:

IOB Bank has large number of credit schemes to suit to the requirements of individual

customers. Thus, loans and advances are extended against pledge of bank deposits

receipts, Life Insurance Policies, fully paid shares and debentures, National Savings

Certificates.

Kisan Vikas Patras, Indira Vikas Patras, Unit Trust of India Certificates, etc. IOB Bank

also extends loans against pledge of Jewels to Agriculturists and others. Normally 25%

margin is maintained for all the advances. However, in specific cases like advances

against National Savings Certificates, Kisan Vikas and Indira Vikas Patras, higher margin

is stipulated as these instruments are not encashable on demand but can be encashed only

on the date of maturity. The rate of interest is fixed by Bank from time to time.

IOB Bank also extends finance to the Farmers for cultivation of crops, minor irrigation,

land development, farm mechanisation, Horticulture and plantation and allied activities

like diary, poultry, goat and sheep rearing, fishery, prawn culture, piggery, seri-culture

and for construction of bio-gas plants. Credit facilities are also extended for construction

and repair of houses under SUBHA GRUHA SCHEME, purchase of new and old cars

under PUSHPAKA SCHEME, payment of taxes under TAX SULABH SCHEME and

credit assistance for stock brokers / share brokers under SOWMITRA SCHEME. Credit

facilities are also extended under HOME DECORSCHEME for purchase of furnishing

etc, under CLEAN LOAN & PERSONAL LOAN schemes to salaried persons for

personal expenses & purchase of consumer durable respectively, SAHAYIKA for

purpose of meeting social commitment, EASY TRADE FINANCE scheme for hassle

free finance for trading activities etc.

Loans are extended to Small Scale Industries, Tiny Sector and ancillary units. Credit

facilities are also extended to Women entrepreneurs, weaker section, rural artisans,

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village and cottage industries and Transport operators, Retail Traders, professional and

self-employed and business enterprises. Loans are also extended to bright and deserving

students for higher education. Credit facilities are also extended for various Government

Sponsored Schemes like IRDP, PMRY, and Scheme for Urban Micro-Enterprises and

Self-Employment scheme for educated, unemployed youth. Loans are extended at a

differential rate of interest to the citizens belonging to weaker section of the society,

Scheduled Caste and Scheduled Tribes and Physically handicapped person.

Loans against LIC Policies:

Credit facilities are extended against pledge of Life Insurance Policies, preferably

endowment policies upto 90% of the surrender value. No advance is granted against a

policy, which stands assigned to a minor. The policy should not contain any special

conditions, which restricts its assignability. Citizens' have to produce the latest premium

paid receipt as a proof that the premia has been paid upto date and that the policy is in

force. Loan is sanctioned after the policy is assigned in favour of the bank and

registration of such assignment with LIC. Loans are also extended against insurance

policies of private insurance companies recognised by IRDA.

Loan against National Savings Certificates, Indira Vikas Patras and Kisan Vikas

Patras:

Citizens can also avail loan against their National Savings Certificates, Indira Vikas

Patras and Kisan Vikas Patras upto 50% of the invested amount by pledging the

certificates / bonds with the Bank. The respective Post Offices are also to record the

pledge in Bank's favors. Margin and rate of interest are fixed by Bank from time to time.

Agricultural Loans:

Short-term loans are sanctioned for raising crops, for cultivation of traditional plantations

like tea, coffee, rubber and, etc. Loan facility is also available for dairy development,

poultry farming, purchase of electric motor / oil engine with pumpsets, purchase of

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tractors, trailers and other agricultural implements and also for development of irrigation,

for reclamation and land development.

Loan under scheme of Urban Micro Enterprises:

This scheme is introduced to encourage self-employment for the urban unemployed

citizens. To be eligible to avail this loan the family income of the citizen should not

exceed Rs.11, 850/- per year. He /she should have continuously lived in the area for the

last three years. He should either possess a Ration card or his/her name should be

mentioned in the ration card of his family. He/she should not be a borrower of any other

bank.

