Punjab
Content
Minor Project Report On
Punjab National Bank
By: Jasmine kaur 04521201709 Maharaja Surajmal Institute Batch : 2009-2012
Acknowledgement
It is my pleasure to express my sense of gratitude to ‘PUNJAB NATIONAL BANK’.
I wish to express my deepest appreciation to my guide Dr. Sunaiana who continuously motivated and directed me at all stages of my project. I also express my gratitude to all those who have helped me in doing my project work. I am very obliged to my coordinator who gave me perfect support, sincere devotion during the course of project preparation.
Jasmine Kaur BBA (gen) 3rd Semester
CERTIFICATE
This is to certify that Jasmine Kaur from Maharaja Surajmal Institute has successfully completed the project on “PUNJAB NATIONAL BANK”. To the best of my knowledge and belief, she bears a good behavior and character in the college. I wish her Success in life.
Dr. Sunaina (Project Guide)
Table of Content
Acknowledgement Certificate Table of content Executive summary Analysis of questionnaires Swot analysis Conclusions and Suggestions
Chapter-1 Introduction • Overview • Importance of banks in financial sector Reserve bank of India • Commercial Banks • Cooperative Societies • Other Institutions Chapter-2 Punjab National bank • Overview • Financial Performance • Achievement
Chapter-3 Risk Management •Introduction • Types of risk • Credit risk Vs Market risk Chapter-4 Operational Risk • Details • Factors affecting risk • Management • Broad areas • Functions Chapter-5 Evaluation of management and control techniques
• •
Nature of controls Examples
Chapter-6 Models & Approaches • Scalar • Statistical Chapter-7 Management Information for Op Risk Committees
•
Various committees
Chapter-8 Capital calculations
• • •
Basic Indicator approach Standardized approach Advance Measurement approach
Chapter-9 Mitigation Operational risk
Chapter-10 Challenges in operational risk management
Chapter-11 Research Methodology Appendixes Bibliography
Executive Summary
A study is been done on Punjab National Bank. This a Minor Project Report in which the risk management, its types, its products & its achievements are been discussed.
Chapter 1
It includes the overview of banking in India its importance, its types, management and its products.
introduction, its
Chapter 2 In this chapter study on Punjab National Bank, its history, its sales & its value of assets are concern.
Chapter 3
In this chapter, we study risk management in details.
Chapter 4
In it, operational risk is being studied, factor affecting it, its management, broad areas are studied. Chapter 5 In this part of project, the various evaluation & control method & other examples are given.
Chapter 6 It includes various models & approaches. Chapter 7 It consists of various committees that provide management information. Chapter 8 It defines how capital is being calculated by using various approaches. Chapter 9 It defines mitigation op risk. Chapter 10 It includes challenges comes in the way of operational risk management.
Chapter 1:
Introduction
1Overview of Banking in India
Importance of Banks in financial sector
Financial institutions in a community can form the core of economic development. Although they shouldn't be expected to finance revitalization programs single handedly, they should be considered as essential to success. Yet banks and other local financial institutions have largely ignored local improvement efforts in recent decades. In an increasingly focused effort to satisfy their stockholders, they have looked for investments, which provide the highest rate of return. As a result, their investment money has gone elsewhere, to other regions of the country or even to other parts of the world. In doing so, often they have ignored their responsibilities to the local community in which they are based, and from which comes most of their business. Local banks need to be reacquainted with their need to be locally involved. Downtown organizations should include local bankers, and downtown leaders should feel comfortable including them as integral members of revitalization programs.
2 Reserve Bank of India
India’s central bank – the RBI – was established on 1st April 1935 and was nationalized on 1st January 1949. Reserve bank of India occupies a special and a distinctive place in the Indian Banking industry. It is the monetary authority and central bank of the country and has been assigned wide powers and responsibilities. The reserve bank of India Act says “ to regulate the issue of bank notes and for keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage . FUNCTIONS OF RESERVE BANK OF INDIA Some of its main objectives are regulating the issue of bank notes , managing India’s foreign exchange reserves , operating India’s currency and credit system with a view to
securing monetary stability and developing India’s financial structure in line with national socio-economic objectives and policies. The functions of Reserve Bank of India are as follows: 1. . 2. To issue bank notes To transact Government Business in India.
3. To manage public debt. 4. To undertake Transactions in foreign Exchange and to act as Controller of Foreign exchange. 5. To keep cash reserves of scheduled Banks. 6. To grant loans to scheduled commercial banks and cooperative banks. 7. To act as controller of credit. 8. To grant advances to government.
It has three Parts:1. Commercial Banks 2. Cooperative Societies 3. Other Institutions
1. Commercial banks
It includes: -
(a) Public Sector Banks
• Public Sector
• State bank of India • Nationalized Banks • Regional Rural Banks • 14 major banks nationalized on 19 July 1969 • 6 Banks nationalized on 15 April 1980
(b)Private Sector Banks
• • • • • • Foreign Banks Other Indian Banks Non Scheduled Banks Foreign Banks in India Private Banks Local area Banks
2. Cooperative Societies
• • • • • • •
•
Cooperative Societies State Cooperative State Land Development Central Cooperative Primary Agriculture Credit societies Primary urban credit societies Central land development bank
PLDB’s
3. Other institutions
• • • • • • • • • • • • Other institutions Government Public Sector Private Sector N.S.C LIC, UTI, IDBI Post office Saving Bank E.P.F ICICI, IFCI Chits Nidhis Corporate bodies
R.B.I. was originally constituted as a Shareholder’s Bank with a share capital of Rs 5 crores divided into 5 lakhs fully paid shares of Rs 100 each. Central Board of directors controls the affairs of the bank.
Chapter 2:
PUNJAB NATIONAL BANK
OVERVIEW
Punjab National Bank (PNB), established in 1895 in Lahore, then a part of undivided India, is the second largest public sector commercial bank in India with about 4500 branches and offices throughout the country. It has second largest network in India. The Government of India nationalized the bank, along with 13 other major commercial banks of India, on July 19, 1969. The sales of Punjab National Bank are $2.32 billion and the profits are $ .28 billion. The value of assets is equal to $24.12 billion and the market value is $2.79 billion.
Chapter 3
RISK MANAGEMENT
RISK : -
The term risk has a variety of meanings in business and everyday life. At its most general level, risk is used to describe any situation where there is uncertainty about what outcome will occur. Life is very risky. Even the short-term future is often highly uncertain. In probability and statistics, financial management, and investment management, risk is often used in a more specific sense to indicate possible variability in outcomes around some expected value. The degree of probability of loss (Hazard, danger, chance of loss or injury.)
