HISTORY OF BANKING

INTRODUCTION
A bank is a financial intermediary that creates credit by lending money to a
borrower, thereby creating a corresponding deposit on the bank's balance sheet.
Lending activities can be performed either directly or indirectly through capital
markets. Due to their importance in the financial system and influence on
national economies, banks are highly regulated in most countries. Most nations have
institutionalized a system known as fractional reserve banking under which banks
hold liquid assets equal to only a portion of their current liabilities. In addition to
other regulations intended to ensure liquidity, banks are generally subject
to minimum capital requirements based on an international set of capital standards,
known as the Basel Accords.
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting cheques
deposited to customers' current accounts. Banks also enable customer payments via
other

payment

methods

transfers or telegraphic

such

as Automated

transfer, EFTPOS,

Clearing

House (ACH), Wire

and automated

teller

machines(ATMs).Banks borrow money by accepting funds deposited on current

accounts, by accepting term deposits, and by issuing debt securities such
as banknotes and bonds. Banks lend money by making advances to customers on
current accounts, by making installment loans, and by investing in marketable debt
securities and other forms of money lending.
Banks provide different payment services, and a bank account is considered
indispensable by most businesses and individuals. Non-banks that provide payment
services such as remittance companies are normally not considered as an adequate
substitute for a bank account. Banks can create new money when they make a loan.
New loans throughout the banking system generate new deposits elsewhere in the
system. The money supply is usually increased by the act of lending, and reduced
when loans are repaid faster than new ones are generated. There was an increase in
the money supply, largely caused by much more bank lending, which served to push
up property prices and increase private debt.

If all the banks increase their lending together, then they can expect new
deposits to return to them and the amount of money in the economy will increase.
Excessive or risky lending can cause borrowers to default, the banks then become
more cautious, so there is less lending and therefore less money so that the economy
can go from boom to bust.

ORIGIN OF BANKING
Banking in India in the modern sense originated in the last decades of the
18th century. Among the first banks were the Bank of Hindustan, which was
established in 1770 and liquidated in 1829-32; and the General Bank of India,
established in 1786 but failed in 1791. For many years the presidency banks had
acted as quasi-central banks, as did their successors, until the Reserve Bank of
India was established in 1935, under the Reserve Bank of India Act, 1934.
In 1969 the Indian government nationalized 14 major private banks. In 1980,
6 more private banks were nationalized. These nationalized banks are the majority
of lenders in the Indian economy. They dominate the banking sector because of their
large size and widespread networks. The Indian banking sector is broadly classified
into scheduled banks and non-scheduled banks. The scheduled banks are those
which are included under the 2nd Schedule of the Reserve Bank of India Act,
1934.The scheduled banks are further classified into: nationalized banks; State Bank
of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other
Indian private sector banks. The term commercial banks refer to both scheduled and
non-scheduled commercial banks which are regulated under the Banking Regulation
Act, 1949. Generally banking in India is fairly mature in terms of supply, product
range and reach-even though reach in rural India and to the poor still remains a
challenge.

EARLY PHASE (1786 TO 1935)

Banking in India originated in last decades of the 18th century. The first
banks were the general bank of India, which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is
the state bank of India, which originated in the Bank of Calcutta in June 1806, which
almost immediately became the Bank of Bengal. This was one of three presidency
bank, the other two being the bank of Bombay and the Bank of Madras, all three of
which were established under characters from the British east India company.
For many years the presidency bank acted as quasi-central banks, as did their
successors. The East India company established bank of Bengal, bank of Bombay
and bank of madras as independent units and called it presidency banks. The three
banks merged in 1925 to form the imperial bank of India, which, upon India's
independence, became the state bank of India. Foreign banks too started to arrive,
particularly in Calcutta, in the 1860s. The comptoired' escompte de Paris opened a
branch in Calcutta in 1860 and another in Bombay in 1862; branches in madras and
Pondicherry, then a French colony, followed.
HSBC established itself in Bengal in 1860. Calcutta was the most active
trading port in India, mainly due to the trade of the trade of British empire, and so
became a banking center. Indian merchants in Calcutta established the union bank in
1839, but it failed in 1848 because of the economic crisis of 1848-49. The Allahabad
bank, established in 1865 and still functioning today, is the oldest joint stock bank in
India.

JOINT STOCK BANKS

American civil war played a major role in the development of banking in
India. The next big thin gun folded in the early phase of banking was formation of
joint stock companies, with limited liability. The American civil war cut off the
supply of American cotton to England caused an unprecedented boom in India's
cotton trade with England. The first joint stock bank was bank of upper India, which
was established in 1863, and which survived until 1913, when it failed, with some of
its assets and liabilities being transferred to the alliance bank of Shimla. The first

entirely Indian joint stock bank was the Oudh commercial bank, established in 1881
in faizabad. It failed in 1958. The next was the Punjab national bank, established in
Lahore in 1895, which has survived to present and is now one of the largest banks in
India.

STABILITY & GROWTH

Around the turn of the 20th Century, the Indian economy was passing
through a relative period of stability. Around five decades had elapsed since the
Indian Mutiny, and the social, industrial and other infrastructure had. improved.
Indians had established small banks, most of which served particular ethnic and
religious communities.
The presidency banks dominated banking in India but there were also some
exchange banks and a number of Indian joint stock banks. All these banks operated
in different segments of the economy. The exchange banks, mostly owned by
Europeans, concentrated on financing foreign trade. Indian joint stock banks were
generally undercapitalized and lacked the experience and maturity to compete with
the presidency and exchange banks. This segmentation let Lord Curzon to observe,

SWADESHI MOVEMENT
The Swadeshi movement inspired local businessmen and political figures to
found banks of and for the Indian community. A number of banks established then
have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India. Ammembal Subba Rao Pai
founded "Canara Bank Hindu Permanent Fund" in1906. Central Bank of India was
established in 1911 by Sir Sorabji Pochkhanawala and was the first commercial
Indian bank completely owned and managed by Indians. In 1923, it acquired the
Tata Industrial Bank.
"In respect of banking it seems we are behind the times. We are like some
old fashioned sailing ship, divided by solid wooden bulkheads into separate and
cumbersome compartments."

