INTRODUCTION

MEANING OF NPA
A NPA refers to loans or advances that have stopped generating income for the bank.
This situation occurs when borrowers fail to make scheduled interest payments or principal
repayments for a continuous period of 90 days. When this limit is crossed, the loan is
classified as an NPA. This classification is important because it signals that the loan might be
at risk of default, meaning the bank might not get its money back.
The NPA full form in banking is 'Non-Performing Asset.' NPAs are important signs of
financial health for banks, as they directly impact a bank’s profitability and stability. When a
loan becomes an NPA, it stops affecting the bank's income, leading to a loss of revenue.
Moreover, it requires banks to keep aside additional funds as provisions to cover potential
losses from these assets, affecting their overall financial condition. Essentially, NPAs reflect
the credit risks and management effectiveness of a bank, shaping how it is viewed by
investors and regulators.
Non- performing assets are one of the major concerns for banks in India. NPAs reflect
the performance of banks. The issue of Non-Performing Assets has been discussed at length
for financial system all over the world. The magnitude of NPAs have a direct impact on
Banks profitability legally they are not allowed to book income on such accounts and at the
same time banks are forced to make provisions on such assets as per RBI guidelines The RBI
has advised all State Co-operative Banks as well as the Central Co-operative Banks in the
country to adopt prudential norms from the year ending 31-03-1997. An asset is classified as
non-performing asset (NPAs) if dues in the form of principal and interest are not paid by the
borrower for a period of 180 days, however with effect from March 2004, default status
would be given to a borrower if dues are not paid for 90 days. The importance of bank’s
stability in a developing economy is noteworthy as any distress affects the development plans
thereby the economic progress. Like any other business, success of banking is assessed based
on profit and quality of asset it possesses. Even though bank serves social objective through
its priority sector lending, mass branch networks and employment generation, maintaining
asset quality and profitability is critical for banks survival and growth. A major threat to
banking sector is a prevalence of Non-Performing Assets (NPAs). Moreover, the result shows
that at least Indian banks should take care to ensure that they give loans to creditworthy
customers to reduce the NPA level.
CAUSES OF NPA
 Over-optimism of Banking Sector: Bank did not show much accountability and
diligence when the economy was growing and infrastructure improved during 2006-
08.
 Slow Growth: The financial crisis of 2008 led to slower economic growth which in
turn affected the profits of the companies and reduced their ability to pay back the
loans on time.
 External Factors: To counter the aftermath of the financial crisis and declining
growth, major central banks globally adopted the easy money policy which also
resulted in easy liquidity in emerging markets such as India .This phenomenon pushed
up asset prices and led to inflation and also posed threat of stagflation.
 Regulatory and Policy Risks: A volatile regulatory framework in the country in the
past few years has led to stress in certain industries .For example, Mining ban in
certain southern Indian states caused significant financial and operating stress in
companies engaged therein, which had a cascading effect on overall investments in
the Indian economy.
 Industry Specific Risks: There are industry-specific reasons that cause a rise in the
level of Non Performing Assets in India.For example, higher Non Performing Assets
in aviation sector could be attributed to high cost of aviation turbine fuel. For Indian
airlines, turbine fuels constitute 45% of total operating costs, as compared to the
global average of 30%.
 Poor Credit Appraisal System: The credit appraisal by the banks before giving loans
remains of low quality.
 Diversion of Loans: The poor end-use monitoring system of the Banks has led to
diversion of funds by the companies for other wasteful purposes.
 Wilful Defaulters: A lack of proper mechanisms to deal with them means that there
has been an increase in the number of wilful defaulters.Wilful Defaulters refer to
those loanees who fail to repay back the loans despite of being capable of doing so.
 Red-Tapism: Delays in government approvals led to increase in the number of stalled
projects.
 Lack of Policy Foresight: Legal provisions to deal with Non Performing Assets such
as Insolvency and Bankruptcy Code (IBC) and SARFAESI Act have been formulated
only recently.
 Frauds: The system has failed to bring any high-profile fraudsters to justice. It was
only after the NPA crisis that the RBI established a fraud monitoring cell to facilitate
the early reporting of fraud cases to investigative agencies.
 Ineffective Recovery Tribunal: There has been undue delay in the resolution of
cases before the debt recovery tribunals leading to higher Non Performing Assets.
  Political Interference in working of PSBs: The Non Performing Assets are mainly
concentrated in the Public Sector Banks which could be linked to their poor
governance, political interference and lack of independent decision making body.
 Priority Sector Lending: The lending by the Banks to priority sectors such as
Agriculture and MSMEs has also contributed to Non Performing Assets.
 Credit Culture: The frequent announcement of farm loan waivers by the Central has
affected the credit culture in India.
 Absence of Integrated Database on Credit Information: Presently, the credit
related information is captured by multiple agencies without proper coordination.The
RBI’s proposal of creating Public Credit Registry faces legal challenges.

