A PROJECT REPORT Study of commercial banking in India: Case of Punjab national Bank
A) INTRODUCTION/ IMPORTANCE/ SIGNIFICANCE INTRODUCTION TO COMMERCIAL BANKS Commercial banks play a vital role in the economic development of a nation. They are the most important source of institutional credit in the money market as they provide short term loans and advances to its customers. They perform a variety of functions and are the main source of credit which is the main input for trade and business activity. Credit created by commercial banks is a major component of money supply in a modern economy. Modern economies depend on the banking sector for production, exchange and distribution. A Commercial bank is a type of financial intermediary and a type of bank. Commercial bank has two possible meanings: a) It is the term used for a normal bank to distinguish it from an investment bank. b) Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking).
A commercial bank is a profit seeking organization dealing in the other people’s money, in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as deposits to needy people. It charges higher rate of interests for the loans sanctioned and offers lower rate of interest for the deposits. The difference between the two is the profit earned by the bank. Thus, a commercial bank functions as a mobilize of saving in the economy.
SIGNIFICANCE OF BANKS The importance of a bank to modern economy, so as to enable them to develop, can be stated as follows: (i) The banks collect the savings of those people who can save and allocate them to those who need it. These savings would have remained idle due to ignorance of the people and due to the fact that they were in scattered and oddly small quantities. But banks collect them and divide them in the portions as required by the different investors. (ii) Banks preserve the financial resources of the country & it is expected that they allocate them appropriately in the suitable & desirable manner. (iii) They make available the means for sending funds from one place to another and do this in cheap, safe and convenient manner.
(iv) Banks arrange for payments by cheques, order or bearer, crossed and , which is the easiest and most convenient. Besides they also care for making such payments as safe as possible. (v) Banks also help their customers, in the task of preserving their precious possessions intact and safe. To advance money, the basis of modern industry and economy and essential for financing the developmental process, is governed by banks. (vii) It makes the monetary system elastic. Such elasticity is greatly desired in the present economy, where the phase of economy goes on changing and with such changes, demand for money is required. It is quite proper and convenient for the government and R.B.I. to change its currency and credit policy frequently, this is done by RBI, by changing the supply of money with the changing needs of the public. B) RATIONALE OF THE STUDY Sound financial health of a bank is the guarantee not only to its depositors but is equally significant for the shareholders, employees and whole economy as well. As a sequel to this maxim, efforts have been made from time to time, to measure the financial position of each bank and manage it efficiently and effectively. In this project, an effort has been made to evaluate the financial performance of the two major banks operating in northern India .This evaluation has been done by using theoretical framework and primary and secondary model of analysis. Through this model, it is highlighted that the
position of the banks under study is sound and satisfactory so far as their capital adequacy, asset quality, Management capability and liquidity is concerned. C) OBJECTIVE The main objectives of the study are as follows:(i) To analyze the performance of the bank under study; (ii) To undertake the factors which have led to the current financial performance; and to suggest measures, on the basis of the study results, to improve further the financial performance of the banks under study D) HYPOTHESIS:
The hypothesis being put forth for this study is: H1: Position of the bank under study is sound and satisfactory so far as their capital adequacy, asset quality, Management capability and liquidity is concerned H2: Position of the bank under study is not sound and satisfactory so far as their capital adequacy, asset quality, Management capability and liquidity is concerned
E) RESEARCH METHODOLOGY: The research methodology is data collection through:The research methodology is data collection through:PRIMARY SOURCES
SECONDARY SOURCES PRIMARY SOURCES: Survey by distributing questionnaire to the people taking sample size of 100, questionnaire based Interviews conducted with bankers; accumulating knowledge.
SAMPLE OF THE STUDY The present study seeks to evaluate the performance of one of the top banks based in northern India, representing the biggest nationalized bank
Punjab National Bank,
PNB). This banks was purposely selected for the study, keeping in view its role and involvement in shaping the economic conditions of northern India, specifically in terms of advances, deposits, manpower employment, branch network etc. SECONDARY SOURCES Secondary Sources: Gathering data through books, journals, magazines, websites, newspapers, etc. F) EXPECTED CONTRIBUTION Expectations from the study are that it may contribute to the real scenario of commercial banking demand and accordingly the banks can go for new innovative schemes. It will also specify some recommendations and based on that banks can make suitable arrangements in a particular sector. It will also make people aware about Commercial banking.
G) SCHEME OF THE REPORT. (CHAPTARISATION) The present study has been classified into seven chapters. The first Chapter presents the introduction of the study. It includes objectives of the study, hypothesis, operational definition of concepts, methodology, collection of data, data processing, and scheme of the report. The second chapter deals with the concept of commercial banking & Commercial banks in India. The third chapter -highlights the on bank deposits & their structure. The fourth chapter- relates with current scenario of commercial bank The fifth chapter -deals with case study The sixth chapter – Analysis of collected data The last and final chapter- presents the summary of findings and suggestions based on the study and it also includes conclusion of the study.
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