Acknowledgement

If words are considered to be signs of gratitude then let these words convey the very same our
sincere gratitude to bank of Maharashtra for giving necessary directions on doing this project to the best
of our abilities.

We are highly indebted to Mr. Pradeep Mishra, Manager Economist planning department, & Mrs.
Neeta Shewade, Marketing manager who provided us with the necessary information and also for the
support extended out to us in the completion of this report and his valuable suggestion and comments on
bringing out this report in the best way possible.

We also thank Prof. Ajay Varade, Indira Institute of Management, who has sincerely supported
me with the valuable insights into the completion of this project. We are grateful to all faculty members
of IIMP and our seniors who have helped us in the successful completion of this project

1 
 
GROUP MEMBERS:
1. NEHA SHARMA
2. SUSHANT JANGALE
3. PRANABDEO MANGRULKAR
4. AMAY PAWAR
5. ANITA NERKAR
6. RASHI JAIN
7. VISHAL THAKUR
8. CHETAN MADHUP
9. BHUSHAN KELA
10. SONRAJ SINGH
11. AJAY GUPTA
12. AJINKYA YERUNKAR
13. KARTIK NAIR
14. ANKUR MEHTA
15. ANIRUDHA SHAHAPURKAR
16. AMIT GAIKWAD

FACULTY MENTOR: GAYATRI KULKARNI

STUDENT MENTOR: POOJA DESHMANE

2 
 
 Macro analysis – banking sector analysis
1) History – Global & India

2) Market – structure

3) Major players

4) Legal issue

5) Current govt policies & impact

6) Significant events

7) Important concepts related to this sector

3 
 
 Micro Analysis
1) Intro & history

2) Swot analysis

3) 7p’s

4) Analysis and Balance sheet

5) Key personal & hierarchy

6) Corporate social responsibility

7) Future plan

8) Suggestions & conclusions.

4 
 
 
INTRODUCTION
A bank is a financial institution licensed by a government. The name bank is derived from the
Italian word banco "desk/bench", used during the Renaissance by Florentine bankers, who used to make
their transactions above a desk covered by a green tablecloth. However, there are traces of banking
activity even in ancient times.

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as
• conducting current accounts for his customers
• paying cheques drawn on him, and
• collecting cheques for his customers.

Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small
businesses.

Business banking:

Providing services to mid-market business; corporate banking, directed at large business entities.

Private banking:

Providing wealth management services to high net worth individuals and families; and
investment banking, relating to activities on the financial markets. Most banks are profit-making, private
enterprises. However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They
generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.

5 
 
Types of retail banks:

National Bank of the Republic, Salt Lake City 1908 ATM AL RAJHI BANK

Commercial bank:

The term used for a normal bank to distinguish it from an investment bank. After the Great
Depression, the U.S. Congress required that banks only engage in banking activities, whereas
investment banks were limited to capital market activities. Since the two no longer have to be under
separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that
mostly deals with deposits and loans from corporations or large businesses.

Community Banks:

Locally operated financial institutions that empower employees to make local decisions to serve
their customers and the partners.

Community development banks:

Regulated banks that provide financial services and credit to under-served markets or populations.

Postal savings banks:

Savings banks associated with national postal systems.

Private Banks:

Banks that manage the assets of high net worth individuals.

Offshore banks:

Banks located in jurisdictions with low taxation and regulation. Many offshore banks are
essentially private banks.

6 
 
Savings bank:

In Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their
original objective was to provide easily accessible savings products to all strata of the population. In
some countries, savings banks were created on public initiative; in others, socially committed
individuals created foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings products, credits and
insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also
differ from commercial banks by their broadly decentralized distribution network, providing local and
regional outreach—and by their socially responsible approach to business and society.

Ethical banks:

Banks that prioritize the transparency of all operations and make only what they consider to be
socially-responsible investments.

Islamic banks:

Banks that transact according to Islamic principles.

Functions of Bank:

• Primary function is to accept deposit, lend and invest.

• Secondary functions include opening of Letters of credit , Issuing Bank guarantees, Demand
Drafts
• Mail Transfers, Telegraphic Transfers, Collection of instruments
• Executor Trustee services, Dealing in Forex related transactions
• Offering Safe Deposit Locker facilities, accepting Safe custody articles and so on

Oflate bankers offer other services like:

• ATM, Debit, Credit and other plastic cards
• Accepting Electricity, Telephone bills , and extending services on behalf of the Service providers
• Bank assurance, cross selling of various financial products and so on
• While the bank is making a person as their customer due care has to be shown taking into
consideration the latest provisions of KYC norms
• A banker should be able to justify beyond doubt that his customer has become his customer after
following all the procedures, norms and he has acted as a prudent banker.

Importance of Banks:

Banks are important players in financial markets and offer financial services such as investment
funds. In some countries such as Germany, banks have historically owned major stakes in industrial
corporations while in other countries such as the United States banks are prohibited from owning non-
financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the

7 
 
zaibatsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real
estate services) to their clients.

The level of government regulation of the banking industry varies widely, with countries such as
Iceland, the United Kingdom and the United States having relatively light regulation of the banking
sector, and countries such as China having relatively heavier regulation (including stricter regulations
regarding the level of reserves).

The Indian Banking History:

The Banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors. For the past three
decades India's banking system has several outstanding achievements to its credit. The most striking is
its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact,
Indian banking system has reached even to the remote corners of the country. This is one of the main
reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividend with the
nationalization of 14 major private banks of India.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the
journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned
below:

• Early phase from 1786 to 1969 of Indian Banks

• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
• New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991.

To make this write-up more explanatory, we prefix the scenario as Phase I, Phase II and Phase III.

Phase I:

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank. The East India Company established:

Bank of Bengal (1809),

Bank of Bombay (1840)
Bank of Madras (1843) as independent units and called it Presidency Banks. These three
banks were amalgamated in 1920 and Imperial Bank of India was established which
started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National
Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India,
Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up.

8 
 
Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the
functioning and activities of commercial banks, the Government of India came up with The Banking
Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of
1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision
of banking in India as the Central Banking Authority.
During those days public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was
comparatively safer. Moreover, funds were largely given to traders.

Phase II:

Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it
nationalized Imperial Bank of India with extensive banking facilities on a large scale specially in rural
and semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle
banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,
1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of
India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with
seven more banks. This step brought 80% of the banking segment in India under Government
ownership.

Phase III:

This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which
worked for the liberalization of banking practices.The country is flooded with foreign banks and their
ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net
banking is introduced. The entire system became more convenient and swift. Time is given more
importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is
all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet
fully convertible, and banks and their customers have limited foreign exchange exposure.

9 
 
 GLOBAL BANKING HISTORY:
The first banks were probably the religious temples of the ancient world, and were probably established
sometime during the third millennium B.C. Banks probably predated the invention of money. Deposits initially
consisted of grain and later other goods including cattle, agricultural implements, and eventually precious metals
such as gold, in the form of easy-to-carry compressed plates. Temples and palaces were the safest places to store
gold as they were constantly attended and well built. As sacred places, temples presented an extra deterrent to
would-be thieves. There are extant records of loans from the 18th century BC in Babylon that were made by
temple priests/monks to merchants. By the time of Hammurabi's Code, banking was well enough developed to
justify the promulgation of laws governing banking operations.
The fourth century B.C. saw increased use of credit-based banking in the Mediterranean world.
In Egypt, from early times, grain had been used as a form of money in addition to precious metals, and
state granaries functioned as banks.
In the late third century B.C., the barren Aegean island of Delos, known for its magnificent harbor and
famous temple of Apollo, became a prominent banking center.Ancient Rome perfected the administrative
aspect of banking and saw greater regulation of financial institutions and financial practices. Charging
interest on loans and paying interest on deposits became more highly developed and competitive. The
development of Roman banks was limited, however, by the Roman preference for cash transactions.

