ORGANIZATIONAL STRUCTURE OF BANKS

PUNJAB NATIONAL BANK

BACHELOR OF COMMERCE
Banking and Insurance
SEMESTER-V
Submitted
In partial fulfillment of the requirements
For the awards of the degree of
Bachelor of commerce - Banking and insurance
By
Valerie Dcunha
Roll no. 8208
St. Andrews College of Arts, Science and Commerce
Bandra West, Mumbai - 400 050

ST . ANDREWS COLLEGE OF ARTS, SCIENCE AND

COMMERCE, BANDRA WEST , MUMBAI - 400 050
CERTIFICATE

This is to verify that Shri/ Miss VALERIE DCUNHA of B.Com.

Banking & Insurance - Semester V (2014-2015) has successfully
completed the project on
ORGANIZATIONAL STRUCTURE OF BANKS , PUNJAB
NATIONAL BANK. Under the guidance of prof. JINAL SHAH.

Course Coordinator

Project Guide / Internal Examiner

External Examiner

Principal

DECLARATION
I VALERIE DCUNHA the student of B.Com. (Banking & Insurance) Semester V declare that i have completed the project on
ORGANIZATIONAL STRUCTURE OF BANKS, PUNJAB NATIONAL
BANK. The information submitted is true & original to the best of my
knowledge.

Students Signature
Valerie dcunha
ROLL NO. 8208

ACKNOWLEDGEMENT

INTRODUCTION

INDEX

CHAPTER 1
DEFINITION OF ORGANIZATIONAL STRUCTURE
Thetypically hierarchical arrangement of lines of authority, communicatio
ns, rights and duties ofanorganization. Organizational structure determine
s how the roles, power and responsibilities are assigned, controlled, and
coordinated, and how information flows between the different levels of
management.
A structure depends on the organization's objectives and strategy. In
a centralized structure, the top layer of management has most of
the decision
making power
and
has
tight control over departments and divisions. In a decentralized structure,
the decision making power is distributed and the departments and
divisions may have different degrees of independence. A company such
as Proctor & Gamble that sells multiple products may organize their
structure so that groups are divided according to each product and
depending on geographical area as well.
MEANING : Organizational structure is a system used to define a
hierarchy within an organization. It identifies each job, its function and
where it reports to within the organization. This structure is developed to
establish how an organization operates and assists an organization in
obtaining its goals to allow for future growth. The structure is illustrated
using an organizational chart.

1.1 WHY IS ORGANIZATIONAL STRUCTURE IMPORTANT ?

There are a number of factors that differentiate small-business operations
from large-business operations, one of which is the implementation of a
formal organizational structure. Organizational structure is important for
any growing company to provide guidance and clarity on specific human
resources issues, such as managerial authority. Small-business owners
should begin thinking about a formal structure early in the growth stage
of their business.
Purpose: Organizational structure provides guidance to all employees by
laying out the official reporting relationships that govern the
workflow of the company. A formal outline of a company's structure
makes it easier to add new positions in the company, as well,
providing a flexible and ready means for growth.
Significance: Without a formal organizational structure, employees may
find it difficult to know who they officially report to in different
situations, and it may become unclear exactly who has the final
responsibility for what. Organizational structure improves operational
efficiency by providing clarity to employees at all levels of a company.
By paying mind to the organizational structure, departments can work
more like well-oiled machines, focusing time and energy on productive
tasks. A thoroughly outlined structure can also provide a roadmap for
internal promotions, allowing companies to create solid employee
advancement tracks for entry-level workers.
Communication:The flow of information is essential to an organizations
success. The organization structure should be designed to ensure that
individuals and departments that need to coordinate their efforts have
lines of communication that are built into the structure. The financial
planning and analysis department might report to the Chief Financial
Officer and the Senior Vice President of Marketing, because both of these
members of the top management team depend on information and reports
provided by financial planning.
Reporting Relationships: Reporting relationships must be clear so all
members of the organization understand what their responsibilities are
and know to whom they are accountable. These clear relationships make
it easier for managers to supervise those in lower organization levels.
Each employee benefits by knowing whom they can turn to for direction
or help. In addition, managers are aware of who is outside the scope of
their authority, so they do not overstep their bounds and interfere with

another managers responsibilities.

