A Report On

ACCOUNTS AND SERVICES OF DENA BANK

Submitted as Partial Fulfillment of the Requirement For Masters of Commerce By XXXXXXXX Under the guidance of Ms. XXXXXXXXX

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

Accounts & Services of Dena Bank We appreciate the creativity, ingenuity and dedication depicted by him during the entire project tenure. The successful completion under governing time restrains and communication during various project phases deserve praise too. The project was undertaken for partial course completion activity of their institute

Ms. XXXXXXXX

DECLARATION

I hereby declare that the Project titled Account & Services of Dena Bank is an original work carried out by me, at Dena Bank, Ambala as partial fulfillment for the requirement of M.Com- I Further, this project has not been previously submitted for award of any diploma or degree.

ACKNOWLEDGEMENT
Words often fail to express ones inner feelings of gratitude and indebtedness to ones benefactors, but then it is the only readily available medium through which the undersigned can express his sincere thanks to all those who are associated with the work in one way or the other A project can never exist and thrive in solitude. Project work is never the work of a single individual alone. It is more a combination of views, suggestions, contributions and work involving many individuals. This project also bears the impact of many people. Thus one of the most pleasant part of writing this report is the opportunity to thank all those who have contributed to it. First and foremost, I would like to thank our guide and mentor Mr. Varun Gautam, for being the guiding and encouraging figure all through the duration of this project. Without his cheering and invaluable insights into this project, the project work would not have been accomplished. Discussions on subject matter, constant feedback on the effort and needed references have enriched us and made the project work a pleasing experience. I would also like to thank my family and friends who provided helping hand and instilled confidence in me to complete the project timely.

XXXXXXX

PREFACE

A healthy banking system is essential for any economy striving to achieve good growth and yet remain stable in an increasingly global business environment. The Indian banking system has witnessed a series of reforms in the past, like deregulation of interest rates, dilution of government stake in PSBs, and increased participation of private sector banks. It has also undergone rapid changes, reflecting a number of underlying developments. This trend has created new competitive threats as well as new opportunities.

The Indian banking industry is passing through an exciting growth phase. The surge in the real economy, which has grown at over 8% in the past three fiscals, has provided significant growth opportunities for the sector. The rising personal incomes of the population have provided banks numerous opportunities for product development and distribution innovations. Additionally, expansion of international integration to enable Indian banks to explore global markets and

deregulation that has induced banks to explore new business opportunities have led to the increase in the scope and significance of the Indian banking industry.

India has a robust banking structure characterized by three major bank groups, viz., Public Sector Banks, Private Sector Banks and Foreign Banks, and a large network of branches. Further, prudent policies of regulation and supervision, global standards in banking practice, pursuit of efficiency in business and operations, coupled with a wide range of reforms in processes and procedures have enhanced the potential for sustained growth of Indian banking. The inherent robustness of the sector was witnessed when it posted a strong turnaround after 1993, to emerge as one of the most successful banking industries in the world.

THE INDIAN BANKING INDUSTRY

The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks and scheduled banks. Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership, commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, regional rural banks and private sector banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread across the country.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as priority sectors. The manufacturing sector also grew during the 1970s in protected environs and the banking sector was a critical source. The next wave of reforms saw the nationalization of 6 more commercial banks in 1980. Since then the number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold.

After the second phase of financial sector reforms and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs and provide better services.

During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25 percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period. The share of foreign banks (numbering 42), regional rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the year 2000.

COMPANY PROFILE
Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the name Devkaran Nanjee Banking Company Ltd. It became a Public Ltd. Company in December 1939 and later the name was changed to Dena Bank Ltd. In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in addition to the business of banking, the Bank can undertake other business as specified in Section 6 of the Banking Regulations Act, 1949. Milestones One among six Public Sector Banks selected by the World Bank for sanctioning a loan of Rs.72.3 crores for augmentation of Tier-II Capital under Financial Sector Developmental project in the year 1995.

 One among the few Banks to receive the World Bank loan for technological upgradation and training. Launched a Bond Issue of Rs.92.13 crores in November 1996. Maiden Public Issue of Rs.180 Crores in November 1996. Introduced Tele banking facility of selected metropolitan centers. Dena Bank has been the first bank to introduce: Minor Savings Scheme. Credit card in rural India known as "DENA KRISHI SAKH PATRA" (DKSP). Drive-in ATM counter of Juhu, Mumbai. Smart card at selected branches in Mumbai. Customer rating system for rating the Bank Services.