The fervor of Swadeshi movement lead to establishing of many private

banks in Dakshina Kannadaand Udupi district which were unified earlier and known
by the name South Canara (South Kanara) district. Four nationalized banks started
in this district and also a leading private sector bank. Hence, undivided Dakshina
Kannada district is known as "Cradle of Indian Banking".
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.

Bank of Bengal 1809

Bank of Bombay 1840
Bank of Madras 1843
Allahabad Bank 1865
Punjab National Bank Ltd 1894
Canara Bank 1906
Indian Bank 1907
Bank of Baroda 1908
Central Bank of India 1911
Bank of Mysore 1913
Union Bank of India 1922.

PRE NATIONALIZATION PHASE (1935 TO 1969)

Organized banking in India is more than two centuries old. Until 1935 all,
the banks were in private sector and were set up by individuals and/or industrial
houses, which collected deposits from individuals and used them for their own
purposes. In the absence of any regulatory framework, these private owners of banks
were at liberty to use the funds in any manner, they deemed appropriate and
resultantly, the bank failures were frequent. For many years the Presidency banks
acted as quasi-central banks, as did their successors. Bank of Bengal, Bank of
Bombay and Bank of Madras merged in 1925 to form the Imperial Bank of India,
which, upon India's independence, became the State Bank of India.
Even though consolidation in banking was building trust among the investors
but a central regulatory, authority was much needed. British Government in India
passed many trade and commerce laws but acted little on regulating the banking
industry.

RESERVE BANK OF INDIA

Another breakthrough happened in this phase, which was Reserve Bank of
India. The Reserve Bank of India was set up on the recommendations Royal

Commission on Indian Currency and Finance also known as the Hilton-Young

Commission. The commission submitted its report in the year 1926, though the bank
was not set up for nine years. Reserve Bank of India (RBI) was created with the
central task of maintaining monetary stability in India. The Government on
December 20, 1934 issued a notification and on January 14, 1935, the RBI came
into existence, though it was formally inaugurated only on April 1, 1935.

MAIN FUNCTIONS OF RBI

Regulate the issue of banknotes Maintain reserves with a view to securing
monetary stability and to operate the credit and currency system of the country to its
advantage The Bank began its operations by taking over from the Government the
functions so far being performed by the Controller of Currency and from the
Imperial Bank of India. Offices of the Banking Department were established in
Calcutta, Bombay, Madras, Delhi and Rangoon. Burma (Myanmar) seceded from
the Indian Union in 1937 but the Reserve Bank continued to act as the Central Bank
for Burma until Japanese Occupation of Burma and later unto April 1947. After the
partition of India, the Reserve Bank served as the central bank of Pakistan up to June
1948 when the State Bank of Pakistan commenced operations.

POST NATIONALIZATION PHASE (1969 TO 1990)

I think nationalization 7 of banks in India was an important phenomenon.
On July 19, 1969 - the erstwhile government of India nationalized 14 major
private banks. Nationalization of bank in India was not new or happening first time.
From 1955 to 1960, State Bank of India and other seven subsidiaries were
nationalized under the SBI Act of 1955.

Central Bank of India

Bank of Maharashtra
Dena Bank
Punjab National Bank
Canara Bank
Indian Bank
Indian Overseas Bank
It was not a step taken at random or because of the whims of the leadership

of the time, but reflected a process of struggle and political change which had made
this an important demand of the people. Nationalization took place in two phases,
with a first round in 1969 covering 14 banks followed by another in 1980 covering
seven banks. Currently there are 27 nationalized commercial banks.

WHAT IS NATIONALIZATION
Nationalization, also spelled nationalization, is the act of taking an industry
or assets into the public ownership of a national government or state. Nationalization
usually refers to private assets, but may also mean assets owned by lower levels of
government, such as municipalities, being state operated or owned by the state. The
opposite of nationalization is usually privatization or de-nationalization. The
motives for nationalization are political as well as economic.

REASONS FOR NATIONALIZATION

The need for the nationalization was felt mainly because private commercial
banks were not fulfilling the social and developmental goals of banking, which are
so essential for any industrializing country. Despite the enactment' of the Banking
Regulation Act in 1949 and the nationalization of the largest bank, the State Bank of
India, in 1955, the expansion of commercial banking had largely excluded rural
areas and small-scale borrowers
The developmental goals of financial intermediation were not being achieved
other than for some favored large industries and established business houses.
Whereas industry's share in credit disbursed by commercial banks almost doubled
between 1951 and 1968, from 34 percent to 68 per cent, agriculture received less
than 2 per cent of total credit.

The stated purpose of bank nationalization was to ensure that credit

allocation occur in accordance with plan priorities.
Reduce the hold of moneylenders and make more funds available for
agricultural development. Nationalization of bank was to actively involved in
poverty alleviation and employment generation programs.

