Brief Introduction of Indian Banking Sector
Brief Introduction of Indian Banking Sector
A well organized and efficient banking system is a pre-requisite for economic growth. Banks play an important role in the functioning of organized monetary market. In order to meet the banking needs of various sections of the society, a large network of bank branches has been established.
Principal Enactment of Banking Functions: There is an elaborate framework governing the functioning of banks in India. The principal enactment of which governs the functioning of various banks are as under:-
Banking Regulation Act 1949 Banking Companies (Acquisition and Transfer of Undertaking) Act,
1970 Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 State Bank of India Act, 1955 Regional Rural Bank Act, 1976 Companies Act, 1956 Co- operative Societies Act, 1912 or the relevant state Co-operative societies Act
Besides the above enactment the provisions of Reserve Bank of India Act, 1934 also effect the functioning of banks. The Act gives wide powers to Reserve Bank of India to give directions to banks; such directions also have considerable effect on the functioning of banks.
Structure of Indian Banking System
Evolution of the Indian Banking Industry:The Indian banking industry has its foundations in the 18th century, and has had a varied evolutionary experience since then. The initial banks in India were primarily traders banks engaged only in financing activities. Banking industry in the pre-independence era developed with the Presidency Banks, which were transformed into the Imperial Bank of India and subsequently into the State Bank of India. The initial days of the industry saw a majority private ownership and a highly volatile work environment. Major strides towards public ownership and accountability were made with nationalization in 1969 and 1980 which transformed the face of banking in India. The industry in recent times has recognized the importance of private and foreign players in a competitive scenario and has moved towards greater liberalization.
In the evolution of this strategic industry spanning over two centuries, immense developments have been made in terms of the regulations governing it, the ownership structure, products and services offered and the technology deployed. The entire evolution can be classified into four distinct phases. Phase I- Pre-Nationalization Phase (prior to 1955) Phase II- Era of Nationalization and Consolidation (1955-1990) Phase III- Introduction of Indian Financial & Banking Sector Reforms and Partial Liberalization (1990-2004) Phase IV- Period of Increased Liberalization (2004 onwards)
Phases of Evolution of Banking Sector in India:
Business Segmentation
The entire range of banking operations are segmented into four broad heads- retail banking businesses, wholesale banking businesses, treasury operations and other banking activities. Banks have dedicated business units and branches for retail banking, wholesale banking (divided again into large corporate, mid corporate) etc.
Banking industry Structure:
The entire organized banking system comprises of scheduled and non-scheduled banks. Largely, this segment comprises of the scheduled banks, with the unscheduled ones forming a very small component. Banking needs of the financially excluded population is catered to by other unorganized entities distinct from banks, such as, moneylenders, pawnbrokers and indigenous bankers.
Scheduled Banks:
A scheduled bank is a bank that is listed under the second schedule of the RBI Act, 1934. In order to be included under this schedule of the RBI Act, banks have to fulfill certain conditions such as having a paid up capital and reserves of at least 0.5 million and satisfying the Reserve Bank that its affairs are not being conducted in a manner prejudicial to the interests of its depositors. Scheduled banks are further classified into commercial and cooperative banks. The basic difference between scheduled commercial banks and scheduled cooperative banks is in their holding pattern. Scheduled cooperative banks are cooperative credit institutions that are registered under the Cooperative Societies Act. These banks work according to the cooperative principles of mutual assistance.
Scheduled Commercial Banks (SCBs):
Scheduled commercial banks (SCBs) account for a major proportion of the business of the scheduled banks. As at end-March, 2009, 80 SCBs were operational in India. SCBs in India are categorized into the five groups based on their ownership and/or their nature of operations. State Bank of India and its six associates (excluding State Bank of Saurashtra, which has been merged with the SBI with effect from August 13, 2008) are recognized as a separate category of SCBs, because of the distinct statutes (SBI Act, 1955 and SBI Subsidiary Banks Act, 1959) that govern them. Nationalized banks (10) and SBI and associates (7), together form the public sector banks group and control around 70% of the total credit and deposits businesses in India. IDBI ltd. has been included in the nationalized banks group since December 2004. Private sector banks include the old private sector banks and the new generation private sector banks- which were incorporated according to the revised guidelines issued by the RBI regarding the entry of private sector banks in 1993. As at end-March 2009, there were 15 old and 7 new generation private sector banks operating in India.
Foreign banks are present in the country either through complete branch/subsidiary route presence or through their representative offices. At endJune 2009, 32 foreign banks were operating in India with 293 branches. Besides, 43 foreign banks were also operating in India through representative offices.