IMPACT OF NPA ON BANK

The impact of Non-Performing Assets (NPAs) goes deep into various aspects of a bank's
operations, influencing financial health, strategic decisions, and customer relations. Here’s a
detailed look at how NPAs affect a bank's operations:
 Profitability: On an average, banks are providing around 25% to 30% additional
provision on incremental Non Performing Assets which has direct bearing on the
banks’ profitability.
 Asset (Credit) Contraction: The increased Non Performing Assets has reduced the
banks’ ability to lend more and thus lesser interest income. It contracts the money
stock which may lead to economic slowdown.
 Liability Management: High Non Performing Assets may make Banks lower the
interest rates on deposits on one hand and levy higher interest rates on advances .This
may become hurdle in smooth financial intermediation process and hampers banks’
business as well as economic growth.
 Capital Adequacy: According to Basel norms, banks must maintain sufficient capital
for their risk-weighted assets. An increase in the level of Non Performing Assets adds
to risk weighted assets which requires the banks to shore up their capital base further.
In case of PSBs, it may put additional burden on the Government for recapitalisation
of PSBs.
 Shareholders’ Confidence: The rise in Non Performing Assets is likely to negatively
affect the bank’s business and profitability. As a result, shareholders may not receive a
market return on their capital, and their investment value could erode.
 Public Confidence: The credibility of the banking system is significantly impacted
by high levels of NPAs, as it undermines the general public’s confidence in the
system’s stability and reliability.
 Financial Strain: NPAs increase credit risk, compelling banks to set aside higher
provisions for potential losses. This precaution reduces available funds for other
profitable lending opportunities, diminishing the overall profitability and restricting
financial flexibility.
 Operational Adjustments: High levels of NPAs often lead banks to tighten their
lending criteria. This response might slow down the bank’s growth by reducing the
number of new loans issued and impacting its ability to expand its customer base.
Additionally, stricter credit policies may reduce customer satisfaction and service
quality.
 Reputation: Persistent issues with NPAs can ruin a bank’s reputation. A damaged
reputation can deter potential clients and investors, making it challenging to attract
new business and maintain stability in the market.
 Economic Slowdown: Reduced credit flow hampers economic growth and
development activities.
TYPES OF NPA

Standard Assets
A "standard asset" refers to a loan or advance that is not classified as an NPA,
meaning it is performing as expected, fully secured, and shows no signs of credit impairment
or default.
Substandard Assets
A substandard asset is a type of NPA, meaning it's a loan or advance that has stopped
generating income for the bank. It's characterized by well-defined credit weaknesses that
could lead to potential losses if not addressed. The loan has been overdue for a period of 90
days or more, but for less than or equal to 12 months.
Doubtful Assets
An asset that remains in the substandard category (NPA for more than 12 months) is
classified as a doubtful asset. This means the bank is uncertain about recovering the loan
amount.
Loss Assets
Loss assets are loans or advances that have remained categorized as NPAs for over 36
months. These assets are considered irrecoverable or unlikely to be recovered, leading to
significant losses for the lending institution.
 Classification of Non- Criteria
Performing Assets (NPA)

Substandard Assets These are the assets which have remained NPA for a
period of less than or equal to 12 months

Doubtful Assets If the asset is in the substandard category for a period of

12 months

Loss Assets These assets are of little value, it can no longer continue
as a bankable asset, there could be some recovery value.

NPA Provisioning
NPA provisioning requires banks to set aside funds to cover potential losses from bad loans.
The provision amount varies based on the asset classification – 15% for substandard, 25-40%
for doubtful and 100% for loss assets.
Banks must maintain these provisions as per RBI guidelines, affecting their profitability.
Higher provisions provide better protection against loan losses but reduce funds available for
lending.
Regular review of provisioning adequacy helps banks maintain financial stability. Additional
provisions might be required based on specific asset performance or regulatory requirements.
IOB NPA RECORD IN INIDIA

NPA Ratios : MAR’24 MAR’23 MAR’22 MAR’21 MAR’20

i) Gross NPA 6,794.43 14,071.55 15,298.62 16,323.18 19,912.70

ii) Net NPA 1,216.86 3,266.01 3,824.62 4,577.59 6,602.80

i) % of Gross NPA 3.10 7.44 9.82 11.69 14.78

ii) % of Net NPA 0.57 1.83 2.65 3.58 5.44

Return on Assets % 0.81 0.68 0.59 0.31 -2.95

Chart Title
16
14.78
14

12 11.69

10 9.28

8 7.44

6 5.44

4 3.58
3.1
2.65
1.83
2
0.57
0
GROSS NPA NET NPA

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

OBJECTIVES OF STUDY
 To assess the impact of NPAs on the financial performance and profitability of Indian
Overseas Bank
 To analyze the trend and growth of NPAs in Indian Overseas Bank
 To evaluate the measures taken by IOB and the RBI to control and reduce Non -
Performing Assets
 To suggest recommendations for effective management and reduction of NPAs in IOB
SCOPE OF THE STUDY