1.2 Four Basic Elements of Organizational Structure

1 Growth And Expansion: Companies that grow rapidly are those that
make the best use of their resources, including management talent. A
sound organization structure ensures that the company has the right
people in the right positions. The structure may suggest weak spots or
deficiencies in the companys current management team. As the company
grows, the organization structure must evolve with it. Many times more
layers of management are created, when one department head has too
many individuals reporting to him at one time to give each employee the
attention and direction needed for the employee to succeed.
2 Task Completion:A well-designed organization structure facilitates the
completion of projects. Project managers can better identify the human
resources available to them if the scope of each departments
responsibility -- and each team members capabilities--are clear. A project
to develop a new product would require market research. The project
manager needs to know who in the organization can provide this research,
and whose permission must be obtained for the research to be done.

3 Fits Companys Needs:Companies in different industries require

different mixes of talent and a relatively greater emphasis on certain
management functions. A software company often has a large
development staff. Structuring the reporting relationships within the
development team so creativity and productivity are maximized, and
deadlines are met, is vital to that type of companys success. Companies
often have to go through a reorganization phase in which individual
positions or even whole departments are repositioned on the organization
chart in an effort to better utilize the companys human resources and
make the operation run more smoothly.
4 What Can Go Wrong: Poorly structured organizations find that critical
deadlines are not met because there were not sufficient human resources
in each department to accomplish all parts of a given task, or because it
was not clear whose ultimate responsibility the project was. If individuals
are not sure whom they report to, they may find they are given conflicting
assignments by two or more managers above them.

CHAPTER 2
TYPES OF ORGANIZATIONAL STRUCTURES
We may categorize the arrangements of organizations into seven types of
structures: (1) simple, (2) functional, (3) divisional, (4) matrix, (5) teambased, (6) network, and (7) modular.
1. The Simple Structure: For the Small Firm
Simple Structure:
The first organizational form is the simple structure. This is the form
often found in a firms very early, entrepreneurial stages, when the
organization is apt to reflect the desires and personality of the owner or
founder. An organization with a simple structure has authority centralized
in a single person, a flat hierarchy, few rules, and low work
specialization. Hundreds of thousands of organizations are arranged
according to a simple structurefor instance, small mom-and-pop firms
running landscaping, construction, insurance sales, and similar
businesses. Examples: Both Hewlett-Packard and Apple Computer began
as two-man garage start-ups that later became large.
2. The Functional Structure: Grouping by Similar Work Specialties
The second organizational form is the functional structure. In a functional
structure, people with similar occupational specialties are put together in
formal groups. This is a quite commonplace structure, seen in all kinds of
organizations, for-profit and nonprofit.
Examples: A manufacturing firm will often group people with similar
work skills in a Marketing Department, others in a Production
Department, others in Finance, and so on. A nonprofit educational
institution might group employees according to work specialty under
Faculty, Admissions, Maintenance, and so forth.
3. The Divisional Structure: Grouping by Similarity of Purpose
The third organizational form is the divisional structure. In a divisional
structure, people with diverse occupational specialties are put together in
formal groups by similar products or services, customers or clients, or
geographic regions.

Product Divisions: Grouping by Similar Products or Services

Product divisions group activities around similar products or
services. Examples: The media giant Time Warner has different divisions
for magazines, movies, recordings, cable television, and so on. The
Warner Bros. part of the empire alone has divisions spanning movies and
television, a broadcast network, retail stores, theaters, amusement parks,
and music.
Customer Divisions: Grouping by Common Customers or Clients
Customer divisions tend to group activities around common customers or
clients. Examples: Ford Motor Co. has separate divisions for passengercar dealers, for large trucking customers, and for farm products
customers. A savings and loan might be structured with divisions for
making consumer loans, mortgage loans, business loans, and agricultural
loans.
Geographic Divisions: Grouping by Regional Location
Geographic divisions group activities around defined regional
locations. Example: This arrangement is frequently used by government
agencies. The Federal Reserve Bank, for instance, has 12 separate
districts around the United States. The Internal Revenue Service also has
several districts.
4. The Matrix Structure: A Grid of Functional & Divisional for Two
Chains of Command
The fourth organizational form is the matrix structure. In a matrix
structure, an organization combines functional and divisional chains of
command in a grid so that there are two command structuresvertical
and horizontal. The functional structure usually doesnt changeit is the
organizations normal departments or divisions, such as Finance,
Marketing, Production, and Research & Development. The divisional
structure may varyas by product, brand, customer, or geographic
region.
A hypothetical example, using Ford Motor Co.: The functional
structure might be the departments of Engineering, Finance, Production,
and Marketing, each headed by a vice president. Thus, the reporting
arrangement is vertical. The divisional structure might be by product (the
new models of Taurus, Mustang, Explorer, and Expedition, for example),
each headed by a project manager. This reporting arrangement is
horizontal. Thus, a marketing person, say, would report to both the Vice
President of Marketing and to the Project Manager for the Ford Mustang.