ADVANTAGES OF NATIONALIZATION
Nationalized banks had to provide 18 per cent of their net credit to the
agricultural sectors. This was targeted to reduce the hold of moneylenders and make
more funds available for agricultural development. This has substantially helped
farmers.
The reach of banking widened; the entry barriers that existed for customers
to bank, social economic and political were lowered. This resulted in a massive
quantitative expansion of the bank customer base as well as in the nature of services
provided. Absence of concern for profitability and targeting made banks to expand
rapidly in unbanked areas thereby the entire country was linked to banking activity.
Enhanced bank credit to the farm sector became instrumental for the success of
green revolution and the increase of aggregate food grain production in north and
northwest India in the 1970s and in the eastern region in the 1980s. Increase in
exports by small-scale manufacturers over the 1980s and 1990s, such that they
accounted for around two-third of the total value of all exports, was strongly related
to access to bank credit provided by priority sector norms. Collection of saving:
Private banks were not that good in attracting more saving. However, with
nationalization banks were now backed by Government of India, which.
tremendously improved their credibility. This helped in more deposits, more savings
hence more supply of money.

DISADVANTAGES OF NATIONALIZATION
State intervention to some extent distorted the banking sector. The
domination of the State has had a negative effect on the contribution of the banking
sector as a whole to the economy. Absence of profitability, non-realization of its
potential as a business and the deterioration in service has all affected citizens. The
intervention by the State and excessive domination and intervention by the
bureaucracy and polity into the functioning of banks has led to deterioration on
economic efficiency, which runs counter to the principles of a good Government.
Low Profitability: When the ownership is in public sector, the employs do not work
for profit and do not their performance and efficiency of the employs remains poor.
Competition is necessary for development and increasing the production.
Nationalization has decreased the spirit of competition. This phase of Indian banking
not so happening for entry of new banks. Undoubtedly, it was a phase of expansion,
consolidation and increment in many ways. The banking sector grew at a
phenomenal rate, fruits of nationalization were evident, and common person was
now banking with great trust. National Bank for Agricultural and Rural
Development (NABARD) was set up in 1982, as an apex institution for agricultural
and rural credit, though primarily, a refinance extension institution.
Board for Industrial & Financial Reconstruction (BIFR) came into existence
under Sick Companies (Special Provisions) Act 1985 and started its operations wed
May 15, 1987. It is meant to deal with sick companies or potential sick companies as
defined under the Act. BIFR, based on a reference by the concerned sick company,
takes a decision whether the company should be rehabilitated or wound up.

MODERN PHASE FROM 1991 TILL DATE

This is the phase of "New Generation" tech-savvy banks. This phase can be
called as "The Reforms Phase". Starting of the modern and current phase of Indian
Banking is marked by two important events. Banks in India can be categorized into
Scheduled and Non-scheduled Banks.

10

SCHEDULED BANKS
Scheduled Banks in India constitute those banks, which have been included
in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn
includes only those banks in this schedule which satisfy the criteria laid down vide
section 42 (6) (a) of the Act. As on 30th June 1999, there were 300 scheduled banks
in India having a total network of 64,918 branches. The scheduled commercial
banks in India comprise of State bank of India and its associates (8), nationalized
banks (19), foreign banks (45), private sector banks (32), co-operative banks and
regional rural banks.

NON-SCHEDULE BANKS
Non-scheduled bank in India" means a banking company as defined in clause
(c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a
scheduled bank". Banks in India can also be classified in a different way.
Public Sector Banks
Private Sector Banks
Foreign Banks
Regional Rural Banks (RRBs) The above mentioned classification overlaps
with the previous one. Public Sector, Private Sector and Foreign Banks fall the
category of scheduled banks. Currently, India has 88 scheduled commercial banks
(SCBs) - 27 public sector banks (that is with the Government of India holding a
stake), 31 private banks (these do not have government stake; they may be publicly
listed and traded on stock exchanges) and 38 foreign banks.
They have a combined network of over 53,000 branches and 17,000 ATMs.
According to are port by ICRA Limited, a rating agency, the public sector banks
hold over 75% of total assets of the banking industry, with the private and foreign
banks holding 18.2% and 6.5%respectively.

11

PROFILE OF THE BANK

12

INDIAN OVERSEAS BANK

Indian Overseas

Bank (IOB) is

a major public sector bank based

in Chennai (Madras), with about 3700 domestic branches, including 1150 branches
in Tamil Nadu, 3 extension counters, and eight branches and offices overseas as of
30 September 2014. Indian Overseas Bank has an ISO certified in-house
Information Technology department, which has developed the software that its
branches use to provide online banking to customers; the bank has achieved 100%
networking status as well as 100% CBS status for its branches. IOB also has a
network of about 3300 ATMs all over India.
IOB has branches in Singapore, Hong Kong, Colombo, Seoul, and Bangkok.
It has representative offices in Guangzhou, Vietnam, and Dubai. IOB also is partowner of a joint-venture bank in Malaysia. The net profit for the quarter ended 30
June 2014 stood at INR 272 Crores. The Business touched INR 4,20,739 Crores
(YoY Growth 8.16%) for the quarter ended 30 September 2014. Deposits stood at
INR 2,39,223 Crores (YoY Growth 12.47%), CASA stood at 23.76%, Advances
stood at INR 1,81,515 Crores (YoY Growth 2.96%) Operating Profit for Q2 14-15 is
INR 729 Crores.

