ORIENTAL BANK OF COMMERCE

INTRODUCTION
The coercion to uplift an economy in a right way to growth is more a mystery than a fact. Every
country in the world is determined to be amongst the strong economies of the world. This draws
a line of difference between developed and developing economies of the world. Developed
countries have strong economies as compared to the developing countries. Economic growth
is the major intent of every nation that contributes towards its development but there are certain
hurdles such as over population, illiteracy and political instability that hold back their economic
growth. Economic growth of every nation is dependent upon the role of financial institutions
and the ultimate financial development. Policymakers and economists generally agree that
financial development contributes towards financial institutions and markets, such as
commercial and investment banks, bond and stock exchanges which in turn lead to economic
growth.

Banking is a business activity of accepting and protecting customer’s money and then lending
to the required customer’s with an intension to make profit after calculating various types of
risks. Now a days, role of bank comprise of various diversified services like debit cards, credit
cards, insurance, safety lockers, Automated Teller Machine (ATM), online fund transfer across
countries, etc. It is rightly said that banking services plays a silent and crucial role in everyone
lives.

Banking business has given new ways for the growth of world’s economy, and at the same time
role of banks in economic development and growth has gradually increased. Role of bank
looks straight forward of accepting money from customers and then lending the same funds to
the borrowers. Banking activities have encouraged lot of people towards investments which in
turn is a part of countries economy growth. If banking business was not available then savings
would sit idle in people’s lockers and new business or new ideas would not be in position to
raise the funds and common people wouldn’t have big dreams. Bank capital consist of earnings,
debts, equities, etc. The difficult task in banking business is how well a bank can manage the
risk and drive business into profitable atmosphere. The various risk a bank face are:

 Credit risk
 Market risk
 Liquidity risk
  Operational risk
 Reputation risk
 Macroeconomic risk

ROLE OF PUBLIC SECTOR BANKS

In India, banks play an important role in economic growth and development. Since the1970s,
public sector banks (PSBs) have been in the forefront of mobilizing resources from far rural
areas as well as extending banking services in the remotest parts of the country. The burden
of social agenda has largely been shouldered by PSBs without any compensation. Therefore,
in the interest of maintaining credibility of PSBs which account for nearly 70 percent of
banking activity in the country, the government is justified in recapitalizing the PSBs regularly.
However, there is need to undertake research on evolving appropriate norms, granular, for
evaluating performance of different banks operating in India without stifling flow of credit to
productive sectors.

PSBs have been the backbone of Indian financial architecture since nationalization of State
Bank of India in 1955, followed by more banks in 1969 and 1980. Despite critical global
conditions and turbulence in the Indian economy, PSBs have been successful in meeting their
mandate with support from the Government and the RBI. In recent years, though the credit off
take has been lower than expected, capital adequacy is appropriate and deposit growth has been
following a steady pace. However, the NPAs of PSBs have increased significantly in the recent
past though the uptrend had been brewing for some time. The general refrain of PSBs is that
they operate under constraints, are not on equal footing with private financial institutions and
have to lend to certain risky segments of the economy as part of priority sector lending, as well
as directed lending, sometimes under political compulsions. However, NPAs in PSBs have
been critical in the past also but staged a recovery.
HISTORY

Oriental Bank of Commerce was established on 19th February 1943 in Lahore. It was founded
by late Rai Bahadur Lala Sohan Lal, the first chairman of the bank. Within four years of its
coming to existence the bank had to face partition. After partition, under the guidance of late
Lala Karam Chand Thapar, the then chairman of the bank, Oriental Bank of commerce shifted
its registered office from Lahore to Amritsar paying every Rupee to its departing customers.

The period of 1970 – 76 was the most challenging phase in the history of the bank. At a point
of time the profit dropped to Rs. 175, which prompted the owner of the bank, Thapar House,
to sell or close the bank. Then the leaders and employees of the bank came forward and took
the initiative to save the bank. Seeing this the owners were moved and had to change their
decision of selling the bank and in turn they decided to improve the position of the bank with
the active cooperation, support and dedication of all the employees. Their effort bore fruits and
the performance of the bank improved significantly. This was the turning point in the history
of OBC.

OBC was nationalized on 15th April 1980. At that time OBC ranked 19th among the 20
nationalised banks. Then OBC had 307 branches with Rs. 282.61 crores as deposits and as
advance Rs. 152.69 crores. In 1997. OBC acquired Bari Doab Bank and Punjab Cooperative
Bank. OBC was also rated as the customer friendly bank by The National Institute of Bank
Management (NIBM).

On 14th August 2004, OBC amalgamated Global Trust Bank (GTB). GTB was a leading private
sector bank in India that was associated with various financial discrepancies leading to a
moratorium being imposed by RBI shortly before it merged with OBC. Along with the
acquisition, 103 branches were brought. This increased OBC’s branches number to a total of
1092.