Indeed, Ford Motor Co. used the matrix approach to create the Taurus and
a newer version of the Mustang.
5. The Team-Based Structure: Eliminating Functional Barriers to
Solve Problems
The fifth organizational form is the team-based structure. In a team-based
structure, teams or work groups, either temporary or permanent, are used
to improve horizontal relations and solve problems throughout the
organization. When managers from different functional divisions are
brought together in teamsknown as cross-functional teamsto solve
particular problems, the barriers between the divisions break down. The
focus on narrow divisional interests yields to a common interest in
solving the problems that brought them together. Yet team members still
have their full-time functional work responsibilities and still formally
report to their own managers above them in the functional-division
hierarchy.
6. The Network Structure: Connecting a Central Core to Outside
Firms by Computer Connections
In the sixth organizational form, network structure, the organization has a
central core that is linked to outside independent firms by computer
connections, which are used to operate as if all were a single
organization. Corporations using this structure are sometimes
called virtual corporations or virtual organizations, as we mentioned in
Another term used is the hollow corporation or hollow organization, in
which the company retains important core processes critical to its
performance (such as design or marketing) and outsources most other
processes (such as human resources, warehousing, or distribution),
thereby seeming to hollow out the organization.
With a network structure, an organization can become a boundaryless
organization, operating with extensive, even worldwide operations, yet its
basic core can remain small, thus keeping payrolls and overhead down.
The glue that holds everything together is information technology, along
with strategic alliances and contractual arrangements with supplier
companies.
Nowadays a firm can be completely international. An example is the
medical device start-up EndoStim, nominally based in St. Louis but
operating everywhere.
7. The Modular Structure: Outsourcing Pieces of a Product to
Outside Firms
The seventh organizational form differs from the sixth in that it is
oriented around outsourcing certain pieces of a product rather than

outsourcing certain processes (such as human resources or warehousing)

of an organization. In a modular structure, a firm assembles product
chunks, or modules, provided by outside contractors. One article
compares this form of organization to a collection of Lego bricks that
can snap together.

CHAPTER 3
ORGANIZATIONAL STRUCTURE OF BANKS
The organizational set up of banks is not not same for all banks it varies from
bank to bank & according to the size. For eg: larger banks will have more
controlling offices.they may have a four tire administrative set-up consisting of
branches, regional offices, zonal offices & head offices. In case of smaller banks
they may not have a zonal set-up.they have only the regional offices in between
branches & head office the number of regional offices & branches also may
differ according to the size of the bank . The set up of branches of foreign banks
in India may also differ, since they do not have a registered office in India will
be as follows..
3.1 ORGANIZATIONAL SET UP OF A BANK
The officials of banks are categorize d as top managers, senior managers,
middle managers & Junior Managers (JM). The entry of the official cadre is
normally JM. They are above the operating staff. They are often the section
heads in smaller branches. JM officers can also become managers in small
branches (Scale I) after gaining sufficient experience. However, branches
headed by JM officials are not common now because even a rural branch is
opened at a higher scale. Middle managers can be a branch manager, deputy
managers in branches or administrative offices. They can head medium level
branches

categorized as scale II branches. Senior managers are normally heads the scale
III branches or become section Heads in administrative offices or larger
branches. The officials from chief managers to CMD are top management
people . Generally they are stationed in the administrative offices. However,
there are branches headed by chief managers, assistant managers, deputy
general managers & even general managers depending upon the size of the
branch measured in term of volume of business handled by it.
3.1 (i) FUNCTIONS OF HEAD OFFICE
Head office is the administrative appellate body of the Bank. Some banks have
corporate office at one center and administrative office in another place. For eg,

Bank Of Baroda is having their head office at Baroda and Corporate Office at
Mumbai. All the administrative offices are located in the head office. Generally,
head office of a bank has the following functional departments:
1 Vigilance Department:
Vigilance department is a separate department. But generally the department ia
associated with inspection department. Therefore it is better known as
inspection and vigilance department. This department institutes enquireswhen
cases of corruption, bribery etc., are charged against employees. They also
handle the frauds and submit periodic reports to RBI.
2 MIS Department:
This department coordinatesthe information system in the bank and generates
various statutory as well as inter statements and returns. The management
information system is essentialfor the efficient and effictive management of
banks. In the automatedbanking enviroment the MIS department need not wait
for the inormation flow from branches. Instead, it can draw the required data
from the data pool and generate necessary statements.