Mission DENA BANK will provide its Customers - premier financial services of great value, Staff - positive work environment and opportunity for growth and achievement, Shareholders - superior financial returns, Community - economic growth

Vision DENA BANK will emerge as the most preferred Bank of customer choice In its area of operations, by its reputation and performance

SERVICES

Core Banking Solution Dena Bank has entered the Core Banking Era on 12th March 2007 with the launch of core banking system at its Mahim Branch in Mumbai at the hands of Shri V. Leeladhar, Deputy Governor, Reserve Bank of India with its Data Centre at its own premises at Jogheshwari West, Mumbai. The Bank's Disaster Recovery Site at Bengaluru (Bangalore) is also operational to ensure business continuity. The Bank plans to put around 92% of its business under core banking in the next 15 quarters. In all, 850 branches out of the 1122 branches including extension counters of the Bank are slated for coverage. All new branches of the Bank will henceforth be opened straightaway with core banking solution.

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

has been executed by M/S Wipro Ltd, with Finacle software support from M/S Infosys Technologies Ltd. The entire project had been preceded by business process reengineering. The Core Banking system comes with a host of customer friendly services like Internet Banking, Phone Banking, Mobile Banking and Cash Management Services besides software system for integrated Treasury operations. A number of third party software solutions are being integrated with Core Banking mainly with a view to address Regulatory concerns. Among others, the Bank will be implementing, in a phased manner, solutions for Asset Liability Management from M/s. Oracle, Anti Money Laundering solution from M/s 3i Infotech, Integrated Treasury solution from Credence, Cash Management solution from Cashtech, Credit Appraisal System from Sysarc and Integrated Risk Management from SAS will ensure Basel II compliance. The Bank has undertaken data cleaning exercise before migrating to CBS platform. Similarly, bank will have uniform look & feel of all the branches coming under CBS. Core banking implementation is the first but an important step the Bank has taken towards fulfillment of its Vision statement "Dena Bank will provide its Customers, premier financial services of great value".

The Core banking project of the bank has been guided by its Technology Advisor Prof. N.L.Sarda of IIT, Mumbai and the consultants to the Bank, M/S Ernst &

Young Pvt Ltd. The Bank has already trained over 60 IT Professionals to man the project and over 170 officials for branch level operations. The Bank has also initiated strategic exercises for developing new business models under Core Banking Environment.

Multi-City Cheque Facility Dena Bank is at the forefront of Indias like premier banking institutions that are rapidly adapting to the changing technology environment. Technologically, Bank has been making great strides with its various IT enabled services. The Bank has always been the first to absorb the latest banking innovations while retaining its traditional, in an endeavor to blend time tested values-of-the-art technology, creating a banking culture that is Value Based and innovative. All the IT initiatives are aimed at providing customers the convenience of 24x7 Banking.

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

The Facility The customer will get the AT PAR cheque books wherein cheques can be drawn at par on any of the ABB branch. These special series cheques issued by the customer to their clients will be payable at par like local cheques in the Any Branch Banking (ABB) centers of the Bank

Who Can Join This Facility All Account holders of the Bank can avail this facility provided the conduct is satisfactory and the Account has been maintained for more than 6 months with minimum balance as per normal requirement of the branch.

Cost Of Facility A) (i) Upto Rs 5000 /- @ Rs 15 per cheque (ii) Rs 5001/-to Rs 10000/- @Rs 25 per cheque (iii) Rs 10001/-to Rs 1.00 lac ( Rs 2.50 per thousand or part thereof ) (Minimum Rs 25/-) (iv) Above Rs 1.00 lac ( Rs 2/- per thousand or part thereof (Minimum Rs 250/- and maximum Rs 5000/-)

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

C)MCC facility is free for Premium customersmaintaining quarterly average balance SB A/Cs -Rs 25000 /Current Accounts- Rs 1.00 lac Benefits Payments can be made directly without taking a demand draft or telegraphic transfer. Payee of the cheque gets payment locally as a clearing cheque.

Dena Connect It is Bank's information based service Dena Connect(Internet Banking) in an effort to further facilitate our valued customers. Dena Connect(Internet banking) is a new service from Dena Bank, which enables you to make inquiries about your account through a personal computer by using the Internet facility with total confidentiality and security.