 The study focuses on analyzing the non - performing assets in Indian Overseas Bank.
 Explore the causes and consequences of rising NPA
 It helps to identify the NPA trends of IOB Bank
 Evaluate how NPAs affect the bank’s profitability, provisioning, and capital adequacy
 Compare gross and net NPA ratios
NEED OF STUDY

 Non-Performing Assets (NPAs) have emerged as one of the most critical challenges
facing the Indian banking sector, particularly public sector banks like Indian Overseas
Bank (IOB). The increasing volume of NPAs poses a direct threat to the financial
stability and profitability of banks and indirectly affects the broader economy
 To analyze the reasons behind the accumulation of bad loans
 Assess the impact of NPA is study seeks to understand how IOB’s financial
performance has been affected over the years due to NPAs.
 A data-centric analysis helps in drawing meaningful patterns and trends regarding
IOB’s NPA levels, helping stakeholders make informed decisions.
 Understanding NPAs at a granular level allows for the identification of gaps in credit
appraisal, risk management, and recovery strategies—paving the way for improved
banking practices.
LIMITATIONS OF THE STUDY

 Limited access to internal data , the study is primarily based on publicly available data
such as annual reports, RBI publications, and government reports. Access to detailed
internal records of IOB, such as borrower-level data or internal audit reports, was
restricted.
 The study is primarily based on publicly available data such as annual reports, RBI
publications, and government reports. Access to detailed internal records of IOB, such
as borrower-level data or internal audit reports, was restricted.
 The study focuses on IOB at the branch level and does not include national-level or
region-wise analysis, which might provide deeper insights into the concentration of
NPAs.
LITERATURE REVIEW

1. Indian Overseas Bank Annual Reports (Various Years)

Summary: IOB’s financial statements provide key insights into NPA trends, sector-wise
distribution, recovery strategies, and their impact on profitability over the years
2. Reserve Bank of India (RBI) Financial Stability Reports (Various Years)
Summary: These reports analyze sectoral NPAs in Indian banks, including IOB, highlighting
factors leading to rising NPAs and RBI’s regulatory measures for mitigation.
3. Mishra, P. & Reddy, K. (2020) - "A Case Study on Non-Performing Assets in Indian
Overseas Bank"
Summary: This study examines the causes, trends, and impact of NPAs in IOB, comparing its
performance with other public sector banks (PSBs).
4. Goyal, A. & Sharma, R. (2021) - "Effectiveness of NPA Recovery Mechanisms in Indian
Overseas Bank"
Summary: The paper evaluates recovery strategies such as SARFAESI Act, Debt Recovery
Tribunals (DRTs), and One-Time Settlement (OTS) in reducing NPAs in IOB.
5. Bhatia, S. & Mehta, K. (2019) - "NPA Trends in Indian Public Sector Banks: A Special
Focus on IOB"
Summary: This research provides a comparative analysis of NPAs in IOB vs. other PSBs,
identifying the major sectors contributing to rising NPAs.
6. Kumar, R. & Singh, P. (2022) - "An Empirical Study on Credit Risk and NPA Levels in
IOB"
Summary: This study examines credit risk management practices in IOB and their
effectiveness in controlling rising NPA levels.
 COMPANY PROFILE

Indian Overseas Bank was established in 1937, is a major bank based in Chennai with 3236
domestic branches and six branches overseas. Indian Overseas Bank has an ISO certified
inhouse Information Technology department, which has developed the software that 3236
branches use to provide online banking to customers; the bank has achieved 100% networking
status as well as 100% Core Banking Soultion status of branches with a total number of 3236
branches and IOB also has a network of about 3506 ATMs all over India and IOB's
International VISA Debit Card is accepted at all ATMs belonging to the Cash Tree and NFS
networks. IOB offers internet Banking (E-See Banking) and is one of the banks that the
Government of India has approved for online payment of taxes. IOB’s total business increased
to Rs 5.42 trillion as of December 2024, up from Rs 4.94 trillion as of December 2023. Total
deposits grew to Rs 3.05 trillion in Q3FY25, compared to Rs 2.78 trillion in the same quarter
last year. The bank’s current account and savings account (Casa) deposits increased to Rs 1.32
trillion, reflecting a Y-o-Y growth of 9.45 per cent. The CASA ratio stood at 43.37 per cent for
the quarter ended December 2024.

HISTORY:

The founder Chairman was M.Ct.Chidambaram Chettiyar.

1969 - When it was nationalised, the bank had 208 branches and business mix of Rs.156
crores.

1990 - The Bank of Tamil Nadu was merged with the Bank. The bank has launched credit
card in tie up arrangement with Cancard.

1995 - The Bank signed on July 26, a MOU with the three Regional Rural Banks (RRBs)
sponsored by it - Puri Gramya Bank (in Orissa), Pandyan Grama Bank (in Tamil Nadu) and
Dhenkanal Gramya Bank (also in Orissa). Under the MOU, the RRBs committed themselves
to achieve targets under various business parameters for turning the corner within a span of
five years.