3 EDP Department:
Electronic Data Processing Department is the nerve center of mordern banking
enviroment which depends on technology to a great extent. This department
controls and monitors the hardware and software systems of branches and
administrative offices. They have trained system administrators posted at each
branch/office who coordinate this function. They also develop softwares
themselves by employing project teams as also they outsource some of the
softwares fromprofessional agencies like wipro, infosys etc. the DEP
department ios responsible for the supply of hardware and software of all
branches & for implementation of core banking solution, anywhere banking,
ATMs etc.

4 Corporate Finance Department:

This department handles the corporate advances. The department will be
analysing credit proposal received from large corporate client and placing
before the appropriate authorities for sanction.
5 Priority & Non Priority Credit Department:
This department monitors the credit to priority sectors and give necessary
instruction to the branches. Generally, the branches are having powers to
sanction loans under the priority sector. Therefore, the deparment need not
appraise credit proposal unless such loans require clearance at higher level.
6 ORGANISATION & METHOD (O&M):
This department is charged with the responsibility of a review of banks
procedures & rules & also the forms & registers used. The department suggests
simplification of procedures & rules as well as standardization of forms&
registers. It is continuously on the lookout to eliminate unnecessary work &
simplify the clerical routines that it can result in an increase of productivity.
Previously these functions were part of the inspection department, but in view
of the gaining importance of these functions banks have started opening
separate O&M departments.
7 INVESTMENT DEPARTMENTS:
All banks invest sizeable funds in Government & other securities to satisfy
liquidity requirements &also with a view to utilize idle funds during periods of
low demand for bank funds. Most of the loans floated by the central & state
governments are subscribed by the banks. This department takes care of
purchase & sale of securities, collection of interest on due dates, custody of
securities, lodgement of securities for borrowing from Reserve Bank of India,
state bank of India or other Banks, filing of returns of survey of investments to
RBI & a review & planning of banks investments.
7 ESTATE DEPARTMENT: The department looks after the acquisition and
maintenance of buildings, Furniture, office equipment, vehicles,

telephones, telex and other communication facilities. Where premises are

taken on rent, lease agreements will have to be entered into and in some
cases, alterations will have to be entered into an in some cases, alteration
will have to be effected to such buildings. The department has to pay rent
for premises taken on hire.
8
3.2 REGIONAL HEAD
For the purpose of administrative convenience, the control of branches is
decentralized. Accordingly, a set of branches are bought under a particular
region. Some banks have classified the regions geographically, like north
Kerala, south Kerala, Mumbai etc. Some other banks classified it as Region NO
1, Region NO. 2 etc . Bringing certain number of branches under each region
irrespective of their geographical locations. Banks having lesser number of
branches in a particular state may have only one region for that state looking
after all the branches in that state. For eg, Punjab National Bank has only one
regional office at Trichy to look after all the branches in the state of Tamil Nadu.
They are headed byChief Managers/Asst. General manager/Dy. General
managers depending on the no ofd branches coming under their span of
control. They are assisted by Asst. General manager /Chief Manager etc as the
case may be. The organizational set-up of regional offices are different for each
bank. The organizational set-up depends on thje size of the bank, volume of
buisness etc. the typical administrative set-up of aregional office is shown
under. Regional offices oversee the functions of branches and act as
intermediary betweeen the head office/Zonal Office. They also provide the
consolidated buisness position of the branches coming under their region.
Regional heads spend a specific tiome periodically at he regional offices to
attend to the grevience of customer and take initiative to redress the griveance.