1. Dena Connect(Internet Banking) Dena Connect(Internet Banking) offers an easy, hassle free means to access banking information by a few keystrokes on your keyboard. It means that one

need not go to your bank to get the information about account. All he need is a PC internet connection, login id & password obtained from the branch.

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

One can know about status of various accounts held. One can know the status of the cheque issued.

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

SELECTED

BRANCHES

who

have

registered

for

this

service.

4. Dena Connect (Internet Banking) services

Balance enquiry Mini Statement (last 10 transactions) Cheque status query

5. Charges This service is offered free of cost. Any Branch Banking

ANY BRANCH BANKING is a comprehensive network based software product linking various branches of our Bank so that customers of the Bank can access their accounts from any other branch of the Bank . All the customers can avail this facility provided the scanned signature of the customer is available in branch server . Facilities under ABB: Financial 1. Cash Withdrawal 2. Cash Deposit 3. Fund transfer 4. Cash Management Services through collection of Cheques. 5. Debit Clearing ( At par payment of Cheque i.e. Multi City Cheque ) Non Financial 1. Statement of account 2. Details of last 5 transaction 3. Balance enquiry

Transaction Limits 1) Cash withdrawal and Cash Deposit Rs 25000/- for cash withdrawal and cash deposit transaction per customer per day. 2) Fund Transfer

Threshold limit of Rs 2 lakh per day transaction has been fixed for the purpose of funds transfer through ABB.In case customer desires to transfer more than the above limit ,he may be permitted based on prior approval from respective Regional Managers and if customers wants to transfer funds of Rs 25 lakhs and more,then respective Regional Manager should obtain clearance from HO.Funds Dept. Charges 1. Fund Transfer Charges for customer are at par with prevailing TT charges. 2. Cash Management Services The charges are @Rs 3/- over and above OBC.Charges per Rs 1000/-

Facility provided Bank is offering this facility through more than 125 of its designated ABB branches spread all across the country. Dena ATM Services Dena Bank always stands in forefront in understanding it customers need.

Dena Bank Debit cum ATM Card offers an easy and convenient way to do all transactions and that too within a fraction of seconds.

Presently they have more than 270 ATMs all across India.

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

Dena Debit Card gives the freedom to access your savings or current account at any VISA accredited POS Terminals (Merchant Establishment), ATM, Cash tree group, Cashnet group , Corporation Bank and SBI & its associates.

Features:One can link multiple accounts at different branches of Dena Bank to a single Debit cum ATM Card. The Account number of Debit cum ATM Card issuing branches will be the Primary account number and account at other Cards issuing branches link to the same card will be the Secondary account. One can do the following transactions:-

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

Cash/Cheque Deposit:-

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

Balance Enquiry:One can check balance of account.

Mini Statement:One can get Mini statement of transactions.

PIN Change:One can change Personal Identification Number (PIN).

Value Added Services Through ATM

Mobile Recharge through ATM Mobile Post Paid BillPayment Fund Transfer

Dena IndiaRemit Dena Bank brings a unique new service. Send money to family anywhere in India from the US, UK and Europe.

Dena IndiaRemit is a completely web-enabled remittance service supported by superior technology, state-of-the-art operations and a highly professional team to offer complete peace-of-mind.

Dena m-Banking Dena Bank is pleased to announce the launch of Mobile Banking Services in an effort to further facilitate its valued customers. Mobile Banking is a new service from Dena Bank, which enables to make inquiries about account through his mobile phone by using the SMS facility with total confidentiality and security

Dena m-banking offers an easy, hassle-free means to access banking information at the touch of a button 24 hours a day, 7 days a week. That means one will be able to access your account better - anytime, anywhere, with just mobile phone.

Now one will not have to go to your bank for any enquiries and transactional information. But one can get the required information by using SMS from your mobile phones. This time saving activity is another service being offered by Dena Bank to facilitate their customers. Dena m-banking is available to all Dena Bank account holders in Selected Branches who are registered for the m-banking facility.

m-banking is absolutely free of cost *. *Normal SMS charges, as charged by the Mobile service provider.

