Professional Documents
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The following are the steps taken in chronological order by the Government of India to Regulate Banking Institutions in the Country: 1949: Enactment of Banking Regulation Act. 1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore. The nationalization of banks in India was initiated in 1969 by Mrs. Indira Gandhi, the then prime minister. After the nationalization of banks, the branches of the public sector bank India rose to 11,000%. In1991, under the chairmanship of M. Narasimham, a committee was set up by his name which worked for the liberalization of banking practice. The country was flooded with foreign banks and their ATM stations. Efforts were being put to give a satisfactory service to customers. Phone banking and net banking were introduced. The entire system became more convenient and swift. Time is now given more importance than money. The commercial banking structure in India consists of: Scheduled Commercial Banks in India Unscheduled Banks in India Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act. As on 30th June, 1999, there were 300 scheduled banks in India having a total network of 64,918 branches. The scheduled commercial banks in India comprise of State bank of India and its associates (8), nationalized banks (19), foreign banks (45), private sector banks (32), cooperative banks and regional rural banks. "Scheduled banks in India" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a
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corresponding new bank constituted under section 3 of the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank". "Non-scheduled bank in India" means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank".
LIST OF MAJOR SCHEDULED URBAN CO-OPERATIVE BANKS 1. Saraswat Co-Op. Bank Limited, MUMBAI 2. Abhyudaya Co-Op. Bank Limited, MUMBAI 3. Bombay Mercantile Co-Op. Bank Limited. MUMBAI 4. Citizen Credit Coop. Bank Ltd. Dadar, MUMBAI 5. Andhra Pradesh Mahesh Co-Op Urban Bank Ltd. HYDERABAD 6. Cosmos Coop. Urban Bank Ltd. MUMBAI 7. Janakalyan Sahakari Bank Ltd., Bombay MUMBAI 8. Shamrao Vithal Co op Bank Ltd. MUMBAI 9. Punjab & Maharashtra Coop Bank Ltd. MUMBAI 10. Charminar Coop.Urban Bank Ltd. HYDERABAD 11. Dombivli Nagari Sahakari Bank Ltd. MUMBAI 12. Goa Urban Co-Op. Bank Limited. MUMBAI 13. Kapole Cooperative Bank Ltd., Bombay MUMBAI 14. Thane Janata Sahakari Bank Ltd. NAGPUR 15. Bharat Co-Operative Bank (Mumbai) Ltd. MUMBAI And many more.
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2.1 Internet banking: Internet banking Also referred to as E-banking, internet banking is changing the banking industry and is having the major effects on banking relationships. Almost every bank has a website today and provides for delivery of its products & services electronically. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service, and it is soon to become a norm from an exception due to the fact that it is the cheapest way of providing banking services. Using ebanking a customer can view account balances & statements, transfer funds between accounts, create FDs Online, request a DD, pay bills, order a cheque book, request stop payment on a cheque, apply for and access credit cards, apply for loans and most importantly gets easy access to complete information about various products and offers.
2.2 Phone Banking: It use an automated phone answering system with phone keypad response or voice recognition capability. This feature is known as Interactive Voice Response System (IVR). With the obvious exception of cash withdrawals and deposits, it offers virtually all the features of an automated teller machine: account balance information and list of latest transactions, electronic bill payments, funds transfers between a customer's accounts, etc. Some banks engage call centers to provide 24*7 services to their customers, via toll-free numbers. Others connect their customers to phone bankers, but in this case, the service is only available for particular hours for which phone bankers are available. Some make use of both i.e. toll-free numbers for some services, and phone bankers for the ones that require professional assistance. Telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, cheque book orders, debit card replacements, change of address, etc.
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2.3 Mobile Banking: (also known as M-Banking, m-banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). Mobile banking and Mobile payments are often, incorrectly, used interchangeably. The two terms are differentiated by their service provider-to-consumer relationship; financial institution-to-consumer versus commercial institution-to-consumer for mobile banking and payments, respectively. Mobile Banking involves using mobile devices gain to access financial services. Mobile payments on the other hand may be defined as the use of mobile devices to pay for goods or services either at the point of purchase or remotely. Bill payment is not considered a form of mobile payment because it does not occur in real time. The earliest mobile banking services were offered over SMS, a service known as SMS banking. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers. Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apples initial success with iPhone and the rapid growth of phones based on Google's Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device.
