INDEX

Introduction: ........................................................................................................................................... 2

Company Profile: ..................................................................................................................................... 2

Reason for BPR Initiative: ........................................................................................................................ 5

Scope and Time Frame: ........................................................................................................................... 5

Team Involved: ........................................................................................................................................ 6

Project Design: ........................................................................................................................................ 6

Supporting tools and techniques: ............................................................................................................ 8

Impact of the project"as is: and "to be": ................................................................................................ 11

Conclusion and Recommendations: ....................................................................................................... 11

Bibliography: ......................................................................................................................................... 12
Introduction:
Business process reengineering (BPR) is the analysis and redesign of workflow within and
between enterprises. BPR reached its heyday in the early 1990's when Michael Hammer and
James Champy published their best-selling book, "Reengineering the Corporation". The authors
promoted the idea that sometimes radical redesign and reorganization of an enterprise (wiping
the slate clean) was necessary to lower costs and increase quality of service and that information
technology was the key enabler for that radical change. Hammer and Champy felt that the design
of workflow in most large corporations was based on assumptions about technology, people, and
organizational goals that were no longer valid. They suggested seven principles of reengineering
to streamline the work process and thereby achieve significant levels of improvement in quality,
time management, and cost:

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of redesign urgency.

3. Integrate information processing work into the real work that produces the information.

4. Treat geographically dispersed resources as though they were centralized.

5. Link parallel activities in the workflow instead of just integrating their results.

6. Put the decision point where the work is performed, and build control into the process.

7. Capture information once and at the source.

By the mid-1990's, BPR gained the reputation of being a nice way of saying "downsizing."
According to Hammer, lack of sustained management commitment and leadership, unrealistic
scope and expectations, and resistance to change prompted management to abandon the concept
of BPR and embrace the next new methodology, enterprise resource planning (ERP).

Company Profile:
With over 56 million satisfied customers and 5002 offices, PNB has continued to retain its
leadership position amongst the nationalized banks. The bank enjoys strong fundamentals, large
franchise value and good brand image. Besides being ranked as one of India's top service brands,
PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart
from offering banking products, the bank has also entered the credit card & debit card business;
bullion business; life and non-life insurance business; Gold coins & asset management business,
etc.

Since its humble beginning in 1895 with the distinction of being the first Indian bank to have
been started with Indian capital, PNB has achieved significant growth in business which at the
end of March 2010 amounted to Rs 435931 crore. Today, with assets of more than Rs 2,96,633
crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has
the 2nd largest network of branches (5002 offices including 5 overseas branches ).During the FY
2009-10, with 40.85% share of CASA deposits, the bank achieved a net profit of Rs 3905 crore.
Bank has a strong capital base with capital adequacy ratio of 14.16% as on Mar’10 as per Basel
II with Tier I and Tier II capital ratio at 9.15% and 5.01% respectively. As on March’10, the
Bank has the Gross and Net NPA ratio of 1.71% and 0.53% respectively. During the FY 2009-
10, its’ ratio of Priority Sector Credit to Adjusted Net Bank Credit at 40.5% & Agriculture Credit
to Adjusted Net Bank Credit at 19.7% was also higher than the stipulated requirement of 40% &
18%.

The Bank has maintained its stake holder’s interest by posting an improved NIM of 3.57% in
Mar’10 (3.52% Mar’09) and a Return on Assets of 1.44% (1.39% Mar’09). The Earning per
Share improved to Rs 123.98 (Rs 98.03 Mar’09) while the Book value per share improved to Rs
514.77 (Rs 416.74 Mar’09)

Punjab National Bank continues to maintain its frontline position in the Indian banking industry.
In particular, the bank has retained its NUMBER ONE position among the nationalized banks in
terms of number of branches, Deposit, Advances, total Business, Assets, Operating and Net
profit in the year 2009-10. The impressive operational and financial performance has been
brought about by Bank’s focus on customer based business with thrust on CASA deposits,
Retail, SME & Agri Advances and with more inclusive approach to banking; better asset liability
management; improved margin management, thrust on recovery and increased efficiency in core
operations of the Bank. The performance highlights of the bank in terms of business and profit
are shown below:

Rs in Crore

Parameters Mar'08 Mar'09 Mar'10 CAGR(%)

Operating Profit 4006 5744 7326 22.29
Net Profit 2049 3091 3905 23.98
Deposit 166457 209760 249330 14.42
Advance 119502 154703 186601 16.01
Total Business 285959 364463 435931 15.09

PNB has always looked at technology as a key facilitator to provide better customer service and
ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive at “Best Fit”. The
bank has made rapid strides in this direction. All branches of the Bank are under Core Banking
Solution (CBS) since Dec’08, thus covering 100% of its business and providing ‘Anytime
Anywhere’ banking facility to all customers including customers of more than 3000 rural & semi
urban branches. The bank has also been offering Internet banking services to the customers of
CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc.
Towards developing a cost effective alternative channels of delivery, the bank with more than
350 ATMs has the largest ATM network amongst Nationalized Banks.

With the help of advanced technology, the Bank has been a frontrunner in the industry so far as
the initiatives for Financial Inclusion is concerned. With its policy of inclusive growth in the
Indo-Gangetic belt, the Bank’s mission is “Banking for Unbanked”. The Bank has launched a
drive for biometric smart card based technology enabled Financial Inclusion with the help of
Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The Bank has started several innovative initiatives for marginal groups like rickshaw
pullers, vegetable vendors, dairy farmers, construction workers, etc. Under Branchless Banking
model, the Bank is implementing 40 projects in 16 States. The Bank launched an ambitious
‘Project Namaskar’ under which 1 lakh touch points will be established in unbanked villages by
2013 to extend the Bank’s outreach. Under this, 30 Kiosks have been opened covering 119
Villages reaching 1.32 Lakh beneficiaries.

Backed by strong domestic performance, the bank is planning to realize its global aspirations.
Bank continues its selective foray in international markets with presence in 9 countries, with
branches at Kabul and Dubai, Hong Kong & representative offices at Almaty, Dubai, Shanghai
and Oslo, a wholly owned subsidiary in UK, a joint venture with Everest Bank Ltd. Nepal and a
JV banking subsidiary “DRUK PNB Bank Ltd.” in Bhutan. Bank is pursuing upgradation of its
representative offices in China & Norway and is in the process of setting up a representative
office in Sydney, Australia and taking controlling stake in JSC Dana Bank in Kazakhastan.

Bank has been a recipient of many awards and accolades during the year:-

• Gold trophy of SCOPE Meritorious Award for Excellence in Corporate Governance 2009 by
Standing Conference of Public Enterprises

• As per Financial Express-Ernest & young (FE-EY) India’s Best Banks Survey, PNB is
identified as the best bank among the nationalized banks in terms of overall ranking.
• As per HT-MaRS Survey on Customer Satisfaction, PNB stood NUMBER ONE in Delhi and
Chennai in terms of customer satisfaction.

• As per the Forbes Annual list of 2000 global giants, PNB tops the list of nationalized banks
with a global ranking of 695, substantial improvement over last year’s placement at 946th
position.

• The Economic Times has ranked CEO of PNB as the 32nd Most Powerful CEO of 2010.

• Skoch Challenge Award 2010 for “Livelihood Linkage” of the milk producers in Bulandshahr
District, Uttar Pradesh.

• IDC Financial Insights Innovation awards 2010 by IDC Financial Insights

Reason for BPR Initiative:

 100% commitment solely to your organization

 Detailed, yet diverse, set of industry and general business experiences

 Niche focus of the services provided

 Technical and strategic business focus

 Lower overall cost than other firms offering similar services

 Less expensive than using internal employees

 Customization of projects, analysis, and outputs

 Tailoring of the project to meet management expectations, timeline reporting, and goals.