The bank has progressed on several fronts crossing the Business mix mark of Rs. 2 lakh crores
as on 31st March 2010making it the 7th largest Public sector in India, achievement of 100
percent CBS, reorienting of lending strategy through large and mid-corporates and
establishment of new wings, i.e.: Rural Development and Retail & Priority Sector. The bank
has to its utmost credit lowest staff cost with highest productivity in the Indian baking industry.
BOARD OF DIRECTORS

 Sh. Mukesh Kumar Jain (MD & CEO)

 Sh. Himanshu Joshi (Executive director)
 Sh. Prashant Goyal
 Sh. S. Ganesh Kumar
 Sh. Sanjay Kapoor
 Smt. Mala Srivastava
 Sh. Desh Deepak Khetrapal
 Sh. Ashok Kumar Sharma
 Sh. Madan Mohan Lal Verma

SHAREHOLDING PATTERN

HOLDERS NAME NO. OF SHARES % SHARE HOLDING

Promoters 488,679,067 77.23 %
Financial Institutions 54,358,780 8.59%
General Public 32,061,120 5.07%
Foreign Institutions 26,072,103 4.12%
Banks mutual funds 20,868,383 3.3%
Others 10,728,072 1.7%

Historical promoter holding in Oriental Bank of Commerce

 Historical Institutional (FII + DII) holding in Oriental Bank of Commerce.

PRODUCTS AND SERVICCES OF ORIENTAL BANK OF COMMERCE

Oriental Bank of Commerce offers a comprehensive range of products and services to its
individual customers and institutional clients. They are as follows:
1. Deposit schemes
 ORIENTAL 500
 ORIENTAL 1000
 Oriental Double Term Deposit
 OBC Aadhar
 Flexi Fixed Deposit Scheme
 Basic banking account
 Savings account
 Current account
 Term deposit
 Tax saving term deposit
 Variable progressive deposit
 Jeevan sarathi for PH
 Prgati Deposit Scheme
 Unnati Deposit Scheme
2. Loan
 Loan schemes for minority communities
 Housing loan
 Car / vehicle loan scheme
 Education loan scheme
 Personal loan scheme
 Loan to doctors
 Loan to professionals
  Clean loan to traders
 Loan to Defence Personnel
 Loan to SMEs
o Loan to SMEs
o Debt restructuring scheme for SMEs
 Loan to women
o Oriented mahila vikas yojana
o Scheme for professional & self employed women
o Scheme for financing working women
 Other loan schemes
o Loan against Government securities
o Laghu udhami credit card
o Credit guarantee fund trust for micro & small enterprises
o Swarojgar credit card scheme
 Agrivulture loan schemes
o Kishan credit card
o Composit credit scheme for agricultural leading
o Overdraft facility for farrmers
o Advance against warehouse receipts to farmers
o Purchase of land for agricultural purpose
o Agriculture clinic & business centres
o Financing two / three wheelers to farmers
o Scehemes for financing farmers for purchase of trucks & other
o Schemes for financing commission agents
o Scheme for financing farmers for purchase of second hand trucks & other
o Scheme for purchase of tractor
o Scheme for financing working capital requirement of cold storage
o Scheme for financing timber merchants and saw mills
o Scheme for purchase of second hand tractor
o Agricultural loa against security of gold jewellery
3. SERVICES
 NRI accounts
o Non residence external account
o Non residence ordinary account
 o Foreign currency non – residence
o Residence foreign currency
 Premium services
o Internet banking
o R.T.G.S.
o N.E.F.T.
 Other services
o ABSA
o DMAT account
o Foreign Remittances
o Cash management Services

 Credit cards
The bank provides tow variants of credit cards which are both co- brandes cards offered
in association with the State bank of India (SBI).
o Oriental bank of commerce – SBI Platinum card
Like other credit cards, this card offers reward point earnings on shopping and
discounts, dining and other expenses of an individual’s lifestyle
o Oriental bank of commerce – SBI Gold card
This credit card is offered as a co- branded card offering discounts and benefits
on expenses charged on the card.
 Debit cards
The bank offers two forms of debit cards. One is issued in partnership with RuPay and
the other one is affiliated with VISA. Following are the debit cards
o RuPay Debit carad
o VISA Debit card

These cards are offered to the account holders so that they can withdraw cash from any
ATM or make cashless transactons across multiple outlets without any hassles.