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3.2 INDIAN BANKING MARKET Indian banks have compared favorably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index for the same period. Policy makers have made some notable changes in policy and regulation to help strengthen the sector. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial and co-operative banks. However, the cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies. While bank lending has been a significant driver of GDP growth and employment, periodic instances of threatened the stability of the system Structural weaknesses such as fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could seriously weaken the health of the sector. Further, the inability of bank managements (with some notable exceptions) to improve capital allocation, increase the productivity of their service platforms and improve the performance ethic in their organizations could seriously affect future performance. The second unique feature of Indias banking sector is that the Reserve Bank of India has permitted commercial banks to engage in diverse activities such as securities related transactions, foreign exchange transactions and leasing activities.
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4.1 BANK RATEBank Rate is the oldest instrument of monetary policy. It is the rate at which RBI lends money to other banks or financial institutions or commercial banks. In other words it is the rate of interest which is charged by RBI on its advances to commercial banks. If bank rate is increased by RBI, then all banks will also hike their own lending rates such as deposit rates and prime lending rates etc. The bank rate policy seeks to affect both the cost and availability of credit. Bank Rate is the rate at which central bank of the country (in India it is RBI) allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Prime Lending Rate. This any revision in the Bank rate indicates could mean more or less interest on your deposits and also an increase or decrease in your EMI.
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4.2 REPO RATERepo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from RBI becomes more expensive. Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. It is known as repurchase rate. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate. If increases the repo rate it will increase general interest rates throughout the economy. If the repo rate for commercial banks increases they will pass this onto their own consumers. Higher interest rates have the effect of reducing spending, investment and economic growth. This will reduce inflationary pressures in the economy.
4.3 REVERSR REPO RATEA repo or repurchase Agreement is an instrument of money market. Usually reserve bank (federal bank in U.S) and commercial banks involve in repo transactions but not restricted to these two. Individuals, banks, financial institutes can also participate in repurchase agreement. Repo is a collateralized lending i.e. the banks which borrow money from Reserve Bank to meet short term needs have to sell securities, usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. In this way for the lender of the cash (usually Reserve Bank) the securities sold by the borrower are the collateral against default risk and for the borrower of cash (usually commercial banks) cash received from the lender is the collateral. Reserve bank charges some interest rate on the cash borrowed by banks. This rate is usually less than the interest rate on bonds as the borrowing is collateral. This interest rate is called repo rate. The lender of securities is said to be doing repo whereas the lender of cash is said to be doing reverse repo.
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In a reverse repo Reserve Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate. Borrower of funds is called as seller of repo and lender of funds is called as buyer of repo. When the term of the loan is for one day it is known as an overnight repo and if it is for more than one day it is called a term repo. The forward clean price of bonds is set at a level which is different from the spot clean price by adjusting the difference between repo rate and coupon earned on the security.
4.4 CASH RESERVE RATIOThe Reserve Bank of India (Amendment) Bill, 2006 has been enacted and has come into force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the Reserve Bank, having regard to the needs of securing the monetary stability in the country, can prescribe Cash Reserve Ratio (CRR) for scheduled banks without any floor rate or ceiling rate. [Before the enactment of this amendment, in terms of Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled banks between 3 per cent and 20 per cent of total of their demand and time liabilities]. RBI uses CRR either to drain excess liquidity or to release funds needed for the economy from time to time. Increase in CRR means that banks have less funds available and money is sucked out of circulation. Thus we can say that this serves duel purposes i.e. it not only ensures that a portion of bank deposits is totally risk-free, but also enables RBI to control liquidity in the system, and thereby, inflation by tying the hands of the banks in lending money. What is CRR (For Non Bankers): CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks dont hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivalent to holding cash with themselves.. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, when a banks deposits increase by Rs100, and if the cash reserve ratio is 9%, the banks will have to hold additional Rs 9 with RBI and Bank will be able to use only Rs 91 for investments and lending
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/ credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system.