HISTORY OF IOB
On 10th February 1937, Thiru.M. Ct. M. Chidambaram Chettyar established
the Indian Overseas Bank (IOB) in Madras. It was created to encourage overseas
banking and foreign exchange operations. IOB started up simultaneously at three
branches, one each in Karaikudi, Madras, and Rangoon (Yangon). It quickly opened
a branch in Penang, Kuala Lumpur (1937 or 1938), and another in Singapore (1937
or 1941).
The bank served the Nattukottai Chettiars, who were a mercantile class that
at the time had spread from Chettinad in Tamil Nadu state to Ceylon (Sri Lanka),
Burma (Myanmar), Malaya, Singapore, Java, Sumatra, and Saigon. As a result, from
the beginning IOB specialised in foreign exchange and overseas banking. Due to the
war, IOB lost its branches in Rangoon and Penang, and Singapore, though the
branch in Singapore resumed operations in 1942 under Japanese supervision.

13

In 1945 or 1946 IOB opened a branch in Colombo. In 1947, IOB opened a

branch in Bangkok. Then IOB added a branch each in Ipoh, Klang, and Malacca, all
in Malaya. Some years later, in 1955, IOB opened its first branch in Hong Kong.
Others would follow. IN 1963 the revolutionary government in Burma nationalized
Indian Overseas Bank's branches in Rangoon, Mandalay, and Moulmein, which
became People's Bank No. 4. In the 1960s, the banking sector in India was
consolidating through the merger of weak private sector banks with stronger ones.

IOB ACQUIRED A NUMBER OF LOCAL BANKS

Coimbatore Standard Bank (acq. 1963; one branch at Madras),

Nanjinnad Bank (or Nanjanad Bank),
Coimbatore Vasunthara Bank (or Coimbatore Vasundara Bank; est. June

1924; Head office and three branches; acq. 1964),

Kulitalai Bank (est. 1933; acq. 1964; six branches),
Srinivasa Perumal Bank (est. November 1935 at Coimbatore; acq. 1966),
(Sri/Lord) Venkateswara Bank (est. June 1931 as Salem Shevapet Sri
Venkateswara Bank; acq. 1967; two branches in Salem, Tamil Nadu).
Then in 1969 the Government of India nationalized IOB. At one point,

probably before nationalisation, IOB had twenty of its eighty branches located
overseas. However, Malaysian law forbade foreign government ownership of banks
in Malaysia. After nationalisation Indian Overseas Bank, like all the nationalized
banks, turned inward, emphasizing the opening of branches in rural India. In 1973,
IOB, Indian Bank and United Commercial Bank established United Asian Bank
Behead in Malaysia. (Indian Bank had been operating in Malaysia since 1941 and
United Commercial Bank had been operating there since 1948). The banks set up
United Asian to comply with the Banking Law in Malaysia, which prohibited
foreign government banks from operating in the country. Each contributed their
operations in Malaysia to the new joint-venture bank, with each of the three parent
banks owning a third of the shares.

14

At the time, Indian Bank had three branches, and Indian Overseas Bank and
United Commercial Bank had eight between them. Also, IOB and six Indian private
banks established Bharat Overseas Bank as a Chennai-based private bank to take
over IOB's Bangkok branch. In 1977 IOB opened a branch in Seoul. it also opened a
branch in Tsim Sha Tsui, Kowloon, Hong Kong. Two years later, IOB opened a
foreign currency banking unit in Colombo, Sri Lanka.
In 1983 ethnic sectarian violence in the form of anti-Tamil riots resulted in
the burning of IOB's branch in Colombo. Indian Bank, which may have had stronger
ties to the Sinhalese population, escaped unscathed. In 198889, IOB acquired Bank
of Tamil Nadu, and its 99 branches, in a rescue. Bank of Tamil Nadu (or Bank of
Tamilnadu), had been established in 1903 in Tirunelveli as the South India Bank. In
1992 Bank of Commerce (BOC), a Malaysian bank, acquired United Asian Bank
(UAB).
In 2000, IOB engaged in an initial public offering (IPO) that brought the
government's share in the bank's equity down to 75%. In 2001 IOB acquired the
Mumbai-based Adarsha Janata Sahakari Bank, which gave it a branch in Mumbai.
Then in 2009 IOB took over Shree Suvarna Sahakari Bank, which was founded in
1969 and had its head office in Pune. Shree Suvarna Sahakari Bank had been in
administration since 2006. It had nine branches in Pune, two in Mumbai and one
in Shirpur. The total employee strength was estimated to be little over 100.
IOB opened an extension counter at New Kathiresan Temple complex,
Bambalapitiya, Ceylon, on 29 August 2003.In 2005 IOB opened a representative
office in Guangzhou, China. The next year IOB opened another representative
office, this time in Kuala Lumpur. In the new millennium, international expansion
picked up once again. In 2007, IOB took over Bharat Overseas Bank. Three years
later, Malaysia awarded a commercial banking license to a locally incorporated bank
to be jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank.

15

The new bank, India International Bank (Malaysia), commenced operations

in 2012 in Kuala Lumpur, which has a large population of Indians. Andhra Bank
holds a 25% stake in the joint-venture; Bank of Baroda owns 40%, and IOB the
remaining 35%.IOB opened an Offshore Banking Unit in Colombo, Sri Lanka, on
31 August 2013. The bank also upgraded its existing Extension Counter at
Bambalapitiya into a full-fledged branch.