1998 - Ms. P. Bolina, Deputy Secretary, Ministry of Finance was appointed director of the
Bank with effect from September 4, in the place of Shri Paramjit Singh. Shri K. Nagappan
was appointed director representing workmen employees with effect from October 12, in the
place of Shri Bhadresh U. Banker. The Bank launched its improved version of Kisan Credit
Card on November 27. The Scheme is gaining popularity speedily. Branches distributed
2,369 cards, disbursing a credit of Rs. 538.0 lakh within the four months of inception of the
Scheme.

1999 - The Bank launched a Housing Scheme called `Subha Gruha' with simplified and
borrower friendly features. To benefit students undergoing studies in India and abroad, the
Bank's `Vidya Jyothi' educational loan scheme was further modified. Loan amounts for
inland and foreign studies were increased and interest rates were reduced. With effect from
March 1, a new system was introduced for reconciling high value demand drafts.

2000 - Indian Overseas Bank has launched its customer care cell in Chennai. Chennai-based
Indian Overseas Bank is all set to go public on September 25 with an IPO to raise Rs 111.20
crore. The IPO is for an issue of 11,12,00,000 No. of equity shares of Rs 10 each at par. The
public sector Indian Overseas Bank will be setting aside about Rs 75 crore for offering
voluntary retirement scheme package to about 1,500 of its employees. Indian Overseas Bank
(IOB) has tied up with Dabur-All State Insurance to market the joint venture's life insurance
products. Indian Overseas Bank, the first public sector bank to introduce anywhere banking at
its 129 branches in the four metros, is extending the connectivity to another 100 branches in
Hyderabad, Bangalore, Ahmedabad and Ludhiana. One more public sector bank, Indian
Overseas Bank is coming out with a public issue of 11,12,00,000 shares of Rs 10 each for
cash par aggregating Rs 111.20 crore. Indian Overseas Bank (IOB) has launched its "gold
loan scheme' for exporters taking advantage of the uniform sales tax on bullion adopted by
the states recently. Indian Overseas Bank the first public sector bank in the country to
introduce mobile banking services using Wireless Application Protocol (WAP). The Bank
has launched its Any Branch Banking service in Hyderabad.

2001 - Indian Overseas Bank is set to raise Rs 125 crore through bond issue. Crisil has given
a rating of `AA' for the issue and `P1+' for its certificate of deposit. Indian Overseas Bank
chairman and managing director R V Shastri is expected to take over from R J Kamath as the
new head of the nationalised Canara Bank. S C Gupta, executive director of Indian Overseas
Bank will take over as the chairman and managing director of the bank. Mr R Natarajan has
been appointed as executive director of Indian Overseas Bank.

2002 - Indian Overseas Bank has informed that the Government of India has nominated Smt.
Usha Mathur, Joint Secretary, Department of Expenditure, Ministry of Finance, Government
of India, New Delhi in place of Shri Ram Mohan as Government Director in the Board with
effect from March 20, 2002. Ananda Kumar nominated as Director in the Board of Indian
Overseas Bank. Rohit M Desai appointed as a Director on the Board of Indian Overseas
Bank. Indian Overseas Bank has informed that in the EGM held on December 07, 2002, the
4 candidates were declared elected as Directors of the Bank representing shareholders other
than the Central Government. Mr M N Venkatesan, Mr Christopher Thomas Kurien, Dr
Harsh Mahajan and Mr S K Seghal.

2003 - IOB slapped notices to 70 defaulters and has seized a number of properties. Indian
Overseas Bank decides not to return any share capital to the government. Mr.Sivaram Swamy
has been appointed as Compliance Officer in the place of Mr.V Rajgopalan. IOB hands over
'Credence Mercury-fx' inter branch messaging software contract to Credence Analytics(I) Pvt
Ltd. Shri Pradeep K Deb has been appointed as the Director of Indian Overseas Bank. B
Swaminathan, General Manager started a new Automated Teller Machine (ATM) at the IOB
in Pondicherry. IOB's non food credit has surged up by Rs.650 cr. Government has
appointed Shri Anand Sinha, Chief General Manager, DICGC, RBI, Mumbai in place of Shri
B Ghosh, RBI Director in the Board of IOB along with other 3 banks have tied up for ATM
networks on cards with Canara Bank. Comes out with Initial Public Offering (IPO) of 10
crore equity shares of Rs 10 each at a premium of Rs 24 aggregating Rs 240 crore , issue was
7 times oversubscribed. High Court restricts order on IOB staff dismissal

2004 - The government has chosen Indian Overseas Bank (IOB) for channelizing government
credit to other countries which runs into billions of dollars. Indian Overseas Bank (IOB) ties
up with Times Online Money to launch an Internet-based remittance product, e-Cash Home,
targeted at NRIs in the US wishing to transfer money to India. IOB sets up new ATM in
Vizag. IOB pact with Chola for MF products

2005 - IOB joins hand with Visa to offer debit cards. IOB joins hand with Jatropha to
promote biofuel. Indian Overseas Bank has tied up with the Export credit Guarantee
Corporation of India to distribute the latter's products. ECGC products would be initially
distributed through 21 AD (authorized dealer) branches of IOB. IOB joins hand with NCR.