Scope and Time Frame:

Due to cut-throat competition from other banks, PNB has started implementing BPR from year
2000 only. PNB being the second largest bank in India after State Bank of India when saw that
Finacle (by Infosys) is being used by State Bank of India also came up with new methods as per
the regulations of Reserve Bank of India. There was a huge scope while implementing BPR to
increase the income of the bank and satisfy the customers.
Team Involved:
 The bank’s consultant, Boston Consulting Group, which has been working with PNB for
its business process re-engineering exercise (PNB Parivartan) will help the bank decide
on the number of new posts of general managers.

 PNBIIT (Punjab National Bank Institute of Information Technology was also involved in
research to implement. It is still implementing new concepts for the benefit of the bank.

 Hitachi Storage Solutions: To address competition from other banks while, at the same
time, providing superior services to customers, India’s second largest public sector bank
selected a Hitachi Data Systems solution for storage consolidation. This greatly improved
efficiencies and lowered costs.

 Technology partners: Infosys, Oracle and Sun Microsystems

Project Design:
Punjab National Bank (PNB) is the second largest public sector bank in India. Headquartered

in New Delhi, the bank has 26 zonal offices, 45 regional offices, 4 foreign-exchange offices, 13
zonal audit offices, 37 regional collection offices, 17 MICR Centres and 58 lead bank/district
coordination offices. With nearly 60,000 employees and over 4,500 branches including 417
extension counters, PNB epitomizes global banking on a massive scale. PNB, under the
leadership of its present Chairman and Managing Director Mr. S.C. Gupta, has not only
maintained the lead position among Public Sector Banks, but it has also seen an increase in the
overall efficiency and effectiveness of the bank in all business parameters. The growth that
propelled PNB to this reach and span has demanded the best from its information architecture
year after year. Prior to March 2004, already a very large bank, PNB was growing beyond its
capacity to efficiently support services. At that time, the number of core banking branches
surpassed 500. In the systems area, this growth was causing increased I/O wait and decreased
server performance. Given the massive scale of operations and the growing size of infrastructure,
updating systems capacity and performance became a business imperative for PNB. At the same
time, reforms in the financial sector saw foreign banks and financial institutions making headway
into the country, changing the complexion of banking in India. The combined forces of growing
competition and a technology-driven paradigm shift in the Indian banking system led PNB to
launch a full-fledged computerization update of its operations.

Needed: An Enterprise-class Storage System

The bank’s drive for new technology began in the year 2000. At that time, changing regulatory
guidelines drove the focus on computerization. The bank’s branches were at various stages of
modernization, with local area networks prevalent in a number of branches. In most cases, data
storage and backup were handled with portable media. Since the project began, PNB has been
aggressively beefing up its IT infrastructure through IT initiatives across all major functions,

departments, and branches. With Mr. RIS Sidhu taking charge as General Manager—IT, there
has been an intense focus on new IT initiatives and a drive to leverage the existing IT
infrastructure more efficiently. Part of this project has included the selection of an enterprise
class storage solution to support more than 2,000 branches of the bank in core banking. The bank
required a storage infrastructure that would be cost-effective, reliable, scalable, and able to
manage replication requirements, while being relatively easy to administer. The new storage
solution would also need to support the overall efforts of the bank’s IT staff. At PNB, IT is
positioned to deliver value through improvement in the existing systems and procedures in order
to maintain quality. The bank constantly works for business process re-engineering and system
re-engineering.” Sun Microsystems, the bank’s technology partner for supply and installation of
servers, had recommended Hitachi Data Systems. PNB opted for two Hitachi Lightning
9980VTM multi-cabinet enterprise storage systems. Software selected included Hitachi Resource
ManagerTM utility package and Hitachi Shadow Image TM In-System Replication software.
Resource Manager utility package provides essential functions for management and enables the
full feature set offered by Hitachi storage systems, as well as an advanced set of tools for third-
party application integration and optimization. Hitachi Shadow Image software provides non-
disruptive, host-independent data replication, providing copies for immediate access to and
sharing of information for decision support or to optimize tape backup operations. Shadow
Image copies can provide near-instant recovery from data corruption. By enabling backups to run
concurrently with production, Shadow Image software increases the availability of revenue
producing applications. Today, thanks to this solution, PNB has a robust and efficient storage
infrastructure that is delivering non disruptive availability. Now the bank’s data is reliably stored
and enables high performance. The Hitachi Data Systems solution has contributed to taking
PNB’s overall performance improvements to new heights. Some of the key benefits of the
Lightning 9980V system have included a high degree of reliability and scalability, reduction in
per-transaction cost, increased business, and greater convenience for customers, and a lower
requirement for manpower. Business per bank employee has nearly doubled while the number of
employees per branch has declined—a clear indicator that PNB’s focus on IT improvements has
helped to reduce manpower despite the huge growth in business volume. Return on assets has
increased to 1.22 percent in fiscal year 2006-2007 from 0.77 percent in fiscal year 2001-2002.
The bank has seen reduced lead time in its ability to deliver various branch services and is
benefiting from increased ease in handling voluminous business data. Day-to-day functioning is
noticeably improved. Technology provided by Hitachi Data Systems has played a significant role
in PNB’s overall efficiency, performance level, and quality of service.
The Punjab National Bank (PNB) will be one of the first few public sector banks to exercise the
new-found freedom following the government’s recently announced managerial autonomy
package.

