Commerce Project 1

Topic
Visit a commercial bank. Find out the procedure to open a savings account. Find out the
details of various agencies and general utility services provided by the bank.

Introduction
Meaning of bank:
A bank is a financial institution that provides various services, including accepting deposits,
lending money, and facilitating transactions. Banks play a crucial role in the economy by
helping individuals and businesses manage their finances, offering investment opportunities,
and supporting economic growth.
Types of banks:
Banks come in different types, each serving distinct financial needs and sectors. Here are the
main categories:
1. Commercial Banks
 Serve individuals and businesses with services like savings accounts, loans, and credit
cards.
 Examples: State Bank of India (SBI), HDFC Bank.
2. Central Banks
 Regulate and oversee the monetary system, control money supply, and manage
interest rates.
 Example: Reserve Bank of India (RBI).
3. Investment Banks
 Specialize in financial advisory, mergers and acquisitions, and securities trading.
 Example: Goldman Sachs, Morgan Stanley.
4. Cooperative Banks
 Operate for specific communities or groups, often at lower interest rates.
 Example: Punjab State Cooperative Bank.
5. Regional Rural Banks (RRBs)
 Focus on rural development, providing financial assistance to farmers and small
businesses.
 Example: Gramin Bank.
6. Development Banks
 Fund long-term economic development projects, infrastructure, and industries.
 Example: Industrial Development Bank of India (IDBI).
7. Payment Banks
 Offer limited banking services like deposits and money transfers, but do not issue
loans.
  Example: Paytm Payments Bank.
8. Foreign Banks
 Operate in India but are headquartered abroad.
 Example: Citibank, HSBC.
Advantages of bank:
Banks provide several advantages that help individuals, businesses, and the economy
function smoothly. Here are some key benefits:
1. Safety & Security
 Banks offer a secure place to store money, protecting it from theft and loss.
 Deposits are often insured, ensuring protection against bank failures.
2. Convenient Transactions
 Digital banking services like online transfers, mobile banking, and ATMs make
money management easier.
 Banks facilitate domestic and international transactions efficiently.
3. Credit & Loans
 Provide various loans (home, business, education, personal) with structured
repayment plans.
 Help individuals and companies fund investments and growth.
4. Investment & Wealth Growth
 Offer savings accounts, fixed deposits (FDs), and investment options to grow wealth
over time.
 Provide guidance on mutual funds, stocks, and retirement planning.
5. Economic Development
 Banks support industries, businesses, and startups by funding projects and expansions.
 They contribute to national development through financial inclusion and
infrastructure financing.
6. Regulated & Trusted System
 Operate under government and central bank regulations to maintain stability and
transparency.
 Protect customers with legal frameworks and financial monitoring.
7. Employment & Business Growth
 The banking sector creates jobs and fosters entrepreneurship.
 Businesses rely on banks for cash management, trade financing, and risk
mitigation.
8. Financial Planning & Advisory
 Offer expert financial guidance and personalized services.
 Help customers plan for future expenses, investments, and retirement.
Disadvantages of bank:
While banks offer many benefits, they also come with certain disadvantages. Here are some
key drawbacks:
1. High Fees & Charges
 Banks often impose service fees, transaction charges, loan processing fees, and
penalties for late payments.
 Interest rates on loans can be high, making borrowing expensive.
2. Limited Accessibility
 Banking services may not be easily available in remote or rural areas.
 Some financial products have strict eligibility requirements, making them inaccessible
to certain groups.
3. Risk of Fraud & Cyber Threats
 Online banking exposes users to risks like identity theft, hacking, and phishing
scams.
 Banking systems are sometimes targeted by cyberattacks.
4. Low Returns on Savings
 Savings accounts and fixed deposits (FDs) often offer low interest rates compared to
other investment options.
 Inflation can reduce the actual value of money over time.
5. Lengthy Loan Approval Process
 Borrowers must go through complex documentation and credit checks, leading to
delays.
 Banks may reject applications due to strict loan policies.
6. Potential for Bank Failures
 Although rare, financial institutions can face insolvency or liquidity crises.
 Customers might lose access to their funds during financial instability.
