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100 marks project for BBI students on banking structure semester 5
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INDEX
Sr No. Chapter Name Page No.1 INTRODUCTION1.1 General Introduction about the Banking sector 1
1.2 Banking Sector in the Past 3
1.3 Indian Banking Scenario 2011 4
1.4 Future of the Indian Banking Market 5
2 PROFILE OF THE ORGANIZATION
2.1 Organizational Chart of the Bank 6
2.2 Banking Structure in India 7
2.3 Changes in Banking Structure 28
2.4 Impact of Changes in Banking Structure of Economy
30
2.5 Comparison of Banking Structure in China And India
34
2.6 Organizational Structure of the Co-operative Bank
36
2.7 State Bank of India 39
2.8 Structure of the State Bank of India 41
3 STUDY OF SELECTED PROBLEM RESEARCH
3.1 Statement of Research Objective 48
3.2 Research Design & Methodology 49
4 SUMMARY AND CONCLUSION 4.1 Summary by Learning the Project 49
4.2 Recommendation & Conclusion 50
BIBLIOGRAPHY 51
INTRODUCTION
India has a well developed Banking system. The banking industry
originated in India in the 18th century and since then it has
undergone significant number of changes. The commercial banking
industry in India over the past few decades has been revolutionized
by a number of factors such as independence, nationalization,
deregulation , rise of the Internet, etc. The commercial banking
structure in India consists of Scheduled Banks and Unscheduled Banks.
In the past the banks did not find any attraction in the Indian
economy because of the low level of economic activities and little
business prospects. Today we find positive changes in the National
business development policy. Earlier, the money lenders had a strong
hold over the rural population which resulted in exploitation of small
and marginal savers. The private sector banks failed in serving the
society. This resulted in the nationalization of 14 commercial banks in
1969. Nationalization of commercial banks paved ways for the
development of Indian economy and channelized financial resources for the
up liftment of weaker sections of the society. The passage of financial
modernization legislation by Congress in 1999 removed barriers, allowing
banks to expand product offerings, while the potential of the Internet as a
sales, marketing and delivery tool, widened the avenues to sell and deliver
these products. The main products of the commercial banking industry-
insurance, securities , mortgages, mutual funds and consumer credit-have all
benefited from these changes. This report will examine the extent to which
increased product sales have influenced overall bank assets and how commercial
banks' increased market share in each of these products areas over the next five
years will raise overall bank income and assets.
Currently (2011), banking industry in India is generally fairly mature in terms of
supply, product range and reach-even though reaches in rural India still remains a
challenge for the private sector and foreign banks. In terms of quality of assets
and capital adequacy, Indian banks are considered to have clean, strong and
transparent balance sheets relative to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimal pressure
from the government. The stated policy of the Bank on the Indian Rupee is to
manage volatility but without any fixed exchange rate-and this has mostly been
true.
With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may
also expect mergers and acquisitions, takeovers, and asset sales.
BANKING SECTOR IN THE PAST
Banking in India originated in the first decade of 18th century with The General
Bank of India coming into existence in 1786. This was followed by Bank of
Hindustan. Both these banks are now defunct. The oldest bank in existence in
India is the State Bank of India being established as "The Bank of Bengal" in
Calcutta in June 1806. A couple of decades later, foreign banks like Credit
Lyonnais started their Calcutta operations in the 1850s. The first fully Indian
owned bank was the Allahabad Bank, which was established in 1865.By the
1900s, the market expanded with the establishment of banks such as Punjab
National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both
of which were founded under private ownership. The Reserve Bank of India
formally took on the responsibility of regulating the Indian banking sector from
1935. After India's independence in 1947, the Reserve Bank was nationalized and
given broader powers.
At the beginning of the 20th century, Indian economy was passing through a
relative period of stability. Around five decades have elapsed since the India's
First war of Independence, and the social, industrial and other infrastructure have
developed. At that time there were very small banks operated by Indians. The
banking in India was controlled and dominated by the presidency banks, namely,
the Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later
on merged to form the Imperial Bank of India, and Imperial Bank of India.
INDIAN BANKING SCENARIO 2011
The last decade has seen many positive developments in the Indian banking
sector. The policy makers, which comprise the Reserve Bank of India (RBI),
Ministry of Finance and related government and financial sector regulatory
entities, have made several notable efforts to improve regulation in the sector. The
sector now compares favorably with banking sectors in the region on metrics like
growth, profitability and non-performing assets (NPAs). A few banks have
established an outstanding track record of innovation, growth and value creation.
This is reflected in their market valuation. However, improved regulations,
innovation, growth and value creation in the sector remain limited to a small part
of it. The cost of banking intermediation in India is higher and bank penetration is
far lower than in other markets. India’s banking industry must strengthen itself
significantly if it has to support the modern and vibrant economy which India
aspires to be.
Opportunities And Challenges For Players
The bar for what it means to be a successful player in the sector has been raised.
Four challenges must be addressed before success can be achieved.
First, the market is seeing discontinuous growth driven by new products
and services that include opportunities in credit cards, consumer finance and
wealth management on the retail side, and in fee-based income and
investment banking on the wholesale banking side. These require new skills
in sales & marketing, credit and operations. Second, banks will no longer
enjoy windfall treasury gains that the decade-long secular decline in interest
rates provided. This will expose the weaker banks. Third, with increased interest
in India, competition from foreign banks will only intensify. Fourth, given
the demographic shifts resulting from changes in age profile and household
income, consumers will increasingly demand enhanced institutional capabilities
and service levels from banks.