4.5 STATUTORY LIQUIDITY RATIO Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of cash, or gold or govt. approved securities before providing credit to the customers. Here by approved securities we mean, bond and shares of different companies. Statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit. It is determined as percentage of total demand and percentage of time liabilities. Time Liabilities refer to the liabilities, which the commercial banks are liable to pay to the customers on there anytime demand. it is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved liabilities (deposits).It regulates the credit growth in India The liabilities that the banks are liable to pay within one month's time, due to completion of maturity period, are also considered as time liabilities. The maximum limit of SLR is 40% and minimum limit of SLR is 23%.In India, Reserve Bank of India always determines the percentage of Statutory Liquidity Ratio. There are some statutory requirements for temporarily placing the money in Government Bonds. Following this requirement, Reserve Bank of India fixes the level of Statutory Liquidity Ratio. At present, the minimum limit of Statutory Liquidity Ratio that can be set by the Reserve Bank is 23% AS ON AUGUST 2012 Objectives of SLR: The main objectives for maintaining the Statutory Liquidity Ratio are the following: Statutory Liquidity Ratio is maintained in order to control the expansion of Bank Credit. By changing the level of Statutory Liquidity Ratio, Reserve bank of India can increase or decrease bank credit expansion. Statutory Liquidity Ratio in a way ensures the solvency of commercial banks. By determining Statutory Liquidity Ratio, Reserve Bank of India, in a way, compels the commercial banks to invest in government securities like government bonds.
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If any Indian Bank fails to maintain the required level of Statutory Liquidity Ratio, then it becomes liable to pay penalty to Reserve Bank of India. The defaulter bank pays penal interest at the rate of 3% per annum above the Bank Rate, on the shortfall amount for that particular day. But, according to the Circular, released by the Department of Banking Operations and Development, Reserve Bank of India; if the defaulter bank continues to default on the next working day, then the rate of penal interest can be increased to 5% per annum above the Bank Rate. This restriction is imposed by RBI on banks to make funds available to customers on demand as soon as possible. Gold and Government Securities (or Gilts) are included along with cash because they are highly liquid and safe assets.
TERMINOLOGY Bank Rate Repo Rate Reverse Repo rate Cash Reserve Ratio(CRR) Statutory Liquidity Ratio
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S.No
Bank
1 2 3 4 5 6 7 8 9 10
State Bank of India ICICI Bank Limited Punjab National Bank Bank of Baroda Bank of India Canara Bank HDFC Bank Ltd IDBI Bank Ltd Union Bank of India Central Bank of India
256,124.00 94,747.00 49,777.00 45,600.00 44,432.00 43,210.00 36,000.00 34,169.00 31,598.00 29,026.00
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The Society was initially set up to help families in distress. Its objective was to provide temporary accommodation to its members in eventualities such as weddings of dependent members of the family, repayment of debt and expenses of medical treatment etc. The Society was converted into a full-fledged Urban Co-operative Bank in the year 1933.
The Bank has the unique distinction of being a witness to History. The Bank, which was originally founded in 1918, i.e. close on the heels of the Russian Revolution, also witnessed as a Society and as Bank-the First World War, the Second World War, India's freedom Movement and the glorious chapter of post-independence India. During this cataclysmic cavalcade of history, the Bank as a financial institution and its members could not of course remain unaffected by the economic consequences of the major events. The two wars in particular brought in their wake, paucities of all kinds and realities and stand by its members in distress as a solid bulwark of strength. The Founder Members and the later-day management's of the Bank continued to demonstrate their unwavering faith in the destiny of the common man and the co-operative movement and they encouraged the shareholders to save despite all odds.
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Last two decades the Bank has witnessed a steady growth in the business and also taken several Strategic Business Initiatives like undertaking Business Process Reengineering initiative. Merging seven coop Banks and then consciously nurturing them. Bank tied up
with VISA international for issuance of Debit Card. The Bank has a network of 226 fully computerized branches as on 31st-Mar-2012 covering six states viz. Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi. The Bank is providing 24- hour service through ATM at 147 locations. As on 31st March, 2012 Bank business had surpassed Rs 33000 Crores. Bank has retained its coveted position as ZERO NET NPA Bank for the eighth successive year. In 2011 Bank was granted permission for All India Area of Operation by Reserve Bank of India. Bank has an an ambitious business expansion plan in place to have a presence in all major cities of the country, reach a business level of Rs 50000 Crores by 2016 and Rs 100000 by 2018.
