indus bank -report on summer training

7/25/2019 Indus Bank -Report on Summer Training

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LOVELY PROFESSIONAL UNIVERSITY

DEPARTMENT OF MANAGEMENT

Report on Summer Training

Know Your u!tomer

"it# !pe$ia% re&eren$e to

INDUSIND 'ANK LTD(

Su)mitte* to Lo+e%, Pro&e!!iona% Uni+er!it,

Su)mitte* ),-

Name o& t#e !tu*ent....

Uni+er!it, ro%% no( ..........

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

/ALAND0AR NE" DEL0I GT ROAD

P0AG"ARA

PUN/A'


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DELARATION

This is to certify that the project report entitled Know Your Customer

with special reference to Indusind Bank Ltd. submitted in partial

fulllment of the degree of Master of Business Administration in Lovely

Professional niversity! "alandhar by Manpreet kaur ! university #oll no$

11303066 $has no part of it been submitted for the award of any other

degree and that the wor% has not been published in any journal! maga&ine

or boo%$

$

'ate( )*+),+-)./

0ignature

Place( 1anpur


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AKNO"LEDGEMENT

2t is my proud privilege to e3press a deep sense of gratitude to my

internship supervisor Mr$ 42T24 1MA# for his %een initiative! e3pert andvaluable guidance at every step$ 5ithout his guidance and support it

would not have been possible to come this far$

2 am very much than%ful for precious contribution of M#$ AB620671

06A#A4 8Branch manager of 2ndusind Ban% Ltd$9! 1anpur! who provided

his best help in my training$


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PREFAE

5e all %now that there are di:erent directions in the theoretical and

practical %nowledge di:ers in a great way through its operation and

implementation$Ban% is a nancial institution! which is a service oriented

as well as 2nterest orientedorgani&ation$

As a part of it 2 was really fortunate of getting an opportunity to pursue

my 0ummer Training in reputed! well established! fast growing and

professionally managed organi&ation li%e INDUIND B!NK LIMI"#D.

This report will mainly tal% about the 1;< 81now ;our


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E1EUTIVE SUMMARY

This 2nternship report covers the detail of 2ndusind Ban% Ltd$ practices

on 1;< 81now your customer9 proling! its variance and the veritable

solution of the problem$ 2 have wor%ed on the 0waroop 4agar Branch of

2ndusind Ban% Ltd$ And my responsibility was at the general ban%ing

section$ The main aims of my study are to give a brief idea about 1;.$.-$-))/$ Accordingly! the

?ones@Branches had been advised to comply with the #B2 directive as per

the action plan$ All the ?ones had conrmed compliance of the 1;< norms

for all the accounts based on branch conrmations and the nal certicate

was furnished by the Ban% to the #B2 in April! -))*

O'/ETIVE OF T0E STUDY

To get the insight of ban%ing and investment operation in an

organi&ations

Better understanding of how funds are managed in the

organi&ation

An overview of the advantages and disadvantages of the di:erent

sources of funds

An understanding of the factors governing the choice between

di:erent sources of funds$

A portfolio analysis helps optimi&e investments and locates

relatively productive business opportunities$


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Through the analysis! performance of the company over a period

of time can be evaluated thus plans for the future can be

formulatedTo get the insight of ban%ing and investment operation

in an organi&ations$

Intro*u$tion to

'ANKING INDUSTRY

Ban%ing operation of a company involves deposition of che=ues for

clearance and issuance of che=ues to various parties on the basis of the

ban% balance available with the company$ They are leaning on ban%s for

assistance in managing their payables! receivables and other treasury

functions$ The types of activities included in ban%ing department are(


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T#e mo!t $ommon term! t#at are re%ate* to *i&&erent t,pe! o& in+e!tment!-

'on*

A debt instrument! a bond is essentially a loan that you are giving to the

government or an institution in e3change for a pre+set interest rate paid

regularly for a specied term$ The bond pays interest 8a coupon payment9

while itDs active and e3pires on a specic date! at which point the total

face value of the bond is paid to the investor$ 2f you buy the bond when it

is rst issued! the face or par value you receive when the bond matures

will be the amount of money you paid for it when you made the purchase$

2n this case! the return you receive from the bond is the coupon! or

interest payment$ 2f you purchase or sell a bond between the time it is

issued and the time it matures! you may e3perience losses or gains on the

price of the bond itself.