FUTURE OF INDIAN BANKING MARKET
The Indian banking market is growing at an astonishing rate, with
assets expected to reach US$1 trillion by 2010. An expanding
economy, middle class, and technological innovations are all contributing
to this growth.
A new Celent report, Overview of Indian Banking Market, examines
the impressive growth of this industry, largely due to an expanding
economy and growing consumer middle class in need of financial
services . India's economy is growing at a rate of 8%, with banking
assets increasing at a CAGR of 24% from 2001 to 2008, from
US$374.4 billion in 2003 to US$616.15 billion in 2008. While public
sector banks still dominate India’s banking industry, the private sector
is growing, with global players now actively competing with domestic
banks.
Organizational Chart of the Bank
Banking Structure in India
Scheduled bank in India
Scheduled Banks in India constitute those banks which have been
included in the Second Schedule of Reserve Bank of India (RBI) Act,
1934. RBI in turn includes only those banks in this schedule which
satisfy the criteria laid down vide section 42 (6) (a) of the Act.
As on 30th June, 1999, there were 300 scheduled banks in India
having a total network of 64,918 branches. The scheduled commercial
banks in India comprise of State bank of India and its associates
(8), nationalised banks (19), foreign banks (45), private sector banks
(32), co-operative banks and regional rural banks.
A] Commercial Banks in India
Commercial Banks in India are broadly categorized into Scheduled
Commercial Banks and Unscheduled Commercial Banks. The Scheduled
Commercial Banks have been listed under the Second Schedule of the Reserve
Bank of India Act, 1934. The selection measure for listing a bank under
the Second Schedule was provided in section 42 (6) (a) of the
Reserve Bank of India Act, 1934.
Commercial bank is the term used for a normal bank to
distinguish it from an investment bank or retail bank. It can also
refer to a bank or a division of a bank that mostly deals with
deposits and loans from corporations or large businesses, as opposed to
normal individual members of the public (retail banking).
Activities of Commercial Banks
The modern Commercial Banks in India cater to the financial needs of
different sectors. The main functions of the commercial banks comprise:
transfer of funds
acceptance of deposits
offering those deposits as loans for the establishment of industries
purchase of houses, equipments, capital investment purposes etc.
The banks are allowed to act as trustees. On account of the knowledge of the
financial market of India the financial companies are attracted towards them to act
as trustees to take the responsibility of the security for the financial instrument
like a debenture. The Indian Government presently hires the commercial banks
for various purposes like tax collection and refunds, payment of pensions etc.
Functions of Commercial Banks
The functions of commercial banks are divided into two categories:
i) Primary functions, and
ii) Secondary functions including agency functions.
i) Primary functions:
The primary functions of a commercial bank include:
a) Accepting deposits; and
b) Granting loans and advances;
i i ) Secondary function
Be sides the primary functions of a accepting deposits and lending money, banks
perform a number of other function which are called secondary functions.
These are as follows-
Issuing letter of credit, traveler cheques, circular notes etc.
Undertaking safe custody of valuables, important documents and
securities by providing safe deposit locker
Providing customers with facilities of foreign exchange.
Transferring money from one place to another; and from one branch to
another branch of the bank.
Standing guarantee on behalf of its customers, for making payments for
purchase of goods , machinery, vehicles etc
Collecting and supplying business information;
Providing reports on the credit worthiness of customers
Nationalized Banks in India
Nationalised banks in India are the major players in Indian banking
system dominating the industry. Not only that, the nationalized banks in
India also play pivotal role in the economic development of the
country at the same time. The history of nationalization of Indian
banks dates back to the year 1955 when the Imperial Bank of India
was nationalized and re-christened as State Bank of India (under the
SBI Act, 1955). Later on July 19, 1960, the 7 subsidiaries of SBI
viz. State Bank of Hyderabad (SBH), State Bank of Indore, State
Bank of Saurashtra (SBS), State Bank of Mysore (SBM), State Bank
of Bikaner and Jaipur (SBBJ), State Bank of Patiala (SBP) and State
Bank of Travancore (SBT) were also nationalized with deposits more
than 200 crores
Nationalised Banks:
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank Ltd.
Indian Bank
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
Union Bank of India
United Bank of India
II] Private sector banks in India
Private banking in India was practiced since the beginning of
banking system in India. The first Private bank in India to be
set up in Private Sector Banks in India was Induslnd Bank. It
is one of the fastest growing Private Sector Banks in India.
IDBI ranks the tength largest Development bank in the world
as Private Banks in India and has promoted a world class
institution in India. The First Private Bank in India to receive an
in principle approval from the Reserve Bank of India was
Housing Development Finance Corporation Limited, to set up
a bank in the private sector banks in India as part of the
RBI's liberalization of the Indian Banking Industry. It was
incorporated in August 1994 as HDFC Bank Limited with
registered office in Mumbai and commenced operations as Scheduled
Commercial Bank in January 1995. ING Vysya, yet another
Private Bank of India was incorporated in the year 1930
Bangalore has a pride of place for having the first branch
inception in the year 1934. With successive years of patronage
and constantly setting new standards in banking, ING Vysya
Bank has many credits to its account.