Simply by sending an SMS from your mobile phone, you can receive updated information of your account: Description Balance Enquiry * Cheque status *** Service Code BQ (A/c type ) (A/c Scheme) (A/c no) CS (A/c type) (A/c Scheme) (A/c no)

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

*For balance inquiry in Saving Bank A/c 11111 send SMS as BQ SB GEN 11111 **For Mini Statement for Saving Bank A/c 11111 send SMS as MS SB GEN 11111 ***For Cheque status of cheque no XXXXX in Saving Bank A/c 11111 send SMS as CS SB GEN 11111 XXXXX A/c type: SB (Saving Bank), CA (Current A/c), CC (Cash Credit), OD (Over Draft)

A/c Scheme: Gen (General) So, now no need to worry about your Account status anymore. Take the benefit of this financial solution right now and have access to your accounts anytime from anywhere.

Premium Savings Account Scheme SALIENT FEATURES : Minimum Balance: Quarterly average balance of Rs. 25,000/-

Concessions offered Free cheque books facility 1. Free remittance within the Dena Bank MBB network 2. Free of commission Demand Drafts/ MT/ Pay Orders up to an aggregate amount of Rs. 10,000/- per month

OR

Free collection of outstation cheques up to Rs. 10,000/ per month on the centres where we have branches. Actual Postage & out of pocket expenses shall be borne by the accountholder. Where we have no branch, only our commission will be waived. The account holder has to bear the commission of the Agent bank in addition to postage & out of pocket expenses. 4. One free Debit Card- as per scheme ( whenever applicable)with Insurance cover of Rs. 2 lac in case of accidental death.

5. Free Tele Banking facility( whenever applicable)

Premium Current Account Scheme

SALIENT FEATURES :

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

Concessions offered

1. Free cheque books facility 2. Free remittance within the Dena Bank MBB network- whenever applicable 3. Free of commission Demand Drafts/ MT/ Pay Orders up to an aggregate amount of Rs. 1.00 lac per month OR Free collection of outstation cheques up to Rs. 50,000/ per month on the centres where we have branches. Actual Postage & out of pocket expenses shall be borne by the accountholder. Where we have no branch, only our commission will be waived. The account holder has to bear the commission of the agent bank in addition to postage & out of pocket expenses. 4. One free Debit Card with Insurance cover of Rs. 1 lac in case of accidental death. 5. Free Tele Banking facility( whenever applicable)

Dena Jeevan SB Account "Dena Jeevan SB Account" provides the value addition of life insurance for its Savings deposit account holders, who can now avail of life insurance cover through their account. The insurance cover is available under a One Year Renewable Term Insurance Plan of Life Insurance Corporation of India [LIC], for whom Dena Bank is a Corporate Agent.

The Savings Deposit account holders of the Bank between 18 and 59 years of age, who opt to become members under the scheme, would be eligible for an insurance cover of Rs.1,00,000/- ( Rupees One lac only ) on life, at very low premium. The amount of annual premium depends on the age of the optee. The salient features of the scheme ( which is a part of our Savings Deposit Scheme) are given below: Life cover of Rs. 1 lac. Life insurance cover upto 60 years of age.

Very low premium.

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

 Insurance cover commences immediately on signing the Consent-cumAuthorisation Letter and debit of premium to the account. The customer does not have to wait for the policy document. Simple payment mechanism : the premium can be debited to customers account and standing instructions can be given for renewal. Thus there is no possibility of lapse of cover. Income Tax benefit is available. Effectively, the premium cost is lower. Nomination facility is available. Simple claim settlement process. The insurance cover is provided under the Group Insurance Scheme of LIC, the premier life insurance company in the country having sovereign guarantee. Such One Year Renewable Term Insurance Plan is not available off the shelf for individuals.

CURRENT SCENARIO

The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (Npas) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions.

PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, Hdfc Banks merger with Times Bank Icici Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks.

Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.

A number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of a separate jointventure insurance company with risk participation. Aggregate Performance of the Banking Industry Aggregate deposits of scheduled commercial banks increased at a compounded annual average growth rate (Cagr) of 17.8 percent during 1969-99, while bank credit expanded at a Cagr of 16.3 percent per annum. Banks investments in government and other approved securities recorded a Cagr of 18.8 percent per annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only 6.0 percent as against the previous years 6.4 percent. The WPI Index (a measure of inflation) increased by 7.1 percent as against 3.3 percent in FY00. Similarly, money supply (M3) grew by around 16.2 percent as against 14.6 percent a year ago.

The growth in aggregate deposits of the scheduled commercial banks at 15.4 percent in FY01 percent was lower than that of 19.3 percent in the previous year, while the growth in credit by SCBs slowed down to 15.6 percent in FY01 against 23 percent a year ago.