7. Overdependence on Banks
 Businesses and individuals relying heavily on bank loans may struggle during
economic downturns.
Commercial Bank
Functions of commercial bank:
Commercial banks perform several essential functions that support individuals, businesses,
and the overall economy. Here are their key roles:
1. Accepting Deposits
 Offer savings accounts, current accounts, fixed deposits (FDs), and recurring
deposits to store money securely.
 Provide interest on deposits, helping customers grow their funds.
2. Providing Loans & Credit
 Offer personal loans, business loans, home loans, and credit facilities.
 Charge interest on borrowed funds, which is a primary source of income for banks.
3. Facilitating Payments & Transactions
 Enable online banking, UPI payments, fund transfers, debit/credit card
transactions.
 Provide cheques, demand drafts, and electronic clearing services for seamless
payments.
4. Foreign Exchange & International Trade Services
 Handle currency exchange for international transactions.
 Support businesses with letters of credit and foreign trade financing.
5. Wealth Management & Investment Services
 Offer mutual funds, insurance, pension schemes, and stock investments.
 Provide financial planning advice and customized wealth management solutions.
6. Credit Creation & Economic Growth
 Issue loans and credit, increasing money supply and boosting business expansion.
 Play a crucial role in capital formation and economic development.
7. Risk Management & Financial Stability
 Assess credit risks, ensuring responsible lending.
 Implement security measures to protect customer funds and prevent fraud.
8. Providing Safe Deposit Services
 Offer lockers for storing valuable documents and assets securely.
Features of commercial bank:
Commercial banks have several distinctive features that make them essential for individuals,
businesses, and the economy. Here are some key characteristics:
1. Profit-Oriented
 Operate primarily to generate profits through interest, fees, and financial services.
2. Accept Deposits
 Provide various deposit options like savings accounts, fixed deposits (FDs), and
current accounts to store money securely.
3. Loan & Credit Facilities
 Offer personal loans, business loans, mortgages, and credit cards, charging
interest to borrowers.
4. Payment & Transaction Services
 Enable online banking, fund transfers, cheque clearing, UPI payments, and
mobile banking for convenience.
5. Foreign Exchange Services
 Handle currency exchange and international trade financing, supporting global
commerce.
6. Wealth Management & Investment Services
 Offer financial products like mutual funds, insurance, pension plans, and advisory
services for asset growth.
7. Liquidity Provider
 Ensure the smooth flow of money in the economy by managing cash reserves and
circulating funds.
8. Regulated by Central Banks
 Operate under strict regulations set by a central bank (e.g., Reserve Bank of India) to
maintain financial stability.
9. Financial Risk Management
 Assess credit risks, prevent fraud, and implement security measures to protect
customer funds.
10. Digital & Technological Integration
 Adopt ATM services, mobile banking apps, AI-driven customer support, and
digital financial solutions for efficient operations.
Savings Account
Advantages of savings account:
A savings account offers several benefits, making it a valuable financial tool for individuals
looking to manage their money efficiently. Here are its key advantages:
1. Safe & Secure Storage
 Keeps your money protected from theft and loss.
 Deposits are insured by regulatory authorities, ensuring financial security.
2. Earns Interest
 Your savings grow over time as banks offer interest on deposited funds.
 Compound interest helps maximize earnings.
3. Easy Access to Funds
 Withdraw or transfer money conveniently through ATMs, online banking, or branch
services.
 Unlike fixed deposits, savings accounts allow flexible withdrawals.
4. Digital & Mobile Banking Services
 Enable online transactions, mobile banking, UPI payments, and bill payments
anytime, anywhere.
 Offers seamless integration with financial apps.
5. Encourages Saving Habit
 Helps individuals build financial discipline by keeping funds separate from spending
accounts.
 Ideal for setting aside money for emergencies and future goals.
6. Linked Services & Benefits
 Can be linked to investment accounts, loans, and automated bill payments.
 Some banks offer cashback, discounts, or premium benefits.
7. Low Maintenance & No Lock-in Period
 No restrictions on deposits or withdrawals, unlike fixed deposits.
 Minimum balance requirements may vary, but basic accounts have zero or low
minimum balance options.