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Interpretation: After analysis of the data the results are drawn upon. The calculation of various ratios and the credit rating based upon it helps in interpretation. This helps the assessing officers in granting credit facilities to the applicant firm.
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Total Business
(Rs in crores)
30000 25000 20000 15295.4 15000 10000 5000 0 2007 2008 2009 2010 2011 18879.13 23517.08 21029.26 27312.95
Working Funds
(Rs in crores)
25000 20000 15000 10745.47 10000 5000 0 2007 2008 2009 2010 2011 13874.1 15622.82 19186.27 17071.06
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Own Funds
(Rs in crores)
1600 1400 1200 1000 800 600 400 200 0 2007 2008 2009 2010 2011 1042.4 1130.95 1174.24 1270.37 1473.49
9.4 DEPOSITS
Deposits
(Rs in crores)
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 15800.96 14266.73 12918.85 11430.82 8924.94
2007
2008
2009
2010
2011
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9.5 ADVANCES
Advances
(Rs in crores)
14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 2010 2011 7448.31 6370.46 8110.41 9250.35 11511.99
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9.6 SWOT ANALYSIS SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960sand 1970s using data from Fortune 500 companies.
STRENGTH It specifies the attributes of the person or company that are helpful to achieve the objective(s). Saraswat Bank is No. 1 amongst the 1,700 UCBs in the Urban Cooperative Banking Sector in India with over 90 years of cumulative banking experience. High standard regulatory environment. Flexible work permit system and good quality staff offering personal client service. Bank has implemented Core Banking Solution (CBS) in the Bank. This solution primarily aims at having a unified customer approach. Bank is a member of the Credit Information Bureau India Ltd. (CIBIL). CIBIL is Indias first credit information bureau and is a repository of factual information on the credit history and repayment records of millions of commercial and individual borrowers.
OPPORTUNITY External conditions that is helpful to achieving the objective(s). Maharashtra State has a huge banking business market of around Rs. 17, 00,000/crore. Of these Rs. 17,00,000 crore, Saraswat Bank has a business stake of only Rs. 20,000 crore, which is a miniscule of merely 1.2% share in the total banking business in the State of Maharashtra. This provides a huge opportunity to the bank.
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Saraswat Bank does 0.3% to 0.4% of the nations banking business. In India today, 60%of the population do not have access to a banking product; 80% of the population do not have access to an insurance product and 98% of the population do not have access to a stock market product. Thus, there is tremendous untapped growth potential in the Indian subcontinent.
WEAKNESS Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% thus choking the headroom available to these banks for raining equity capital. Lack of competitive differential with other offshore centres Rigid legislation that inhibits business development
THREAT Rise in inflation figures which would lead to increase in interest rates. Increase in the number of foreign players would pose a threat to the PSB as well as the private players. Anti-offshore regulations in foreign target markets restricting the development of products and new markets. Downsizing and reduction in banking operations in favour of rival jurisdictions. Outsourcing to cheaper jurisdictions Subsequent impact on rest of finance sector ecosystem
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Assets: Debit balances in all the personal and real accounts appear on assets side. Following items may appear on assets side: Fixed assets: Fixed assets indicate the value of infrastructure properties acquired by the business where the benefit received over long period of time. Fixed assets are land, building, machinery, furniture vehicles, and computer. Investments: This indicates the amounts of funds invested by the organization outside the business. Current assets: Current assets are the assets which are likely to be converted in the form of cash of likely to be consumed during the normal operating cycle of a business within a very short span time say one year. Current assets are stocks, sundry debtors, cash & bank balances, prepaid expenses.
10.1 Maximizing CASA deposits A sharp focus on reduction in costs has become priority No. 1 in your Bank. On the liability side, the cost advantage will be available to your Bank, only if the Bank makes rapid strides in mobilization of Current Accounts and Savings Accounts (CASA). Major banks in the country have around 35% to 45% CASA deposits, while your bank has been hitting only the 22% to 30% range in CASA deposits. As CASA deposits carry an average low level of interest, the average cost of funds (i.e. CASA Deposits + Term Deposits)comes down. We have repeatedly impressed on our staff the need to mobilize CASA deposits aggressively.