3.3 ZONAL HEAD

Large banks have zonal offices which are higher than the regional offices. Each
zonal office has few regional offices under it. For eg, two regional offices of
Punjab National Bank have one Zonal Office for each state irrespective of the
number of branches. They have only one regional office in Gujrat which is
under the Ahmedabad zonal office. Similarly, there are six regional offices in
Bihar which is under Bihar Zonal Office. Some Banks have extended Corporate
Office instead of Zonal Office. For eg, Union Bank of India has five offices
headed by General Manager at Ahmedabad, Lucknow,Delhi,Mumbai & Kolkata
which at as the extended arms of corporate office. They have two zonal offices
at Pune&Bhopal. The zonal office acts as the local head office & processes
credit proposal ans sanction it, treansfers officers and staff as per thetransfer
poolicy of the bank, monitors funds management, provides customer redressal
mechanism etc. The organizational set up of zonal office is shown below.
The organizational structure and functions of regional offices and zonal offices
may differ from bank to bank. Each bank may have their own systems
depending on their size, span of control etc.

3.3(I)FUNCTIONS OF A ZONAL OFFICE:

Zonal and regional offices are extended arms of the head office. Therefore,
almost all the functional departments at Head office are seen at hese offices
also. However ther are certain differences in the functions of these departments
some typical departments and their functions are mentioned below .
1 Planning Department: This department obtains the budget figures, annually

from branches and submits a consolidated statement to the head office. Where a
bank is having regional office and zonal office, the regional office consolidates
the data from branches under their jurisdiction and send a consolidated
statement to the zonal office. The zonal office consolidates the figures from the
regions under them and send a consolidated data sheet to the head office. This
department also redistributes the buisness targets alloted to them by the head
office among the branches. They alsoconduct yearly/annual quarterly/half
review meetings, evaluate the performance4 of branches and sutably advice
them for improvement. They periodically visit the branches under theircontrol
and monitors their buisness development activities as well as functioning of the
branches.
2 Personnel Department:
This department deals with all matters of relating to employees except
recruitment, selection and industrial relations. These functions are generally
conducted by head office. However, they conduct the recruitment tests,
interviews ect. On behalf of the head office. They conduct the performance
evaluation of employees. They are also empowered to transef the officers and
staff within the region/zone. This department sanctions loans to staff and
maintain the relevant files and records.
3 Credit Department:
Credit department appraises the credit proposal received from brsnches and
submit to the regional Head/Zonal Head are sanctioned to Head Office. Loans
which are under the power of the Regional/Zonal Head aresanctioned at the
Regional/Zonal office. Tose which are beyond their powers are forwarded to
Head Office with their recommendations.credit department issues the sanction
orders in respect of the loans disbursed by the branches under their control. The
credit department evaluates the measures taken by branches for reduction of
non-performing assets by giving suitable advice/guidance. They also evaluate
the performance of branches in respect of lending to priority sectors,

beneficiaries under government sponsored schemes like PMRY and submity

necessary reports to the appropriate authorities. In short, they handle all the
matters relating to credit.
4 Inspection Department:
The inspection wing of regional/zonal office conducts periodic inspection of
branches under their control as per the schedules fixed by the head office. They
also follow up the rectification of irregularities pointed out by the internal
inspection team as well as external auditors.
5 Lead Bank Division:
Wherever the bank is acting as lead bank under the lead bank scheme, there are
separate divisions in the regional/zonal office to handle the matters connected
with the lead bank scheme. This includes convening the meeting of the District
Consultative Committee, evaluating the performance of banks, coordinating
with the government agencies etc.
6 Customer Care:
Another important function of the Regional/Zonal head keeps a particular day in
a week to listen to customers and redress their grievances. They also submit
necessary report to the head office regardind disposal of customer complaints.
CHAPTER 4
ORGANIZATIONAL STRUCTURE OF BRANCHES
Branches are the last link through which the buisness is transacted. The
branches are classified on the basis of volume of buisness as well as functions.
The branches according to buisness volume are:
Scale I Branch- mostly rural branches are headed by junior officers
Scale II Branch-mostly semi-urban branches are headed by an officer in
the middle management cadre-scale II
ScaleIII Branch-mostly urban branches are headed by seniour manager in

scale III
Scale IV- mostly urban and some times metro branches are headed by an
officer in scale IV
ScaleV Branch-Large Branch- mostly metro and some times urban also
are headed by an officer in scale V
ScaleVI Branch- Exceptionally Large Branch-mostly metro branches and
specialised branches are headed by an officer in scaleVI.

4 (i) DEPARTMENTS IN A BRANCH:

1. ADVANCES DEPARTMENT: This department deals with grants of
advances. It gives publicity to the various lending schemes, identify
individual borrowers, collect credit information about borrowers, process the
loan applications & sanction them if it is within the limits of the branch. In
other cases, the proposals are forwarded to the regional or central office as
the case may be. It must also follow up regarding proper utilization of credit
& subsequent recovery of advances. In the case of irregular accounts, it must
report to the regional office & after obtaining necessary sanction from
appropriate authority must proceed with legal action. It must also submit

2.