IOB MILESTONES

1957 - Bank established its own training center

1964 - Inauguration of IOBs Head Office in Mount Road.
1974 - Official Language Department established in 1974
1984 - 1000th branch opened
1991 - Bank moved its Staff College premises to an own spacious learning zone

at Koyambedu
1996 - Banks profit reached INR 100 cr. for the first time i.e. USD16.69Mn
[1USD=Rs.59.9150]
2000 - Initial Public Offer. Follow on Public Offer in 2003.
The first public sector bank to introduce anywhere banking at its 129
branches in the four metros, is extending the connectivity to another 100 branches in
Hyderabad, Bangalore, Ahmedabad and Ludhiana
The first public sector bank in the country to introduce mobile banking
services using Wireless Application Protocol (WAP).
2005 - Launched Debit Card
2006 - Launched VISA Card, Retail Sale of Gold and Non-Life Joint Insurance
Bank reached INR 1 lac crore mark in Total Business
2006 - 07 - Net Profit reached INR 1000 Cr. (USD 229.78 MN) [1USD=
Rs.43.5200] Bharat Overseas Bank Ltd. Was merged with IOB and First Off site
ATM at Kamatchi Hospital, Chennai
2009 - 100% CBS

16

2010 - 2000th Branch -Yamuna Vihar, New Delhi-opened

2011-12 - No. of Branches in Tamil Nadu reached 1000, and IOB celebrated
Platinum Jubilee 2012-13.
As on 31.3.2013, total deposits reached INR 202,135 cr. (USD 37,236Mn.) [1USD
=Rs.54.2850]
As on 31.3.2013, Total Advances reached INR 164,366cr. (USD30,278 MN.)
As on 31.3.2013, Total Business Mix is at INR 366,501cr. (USD 67,514Mn.),
Total No. of Branches 2908
2014- Bank has surpassed the landmark of 3000 ATMs as on 31.07.2014 Tirumalaipatti Branch
2015 - IOB launched new Android Mobile Banking Application.
Joint Ventures / Tie-Ups
IOB entered into Non-Life Insurance Business with Universal Sompo
General Insurance (USGI) Company Limited with equity participation of 19% along
with Allahabad Bank, Karnataka Bank and Dabur Investments. Indian Overseas
Bank (IOB) has tie up with Apollo Munich Health Insurance to provide specialized
health and personal accident products to its customers

17

PROFILE OF THE BRANCH

18

Name of the Bank:

INDIAN OVERSEAS BANK

Name of the Branch:

Velachery-Taramani link road

Branch Code:

2813

Manager name:

Mr. R. BALAKRISHANAN

Assistant manager:

Mrs. Kavitha Santhanagopal

Senior clerk:

Mr. Sathya Sudhakar. C.P

Clerk /Chief Cashier:

Mr. V. RaghuRaman

Clerk:

Mrs. G. Vidya

No. of. Staffs:

05

Address:

2/16, Kennedy Street,

Thanthai Periyar Nagar,
Velachery-Taramani link road

City:

Chennai

State:

Tamil Nadu

E-mail:

[email protected];

Micr Code:

600020207

IFSC Code:

IOBA0002813

Swift Code:

IOBAINDB001

Website:

www.iob.in

ACCOUNT DETAILS
TOTAL NO. OF SAVINGS A/C 6025
TOTAL NO. OF CURRENT ACCOUNT -188

DEPOSIT DETAILS AS ON 31.12.2015

TOTAL DEPOSITS: Rs.25,85,03,857.77
TOTAL ADVANCES: Rs.9,70,90,314.71

19

SERVICE RENDERED BY THE BRANCH

TYPES OF ACCOUNTS
A deposit account is a savings account, current account, loan, deposit, or
other type of bank account, at a banking institution that allows money to be
deposited and withdrawn by the account holder. These transactions are recorded on
the bank's books, and the resulting balance is recorded as a liability for the bank and
represents the amount owed by the bank to the customer. Some banks charge a fee
for this service, while others may pay the customer interest on the funds deposited.

SAVING BANK ACCOUNT

Savings Bank Deposit Schemes - U name it we have it Indian Overseas Bank
provides various Savings Bank Deposit schemes meant for people belonging to all
sections of the society. The Bank stays committed to society to inculcate savings
habit among the people while allowing them to use their funds as per their
convenience.

Our Savings Bank Deposit Schemes include

Regular Savings Bank Account- 4%
Savings Bank No Frills Account- 4%

IOB Savings Bank Gold I

If the quarterly average balance is between Rs 50,000 and < Rs 100000, the
balance exceeding Rs 65,000 will be swept out and kept in TD in units ofRs.2000/-.
As and when the minimum balance goes down, the adequate units in TD will be
closed and transferred to SB, on a last in - first out basis

IOB savings Bank Gold II

If the quarterly average balance is between Rs 1,00,000 and above, the
balance exceeding Rs 1,25,000 will be swept out and kept in TD in units of
Rs.2000/-. As and when the minimum balance goes down, the adequate units in TD
will be closed and transferred to SB, on a last in - first out basis Open a Savings

20

Bank account with us and enjoy hassle free Banking. With our Core Banking
solution, you have the flexibility to operate your account from any of the 2600+
Core Banking Branches all over India.

CURRENT ACCOUNT
Current Deposit Schemes
Current Deposit Schemes are cheaque operated accounts primarily meant for
businessmen, firms, companies, public enterprises etc. that have numerous daily
banking transactions. It is the name given to a transactional account in the United
Kingdom and countries with a UK banking heritage, offering various flexible
payment methods to allow customers to distribute money directly to others. Most
current accounts come with a cheaque book and offer the facility to arrange standing
orders, direct debits and payment via a debit card. Current accounts may also allow
borrowing via an overdraft facility.

FIXED DEPOSIT
Rate of interest: 7.5%
A fixed deposit account allows you to deposit your money for a set period of
time, thereby earning you a higher rate of interest in return. Fixed deposits also give
you a higher rate of interest than a savings bank account.

The benefits of a Fixed Deposit

The option to withdraw the deposit at any time before maturity without any
difficulty You can avail loans up to 85% of the principal Variable deposit periods
ranging from 6 months to 120 months You get interest once in 6 months.