Regional Rural Banks:
Regional Rural Banks (RRBs) were set up in September 1975 in order to develop the rural economy by providing banking services in such areas by combining the cooperative specialty of local orientation and the sound resource base which is the characteristic of commercial banks. RRBs have a unique structure, in the sense that their equity holding is jointly held by the central government, the concerned state government and the sponsor bank (in the ratio 50:15:35), which is responsible for assisting the RRB by providing financial, managerial and training aid and also subscribing to its share capital. Between 1975 and 1987, 196 RRBs were established. RRBs have grown in geographical coverage, reaching out to increasing number of rural clientele. At the end of June 2008, they covered 585 out of the 622 districts of the country. Despite growing in geographical coverage, the number of RRBs operational in the country has been declining over the past five years due to rapid consolidation among them. As a result of state wise amalgamation of RRBs sponsored by the same sponsor bank, the number of RRBs fell to 86 by end March 2009.
Scheduled Cooperative Banks:
Scheduled cooperative banks in India can be broadly classified into urban credit cooperative institutions and rural cooperative credit institutions. Rural cooperative banks undertake long term as well as short term lending. Credit cooperatives in most states have a three tier structure (primary, district and state level).
Non-Scheduled Banks:
Non-scheduled banks also function in the Indian banking space, in the form of Local Area Banks (LAB). As at end-March 2009 there were only 4 LABs operating in India. Local area banks are banks that are set up under the scheme announced by the government of India in 1996, for the establishment of new private banks of a local nature; with jurisdiction over a maximum of three contiguous districts. LABs aid in the mobilization of funds of rural and semi urban districts. Six LABs were originally licensed, but the license of one of them was cancelled due to irregularities in operations, and the other was amalgamated with Bank of Baroda in 2004 due to its weak financial position.
Products of the Banking Industry:
The products of the banking industry broadly include deposit products, credit products and customized banking services. Most banks offer the same kind of products with minor variations. The basic differentiation is attained through quality of service and the delivery channels that are adopted. Apart from the generic products like deposits (demand deposits current, savings and term deposits), loans and advances (short term and long term loans) and services, there have been innovations in terms and products such as the flexible term deposit, convertible savings deposit (wherein idle cash in savings account can be transferred to a fixed deposit), etc. Innovations have been increasingly directed towards the delivery channels used, with the focus shifting towards ATM transactions, phone and internet banking. Product differentiating services have been attached to most products, such as debit/ATM cards, credit cards, nomination and demat services.
UCO Bank :UCO Bank, formerly United Commercial Bank, established in 1943 in Kolkata, is one of the oldest and major commercial bank of India. Ghanshyam Das Birla, an eminent Indian industrialist, during the Quit India movement of 1942, had conceived the idea of organizing a commercial bank with Indian capital and management, and the United Commercial Bank Limited was incorporated to give shape to that idea. Bank started with its Head Office at Kolkata with an issued capital of Rs 2 crore and a Paid-up capital of Rs 1 crore. The bank, along with 13 major commercial banks of India, was nationalized on 19 July 1969 by the Government of India. Its name was changed to UCO Bank, in 1985, by an act of Indian Parliament as a bank in Bangladesh existed in the name United Commercial Bank which was posing problem in the international banking arena. As of 2011 the bank had 2206 Service Units spread all over India, with four overseas branches two each in Singapore and Hong Kong. It has a turnover of Rs 800 Indian Banking Sector: A well organized and efficient banking system is a pre-requisite for economic growth. Banks play an important role in the functioning of organized monetary market. In order to meet the banking needs of various sections of the society, a large network of bank branches has been established. CRM:Customer relationship management (CRM) is a widely implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a companywide business strategy including customer-interface departments as well as other departments. Measuring and valuing customer relationships is critical to implementing this strategy.
About UCO Bank
UCO Banks Profile
Founded: In 1943, UCO Bank is a commercial bank and a Government of India Undertaking. Its Board of Directors consists of government representatives from the Government of India and Reserve Bank of India as well as eminent professionals like accountants, management experts, economists, businessmen, etc
Head office:Kolkata Products:Loans, credit cards, savings Slogan:HONOURS YOUR TRUST Industry:Banking, insurance and allied industries
Vision Statement: To emerge as the most trusted, admired and sought-after world class financial institution and to be the most preferred destination for every customer and investor and a place of pride for its employees.
Mission Statement:
To be a Top-class Bank to achieve sustained growth of business and profitability, fulfilling socio-economic obligations, excellence in customer service; through up gradation of skills of staff and their effective participation making use of state-of-the-art technology.
Overview:
It is in the Service of Community since 1943. It has nearly 2000 Service Units spread all over India. It also operates in two Major International Financial Centers namely
Hongkong and Singapore. It has own Correspondents/Agency arrangements all over the world. It undertakes Foreign Exchange Business in more than 50 Centers in India. It has Foreign Exchange Dealing Operations at 4 Centers.