The following is a list of “The World’s Top 10 Banks for 2008″ based on assets held as of
April 30,2008:

TOP 10 BANKS IN THE WORLD

BANK
The Royal Bank of Scotland
Group plc , Edinburgh , UK
Deutsche Bank AG , Frankfurt
am Main , Germany
BNP Paribas SA , Paris , France
Barclays PLC , London , UK
Credit Agricole SA , Paris ,
France
UBS AG , Zurich , Switzerland
Societe Generale , Paris La
Defense , France
ABN AMRO Holding NV ,
Amsterdam , Netherlands
ING Bank NV , Amsterdam ,
Netherlands
The Bank of Tokyo-Mitsubishi
UFJ Ltd , Tokyo , Japan
RANK ASSETS- US $ MILLION
1 $3,782,880.00
2 $2,953,727.00
3 $2,477,272.00
4 $2,442,996.00
5 $2,067,577.00
6 $2,007,224.00
7 $1,566,904.00
8 $1,498,849.00
9 $1,453,382.00
10 $1,362,598.00

10 
 
List of Top Banks of India:
State bank of india:

SBI is the oldest bank of India and also India's largest commercial bank. This government owned bank
was established in the year 1806.It is also the second largest bank in the globe. The bank provides a wide array
of banking products through their effective network not only on India but also overseas. The bank has about
16,000 branches and is also accountable for one-fifth of the loans of India. It has about 8500 ATMs across the
nation.

ICICI Bank:
This is the second largest bank in India with about 1,419 branches and 4,644 ATMs spread countrywide.
It is among the top commercial banks of India providing a wide range of banking services through varied
delivery channels. Besides offering high-end banking facilities like Internet banking, Phone Banking and
Mobile Banking, ICICI also plays a pivotal role in the domains of investment banking, venture capital and asset
management and life and non-life insurance. It has its presence in 18 countries across the world including UK,
Canada, Russia and others.

AXIS Bank:
One of the top private banks in India, it was earlier known as the Unit Trust of India (UTI) since it was
promoted by the same organization. It was first among the new private banks to have started its operations in
the year 1994. AXIS has its significant presence in about 4509 districts of India with a wide network of over
729 branch offices and Extension Counters. With around 3171 ATMs, the bank provides round the clock
banking convenience.

HDFC Bank:
It is also among the top banks of India offering various banking services for the customers like Personal
Banking, NRI Services, Net Banking, Online Remittances and others. The year 2008 has been very prosperous
for HDFC as it won a host of awards for being the best retail bank and also the best among other Indian banks
to adopt Information Technology.

HSBC:
The first ATM provider of India, HSBC Bank is one of India's top banks with its operational base
extending consistently. This commercial bank of India first started to function in 1853. It opens up ample
banking services for the customers apart from cash management, financial planning and business banking
facility. It has a provision of 150-in-branch and off-branch ATMs and phone banking for 24 hours.

Punjab National Bank:

Has been in operation since 1895, PNB is a trusted name in the banking segment of India. It is among the
few other public sector banks of India that runs special schemes for senior citizens, army personnel, students
and women. Despite the recessive tendency in Indian economy, PNB has managed to eke out profit on a
sustained manner.

11 
 
Central Bank of India:

This is one of the largest and oldest commercial banks in India. Founded in the year 1911, this is India's
first commercial bank that was completely managed and owned by Indians. With an average business of around
2,000 crore, Central Bank of India has a significant presence in India's financial orbit.

Union Bank of India:

This PSU unit has convinced the customers that they are 'Good people to bank with'. More than 50% of share
capital of Union Bank of India is held by Indian government. Around 27,000 employees work together to fulfill
the bank's mission to reduce the gap between expectations and deliverables.

12 
 
 Legal Issues:
Banks work under various legal framework the most important of these is the Banking
Regulation Act 1949, Basel II norms, RBI act and Negotiable Instruments Act

Banking Regulation Act, 1949 As per Section 5(c) of Banking Regulation Act, 1949 a "Banking
Company" means any company which transacts the business of banking in India.

As per Section 5(b) of Banking Regulation Act, 1949 , banking means the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on demand or
otherwise, and withdrawable by cheque, draft, order or otherwise.
As per section 51 of Banking Regulation Act, 1949, certain provisions of the Banking Regulation
Act are also applicable to the State Bank of India, any corresponding new bank, a regional rural bank
and any subsidiary bank. "Corresponding new bank" has been defined under clause (ee) of section 2 of
the DICGC Act to mean a corresponding new bank constituted under the Banking Companies
(Acquisition and Transfer of Undertakings) Acts of 1970 or 1980.

Basel II Regulations:
Basel II is the second of the Basel Accords, which are recommendations on banking laws and
regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II, which was
initially published in June 2004, is to create an International standard that banking regulators can use
when creating regulations about how much capital banks need to put aside to guard against the types of
financial and operational risks banks face. Advocates of Basel II believe that such an international
standard can help protect the international financial system from the types of problems that might arise
should a major bank or a series of banks collapse.

RB I ACT:
Reserve Bank of India Act, 1934 was enacted to constitute the Reserve Bank of India
a. To regularize issue of Bank notes
b. To regulate the issue of Bank notes
c. For directing the banks when they err
d. To consolidate and amend the law relating to banking

Reserve Bank of India act was introduced in 1934 and since then amended from time to time to
include the latest requirements.
• A provision was inserted by the Information Technology Act,2000 to enable RBI to make
regulations for regulating payment systems of banks and financial institutions

Focal points for Strengthening the Banking System

Prudential Regulation:
Issues in prudential regulation related to FCAC would encompass broadly
the following components:
(i) Regulation of the specific and inter-related risks that arise from international capital flows, notably
liquidity risk, interest rate risk, foreign currency risk, credit risk, counter-party risk and country risk.

13 
 
(ii) Improvements in financial institutions’ liquidity management and disclosure practices as they are
encouraged to diversify funding sources to contain maturity mismatches and improve debt equity mix.
(iii) There is scope for considerable improvements in corporate governance in public sector banks with
the aim of ensuring operational autonomy and equipping them to compete with other banks as equals.
(iv) The Banking Regulation (BR) Act, 1949 allows issue of only one type of banking licence, viz., and
whole banking licence, which permits all licensed banks to undertake all banking activities. There may
be a need for the RBI to issue restricted banking licences to some banking institutions to enable them to
exploit their core competencies.
(v) Level of computerization and branch interconnectivity and computer security should meet the
standards of well developed financial markets.
(vi) Capital adequacy standards should enhance the resilience of banks. The system should move
forward to a differential capital regime. Consideration should be given to introducing a higher core
capital ratio than at present. The risk weighting system should be modified to reflect the actual economic
risk undertaken by banks.
(vii) The scope for undertaking enhanced activity particularly in new financial services should be linked
to quality and adequacy of capital, risk management system and personnel.
(viii) On derivatives and related transactions, strengthening of risk management frameworks in banks
and supervisory capacity, including oversight to limit excessive exposures, would be needed.
(ix) Uniform prudential limits prescribed by the RBI for interest rate risk (IRR) and capital market
exposure (CME) need to be replaced with a differential limit regime which will factor-in the level and
quality of risk management systems and capital in banks.
(x) Increased transparency and market discipline with quantitative and qualitative disclosures will be
needed on risk exposures and risk management systems in banks.
(xi) Modifications to regulation to discourage or eliminate scope for regulatory arbitrage, focusing on
activity-centric regulation rather that institution-centric regulation will be needed. This will require
active involvement, coordination and cooperation among the financial sector regulators.