Prime Minister's Rozgar Yojana (PMRY)

The objective of the scheme is to provide employment for more than a million persons by

setting up of 7 lakh micro enterprises by the educated unemployment youth who are

matriculates. Preference is given for women entrepreneurs. The person should be

between 18 and 35 years old having permanent residence of the area for atleast 3 years.

Family income of the beneficiary should not be above Rs.24, 000/- per year. Loans are

extended upto Rs.95, 000/- under this scheme.

Margin on advances and rate of interest, security norms and income criteria are subject to

the guidelines issued by Reserve Bank of India from time to time. It is expected that the

applicants should not be defaulters to any financial institution including Cooperative

Societies and Land Development Banks. Crops, Livestock, Machinery purchased from

the bank loans are to be insured as per guidelines issued by Government of India/Reserve

Bank of India, from time to time.

Subha Gruha (Housing Loan Scheme):

Eligibility: Individuals/group of individuals/members of cooperative societies. The

individuals should have regular monthly income from employment, business, profession,

agriculture. In the case of employed persons three years continued service is necessary

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and for self-employed, professionals, business people three years standing in their

respective field is necessary. The applicant should not be more than 55 years of age.

Purpose: The loan is granted for purchase/construction of new flat/house or for purchase

of old house/flat not exceeding 15 years. The loan is also granted for extension of the

existing house/flat. Higher quantum may be considered for High Net Worth individuals.

Quantum: Maximum quantum of loan is Rs 50 lacs. The loan is however restricted to

80% of the cost of purchase/construction and also the repaying capacity of the applicant

is taken into account while fixing the quantum of loan. Higher quantum may be

considered for high net worth individuals.

Security: The property purchased/constructed should be mortgaged to the bank.

Interest rate: Two types of interest rate namely fixed and floating interest rate are

permitted. Bank retains the right to convert the fixed rate to floating rate after three years

Repayment: The maximum repayment period is 20 years in equated monthly

instalments. Loan to be closed before the applicant attains 65 years. Fixed interest rates

are repayable within 10 years. Repayment holiday period of 18 months for construction

and 3 months for purchase is granted. 36 post dated cheques to be obtained. Pre closure

of loan attracts levy of charges of 1%.

Clean Loan

Eligibility: Employees in Government, Public Sector Undertakings, reputed private

enterprises, firms, companies etc. and confirmed in service. The take home pay, after

deduction of the proposed loan installment should be more than 50% of the gross pay.

LIC agents are also eligible to apply for the loan subject to conditions.

Purpose: For any purpose including any social / financial commitment.

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Ten times of salary or Rs.10.00 lac whichever is lower, if your employer

undertakes to deduct the loan installment from salary and remit to us or the salary

is routed through the loan granting branch.

For others, it is 5 times of salary or Rs.1.00 lakh whichever is lower.

For LIC agents, the maximum loan is up to 10 times average monthly

commission or Rs.5.00 lakh whichever is lower.

Repayment: In a maximum of 60 months in case the loan is for 10 month salary and 36

months in case the loan is for 5 months’ salary.

Security: Two, third party personal guarantee, the salary of each guarantor being at least

equal to that of the borrower.

Other Conditions:

1. The employee should have a S.B. account in the branch from where the loan is

proposed to be availed.

2. Salary of the employee should be routed through the S.B. account at the branch where

the loan is sanctioned.

3. Undertaking letter from the employer undertaking to deduct from salary, loan

installment every month and remit to bank to be produced.

4. Letter from the employer, undertaking to recover the dues from the terminal benefits of

the employee in case of death, retirement or resignation to be produced.

Documents Required: Application form, Salary certificate of applicant and guarantor

with deduction particulars, undertaking letter from employer to deduct monthly

installment and recover the dues from terminal benefit in case of necessity.

Processing Fee: One time processing fee of Rs. 204/- per lakh or part there of (subject to

change).

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Home Improvement Scheme

Loan granted for repair/renovation of existing house(s) in the name of borrower, e.g.

painting, building a compound wall, flooring/tiling, replacement of doors/windows,

wiring etc. The loan can be availed by individuals (salaried, business people,

professionals) owning at least a flat/house in his/her name. The applicant must be

confirmed in service in a reputed organisation. Take home pay should be more than 50%

of the gross salary after taking into account the instalment for the loan under reference.