Risk in banks
In banks three types of risks are there:-
• • •
Credit risk Market risk Operational risk
1. Credit risk: - Credit risk is a risk of economic loss from the failure of a counter party to fulfill its contractual obligations. Its effect is measured by the cost of replacing cash flows if the other party defaults. Credit risks requires constructing the distribution of default probabilities, of loss given default, and of credit exposures, all of which contribute to credit losses and should be measured in a portfolio context. In comparison, the measurement of market risk using VAR is a simple affair. For most institutions, market risks plays significant role as compared to credit risk. The amount of risk based capital for the banking system reserved for credit risk is vastly greater than that for market risk. The history of financial institutions has also shown that the biggest banking failures were due to credit risk. Credit risk involves the possibility of non-payments, either on a future obligation or during a transaction. The evolution of credit risk management tools has gone through these steps:•
Notional amounts
• • •
Risk weighted amounts External/internal credit ratings Internal portfolio credit models
Initially, risk was measured by the total notional amount. A multiplier, say 8%, was applied to this amount to establish the amount of required capital to hold as a reserve against credit risk. The problem with this approach is that it ignores variations in the probability of default. In 1988, the Basel committee instituted a very rough categorization of credit risk by risk class, providing risk weights to scale each notional amount. This was the first attempt to force banks to carry enough capital in relation to the risks they were taking. These risk weights proved to be simplistic, however, creating incentives for banks to alter their portfolio in order to maximize their shareholder returns subject to the Basel capital requirements. This had the perverse effect of creating more risk into the balance sheets of commercial banks, which was certainly not the intended purpose of the 1988 rules. As an example, there was no differentiation between AAA-rated and C-rated corporate credits. Since loans to C-credits are more profitable than those to AAA-credits, given the same amount of regulatory capital, the banking sector responded by shifting its loan mix toward lower-rated credits. This led to 2001 proposal by the Basel committee to allow banks to use their own internal or external credit ratings. These credit ratings provide a better representation of credit risk, where better is defined as more in line with economic measures.
2. Market risk
Market risk is the risk of fluctuations in portfolio values because of movements in the level or volatility of market prices. The first step in the measurement of market risk is the identification of the key drivers of risk. These include fixed income, equity currency, and commodity risks. Market risk is usually measured separately. Market risk also reflects credit risk – for example some of the price movement may be due to movements in risk-free interest rates, which is pure market risk. The remainder will reflect the market’s changing perception of the likelihood of default. Thus, for traded
assets, there is no clear – cut delineation of market and credit risk. Some arbitrage classification must take place.
Credit risk vs. Market risk
1. Source of risk: - In market risk the source of risk is market risk only but in credit risk the source of risk are default risk, recovery risk, and market risk. 2. Distributions: - In market risk distribution is mainly symmetric but in credit risk the distribution is skewed to the left. 3. Time horizon :- In market risk the time horizon is short term (in days) but in credit risk the time horizon is long term(in years) 4. Legal issues: - In market risk legal issues are not applicable and in credit risk legal issues are very important.
3.Operational risk :The Basel II committee defines operational risk as ‘the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events.’ By means of this definition legal risks are included, whereas strategic and reputation risk are not considered. Due to this less specific definition of operational risks the consultative document is exposed to severe criticism. Only a more precise specification, that has still to be developed, and an accepted delimitation (standardization) of operational risk as generally as possible will provide for an accurate recordation and an evaluation of these risks.
Chapter 4
OPERATIONAL RISK MANAGEMENT
Details
Operational risk has assumed greater importance because: 1. The use of highly automated technology has the potential, if not properly controlled, to transform risks from manual processing errors to system failure risks, as greater reliance is placed on globally integrated systems; 2. Growth of e-commerce brings with it potential risks [e.g., external fraud and system security issues] that are not yet fully understood; 3. Large-scale mergers, de-mergers and consolidations test the viability of new or newly integrated systems and have resulted in some noteworthy problems; 4. The emergence of banks acting as very large-volume service providers creates the need for continual maintenance of high-grade internal controls and back-up systems; 5. Banks may engage in risk mitigation techniques [e.g., collateral, credit derivatives and asset securitization to optimize their exposure to market risk and credit risk, which in turn may produce other forms of risk.
Factors affecting banking industry
The following factors contribute to increased Operational risk in the banking industry globally: • Competitive pressures • Expense and headcount reduction • Centralization of operations sites
• Sales force incentives • Product complexity • Pace of change, especially product and technology • Organized crime • Public and community ethics • Technology dependence • Consumerism
Management of Operational Risk:-
The Management shall decide whether to: • Transfer risk to a third party (e.g., outsourcing, insurance) • Avoid risk altogether by changing the nature of the business (e.g., withdrawing Products, avoiding jurisdictions) or, • Reducing risk (e.g., limiting growth/diversification)
The Management determines the remaining level of risks, which is accepted and dealt with by establishing adequate control techniques. Typical internal control techniques include: • Segregation of duties • Exception and exposure reporting • Reconciliation • Delegation of authority/limit • Prompt, reliable management information
BROAD AREAS
The following are the broad areas of Operational Risk in Banks 1. Organizational • Control consciousness • Timely, relevant management information • Risk delegation [authority, limits] 2. Product
• Design and development • Performance management • Communication 2. Customer • Acquisition • Service • Satisfaction 3. Human Resources Risk • Quality [recruit, develop, perform] • Occupational health and safety • Employee turnover • Key personnel risk • Fraud, Error • Money laundering • Confidentiality breach 4. Process • Fraud, error, theft • Accuracy and completeness of data and transaction processing • Information technology
FUNCTIONS
Function wise operational Risk can be illustratively explained as under: 1. Technology Risks • Programmed Error • Model Risk • Management information • Telecommunication failure • Contingency planning
2. Relationship Risk • Contractual disagreement • Dissatisfaction • Default 3. Transaction Risk • Execution error • Product complexity • Booking error • Settlement error • Commodity delivery risk
4. Facilities Risk
• Safety • Operating Cost • Fire/ Flood/ Earth quake
Chapter 5 : Evaluation of management and control techniques
MANAGEMENT & CONTROL
Management and control techniques are evaluated against the related risks to determine appropriateness, likely effectiveness and efficiency. The nature of controls considered is as follows:
1. Preventive: Preventive controls are designed to stop undesirable
transactions, items, events, errors or incidents occurring. Examples are: authorization and approval controls, staff training, automated system calculation and validation, password and access controls.
2. Detective: Detective controls are designed to promptly reveal
undesirable transactions, items, events, errors or incidents so that appropriate corrective action can be taken. Examples are: reconciliation, review of exception reports.
3. Recovery:
Recovery techniques are designed to reduce the consequences of damage arising from crystallization of an individually significant incident or a significant number of undesirable transactions, items, events, errors or incidents. Examples are: tested business continuity plans, succession plans, back-up sites and files, crisis management. The techniques used to deal with risks need to be tailored to the particular business circumstances. Some examples of typical strategies that might be appropriate are: • High Impact – Low Likelihood
Example: A plane crash destroying the main computer site [unlikely to happen but shall have far reaching consequences] Focus: Recovery techniques are often the best option in these circumstances, rather than attempting to prevent this risk. • High Impact – High Likelihood: Example: Unauthorized payments
Focus: These circumstances are the most urgent to deal with. Effective preventive techniques in combination with recovery techniques are essential to reduce the level of risk to an acceptable level. • Low Impact – High Likelihood: Example: Teller deficiencies Focus: These are low impact, individually, but if not controlled could get out of hand cumulatively. An effective strategy here shall be to focus on detective controls and monitoring, combined with prompt action if errors exceed preset tolerances.