Current Government Policies: Monetary Measures

Bank Rate:
The Bank Rate has been retained unchanged at 6.0 per cent.

Repo Rate:
The repo rate under the Liquidity Adjustment Facility (LAF) has been retained unchanged at 4.75 per
cent.
Reverse Repo Rate:
The reverse repo rate under the LAF has been retained unchanged at 3.25 per cent.
The Reserve Bank has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable
rates as circumstances warrant.
Cash Reserve Ratio:
The cash reserve ratio (CRR) of scheduled banks has been retained unchanged at 5.0 per cent of net
demand and time liabilities (NDTL)

Interest Rate Response from Banks:

As liquidity remains ample, the competitive pressure on banks to reduce lending rates has increased.

14 
 
Consequently, the transmission of policy rate changes to bank lending rates has improved since the last
Annual Policy Statement in April 2009. As the short-term deposits contracted earlier at high rates
mature and get repriced, it opens up room for banks to further reduce their lending rates.

Monetary Policy Stance

On the basis of the above overall assessment, the stance of monetary policy for the remaining period of
2009-10 will be as follows:

• Manage liquidity actively so that the credit demand of the Government is met while ensuring the
flow of credit to the private sector at viable rates.

• Keep a vigil on the trends and signals of inflation, and be prepared to respond quickly and
effectively through policy adjustments.

• Maintain a monetary and interest rate regime consistent with price stability and financial stability
supportive of returning the economy to the high growth path.

The Reserve Bank reiterates that it will maintain an accommodative monetary stance until there are
definite and robust signs of recovery. This accommodative monetary stance is, however, not the steady
state. On the way forward, the Reserve Bank will have to reverse the expansionary measures to anchor
inflation expectations and subdue inflationary pressures while preserving the growth momentum. The
exit strategy will be modulated in accordance with the evolving macroeconomic developments.

Monetary Policy
The monetary policy stance of the Reserve Bank shifted from concerns related to inflation in the
first half of 2008-09 to maintaining financial stability and arresting the moderation of growth in the
second half. While money supply evolved consistent with indicative projections, credit to private sector
reflected the conditions evolving in the real sector of the economy.
Growth in broad money (M3), year-on-year (y-o-y), was 18.4 per cent at end-March, 2009 as
compared with 21.2 per cent a year ago, reflecting deceleration in the expansion of bank credit and
capital inflows. Aggregate deposits of banks, y-o-y, was 18.8 per cent at end-March 2009 as compared
with 21.7 per cent a year ago

Monetary Conditions

• The conduct of monetary policy had to contend with the scale and pace of external shocks and
their spillover effects through the real, financial and confidence channels. The thrust of the
various policy initiatives has been on providing ample rupee liquidity, ensuring comfortable US
dollar liquidity and maintaining a market environment conducive for continued flow of credit to
the productive sectors.

• Since mid-September 2008, the policy repo rate has been reduced by 425 basis points, the
reverse repo rate has been brought down by 275 basis points and the actual/potential liquidity

15 
 
 injection/availability is over Rs.5,61,700 crore (excluding Rs.40, 000 crore under SLR
reduction). These measures taken by the Reserve Bank have ensured availability of ample
liquidity in the banking system, which was evident in the large and regular absorption of the
surplus from the system through LAF by the Reserve Bank.

• Broad money growth (year-on-year) remained high at 20.0 per cent (up to July 3, 2009), driven
by robust growth in deposits (21.0 per cent) on the components side and significant increase in
banking system's credit to the Government (48.0 per cent) on the sources side. Market absorption
of the government borrowing programme was facilitated by dampened demand for credit from
the private sector in the face of a high deposit growth.

Money Supply
In order to ensure that the increased Government market borrowing programme does not crowd
out credit flow to the private sector, the projection of money supply (M3) growth for 2009-10 has been
raised to 18 per cent from 17 per cent indicated in the Annual Policy Statement. Consistent with this,
aggregate deposits and adjusted non-food credit of commercial banks are projected to grow by 19 per
cent and 20 per cent respectively. As always, these numbers are provided as indicative projections and
not as targets..

Inflation Outlook
According to the reserve bank governor WPI inflation for end-March 2010 is projected at
around 5.0 per cent ─ higher than the projection of 4.0 per cent made in the Annual Policy Statement of
April 2009. As anticipated, the WPI inflation turned negative in June 2009 due to the statistical base
effect and not because of any contraction in demand.

Macroeconomic Outlook
• An assessment of the economic conditions at the current juncture indicates that the global
economic conditions have deteriorated sharply during 2008 and the forecasts of the various
international agencies point to deepening of recessionary conditions during 2009 as well.
• Reflecting global developments and their impact on the Indian economy, as well as domestic
cyclical factors, the various surveys of economic activity point towards prevalence of less than
optimistic sentiment for the outlook of the Indian economy in the coming months. The
Professional Forecasters’ Survey conducted by the Reserve Bank in December 2008 suggested
moderation in economic activity in 2008-09 and 2009-10.
• The Reserve Bank’s Industrial Outlook Survey of Manufacturing Companies in the Private
Sector indicates that the business expectations indices based on the assessment for January-
March 2009 and expectations for April-June 2009 declined sharply by 20.7 per cent and 13.9 per
cent, respectively, over the previous quarters.

Major Reform Initiatives

Some of the major reform initiatives in the last decade that have changed the Face of the Indian
banking and financial sector are:
• Interest rate deregulation. Interest rates on deposits and lending have been deregulated with
banks enjoying greater freedom to determine their rates.
16 
 