The Delhi-based bank’s board has decided to create the post of chief general managers (CGMs)
in an effort to offer growth opportunity to its senior executives.

The State Bank of India (SBI) has been working on a performance-linked pay package for its
employees and Bank of Baroda is planning to increase its number of general managers.

The bank has formed an internal committee of general managers to look at what other initiatives
can be taken following the autonomy package.

So far only the country’s largest bank, the State Bank of India, has chief general managers who
are the functional heads of businesses.

All other public sector banks have a set of general managers who are the functional heads
working under the executive director and chairman and managing director-both appointed by the
government of India.

Supporting tools and techniques:

 Core Banking Solution – Finacle by Infosys

 The system uses Infosys’ Finacle software, database platform from Oracle and enterprise
servers from Sun Microsystems.

On 30 March 2001, the bank used the services of Infosys for the deployment of Finacle.
A core team was selected, which would be the heart of the project. Infosys trained 200-
odd personnel from a core team over six months. The core team modified and customized
the package according to its specific needs.

It was then time to procure hardware. K.S. Bajwa, Deputy General Manager, Information
Technology Division, PNB, said, "It's a standard international practice to procure
hardware based on the type of software applications that an enterprise has selected. This
helps to match the specific computing needs required by the software."

PNB purchased servers, security infrastructure, and storage equipment and decided to
house it in its own central data center in New Delhi. A lot of infrastructure from Cisco
has been used to build the data center.

In April 2002 the bank rolled-out Finacle in seven branches as a pilot venture. This was
done because the bank had seven different application packages, and it wanted to ensure
smooth migration of the data into Finacle. By mid May 2002, all data from other software
was successfully migrated into Finacle.

Culture and technology issues

Issues were mostly cultural. Most staffers were used to working in a manual
environment, and some had worked in standalone environments. In the new networked
environment, personnel at the node/counter didn't actually 'see' the transactions updating
in the various account books.

This gave rise to a number of queries and suggestions from personnel. The bank
consulted IDRBT and RBI to verify the implementation success and it was reported that
the deployment was absolutely correct. Around six months later, the personnel felt that
the environment 'change' had done them good, and was used to working on the systems.

"There were a few integration issues when migrating to Finnacle, but the in-house IT
team was able to resolve them all. The pilot for the initial seven branches was a test-bed
for us. The knowledge we gained from the pilot deployments helped us overcome the
future issues," explained Bajwa.

Systems

Before deploying the core banking architecture, PNB used servers which were NT-based,
from IBM, and from other vendors. The bank conducted benchmarking tests for Finnacle
on various server platforms. And it was satisfied with the performance of Sun's hardware
on Solaris. Sun's Fire servers, Solaris OS, and Oracle's RDBMS are now in use.