Chapter 6: MODELS AND APPROACHES
A.
MODELS
Scalar Models:
The operational risk in these models is calculated as a percentage of major business parameters like gross income, operating costs, asset base, borrowings, etc. The basic reasoning behind these models is that these parameters serve as proxies to the scale of business operations and hence risk exposure. The Basel Committee recommends two variants of this model.
•
•
Basic Indicator Approach: BCBS recommends computation of operation risk as a percentage of the average of three years positive gross annual income. Standardized Approach: Bank’s activities are divided into eight business lines and the risk is calculated separately for each of the business line applying appropriate percentage.
B.
Statistical Approaches:
Pure statistical models rely on building historical internal loss databases and make predictions about their behavior and loss influence using statistical tools. This method is scientific and is based on recorded facts. Operational risks are dynamic and even a small change in the process flow affects the risk profile of the business unit. Hence past loss data cannot be a true reflection of current state of affairs and measuring the risk using these approaches though are based on sound reasoning is like driving a vehicle looking only at the rear view mirror. Use of Scorecards in combination with statistical approaches can effectively overcome this drawback.
Chapter 7: Management Information for Op Risk Committees
• •
KRI RCSA
• • •
Matrix Regulatory Capital Economic Capital
Historical Data Forward Looking Data 3. Synthesis of Historical and Forward Looking Data This process will comply with the qualifying criteria for the AMA approach for regulatory capital calculation
Chapter 8:
CAPITAL CALCULATION
The Basic Indicator Approach
Banks using Basic Indicator Approach (BIA) have to hold capital for operational Risk equal to a fixed percentage (alpha) of a single indicator (Gross Income) •K = [( S(GI 1…n * a)]/n •Where K = Capital charge under BIA •GI = annual gross income where positive over previous 3 yrs •n = number of previous 3 yrs for which gross income is positive •a = a fixed percentage set by the Basle committee RBI has defined a as 15% As per RBI guidelines, banks are required to maintain Capital (besides credit and market risk) for Operational Risk also w.e.f. FY 2007-08. RBI in its guidelines on implementation of the New Capital Adequacy framework issued on 27.04.2007 has advised that Banks in India having foreign presence should adopt BIA for calculating capital charge for Operational Risk w.e.f. 31.03.2008, wherein RBI has revised the definition of Gross Income. The Gross Income component as per RBI is:
Gross Income as per Draft Guidelines = Net profit (+) Provisions & Contingencies (+) Operating expenses (Schedule 16) (-) Profit on sale of HTM investments (-) Income from insurance (-) Extraordinary / irregular item of income (+) Loss on sale of HTM investments Working on BIA Capital Calculation:
Rs. In Crore Detail of calculation Mar 03 Net Profit 842.20 Add Provision & 1475.09 Contingency Add: Operating Expenses 2056.73 Less: Profit on Sale of HTM 4.00 Less: Income from Insurance 0.00 Less: Irregular Income 0.00 Add: Loss on Sale of HTM 0.00 Total Gross Income 4370.02 Average Gross Income of last 3 Years Mar 04 1109.69 2012.17 2370.72 143.00 0.00 0.00 0.00 5348.58 Mar 05 1410.12 1297.09 2975.21 97.51 0.00 0.00 0.00 5584.91
5101.00 Crore 765.18 Crore
Total Capital required under BIA @. 15%
• • • •
The Standardized Approach
Banks activity is to be divided into 8 Business Lines. Each Business Line is measured by an Exposure Indicator, which is Gross Income for that Business Line. Within each Business Line the capital charge is calculated by multiplying the said Business line Gross Income by a “beta” factor The sum of all Business Line Capital charge would be the Capital charge for the Bank. K = {S yrs1-3 max[S(GI 1…8 * b 1…8 ),0]}/n
•
K- is capital charge GI 1…8 Gross Income over the past 3 yrs for each business line.
b is the a fixed percentage for each Business line set by the Basle Committee. Business Line Beta FACTOR 18% 18%
Corporate Finance Trading & Sales
Retail Banking 12% Commercial Banking 15%
Payment & Settlement 18% Agency Services Asset Management 15% 12%
Retail Brokerage 12%
Advanced Measurement Approach
Under Advanced Measurement Approach the capital charge would be based on an estimate of operational risk derived from bank’s internal risk measurement system. This approach is expected to be more sensitive than the other two approaches. Adoption of this approach is subject to certain qualitative and qualitative standards.
•
• •
A bank’s internal operational risk measurement system must take into account the following elements:
• •
Internal Loss data External Loss data
•
Internal control and business environment factors
The measurement system may also factor in the following elements:
• •
Risk mitigation (e.g., insurance) Correlations
These elements can be combined in different ways to quantify exposure to operational risk.
Chapter 9: Mitigating Operational Risk
DETAILS
A firm has various options to encounter an operational risk. First and foremost, it can avoid the risk, for example keeping away from a particular line of business. Secondly, the firm can retain the risk but develop controls to reduce the frequency and severity of the losses. The firm may also choose to absorb these losses through earnings. Where the firm still incurs risk after introducing controls and self financing through earnings, the firm may choose to either retain the risk of loss or transfer the risk through insurance or other mechanisms. Normally, low-severity highfrequency losses are preferred to be funded through earnings and lowfrequency high-severity risks are spread through geographical diversification, recovery sites, insurance, etc. Operational Risk Management is more important today for internationally active banks because the Bank for International Settlements’ latest capital framework requires capital charge based on their operational risk exposure. This requirement has tremendous impact on market competitiveness of bank
Chapter 10
CHALLENGES IN OPERATIONAL RISK MANAGEMENT
CHALLENGES
The biggest challenge in addressing Operational risk perhaps lies in accepting the fact that people, processes, systems and external events, if not properly managed, could indeed pose a major threat to the profitability, efficiency and in fact, the very existence of a bank and that by managing operational risk across all functions and geographical locations, a bank will maximize shareholder value, optimize the use of capital and reduce volatility of earnings.
Chapter-11: Research Methodology
Research Methodology
A market research is a systematic study for & analysis of information. We started with a clear, concise objective in our mind- do the people feel the need of savings mode of transactions and business heps, & what factors fulfill their needs .
1) Objective of the study: The market research was undertaken with the
objective in mind- to study the consumer behaviour & their aforesaid needs .
2) Determining Research Design: A Research Design is the specification
of the methods for acquiring the necessary information keeping the goal in mind. Descriptive research was undertaken to find out how the purchase patterns varied with the demographics like sex, age, group, income level, & occupation. Casual research design was also used to find out how the consumer reacted to any change in either the availability of the preferred Punjab National bank.
3) Determining Data Collection Method & Forms:
Primary market: The data has been collected with the help of questionnaire with a view of obtaining the information on all the aspects relating to the banking industry in general and PUNJAB NATIONAL BANK specifically.
Secondary market: This data has collected through Internet analysis tools: the major analysis tools used have been percentages and data is interpreted with the help of bar graph and pie diagrams.
4) Data
Analysis & Interpretation: Once the data was collected, it was edited, coded & tabulated before the analysis was performed. Coding was done in terms of percentage & Ratio’s, as can be seen in the following pages. The results of the analysis are being interpreted with the help of Ratio Analysis.