 • Adoption of prudential norms in terms of capital adequacy, asset classification, income
recognition, provisioning, and exposure limits, investment fluctuation reserve, etc.
• Reduction in pre-emotions’ – lowering of reserve requirements (SLR and CRR), thus releasing
more lendable resources which banks can deploy profitably. Government equity in banks has
been reduced and strong banks have been allowed to access the capital market for raising
additional capital.
• Banks now enjoy greater operational freedom in terms of opening and swapping of branches,
and banks with a good track record of profitability have greater flexibility in recruitment.
• New private sector banks have been set up and foreign banks permitted to expand their
operations in India including through subsidiaries. Banks have also been allowed to set up
Offshore Banking Units in Special Economic Zones.
• New areas have been opened up for bank financing: insurance, credit cards, infrastructure
financing, leasing, gold banking, besides of course investment banking, asset management,
factoring, etc.
• New instruments have been introduced for greater flexibility and better risk management: e.g.
interest rate swaps, forward rate agreements, cross currency forward contracts, forward cover to
hedge inflows under foreign direct investment, liquidity adjustment facility for meeting day-to-
day liquidity mismatch.
• Several new institutions have been set up including the National Securities Depositories Ltd.,
Central Depositories Services Ltd., Clearing Corporation of India Ltd., Credit Information
Bureau India Ltd.
• Limits for investment in overseas markets by banks, mutual funds and corporate have been
liberalized. The overseas investment limit for corporate has been raised to 100% of net worth and
the ceiling of $100 million on prepayment of external commercial borrowings has been removed.
MFs and corporate can now undertake FRAs with banks. Indians allowed to maintain resident
foreign currency (domestic) accounts. Full convertibility for deposit schemes of NRIs
introduced.
• Universal Banking has been introduced. With banks permitted to diversify into long-term
finance and DFIs into working capital, guidelines have been put in place for the evolution of
universal banks in an orderly fashion.
• Technology infrastructure for the payments and settlement system in the country has been
strengthened with electronic funds transfer, Centralized Funds Management System, Structured
Financial Messaging Solution, Negotiated Dealing System and move towards Real Time Gross
Settlement.
• Adoption of global standards. Prudential norms for capital adequacy, asset classification,
income recognition and provisioning are now close to global standards. RBI has introduced Risk
Based Supervision of banks (against the traditional transaction based approach). Best
international practices in accounting systems, corporate governance, payment and settlement
systems, etc. are being adopted.
• Credit delivery mechanism has been reinforced to increase the flow of credit to priority sectors
through focus on micro credit and Self Help Groups. The definition of priority sector has been
widened to include food processing and cold provisioning, along with legal and institutional
reforms, has led to visible improvement in asset quality in banks. Net NPAs (i.e. that portion of
NPAs which is not provided for) have declined Gradually from 10.7% in 1994-95 to 5.8% in
2001-02. Increase in the number of players has increased competition, which is reflected in the
decline in the bank concentration ratio. The share of top 5 banks in total assets declined from

17 
 
 51.7% in 1991-92 to 43.5% in 2001-02 while its share in profits fell from 54.5% to 41.4% in the
same period. Despite intensification of competition and introduction of prudential norms, all
major bank groups in India have remained profitable. The Return on Assets has hovered in the
range of 0.5-0.8% since the mid-1990s – while this is on the lower side compared to many
developing countries, it is higher than the profitability at around 0.5% in industrialized countries.
The improvement in efficiency is also seen from the intermediation cost for scheduled
commercial banks, which declined from 2.85% in 1996-97 to 2.19% in 2001-02.
• RBI guidelines have been issued for putting in place risk management systems in banks.
• The limit for foreign direct investment in private banks has been increased from 49% to 74% and
the 10% cap on voting rights has been removed. In addition, the limit for foreign institutional
investment in private banks is 49%.
• Wide ranging reforms have been carried out in the area of capital markets. Fresh investment in
CPs, CDs are allowed only in dematerialized form.

MARKET STRUCTURE:

Commercial Banks
The commercial banking structure in India consists of:
Scheduled Commercial Banks
Unscheduled Banks

Scheduled commercial Banks 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 (60 of the Act. Some co-operative banks are scheduled commercial banks albeit not all
co-operative banks are. Being a part of the second schedule confers some benefits to the bank in
terms of access to accommodation by RBI during the times of liquidity constraints. At the same
time, however, this status also subjects the bank certain conditions and obligation towards the
reserve regulations of RBI.

For the purpose of assessment of performance of banks, the Reserve Bank of India categorizes
them as public sector banks, old private sector banks, new private sector banks and foreign banks.

Directory of Banks in India: Old Private Sector Banks

1. Bank of Rajasthan Ltd.

2. Catholic Syrian Bank Ltd.

3. City Union Bank Ltd.

4. Dhanalakshmi Bank Ltd.

18 
 
5 Federal Bank Ltd

6. ING Vysya Bank Ltd.

7. Jammu and Kashmir Bank Ltd.

8. Karnataka Bank Ltd.

9. Karur Vysya Bank Ltd.

10. Lakshmi Vilas Bank Ltd.

Directory of Banks in India: New Private Sector Banks

1. Bank of Punjab Ltd. (since merged with Centurion Bank)

2. Centurian Bank of Punjab (since merged with HDFC Bank)

3. Development Credit Bank Ltd.

4. HDFC Bank Ltd.

5. ICICI Bank Ltd.

6. IndusInd Bank Ltd.

7. Kotak Mahindra Bank Ltd.

8. Axis Bank (earlier UTI Bank)

9. Yes Bank Ltd.

Directory of Banks in India: Directory of Public Sector Banks- Links to all

Nationalized Bank Websites
1. Allahabad Bank

2. Andhra Bank

3. Bank of Baroda

4. Bank of India

19 
 
5. Bank of Maharashtra

6. Canara Bank

7. Central Bank of India

8. Corporation Bank

9. Dena Ban

10. Indian Bank

Regional Rural Banks in India

Rural banking in India started since the establishment of banking sector in India. Rural Banks in those
days mainly focused upon the agro sector. Regional rural banks in India penetrated every corner of the
country and extended a helping hand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs.

Apart from SBI, there are other few banks which functions for the development of the rural areas in
India. Few of them are as follows

• Haryana State Cooperative Apex Bank Limited:

• NABARD:
National Bank for Agriculture and Rural Development (NABARD) is a development bank in the
sector of Regional Rural Banks in India.
• Sindhanur Urban Souharda Co-operative Bank:
Popularly known as SUCO BANK is the first of its kind in rural banks of India. The impressive
story of its inception is interesting and inspiring for all the youth of this country.
• United Bank of India:
• Syndicate Bank was firmly rooted in rural India as rural banking.

Foreign Banks in India:

Foreign banks have brought latest technology and latest banking practices in India. They have
helped made Indian Banking system more competitive and efficient. Government has come up with a
road map for expansion of foreign banks in India.

The road map has two phases. During the first phase between March 2005 and March 2009,
foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or
conversion of existing branches into a WOS. The second phase will commence in April 2009 after a
review of the experience gained after due consultation with all the stake holders in the banking sector.

20 
 
Major foreign banks in India are:
ABN-AMRO Bank:
The history of ABN Amro Bank dates back to the year 1924

Abu Dhabi Commercial Bank Ltd.:

Abu Dhabi Commercial Bank (ADCB) is one of the most prominent nationalized banks of the United
Arab Emirates (UAE).

American Express Bank Ltd:

With its headquarters located in New York, U.S., American Express Company is a global financial
services provider, also known as “AmEx” in short.

BNP Paribas:
BNP Paribas is one of the oldest banks in the continent of Europe.

Citibank:
Citibank is one of the largest banks in the U.S., and is a part of the financial services company
Citigroup.

DBS Bank Ltd:

DBS Bank is a Singapore-based bank, and is known to be one of the largest banks to exist in South East
Asian region by asset value.

Deutsche Bank:
Deutsche Bank, headquartered at Frankfurt in Germany, is one the world's leading international financial
service providers with roughly EURO 2.2 trillion in assets and approximately 80,000 employees.

HSBC Ltd:
HSBC Bank is a subsidiary of HSBC Holdings plc, a London based banking giant which, according to
the Forbes magazine, is the largest banking group in the world, and the 6th largest company in the world
as of April 2009.