RECURRING DEPOSIT
Rate of interest: 7.5%
Recurring deposits are similar to systematic investment plans and fixed deposits.
You make a fixed investment every month, which earns a certain rate of interest. At
the end of the tenure, you get a lump sum, which is equal to the total amount
invested, along with the interest earned on it.

21

The benefits of a recurring Deposit

Recurring deposit can be opened both with banks and your local post office. The
minimum investment is Rs 100 at most banks, while post offices accept even an
initial amount of Rs 10. Some banks have an upper limit of Rs 15 lakh and the
tenure varies from 6 months to 10 years. Senior citizens are eligible for a higher rate
of interest, usually 0.5% more than that for other investors.

VARDHAN DEPOSIT
Vardhan' - Deposit of Senior Citizens
Who is a senior citizen?
Any individual who has completed 60 years of age is treated as Senior Citizen for the
purpose of opening account under Vardhan scheme.

How to verify the age?

Age can be verified by calling for anyone of the following document.
Pension Payment Order.
School leaving certificate.
Voters identity card
LIC policy where age is admitted.
Birth certificate issued by competent authority.
Passport.
Driving License
At the time of renewal of a Vardhan deposit branches need not insist on
producing the documents in proof of age again.

LOANS
Loans can come from individuals financial, corporations, institutions and
governments. They are a way to grow the overall money supply in an economy as
well as open up competition, introduce new products and expand business
operations. Loans are a primary source of revenue for many financial institutions
such as banks, as well as some retailers through the use of credit facilities.

TYPES OF LOANS

22

HOUSING LOANS
Eligibility
Groups of individuals
Members of Co-operative Societies Individuals not more than 55 years of age Loan
must be liquidated before attaining 65 Years of age.

For salaried individual

A permanent job with a minimum of2 or 3 years service
For self-employed professional
A minimum period of three years of activity in the related field
Value Addition
We are extending Vehicle Loan to our existing Housing Loan Borrowers (Minimum
One Year Regular Repayment) with the following concessions:
0.50% concession in rate of interest
50% concession in applicable rate of Processing Charges.
Purpose
To buy, build or renovate flat/house.
Quantum of loan
A maximum of 90% of the cost of the house/flat or Rs. 500 lakhs whichever is less.
The amount depends on your age and repayment capacity.
Margin
The minimum margin is 10% of the estimated cost (including the cost of the land)
for new as well as old houses flats.
Repayment

23

Repayable in equated monthly installments for a maximum period of 25 years.

Holiday period
A maximum holiday period of 18 months from the date of first disbursement or
completion of construction - whichever is earlier.
In case the house is purchased, the holiday period is 3 months.
Security
First mortgage on the property to be bought, constructed or renovated.
The land should be in the applicant's name or jointly with spouse who should be a
co-obligant Should have a clear and marketable title over the property
should have comprehensive insurance on the property for adequate value Additional
security in the form of NSC, LIC, Units of UTI will also be accepted
Processing charges
A flat rate of 0.58% of the loan amount- maximum of Rs. 10,190/- There is no
hidden charge. This is subject to change from time to time without prior intimation.
Documents required
An application form. Salary certificate as a proof of income (for employed
individuals) Proof of income (for professionals, business people etc.) Agreement for
sale of house flat Proof of membership (for co-operative societies etc.)
Proof for experience in the line of activity (for professionals, business people etc.)
Estimates for Construction/Valuation Report for Acquisition/Legal opinion on the
Property from Bank Approved Engineer/Lawyer
Download the application form. Save it on your computer, print it out and send it to
the nearest! convenient IOB branch for Processing
While all efforts have been made to update the information, constituents are
requested to contact the branches for latest details.

EDUCATIONAL LOANS- Vidya Jyoti

24

Eligibility
Should be an Indian National
Should have secured admission to professional/technical courses in India or abroad
Purpose
Loan is made available for Graduation/Post graduation/Diploma/Computer
education in any recognized State/Central Government/University, professional
courses including Engineering, Medical, Agriculture, Veterinary, Law, Dental,
Management, courses like ICWA, CA, CFA, etc., courses conducted by JIM, IISC,
XLRT, NIFT etc. courses offered in India by reputed foreign universities/Evening
courses of approved institutes, regular degree/ diploma courses like Aeronautical ,
Pilot training , shipping etc. approved by Director General of Civil A viation/
shipping if the course is pursued in India. In case the course is pursued abroad, the
institute should be recognized by the competent local aviation/ shipping authority.
For studies abroad, loans will be made available only for Graduation and PostGraduation Courses offered by Reputed Universities and not for diplomas.
Quantum of loan
Maximum of Rs. 15.00 lakh for studying in India and Rs. 25.00 lakh for studying
abroad.
Rate of Interest
Vidyajyothi - loan for pursuing higher education:
Up to Rs. 4lakhs

12.25

> Rs. 4 lakhs and up to Rs 7.5 lakhs

13.50

Above Rs 7.5 lakhs

13.25

25

Security

Security
For loans up to Co obligation of parents. No security
RS. 4 lakhs
For loans above Co obligation of parents together with collateral security
Rs.4 lakhs and up in the form of suitable third party guarantee.
to s. 7.50 lakhs
For loans above Co obligation of parents together with collateral security.
Rs.7.50 lakhs

Collateral security in the form of NSC /KVP/ LIC Policy/

Gold/ Shares/Debentures or immovable properties Bank
Deposits in the name of student/Parent/Guardian or any
other third party with suitable margin. Wherever the land/
building is already mortgaged the unencumbered portion
can be taken as security on second charge basis provided
it covers the required loan amount. In case the loan is
given for the purchase of computer, the computer has to
be hypothecated to the bank...