10.2 Reduction in NPA To bring down the Gross NPA level as also to ensure that substantial new NPAs are not added, branches were asked to speed up efforts for recovery in respect of overdue accounts with them. The drive for reduction in NPAs has been hugely successful under the leadership of Sheri P. G. Kamath, Chief General Manager.
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CHAPTER 11 MARKETING
Business Process Reengineering (BPR) initiative primary objective of this initiative is to convert the branches into sales and service outfits. India is a huge banking market but The penetration of Indian Banking is thus one of the lowest in the world. Also a large number of our branches are functional in Maharashtra State, which has a huge banking business market of around Rs. 17,00,000/- crore (with aggregate bank deposits of Rs. 8,57,771 crore and gross credit of Rs. 8,34,701 crore in September 2008). Of these Rs. 17,00,000 crore, we at Saraswat Bank have a business stake of only Rs. 20,000 crore, which is a miniscule of merely 1.2% share in the total banking business in the State of Maharashtra. This provides a huge opportunity to banks including your Bank. In fact, it is on the basis of these statistics that we have planned to do a business of Rs.1,00,000 crore by 2021 under Dr. Adarkar Mission IV of your Bank. All the employees in the branches are being trained, equipped and instructed to take extra efforts for marketing all the products and services of your Bank
4 Ps OF MARKETING:
Basically, the concept of Marketing is given by McCarthy who has classified Marketing Mix tools of four broad kinds called 4 P's and they are as follows Product Price Promotion Place These marketing mix tools are used by the marketers to influence their trade channels and final consumers. The Saraswat co-operative banks 4P's criteria is followed below
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1) Product Sarswat co-operative bank is No. 1 amongst the 1,700 UCBs in the Urban Cooperative Banking Sector in India. The fact remains that we do 0.3% to 0.4% to nation's banking business. A Sarswat Co-operative Bank has special Product Development Department which is been seen by Sheri M.S.Vaidya, Dy.General Manager. The product Development department has initiated into all these areas Products and their attributes. Unique Selling Propositions of our Products. Marketing positions of our products. Promotional imperatives. Value addition ingredients of our products and their enrichment.
This helps the bank to process of redefining and refashioning our existing products and creating new products. This helps to maintain relationships i.e. helps to maintain CMR
2) Place The bank has adopted the policies of inorganic growth since 2006 for increasing its branch outlets From 2009 the bank has been pursuing a mix of inorganic and organic growth for branch expansion purposes. The bank has adopted the cluster based approach. Instead of having an isolated branch, they have 4-5 branches in a far off area. This approach has enabled the bank to cluster presence in western Maharashtra, Goa and Karnataka. The bank has planned under Dr.Adarkar Mission 2, to open 70 more branches by 31stMarch,2011 The is following the mantra of one branch in every 15 days in programme called 'Ashwamedh'
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3) Promotion Promotion of any brand is very necessary; this helps the marketer as well as customer to understand each other well. The Sarswat Co-operative bank has appointed Sheri Dilip Prabhavalkar, veteran artist as their Brand Ambassador This has heed the bank to achieve and promote heights of success in their business To attract the young generation the bank has appointed a junior brand ambassador to Ms.Shalmali Sukthankar, budding artist. From last five years the bank has encapsulated and expressed our uniqueness to the customers that the bank is having the "Ability of the Big and Agility of the Small"
4) Pricing
In any service industry, cost leadership is critical to the long term success of the organization. The bank has to compete with other banks on the basis of total reduction of all economic and unwarranted expenditures and also to control costs in all areas The bank initiatives are as follows Optimum utilization of the available resources of the bank. Streamlining/Re-engineering various procedures in the bank, thus improving customer service. The bank has sustained work of the income and cost council, which helps the bank to offer services to the customers with lower intermediations costs.