Should have balance of service equal to or more than the repayment period.

Professionals/business people should be in the line of activity for a minimum period of 3

years and should be an Income Tax assessee.

Quantum: The minimum loan is Rs.25,000 and the maximum limit is Rs.5.00 lacs.

Margin: Immovable property =50% of market value

Repayment: In maximum 120 equated monthly instalments with a holiday of 3 months.

36 post dated cheques to be obtained

Security: Either equitable mortgage of the house/flat, which is under renovation/repair

and the land or any other immovable property in the name of the borrower and

unencumbered with a market value twice that of the loan amount.

HOMEDECOR SCHEME:

Loan is granted for furnishing the house with drawing room furniture, kitchen

equipments, bath tubs, air conditioners, cupboards etc. The scheme aims at a package to

furnish the entire house. Individuals in employment in reputed organisations and put in a

minimum of 3 years confirmed service, business people who are in the business for

atleast three years who have a house/flat in their name or in the name of spouse can

apply.

Quantum: Loan amount depends on the monthly income:

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Amount of Monthly Income Maximum Loan amount:

Rs.20,000/ and above 1.00 lac

Rs.10,000 to Rs.20,000 75,000/

Rs.10,000 and below 50,000/

Security: Hypothecation of the items purchased. Mortgage of the house if available and

third party guarantee worth for the loan amount.

Margin: 25% of the cost kept as term deposit till the loan is closed.

Repayment: Repayable in 60 equated monthly instalments. 36 Post dated cheques to be

obtained

Liquirent: Loan granted against the rent receivable for the unexpired period of the lease.

Owners of property let out to reputed companies, banks including our bank and to owners

of officers’ quarters are eligible to apply. A firm lease agreement is required. The rent

payable should be free of any encumbrance. If the rent is partly charged, the balance

should be sufficient to cover the loan instalment. Property is not subject to dispute or plan

violation.

Quantum: 75% of the net rent receivable for the unexpired lease period after deducting

the rental advance and "Tax Deductible at source. Maximum loan is equivalent to 84

months’ rent.

Repayment: Loan is repayable in a maximum of 84 equated monthly instalments not

exceeding the lease period.

Security: For loan upto Rs.2.00 lacs the rent receivable charged to the bank. For loan

above Rs.2.00 lacs, in addition to charging the rent receivable the property under lease or

any other property(market value 150%) is to be mortgaged or security such as Bank

Deposit, NSC, KVP, IVP,LIC, UNIS etc. to be offered.

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Pushpaka:

Eligibility of the applicant: Individuals in confirmed service in reputed Organisations,

Professionals, self-employed persons and business people. Salaried individual should

have atleast 50% of take home pay. Professionals, self-employed and business people

must be in the line of business for atleast three years. Total income should not be less

than Rs 5000 for two wheeler loan and Rs 8000 for car loans. Firms/Companies are also

eligible

Purpose: Loan is granted for purchase of new car of any make and also for used cars.

(Not older than 5 years)

Quantum: The maximum loan is 90% of the cost of the new car or 75% of the market

value of the used car. In the case of used car the maximum loan amount is Rs.5.00 lacs.

Two wheelers 90% of the cost or 10 times of monthly salary or Rs 60000/ whichever is

less

Repayment: The Loan is repayable in 60 equated monthly instalments for new car and

36 monthly instalments for used car. For two wheelers 60 equated monthly instalments.

12 Post dated cheques to be submitted.

Security: The vehicle is to be hypothecated to the bank and the RC book and insurance

for the vehicle should indicate the name of the bank as financiers.

Vidya Jyothi with Suraksha Educational Loan Scheme:

Eligibility of the applicant: Students of Indian National secured admission in

professional/technical course/foreign university/institution Scheme and services: Loan is

granted for study in graduation/post-graduation/professional courses/diploma course in

recognised institution/university in India and abroad. Need-based request for tuition fee,

hostel fee, cost of books, examination fee, and air fares (in the case of study abroad) are

provided for the entire duration of the course.