26

Holiday period
6 months after getting the job or 12 months after completion of the course whichever
is earlier.
Repayment
Repay the loan in equal monthly Instalments for a maximum period of 5 - 7 years
excluding holiday period.
Interest servicing
It is left to the option of the student either to service the interest during the study:
period or pay it along with the principal over a period of 5 - 7 years to commence
from 12th month after completion of the study.
Interest servicing - concession
For prompt servicing of interest for all months during the study period when
repayment holiday is specified for interest / repayment under the scheme, an interest
rebate @1.00 % is allowed. Interest concession at 0.50% on all Education Loans to
Girl Students for pursuing education in India and Abroad is allowed. The interest
rebate thus calculated will be credited back to loan account at the time of
commencement of repayment of the principal sum.
Download the application form in MS - Word format.
Save it on your computer, print it out and send it to the nearest/convenient 1.0.8.
branch for processing.

27

VEHICLE LOANS
Eligibility

Permanent employment in a ...

A Government Office
A public sector undertaking
A reputed private enterprise or A self-employed professional
The loan can be applied for in the name of the firm or company.
Non Resident Indian can also apply.

(For NRIs subject to condition of obtaining a suitable guarantee from Resident

Indian acceptable to the Bank)
Income eligibility
In confirmed service with a take home pay of more than 50% of the gross salary,
after PF and Insurance Deductions The total monthly income of the applicant
including that of spouse and other income should be not less than Rs.8000/- in the
case of loan for purchase of car and Rs.5000 in the case of loan for purchase of 2wheeler.
Purpose
For buying a new or used car (not more than 5 years old) or new two-wheeler.
Loan amount
New car Up to 90% of the cost of the car.
Used car Up to 75% of the market value of the car.
New two-wheeler - 90% of the cost of the vehicle or 10 times the gross monthly
income or Rs. 60,000- whichever is lower.
Rate of interest
Retail credit interest rates:
Pushpaka- loan for purchase of new vehicles: 10.75%
Repayment

28

New car - repayable in 72 equated monthly installments Used car - repayable in 36

equated monthly installments
New Two-wheeler - repayable in 72 equated monthly installments
Security
Hypothecation of the vehicle purchased
The Banks lien on the vehicle should be marked in the R.C. book Vehicle should be
insured for the full value with the bank clause
Processing charges
For loan up to Rs. 2 lakhs, Rs. 134/- in rural areas and Rs. 168/- in other areas as
processing charges (subject to change). For loan above Rs. 2 lakhs, Rs. 134/- per Rs.
1 lakh or part thereof, in rural areas and Rs. 168/per Rs. 1 lakh or part thereof, in
other areas as processing charges (subject to change).
Documents
An application form.
Salary certificate, IT return or assessment order as a proof of income.
Quotation/preformat invoice for a new carl new two-wheeler. Valuation certificate
from two reputed auto dealers - for used car.

CLEAN LOAN
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. Lie
agents are also eligible to apply for the loan subject to conditions. For any purpose
including any social/financial commitment.
a) Ten times of salary or Rs. l 0.00 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.

29

b) For others, it IS 5 times of salary or Rs.1 lakh whichever is lower. c) 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 condition
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 thereof
(subject to change). Rate of returns
Clean Loan - loan to employees of reputed organizations to meet personal
expenditure: 15.25%
30

CONSUMPTION LOANS
Eligibility
Individual, confirmed permanent employee of a reputed organization 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.
Maximum loan
Maximum loan amount is Rs.5 lakhs. 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 J.T. return or assessment order but not exceeding
Rs.5 lakhs.
Rates
Sahayika- Loan to meet social financial commitments: 14%

CREDIT CARD
Bank in association with VISA has introduced Visa International Credit Card in
order to pay for the expenses for shopping, dining, travelling etc. The customers can
also use the card for drawing cash from any of the IOB's Instant Cash ATM and all
the ATMs that display the VISA logo. Our Bank is issuing two types of cards i.e.
IOB Gold & IOB Classic. Interest charged is 24% per annum (annualized). The
minimum card limit is Rs. 10,000 and the maximum credit limit is fixed at Rs 5 lacs.

31

INTERNATIONAL VISA DEBIT CARDS

Indian Overseas Bank has tied up with Visa for its International Debit Card
Program. A large segment of the Bank's customers still prefers to spend from their
income and savings rather than availing credit. With the introduction of Debit cards,
this long felt desire of customers to pay for the purchases at shops and business
establishments directly from their account would be fulfilled. It would no longer be
required for the customer to draw cash either from the A TM or from the branch
counters to pay for them spends. No charges would be levied by our Bank on such
Point of Sale transactions, except for using in Petrol Bunks.
For Drawing cash, customers can use these cards not only in our Bank's
ATMs, but also in any Bank's ATM that display the VISA logo. The Bank, in its
constant endeavor to enhance customer service, has already tied up with a
consortium of Banks under the banner of NFS and Cash Tree by which customers
can access their individual accounts from more than 84,000 ATMs. Customers can
also use their Debit cards IOB during their visits abroad. In addition, the cards can
also be used through secured electronic payment gateways for ecommerce / Internet
payments.

Life Insurance-IOB Jeevan

IOB-Jeevan - Group Life Insurance Scheme in association with Lie
of India
What is IOB-Jeevan Scheme?
The scheme is a Group Term Assurance scheme for the account holders of Indian
Overseas Bank, with very low premium offered in association with LIC of India.
The insurance cover is available to account holders who pay the prescribed
premium.