8. Automatic Fund Transfers
 Allows direct debit for bills, loan payments, and investments, simplifying money
management.
Disadvantages of savings account:
Savings accounts have their drawbacks, despite being a safe and accessible way to store
money. Here are some key disadvantages:
1. Low Interest Rates – Compared to other investment options, savings accounts offer
relatively low returns, which may not keep up with inflation.
2. Limited Transactions – Many banks impose restrictions on the number of
withdrawals or transfers per month, which can be inconvenient.
3. Fees and Charges – Some banks charge maintenance fees, penalties for falling below
the minimum balance, or transaction fees.
4. Opportunity Cost – Money in a savings account could potentially earn higher returns
if invested in stocks, mutual funds, or fixed deposits.
5. Inflation Impact – The interest earned may not be sufficient to counteract inflation,
leading to a gradual decrease in purchasing power.
Eligibility and savings features:
Eligibility and savings features vary depending on the type of savings account or scheme.
Here are some general guidelines:
Eligibility Criteria
 Age Requirement: Most savings accounts are available to individuals of all ages, but
some specialized accounts (e.g., Senior Citizen Savings Scheme) require a minimum
age of 60 years.
 Residency: Some savings schemes are restricted to Indian residents, while others may
allow Non-Resident Indians (NRIs) to open accounts.
 Minimum Deposit: Different accounts have varying minimum deposit requirements,
ranging from ₹500 for basic savings accounts to ₹30 lakh for senior citizen schemes.
Savings Features
 Interest Rates: Savings accounts typically offer interest rates between 3% and 4%,
while government-backed savings schemes provide higher returns (e.g., 8.2% for
Senior Citizen Savings Scheme).
 Tax Benefits: Certain savings schemes, like Public Provident Fund (PPF) and
National Savings Certificate (NSC), offer tax deductions under Section 80C of the
Income Tax Act.
 Withdrawal Flexibility: Some accounts allow unlimited withdrawals, while others
impose restrictions (e.g., fixed deposit accounts have lock-in periods).
 Security: Government-backed schemes ensure safety and guaranteed returns, making
them ideal for risk-averse investors.
Documents required for opening a savings account:
To open a savings account, banks require several documents for identity verification and
compliance with regulations. Here’s a detailed breakdown:
1. Identity Proof (Any one of the following)
These documents confirm your identity and must be government-approved:
 PAN Card – Essential for financial transactions.
 Passport – Valid for both identity and address proof.
 Driving License – Must be issued by the transport authority.
 Voter ID – Recognized for identity verification.
 Aadhaar Card – Widely accepted for KYC compliance.
 Ration Card – Some banks accept this as identity proof.
2. Address Proof (Any one of the following)
These documents validate your residential address:
 Passport – Serves as both identity and address proof.
 Utility Bill – Electricity, water, gas, or telephone bill (less than 2 months old).
 Bank Passbook or Account Statement – Issued by a recognized bank.
 Letter from a Gazetted Officer – Official verification of residence.
 Voter ID – Also serves as address proof.
 LIC Policy/Receipt – Some banks accept this as proof.
3. Additional Requirements
 Two Passport-Size Photographs – Required for account setup.
 Duly Filled Account Opening Form – Available at the bank or online.
 Signature Specimen – Some banks require a signature verification.
4. Special Cases
 Relaxed KYC Accounts – Some banks allow account opening with minimal
documentation, especially for financially weaker sections.
 Zero-Balance Accounts – Banks like SBI, ICICI, and HDFC offer accounts with no
minimum balance requirement.
  Digital Account Opening – Many banks allow online account opening with Aadhaar-
based e-KYC.
Case Study
Bank of Baroda:
Bank of Baroda (BoB) is one of India's largest public sector banks, headquartered in
Vadodara, Gujarat. Founded in 1908 by Maharaja Sayajirao Gaekwad III, it has grown
into a global banking institution with a strong presence in India and overseas.
BoB offers a wide range of financial services, including retail banking, corporate banking,
investment banking, wealth management, and insurance. It was nationalized in 1969 and
is now a government-owned entity. With over 9,693 branches and 10,033+ ATMs, it serves
millions of customers worldwide.