The industrial slowdown also affected the earnings of listed banks. The net profits of 20 listed banks dropped by 34.43 percent in the quarter ended March 2001. Net profits grew by 40.75 percent in the first quarter of 2000-2001, but dropped to 4.56 percent in the fourth quarter of 2000-2001. On the Capital Adequacy Ratio (CAR) front while most banks managed to fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at present is 9.0 percent, is likely to be hiked to 12.0 percent by the year 2004 based on the Basle Committee recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at the same time so that its capital as a percentage of the risk-weighted assets is maintained at the stipulated rate. While the IPO route was a much-fancied one in the early 90s, the current scenario doesnt look too attractive for bank majors.

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

capital base. While some are wooing foreign partners to add to the capital others are employing the M& A route. Many are also going in for right issues at prices considerably lower than the market prices to woo the investors.

Interest Rate Scene The two years, post the East Asian crises in 1997-98 saw a climb in the global interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has however remained more or less insulated. The past 2 years in our country was characterized by a mounting intention of the Reserve Bank Of India (RBI) to steadily reduce interest rates resulting in a narrowing differential between global and domestic rates. The RBI has been affecting bank rate and CRR cuts at regular intervals to improve liquidity and reduce rates. The only exception was in July 2000 when the RBI increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The steady fall in the interest rates resulted in squeezed margins for the banks in general.

Governmental Policy After the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with

administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant financial repression led to decline in productivity and efficiency and erosion of profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily deregulated in the past few years with banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and non-banking financial companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars.

Implications Of Some Recent Policy Measures The allowing of PSBs to shed manpower and dilution of equity are moves that will lend greater autonomy to the industry. In order to lend more depth to the capital markets the RBI had in November 2000 also changed the capital market exposure norms from 5 percent of banks incremental deposits of the previous year to 5 percent of the banks total domestic credit in the previous year. But this move did not have the desired effect, as in, while most banks kept away almost completely from the capital markets, a few private sector banks went overboard and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks making a comeback to the stock markets are therefore quite unlikely in the near future.

The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent during the first quarter of this fiscal came as a welcome announcement to foreign players wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who are starved of networth to meet CAR norms. Ceiling for FII investment in companies was also increased from 24.0 percent to 49.0 percent and have been included within the ambit of FDI investment.

The abolishment of interest tax of 2.0 percent in budget 2001-02 will help banks pass on the benefit to the borrowers on new loans leading to reduced costs and easier lending rates. Banks will also benefit on the existing loans wherever the interest tax cost element has already been built into the terms of the loan. The reduction of interest rates on various small savings schemes from 11 percent to 9.5 percent in Budget 2001-02 was a much awaited move for the banking industry and in keeping with the reducing interest rate scenario, however the small investor is not very happy with the move.

Some of the not so good measures however like reducing the limit for tax deducted at source (TDS) on interest income from deposits to Rs 2,500 from the earlier level of Rs 10,000, in Budget 2001-02, had met with disapproval from the banking fraternity who feared that the move would prove counterproductive and lead to increased fragmentation of deposits, increased volumes and transaction costs. The limit was thankfully partially restored to Rs 5000 at the time of passing the Finance Bill in the Parliament. April 2001-Credit Policy Implications The rationalization of export credit norms in will bestow greater operational flexibility on banks, and also reduce the borrowing costs for exporters. Thus this

move could trigger exports growth in the future. Banks can also hope to earn increased revenue with the interest paid by RBI on CRR balances being increased from 4.0 percent to 6.0 percent.

The stock market scam brought out the unholy nexus between the Cooperative banks and stockbrokers. In order to usher in greater prudence in their operations, the RBI has barred Urban Cooperative Banks from financing the stock market operations and is also in the process of setting up of a new apex supervisory body for them. Meanwhile the foreign banks have a bone to pick with the RBI. The RBI had announced that forex loans are not to be calculated as a part of Tier-1 Capital for drawing up exposure limits to companies effective 1 April 2002. This will force foreign banks either to infuse fresh capital to maintain the capital adequacy ratio (CAR) or pare their asset base. Further, the RBI has also sought to keep foreign competition away from the nascent net banking segment in India by allowing only Indian banks with a local physical presence, to offer Internet banking

Crystal Gazing On the macro economic front, GDP is expected to grow by 6.0 to 6.5 percent while the projected expansion in broad money (M3) for 2001-02 is about 14.5

percent. Credit and deposits are both expected to grow by 15-16 percent in FY02. India's foreign exchange reserves should reach US$50.0 billion in FY02 and the Indian rupee should hold steady.