Sto$2

A type of investment that gives you partial ownership of a publicly

traded company$

Mutua% &un*

An investment vehicle that allows you to invest your money in a

professionally+managed portfolio of assets that! depending on the specic

fund! could contain a variety of stoc%s! bonds! mar%et+related inde3es! and

other investment opportunities$

Mone, mar2et a$$ount

A type of savings account that o:ers a competitive rate of interest 8real

rate9 in e3change for larger+ than normal deposits$

E3$#ange.Tra*e* Fun* 4ETF5- ETF! are &un*!

0ometimes referred to as bas%ets or portfolios of securities E that trade

li%e stoc%s on an e3change$ 5hen you purchase an 7T! you are

purchasing shares of the overall fund rather than actual shares of the

individual underlying investments$
https://www.wellsfargo.com/financial-education/investing/investment-types/https://www.wellsfargo.com/financial-education/investing/investment-types/https://www.wellsfargo.com/financial-education/investing/investment-types/https://www.wellsfargo.com/financial-education/investing/investment-types/


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Intro*u$tion o& New Te$#no%ogie!. re*it

ar*!6De)it ar*!6Smart ar*!

Ban%s should pay special attention to any money laundering threats

that may arise from new or developing technologies including

internet ban%ing that might favor anonymity! and ta%e measures! if

needed! to prevent their use in money laundering schemes$ Many ban%s are engaged in the business of issuing a variety of

electronic cards that are used by customers for buying goods and

services! drawing cash from ATMs! and can be used for electronic

transfer of funds$ urther! mar%eting of these cards is generally

done through the services of agents$ Ban%s should ensure that

appropriate 1;< procedures are duly applied before issuing the

cards to the customers$ 2t is also desirable that agents are also

subjected to 1;< measures$

KNO" YOUR USTOMER 4KY5

The objective of 1;


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counterfeiting! bogus invoicing! ta3 evasion! misappropriation of public

funds and the li%e are converted into legitimate money through a series of

nancial transactions ma%ing it impossible to trace bac% the origin

o:unds$ Most often! such clandestine deals are the rst step in using theban%ing system to launder or clean up the cash obtained from trade of

illegal goods or services$ Gnce the money is placed within the Ban%! it

goes through an intricate web of transactions! better %nown as layering

that leave no audit trail$


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"0AT DOES KY MEAN8

1;< 81now ;our


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A person or entity that maintains an account and@or has a business

relationship with the ban%$ Gne on whose behalf the account is maintained 8i$e$! the benecial

owner9$

Beneciaries of transactions conducted by professional

intermediaries! such as 0toc% Bro%ers!


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5e have! thereafter! been time and again reiterating the importance

of e3tremely careful compliance of 1;< guidelines$

2n spite of these instructions and compliance certicates! instances

of non+compliance of 1;< norms have been pointed out by the

#B2Auditors and 2nternal@


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Gn account of fraudulent encashment of interest@ dividend warrants

ban%s were as%ed to not open accounts without proper introduction$

2n 'ecember .> Ban%s were as%ed to see% customer identication

while opening accounts including the obtaining of photographs of

customers$

2n April ./ the #B2 claried that photographs must be obtained for

both residents and non+ residents and for those authori&ed to

operate accounts$

The %ey principle of the %now your customer procedure should be

the identication of an individual@ corporate opening an account$

This should entail an introductory reference from an e3isting

account holder@ person %nown to the ban%$ The board of directors must have in place ade=uate procedures to

verify the bona de identication of individuals$ There should also

be processes to monitor transactions of a suspicious nature$

This instruction raised the re=uirement of giving PA4 to transactions

of #s$ *)!))) or more 8earlier it was #s$ .)!))) E August .NK9$

There must be good control systems plus audits and chec%s to

ensure the ban% adheres to its 1;< policies$

There should be a system at branch level to ensure that lists ofterrorist entities are circulated so that accounts@ transactions are not

opened@ consummated$

Transactions of a suspicious nature must be reported to the

appropriate authorities$2n May -))/! it was stated that information

collected from the customer for 1;< purposes should not be used for

cross selling$

2n recent years on account of the proliferation of ban%s and their

opening branches in locations that they had no branches before! it

has been diFcult to adhere strictly to 1;< guidelines$ 2n these

instances! introductions by prominent citi&ens and individuals %nown

to the ban% are considered acceptable$ The concern is usually with

respect to accounts introduced by outsiders retained for this

purpose who are remunerated on the basis of the number of

accounts they introduce$

2n 4ovember -))/! the #B2 issued comprehensive guidelines$ Thesereiterated that the objective of 1now ;our


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is to prevent ban%s from being used! intentionally or unintentionally!

by criminal elements for money laundering activities or for the

nancing of terrorism$ 1;< procedures also enable ban%s to %now @

understand their customers and their nancial dealings better whichin turn help them manage their ris%s prudently$ The guidelines are

applicable to foreign currency accounts @ transactions and to all new

accounts$

KY NORMS

Ban%s should frame their 1;< policies incorporating the following four %ey

elements(


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perceived ris% and %eeping in mind the re=uirements of PML Act!