Benefits:
Opening a savings account with Bank of Baroda comes with several benefits, making it a
great choice for managing your finances. Here are some key advantages:
 Competitive Interest Rates: Earn interest on your savings, with rates ranging from
2.75% to 4.50%, depending on the balance.
 Easy Access & Convenience: Enjoy internet banking, mobile banking, and SMS
alerts for seamless transactions.
 Multiple Withdrawal Options: Access your funds through ATMs, debit cards, and
online banking.
 Nomination Facility: Secure your savings by nominating a beneficiary.
 No Hidden Costs: Transparent fee structure with minimal charges.
 Additional Banking Services: Get a passbook, cheque book, and credit card along
with your account.
 Auto Debit & Credit: Set up automatic payments and deposits for hassle-free
financial management.
Types of savings accounts in Bank of Baroda:
Bank of Baroda offers a variety of savings accounts tailored to different customer needs.
Here are some of the main types:
 Baroda Advantage Savings Account – A standard savings account with competitive
interest rates and digital banking facilities.
 Baroda Super Savings Account – Offers enhanced benefits and privileges for high-
value customers.
 Baroda Salary Accounts – Includes different salary packages for government
employees, military personnel, and corporate employees.
 Baroda Champ Account – Designed for minors to encourage early financial literacy.
 Baroda Jeevan Suraksha Savings Account – Provides insurance benefits along with
savings features.
 Baroda Mahila Shakti Savings Account – Specially designed for women, offering
exclusive benefits.
 Baroda Senior Citizen Privilege Scheme – Tailored for senior citizens with higher
interest rates and additional perks.
 Baroda Pensioners Savings Account – Specifically for pensioners, ensuring easy
access to funds and benefits.
Procedure:
Offline:
To open a savings account in Bank of Baroda offline, follow these steps:
1. Visit the Nearest Branch – Go to your local Bank of Baroda branch and request an
account opening form.
2. Fill Out the Form – Choose the type of savings account you want and complete the
form with accurate details.
3. Provide KYC Documents – Submit required documents, including:
o Identity Proof (Aadhaar card, PAN card, Passport, Voter ID, etc.)
o Address Proof (Utility bill, Aadhaar card, Passport, etc.)
o Two Passport-Size Photographs
4. Initial Deposit – Make the minimum deposit required for the account type.
5. Verification Process – Bank officials will verify your documents and details.
6. Receive Account Details – Once verified, you will receive your passbook, debit
card, and account number.
Online:
We can open a Bank of Baroda savings account online through their digital banking
platform. Here’s the step-by-step process:
1. Visit the Official Website – Go to Bank of Baroda's savings account page.
2. Select ‘Open a Savings Account Digitally’ – This option is available on their
website or mobile app.
3. Agree to Terms & Conditions – Read and accept the terms before proceeding.
4. Enter Your Details – Provide your name, contact information, PAN card, and
Aadhaar card numbers.
5. Generate OTP – Verify your mobile number using the OTP sent to your registered
number.
6. Complete Video KYC – A bank official will verify your details through a video call.
7. Account Activation – Once verification is complete, your account will be activated,
and you can start using it.
General utility services:
Bank of Baroda offers a range of general utility services to enhance customer convenience
and financial security. Here are some of the key services:
 Safe Deposit Lockers – Secure storage for valuables like jewelry and important
documents.
 Fund Transfers – Options like NEFT, RTGS, IMPS, and UPI for seamless money
transfers.
 Demand Drafts & Cheques – Issuance of demand drafts and cheque facilities for
payments.
 Foreign Exchange Services – Currency exchange and remittance services for
international transactions.
 E-Statements & Passbooks – Digital and physical account statements for easy
tracking.
 Online Bill Payments – Pay utility bills, taxes, and other expenses through digital
banking.
 Insurance & Investment Services – Access to life insurance, mutual funds, and
fixed deposits.
 Traveler’s Cheques & Forex Cards – Convenient options for international travelers.
 Government Schemes & Subsidies – Assistance with schemes like PMJDY, Atal
Pension Yojana, and more.