List of Private Banks in India
Bank of Punjab
Bank of Rajasthan
Centurion Bank
City Union Bank
Dhanalakshmi Bank
Development Credit Bank
Federal Bank
HDFC Bank
ICICI Bank
Jammu & Kashmir Bank
Karnataka Bank
South Indian Bank
United Western Bank
UTI Bank
III] 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. The rural banks of SBI is spread in 13 states extending from
Kashmir to Karnataka and Himachal Pradesh to North East. The
total number of SBIs Regional Rural Banks in India branches is
2349 (16%). Till date in rural banking in India, there are 14,475
rural banks in the country of which 2126 (91%) are located in
remote rural areas Regional Rural Banks in India are an integral
part of the rural credit structure of the country. Since the very
beginning, when the Regional Rural Banks in India (RRBs) were
established in October 2, 1975, these banks played a pivotal role in the
economic development of the rural India. The main goal of establishing
regional rural banks in India was to provide credit to the rural people
who are not economically strong enough, especially the small and marginal
farmers, artisans, agricultural labours, and even small entrepreneurs . Apart
from SBI, there are many other banks which function for the development
of the rural areas in India. These banks are listed below:
Chhattisgarh Gramin Bank
Madhya Bihar Gramin Bank
Dena Gujarat Gramin Bank
Baroda Gujarat Gramin Bank
Harayana Gramin Bank
Gurgaon Gramin Bank
Assam Gramin Vikash Bank
Jharkhand Gramin Bank
Madhya Bharath Gramin Bank
Chambal-Gwalior Kshetriya Gramin Bank
Himachal Gramin Bank
Punjab Gramin Bank
Aurangabad -Jalna Gramin Bank
Thane Gramin Bank
Baroda Rajasthan Gramin Bank
Rajasthan Gramin Bank
Baroda Western Uttar Pradesh Gramin Bank
B] Co-Operative Bank in India :
The Co–operative banks in India started functioning almost 100 years
ago. The Cooperative bank is an important constituent of the Indian
Financial System, judging by the role assigned to co operative, the
expectations the co operative is supposed to fulfil, their number, and
the number of offices the cooperative bank operate. Though the co
operative movement originated in the West, but the importance of such
banks have assumed in India is rarely paralleled anywhere else in
the world. The cooperative banks in India play an important role even
toda y in rural financing. The businesses of cooperative bank in the urban
areas also have increased phenomenally in recent years due to the
sharp increase in the number of primary co-operative banks. Co-
operative Banks in India are registered under the Co-operative
Societies Act. The cooperative bank is also regulated by the RBI. They
are governed by the Banking Regulations Act 1949 and Banking Laws
(Co-operative Societies) Act , 1965.
Features of Cooperative Banks
Co-operative Banks are organized and managed on the principal of
co-operation, self-help, and mutual help. They function with the rule
of "one member, one vote". Function on "no profit, no loss" basis. Co-
operative banks, as a principle, do not pursue the goal of profit maximisation.
Co-operative bank performs all the main banking functions of deposit
mobilisation, supply of credit and provision of remittance facilities.
Co-operative Banks provide limited banking products and are functionally
specialists in agriculture related products. However, co-operative banks
now provide housing loans also. UCBs provide working capital loans and
term loan as well. The State Co-operative Banks (SCBs), Central Co-
operative Banks (CCBs) and Urban Co-operative Banks (UCBs) can
normally extend housing loans upto Rs 1 lakh to an individual. The
scheduled UCBs, however, can lend upto Rs 3 lakh for housing purposes.
The UCBs can provide advances against shares and debentures also. Co-
operative bank do banking business mainly in the agriculture and rural
sector. However, UCBs, SCBs, and CCBs operate in semi urban, urban, and
metropolitan areas also. The urban and non-agricultural business of these
banks has grown over the years. The co-operative banks demonstrate a
shift from rural to urban, while the commercial banks, from urban to rural.
Co-operative banks are perhaps the first government sponsored, government-
supported, and government-subsidised financial agency in India. They get
financial and other help from the Reserve Bank of India NABARD, central
government and state governments. They constitute the "most favoured"
banking sector with risk of nationalisation. For commercial banks, the
Reserve Bank of India is lender of last resort, but co-operative banks it is
the lender of first resort which provides financial resources in the form of
contribution to the initial capital (through state government), working capital,
refinance. Co-operative Banks belong to the money market as well as to the
capital market. Primary agricultural credit societies provide short term and
medium term loans. Land Development Banks (LDBs) provide long-term loans.
SCBs and CCBs also provide both short term and term loans. Co-operative banks
are financial intermediaries only partially. The sources of their funds
(resources) are
central and state government,
the Reserve Bank of India and NABARD,
other co-operative institutions,
ownership funds and,
deposits or debenture issues.
NAFSCOB
The National Federation of State Cooperative Banks Ltd. (NAFSCOB), was
established on 19th May 1964 with a view to facilitate the operations of
State and Central Cooperative Banks in general and Development of
Cooperative Credit in particular.
The objectives of NAFSCOB are:
To provide a common forum to the member banks to examine the
problems of cooperative credit, banking and allied matters and
evolve suitable strategies to deal with them.
Promote and protect the interests of the member banks in all spheres
of their activities and to give expression to the views of the member banks.
Co-ordinate and liaison with Government of India , Reserve Bank of
India respective State Governments, NABARD and other higher
financing institutions for the development of cooperative credit on behalf
of the member banks.
Provide research and consultancy inputs to the member banks in
order to facilitate them to strengthen their own organizations.
Organise conferences / seminars/ workshops / meeting to share the
views of common interest with a view to contribute for better policy
decisions.
The Federation functions with three of its wings, viz.