3.

4.

5.

returns under garantee schemes to the regional office. In some branches

located in rural areas there are separate departments to look after agricultural
finance. Similarly branches located in urban areas may have industrial credit
cell & small industries credit cell.
DEPOSITS DEPARTMENT: This can be sub-divided into current
deposits, fixed deposits & savings deposits. This department deals with the
opening of various deposit accounts after completing the necessary
formalities. In the case of current & savings deposits accounts, cheque books
are issued. Entries are made in the ledger on the basis of cash deposited &
cheques collected. When customers present cheques, they are passed for
payment & entries are made in pass-book or statements of account are sent.
In case of fixed deposits & other allied deposits, deposit receipts are issued
& interest payments are made credited to current or S.B. Account. In the case
of recurring deposits, pass-book are issued & entries are made as & when
payments are made.
In the current & savings accounts, as the volume of work is heavy,
accounts are numbered and certain range of numbers are allotted to each
other ledger clerk. The range of numbers allotted is prominently
displayed on the counter at the place where the clerk sits, so that the
customer can identify the ledger clerk whom he should approach for
passing his cheque.
CASH & CLEARING: Cash department deals with receipts & payments &
safe-custody of cash. The department also sends solied notes to the Reserve
Bank for exchange. In the case of local cheques, deposited for collection,
they are sorted bank wise & sent to the clearing house. The department is
usually provided with a cash safe in the strong room & is jointly operated by
the branch manager & the chief cashier.
REMITTANCE DEPARTMENT: This department issues demand drafts to
customer & public. Then advice is sent to the drawee branch. When
customers report loss of drafts, duplicate drafts are issued after ascertaining
the non-payment of the original draft from the drawee branch & obtaining
indemnity from the applicant.
In case of mail transfers & telegraphic transfer advice is sent to the
branch either by mail or telegrams to make payment to the payee.
BILLS DEPARTMENT: This department deals with inland trade bills-both
inward & outward. In case of inward bills, which may be D/A bills or D/P
BILLS, acceptance or payment is secured from the customers. In the case of
D/A bills, they are again presented for payment on the due date & the
proceeds are remitted to the seller of the goods.

Similarly, in the case of outward bills, this department undertakes the

responsibility of sending the bills along with the documents to the buyer
of the goods either through its own branch or through the drawees
banker. The amount is credited to the customer on realization of the bills.
In case of D/A bills, this department may discount the same, if the
customer has bill discounted facility.
6. ESTABLISHMENT DEPARTMENT: This department looks after matters,
premises & branch assets. It prepares the salary & overtime bills, looks after
INCOME-Tax matters & submits returns to the tax authorities & the
divisional or regional office in the prescribed forms. It also looks after the
maintenance of branch premises, furniture & fixtures, machines &
equipment. It indents stationery from the zonal office & maintains records
relating to the same. Maintenance of old records & execution of standard
instructions of customers are also entrusted to this department. It also looks
after the security of property & intimates the divisional office regarding the
cover required for branch assets
7. FOREIGN DEPARTMENT: This department performs the same functions
as the one situated in the central office except for some matters like training.
There are other departments in a branch. It also includes various section
some of them are as follows.
4 (ii) DEPOSIT SECTION:
1. Customer fills up the relevant remittance slips and remits cash at
the cash counter.
2. Cashier accepts the cash, enters the transaction in his book and
passes the slip with his signature to the officer.
3. Officer verifies the slip, enters the same in his scroll book and
passes the slip to the respective sections

.
4. The section clerks enter the transactions in their ledgers and hand
over the updated pass book to the customer (if pass book is
presented),(current a/c section clerk enters thetransaction in the a/c
of the custoimer and the term deposit section clerk hands over the
term deposit receipt to the customer after getting his signature on
the counter foil of the term deposit receipt.)
5. The current account section clerk enters the transaction in the
account of the customer and hands over the pass book (if pass book
is presented)
This is a brief description of a typical trancastion that takes place in
the deposit section of a bank.
4 (iii) ADVANCE SECTION:
1 Customer submits the loan application to the credit officer.
2 Credit officer processes the application by interviewing the
customer, conducting site inspection wherever necessary and
submits his recommendation note to the manager.
3 Manager sanctions the loan and sends the papers back to the
credit officer.
4 Credit officer sends the paper to the loan clerk.
5 The customer executes loan documents and hands them to the
loan clerk.

