K. G.

JOSHI COLLEGE OF ARTS

AND
N. G. BEDEKAR COLLEGE OF
COMMERCE, THANE (W.)
Assignment III on
Importance and process of banking
service and process of banking as a
service
Subject: Service Sector Management.

Class: T. Y. B. M. S.

Div: A

Roll No: 59

Semester: V

Prepared by

RISHIKESH S. GARUDE
Academic Year: 2011 2012

 Introduction:
Banking in India originated in the last decades of the 18th
century. The first banks were The General Bank of India, which
started in 1786, and Bank of Hindustan, which started in 1790; both
are now defunct. The oldest bank in existence in India is the State
Bank of India, which originated in the Bank of Calcutta in June 1806,
which almost immediately became the Bank of Bengal. This was one
of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras, all three of which were established
under charters from the British East India Company. For many years
the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank
of India, which, upon India's independence, became the State Bank of
India.
Bank is an institution which deals in money and credit. It accepts
deposits from the public and grants loans and advances to those who
are in need of funds for various purposes. Banking is an activity which
involves acceptance of deposits for the purpose of lending or investing.
In addition to accepting deposits and lending funds, banking also
involves providing various other services along with its main banking
activity. These are mainly agency services, but include several general
services as well. A banker is one who undertakes banking activities,
accepting deposits and lending money for different purposes. The
Banking Regulation Act, 1949 defines banking as an activity of
accepting funds from the public for the purpose of lending or
investment. The essential features of banking activities are as follows:-

i)
ii)

Accepting deposits from public.

Lending or investment of such deposits.
iii) Incidental to the activities of accepting deposits for lending or
investing,

banks undertake activities like

a) Promoting and mobilizing savings of the public;

b) Providing funds to trade and industry by way of discounting bills,
overdraft, cash credit facility, and transfer of funds from one place to
another;
c) Providing agency services to customers, such as collection of bills,
payment of insurance premium, purchase and sale of securities, etc., and
other general services, such as issue of travelers cheques, credit cards,
locker facility, etc. Money deposited with the bank is assured as far as its
safety is concerned. Further the depositor is allowed to withdraw it
whenever required. Banks allow interest on deposits. Such interest helps
in the growth of funds deposited with the bank. Thus the rate of interest
provided on deposits acts as an incentive to the depositors.
Importance of Banking Service Excellent customer service can improve the bank's ability to lure
affluent prospects, elevate the bank's profitability, lower bank operation
costs, and/or create greater customer loyalty. When a bank invests in
training its customer service staff, impressive results may follow.
Customer service management software, sometimes referred to as CSM
software, helps banks accomplish these goals.
Background on crisis and emerging lessons
Before I talk about the Committees response, I think it is
important to provide some context as to how we have arrived at where we

are today. From a supervisory perspective, the main contributing factors

that came together to form a perfect storm include:
1) A large amount of pre-crisis, system-wide liquidity, which led to
excessive risk taking.
2) Inadequate measures to contain leverage, maturity mismatches, risk
concentrations and the erosion of liquidity buffers over the credit
cycle.
3) Regulatory gaps, which left important segments of the financial
system under regulated;
4) Poor incentives in regulatory frameworks;
5) Poor underwriting standards;
6) Outsourcing of the due diligence process to the rating agencies; and
7) Fundamental shortcomings in financial institutions governance, of
which the current risk management shortcomings are just a
symptom.
These are now helping to stabilise the banking sector and financial
markets. But it is clear that we continue to face significant challenges as
real economic activity slows. The official sector, including supervisory
authorities, continues to work nationally and collectively to promote an
orderly deleveraging process. We also need to develop a coordinated
strategy to put the banking system on a sound footing over the longer
term.
Strengthening capital buffers I will start with the Committees initiatives to strengthen the
regulatory capital framework. I would note up front that regulators need
to be extremely cautious about adding to the already severe procyclical

behaviour in the market place. As such, we do not propose to raise global

minimum capital ratios during a crisis. However, banks need to ensure
they have adequate buffers above the current regulatory minimum that
reflect the nature of their portfolios and their exposure to a plausibly
severe economic downturn scenario.
Risk capture Let me begin with the issue of the risk capture of the Basel II
framework. The move to Basel II addresses many of the risks that were
not captured under the Basel I framework and helps reduce a number of
the perverse incentives that contributed to the crisis. The three pillars of
Basel II will help ensure that capital regulation is better positioned to
handle periods of rapid innovation and the new products that such periods
produce. Moreover, Basel II will ensure that all contractual exposures to
off-balance-sheet vehicles are subject to regulatory capital requirements.
Non-contractual exposures and implicit support will be addressed through
enhancements to the Pillar 2 framework.
Quality of capital Let me now turn to the issue of the quality of capital. The
Committee has been reviewing the key elements of Tier 1 capital and the
importance of ensuring strong core capital. A strong, high quality capital
base is critical for banks to be able to absorb losses and maintain lending
during periods of severe economic and financial stress. The Committee
will continue to provide global leadership on what the key elements of a
strong capital base should be, reflecting the lessons of recent
developments. Such an effort will ensure that both prudential and
competitive equity objectives are maintained in the future.
Strengthen liquidity risk management and buffers -