Standard Chartered Bank:

Standard Chartered Bank is a London based bank. Although the bank is located in Britain, still a huge
chunk of its revenues originate from the continents of Asia, Africa and Middle East.

Barclays Bank:
Barclays GRCB India is led by Samir Bhatia as its Managing Director. In a short period of just two and
a half years, Barclays GRCB India has placed itself amongst the most respected foreign banks in the
country that is serving more than 830,000 clients.

21 
 
SIGNIFICANT EVENTS IN BANKING SECTOR
The following are the steps taken 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.

After the nationalization of banks, the branches of the public sector bank India rose to approximately
800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.

On July 19, 1969, the Govt. promulgated Banking Companies (Acquisition and Transfer of
Undertakings) Ordinance 1969 to acquire 14 bigger commercial bank with paid up capital of Rs.28.50
cr, deposits of Rs.2629 cr, loans of Rs.1813 cr and with 4134 branches accounting for 80% of advances.
During December 1969, RBI introduced the Lead Bank Scheme on the recommendations of FK
Nariman Committee. Meanwhile, during 1962 Deposit Insurance Corporation was established to provide
insurance cover to the depositors.
The Service Area Approach was introduced during 1989.

In these five decades since independence, banking in India has evolved through four distinct phases:

Foundation phase can be considered to cover 1950s and 1960s till the nationalization of banks in
1969. The focus during this period was to lay the foundation for a sound banking system in the country.

Expansion phase had begun in mid-60s but gained momentum after nationalization of banks and
continued till 1984. A determined effort was made to make banking facilities available to the masses.
Branch network of the banks was widened at a very fast pace covering the rural and semi-urban
population, which had no access to banking hitherto. Most importantly, credit flows were guided
towards the priority sectors.

Consolidation phase: The phase started in 1985 Attention was paid to improving house-keeping,
customer service, credit management, staff productivity and profitability of banks. Measures were also
taken to reduce the structural constraints that obstructed the growth of money market.

22 
 
Reforms phase The macro-economic crisis faced by the country in 1991 paved the way for extensive
financial sector reforms which brought deregulation of interest rates, more competition, technological
changes, prudential guidelines on asset classification and income recognition, capital adequacy,
autonomy packages etc.

MAJOR EVENTS IN GLOBAL BANKING HISTORY:

• Florentine banking — The Medicis and Pittis among others.
• Knights Templar- earliest Euro wide /Mideast banking 1100-1300.
• Banknotes — Introduction of paper money.
• 1602 - First joint-stock company, the Dutch East India Company founded.
• 1720 - The South Sea Bubble and John Law's Mississippi Scheme, which caused a European
financial crisis and forced many bankers out of business.
• 1781 - The Bank of North America was found by the Continental Congress.
• 1800 - Rothschild family founds Euro wide banking.
• 1930-33- In the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping out a third of
the money supply in the United States.[5]
• 2008 - Washington Mutual collapses. It was the largest bank failure in history.

23 
 
IMPORTANT CONCEPT RELATED TO BANKING:
1. 4 C’S OF CREDIT: - The four key elements a borrower should have to obtain credit: character
(integrity), capacity (sufficient cash flow to service the obligation), capital (net worth or owned
funds), and collateral (assets to secure debit).
2. AMORTIZATON: - The gradual elimination of a liability, such as loan, by regular payments
over a specified period of time .such payments must be sufficient to cover both principal and
interest. EMI’S are an example of this.
3. APR:-ANNUAL PERCENTAGE RATE. The yearly cost of a loan including interest, insurance,
etc. expressed as a percentage.
4. BANK:-An organization, which does most or all of the following ;receives demand and time
deposits; honors instruments drawn on them, pays interest on them ;discounts notes; makes loans
and invests in securities ;collects cheques, drafts and notes; certifies depositor’s cheques and
issues drafts.
5. BANK CREDIT:-The borrowing capacity provided to an individual by the banking system in the
form of credit or a loan. The total bank credit the individual has is the sum of the borrowing
capacity each lender bank provides to the individual.
6. BANK DISCOUNT: - The bank charge made for payment of a note prior to maturity, expressed
as a percentage of note’s face value. In short, front-end interest discounted on an instrument or
the amount paid to the holder/bearer of the instrument (borrower) after interest is deducted. The
full amount expressed in the instrument is called as repayment.
7. BANK DRAFT: - A cheque drawn by one bank against funds deposited into its accounts at
another bank, authorizing the second bank to make payment to the individual named in the
drafts.
8. BANK RATE: - The floor interest rate (Least interest rate) charged by banks to the borrowers or
the discount rates set by a central bank or the rate at which RBI lends to member banks.
9. BANK RECOCILIATION: - The process of adjusting balance in an account reported by a bank
that has occurred since the reporting date. For instance, cheque issued by account holder may not
yet reflect in banks books but accounted for by the issuer. Hence, the need to know the likely
balanced.
10. BANKER’S ACCEPTANCE: - A written demand accepted by a bank to pay a specified amount
at a future date.
11. BANKRUPT: - A person, firm or corporation that has been declared insolvent through a court
proceeding and is relieved from the payment of debts (or allowed to do so) after the surrender of
all assets to a court appointed trustee.
12. BEARER: - The holder of a negotiable instrument. That is, a person who is entitled to received
payment on the instrument as a payee in a cheque.
13. BOUNCED CHEQUE: - A cheque which a bank returns because it is not payable due to
insufficient funds in the account of the drawer of the cheque to search other reasons.

24 
 
 14. CREDIT RISK: - The possibility that a bond issuer/borrower will default, by failing to repay
principal and interest in a timely manner. Sovereign bonds issued by the government for the most
part, are immune from default (if the government needs money it can just print more). Bond
issued by corporation is more likely to be defaulted on, since companies could go bankrupt.
Quasi government bodies occasionally default as well although it is much less common. Also
called default risk.
15. DEBT FINANCING: - Financing by selling bonds, bills or notes to individuals or institutions.
16. INTERNAL RATE OF RETURN ( IRR ):- the rate of return that would make the present value
of future cash flows of an investment or business opportunities plus the terminal values of the
business equal the current market price of the investment or opportunities. Simply put, it is the
discount rate, which makes the current investment in a business equal to the present value of
future cash flows arising out of the business plus the terminal value of business, i.e. the NPV of
the business equals zero.

25 
 
 MICRO ANALYSIS

Bank of Maharashtra
2010 Platinum Jubilee Year

Introduction and History:

The fledgling First Steps:

The bank was founded by a group of visionaries led by the late Prof. V.G.Kale and the late Shri. D.K.
Sathe and registered as a banking company on 16th September, 1935 at Pune. The authorized capital was
Rs.10 lakhs and issued capital of Rs. 5 lakhs. Their vision was to reach out and serve the comman man
and meet all their working needs. Successive leadership of the Bank and the employees have
endeavoured to fulfil their vision.

Today, Bank of Maharashtra has over 12 million customers across the length and breadth of the country
served through a network of 1428 branches in 22 states and2 union territories – a truly pan India bank.

The Birth
Registered on 16th Sept 1935 with an authorized capital of Rs 10.00 lakh
and commenced business on 8th Feb 1936.

The Childhood

Known as a common man's bank since inception, its initial help to small
units has given birth to many of today's industrial houses. After
nationalization in 1969, the bank expanded rapidly. It now has 1428
branches all over India. The Bank has the largest network of branches by
any Public sector bank in the state of Maharashtra.