2006 - IOB inks MoU with CRI Pumps. IOB launches new tax saving deposit scheme. IOB to
acquire BhOB for Rs 170 cr.

2007 - Indian Overseas Bank has announced a scheme to extend housing loan facility up to a
maximum of Rs 20,000 for such beneficiaries at 4 per cent interest rate. IOB, Regional
Office, Karaikudi, disbursed loans to 639 beneficiaries to the tune of Rs 2.07 crore.

2008 - Chennai: Indian Overseas Bank has inked the pact with Rotary International District
3230 for implementation of 'IOB- Rotary Sampoorna Scheme'. Indian Overseas Bank has
forged an alliance with Alankit Assignment Ltd, a Delhi-based financial services company.
Indian Overseas Bank has inked a Memorandum of Understanding with Coir Board for
implementation of rejuvenation, modernization and technology up-gradation of the coir
industry.

2009 - IOB signs MoU with Asia Motor Works

2010 - Indian Overseas Bank has inked a memorandum of understanding with Tata Motors
for extending loans. This is for the purchase of commercial transport vehicles. As per a
release, loans under this MoU will be extended without any processing charges.
International expansion

1937-38 - As mentioned above, IOB was international from its inception with branches in
Rangoon, Penang, and Singapore.

1941 - IOB opened a branch in Malaya that presumably closed almost immediately because
of the war.

1946 - IOB opened a branch in Ceylon.

1947 - IOB opened a branch in Bangkok and re-opened others.

1948 - United Commercial Bank (see below) opened a branch in Malaya.

1949 - IOB opened a branch in Bangkok.

1963 - The Burmese government nationalized IOB’s branch in Rangoon.

1973 - IOB, Indian Bank and United Commercial Bank established United Asian Bank
Berhad in Malaysia. (Indian Bank had been operating in Malaysia since 1941 and United
Commercial Bank Limited had been operating there since 1948.) The banks set up United
Asian to comply with the Banking Law in Malaysia, which prohibited foreign government
banks from operating in the country. Also, IOB and six Indian private banks
established Bharat Overseas Bank as a Chennai-based private bank to take over IOB's
Bangkok branch.

1977 - IOB opened a branch in Seoul.

1979 - IOB opened a Foreign Currency Banking Unit in Colombo, Sri Lanka.

1992 - Bank of Commerce (BOC), a Malaysian bank, acquired United Asian Bank (UAB).

2007 - IOB took over Bharat Overseas Bank.

2009 - IOB took over assets and liabilities of Shree Suvarna Sahakari Bank.

2010 - Malaysia awarded a commercial banking license to a locally incorporated bank to be

jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank. The new bank,
India BIA Bank (Malaysia), will reside in Kuala Lumpur, which has a large population of
Indians. Andhra Bank will hold a 25% stake in the joint-venture, Bank of Baroda will own
40% and IOB the remaining 35%.

ORGANIZATIONAL STRUCTURE OF INDIAN OVERSEAS BANK

 LOAN AND
CRDEIT OFFICER
PROBATIONARY
STAFF
OPERATION
OFFICER

BRANCH ASSISTANT
CHIEF CASHIER
MANAGER MANAGER

ACCOUNT
OPENING
CLERICAL
STAFF
TELLER

CUSTOMER
OFFICE

VISION

To emerge as the preferred bank connecting generations with high standards of ethics and
governance.

MISSION

To Provide best banking solutions through digital and physical experience for customer
delight with skilled manpower