Planning, Research and Development (PRD)
All India Mutual Arrangement Scheme (AIMAS) and
Computer Services Division (CSD).
I] Rural Cooperative Banking
Rural Cooperative Banking and Credit Institutions play an important role in
meeting the growing credit needs of rural India. The volume of credit
flowing through these institutions has increased. The performance of these
institutions, however (apparent in the share of total institutional credit and the
indicators of their financial health), has been less than satisfactory and is
deteriorating rapidly. Of late, a number of Committees have gone into the
reasons for this situation and suggested remedial measures, but there has been
little progress in implementing their recommendations. The Government of
India, which is committed to reviving and revitalising the rural cooperative
credit structure (CCS) and attributes high priority and urgency to it, felt
it necessary To commission a fresh review. The Union Government
constituted a Task Force (vide Government of India notification dated 05
August 2004 reproduced in Annexure I) to formulate a practical and
implementable plan of action to rejuvenate the rural cooperative credit
structure.
1) Short-term Rural Co-operatives:
The short-term rural co-operatives provide crop and other working
capital loans to farmers and rural artisans primarily for short-term purpose.
These institutions have federal three-tier structure.
At the Apex of the system is a State Co-operative bank in
each state.
At the middle (or district) level, there are Central Co-
operative Banks also known as District Co-operative banks.
At the lowest (or village) level, are the Primary Agricultural
Credit Societies.
State co-operative Bank
State Co-operative Banks are the apex of the three-tier Co-operative
structure dispensing mainly short / medium term credit. It is the principal
society in a State which is registered or deemed to be registered under the
Government Societies Act, 1912, or any other law for the time being in
force in India relating to co-operative societies and the primary object of
which is the financing of the other societies in the State which are
registered or deemed to be registered. The State Co-operative Banks receive
current and fixed deposits from its constituent banks as well as savings, current
and fixed deposits from the general public and from local boards, other local
authorities, etc. Further, they receive loans from the RBI and NABARD.
NABARD is the supervisory authority for State Co-operative Banks. The state
government contributes the certain portion of their working capital. The principal
function of State Co-operative Banks is to assist the Central Co-operative Banks
and to balance excesses and deficiencies in the resources of Central Co-operative
Banks. It also act as the “balancing centre” for Central Co-operative Banks in the
sense that surplus fund of some of these banks are made available to other needy
banks. It also serves the link between RBI and the Central Co-operative Banks
and Primary Agriculture Credit Societies. But the connection between the State
Co-operative Banks and Primary Co-operative Societies is not direct. The Central
Co-operative Banks are acting as intermediaries between the State Co-operative
Banks and Primary societies
Central co-operative Bank
Central Co-operative Banks form the middle tier of Co-operative credit
institutions. These are the independent units in as much as the State Co-operative
Banks have control to control or supervise their affairs. They are of two kinds i.e.
‘pure’ and ‘mixed’. Those banks are the membership of which is confined to co-
operative organizations only are included in ‘pure’ type, while those banks the
membership of which is open to co-operative organizations as well as to the
individuals are included in ‘mixed’ type. The pure type of Central Banks can be
seen in Kerala, Bombay, Orissa, etc., while the mixed type can be seen in Andhra
Pradesh, Assam, Tamil Nadu, etc. The pure type of banks is based on strict co-
operative principles. However, the mixed type has an advantage over the pure
type in so far as they can draw their funds from the non-agricultural sector too.
The Central Co-operative Banks draw their funds from share capital, deposits,
loans from the State C-operative Banks and where State Banks do not exist from
the RBI, NABARD and commercial banks. NABARD is the supervisory authority
for Central Co-operative Banks. Deposits constitute the major component of
sources of funds, followed by borrowings. The main function of Central Co-
operative Banks is to finance the primary credit societies. In addition they carry
on Commercial banking activities like acceptance of deposits, granting of loans
and advances on the security of first class guilt-edged securities, fixed deposit
receipts, gold, bullion, goods and documents of title to goods, collection of bills,
cheques, etc., safe custody of valuables and agency services. They are expected to
attract deposits from the general public. They also act as ‘balancing centres’,
making available access funds of one primary to another which is in need of them.
The central co-operative banks are located at the district headquarters or some
prominent town of the district. These banks have a few private individuals also
who provide both finance and management. The central co-operative banks have
three sources of funds,
Their own share capital and reserves
Deposits from the public and
Loans from the state co-operative banks
Primary Agriculture Credit Societies:
Primary Agricultural Credit Societies is the foundation of the co-operative
credit system on which the superstructure of the short-term co-operative credit
system rests. It deals directly with individual farmers, provide short and
medium term credit, supply agricultural inputs, distribute consume articles
and also arrange for the marketing of products of its members through a c-
operative marketing societies. These societies form the basic unit of co-
operative credit system in India. These voluntary societies based on principle
of one man one vote has posed challenge to exploitative practices of the
village moneylenders. The farmers and other small-time borrowers come in
direct contact with these societies. The success of the co-operative credit
movement depend largely on the strength of these village level societies.
The major objective of Primary agricultural Credit Societies is to serve the
need of weaker sections of these society. For this purpose, the people with
limited means, particularly with schedules castes and scheduled tribes, are
encouraged to become members of these societies. So, they must function
effectively as well-managed and multi-purpose institutions mobilizing the
savings of the rural people and providing the package of services including
credit, supply of agricultural inputs and implements, consumer goods,
marketing services and technical guidance with focus on weaker sections.