32

Who are eligible to join the scheme: You are eligible, if you are;
Existing account holder of the Bank maintaining a Savings Bank or a Current
Deposit account in your individual capacity either singly or jointly with others.
Opened a fresh S.B. or C.D. account in your individual capacity either singly or
jointly with others. Completed 18 years of age and not over 54 years of age.

TAX SAVER SCHEME

In the Finance Act 2006, Section 80C of Income Tax Act 1961 was amended
to include deposits placed with a scheduled bank to qualify for deduction under 80C.
The amount of investment up to Rs. l, 00,000 under the notified deposit scheme will
be eligible for deduction under Section 80C of Income Tax Act for individuals /
Hindu Undivided Families. In terms of the amendment a deposit scheme has been
introduced with certain value added features for the benefit of customers.
Who can deposit
The deposit scheme is open to individuals. The Karta of a Hindu Undivided
Family (HUF) can open in his capacity as Karta. The deposit can be in the single
name of the depositor or in joint names of two adults or jointly in the name of an
adult with a minor (only two joint account holders are permitted) payable to either or
survivor. In the case of deposits in the joint names, the tax benefit can be claimed by
the first named depositor.
How much deposit can be accepted?
A maximum of Rs. 1,00,000 is accepted under the scheme from one
individual/under one deposit account in year (Year means one year from 1st April to
31st March). The minimum amount that can be accepted is Rs. 10,000.
Period for which deposit can be accepted
The deposit is accepted for any period from 5 years to 10 years.

33

Types of deposit that can be accepted

The deposit can be accepted in the form of reinvestment deposit (RDP) or
Fixed Deposit or Special Fixed Deposit (SFD) and interest can be payable halfyearly or quarterly or monthly.
Branches where the deposit can be opened
The deposit can be accepted by all branches of the Bank.
Transfer of deposit
While transfer of deposit between branches of IOB is permitted, transfer
between banks is not permitted. Branches, therefore, should not accept deposits
transferred from another bank.
Special conditions for issue of deposit receipt
The PAN number of the depositor and his signature will appear on the
deposit receipt.
Loan against deposit / accepting the deposit as collateral security
Loan cannot be granted against the deposit nor can the deposit be accepted as
collateral security.
Repayment of deposit
Deposit is repayable on or after maturity date in the normal course.
Premature closure is not permitted till the deposit completes 5 years from date of
deposit.
Rate of Interest
Special rate of interest is offered for the deposits.
Special rate for deposits of Rs. 10,000 to Rs. l lakhs 9.00% Senior Citizen deposits:
0.75% over and above the above rates.

34

Nomination
Nomination can be made for the deposits as per the existing rules for
nomination. No nomination, however, can be accepted in the case of deposits held
for and held by or on behalf of a minor.
Replacement of lost/destroyed deposit receipt
In case of deposit receipt lost or destroyed, duplicate receipt can be issued by
furnishing an indemnity.
Death of depositor
In case of death of depositor, the nominee is entitled to claim the deposit
amount before or after the maturity date. The claim from nominee will be settled as
per the current guidelines in force for settlement of claim on death of depositors. In
case of deposits where the depositor died without giving nomination, the deposit
amount can be settled to the legal heirs.
Tax liability on interest on the deposit
Interest on the term deposit is liable to tax under the Income Tax Act.

35

LEARNING PROCESS

36

FIRST WEEK
In the first week of internship the intern learnt about the general banking
operations in day today life. The intern also leant about how to fill the different types
of challan available in the bank and the intern also helped out the customers. The
intern also learnt about how to handle cash receipts and payments. The intern learnt
about the procedures for opening different deposit accounts (savings account,
current account, fixed deposit account). The intern learnt about the process of
clearing the bank cheaque; lodging of own bank cheaque and posting them. The
intern was helping customers with Opening and posting of Savings Bank account,
fixed deposit account, current account, etc.

SECOND WEEK
During the second week of internship the intern learnt about demand draft
printing, issuing and cancelling to update transactions. The intern was taught about
e-banking facility. The intern learnt about debit credit transfer and the issue of
closing book. The intern also learnt about opening and closing of recurring deposit,
fixed deposit, account opening and closing and posting them.

THIRD WEEK
During the third week of internship the intern learnt about master creation,
interest calculation and closure of advances. The intern learnt how to loan and
renewal of loan. The intern learnt about the procedures to avail different kinds of
loan. The intern was also taught about the gold loan calculations; filling of clean
loan, study loan, vehicle loan, personal loan forms and pensioners loan forms. The
intern also learnt about life certificate; verification of performing and nonperforming assets of day end process in a bank.

FOURTH WEEK
During fourth week of internship the intern helped the customers by printing
pass book entries, lodging and posting of withdrawal challans and self cheques, then
issuing of tokens. The inter also learnt about opening of an ATM account; recording
and issuing of ATM cards to the customers. The intern learnt about charges for ATM
service from customers. The intern was also taught about the lockers operations.

37

CONSOLIDATION OF REPORTS

38

CONCLUSION

65

To conclude, this internship at Indian Overseas Bank gave the inter the necessary
exposure to work in an environment which thrives for excellence. The intern was
made aware of the various banking activities and the different schemes and policies
offered to its customers. The intern experienced what it is like to work with a diverse
group of people who belong to different age groups. The intern gained experience in
dealing with customers and learnt how a friendly and efficient atmosphere is
maintained in the workplace. The intern was able to understand and the vital role it
plays in the society.

66

ANNEXURES

BIBLIOGRAPHY

78

www.google.co.in
en.m.wikipedia.org
www.iob.in
www.slideshare.net
www.gktoday.in

79