 Loans
The bank provides a wide variety in its loan category. It offers both specialized and
general loans. Following are the variousforms of loans the bank offers:
o Housing loan
Housing loan is granted to individuals for the purpose of purchasing or
constructing a house for residential purposes. The loan amount can also be used
for renovation or revamping of an existing home.
o Education Loan
Loans that are specifically granted to students so that they can enroll themselves
for higher studies.
o Vehicle Loan
If an individual wants to purchase a two-wheeler or a four-wheeler, he can avail
vehicle loan for funding the same
o Personal Loan
This loan is granted to fund the personal expenses of an individual.
o Loan against Property
Any residential or commercial property can be mortgaged with the bank to avail
of a loan against the value of the property which can then be used for any
personal or business use.
o Oriental UttamVyapari Scheme
This loan is specially granted to traders to fund their business expenses
o Financing Autos and Taxis
Individuals looking forward to purchase an auto, taxi or a small cargo vehicle
for business can avail of this loan
o Loan to Doctors
This loan is given to doctors and other medical professionals to fund the
expenses of their profession
o Loan to other Professionals
Any other professionals other than doctors can avail of a loan from the bank
under this category
o Finance against Government Securities
If an individual holds government securities, a loan can be availed against such
securities in the form of an overdraft or a demand loan
o Loan against Gold Ornaments
This is a gold loan which provides funds against the value of pledged gold
ornaments and jewelry.
 o Earnest Money Scheme
Loan offered to individuals who desire to purchase plots or flats under the
schemes offered by State Housing Boards
o Loan against Deposits
Loans can be taken against deposits held by applicants
o Oriental Loan to women
Loans specially offered to women to meet their personal or business expenses
o Oriental Reverse Mortgage Scheme
A loan scheme that provides lifelong annuity for retirement planning
 Savings Account
Oriental bank of commerce offers only two types of savings accout at present. They
are:
o Unnati Deposit Scheme
It is a savings account which can be opened with an amount as little as Rs.500
and is available also for minors
o Basic Savings Bank Deposit Accounts
An account which is designed for low income people where they do not have
to maintain any minimum balance to keep the account active.
 Term deposit account
In addition to savings account the bank also provides multiple types of fixed deposit
accounts with varied features and varied suitability. Following are the deposit accounts:
o Oriental Double deposit Scheme
This is a deposit scheme which doubles the investment made in the account
within a specified period
o Flexi Fixed Deposit Scheme
It is a fixed deposit account which offers the facility of liquidity to individuals
in the form of a saving account
o Tax Saving Term Deposit
A deposit account where the money is held for a period of minimum 5 years to
be eligible for tax exemption under the Section 80C
o VarishthaSanman
A term deposit account which is meant for the senior citizens that offers them
an increased rate of interest
 o OBC Aadhar
OBC Aadhar is a recurring deposit scheme where the amount can be deposited
monthly and subsequent deposits can also be increased if required.
 NRI Banking
Oriental Bank of Commerce provides NRI banking facilities to both NRIs (non-
Resident Indians) and PIOs(Persons of Indian Origin). This enabes them to transact
business in India without any problem. The list of services rendered by OBCs NRI
banking includes:
o Forex remittance facility
o Premium deposit accounts for NRIs
o Facility of four types of accounts which are Non-Resident External Account,
Non-Resident Ordinary Account, Foreign Currency Non-Resident Account and
Resident Foreign Currency Account
o Facility of foreign remittances through a tie-up with Western Union Money
Transfer
o Speed credit services to enable remittances from abroad
 Internet Banking
The bank facilitates banking ease by allowing transactions to be carried out online by
the way of internet banking. With internet banking customers can easily carry out a
range of transactions online which includes:
o Fund transfer to any third party
o Fund transfer to own linked account
o Payment of loan instalments
o Creation of online deposit accounts
o Facility of online trading in stocks and shares
o Operating and maintaining a Demat Account
o Payment of electricity or other related bills
o Generating a request for a cheque book
o Payment of taxes

This is not an exhaustive list as multiple transactiond are allowed through internet
banking.
RATIO ANALYSIS

RATIOS Mar’18 Mar’17 Mar’16 Mar’15 Mar’14

LIQUIDITY RATIOS

Current ratio 2.40 3.26 1.96 0.75 0.76

Quick ratio 35.30 36.89 30.81 25.91 27.77

Cash ratio 1.87 1.58 1.29 1.5 1.62

PROFITABILITY RATIOS
Operating
profit margin -49.73 -20.95 -8.02 -8.13 -4.23
(%)
Gross
margin (%) 5.29 7.62 9.55 10.54 11.62
Net profit
margin (%) -33.74 -5.93 0.77 2.49 5.99
Adj. cash
margin(%) -28.01 -4.84 1.42 428 6.05
Return on
equity (%) -56.55 -8.63 1.16 3.77 8.91
Return on
Assets (%) -2.51 -0.43 0.06 0.21 0.51
Return on
long term 65.43 94.60 111.73 120.02 121.06
funds (%)
Net Interest
margin 1.93 1.94 2.26 2.20 2.32
LEVERAGE RATIOS
Long term
0.00 0.00 0.00 0.00
debt/equity 0.00
 Total
18.46 16.14 16.00 15.76
debt/equity 20.91

Owners fund
5.46 6.04 6.05 6.19
as % of total 4.76
source
Fixed assets
0.07 0.08 0.09 0.09
turnover 0.07
ratio
Solvency
0.00 0.00 0.00 0.01
ratio -0.03
Interest
1.31 1.26 1.30 1.31
coverage 1.30
ratio