Government has promoted multi-purpose societies in tribal areas for the
benefit of people living there
2) Long-term Rural Co-operatives:
The long-term rural co-operative provide typically medium and long-term
loans for making investments in agriculture, rural industries and, in the
recent period, housing. Generally, these co-operatives have two tiers, i.e.
State Co-operative Agriculture and Development Banks (SCARBDs) at the
state level and Primary Co-operative Agriculture and Rural Development Banks
(PCARDBs) at the taluka or tehsil level. However, some States have a
unitary structure with the state level banks operating through their own
branches.
i. State Co-operative Agriculture and Development Banks
(SCARBDs):
State Co-operative Agriculture and Development Banks constitute the upper-
tier of long term co-operative credit structure. Though long term credit co-
operatives have been allowed to access public deposits under certain
conditions, such deposits constitute a relatively small proportion of their total
liabilities. They are mostly dependent on borrowings for on-lending.
The main objective of the Co-operative State Agriculture and Rural
Development bank is to finance primary agriculture and rural development
banks. The bank undertakes the following functions to achieve the above
objectives:-
(a) Floatation of Debentures;
(b) Receiving Deposit;
(c) Grant of loans to primary cooperative agriculture and rural
development banks for purposes approved by the National Bank for
Agricultural and Rural Development and Registrar of Cooperative
Societies;
(d) To function as the agent of any cooperative bank subject to such
conditions as the Registrar may specify;
To develop, assist and coordinate the work of affiliated primary cooperative
agriculture and rural development banks
The bank issues long term and medium term loans towards
agricultural and allied activities like construction of godowns, cattle shed,
farm house, purchase of lands etc., and for minor irrigation purposes like
construction of new wells, deepening of existing wells etc., In addition ,
long term loans are also sanctioned for animal husbandry, fisheries,
plantation, farm mechanization, non-farm sector and other non-minor
irrigation schemes.
i. Primary Co-operative Agricultural and Rural
Development Banks (PCARDB)
Primary Co-operative Agriculture and Rural Development Banks are
the lowest layer of long term credit co-operatives. It is primarily
dependent on the borrowings for their lending business. They provide
credit for developmental purposes like minor irrigation, cultivation of
plantation crops and for diversified purposes like poultry, dairying and
sericulture on schematic basis. They get requisite financial assistance
from the Cooperative State Agriculture and Rural Development Bank.
In order to widen their scope of lending to compete with other
financial agencies, the primary cooperative agriculture and rural
development banks have been permitted to finance artisans, craftmen
and small scale entrepreneurs. They have also been permitted to
issue loans to small road transport operators in rural areas for
purchase of goods carriers and passenger vehicles. As a result,
during 2007-08, the Primary Cooperative Agriculture and Rural
Development Banks have again started lending for the Non-Farm
Sector including Jewel Loans.
B] Urban Co-operative Banks
The term Urban Co-operative Banks (UCBs), though not formally defined,
refers to primary cooperative banks located in urban and semi-urban areas.
These banks, till 1996, were allowed to lend money only for non-
agricultural purposes. This distinction does not hold today. These banks were
traditionally centred around communities localities work place groups. They
essentially lent to small borrowers and businesses. Today, their scope of
operations has widened considerably. The origins of the urban cooperative
banking movement in India can be traced to the close of nineteenth century
when, inspired by the success of the experiments related to the cooperative
movement in Britain and the cooperative credit movement in Germany such
societies were set up in India. Cooperative societies are based on the
principles of cooperation, - mutual help, democratic decision making and
open membership. Cooperatives represented a new and alternative approach to
organisation as against proprietary firms, partnership firms and joint stock
companies which represent the dominant form of commercial organisation.
Improving health
The tally of financially weak urban banks declined (grade III and IV banks)
to 330 in 2009-10 from 392 in 2008-09. Due to the consolidation process
in the sector, the percentage of banks in grades III and IV witnessed a
declining trend during recent years. There was an improvement in the
asset quality of the entire UCB ector in both a bsolute and percentage
terms as at end-March over the previous year. Gross bad loans declined by
Rs 135 crore to Rs 12,727 crore. However, both gross as well as net non-
performing loans of the UCB sector continued to be on the higher side, RBI
said, in its Trends and Progress report for the banking sector in 2009-
10 .Along with a decline in non-performing loans, there was also an
increase in the coverage ratio of UCBs as of end-March over the previous
year, indicating improvement in financial soundness. The provision coverage
ratio improved to 62.9 per cent at the end of 2009-10 from 59.9 a year
before.
C] All India financial institution
AIFIs With the progressive blurring of functions between banks and
financial institutions, the AIFIs are fast losing ground and adopting the
business model of a bank to remain viable in the long run (Table 3.11).
The merger of ICICI with ICICI bank on March 30, 2002 was the
beginning of conversion of AIFIs into universal banks. Taking into account
the changing operating environment following the initiation of economic
reforms in the early1990s, the Government decided to transform IDBI into a
commercial bank without eschewing its traditional development finance
obligations. The migration to the new business model of commercial
banking, with its access to low cost, current/saving bank deposits is expected to
enable it to overcome most of the limitations of the current model of
development finance and also to diversify its client/ asset base.
I. NABARD
The National Bank for Agriculture and Rural Development (Nabard) is
seriously mulling a proposal to provide Credit Plus services through the
Farmers’ Clubs. Nabard regional office chief general manager Venkatesh
Tagat said North Karnataka offers ample scope for construction of rural
godowns and the banks should hold talks with farmers and explore the
possibility of godown construction especially in the chilly growing belt.