6 Loan clerk enters the details in the loan register, perperes the
debit slip ans sends it togetherwith the loan document to the officer
for signing and sendind the slip to the cash section.in the case of
disbursing the loan directly to the supplier, the loan clerk will debit
the margin amount from the savings bank account of the customer,
prepare the demand draft for the full cost of the equipmentto be
purchased and send it to the cashier for the effecting payment. In
case of demand draft he signs it and sends it to the loanclerk for
either handing over to the customer or sending it directto the
suplier.

4 (iv) OTHER SERVICES:

In case of other services like purchasing of demand draft and
depositing a cheque for collection:
1 The customer remits the cash together with the demand
draft applicationfrom the cash counter and gets the
counterfoil. If the amount of demand draft is to be debited
into his account, he tenders the application together with the
cheque for the amount of Ddplus commission at the

respective deposit section. He deposits the cheque for

collection at the collection sectionand gets the counterfoil.
2 The cashier after recording the transaction in the cash
book sends the voucher to the officer.If the amount of the
customer, the deposit section sends the voucher to the
officer.
3 The officer signs the voucher and sends it to the remittance
section.
4 Remittance section prepares the DD, gets the signature of
the officer and hands it over to the customer under
acknowledgement.

CHAPTER 5
HISTORY OF PUNJAB NATIONAL BANK
Punjab under the British especially after annexation in 1849 witnessed a period

of rapid development giving rise to a new educated class fired with a desire for
freedom from the yoke of slavery. Amongst the cherished desires of this new
class was also an overriding ambition to start a Swadeshi Bank with Indian
Capital and management representing all sections of the Indian community. The
idea was first mooted by Rai Mool Raj of Arya Samaj who, as reported by Lala
Lajpat Rai, had long cherished the idea that Indians should have a national bank
of their own. He felt keenly "the fact that the Indian capital was being used to
run English banks and companies, the profits accruing from which went entirely
to the Britishers whilst Indians had to contend themselves with a small interest
on their own capital".
At the instance of Rai Mool Raj, Lala Lajpat Rai sent round a circular to
selected friends insisting on an Indian Joint stock Bank as the first special step
in constructive Swadeshi. Lala Harkrishan Lal who had returned from England
with ideas regarding commerce and industry, was eager to give them practical
shape.
'PNB was born on May 19, 1894. The founding board was drawn from different
parts of India professing different faiths and a varied back-ground with,
however, the common objective of providing country with a truly national bank
which would further the economic interest of the country.
The Bank opened for business on 12 April, 1895. The first Board of 7 Directors
comprised of Sardar Dayal Singh Majithia, who was also the founder of Dayal
Singh College and the Tribune; Lala Lalchand one of the founders of DAV
College and President of its Management Society; Kali Prosanna Roy, eminent
Bengali pleader who was also the Chairman of the Reception committee of the
Indian National Congress at its Lahore session in 1900; Lala Harkishan Lal who
became widely known as the first industrialist of Punjab; EC Jessawala, a well
known Parsi merchant and partner of Jamshedji & Co. of Lahore; Lala Prabhu
Dayal, a leading Rais, merchant and philanthropist of Multan; Bakshi Jaishi
Ram, an eminent Civil Lawyer of Lahore; and Lala Dholan Dass, a great
banker, merchant and Rais of Amritsar. Thus a Bengali, Parsi, a Sikh and a few
Hindus joined hands in a purely national and cosmopolitan spirit to found this
Bank which opened its doors to the public on 12th of April 1895. They went
about it with a Missionary Zeal. Sh. Dayal Singh Majithia was the first
Chairman, Lala Harkishan Lal, the first secretary to the Board and Shri Bulaki
Ram Shastri Barrister at Lahore, was appointed Manager.
A Maiden Dividend of 4% was declared after only 7 months of operation. Lala
Lajpat Rai was the first to open an account with the bank which was housed in
the building opposite the Arya Samaj Mandir in Anarkali in Lahore. His
younger brother joined the Bank as a Manager. Authorised total capital of the
Bank was Rs. 2 lakhs, the working capital was Rs. 20000. It had total staff
strength of nine and the total monthly salary amounted to Rs. 320.
The first branch outside Lahore was opened in Rawalpindi in 1900. The Bank
made slow, but steady progress in the first decade of its existence. Lala Lajpat
Rai joined the Board of Directors soon after. in 1913, the banking industry in