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Quantum: The maximum loan amount is Rs.7.50 lacs for study in India and Rs.15.00

lacs for study abroad.

Margin: Upto 4 lacs Nil. More than Rs 4 lacs studies within India 5%, abroad 15%.

Security: Upto 4 lacs Nil.. More than Rs 4 lacs to Rs 7.50 lacs, Third Party Guarantee..

More than Rs 7.50 lacs, Collateral Security of suitable value or co-obligation of

parents/guardian/third party alongwith assignment of future income of the

student.Land/Buildings/Govt Securities/ PS Bonds/ Units/KVP, NSC, Gold, Shares/ Bank

Deposits. Assignment of LIC policy in the name of the student beneficiary for the amount

of the loan.

Repayment: The loan is repayable in 60 to 84 equated monthly instalments from the

sixth month from the date of employment or after 12 months after completion of the

course whichever is earlier. Life cover for parent and student is available on payment of

full premium for the entire period.

Personal Loan to Citizens:

Any citizen who is a customer of our Bank and who is permanently employed in

Government Department / Public Sector undertaking and reputed organisations, can avail

Personal Loans to purchase of new consumer durables like radio, refrigerator, television,

washing machine, etc. Normally Bank extends loan upto 90 % of the cost of the article or

5 times of the salary of the employee whichever is lower. The loan component and the

margin money from the customers are directly paid to the dealer with instructions to

deliver the article to the customer.

Pensioners’ Loan Scheme:

Eligibility: Central/State Govt/ Defence Pensioner/Pilot pensioner/EB/PSU /Family

Pensioners.

Purpose: To meet household expenses.

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Quantum: Maximum loan amount is 10 times monthly pension or Rs 1 lacs whichever is

less for those not exceeding 65 years of age, for those who are over 65 years, the

maximum loan is Rs 50,000.

Repayment: Upto 65 years 48, EMI, Over 65 years 24 EMI.

Shubh Yatra:

Eligibility: Individuals not more than 70 years of age. In case of seeking employment

abroad, the maximum age should not be more than 40 years. Minimum Household

income should be Rs 1.20 lacs per annum (employees of reputed organisations)

Purpose: Tourism (both domestic and foreign travel), medical treatment and

employment abroad

Quantum: Maximum loan amount is 12 times gross monthly household income.

Minimum Rs 10000 and maximum Rs 10 lacs

Repayment: 36 EMI with a holiday period of 3 months

Security: Salary to be routed through us. Upto loan of Rs 1 lac, third party guarantee.

Above Rs 1 lac, Security by way of NSC, IVP, KVP, LIC etc.

Margin: 25% for foreign travel and nil margin for domestic travel

Consumption Loans-Sahayika:

Eligibility: Individual, confirmed permanent employee of a reputed organisation or a

professional or self-employed or businessperson with three years standing in the field of

activity, can apply for the loan. For salaried person the take home pay is at least 40% of

the gross salary after taking into account the installment for the present loan.

Purpose: For meeting social financial commitments such as marriage in the family,

education of children, medical treatment etc. The loan can be availed for any financial

commitment with in the ambit of law. Bank will not verify the purpose declared.

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Maximum loan: Maximum loan amount is Rs.3 lakh. The loan amount, however,

depends on the value of the security offered and repaying capacity. For professionals,

self-employed and business persons, the maximum loan is restricted to total annual

income of previous year, as declared in the I.T. return or assessment order but not

exceeding Rs.3 lakh.

Margin: 50% on immovable property; 25% on securities such as NSC, KVP, IVP, ULIP

etc; 10% on Life policies (surrender value) of LIC of India and other private insurance

companies.

Repayment: Repayable in Equated Monthly Installments up to a maximum period of 48

months. Shorter repayment period is also permitted.

Security: Immovable property or Liquid securities like NSC, IVP,KVP, ULIP, UNITS

etc. or Life policies of LIC of India and other private insurance companies approved by

IRDA

Documents:

Application indicting the purpose for which the loan is required, amount of loan

required and the repayment period

Proof of employment and income

Proof of standing in the field of activity for Professionals, self-employed and

business people

Income tax assessment order or return with ITO acknowledgement for

Professionals etc.