5)Research Report: We culminate our research process with presentation of the research reports. The report is here by made, depending upon the level of understanding of analysts.
Sampling plan for survey:
Sample size = 100 Sampling area = New Delhi Sampling time frame = 2 months
ANALYSIS OF OUESTIONAIRES
Q1. Do you know about Punjab National Bank ?
ANS.
YES : 98
NO : 02
2%
yes no
98%
Number of people knowing about Punjab National Bank. The study shows that out of 100 people, 98 people know about Punjab National Bank and 2 don’t. The above analysis proves that Punjab National Bank as a brand had established itself among the common man.
Q2. If yes, then how? ANS.
Through an association with the Bank Through friends/relatives Through advertisements Through any other sources
13 24 54 9
9%
13%
24% 54%
association with the bank friends/relatives advertisements other sourses
Source of information about bank The pie diagram at the preceding page shows that maximum no. Of people know about Punjab National BANK through its advertisements followed by friends / relatives, than about 13% people knows about it through an association with bank and rest from other sources. So this study shows that most effective way to approach its customer is the advertisements.
Q3. Do you have a Bank Account? ANS. YES 88
NO
12
12%
yes no
88%
People having bank A/C It can be observed from the above pie diagram that a considerable no. Of people are having bank account; this shows that having a bank A/c is becoming necessity these days. Those people not having bank a/c are mostly minors.
Q4. Which categories of bank you prefer? ANS.
NATIONALISED BANKS PRIVATE BANKS MULTINATIONAL BANKS
54 40 06
6%
40%
54%
Nationalized banks private banks multinational banks
Share of different categories of banks
It can be inferred that still nationalized banks are people’s favorite. Private Banks have also been able to get a good market share. But the position of multinational banks is not satisfactory. They have to work constantly very hard for establishing themselves among the common man.
Q5. Presently, which of the following facilities you are Availing?
Phon e Banki ng 2
Petro card
Debit card
Credit card 3
Internet Bankin g
15
17 None 1
41
ATM 0
All
Any other
57
32
60 50 40 30 20 10
any other phone banking internet banking debit card petro card credit card none ATM all
no. of people
0
Graph showing number of people availing different facilities
This study shows that the maximum no. of people are using ATM facility followed by phone banking. But still many people are not using any of the facilities. Debit card and credit card are still holding a place among the people. But facilities like petrocard and Internet banking are not much popular among the common man.
Q6. What is your perception about Punjab National Bank?
Very Good Average 4
Good
48 17
Below Average
38
50 40 30 20 10 0
very good good
very good good average below average
average
below average
PERCEPTION OF PEOPLE FOR
Punjab National BANK
The diagram shows that generally people have good perception about Punjab National BANK where as a considerable number of people have average perception, followed by very good perception and a very few number of people have below average perception.
Q7 Do you know about following products of Punjab
National Bank? ANS.
SAVING ACCOUNT CURRENT ACCOUNT CREDIT CARDS
65 28 34
LOANS INSURANCE RBI RELIEF BONDS ALL OF THE ABOVE NONE OF THE ABOVE
29 11 03 04 14
RBI relief bonds
loans
saving a/c
credit card
current a/c
People knowing about Punjab National BANK products
The graph shows that the saving a/cs are most popular among the people followed by credit cards of Punjab National BANK. Customers are also aware of its loans schemes and current a/c. but still there is certain number of people who don’t know about any of its product. People also know about its insurance plans but only a few people know about RBI relief bond offer by Punjab National BANK, also there is hand full number of people who know about all the products of Punjab National BANK.
Q8. Have you seen/ heard any of the Punjab National Bank’s advertisements?
insuarence
all of the above
none
70 60 50 40 30 20 10 0
no. of people
ANS.
Yes No
64 36
36%
yes no
64%
People seen/ advertisements?
heard
Punjab
NationalBank’s
The pie diagram shows that a good percentage of people have seen or heard Punjab National BANK advertisements, but still there are some of people who haven’t seen or heard Punjab National BANK advertisement. This shows that a large number of people know Standard Chartered Bank through its advertisements.
Q9. Which Bank you like the most and why? HDFC Punjab National bank STANDARD CHARTERED ICICI 12 32 6 31
HSBC ANY OTHER
3 16
35 30 25 20 15 10 5
ANY OTHER
no. of people
HDFC
UTI
SCB
Graph showing preference of different banks
The study shows that performance of Punjab National Bank is quite good except in regard to ICICI Bank and HDFC Bank. It can even evade them through constantly providing good services and low prices to people.
Q 10. Where do you think a Punjab National Bank/ATM should come
up?
Rajouri Garden 64 • Karol
Janak Puri 11 Pitam
HSBC
ICICI
0
Rohini 14 Ashok
bagh 24 Kamla Nagar 12
Pura 7 Moti Bagh 6
Vihar 0 Others 16
Rajouri Garden
Kamla nagar
Rohini
Moti Bagh
Ashok Vihar
Janak Puri
Vikas Puri
(Punjab National Bank ATM can be found anywhere)
PitamPura
other areas
70 60 50 40 30 20 10 0
no. of people
SWOT ANALYSIS
STRENGTHS
(1)
Punjab National Bank is celebrating its 150 years of existence. This is because it is getting tremendous support of its customers in India and abroad.
(3) In India Punjab National BANK has been marked as the second most profitable multinational company after HLL.
(4) The first four cash withdrawals per month from a non standard chartered bank ATM are free of cost.
(5) The Connaught Place branch of Punjab National BANK it’s opened 365 days 24 hours.
Conclusion and Suggestion
CONCLUSION
Founded in 1906, Punjab national bank is one of the premier banks in India, with a network of 2508 branches across the country. The bank was the first to launch networked ATMs in India and obtain an ISO Certification. Punjab national Bank has also achieved the distinction of being the country's highest net profit earner among nationalized banks for the year 2005. The bank has already carved a niche in providing IT-based services such as Networked ATMs, Anywhere Banking, Tele banking, Remote Access Terminals, Internet & Mobile Banking, Debit Cards, etc Punjab national Bank has a vision to help improve the economic condition of common people of India.
LIMITATION OF STUDY:
Due to the following unavoidable and uncontrollable factors the results might not be accurate. Some of the problems might faced while conducting the survey are as follows: 1. Certain open-ended questions have been put in the questionnaire to give respondents freedom to express their perception. 2. Time and cost constraints were also there 3. Chances of some biasness couldn’t be eliminated. 4. A sample size of 100 has been used due to time limitations.
Suggestions
The company should improve their Current Ratio & Liquidity Ratio. The co. should increase the Strength of their policyholders. The co. should introduce the new investment plans & policies for the upcoming customers or the future customers. The co. should make a particular sector as a target, which they have to achieve within a specified period. The co. should focus on their investment & profitability constraints. The co. should improve their lifetime common features plans. The investment plans & policies must be very flexible in nature & it should not be rigid one.