-))- and instructions@guidelines issued by #eserve Ban% from time

to time

4ot to open an account or close an e3isting account where the ban% is

unable to apply appropriate customer due diligence measures i$e$

ban% is unable to verify the identity and @or obtain documents re=uired

as per the ris% categorisation due to non+cooperation of the customer

4on+ reliability of the data@information furnished to the ban%$


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diligence was carried out based on the ris% prole of the customer in

compliance with the e3tant guidelines in place$ 0atisfying about the

identity of the customer is a process that re=uires combination of the

following modalities(J ace to face with the customer mandatory! at his wor% place or

residence! including wal%+in customers$

J Perusal of various documents and verication with originals

J 0crutiny of documents for any signs of forgery

J 2n case of non+individual customers discreet en=uiries with mar%et

sources about the identity@ business should be made$

0ourcing 73ecutives should conduct an appropriate investigation to

establish the following(

8i9 The customerIs identity

8ii9 nderstand the customerIs prole! business and account activity

8iii9 2dentify relevant adverse information

5hile sourcing current accounts! the sourcing e3ecutive should ensure

that a specic nature of business is identied for the non+individual entity

and it should match with the rm e3istence proofs submitted and AG$

ew e3amples of generic nature of business are Trading! 2mport+ 73ports!

Manufacturing! Production! 0ervice provider!


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can happen easily and hence it is necessary to conduct enhanced due

diligence$ 2t is not prudent to open account of an individual with a rst

name without surname 8not a complete name li%e Manoj! #adha! Anil!

Oijay! etc9 as the chances of manipulation in identity in such casesincreases$ 6ence! as far as possible! such accounts with incomplete

names should not be opened$ Preferably! the applicant should have some

supporting document which provides the full name$ BM can certify process

application of individuals in rst name on case to case basis$


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etc$ 2n order to avoid customer inconvenience! under special

circumstances! the Ban% may rely on certain data@information available

with itself or with e3ternal reliable sources for the purpose of establishing

the identity to the customer.

Opening o& A$$ount!

Account opening has been totally centralised at


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Gngoing monitoring is an essential element of e:ective 1;< procedures$

Ban%s can e:ectively control and reduce their ris% only if they have an

understanding of the normal and reasonable activity of the customer so

that they have the means of identifying transactions that fall outside theregular pattern of activity$ 6owever! the e3tent of monitoring will depend

on the ris% sensitivity of the account$

Ban%s should pay special attention to all comple3! unusually large

transactions and all unusual patterns! which have no apparent

economic or visible lawful purpose$ The ban% may prescribe

threshold limits for a particular category of accounts and pay

particular attention to the transactions which e3ceed these limits$

Transactions that involve large amounts of cash inconsistent with

the normal and e3pected activity of the customer should

particularly attract the attention of the ban%$

Oery high account turnover inconsistent with the si&e of the balance

maintained may indicate that funds are being washed through the

account$ 6igh+ris% accounts have to be subjected to intensied

monitoring$ 7very ban% should set %ey indicators for such accounts! ta%ing note

of the bac%ground of the customer! such as the country of origin!

sources of funds! the type of transactions involved and other ris%

factors$ Ban%s should put in place a system of periodical review of

ris% categori&ation of accounts and the need for applying enhanced

due diligence measures$

Ban%s should ensure that a record of transactions in the accounts is

preserved and maintained as re=uired in terms of section .- of the

PML Act! -))-$ 2t may also be ensured that transactions of a

suspicious nature and @ or any other type of transaction notied

under section .- of the PML Act! -))-! is reported to the

appropriate law enforcement authority$

Ban%s should ensure that its branches


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6ave an internal monitoring system that has an inbuilt procedure

for reporting of large cash transactions and those of a suspicious

nature to controlling@ head oFce on a fortnightly basis$ 7arly

computeri&ation of branch reporting will facilitate promptgeneration of such reports$

#eport transactions of a suspicious nature to the appropriate law

enforcement authorities designated under the relevant laws

governing such activities$

6ave well laid down systems for free&ing of suspicious accounts$

There must be =uarterly reporting of suspicious accounts to the

audit committee of the board or the board of directors$

RISK MANAGEMENT

Interna% ontro% S,!tem!