CORE VALUES

 Integrity and Transparency

 Innovation and Collaboration
 Sustainability

INDIAN OVERSEAS BANK BRANCHES

Bank Name State No of Branches

Indian Overseas Bank Andaman And Nicobar Island 2

Indian Overseas Bank Andhra Pradesh 350

Indian Overseas Bank Arunachal Pradesh 1

Indian Overseas Bank Assam 45

Indian Overseas Bank Bihar 105

Indian Overseas Bank Chandigarh 13

Indian Overseas Bank Chhattisgarh 52

Indian Overseas Bank Dadra And Nagar Haveli 1

Indian Overseas Bank Daman And Diu 1

Indian Overseas Bank Delhi 91

Indian Overseas Bank Goa 38

Indian Overseas Bank Gujarat 144

Indian Overseas Bank Haryana 72

Indian Overseas Bank Himachal Pradesh 11

Indian Overseas Bank Jammu And Kashmir 6

Indian Overseas Bank Jharkhand 51

Indian Overseas Bank Karnataka 275

Indian Overseas Bank Kerala 197

Indian Overseas Bank Madhya Pradesh 68

Indian Overseas Bank Maharashtra 182

Indian Overseas Bank Manipur 3

Indian Overseas Bank Meghalaya 3

Indian Overseas Bank Mizoram 1

Indian Overseas Bank Nagaland 2

Indian Overseas Bank Odisha 148

Indian Overseas Bank Puducherry 28

Indian Overseas Bank Punjab 109

Indian Overseas Bank Rajasthan 48

Indian Overseas Bank Sikkim 3

Indian Overseas Bank Tamil Nadu 1197

Indian Overseas Bank Telangana 3

Indian Overseas Bank Tripura 3

Indian Overseas Bank Uttar Pradesh 250

 Indian Overseas Bank Uttarakhand 47

Indian Overseas Bank West Bengal 155

INDUSTRIAL PROFILE

According to the Banking Companies Act of 1949, a bank is a financial institution that
provides banking and other financial services to its customers. Banks offer fundamental
banking services such as providing loans and accepting deposits.

The history of banking in India is a rich and complex subject that has shaped the nation’s
economic landscape. By understanding the evolution of banking in India, we gain insights
into the current banking system and its role in the country’s development.

Banking in India can be broadly divided into three stages:

1. Pre-Independence (Before 1947)

2. Post-Independence Phase (Between 1947 to 1991)
3. Liberalization (1991 - Until Now)

Pre-Independence (Before 1947)

 The pre-independence stage saw the presence of over 600 banks.

 The banking system in India began with the establishment of the Bank of Hindustan
in 1771, which ceased operations by 1832.
  Three major banks, the Bank of Bengal, Bank of Bombay, and Bank of Madras,
merged to form the Imperial Bank. The State Bank of India (SBI) later took over the
Imperial Bank in 1955.

Banks Established During Pre-Independence

Bank Name Established In
Allahabad Bank 1865
Punjab National Bank 1894
Bank of India 1906
Bank of Baroda 1908
Central Bank of India 1911

Post-Independence Phase - (Between 1947 to 1991)

 Nationalization of banks was a significant event during this phase.

 The Reserve Bank of India (RBI) was nationalized on January 1, 1949.
 In addition to bank nationalization, various Regional Rural Banks (RRBs) were
formed on October 2, 1975.

Nationalization of Banks in India

On April 15, 1980, several banks in India with reserves exceeding INR 200 crore were
nationalized. These banks included:

 Andhra Bank
 Corporation Bank
 New Bank of India
 Oriental Bank of Commerce
 Punjab and Sind Bank
 Vijaya Bank
In addition to these banks, seven subsidiaries of the State Bank of India (SBI) were also
nationalized in 1959. These subsidiaries included:

 State Bank of Patiala

 State Bank of Hyderabad
 State Bank of Bikaner & Jaipur
 State Bank of Mysore
 State Bank of Travancore
 State Bank of Saurashtra
 State Bank of Indore

With the exception of the State Bank of Saurashtra, which merged in 2008, and the State
Bank of Indore, which merged in 2010, all of these banks were later merged with the SBI in
2017.Currently there are four nationalized bank in India and they are listed below

Structure of Banking in India

Name of the Banks

Allahabad Bank UCO Bank

Bank of India Union Bank

Central Bank of India United Bank of India

Canara Bank Bank of Baroda

Indian Bank Bank of Maharashtra

Punjab National Bank Dena Bank

Syndicate Bank Indian Overseas Bank

The banking system in India is broadly divided into two sectors: the organized sector and the
unorganized sector. The organized sector comprises the Reserve Bank of India (RBI),
commercial banks, cooperative banks, and specialized financial institutions such as ICICI and
IFC. The unorganized sector, on the other hand, is not regulated by the government or the
RBI and is therefore more vulnerable to fraud and instability.
Scheduled Banks

A scheduled bank is a bank that has been included in the Second Schedule of the Reserve
Bank of India (RBI) Act, 1934. As of 31 March 2020, there are 27 scheduled commercial
banks in India. They comprise 21 public sector banks (PSBs), three private sector banks, and
three foreign banks. The RBI has granted scheduled bank status to a bank only if it fulfils
certain conditions laid

down in the RBI Act, 1934, and the Banking Regulation Act, 1949. These conditions include
a minimum paid-up capital of Rs. Five Lakhs. The RBI has also prescribed certain norms
relating to the management of a scheduled bank, which are laid down in the RBI Directions,
2015. These norms include the appointment of a CEO and other senior management
personnel, maintenance of capital adequacy, asset quality, and profitability.