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(Amount in Rs) PROPERTY & ASSETS 1) CASH 2) BALANCES WITH OTHER BANKS 3) MONEY AT CALL & SHORT NOTICE 4) INVESTMENTS 5) ADVANCES 6) INTEREST RECEIVABLE 7) BILLS RECEIVABLE 8) FIXED ASSETS 9) OTHER ASSETS 10) COMPUTER SOFTWARE 11) DEFERRED AMORTISATION INVESTMENTS 12) NON-BANKING ACQUIRED ASSETS IN 22,78,400.00 22,78,400 OF 11 12 9 10 52,53,76,68,612.60 1,15,11,99,23,393.74 1,35,32,79,974.37 15,05,61,88,896.43 5,45,73,77,098.58 8,29,64,60,223.62 62,000.02 3,10,14,176.42 53,21,39,11,321 92,50,35,46,892 1,51,26,21,884 14,40,59,01,784 5,51,06,28,226 7,05,70,97,868 1,90,000 3,90,19,314 34,64,22,562.00 1,31,84,56,314 Schedule 7 8 31.03.2011 11,03,74,27,758.63 2,26,29,21,605.29 31.03.2010 10,00,16,55,468 4,38,24,29,025
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Profit and Loss accounts: A profit and Loss account is prepared to disclose the results of operation of the business transaction during certain duration of time. Accounts may have following four components: Manufacturing accounts: This part of profit and loss accounts discloses the results of manufacturing operations carried out by the organization. The final result in terms of manufacturing accounts is a cost of production incurred by the organization. Trading accounts: This part of profit and loss accounts discloses the results of trading operations carried by organization. The final results in terms of Gross Profit earned by the organization. Profit and Loss accounts: This part of profit and loss accounts discloses the final results of business transactions of the organization. The final results in terms of Net profit earned by organization. Profit and Loss appropriation accounts: This part of profit and loss accounts which mainly applicable to company form of organization, discloses the manner in which the net profit earned by the organization is appropriated. The amounts of profit not appropriated or retained transferred to reserves and surplus in balances sheet.
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PERFORMANCE HIGHLIGHTS
(`In Crore) Particulars FOR THE YEAR ENDED 31-Mar-10 Total Income Total Expenditure Gross Profit Less: Provisions Net Profit Before Tax and Exceptional Items Less: Income Net Profit After Tax and Exceptional Items Less: Exceptional Items Net Profit 1,458.20 1,242.36 215.84 36.68 179.16 40.00 139.16 19.49 119.67 AT THE YEAR END Own Funds Share Capital Reserves and Surplus Deposits Current Savings Term Advances Secured Unsecured Priority Sector 1,270.37 86.23 1,184.14 14,266.73 1,244.30 3,003.37 10,019.06 9,250.35 9,151.61 98.74 5,300.48 1,473.49 102.83 1,370.66 15,800.96 1,050.94 3,513.15 11,236.87 11,511.99 11,433.19 78.80 5,765.90 15.99% 19.25% 15.75% 10.75% -15.54% 16.97% 12.15% 24.45% 24.93% -20.19% 8.78% 31-Mar-11 1,690.86 1,332.67 358.19 63.39 294.80 81.23 213.57 1.30 212.27 % Change 15.96% 7.27% 65.95% 72.82% 64.55% 103.08% 53.47% -93.33% 77.38%
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% to Advances Small Scale Industries Small Businessmen and Traders Other Priority Sectors Working Capital Investments Borrowing And Refinance Net NPAs (%) Capital Adequacy (%) Number of Members Regular Nominal Number of Branch Licenses/Branches Number of Employees Productivity per Employees Profit Per Employees (in laces) Return on Average Assets (%) Net Interest Margin (%)
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CHAPTER 13 PRODUCTS
The products that are offered by Saraswat Bank can be categorized into SIX groups as follows:
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1) PERSONAL The bank offers retail deposit products like savings, current and term deposit accounts. The Bank also offers a bouquet of Retail Loan Products such as Vastu Siddhi Home Loan, Saraswati Education Loan, Car Loan etc. With a view of fulfilling all the needs of the customers under one roof Bank has entered into tie-ups with various premium institutions, through which third party products like Life and nonlife Insurance, Mutual Funds and Demat Services are offered. The NO account called Janhit Account and the CUBS savings account for the kids are the prominent features of this segment of products offered by Saraswat Bank. Also, the bank has entered into a tie-up with one of the most respected and leading industrial house of the nation, TATA MOTORS, to finance its world-renowned most cost effective NANO cars.
2) NRI (Non Resident Indian) The Saraswat Co-operative Bank is the only Urban Co-operative Bank having a permanent license from RBI to deal in foreign exchange. This division plays an active role in the Forex operations through its B-category branches. The Bank has relationship with more than 125 correspondent banks spread over 45 countries covering nine currencies. The banks International Banking Division monitors the flow of export credit. The bank offers various NRI deposit products (like FCNR, NRE, NRO and RFC accounts) and personal loans (against the security of funds held in NRE accounts and NRO accounts) to the NRI segment.