The Adult

The bank has fine tuned its services to cater to the needs of the common man and incorporated the latest
technology in banking offering a variety of services.

Our Vision Statement

To be a vibrant, forward looking, techno-savvy, customer centric bank serving diverse sections of the
society, enhancing shareholders’ and employees’ value while moving towards global presence.

26 
 
Our Logo

The Deepmal
With its many lights rising to greater heights.

The Pillar
Our institution- Symbolising strength.

The Diyas
Our Branches- Symbolising service.

The 3 M's
Symbolising

• Mobilisation of Money
• Modernisation of Methods and
• Motivation of Staff.

Our Aim:

The bank wishes to cater to all types of needs of the entire family, in the whole country. Its dream
is "One Family, One Bank, Bank of Maharashtra ".

The Autonomy

The Bank attained autonomous status in 1998. It helps in giving more and more services with simplified
procedures without intervention of Government.

Our Social Aspect

The bank excels in Social Banking, overlooking the profit aspect; it has a good share of Priority sector
lending having 38% of its branches in rural areas.

Other Attributes

Bank is the convener of State level Bankers committee.

Bank offers Depository services and Demat facilities at 131 branches.
Bank has a tie up with LIC of India and United India Insurance company for sale of Insurance policies.
All the branches of the Bank are fully computerised.

27 
 
 SWOT Analysis

Strengths:

1. Strong customer base in Maharashtra

2. Loyal group of customers since many years

3. Highly qualified staff with doctorates, economists and CAs

4. Strong network in Maharashtra and Gujarat

5. Large number of branches in semi-urban areas in Maharashtra and Madhya Pradesh

6. Large retail customer base (Low cost deposits from retail of BOM were highest upto last year)

7. Efficient internal system

8. Adequate sanctioning powers of authorities internally

Weaknesses:

1. The name of the bank carries a regional image.

2. NPA (Non-performing assets) is high.

3. Forex business is low.

4. No branches abroad.

5. Density of branches in Maharashtra alone is very high.

6. Larger risk involved in retail customer base.

7. Retail customers are more demanding.

Opportunities:
1. Acquisition of smaller private sector banks.

2. Acquiring more government business such as pension and PPF.

3. More scope into Retail advances and Macro finances.

Threats:
28 
 
1. Reducing NPI (Net Profit Interest).

2. Reducing Feebased income.

3. Free entry of foreign banks after 2009.

7Ps
1. Product
A ) Huge Range of Products :

1) Retail financing
2) Housing loan to public
3) Model Educational Loan scheme-from learning to earning
4) Aadhar Scheme for pensioners-no old age blues
5) Mahabank Kisan Credit Card (MKCC)- farmers ease
6) Finance for Non-conventional Sources of Energy-beyond time
7) Micro Finance-never too small for us
8) Swarna jayanti Gram Swarozgar Yojana (SGSY)-Rural focus
9) Swarna Jayanti Shahari Rozgar Yojana (SJSRY)- of towns and cities
10) Assistance to SC/ST Category-finance for everyone
11) Advances to Minority Community-no bars
12) Maha-Entrepreneur-for the spirit of challenge
13) Women Empowerment

b) Products catering to different segments of population such as students, senior citizens or even NRIs.

c) Products catering to different needs of people such as educational loans, consumer loans, banking
needs of women in rural areas, e-banking etc

2. Price
a) Attractive Interest rates of fixed term deposits and interest rates of loan.

For Amount of Rs. 1 For Amount above For Amount

crore up to and Rs. 5 crore to less of Rs.100
inclusive of Rs. 5 than Rs. 100 crore crore and
Duration crore above
Revised rates wef Revised rates wef Revised rates
02.05.09 02.05.09 wef 02.05.09
7days -14 days 2.50 2.50 2.50
15 days to 30 days 3.00 2.50 2.50

29 
 
 31 days to 45 days 3.25 2.50 2.50
46 days to 90 days 3.25 3.00 3.00
91 days to 180 days 3.50 3.50 3.25
181 days to 270 days 4.25 4.25 4.00
271 days to less than one year 5.25 5.25 5.00
ONE YEAR or 365 days 5.50 5.50 5.25
Over One year to less than three
6.00 6.00 5.75
years
Three Years
6.00 6.00 6.00
(Mahalaxmi Term Deposit)
Over three years to five years 6.00 6.00 6.00
Above 5 years 6.00 6.00 6.00

b) Concession of 0.5% to the senior citizens on the same

3. Place

a) Bank Of Mahrashtra has largest number of branches in Maharashtra

b) Thick network in semi-urban and rural areas.

c) Large network of ATMs.

4. Promotion
a) Promotes its image as “ One family – One bank ” through various family oriented schemes.

b) Uses promotional literature such as brochures and pamphlets to increase awareness about schemes
available among customers

c) Promotes its social image by sponsoring events such as CommonWealth Youth Games 2008,
SavaiGandharv Mahotsav in Pune, Felicitation of Bhimsen Joshi on his receiving of highest honour of
Bharat Ratna

5.People

a) Highly Qualified Staff.

b) Loyal Employees working since many years.

30 
 
 c) Relationship building with the customer

d) Special treatment is given to valued customers such as Insta-Debit Cards which are issued and
delivered to customers within two days.

6.Process :
a) Use of simple and less complicated technology at all branches to facilitate easy and smooth
transactions.

b) Implementation of Information Technology

801 branches are connected through Core Banking Solutions while the rest in semi-urban and rural areas
use Bibas software solution.

c) Disaster Recovery and Contingency management plans are in place in case of any calamities.

d) Process Control Mechanisms implemented in BoM

There is an Inspection department at Central and all regional offices.

a) Concurrent Audits

Their purpose is to check conformance to procedural guidelines.

These are held every month in selected branches by external auditors.

b) Cash Verification Inspections

These are internal inspections carried out within the organization.

One branch cross-checks the other branch’s functioning.

7. Physical Evidence
a) Large network of 1428 branches in 22 states and2 union territories

b) Large number of ATMs

c) Computerized branches and use of software solutions for banking such as Core Banking Solutions
and Bibass. Information Technology centre is established in Kharadi, Pune while its disaster recovery
unit is established in Chennai.

31 
 
 Analysis of Balance Sheet
Bank of Maharashtra - Financial Report as on 31.03.2009.

1.Total Business for year 2009 Rs.87072 Cr & year 2008 Rs.71556 Cr Growth of 21.68%.

2. Deposits Rise of Rs 10497 Cr .Deposit for 2009 Rs. 52255 Cr & 2008 Rs .41758Cr.

Share of Current & saving deposit was 35.69%.

3. Gross advances growth of 16.84 % from Rs. 29798 Cr on 31.03.08 to Rs.34817 on 31.03.09.

4. Total income was Rs.4792 Cr for year 08-09. Growth of 25.41% of previous year reflecting robust
growth on core activity.

5. NET PROFIT was Rs.375.16 Cr for the year 2009 Rise of 14.24% .NP for 2008 Rs.328.38 Cr.

6. Decline In NPA (non performing assets) to 2.29% against 2.57% as on 31.03.08.

Net NPA declined to 0.79% on 31.03.09 from 0.87% as on 31.3.08.