Addressing the farmers during an interaction session organised at
Neeralakatti village in Dharwad taluk recently, he said refinance facility from
Nabard would be available for the purpose with subsidy of up to 25 per
cent of the project cost. Likewise, Nabard was also extending subsidy for
units producing organic manure. Villages covered 100 per cent under solar
energy units, would get a special package from Nabard, he revealed.
II. EXIM
Export-Import Bank of India is the premier export finance institution of the
county, set up in 1982 set up in 1982 under the Export-Import Bank of India Act
1981. Government of India launched the institution with a mandate, not just to
enhance exports from India, but to integrate the country’s foreign trade and
investment with a mandate, not just to enhance exports from India, but to
integrate the country’s foreign trade and investment with the overall
economic growth. Since its inception, Exim Bank of India has been both a
catalyst and a key player in the promotion of cross border trade and
investment. Commencing operations as a purveyor of export credit, like other
Export Credit Agencies in the world, Exim Bank of India has, over the
period, evolved into an institution that plays a major role in partnering
Indian industries, particularly the Small and Medium Enterprises, in their
globalisation efforts, through a wide range of products and services offered at
all stages of the business cycle, starting from import of technology and
export product development to export production, export marketing, pre-
shipment and post- shipment and investment
III. Small Industries Development Bank of India
It is an independent financial institution aimed to aid the growth and
developmen t of micro, small and medium-scale enterprises in India. Set up
on April 2, 1 990 through an act of parliament, it was incorporated initially
as a wholly owned subsidiary of Industrial Development Bank of India.
Current shareholding is widely spread among various state-owned banks,
insurance companies and financial institutions. Beginning as a refinancing
agency to banks and state level financial institutions for their credit to
small industries, it has expanded it s activities, including direct credit to the
SME through 100 branches in all major industrial clusters in India. Besides, it
has been playing the development role in several ways such as support to
micro-finance institutions for capacity building and on lending. Recently it
has opened seven branches christened as Micro Finance branches, aimed
especially at dispensing loans up to Rs. 5.00 lakh.
It is an apex body and nodal agency for formulating, coordination and
monitoring the policies and programmed for promotion and development of
small scale industries.
IV. Industries Development Bank of India
The Industrial Development Bank of India (IDBI) was established on 1 July
1964 under an Act of Parliament as a wholly owned subsidiary of the
Reserve Bank of India. In 16 February 1976, the ownership of IDBI was
transferred to the Government of India and it was made the principal financial
institution for coordinating the activities of institutions engaged in
financing, promoting and developing industry in the country. Although
Government shareholding in the Bank came down below 100% following IDBI’s
public issue in July 1995, the former continues to be the major shareholder
(current shareholding : 65.14%). IDBI provides financial assistance, both in
rupee and foreign currencies, for green-field projects as also for expansion,
modernisation and diversification purposes. In the wake of financial sector
reforms unveiled by the government since 1992, IDBI also provides
indirect financial assistance by way of refinancing of loans extended by
State-level financial institutions and banks and by way of rediscounting of
bills of exchange arising out of sale of indigenous machinery on deferred
payment terms. IDBI’s transformation into a commercial bank would provide
a gateway to low-cost deposits like Current and Savings Bank Deposits. This
would have a positive impact on the Bank’s overall cost of funds and
facilitate lending at more competitive rates to its clients. The new entity
would offer various retail products, leveraging upon its existing relationship
with retail investors under its existing Suvidha Flexi-bond schemes.
The responsibility for maintaining standards of corporate governance lies with its
Board of Directors. Two Committees of the Board viz. the Executive Committee
and the Audit Committee are adequately empowered to monitor implementation
of good corporate governance practices and making necessary disclosures
within the framework of legal provisions and banking conventions.
CHANGES IN BANKING STRUCTURE
The opening up of the Indian banking sector to private players acted as 'the
tipping point' for this transformation. The deregulatory efforts prompted many
financial institutions (like HDFC and ICICI) and non-financial institutions enter
the banking arena. With the entry of private players into retail banking and with
multi-nationals focusing on the individual consumer in a big way, the banking
system underwent a phenomenal change. Multi-channel banking gained
prominence. For the first time consumers got the choice of conducting
transactions either the traditional way (through the bank branch), through ATMs,
the telephone or through the Net. Technology played a key role in providing this
multi-service platform. The entry of private players combined with new RBI
guidelines forced nationalized banks to redefine their core banking strategy. And
technology was central to this change.
Today banks have to look much beyond just providing a multi-channel service
platform for its customers. There are other pressing issues that banks need to
address in order to chalk-out aroadmap for the future. Here are the top three
concerns in the mind of every bank's CEO.
Customer retention:
Customer retention is one of the main priorities for banks today. With the entry of
new players and multiple channels, customers have become more discerning and
less 'loyal' to banks. Given the various options, it is now possible to open a new
account within minutes. Or for that matter shift accounts within a couple of hours.
This makes it imperative that banks provide best levels of service to ensure
customer satisfaction.
Cost pressures:
Cost pressures come into play when banks are not able to afford the cost of a
certain service or initiative although they want to or need to have it in place. This
is primarily because the cost structure at the backend is not efficient enough to
offer that kind of service to the marketplace.