Account opening is now totally centralised at


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Training o& !ta&& an* management

2t is crucial that all the operating and management sta: fully understand

the need for strict adherence to 1;< norms$ A session on 1;


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All the new products@0ervices and processes should be referred to 6ead E

Ban%ing Gperations! the Principal GFcer for evaluation of 1;


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+ 4ame of the company 8i9


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!&&ounts o, $roprietors+ip Con&erns

+ Proof of the name!

address and activity ofthe concern

S #egistration certicate 8in the case of a registered concern9

S


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2n respect of accounts where documents as per current 1;+)/! the Ban% opened their representative oFce in

'ubai$ They launched their debit card with the name 2nternational Power


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A forerunner in the mar%et place in terms of protability!

productivity and eFciency

7ngaged with all our sta%eholders and will deliver sustainable and

compliant returns

Mi!!ion

5e will consistently add value to all our sta%eholders and emerge as the

Hbest+in+classI in the chosen parameters amongst the comity of ban%s! by

doubling our prots! clients and branches within the ne3t three years$

Parent Company Hinduja Group

Category Banking, Financial Services

Sector Banking

Tagline/ Slogan We Care Dil Se

USP Giving a good value proposition to the customers

STP

Segment People who are wish to put their money in the anking


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sector

Target Group !arning individuals, Corporates, "#$s

Positioning Delivering what the customer needs

'oar* o& *ire$tor!

Mr$#omesh0obtihas joined the ban% as Managing 'irector R


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CompanySales

(Rs.Million)

CurrentPrice

Change(%)

P/E RatioMarket

Cap.(Rs.Million)

52!eek"igh/#o$

HDFC Bank 411355.34 812.15 -1.55 23.07 1956375.02 861/528

ICICI Bank NA 1355.60 -2.53 15.97 1567022.53 1590/759

Axis Bank 306411.55 1816.10 -2.35 13.77 856153.44 1990/764

Kotak a!in"#a

Bank

87671.15 858.75 -0.97 44.04 661774.79 972/588

In"$sin" Bank 82535.34 536.25 -0.18 18.88 282186.26 587/318

%&s Bank 99813.52 509.95 -3.68 13.07 211481.55 588/216

IN' ()s)a Bank 52052.19 626.15 -1.88 18.06 118791.90 723/406

F&"a* Bank 69460.81 113.90 -4.29 11.61 97429.99 136/44

C&nt$#ion Bk o+ ,$n 12685.30 41.40 0.00 52.93 78932.68 43/41

Ka#$#()s)a Bank 42424.29 471.25 -3.40 11.77 50559.01 510/298

o$t! In"ian Bank NA 32.10 -3.89 8.51 43208.33 35/19

Cit) nion Bank 21887.50 74.25 0.34 11.61 40298.46 79/38

Bank o+ a 13594.89 212.10 0.00 0.00 34222.35 214/207

tan"a#" C!a#t&" 90834.94 113.60 -1.26 0.92 27264.00 133/108

Ka#nataka Bank 41888.28 124.80 -4.51 7.56 23514.40 151/69

Future Out%oo2

The Ban% is witnessing a high growth phase as it is continuously e3panding

its geographical footprint across 2ndia$ A large number of branches has also

boosted its client ac=uisition and mobili&ed low cost


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The Ban% maintains its focus on loan boo%Is =uality which is reCected in

its declining 4et 4PA ratio$ 2t has a decent share of revenue coming from

its non+core fee based activities$ This non+core revenue is mainly

contributed by for my account my number$

Best 2nitiative of the year+ TA #oll of 6onour+ 2ndiaIs Best


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STRENGT0-

Bac%ing of the 6induja group

ives importance to customer e3perience

G:ers a large variety of products and service pan 2ndia

"EAKNESS-

Lags behind many ban%s in capital structure

ew no$ of branches across the country in comparison with leading

ban%s

OPPORTUINITIES-

Mobile Ban%ing! 2nternet ban%ing

73pansion into rural areas to ban% the unban%ed and underban%ed

'oing aggressive mar%eting in order to improve brand value

T0REATS-

4ew ban% licenses to be issued by #B2


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indus bank -report on summer training

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