There are four types of scheduled commercial banks:

 Public Sector Banks

 Private sector banks
 Foreign banks
 Regional Rural Banks

Non-Scheduled Banks

Non-scheduled banks are private banking institutions that offer banking services to the
general public and businesses. Non-scheduled banks are those that are not included in the
second schedule of the RBI Act of 1934 and do not meet all of the criteria under clause 42,
but strictly adhere to the RBI's rules. These banks are free to keep their CRR funds on hand
as no compulsion has been made by the RBI to deposit them in the Reserve Bank of India.
These banks have reserve capital of less than 5 lakh rupees. These banks may not have access
to certain privileges and benefits enjoyed by scheduled banks, such as membership in the
clearinghouse, obtaining a refinancing facility from the RBI, etc. The bank must be a
company, rather than a sole proprietorship or partnership.
PRODUCT PROFILE

The thoughtfully designed products and services of the Indian Overseas Bank can be listed as
given below:

Personal Banking

 Saving bank

An Indian Overseas Bank (IOB) savings account is a deposit account that allows
customers to save money and earn interest. IOB offers a variety of savings accounts,
including the Regular Savings Account and the IOB Savings Bank Defcom

 Current account

An Indian Overseas Bank (IOB) current account is a bank account that allows
customers to conduct a large number of transactions. It's often used by business
owners, traders, and service providers

 Term deposit

Moneys deposited for specific periods come under the category of Term Deposits. The
Depositor invests the money with the bank for a specific period to mature on a
specific future date as required by the depositor. Term deposits can be made for
periods ranging from 7 days to one hundred and twenty months. In case of deposits in
the name of minors the deposits can be more than 120 months provided the bank is
convinced that it is necessary to do so for the protection of minor’s interest.

 Retail loans

Retail loans from the Indian Overseas Bank (IOB) are loans for personal use, such as
home loans, personal loans, and vehicle loans. They are intended to help people with
personal financial needs, rather than business needs
  Home loans and mortgages

Indian Overseas Bank (IOB) offers a variety of home loan solutions tailored to meet
your unique needs. Whether you're planning to buy a new home, construct your dream
house, or renovate your existing property, IOB's housing loan products like Subha
Gruha, Subha Gruha Top-Up, and the Home Improvement Scheme are designed to
fulfill your aspirations.

 Depository services

Depository services include checking and savings accounts, and transfer of funds (e-
payments through online banking or debit cards). A number of regulations affect the
rules governing these services and protect your rights to receive timely information
about fees and interest paid.

 IOB Fine Gold

The Indian Overseas Bank (IOB) offers a variety of gold-related services, including
gold loans, gold deposit schemes, and the sale of Indian Gold Coins

 International VISA Cards

An IOB International Visa Card is a debit or credit card from Indian Overseas Bank
(IOB) that can be used for transactions outside of India

Corporate Banking

 Micro Small and Medium Enterprises (MSME)

The Indian Overseas Bank (IOB) MSME scheme provides loans to Micro, Small, and
Medium Enterprises (MSMEs). These loans can be used for business expansion, new
ventures, working capital, and more

 IT & ITs BPO

 Indian Information Technology (IT) and Ites-BPO sector playing vital role in the
growth of our countrys economy. The growth of the Industry in India is more than
28%.Due to liberalization of Indian economic policy, the growth of IT industry is in
commendable position. Due to cost advantage, availability of skilled manpower,
quality services are the main reasons for the growth of IT industry in India.Indian
Information Technology (IT) and Ites-BPO sector playing vital role in the growth of
our countrys economy. The growth of the Industry in India is more than 28%.Due to
liberalization of Indian economic policy, the growth of IT industry is in commendable
position. Due to cost advantage, availability of skilled manpower, quality services are
the main reasons for the growth of IT industry in India.

Rural

 IOB's commitment for social causes

IOB has been committed to and involved in various social causes, the most prominent
being women empowerment - the Sakthi IOB Chidambaram Chettiar Memorial Trust
and IOB's Promotion of the Agricultural Seed Bank. The Sakthi IOB Chidambaram
Chettiyar Memorial Trust is a public charity trust initiated by the Bank and its Staff
Representative organisations in February 1996 in memory of Shri
M.Ct.M.Chidambaram Chettiyar, the founder of IOB. The objective of this scheme is
to enable women in the lower strata of society to equip themselves with the essential
skills and knowledge required for embarking on a career of their choice.

 Agricultural short time loans

IOB provides KRISHI SARAL loan it covers all Agri activities except Food & Agro
units.

Their objective is to provide security backed scheme for Individuals/firms/companies

engaged in agricultural activities to extend hassle free flow of credit.

 Financial inclusion

Financial Inclusion, broadly defined, refers to universal access to a wide range of

financial services at a reasonable cost. These include not only banking products but
 also other financial services such as insurance and pension products. Financial
inclusion broadens the resource base of the financial system by developing a culture
of savings among large segment of rural population and plays its own role in the
process of economic development. Further, by bringing low income groups within the
perimeter of formal banking sector; financial inclusion protects their financial wealth
and other resources in exigent circumstances. Financial inclusion also mitigates the
exploitation of vulnerable sections by the usurious money lenders by facilitating easy
access to formal credit.

 Agri business consultancy

IOB provides various loans to agriculture business and they have been classified into
three major heads like government sponsored schemes, short term credit schemes ,
special credit schemes.