Increased competition:
The entry of new players into the banking space is leading to increased
competition. A recent example would be of Kotak Mahindra Finance Limited
(KMFL)—a financial services company focused on investment consulting, auto
finance, insurance, etc— morphing into Kotak Bank. Many other such players are
waiting on the sidelines. Technology makes it easier for any company with the
right channel infrastructure and money reserves to get into banking. This has been
one of the major reasons behind this kind of competition from players who do not
have a banking background. Kotak Bank overcame the initial costs of setting up
its own ATM network by getting into a sharing agreement with UTI bank. New
entrants with strategies such as these make the banking game tough
IMPACT OF CHANGE IN BANKING STRUCTURE ON
ECONOMY
Financial and Banking reforms
The last decade witnessed the maturity of India's financial markets. Since 1991,
every governments India took major steps in reforming the financial sector of the
country. The important achievements the following fields are discussed under
separate heads:
Financial Markets
In the last decade, Private Sector Institutions played an important role. They grew
rapidly in commercial banking and asset management business. With the
openings in the insurance sector for these institutions, they started making debt in
the market. Competition among financial intermediaries gradually helped the
interest rates to decline. Deregulation added to it. The real interest rate was
maintained. The borrowers did not pay high price while depositors had incentives
to save. It was something between the nominal rate of interest and the expected
rate of inflation.
Regulators
The Finance Ministry continuously formulated major policies in the field of
financial sector of the country. The Government accepted the important role of
regulators. The Reserve Bank of India (RBI) has become more independent.
Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and
Development Authority (IRDA) became important institutions. Opinions are also
there that there should be a super-regulator for the financial services sector instead
of multiplicity of regulators.
Development Finance Institutions
Financial institution's access to SLR funds reduced. Now they have to approach
the capital market for debt and equity funds. Convertibility clause no longer
obligatory for assistance to corporate sanctioned by term-lending institutions.
Capital adequacy norms extended to financial institutions. DFIs such as IDBI and
ICICI have entered other segments of financial services such as commercial
banking, asset management and insurance through separate ventures. The move to
universal banking has started.
Non-banking finance companies
In the case of new NBFCs seeking registration with the RBI, the requirement of
minimum net owned funds, has been raised to Rs.2 crores. Until recently, the
money market in India was narrow and circumscribed by tight regulations over
interest rates and participants. The secondary market was underdeveloped and
lacked liquidity. Several measures have been initiated and include new money
market instruments, strengthening of existing instruments and setting up of the
Discount and Finance House of India (DFHI).The RBI conducts its sales of dated
securities and treasury bills through its open market operations (OMO) window.
Primary dealers bid for these securities and also trade in them. The DFHI is the
principal agency for developing a secondary market for money market
instruments and Government of India treasury bills. The RBI has introduced a
liquidity adjustment facility (LAF) in which liquidity is injected through reverse
repo auctions and liquidity is sucked out through repo auctions. On account of the
substantial issue of government debt, the gilt- edged market occupies an important
position in the financial set- up. The Securities Trading Corporation of India
(STCI), which started operations in June 1994, has a mandate to develop the
secondary market in government securities. Long-term debt market. After
bringing some order to the equity market, the SEBI has now decided to
concentrate on the development of the debt market. Stamp duty is being
withdrawn at the time of dematerialization of debt instruments in order to
encourage paperless trading.
The Capital Market
The number of shareholders in India is estimated at 25 million. However,
only an estimated two lakh persons actively trade in stocks. There has been
a dramatic improvement in the country's stock market trading infrastructure
during the last few years. Expectations are that India will bean attractive
emerging market with tremendous potential. Unfortunately, during recent
times the stock markets have been constrained by some unsavory
developments, which have led to retail investors deserting the stock
markets.
Deregulation of Banking System
Prudential norms were introduced for income recognition , asset
classification, provisioning for delinquent loans and for capital adequacy. In
order to reach the stipulated capital adequacy norms, substantial capital were
provided by the Government to PSBs. Government pre-emption of banks'
resources through statutory liquidity ratio (SLR) and cash reserve ratio
(CRR) brought down in steps. Interest rates on the deposits and lending
sides almost entirely were deregulated . New private sector banks allowed
promoting and encouraging competition. PSBs were encouraged to approach
the public for raising resources. Recovery of debts due to banks and the
Financial Institutions Act, 1993 was passed, and special recovery tribunals
set up to facilitate quicker recovery of loan arrears. Bank lending norms
liberalized and a loan system to ensure better control over credit introduced.
Banks asked to set up asset liability management (ALM) systems. RBI
guidelines issued for risk management systems in banks encompassing
credit, market and operational risks. A credit information bureau being
established to identify bad risks. Derivative products such as forward rate
agreements (FRAs) and interest rate swaps (IRSs) introduced.
Capital Market Developments
The Capital Issues (Control) Act, 1947, repealed, office of the Controller
of Capital Issues was abolished and the initial share pricing were
decontrolled. SEBI, the capital market regulator was established in 1992.
Foreign institutional investors (FIIs) were allowed to invest in Indian
capital markets after registration with the SEBI. Indian companies were
permitted to access international capital markets through euro issues. The
National Stock Exchange (NSE), with nationwide stock trading and
electronic display, clearing and settlement facilities was established. Several
local stock exchanges changed over from floor based trading to screen based
trading.
Private Mutual Funds Permitted
The Depositories Act had given a legal framework for the establishment of
depositories to record ownership deals in book entry form.