Strengths:
Country-wide presence Overseas Presence with Profitable Overseas Operations Strong Capital Base High Proportion of Long Term Liabilities A Well Diversified Asset Portfolio A Large and Diversified Client Base Fully Computerized Branches at Major Centers Branch representation in Top 100 Centers (as per deposits) in the country
Organisation Structure:
Headquartered in Kolkata, the Bank has 35 Regional Offices spread all over India. Branches located in a geographical area report to the Regional Office having jurisdiction over that area. These Regional Offices are headed by Senior Executives ranging up to the rank of General Manager, depending on size of business and importance of location. The Regional Offices report to General Managers functioning at Head Office in Kolkata.
Heritage:
The idea of a truly Indian bank was first conceived of by Mr. G.D Birla, the doyen of Indian Industrial renaissance, after the historic "Quit India" movement in 1942. Soon this nascent idea came into reality and, on the 6th of January 1943, The United Commercial Bank Ltd. was born with its Registered and Head Office at Kolkata. The very first Board of Directors was represented by eminent personalities of the country drawn from all walks of life, and this all-India character of the Bank has been assiduously maintained till this day not only in the composition of its Board but also in the geographical spread of its 1700 odd branches in the country as well as in its overseas centers in Singapore and Hong Kong. Having traversed periods of expansion and consolidation, the Bank was nationalized by the Government of India on the 19th July 1969 whereupon 100 per cent ownership was taken over by the government in UNITED COMMERCIAL BANK. This historic event brought about a sea-change in the entire fabric of the bank's thinking and activities, commensurate with the government's socio-political approach of mass banking as against class banking hitherto practiced. Branch expansion started at a fast pace, particularly in rural
areas, and the bank achieved several unique distinctions in Priority Sector lending and other social upliftment activities. To keep pace with the developing scenario and expansion of business, the Bank undertook an exercise in organizational restructuring in the year 1972. This resulted into more functional specialization, decentralization of administration and emphasis on development of personnel skill and attitude. Side by side, whole hearted commitment into the government's poverty alleviation programmes continued and the convenorship of State Level Bankers' Committee (SLBC) was entrusted on the Bank for Orissa and Himachal Pradesh in 1983. The year 1985 opened a new chapter for the Bank as the name of the Bank changed to UCO BANK by an Act of Parliament. The customer friendly and socially committed character, however, remained even with this change in name which has, over the years, been regarded as one of the well-known and vibrant banks in the country. Today, with all its inner strengths, UCO Bank has come a long way to symbolize friendliness for customers and efficiency in its banking business. Truly, UCO Bank HONOURS YOUR TRUST.
Board of Directors
ShriArunKaul Chairman & Managing Director
Shri N. R. Badrinarayanan Executive Director
ShriS.Chandrasekharan Executive Director
ShriPravinRawal Director
Smt. Uma Shankar Director
Prof. Sebastian Luckose Morris Director
ShriSanjeev Jain Director
Shri Ram Avtar Sharma Director
CA Manoj Kumar Gupta Director
UCO BANK'S ATTRACTIVE LOAN SCHEMES
Being a Commercial Bank, giving Loans and Advances is among our primary activities. Apart from our participation in meeting both Term Loan and Working Capital requirements of Agriculture sector, Trade and Service sector, Large/Medium and Small Scale Industries sector, Infrastructure sector etc. including taking care of their Export/Import and non-fund based needs like Letter of Credit, Bank Guarantee etc., we have a fairly large basket of loan products specially designed to suit customer personal needs. Salient features of some of the more attractive Personal Loan Schemes are described below.
UCO Home UCO Education Loan UCO Mortgage UCO Pensioner UCO Swabhiman Reverse Mortgage Loan Scheme for Senior Citizen
UCO Car UCO Cash UCO Securities UCO Two Wheeler Interest Subsidy Scheme for Housing the Urban Poor (ISHUP)
UCO Trader UCO Rent UCO Real Estate UCO Emd Loan UCO Doctor
Objective of the study:
Now a days India is one of the most booming retail market in the world. So demand of retail products of the banks are also increasing very rapidly. Education loan is one of the most important retail schemes provided by the commercial banks in India. It provides financial help to students to pursue higher education in India and abroad as well as objectives of the project is to analyze and study how education loan schemes of UCO bank helps various categories of students to pursue higher study who suffer from the lack of sufficient financial strength required for study. Also to study how education loan contributes in the economic and educational growth of the country.
The main objectives of the study is : 1. Look insight into education loan 2. Risk involved. 3. Challenges faced by banks in granting education loan.