India was hit by a severe crisis following the failure of the Peoples Bank of
India founded by Lala Harkishan Lal. As many as 78 banks failed during this
crisis. Punjab National Bank survived. Mr. JH Maynard, the then financial
Commissioner, Punjab, remarked...."Your Bank survived...no doubt due to good
management". It spoke volumes for the measure of confidence reposed by the
public in the Bank's management.
The years 1926 to 1936 were turbulent and loss ridden ones for the banking
industry the world over. The 1929 Wall Street crash plunged the world into a
severe economic crisis.
It was during this period that the Jalianwala Bagh Committee account was
opened in the Bank, which in the decade that followed, was operated by
Mahatma Gandhi and Pandit Jawaharlal Nehru. The five years from 1941 to
1946 were ones of unprecedented growth. From a modest base of 71, the
number of branches increased to 278. Deposits grew from Rs. 10 crores to Rs.
62 crores. On March 31, 1947, the Bank officials decided to leave Lahore and
transfer the registered office of the Bank to Delhi and permission for transfer
was obtained from the Lahore High Court on June 20, 1947.
PNB was then housed in the precincts of Sreeniwas in the salubrious Civil
Lines, Delhi. Many a staff member fell victim to the widespread riots in the
discharge of their duties. The conditions deteriorated further. The Bank was
forced to close 92 offices in West Pakistan constituting 33 percent of the total
number and having 40% of the total deposits. The Bank, however, continued to
maintain a few caretaker branches.
The Bank then embarked on its task of rehabilitating the displaced account
holders. The migrants from Pakistan were repaid their deposits based upon
whatever evidence they could produce. Such gestures cemented their trusts in
the bank and PNB became a symbol of Trust and a name you can bank upon.
Surplus staff posed a big problem. Fast expansion became a priority. The policy
paid rich dividends by opening up an era of phenomenal growth.
In 1951, the Bank took over the assets and liabilities of Bharat Bank Ltd. and
became the second largest bank in the private sector. In 1962, it amalgamated
the Indo-Commercial Bank with it. From its dwindled deposits of Rs. 43 crores
in 1949 it rose to cross the Rs. 355 crores mark by the July 1969. Its number of
offices had increased to 569 and advances from Rs. 19 crores in 1949 to Rs. 243
crores by July 1969 when it was nationalised.
Since inception in 1895, PNB has always been a "People's bank" serving
millions of people throughout the country and also had the proud distinction of
serving great national leaders like Sarvshri Jawahar Lal Nehru, Gobind Ballabh
Pant, Lal Bahadur Shastri, Rafi Ahmed Kidwai, Smt. Indira Gandhi etc.
amongst other who banked with us.
CHAPTER 6
PUNJAB KESHARI LALA LAJPAT RAI

(SALUTING THE FOUNDER OF THE BANK)

(1865-1928)
Lala Lajpat Rai and PNB
Lalaji was keenly concerned with the fact that though Indian capital was being
used to run English Banks and companies, the profits went entirely to the British,
while Indians had to contend themselves with a small interest on their capital. He
echoed this sentiment in one of his writing while concurring with Rai Mul Raj of
Arya Samaj who had long cherished the idea that Indians should have a National
Bank of their own. At the instance of Rai Mul Raj, Lala Lajpat Rai sent a circular
to selected friends insisting on an Indian joint stock Bank as the first step in
constructive Swadeshi and the response was satisfactory
After filing and registering the memorandum and Articles of Association on 19
May, 1894, the bank was incorporated under Act VI of the 1882 Indian
Companies Act. The prospectus of the bank was published in the Tribune, and the
Urdu Akhbar-e-Am and Paisa Akhbar. On 23rd May, 1894, the founders met at
the Lahore residence of Sh. Dyal Singh Majithia, the first Chairman of PNB, and
resolved to go ahead with the scheme. They decided to hire a house in the famous
Anarkali Bazar of Lahore opposite the post office and near well known stores of
Rama Brothers.On 12th April 1895, the Bank opened for business, a day before
the great Punjab festival of Baishakhi. The essence of the Banks culture was
clear at this first meeting itself. The fourteen original shareholders and seven
directors took only a modest number of shares; the control of the Bank was to lie
with the large, dispersed shareholders, a purely professional approach that was as
uncommon then as it is today.