Bibliography
1 S. K. Bagchi 2 Brian Coyle 3 www.gloriamundi.com 4 www.google.com
5 www.altavista.com 6 www.valueresearchonline.com
Punjab National Bank
By: Jasmine kaur 04521201709 Maharaja Surajmal Institute Batch : 2009-2012
Acknowledgement
It is my pleasure to express my sense of gratitude to ‘PUNJAB NATIONAL BANK’.
I wish to express my deepest appreciation to my guide Dr. Sunaiana who continuously motivated and directed me at all stages of my project. I also express my gratitude to all those who have helped me in doing my project work. I am very obliged to my coordinator who gave me perfect support, sincere devotion during the course of project preparation.
Jasmine Kaur BBA (gen) 3rd Semester
CERTIFICATE
This is to certify that Jasmine Kaur from Maharaja Surajmal Institute has successfully completed the project on “PUNJAB NATIONAL BANK”. To the best of my knowledge and belief, she bears a good behavior and character in the college. I wish her Success in life.
Dr. Sunaina (Project Guide)
Table of Content
Acknowledgement Certificate Table of content Executive summary Analysis of questionnaires Swot analysis Conclusions and Suggestions
Chapter-1 Introduction • Overview • Importance of banks in financial sector Reserve bank of India • Commercial Banks • Cooperative Societies • Other Institutions Chapter-2 Punjab National bank • Overview • Financial Performance • Achievement
Chapter-3 Risk Management •Introduction • Types of risk • Credit risk Vs Market risk Chapter-4 Operational Risk • Details • Factors affecting risk • Management • Broad areas • Functions Chapter-5 Evaluation of management and control techniques
• •
Nature of controls Examples
Chapter-6 Models & Approaches • Scalar • Statistical Chapter-7 Management Information for Op Risk Committees
•
Various committees
Chapter-8 Capital calculations
• • •
Basic Indicator approach Standardized approach Advance Measurement approach
Chapter-9 Mitigation Operational risk
Chapter-10 Challenges in operational risk management
Chapter-11 Research Methodology Appendixes Bibliography
Executive Summary
A study is been done on Punjab National Bank. This a Minor Project Report in which the risk management, its types, its products & its achievements are been discussed.
Chapter 1
It includes the overview of banking in India its importance, its types, management and its products.
introduction, its
Chapter 2 In this chapter study on Punjab National Bank, its history, its sales & its value of assets are concern.
Chapter 3
In this chapter, we study risk management in details.
Chapter 4
In it, operational risk is being studied, factor affecting it, its management, broad areas are studied. Chapter 5 In this part of project, the various evaluation & control method & other examples are given.
Chapter 6 It includes various models & approaches. Chapter 7 It consists of various committees that provide management information. Chapter 8 It defines how capital is being calculated by using various approaches. Chapter 9 It defines mitigation op risk. Chapter 10 It includes challenges comes in the way of operational risk management.
Chapter 1:
Introduction
1Overview of Banking in India
Importance of Banks in financial sector
Financial institutions in a community can form the core of economic development. Although they shouldn't be expected to finance revitalization programs single handedly, they should be considered as essential to success. Yet banks and other local financial institutions have largely ignored local improvement efforts in recent decades. In an increasingly focused effort to satisfy their stockholders, they have looked for investments, which provide the highest rate of return. As a result, their investment money has gone elsewhere, to other regions of the country or even to other parts of the world. In doing so, often they have ignored their responsibilities to the local community in which they are based, and from which comes most of their business. Local banks need to be reacquainted with their need to be locally involved. Downtown organizations should include local bankers, and downtown leaders should feel comfortable including them as integral members of revitalization programs.
2 Reserve Bank of India
India’s central bank – the RBI – was established on 1st April 1935 and was nationalized on 1st January 1949. Reserve bank of India occupies a special and a distinctive place in the Indian Banking industry. It is the monetary authority and central bank of the country and has been assigned wide powers and responsibilities. The reserve bank of India Act says “ to regulate the issue of bank notes and for keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage . FUNCTIONS OF RESERVE BANK OF INDIA Some of its main objectives are regulating the issue of bank notes , managing India’s foreign exchange reserves , operating India’s currency and credit system with a view to
securing monetary stability and developing India’s financial structure in line with national socio-economic objectives and policies. The functions of Reserve Bank of India are as follows: 1. . 2. To issue bank notes To transact Government Business in India.
3. To manage public debt. 4. To undertake Transactions in foreign Exchange and to act as Controller of Foreign exchange. 5. To keep cash reserves of scheduled Banks. 6. To grant loans to scheduled commercial banks and cooperative banks. 7. To act as controller of credit. 8. To grant advances to government.
It has three Parts:1. Commercial Banks 2. Cooperative Societies 3. Other Institutions
1. Commercial banks
It includes: -
(a) Public Sector Banks
• Public Sector
• State bank of India • Nationalized Banks • Regional Rural Banks • 14 major banks nationalized on 19 July 1969 • 6 Banks nationalized on 15 April 1980
(b)Private Sector Banks
• • • • • • Foreign Banks Other Indian Banks Non Scheduled Banks Foreign Banks in India Private Banks Local area Banks
2. Cooperative Societies
• • • • • • •
•
Cooperative Societies State Cooperative State Land Development Central Cooperative Primary Agriculture Credit societies Primary urban credit societies Central land development bank
PLDB’s
3. Other institutions
• • • • • • • • • • • • Other institutions Government Public Sector Private Sector N.S.C LIC, UTI, IDBI Post office Saving Bank E.P.F ICICI, IFCI Chits Nidhis Corporate bodies
R.B.I. was originally constituted as a Shareholder’s Bank with a share capital of Rs 5 crores divided into 5 lakhs fully paid shares of Rs 100 each. Central Board of directors controls the affairs of the bank.
Chapter 2:
PUNJAB NATIONAL BANK
OVERVIEW
Punjab National Bank (PNB), established in 1895 in Lahore, then a part of undivided India, is the second largest public sector commercial bank in India with about 4500 branches and offices throughout the country. It has second largest network in India. The Government of India nationalized the bank, along with 13 other major commercial banks of India, on July 19, 1969. The sales of Punjab National Bank are $2.32 billion and the profits are $ .28 billion. The value of assets is equal to $24.12 billion and the market value is $2.79 billion.
Chapter 3
RISK MANAGEMENT
RISK : -
The term risk has a variety of meanings in business and everyday life. At its most general level, risk is used to describe any situation where there is uncertainty about what outcome will occur. Life is very risky. Even the short-term future is often highly uncertain. In probability and statistics, financial management, and investment management, risk is often used in a more specific sense to indicate possible variability in outcomes around some expected value. The degree of probability of loss (Hazard, danger, chance of loss or injury.)