The interest rates are likely to remain stable this fiscal based on an expected downward trend in inflation rate, sluggish pace of non-oil imports and likelihood of declining global interest rates. The domestic banking industry is forecasted to witness a higher degree of mergers and acquisitions in the future. Banks are likely to opt for the universal banking approach with a stronger retail approach. Technology and superior customer service will continue to be the imperatives for success in this industry.

Public Sector banks that imbibe new concepts in banking, turn tech savvy, leaner and meaner post VRS and obtain more autonomy by keeping governmental stake to the minimum can succeed in effectively taking on the private sector banks by virtue of their sheer size. Weaker PSU banks are unlikely to survive in the long run. Consequently, they are likely to be either acquired by stronger players or will be forced to look out for other strategies to infuse greater capital and optimize their operations.

Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The outlook for the private sector banks indeed looks to be more promising vis--vis other banks. While their focused operations, lower but more productive employee force etc will stand them good, possible acquisitions of PSU banks will definitely give them the much needed scale of operations and access to lower cost of funds. These banks will continue to be the early technology adopters in the industry, thus increasing their efficiencies. Also, they have been amongst the first movers in the lucrative insurance segment. Already, banks such as Icici Bank and Hdfc Bank have forged alliances with Prudential Life and Standard Life respectively. This is one segment that is likely to witness a greater deal of action in the future. In the near term, the low interest rate scenario is likely to affect the spreads of majors. This is likely to result in a greater focus on better asset-liability management procedures. Consequently, only banks that strive hard to increase their share of fee-based revenues are likely to do better in the future.

RESEARCH METHODOLOGY

INTRODUCTION This focuses on the methodology & the techniques used for the collection, classification & tabulation of data. It sheds light on the research problem, the objective of study & its limitations. The manner in which the data is collected, classified, tabulated so as to reach the conclusive results. Research methodology may include not only the research methods but also considers the logic behind the methods used in the context of study & explains why only a particular method & techniques has been used so that research lend themselves to proper evaluation. Therefore to design a research problem it is necessary to design a research methodology as the same may differ from problem to problem.

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

is to provide for the collection of relevant evidence with minimal expenditure of effort, time and money. But how this can be achieved depends upon the research purpose. In my study the research process is as follows: Descriptive research study i.e. to portray accurately the characteristics of a particular product.

OBJECTIVE OF RESEARCH The purpose of research is to discover answer to question through the application of scientific procedure. The main aim of research is to find out the truth which is hidden, and which has not been discovered as yet

COLLECTION OF DATA After the research problem has been defined and the research task has been chalked out, the task of data collection begins. Data can be collected from either the primary or secondary sources. In this study although the data was collected mainly through primary sources, it was supplemented by secondary sources.

COLLECTION OF DATA

PRIMARY DATA

SECONDARY DATA

i) Primary Data The primary data are those which are collected afresh and for the first time, and thus happen to be original in character. For the collection of primary data, the respondents were contacted personally and the tool for gathering the data was the questionnaire.

ii) Secondary Data The secondary data, on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical process. Here, secondary data was collected through; a) Co. Brochures b) Product Manuals c) Training Hand Book

STUDY LIMITATIONS

The study is based on the data collected through banks website, brochures available with the company and the analysis of the sector published by various sources. The data although could not be fake but as the data was not collected by the researcher himself, a scope of doubt remains. As the Banking Sector is changing at a very rapid case, Basel-II reforms are going to be implemented soon. I could not study the consumer views about the bank as the time was limited. Services of other banks couldnt be compared to that of Dena bank The biggest limitation of the study is that I was not able to get the primary data, the data was not collected at all as the data could have been collected from small sample only so it would not have been advisable to generalize the data collected.