FCNR ACCOUNT Foreign Currency Non Resident (FCNR) accounts are permitted to be maintained in term deposits only from one year to five years by NRIs. Saraswat Banks accepts such deposits in three currencies i.e. US Dollar, Sterling Pound and EURO. NRE ACCOUNT Non Resident (External) Accounts can be opened by Persons of Indian nationality or origin resident abroad. This account is designated in rupees. It can be maintained in the form of
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savings, current or term deposit accounts. Accounts can be opened/credited with remittances from abroad/transfer from existing NRE/FCNR accounts/ deposit of foreign exchange brought into India, during visits to India. NRE Accounts can be opened jointly with any other Non-Resident Indian Principal amount with interest earned is eligible for repatriation abroad.
NRO ACCOUNT When an Indian national or person of Indian origin residing in India leaves India for a foreign country (other than Nepal and Bhutan) for taking up employment, business or vocation outside India, or for any other purpose, indicating his intention to say outside India
permanently or for an indefinite period, he becomes a person resident outside India. His bank account, if any, in India is designated as an Ordinary Non-resident Account (NRO Account). Such accounts can also be opened with funds remitted from abroad. Funds held in NRO accounts, can be repatriated outside India with an overall limit of USD one million per calendar year including sale of assets held by NRIs in India, on production of an undertaking and certificate Interest earned on these deposits is not exempt from Indian Income-tax.
RFC ACCOUNT Resident Foreign Currency Accounts are for the NRIs returning to India permanently. The balances in NRE/FCNR accounts and other foreign currency funds brought in by the NRI at the time of return and subsequently from the assets maintained abroad could be freely invested in RFCs. The funds in RFCs can be remitted abroad for any bonafide purpose of the account-holder or his dependents without RBI`s approval. The funds can also be withdrawn by converting into rupees for local payments. If the Returning Indian subsequently goes abroad to become an NRI, the balance in his RFC account can be converted into an NRE/FCNR account. Saraswat Bank accepts the RFC accounts in US Dollar currency.
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3) CORPORATE The bank provides various products catering to the needs of the Mid Corporate, Small & Medium Enterprises (SMEs), Traders, Professionals and Women Entrepreneurs. The following arrays of facilities are being provided under this segment: Working Capital Term Loan Export Finance (Pre shipment and Post Shipment) Import Finance Bank Guarantees Bill Discounting Letter of Credit (Inland and Foreign) Property Loan Rental Loans
4) Treasury Saraswat Bank Ltd. is the first co-operative Bank to set up a Unified Treasury incorporating Foreign Exchange desk and Money Market desk. The Treasury is located in the city of Mumbai and has a dealing room with Reuters and Bridge systems. All the treasury operations are completely computerized. The treasury complies with the statutory obligations of maintaining C.R.R. and S.L.R. for the Bank apart from managing overall funds. The Money Market desk is specialized in Money market and Debt market. This is one of the active G. Sec traders in the market. The following products are offered: Debt market securities, including Government papers Call money lending and borrowing Retailing of Government Securities and other debt market securities Treasury Bills and Commercial Papers trading
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5) Demat Modernization in the trading and settlement system has been witnessed in the capital market through automated trading mechanism of Demat. The advent of Electronic trading and settlement has brought in transparency in trading and has eliminated risks associated with Bad Delivery and handling huge load of paperwork. The country has made a remarkable growth in the capital market by switching over to electronic trading. Saraswat Bank is registered as depository Participant with NSDL since 22nd February 1999. Since then it provides the Demat Services to its customers. Services include Pledge, Demat, Remat, Transfer & Settlement, and Transposition & Transmission.