NRI Accounts

 Non-Resident Ordinary (NRO)

When a resident Indian becomes non resident, the existing account in India will be
designated as NRO account. The accounts can be in the form of savings, current or
term deposits. NRIs and PIO can maintain NRO account for bonafide local banking
transactions denominated in Rupees, not involving any violation of the provisions of
FEMA and rules and regulations made thereunder.

 Resident Foreign Currency Account (RFC)

A Resident Foreign Currency account in India can be maintained by a Non-resident

Indian who has returned home for permanent settlement, after staying abroad for a
minimum period of one year. An RFC account can be opened without any regulatory
approval from the Reserve Bank of India. RFC accounts can be maintained in
USD/EUR/GBP/JPY/AUD/CAD in the form of Savings / Term Deposit

 NRI home loan scheme

 Indian Overseas Bank (IOB) offers you the option of availing a NRI home loan. The
lender offers the loan at affordable interest rates with the repayment period going up
to a maximum of 15 years.

 NRI remittances

With Indian Overseas Bank, you have multiple choices to remit money to India. We
process remittances received by SWIFT (also known as wire transfer)/web based
remittances/Electronic Fund Transfers/Drafts and Perosnal cheque.SWIFT is an easy
and fastest way to transfer money to India from abroad. It is a direct, bank-to-bank
transaction. The remitter has to approach his banker in his country with the request for
remittance. The remitting bank then sends the payment instruction (SWIFT MT 103)
to IOB for payment to the beneficiary The instruction is processed and funds made
available to the recipient intended.

 Forward cover

It is a feature generally utilized by Indian residents who are engaged in exports and
imports of goods. This enables them to be aware of the risks involved in the trade
transactions and cover the same by booking Forward Sales/Purchases contract as the
case may be. However, RBI guidelines have allowed this service to be extended to
NRIs also. It allows them to balance the credits and debits of their FCNR(B)/NRE
accounts.

 IOB Expo Gold Card

Indian Overseas Bank has formulated Gold Card Scheme for its exporter clients based
on the scheme drawn up by Reserve Bank of India. The scheme aims to ensure easy
availability of export credit on better terms to credit worthy exporters with good track
record. The Gold Card to be offered by IOB will be known as "IOB Expo Gold
Card" .

Forex

 Authorized dealer branches

 To find Indian Overseas Bank (IOB) branches authorized as forex dealers (AD
branches) in Chennai, visit the IOB website, search for "AD Branches" under the
"FOREX" section, and utilize the branch locator tool to find the nearest authorized
branch.

 Forex collection services

Indian Overseas Bank (IOB) offers Forex collection services, including assistance
with inward remittances, export bills for collection, and other foreign exchange
transactions, with a focus on serving exporters, importers, and Non-Resident Indians
(NRIs).

 Overseas cash

Indian Overseas Bank (IOB) offers various services for overseas cash transactions,
including remittances to India via SWIFT and other methods, Foreign Currency Non-
Resident (FCNR) accounts, and debit/credit card usage for international transactions.

Government Business

 E-Payment of direct taxes

IOB Direct Tax Payment refers to the process of paying direct taxes, such as income
tax, TDS, corporate tax, etc., directly to the government through the Indian Overseas
Bank (IOB) using their net banking facility.

 Pension payment scheme

Indian Overseas Bank (IOB) offers the Atal Pension Yojana (APY), a pension scheme
for citizens of India, particularly focusing on the unorganized sector workers,
providing a guaranteed minimum pension of Rs. 1,000 to Rs. 5,000 per month at age
60, depending on contributions.

 Sales tax collections

 Indian Overseas Bank (IOB) is authorized to collect sales tax (now GST) in several
states, including Uttar Pradesh, Maharashtra, Gujarat, Delhi, and Kolkata, and also
offers online collection of VAT in specific states like Delhi-NCT, Maharashtra,
Puducherry, Tamil Nadu, and Uttar Pradesh.

 Senior citizen scheme 2004

The Senior Citizen Savings Scheme (SCSS), introduced by the Government of India
in 2004, is a government-backed savings scheme designed to provide senior citizens
with a regular income stream and tax benefits.
RESEARCH METHDOLOGY

Research in common parlance refers to a research for knowledge. It is an academic activity

and as search the term should be used in technical sense. It is an set of sexentific
investigation. The search of knowledge through objective and systematic method of finding
solution to a problem is research.

According to Clifford woody "Research comprises defining and redefining problems,

Semulating hypothesis of suggested solutions, collective, organizing and evaluating data,
making deductions and reaching conclusions and at last carefully testing the conclusion to
determine whether they fit the formulating hypothesis.

RESEARCH DESIGN:

The research design is purely and simply the frame work or plan for a study, that guides the
collection or analysis of data research design has been considered a highly specialized tool
for success of a research programmed. This project is dont through" Analytical Research"

ANALYTICAL RESEARCH:

facts or information already available. This data is already Analytical Research available in
the bank, with the help of that data calculation is done and the performance of the banks is
analyzed.