 The data provided by the company talked about the features available to its customers but no comparison was made with other banks

FUTURE OF BANKING

REFORMING the financial sector is central to second-generation reforms. This covers three important segments -- banking, insurance and the capital market. Some reform has already taken place in the capital market, though strengthening the institutional mechanism to prevent unethical practices is receiving the Government's attention. The latest to be opened up for private investment, including foreign direct investment, is the insurance sector. On a rough reckoning, commercial bank deposits account for 25 per cent of GDP and credit extended by banks may be 15 per cent of GDP. This leaves out transactions by industrial financial institutions, non-banking financial companies, cooperative banks, deposits in public provident funds treasury payments some of which may be agency functions of the banks. Thus, regular bank credit transactions alone account for a substantial percentage of GDP by way of servicing economic activities.

The banking sector has been undergoing reforms for over a decade now based largely on the report of the Narasimham Committee on Bank Reforms. Considerable progress has been made in the gradual reduction of non-performing assets of banks which stood at alarming 12-15 per cent six or seven years ago. It is now around 7 per cent on net basis.

It is increasingly evident that the economy offers opportunities but no security! Therefore, the future will belong to those who develop good internal controls, checks and balances and a sound market strategy

FINDINGS & SUGGESTIONS

The private sector bank is now being looked as an inspiration for others. The bank has been building key strengths over the years and has been largely hidden behind the more glamorous and bigger banks. It offers a proper balance; it has strong presence in retail (24% of advances), SME (17%), agriculture (8%) and a large corporate segment (51%), and so is not as vulnerable as some other fast growing banks are. Even its deposit book has a high portion (45.5%) of low cost savings and current accounts (CASA) and this bodes well. Net interest income for the bank grew by 72.9% in the second quarter, over the previous year, to touch Rs 341 crore. An increase in demand deposits and also overall business growth meant that the net interest margin grew to 3.28%, from 2.98%, one of the best amongst Indian banks.

The huge rise in other income is something disturbing. Trading income grew by 339% to touch Rs 103 crore. But then the second quarter has seen an overall spurt in trading income for corporates, especially banks. An equally strong growth in fee income, which rose by 69%, on a y-o-y basis to touch Rs 288 crore, is encouraging and once again strengthens the balance. All these initiatives will enable the bank to further strengthen its fee income. And while all this is happening, the bank has been prudent in its non-performing assets management. The gross NPA as a portion of gross customer assets declined to 0.95%, from 1.22% recorded in the second quarter of the previous year. The Bank has account for every class and need of customers and the services offered are among the best in industry.

In the sheltered days of banking, when customers could be freely charged, banks concerned themselves with only `revenue' which was equal to cost plus profit. Post-reforms, when the cost of services became nearly equal across banks and cost-control was key to higher profits, the focus of banks shifted to `profit', which was equal to revenue minus cost. The bank should be customer oriented also.

In the future, as domestic and international competition hots up, banks should have to shift their focus to `cost' which will be determined by revenue minus profit.

In other words, cost-control in tandem with efficient use of resources and increase in productivity will determine the winners and laggards in the future

CONCLUSION

Modern Banks of today are technologically more advanced and professional in their services. The Dena Bank has from the very beginning benefited from the technological innovations like computers and internet with an option to spread its business with the use of ATMs which are much economical to the Institutions, in comparison to operating a full fledged Branch. Also, from day one, Dena Bank has been choosy about its customers and have always judged them according to their financial standing. Drafts, cheque books, money transfers, withdrawals , etc. have different charges and conditions for different types of customers thereby catering to all types of customers. From a small time

businessman to an industrial tycoon all can bank upon the Institution for guidance and benefits, which these so called private and foreign financial institutions have learnt as business acumen.

I understand that with the changing times, the Bank is going through teething problems in its endeavour to cater to its clientele with most sophisticated financial system that would ensure prosperity and convenience to all its account holders irrespective of his/her portfolio. Connecting Branches that are spread out all over the country with its roots from small villages to high terrains, is just not something that any foreign or private Bank would dare think of. Private Banks are taking over other Banks, who fail to perform and forced into liquidation, just to benefit from its network that is already established.

Banking scenario is changing drastically and Bank too has the vision to surge ahead. The staff of today are imparted training in customer relationships, portfolio management, risk management, technical and software knowhow, etc. Management trainees are being directly

recruited, trained and challenges put forth to them. Similarly existing staff are being upgraded with modern knowhow and promoted to higher ranks with better incentives and challenges

BIBLIOGRAPHY

Reference Books:

C.R. Kothari Research Methodology.

Web sites:
www.google.com

www.denabank.com

Magazines & Newspapers

Business Today The Times of India The Hindustan times