Network design

Cisco has tied up with PNB to evolve the network design and implement a nationwide
network backbone to connect all its offices. Cisco will assist the bank in understanding
and implementing the various technologies associated with the project. The converged
network infrastructure will allow PNB to standardize the applications and software
needed to provide the banking services.

The network infrastructure will have a three-tier architecture. The network hub will be in
its data center. The various branches would be connected to the data center using new-
world routing and switching technologies.
Moving to Internet banking

PNB got a license from RBI to offer Internet banking services. Some of the RBI
preconditions were that the systems should be audited by an independent auditor, and an
independent and authentic agency must carry out penetration testing. The bank has
already had its systems audited by an external agency, and the penetration testing process
is still going on.

In the process, PNB has developed the skills of its own personnel to take charge of
security on their own at a later stage. The bank will also recruit technically trained staff to
provide the necessary knowledge pool. With the Internet banking launch, the bank will
also strengthen its security policy.

Storage systems

The bank has followed RBI's storage requirement guidelines. Provisions have been made
to store transaction data for around 10 years. In some cases, data is stored permanently.
Around 164 Sun enterprise class servers are used in a DAS architecture. The total
capacity is of multiple TBs.

The Sun hardware uses an in-built storage management tool. Bajwa feels that the bank
doesn't need a third-party storage management tool right now since the database is not
too large. However the bank is considering a storage management application from
Veritas.

WAN and connectivity

101 branches of the bank are on a WAN. The bank plans to put 500-odd branches on the
WAN this year, and in three years the WAN will have 2000-odd branches.

The bank tried a number of connectivity options. 802.11b wireless connectivity was
installed in five branches to begin with.

"It was a comfortable experience, but suffered the inability to interchange between the
wired medium. Changing between mediums had to be performed manually," said Bajwa.

The bank then explored the option of leased lines and used connectivity from MTNL and
BSNL. It also used Bharti's leased line between Mumbai and Delhi. The bank now uses
Reliance Infocomm's fiber optic backbone along with the leased lines in locations where
the optic fiber does not reach. However, the use of Reliance Infocomm's infrastructure
may be temporary. Bajwa says that his experience with BSNL's service is very
commendable.
 Network management

PNB has appointed HCL Com-net to carry out 24x7 monitoring of the countrywide
network. There's a live link between HCL Comnet's NOC and PNB's IT head office. The
network is monitored remotely and can also be viewed at the bank's IT facility, where a
separate monitoring system is used for the Base24 Switch. Reliance has set up a NOC at
PNB's premise to monitor its optic fiber network.

Impact of the project"as is: and "to be":

Today, PNB has successfully implemented BPR by implementing core banking solution and
having a good IT and network setup in all the branches. Today, the Bank is the second largest
government-owned commercial bank in India with about 5000 branches across 764 cities. It
serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by
the Bankers Almanac, London. The bank's total assets for financial year 2007 were about US$60
billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and
Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

However, certain recommendations and future plans are still left to be implemented by PNB.

Conclusion and Recommendations:

Due to change in the entire banking industry now PNB has also changed the way of working.
PNB separately makes effort to maintain its goodwill among the customers and that’s why only
it the 2nd largest bank in India after State Bank of India.

Certain recommendations and future plans are as follows

 Set up a data warehouse and a data mart soon. It will take six months to achieve. IDRBT
has been involved as a consultant.

 It may need to set up a NAS (Network-attached storage) and SAN (Storage area network)
to consolidate its storage.

 Disaster Recovery site may be built at Mumbai to create a replica of its data center. It will
take around six months to be functional.

 A call center will be set up as a CRM initiative, which uses information from the data
warehouse with the help of the Base24 switch.
Bibliography:
 http://www.pnbindia.in/

 http://www.pnbiit.com/

 Business Process-Reengineering: 7 Critical Success Factors for a Smooth Transformation

of Your Organization Processes

 Business Process Reengineering & Change Management By B. R. Dey

 http://www.google.com