7. Book value per share (excluding revaluation reserve) improved to Rs.39.74 as on 31.3.09

Current Share price:

8. Board of directors Declare Dividend of 15 % for year 2008-2009.

Source: Annual Report BOM 09-10

32 
 
Financials -31st march 2009 (Rs. In Millions)

Parameters 31st March 2009

Total Business 870722

Total Deposits 522549

Gross advances 348173

Total Investments 183821

CD ratio 66.67

Percentage Of Priority sector advance 41.06

Percentage of Agriculture advance 18.21

Percentage of gross NPA to Gross Advances 2.29

Percentage of Net NPA to Net Advances 0.79

Operating Profit 7935

Net Profit 3752

Other Income 5000

Net Interest Margin % 2.43

Return on Equity % 21.93

Book Value Per Share(Rs) 39.74

Capital adequacy ratio % 12.05

Total No of Employees 13631

Per Employee Business(in lakhs) 639

No of Branch(22 states & 2 union territories ) 1421

Of which Metros 368

Urban 271

Semi Urban 262

33 
 
 Rural 520

Source: Annual Report BOM 09-10

BALANCE SHEET AS ON 31st MARCH 2009

(Rs. in thousands)
As on 31 March As on 31st March
st

Schedule 2009(Current 2008 (Previous

Year) Year)
CAPITAL AND LIABILITIES
Capital 1 430 ,52 ,00 430 ,52 ,00
Reserves & Surplus 2 2086 ,66 ,78 1350 ,98 ,26
Deposits 3 52254 ,91 ,96 41758 ,33 ,23
Borrowings 4 190 ,01 ,32 199 ,24 ,83
Other Liabilities & Provisions 5 4068 ,23 ,30 4411 ,83 ,02

TOTAL 59030 ,35 ,36 48150 ,91 ,34

ASSETS
Cash and Balances with Reserve Bank of
6 3881 ,41 ,92 3893 ,88 ,35
India
Balances with Banks, Money at call & short
7 223 ,91 ,65 332 ,05 ,30
notice

34 
 
 Investments 8 18382 ,14 ,36 12282 ,95 ,24
Advances 9 34290 ,77 ,28 29285 ,81 ,29
Fixed Assets 10 654 ,80 ,43 220 ,42 ,19
Other Assets 11 1597 ,29 ,72 2135 ,78 ,97

TOTAL 59030 ,35 ,36 48150 ,91 ,34

Contingent Liabilities 12 15264 ,49 ,66 15116 ,74 ,86

Bills for Collection 1753 ,24 ,69 1216 ,07 ,83

Significant accounting policies 17

Notes on Accounts 18
The Schedules 1 to 18 form an integral part of the Accounts.

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2009
(Rs. in thousands)
st
Year ended 31
Year ended 31st March
Schedule March 2009
2008 (Previous Year)
(Current Year)

I. INCOME
Interest earned 13 4291 ,55 ,73 3440 ,47 ,04
Other Income 14 500 ,02 ,06 380 ,28 ,80
TOTAL 4791 ,57 ,79 3820 ,75 ,84

II. EXPENDITURE
Interest expended 15 3035 ,03 ,48 2311 ,79 ,13
Operating Expenses 16 963 ,01 ,84 836 ,33 ,89
Provisions & contingencies 418 ,35 ,64 344 ,24 ,10
TOTAL 4416 ,40 ,96 3492 ,37 ,12

PROFIT/LOSS
Net Profit for the year 375 ,16 ,83 328 ,38 ,72
Add: Profit brought forward 258 ,61 ,25 134 ,65 ,98

35 
 
 TOTAL 633 ,78 ,08 463 ,04 ,70

APPROPRIATIONS
Transfer to Statutory Reserve 93 ,79 ,21 82 ,09 ,68
Transfer to Capital Reserve 65 ,98 ,80 13 ,60 ,03
Transfer to Revenue Reserve 258 ,61 ,26 Nil
Transfer to Special Reserve 12 ,00 ,00 8 ,00 ,00
Proposed dividend 64 ,57 ,80 86 ,10 ,40
Tax on Dividend 10 ,97 ,50 14 ,63 ,34
Balance carried over to Balance
127 ,83 ,51 258 ,61 ,25
Sheet
TOTAL 633 ,78 ,08 463 ,04 ,70

Earning per share (Basic) (Rs.) 8.71 7.63

36 
 
 37 
 
 38 
 
 39 
 
 40 
 
 Human Resources Policy

• A comprehension HRM policy facilitates acquisition and retention of human resources for
consistent and sustainable business growth.
• Monetary and non monetary rewards and recognition mechanism is in place to motivate
performance of a high order.
• Mahabank employees welfare trust administers annual contribution from banks net profit
towards activities/programmes for welfare of employees and their families through recreation
,education ,health and insurance.

Employees’ Welfare Policies:

1. Pension Schemes.

2. Holiday Homes.

3. Reimbursement of Hospitalization Expenses upto 60 %.

4. For Physically Challenged, reimbursement of 75% of cost of required instrument.

5. Free medical check-up for the family once a year.

6. Distress relief fund on death.

7. Incentives to wards of employees for extra-circular activities.

8. Reward for wards on academic performance.

9. Reimbursement of college fees of wards upto certain specified amount.

10. Availability of LFC (Leave Fare Concession) facility.

11. Canteen Subsidy.

12. Reimbursement of claims such as petrol.

41 
 
Organization Hierarchy:
Organization structure change from four-tier to a three tier structure sice Feb 2008.

Three-tier structure consists of three levels:

1. Central Office

2. Regional Offices

3. Branches

Organization Hierarchy

- Chairman
- Managing Director
- Executive Director
- Genral Manager
- Deputy genral Manager
- Assistant Manager
- Chief Manager
- Seniour Manager
- Manager
- Deputy Manager
- Clerk .

42 
 
Key Personnel:

Shri Allen C A Pereira Chairman and Managing Director

Shri M.G. Sanghvi
Executive Director
Shri V.P. Bhardwaj
Director (Government nominee)
Shri S.K. Gogia
Director (RBI nominee)
Shri Tuljapurkar Devidas Ramchandra
Workmen Director
Shri T Parameswara Rao
Director
Shri Chittaranjan Patwari
Director
Shri Anand Kamalnayan Pandit
Shareholder Director
Dr. Dinesh Shantilal Patel
Shareholder Director
Dr. S. U. Despande
Officer Director
Shri S.H. Kocheta
Director

43 
 
 CSR activities:

Mahabank Self Employment Training Institute( M-SETI)

• M-SETI was established in December 2001 under the aegis of MARDEF with a view to
fostering entrepreneurship skill development for educated unemployed youths, specially from
rural areas.
• Various Rural Entrepreneurship Development Programmes and Entrepreneurship Development
Programmes courses are conducted through 3 M-SETI centres at Pune, Aurangabad and Nagpur.
• These M-SETI centres have conducted 187 programmes and trained 3905 unemployed youths of
which 2696 have successfully started their own livelihood activities.