Risk in banks
In banks three types of risks are there:-
• • •
Credit risk Market risk Operational risk
1. Credit risk: - Credit risk is a risk of economic loss from the failure of a counter party to fulfill its contractual obligations. Its effect is measured by the cost of replacing cash flows if the other party defaults. Credit risks requires constructing the distribution of default probabilities, of loss given default, and of credit exposures, all of which contribute to credit losses and should be measured in a portfolio context. In comparison, the measurement of market risk using VAR is a simple affair. For most institutions, market risks plays significant role as compared to credit risk. The amount of risk based capital for the banking system reserved for credit risk is vastly greater than that for market risk. The history of financial institutions has also shown that the biggest banking failures were due to credit risk. Credit risk involves the possibility of non-payments, either on a future obligation or during a transaction. The evolution of credit risk management tools has gone through these steps:•
Notional amounts
• • •
Risk weighted amounts External/internal credit ratings Internal portfolio credit models
Initially, risk was measured by the total notional amount. A multiplier, say 8%, was applied to this amount to establish the amount of required capital to hold as a reserve against credit risk. The problem with this approach is that it ignores variations in the probability of default. In 1988, the Basel committee instituted a very rough categorization of credit risk by risk class, providing risk weights to scale each notional amount. This was the first attempt to force banks to carry enough capital in relation to the risks they were taking. These risk weights proved to be simplistic, however, creating incentives for banks to alter their portfolio in order to maximize their shareholder returns subject to the Basel capital requirements. This had the perverse effect of creating more risk into the balance sheets of commercial banks, which was certainly not the intended purpose of the 1988 rules. As an example, there was no differentiation between AAA-rated and C-rated corporate credits. Since loans to C-credits are more profitable than those to AAA-credits, given the same amount of regulatory capital, the banking sector responded by shifting its loan mix toward lower-rated credits. This led to 2001 proposal by the Basel committee to allow banks to use their own internal or external credit ratings. These credit ratings provide a better representation of credit risk, where better is defined as more in line with economic measures.
2. Market risk
Market risk is the risk of fluctuations in portfolio values because of movements in the level or volatility of market prices. The first step in the measurement of market risk is the identification of the key drivers of risk. These include fixed income, equity currency, and commodity risks. Market risk is usually measured separately. Market risk also reflects credit risk – for example some of the price movement may be due to movements in risk-free interest rates, which is pure market risk. The remainder will reflect the market’s changing perception of the likelihood of default. Thus, for traded
assets, there is no clear – cut delineation of market and credit risk. Some arbitrage classification must take place.
Credit risk vs. Market risk
1. Source of risk: - In market risk the source of risk is market risk only but in credit risk the source of risk are default risk, recovery risk, and market risk. 2. Distributions: - In market risk distribution is mainly symmetric but in credit risk the distribution is skewed to the left. 3. Time horizon :- In market risk the time horizon is short term (in days) but in credit risk the time horizon is long term(in years) 4. Legal issues: - In market risk legal issues are not applicable and in credit risk legal issues are very important.
3.Operational risk :The Basel II committee defines operational risk as ‘the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events.’ By means of this definition legal risks are included, whereas strategic and reputation risk are not considered. Due to this less specific definition of operational risks the consultative document is exposed to severe criticism. Only a more precise specification, that has still to be developed, and an accepted delimitation (standardization) of operational risk as generally as possible will provide for an accurate recordation and an evaluation of these risks.
Chapter 4
OPERATIONAL RISK MANAGEMENT
Details
Operational risk has assumed greater importance because: 1. The use of highly automated technology has the potential, if not properly controlled, to transform risks from manual processing errors to system failure risks, as greater reliance is placed on globally integrated systems; 2. Growth of e-commerce brings with it potential risks [e.g., external fraud and system security issues] that are not yet fully understood; 3. Large-scale mergers, de-mergers and consolidations test the viability of new or newly integrated systems and have resulted in some noteworthy problems; 4. The emergence of banks acting as very large-volume service providers creates the need for continual maintenance of high-grade internal controls and back-up systems; 5. Banks may engage in risk mitigation techniques [e.g., collateral, credit derivatives and asset securitization to optimize their exposure to market risk and credit risk, which in turn may produce other forms of risk.
Factors affecting banking industry
The following factors contribute to increased Operational risk in the banking industry globally: • Competitive pressures • Expense and headcount reduction • Centralization of operations sites
• Sales force incentives • Product complexity • Pace of change, especially product and technology • Organized crime • Public and community ethics • Technology dependence • Consumerism
Management of Operational Risk:-
The Management shall decide whether to: • Transfer risk to a third party (e.g., outsourcing, insurance) • Avoid risk altogether by changing the nature of the business (e.g., withdrawing Products, avoiding jurisdictions) or, • Reducing risk (e.g., limiting growth/diversification)
The Management determines the remaining level of risks, which is accepted and dealt with by establishing adequate control techniques. Typical internal control techniques include: • Segregation of duties • Exception and exposure reporting • Reconciliation • Delegation of authority/limit • Prompt, reliable management information
BROAD AREAS
The following are the broad areas of Operational Risk in Banks 1. Organizational • Control consciousness • Timely, relevant management information • Risk delegation [authority, limits] 2. Product
• Design and development • Performance management • Communication 2. Customer • Acquisition • Service • Satisfaction 3. Human Resources Risk • Quality [recruit, develop, perform] • Occupational health and safety • Employee turnover • Key personnel risk • Fraud, Error • Money laundering • Confidentiality breach 4. Process • Fraud, error, theft • Accuracy and completeness of data and transaction processing • Information technology
FUNCTIONS
Function wise operational Risk can be illustratively explained as under: 1. Technology Risks • Programmed Error • Model Risk • Management information • Telecommunication failure • Contingency planning
2. Relationship Risk • Contractual disagreement • Dissatisfaction • Default 3. Transaction Risk • Execution error • Product complexity • Booking error • Settlement error • Commodity delivery risk
4. Facilities Risk
• Safety • Operating Cost • Fire/ Flood/ Earth quake
Chapter 5 : Evaluation of management and control techniques
MANAGEMENT & CONTROL
Management and control techniques are evaluated against the related risks to determine appropriateness, likely effectiveness and efficiency. The nature of controls considered is as follows:
1. Preventive: Preventive controls are designed to stop undesirable
transactions, items, events, errors or incidents occurring. Examples are: authorization and approval controls, staff training, automated system calculation and validation, password and access controls.
2. Detective: Detective controls are designed to promptly reveal
undesirable transactions, items, events, errors or incidents so that appropriate corrective action can be taken. Examples are: reconciliation, review of exception reports.
3. Recovery:
Recovery techniques are designed to reduce the consequences of damage arising from crystallization of an individually significant incident or a significant number of undesirable transactions, items, events, errors or incidents. Examples are: tested business continuity plans, succession plans, back-up sites and files, crisis management. The techniques used to deal with risks need to be tailored to the particular business circumstances. Some examples of typical strategies that might be appropriate are: • High Impact – Low Likelihood
Example: A plane crash destroying the main computer site [unlikely to happen but shall have far reaching consequences] Focus: Recovery techniques are often the best option in these circumstances, rather than attempting to prevent this risk. • High Impact – High Likelihood: Example: Unauthorized payments
Focus: These circumstances are the most urgent to deal with. Effective preventive techniques in combination with recovery techniques are essential to reduce the level of risk to an acceptable level. • Low Impact – High Likelihood: Example: Teller deficiencies Focus: These are low impact, individually, but if not controlled could get out of hand cumulatively. An effective strategy here shall be to focus on detective controls and monitoring, combined with prompt action if errors exceed preset tolerances.