A second key building block of our strategy is raising the bar on

liquidity risk management and supervision.
BIS Review 138/2008 3
The Committee recently issued Principles for Sound Liquidity Risk
Management and Supervision. This guidance sets a higher soundness
standard for banks and supervisors to meet.
Strengthening risk management practices A third area of high priority focus is on strengthening governance
and risk management practices. Most of the risk management
shortcomings revealed by the crisis related to the failure to implement the
basics of firm-wide risk management. These points to weaknesses in
governance at the top of the firm. What can we do differently in the
future?
We will be issuing additional guidance on these topics around the new
year. We also need to do a much better job following up on our guidance
in a coordinated global manner.
Strengthening counterparty credit risk Another

building

block

of

the

Committees

strategy

is

strengthening counterparty credit risk practices. The Committee will

review the treatment of this risk under the three pillars of Basel II to
strengthen minimum capital, risk management, and transparency inside
and outside banks. This effort can help individual banks and the system
better withstand the failure of one or more major counterparties.
Strengthening bank resolution and the supervision of cross-border
banks -

Let me also say a few words on our work to strengthen bank

resolution practices and the supervision of cross border banks. The
Committees Cross-border Bank Resolution Group is assessing key issues
and global incompatibilities in the resolutions of global banking groups.
This effort should strengthen supervisory understanding of the challenges
that can arise when resolving a global banking institution and possible
ways to manage through them more effectively.
Strengthening the system-wide approach to supervision Finally, we need to strengthen the system-wide approach to
supervision, another building block for our strategy. It is important that
we move to embed institutional level supervision into a broader context
that seeks to make the overall financial system more resilient to stress.
Service of banking 1) Today's banking environment is the most volatile since the Great
Depression. Before attempting to sell, banks must build trust and
understanding their needs is paramount for success. In order to
respond to the needs of this rapidly changing market, the Integrity
Selling course has been customized for today's changing banking
market.
2) Grounded in a Statement of Values and Ethics, the Integrity Selling
3)
4)
5)
6)
7)

curriculum embodies the following.

Learning dynamics that influence attitudes and beliefs about selling.
A member needs-focused selling system AID, Inc.
How to identify and sell different Behavior Styles.
An eight-week follow-up course with accountability for application.
Principles-based content easily accepted and applied by all bank

employees
8) A corresponding coaching course for Managers and Supervisors
9) Integrity Selling Sales Process

10)

Integrity Selling is typically conducted by your in-house

facilitators, with strong management involvement and supportive

coaching throughout the process. Integrity trainers are available upon
request.
Banking Process as a service The Banking Process Models are banking industry-specific
processes based on Industry best practices around Corporate payments,
Loan processing, Mortgage Refinance, and such other focus areas. The
Process Models have been packaged with the relevant SCA libraries. In
this release, when the Process Models are imported in Web Sphere
Business Modeler, only the relevant SCA libraries are displayed. When
the Process Models are exported as Web Sphere Integration Developer
project interchange file, the file includes the SCA modules with the
required libraries. These Banking Process Models are developed in Web
Sphere Business Modeler Advanced and then packaged as a Web Sphere
Business Modeler Archive (.mar) file. The Banking Process Models
represent application scenarios using well-defined process flows. In
addition, they capture the relationship between roles, tasks, and data
flows. The Process Models are provided for each of the subject areas
mentioned earlier. These Banking Process Models include a high-level
process flow that explains various tasks represented in the form of sub
processes. In addition, Key Performance Indicator (KPI) and business
measures are defined for each process flow to enable monitoring of
business metrics.

 Banking Process Models provided with the Web Sphere Banking

Content Pack The Banking Process Models provided with the Web Sphere Banking
Content Pack are available in the following models.
Analysis Models
The Analysis Models are logical process models created by the
Business Analyst and implemented by an Information Technology (IT)
developer. These models are created in Web Sphere Business Modeler
using the Basic mode of model creation. These Process Models can be
used to understand the business process. The Process Models associate
business measures with the process and provides information that can be
monitored. The performance management aspects of a business that are
required for real-time business monitoring are described using business
measures. These aspects include metrics and Key Performance Indicator
(KPI).
Implementation Models
The Implementation Models are the Process Models that can be
exported into Web Sphere Integration Developer, and then deployed in
Web Sphere Process Server as the run time platform. These Process
Models are developed by an IT developer in Web Sphere Business
Modeler using the Web Sphere Process Server mode. The various
components that constitute Process Models also include a dependency to
the library project. The library projects are grouped based on functional
areas within the Banking domain and contain business services and
business service objects. These business services and business service
objects are used to map service tasks and message flows that exist
between tasks.

 Library Models
Web Sphere Business Modeler libraries include business service
and business service objects that are created from the SCA libraries that
are available in the Web Sphere Banking Content Pack. These Web
Sphere Business Modeler libraries can be used and reused across different
Web Sphere Business Modeler projects for process modeling.