Agency functions:
Bank of Baroda performs several agency functions on behalf of its customers, ensuring
smooth financial transactions and services. These include:
 Collection of Payments – Collecting cheques, bills, dividends, interest, salaries,
pensions, and other payments for customers.
 Fund Transfers – Remitting funds through demand drafts, mail transfers,
telegraphic transfers, and electronic payments.
 Investment Services – Buying and selling shares, debentures, and securities on
behalf of customers.
 Standing Instructions Execution – Handling periodic payments like rent, insurance
premiums, utility bills, and taxes.
 Trustee & Executor Services – Acting as a trustee, executor, or administrator for
estates and wills.
 Loan & Issue Management – Assisting in public and private loan negotiations,
underwriting, and issuing securities.
 Safe Custody Services – Providing safe deposit vaults for valuables and important
documents.
Interest rate:
The interest rate for savings accounts in Bank of Baroda varies based on the balance
maintained. As of the latest update:
 Up to ₹1 lakh – 2.75% per annum
 Above ₹1 lakh to ₹10 lakh – 2.85% per annum
 Above ₹10 lakh – 3.35% per annum
Interest is calculated on a daily balance basis and credited quarterly.
Mobile banking services:
Bank of Baroda offers a comprehensive range of mobile banking services through its bob
World app, designed for secure and convenient banking. Here are some key features:
 Fund Transfers – Send money via NEFT, RTGS, IMPS, and UPI.
 Account Management – Check balances, view statements, and manage transactions.
 Bill Payments & Recharges – Pay utility bills, mobile recharges, and FASTag top-
ups.
 Card Services – Manage debit and credit cards, including blocking and setting limits.
 Investment & Insurance – Invest in mutual funds, fixed deposits, and government
schemes.
 Loan Services – Apply for home, personal, and auto loans digitally.
 Shopping & Travel – Book flights, hotels, and shop securely within the app.
 Secure Banking – Enhanced security features like biometric login and OTP
verification.
SWOT Analysis:
Strengths
 Diversified Branch Network – One of India's largest banks with 8,243 branches and
a strong international presence.
 Comprehensive Banking Services – Offers a wide range of financial products,
including retail, corporate, and investment banking.
 Government Trust & Accounts – Manages several government accounts, including
pension distributions.
 Strong Financial Position – Maintains a high capital adequacy ratio and stable
revenue growth.
Weaknesses
 Limited Market Share Growth – Faces intense competition from private and
foreign banks.
 International Presence Constraints – Not as globally dominant as some
international banks.
Opportunities
 Expansion in Rural Areas – Potential to increase financial inclusion in underbanked
regions.
 Digital Banking Growth – Investing in AI-driven banking solutions and fintech
collaborations.
 Youth Engagement – Capturing younger customers through mobile banking and
digital services.
Threats
 New Banking Licenses – Entry of new players in the banking sector could impact
market share.
 Cybersecurity Risks – Vulnerability to data breaches and online fraud.
 Foreign Bank Competition – Global banks expanding in India pose a challenge.

Conclusion
Visiting the bank provided a comprehensive understanding of the indispensable role
commercial banks play in modern financial systems. From offering seamless savings account
operations to providing diverse agency and utility services, banks serve as the backbone of
economic transactions, catering to both individuals and businesses alike. Their ability to
process fund transfers, investment solutions, trust services, and payment collections
highlights their crucial involvement in maintaining financial stability. Additionally, through
advancements in digital banking, mobile apps, and AI-powered financial tools, banks
continue to evolve, ensuring accessibility and efficiency for customers worldwide.
Beyond basic account management, commercial banks contribute to financial security by
offering loan services, insurance policies, safe deposit lockers, and foreign exchange
assistance, proving their versatility in meeting varied financial needs. Their active
participation in supporting government schemes and facilitating financial inclusion further
reinforces their pivotal role in economic development.
Understanding the services offered by commercial banks allows individuals to make
informed financial decisions, optimize their savings, and leverage banking utilities for long-
term financial planning. As technology continues to reshape banking, selecting the right
financial institution ensures not only security but also financial growth. A well-chosen bank
is more than a transactional entity—it is a strategic partner in shaping financial success.