Chapter 6: MODELS AND APPROACHES
A.
MODELS
Scalar Models:
The operational risk in these models is calculated as a percentage of major business parameters like gross income, operating costs, asset base, borrowings, etc. The basic reasoning behind these models is that these parameters serve as proxies to the scale of business operations and hence risk exposure. The Basel Committee recommends two variants of this model.
•
•
Basic Indicator Approach: BCBS recommends computation of operation risk as a percentage of the average of three years positive gross annual income. Standardized Approach: Bank’s activities are divided into eight business lines and the risk is calculated separately for each of the business line applying appropriate percentage.
B.
Statistical Approaches:
Pure statistical models rely on building historical internal loss databases and make predictions about their behavior and loss influence using statistical tools. This method is scientific and is based on recorded facts. Operational risks are dynamic and even a small change in the process flow affects the risk profile of the business unit. Hence past loss data cannot be a true reflection of current state of affairs and measuring the risk using these approaches though are based on sound reasoning is like driving a vehicle looking only at the rear view mirror. Use of Scorecards in combination with statistical approaches can effectively overcome this drawback.
Chapter 7: Management Information for Op Risk Committees
• •
KRI RCSA
• • •
Matrix Regulatory Capital Economic Capital
Historical Data Forward Looking Data 3. Synthesis of Historical and Forward Looking Data This process will comply with the qualifying criteria for the AMA approach for regulatory capital calculation
Chapter 8:
CAPITAL CALCULATION
The Basic Indicator Approach
Banks using Basic Indicator Approach (BIA) have to hold capital for operational Risk equal to a fixed percentage (alpha) of a single indicator (Gross Income) •K = [( S(GI 1…n * a)]/n •Where K = Capital charge under BIA •GI = annual gross income where positive over previous 3 yrs •n = number of previous 3 yrs for which gross income is positive •a = a fixed percentage set by the Basle committee RBI has defined a as 15% As per RBI guidelines, banks are required to maintain Capital (besides credit and market risk) for Operational Risk also w.e.f. FY 2007-08. RBI in its guidelines on implementation of the New Capital Adequacy framework issued on 27.04.2007 has advised that Banks in India having foreign presence should adopt BIA for calculating capital charge for Operational Risk w.e.f. 31.03.2008, wherein RBI has revised the definition of Gross Income. The Gross Income component as per RBI is:
Gross Income as per Draft Guidelines = Net profit (+) Provisions & Contingencies (+) Operating expenses (Schedule 16) (-) Profit on sale of HTM investments (-) Income from insurance (-) Extraordinary / irregular item of income (+) Loss on sale of HTM investments Working on BIA Capital Calculation:
Rs. In Crore Detail of calculation Mar 03 Net Profit 842.20 Add Provision & 1475.09 Contingency Add: Operating Expenses 2056.73 Less: Profit on Sale of HTM 4.00 Less: Income from Insurance 0.00 Less: Irregular Income 0.00 Add: Loss on Sale of HTM 0.00 Total Gross Income 4370.02 Average Gross Income of last 3 Years Mar 04 1109.69 2012.17 2370.72 143.00 0.00 0.00 0.00 5348.58 Mar 05 1410.12 1297.09 2975.21 97.51 0.00 0.00 0.00 5584.91
5101.00 Crore 765.18 Crore
Total Capital required under BIA @. 15%
• • • •
The Standardized Approach
Banks activity is to be divided into 8 Business Lines. Each Business Line is measured by an Exposure Indicator, which is Gross Income for that Business Line. Within each Business Line the capital charge is calculated by multiplying the said Business line Gross Income by a “beta” factor The sum of all Business Line Capital charge would be the Capital charge for the Bank. K = {S yrs1-3 max[S(GI 1…8 * b 1…8 ),0]}/n
•
K- is capital charge GI 1…8 Gross Income over the past 3 yrs for each business line.
b is the a fixed percentage for each Business line set by the Basle Committee. Business Line Beta FACTOR 18% 18%
Corporate Finance Trading & Sales
Retail Banking 12% Commercial Banking 15%
Payment & Settlement 18% Agency Services Asset Management 15% 12%
Retail Brokerage 12%
Advanced Measurement Approach
Under Advanced Measurement Approach the capital charge would be based on an estimate of operational risk derived from bank’s internal risk measurement system. This approach is expected to be more sensitive than the other two approaches. Adoption of this approach is subject to certain qualitative and qualitative standards.
•
• •
A bank’s internal operational risk measurement system must take into account the following elements:
• •
Internal Loss data External Loss data
•
Internal control and business environment factors
The measurement system may also factor in the following elements:
• •
Risk mitigation (e.g., insurance) Correlations
These elements can be combined in different ways to quantify exposure to operational risk.
Chapter 9: Mitigating Operational Risk
DETAILS
A firm has various options to encounter an operational risk. First and foremost, it can avoid the risk, for example keeping away from a particular line of business. Secondly, the firm can retain the risk but develop controls to reduce the frequency and severity of the losses. The firm may also choose to absorb these losses through earnings. Where the firm still incurs risk after introducing controls and self financing through earnings, the firm may choose to either retain the risk of loss or transfer the risk through insurance or other mechanisms. Normally, low-severity highfrequency losses are preferred to be funded through earnings and lowfrequency high-severity risks are spread through geographical diversification, recovery sites, insurance, etc. Operational Risk Management is more important today for internationally active banks because the Bank for International Settlements’ latest capital framework requires capital charge based on their operational risk exposure. This requirement has tremendous impact on market competitiveness of bank
Chapter 10
CHALLENGES IN OPERATIONAL RISK MANAGEMENT
CHALLENGES
The biggest challenge in addressing Operational risk perhaps lies in accepting the fact that people, processes, systems and external events, if not properly managed, could indeed pose a major threat to the profitability, efficiency and in fact, the very existence of a bank and that by managing operational risk across all functions and geographical locations, a bank will maximize shareholder value, optimize the use of capital and reduce volatility of earnings.
Chapter-11: Research Methodology
Research Methodology
A market research is a systematic study for & analysis of information. We started with a clear, concise objective in our mind- do the people feel the need of savings mode of transactions and business heps, & what factors fulfill their needs .
1) Objective of the study: The market research was undertaken with the
objective in mind- to study the consumer behaviour & their aforesaid needs .
2) Determining Research Design: A Research Design is the specification
of the methods for acquiring the necessary information keeping the goal in mind. Descriptive research was undertaken to find out how the purchase patterns varied with the demographics like sex, age, group, income level, & occupation. Casual research design was also used to find out how the consumer reacted to any change in either the availability of the preferred Punjab National bank.
3) Determining Data Collection Method & Forms:
Primary market: The data has been collected with the help of questionnaire with a view of obtaining the information on all the aspects relating to the banking industry in general and PUNJAB NATIONAL BANK specifically.
Secondary market: This data has collected through Internet analysis tools: the major analysis tools used have been percentages and data is interpreted with the help of bar graph and pie diagrams.
4) Data
Analysis & Interpretation: Once the data was collected, it was edited, coded & tabulated before the analysis was performed. Coding was done in terms of percentage & Ratio’s, as can be seen in the following pages. The results of the analysis are being interpreted with the help of Ratio Analysis.