6) Services The banks value added services can be categorized under this segment. This includes the following: Easy Pay- Payment of utility bills like Telephone, Electricity Bills, Cellular Phone Bills, Insurance Premium etc automatically through the customers account. Mobile Banking- This provides the authorized/registered users to avail the services such as information relating to accounts, details about transactions etc. ATMs- Provides the ATM facility to the customers. The customers can access over 2461 ATMs of 20 members Banks in "BANCS" network, which includes the ATMs of the Saraswat Bank. For drawing cash from the ATMs of Consortium banks, no charges are being levied. Insurance- The bank has a tie-up with HDFC Standard Life Insurance Company Ltd for offering the life insurance products. The life insurance products includes Endowment plans, Children plan, Term plans, Pension plans/ For Non Life Insurance products, the bank has a tie-up with Bajaj Allianz General Insurance Company Ltd, and offers Travel insurance, Health Insurance, Personal Accident Insurance and Vehicle Insurance.
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Mutual Funds- Considering the changes in Indian demographics (more than 70%of the population below the age of 35), changes in investment pattern (rising disposable incomes created a huge potential for investment in Insurance and Mutual Funds), increased competition and thinning of Interest margins, the Indian Banking Industry had to redesign their bouquet of products and introduce marketing of third party products like Insurance and Mutual Funds, to increase fee based income. To encash on this sentiment, the Saraswat Bank has entered into the Mutual fund distribution business 5 years back and today it has a tie up with 21 fund houses with total funds invested at around Rs 100 crores.
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Customer Service The bank has adopted the following codes based on the Standard codes documented by Indian Banks Association: Customer Fair Practice Code Cheque Collection Code Bankers Lender Liability Code Compensation Policy Saraswat Bank has become a member of the Banking Codes and Standards Board of India. This board ensures that the Codes so defined by the Bank are implemented in letter and spirit. For measuring customer satisfaction, a bank- wide Customer Service Audit has been planned to be commissioned by the Board in the ensuing year. Industrial Relation: The Banks human resources have been organized under the two representative bodies viz. the Officers Association and the Employees Union. The industrial relations with both these organizations have been very cordial with joint discussions being held with the Association/the Union for redressing employee issues in an amicable way. Voluntary Retirement Scheme (VRS) This year, the Bank launched the VRS for its employees. Around 236 employees from your Bank (excluding those of merged banks) opted for VRS under the said scheme. Besides, 83employees of the erstwhile Nasik Peoples Cooperative Bank Ltd., 43 employees of erstwhile Annasaheb Karale Janata Sahakari Bank Ltd. and at around 100 employees of the erstwhile Murgharajendra Sahakari Bank Ltd. (i.e. in all 462 employees) opted for VRS and have been relieved under the Schemes. The Bank acknowledges with gratitude the sincerity and hard work put in by all these employees during their tenure with the Bank and wishes the retired employees an eventful and healthy post retirement life.
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SUGGESTIONS
In wake of this, old private sector banks also have the need to fundamentally strengthen skill levels. However, even more imperative is their need to examine their participation in the Indian banking sector and their ability to remain independent in the light of the discontinuities in the sector. Accelerate the creation of world class supporting infrastructure (e.g., payments, asset reconstruction companies (ARCs), credit bureaus, back-office utilities) to help the banking sector focus on core activities. Slower growth in retail credit and narrow spreads spells better fortune for banks that have higher concentration of corporate assets and low cost deposits along with good asset quality.
Saraswat Bank perfectly fits into this matrix. Sustenance of a healthy current and savings account mix and little deterioration in asset quality also reiterates the operating efficiency of the bank. Being the largest Urban Co-operative bank, Saraswat Bank is also one of the lead contenders to initiate the process of building up scalability by acquiring smaller banks in the PSU and private sectors. Besides offering the opportunity to cater to borrowing needs of some of the largest corporate in the country, the consolidation process will also brings about economies of scale for the bank. The banking today is re-defined Andre-engineered with the use of Information Technology and it is sure that the future of banking will offer more sophisticated services to the customers with the continuous product and process innovations. Thus, there is a paradigm shift from the sellers market to buyers market in the industry and finally it affected at the bankers level to change their approach from conventional banking to convenience banking and mass banking to class banking. The shift has also increased the degree of accessibility of a common man to bank for his variety of needs and requirements.
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BIBLIOGRAPHY
a. http://www.rbi.gov.in b. http://www.wikipedia.com c. http://www.investopedia.com d. http://www.mca.gov.in e. http://www.cibil.com f. http://www.moneycontrol.com g. http://www.google.com h. http://www.teachmefinance.com i. http://www.saraswatbank.com
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