Details of the security offered and copies of the documents

Commercial Cash Credit against Jewellery: 

The “Commercial Cash Credit against Jewellery” from Indian Overseas Bank is a

package designed for assisting commercial activities in the country. Business needs for

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running a commercial activity can be met by availing finance under this product in the

form of cash credit or over draft with cheque book facility, against the value of jewels for

investment in commercial activities.

Eligibility: Individuals who own jewels, engaged in business activities like small

business/trade/professional and self-employed etc.

Amount of loan: Minimum finance under the scheme will be Rs.50,000/- and the

maximum will be Rs. 10 lacs.  The limit should not exceed the advance value at any point

of time.

For limits up to Rs.3 lakhs, the quantum of finance will be the advance value multiplied

by the net weight of the jewels or Rs.3 lakhs whichever is lower.

For limits exceeding Rs. 3 lakhs, quantum of finance will be the Advance value

multiplied by the net weight of the jewels or 20% of the projected turn over whichever is

lower, subject to a maximum of Rs. 10 lakh.

Rate of Interest: Interest will be a) For loans up to Rs. 3 lacs 12% b) For loans above 3

lacs - 12.50% (fixed) for Cash Credit/overdraft (subject to change). 

Margin: No margin.

Security: Fully secured by pledge of gold jewellery with fineness of 20 ct to 22 ct.

Repayment:  Cash Credit is to be renewed / reviewed every year. 

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Rate of interest

Retail Credit Interest Rates

Sl.

No.

Name of Scheme Floating  Interest Rate % p.a. Effective

date

1 Pushpaka - Loan for purchase

of new and used cars and new

2-wheelers

Up to 3 Years - 13.25

>3 to 5 Years -  13.75

01.08.2011

2 Sahayika - Loan to meet

social financial commitments

14.50 01.08.2011

3 Sanjeevini - Loan to medical

practitioners for setting up

nursing homes/hospitals and

for purchase of equipments

13.75 01.08.2011

4 Pensioners' Loan Scheme -

loan to pensioners for meeting

immediate emergency needs

14.75 01.08.2011

5 Home Décor - loan for

furnishing your home.

13.50 01.08.2011

6 Liquirent - loan against future

rent receivables

15.75 01.08.2011

7 Akshay - loan against life

policies of LIC and private

insurers approved by IRDA

14.50 01.08.2011

8 Vidya jyothi - loan for

pursuing higher education

01.08.2011

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up to Rs.4 lac

>Rs 4 lac    and up to Rs. 7.5

Lacs

Above Rs.7.5 lacs

12.75

14.00

13.75

9 Clean Loan - loan to

employees of reputed

organisations to meet 

personal expenditure

15.75 01.08.2011

10 Easy Trade Finance - Hassle

free working capital finance

and term loan to retail traders

Working Capital : 13.75

Term Loan : 14.25

01.08.2011

Housing Loans (for purchase/construction/repair/renovation)

Floating rates (based on Base Rate) w.e.f. 16.08.2011

Payment Options Interest rates % p.a.

Repayment * Up to 5 years > 5 to 10 yrs >10 to 20 yrs

Loan Amount

Up to Rs.30 lakh 11.00 11.25 11.50

Over 30 lakh 11.25 11.50 11.75

CONCLUSION

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I hereby conclude that I have learnt a vast thing through my in bank training. Before

going for the In Bank Training, I had only a small and theoretical knowledge on the part

on working of the bank. After taking up my training, I learnt many things like:

How to open an account viz., Current account, recurring deposit account, savings bank

account etc.

The verification of various loan documents.

How to draw a demand draft.

How to pledge the jewellery for loan.

So, last but not the least, with the help of this In Bank Training, I was able to gain more

knowledge on the part of practical, and in bank training helps me to complete my project

successfully.

Bibliography

Books:

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Banking law & practice: 1) Dr. Nirmala Prasad

2) C. Jeevanantham

Law of banking : Dr.S.R. Myneni

Money and banking : K.P.M. Sundhram

Websites:

www.IOB.in

WWW.RBI.in

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