5)Research Report: We culminate our research process with presentation of the research reports. The report is here by made, depending upon the level of understanding of analysts.
Sampling plan for survey:
Sample size = 100 Sampling area = New Delhi Sampling time frame = 2 months
ANALYSIS OF OUESTIONAIRES
Q1. Do you know about Punjab National Bank ?
ANS.
YES : 98
NO : 02
2%
yes no
98%
Number of people knowing about Punjab National Bank. The study shows that out of 100 people, 98 people know about Punjab National Bank and 2 don’t. The above analysis proves that Punjab National Bank as a brand had established itself among the common man.
Q2. If yes, then how? ANS.
Through an association with the Bank Through friends/relatives Through advertisements Through any other sources
13 24 54 9
9%
13%
24% 54%
association with the bank friends/relatives advertisements other sourses
Source of information about bank The pie diagram at the preceding page shows that maximum no. Of people know about Punjab National BANK through its advertisements followed by friends / relatives, than about 13% people knows about it through an association with bank and rest from other sources. So this study shows that most effective way to approach its customer is the advertisements.
Q3. Do you have a Bank Account? ANS. YES 88
NO
12
12%
yes no
88%
People having bank A/C It can be observed from the above pie diagram that a considerable no. Of people are having bank account; this shows that having a bank A/c is becoming necessity these days. Those people not having bank a/c are mostly minors.
Q4. Which categories of bank you prefer? ANS.
NATIONALISED BANKS PRIVATE BANKS MULTINATIONAL BANKS
54 40 06
6%
40%
54%
Nationalized banks private banks multinational banks
Share of different categories of banks
It can be inferred that still nationalized banks are people’s favorite. Private Banks have also been able to get a good market share. But the position of multinational banks is not satisfactory. They have to work constantly very hard for establishing themselves among the common man.
Q5. Presently, which of the following facilities you are Availing?
Phon e Banki ng 2
Petro card
Debit card
Credit card 3
Internet Bankin g
15
17 None 1
41
ATM 0
All
Any other
57
32
60 50 40 30 20 10
any other phone banking internet banking debit card petro card credit card none ATM all
no. of people
0
Graph showing number of people availing different facilities
This study shows that the maximum no. of people are using ATM facility followed by phone banking. But still many people are not using any of the facilities. Debit card and credit card are still holding a place among the people. But facilities like petrocard and Internet banking are not much popular among the common man.
Q6. What is your perception about Punjab National Bank?
Very Good Average 4
Good
48 17
Below Average
38
50 40 30 20 10 0
very good good
very good good average below average
average
below average
PERCEPTION OF PEOPLE FOR
Punjab National BANK
The diagram shows that generally people have good perception about Punjab National BANK where as a considerable number of people have average perception, followed by very good perception and a very few number of people have below average perception.
Q7 Do you know about following products of Punjab
National Bank? ANS.
SAVING ACCOUNT CURRENT ACCOUNT CREDIT CARDS
65 28 34
LOANS INSURANCE RBI RELIEF BONDS ALL OF THE ABOVE NONE OF THE ABOVE
29 11 03 04 14
RBI relief bonds
loans
saving a/c
credit card
current a/c
People knowing about Punjab National BANK products
The graph shows that the saving a/cs are most popular among the people followed by credit cards of Punjab National BANK. Customers are also aware of its loans schemes and current a/c. but still there is certain number of people who don’t know about any of its product. People also know about its insurance plans but only a few people know about RBI relief bond offer by Punjab National BANK, also there is hand full number of people who know about all the products of Punjab National BANK.
Q8. Have you seen/ heard any of the Punjab National Bank’s advertisements?
insuarence
all of the above
none
70 60 50 40 30 20 10 0
no. of people
ANS.
Yes No
64 36
36%
yes no
64%
People seen/ advertisements?
heard
Punjab
NationalBank’s
The pie diagram shows that a good percentage of people have seen or heard Punjab National BANK advertisements, but still there are some of people who haven’t seen or heard Punjab National BANK advertisement. This shows that a large number of people know Standard Chartered Bank through its advertisements.
Q9. Which Bank you like the most and why? HDFC Punjab National bank STANDARD CHARTERED ICICI 12 32 6 31
HSBC ANY OTHER
3 16
35 30 25 20 15 10 5
ANY OTHER
no. of people
HDFC
UTI
SCB
Graph showing preference of different banks
The study shows that performance of Punjab National Bank is quite good except in regard to ICICI Bank and HDFC Bank. It can even evade them through constantly providing good services and low prices to people.
Q 10. Where do you think a Punjab National Bank/ATM should come
up?
Rajouri Garden 64 • Karol
Janak Puri 11 Pitam
HSBC
ICICI
0
Rohini 14 Ashok
bagh 24 Kamla Nagar 12
Pura 7 Moti Bagh 6
Vihar 0 Others 16
Rajouri Garden
Kamla nagar
Rohini
Moti Bagh
Ashok Vihar
Janak Puri
Vikas Puri
(Punjab National Bank ATM can be found anywhere)
PitamPura
other areas
70 60 50 40 30 20 10 0
no. of people
SWOT ANALYSIS
STRENGTHS
(1)
Punjab National Bank is celebrating its 150 years of existence. This is because it is getting tremendous support of its customers in India and abroad.
(3) In India Punjab National BANK has been marked as the second most profitable multinational company after HLL.
(4) The first four cash withdrawals per month from a non standard chartered bank ATM are free of cost.
(5) The Connaught Place branch of Punjab National BANK it’s opened 365 days 24 hours.
Conclusion and Suggestion
CONCLUSION
Founded in 1906, Punjab national bank is one of the premier banks in India, with a network of 2508 branches across the country. The bank was the first to launch networked ATMs in India and obtain an ISO Certification. Punjab national Bank has also achieved the distinction of being the country's highest net profit earner among nationalized banks for the year 2005. The bank has already carved a niche in providing IT-based services such as Networked ATMs, Anywhere Banking, Tele banking, Remote Access Terminals, Internet & Mobile Banking, Debit Cards, etc Punjab national Bank has a vision to help improve the economic condition of common people of India.
LIMITATION OF STUDY:
Due to the following unavoidable and uncontrollable factors the results might not be accurate. Some of the problems might faced while conducting the survey are as follows: 1. Certain open-ended questions have been put in the questionnaire to give respondents freedom to express their perception. 2. Time and cost constraints were also there 3. Chances of some biasness couldn’t be eliminated. 4. A sample size of 100 has been used due to time limitations.
Suggestions
The company should improve their Current Ratio & Liquidity Ratio. The co. should increase the Strength of their policyholders. The co. should introduce the new investment plans & policies for the upcoming customers or the future customers. The co. should make a particular sector as a target, which they have to achieve within a specified period. The co. should focus on their investment & profitability constraints. The co. should improve their lifetime common features plans. The investment plans & policies must be very flexible in nature & it should not be rigid one.
Bibliography
1 S. K. Bagchi 2 Brian Coyle 3 www.gloriamundi.com 4 www.google.com
5 www.altavista.com 6 www.valueresearchonline.com