Gramin Mahila Va Balak Vikas Mandal( GMBVM)

• Gramin Mahila Va Balak Vikas Mandal is a Trust sponsored by the bank in 1989. Its objective is
the empowerment of rural women through the medium of Self help groups. Today GMBVM is
working in 5 lead districts of Bank of Maharashtra i.e Pune, Satara, Nasik, Thane and Jalna ,
nuturing self help groups covering over 1 lakh women. The trust has the following thrust areas of
work.
1. It is the only NGO which not only guides SHGs intaking up income generating activities
but also markets the products of SHG . towards this end the bank has made available
space at Model Colony, Pune to run an emporium called ‘SAVITREE’
2. Educating of SHG members
3. Insurance of SHG members
4. Training in all activities to become a successful SHG
5. Credit linkages with banks

Upto 31st March ’08 GMBVM has formed 15739 SHG s and credit liked 13175 SHGs . Out of which,
8974 SHGs are credit linked through branches of bank.

Councelling for farmers in Vidharbha:

• The bank has taken its social responsibility seriously. With the high number of suicides amongst
the farmers inMaharashtra, the bank has taken innovative steps to bring the farmers into the
formal banking sector and stem the depressive trend
• In its endeavour to provide counselling to the farmers in Vidharbha region, Bank of Maharashtra
thought of going beyond extending financial assistance to them, and it came out with an idea of
providing technical inputs to farmers in the drought-affected Vidharbha region.
• The bank, in association with the NGO, conducts these programmes every Saturday and Sunday
in various parts of Amaravati and Yavatmal districts. Agriculture experts give technical inputs to
these farmers, numbering around 100 to 150 in batch, on various matters. The programme
educates farmers not to depend on a single crop but also encourages them to take up some
ancillary activities.
• So far 3736 farmers from Akola , Amravati, Yeotmal and Buldhana Districts have so far been
given training under this programme.

44 
 
Women Empowerment:
Ever since 2001- the Year of Women, the bank is implementing the 13-point action plan in letter
and spirit. The total credit extended to women beneficiaries amounted to rs.1469 crores covering 167327
women borrowers as on march ’08.

Rural Development Centre:

• The bank has established Mahabank Agricultural research and rural Development Foundation in
1980 for supporting farmers by providing credit plus services along with extension services,
technical support, operational research and development in the field of agriculture.
• Considering the need for upgrading the technology adoption in agriculture and allied activities
and to educate farmers for improving productivity the bank has established 2 rural development
centres one at Hadapsar and another at Bhigwan way back in 1984.
• The centres are implementing various developmental programmes like soil reclamation, crop
production, organic farming and activity specific training programmes through NABARD and
other agencies.

Future Plans

• The bank will step into its 75h year of the service on 16th sept 2009.

• Targeting to achieve a total business of rs.110000 cr.

• During the jubilee year,.75 villages to be adopted for basic sanitation ,health , education , besides
conserving energy and water.

• A branch network of more than 1500 branches by 31st march 2010

• 75 new ATMs to be added to existing network of 345 atms

• To have 7500 SHGs credit linked.

• 100% coverage under CBS of all branches.

• To be everyone bank for every banking need.

Snapshots from Press Conferences with BoM Chairman and Managing Director Allen Pereira:

“We plan to cross Rs 1lakh crore business during the 2009-10 financial year. The growth will
predominently come from the 20 per cent projected rise in credits,” BoM Chairman and Managing
Director Allen Pereira said at a press conference on Thursday 14th may 2009. The bank, in the near
future, plans to add 26 new branches to its present tally of 1,422. “During the present financial year, we
will apply for additional 70 to 80 new branch licenses,” he stated.

Speaking at the FICCI Banking Conclave 2009, Pereira said

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“ The bank had approached the government for providing Rs 500 crore per year for the next three
years.

He said that government holding in the bank is 76 per cent, which could go down to 51 per cent.

For the current fiscal, he said that the bank is eyeing credit growth of 20 per cent and deposit growth of
18 per cent.

He said that the bank is targeting gross NPAs of two per cent for the fiscal and net interest margin of 2.7
per cent.”

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Milestones :

1936: February 8 – Commenced Business

1944: Recognised as a Schedule Bank

1945: Deposits crossed Rs. 1.00 Crore Mark.

1946: Executor And Trustee Company formed.

1957 : First Staff Training Centre Setup.

]1958 : Listed on Bombay Stock Exchange.

1960 : Licensed to deal in all Foreign Currencies.

(34 countries ,36 bank ).

Post – Nationalisation ( 19.07.1969 )

1969 : 153 Branches & Total of Rs 152 crore .

1970 : Deposit base crossed Rs 100 Crore Mark.

1976 : Sponsored “Marathwada Gramin Bank” RRB

With Headquarters at Nanded.

: Appointed as Convenor to the state level Bankers committee.

1978 : The then Hon’ble Prime Minister of india

Shiri. Morarji Desai inaugurated the new head office building

at ‘Lokmangul’.

1980 : 500th branch of the bank at Nariman Point Mumbai

Inaugurated by the late Smt.Indira Gandhi,the then

Prime minister of india .

1981 : “Aurangabad – Jalana Gramin Bank 2nd RRB commenced

operation.

1984 : Dr.Manmohan Singh the then Governor Reserve Bank Of

india, launched the Banks Golden Jubilee celebration.

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1986 : “Thane Gramin Bank “3rd RRB commenced operation.

1987 : 1000th Branch open at indira Vasahat ,pune .

1988 : First overseas branch opened at Mumbai.

1991 : Entry in Credit Card business – Bank of Maharashtra

india card (Master Card ).

1996 : Bank’s Diamond Jubilee Celebration launched. By

The then RBI Governer Dr. C. Rangarajan

2004 : Maiden Equity Issues of the Bank’s shares.

: Acquired 9% stake in global trade finance private Ltd.

2006 : Visa Debit card launched

: commenced Bancassurance business

: Commenced distribution of Mutul Fund Products.

: Surpassed business landmark of rs :50,000 Crores.

: 1st CBS branch rolled out on 13th November at Karve Nagar ,

Pune.

2007 : won “Rajbhasha Puraskar ” from Reserve Bank of India in

“Bilingual House Magazines Compititions for the Years (2005-2006).

: Won Best Perfomance Award from NABARD for 2006-2007 for SHG

Formation & Credit linkage

: Smt. Pratibha Devi Singh Patil ,Hon’ble President of India. Awards ‘Best Bank award for Solar
Water Heating Programme (2002-2007 To Bank of Maharashtra.

2008 : The bank received Indira Gandhi Rajbhusha Puraskar for the year 2006 – 07 for SHG formation
& credit linkage.

2009 : 1421 Branches,345 ATMs Total Business rs.87,072 Crores .More then 750 branches under CBS
covering 88% Of Business, Total Net Worth of Rs 1749.39.

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 Suggestions and Conclusions
Today, Bank of Maharashtra has over 12 million customers across the length and breadth of the country
served through a network of 1428 branches in 22 states and 2 union territories – a truly pan India bank.

“One Family - One Bank” has been truly imbibed in their culture.

Their vision was to reach out and serve the comman man and meet all their working needs. Successive
leadership of the Bank and the employees have endeavoured to fulfil their vision.

The soaring heights have only sky as the limit.

The total business grew to Rs. 87,072 crores in 2009 and still has a large scope for business
development.

The very first opportunity lies in dropping and breaking through its regional image.

It can perhaps, increase its network of branches outside Maharashtra.

More techo-savy bank and further advancements in technologies such as internet banking and mobile
banking can attract the younger segment of population.

Matching up with the technological pace will make the bank competent in front of the new generation
banks.

Bank of Maharashtra is very much in a position to adopt aggressive strategies such as acquisition of
smaller private sector banks can be adopted for Bank’s expansion.

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