Dematerialization of stocks encouraged paperless trading. Companies
were required to disclose all material facts and specific risk factors associated
with their projects while making public issues. To reduce the cost of issue,
underwriting by the issuer were made optional, subject to conditions. The
practice of making preferential allotment of shares at prices unrelated to
the prevailing market prices stopped and fresh guidelines were issued
by SEBI. SEBI reconstituted governing boards of the stock exchanges,
introduced capital adequacy norms for brokers, and made rules for
making client or broker relationship more transparent which included
separation of client and broker accounts.
Comparison of Banking Structure in China and India
A comparison of China and India is both exciting and challenging,
and should ideally lead to a serious consideration of various policy
implications. In this context, our conference today marks the beginning of
a long journey. In my remarks, I will try to compare the banking sectors in
China and India, largely focusing on structure and robustness as well as the
effectiveness of the banking supervisory systems.
As far as the banking sector is concerned, it may well be true that
the two countries share many attributes, particularly in terms of industry
structure. First of all, the two countries heavily depend on bank finance to support
economic growth, and capital markets are less developed. In China, the
total assets in the banking sector represent more than 90 percent of the assets
in the financial sector. And in India, the commercial banking sector
represents about 74 percent of total financial system assets. Nonbank financial
institutions make up the balance in India, of which 8.6 percent are term-
lending institutions and 15.4 percent are investment institutions. Some of
these institutions could be considered as banking institutions according to the
broader definition in China. Moreover, the proportion of commercial banking
sector financial assets in both countries is likely to rise further. Another
strikingly common attribute of the banking system in the two economies is
dominant state ownership. This stands in stark contrast to other developing
economies and has strong implications for the conduct and performance
of the banking sector in general. In China, until very recently, all major
commercial banks except one or two were controlled by the central and
local governments, as are virtually all small commercial banks. China’s banking
sector is relatively concentrated. The four large banks, known as state-owned
commercial banks until the recent diversification of ownership, plus the
Bank of Communications (BOCom), also largely owned by the central
government, account for nearly two-thirds of commercial bank assets.
The Indian banking system can be characterized by a large number of
banks with mixed ownership. However , 27 public sector banks—namely,
banks owned and controlled by the state—continue to dominate the Indian
commercial banking landscape. Together, these banks account for three
quarters of the market share. Even though these public sector banks have
access to capital markets, government policy is to ensure that its equity
interest does not, as a result of public issues by banks, go below 51
percent. As is the case with many developed and developing countries, the
efficiency of the state-owned banks has been a concern for both the Chinese and
Indian governments. And the Indian government also openly admitted that
public sector banks have been consistently outperformed by private sector
banks. The effort to restructure the state-owned banks is still a work in
progress in the two countries. Both governments have continued to launch
many new initiatives to further promote progress in this area.
ORGANISATIONAL STRUCTURE OF THE CO-OPERATIVE
BANK
Managing Director/ Special officer
General Manager Executive Officer
Asst. General Manager (Agricultural Credit)
Board of Directors
Chairman
Asst. General Manager (Non-Agricultural Credit)
Asst. General Manager (Administration credit)
Asst. General Manager
(Banking)
Asst. General Manager (Development)
Manager
Accountant
Section Assistants
Manager
Accountant
Section Assistants
Assistants
Sub-Staff
Filed ManagerFiled Manager
Filed- Staff Filed- Staff
Sub-Staff Sub-Staff
It is observed from chart that the top boss of the Bank is chairman of the bank. The decisions on the policy of the bank are taken by the Board of Directors and are implemented by the chairman through the Managing Director of the Bank
MANAGEMENT OF THE BANK
Management plays a vital role in the operation of business enterprise. A business companies of several elements namely men, materials, money, machines, methods, markets and management. Of these seven M’s, management stand at the apex of the enterprise pyramid and it it determines and controls all other factors of business operation.
As per the provision of the co-operative Societies Act of Tamil Nadu, there are three bodies which control the working of the Central Bank. The representative from the primary co-operative societies and the state Government constitute the General body. Since the general body is large in size, it is impossible for them to meet often. So, they elect a few members who form the Board of Directors. As the Board of Directors is also large in order to carry on the day today activities they select from among themselves a few members who constitute the executive committee. There will be a paid General Manager who is responsible for all the activities of the Bank. He is the officer to sue and to be sued on the behalf of the bank.
The management of the bank was vested in the hands of a special officer in the rank of Joint Registrar of Co-operative department till September 11, 1998 for more than 20 years. Then elections were conducted to the co-operative societies and the management was dissolved on August 10,2001 and the administration was vested with the special officer. Now the bank is under is under the control of a special officer.
According to section 33, sub- section 3 of the Tamil Nadu Co-operative Societies Act, 1983, the minimum number of members in the Board should be 21 and the Maximum should be 31. But of this, the representatives from the PACBS constitute the majority.
Sub-Staff Sub-Staff
27 Members are in the Board of Directors of the Thoothukudi District Central Co-operative Bank, which is constituted as below.
COMPOSITION OF BOARD OF DIRECTORS
Members Number of DirectorsPrimary Agricultural Co-operative Banks 14Other Co-operative Societies 9Government Nominees 4
Total 27
Source : Thoothukudi District Central Co-operative Bank Records.
Out of the 27 directors, directors of PACBS constitute the majority, and one member each from other 9 categories of societies is elected. Tamil Nadu Government nominates 4 directors. The nominees are 1. Management Directors,2 Regional Joint Registrar of Co-operative Societies, 3. Joint Directors from Agricultural Department and 4. Expert in Agricultural Finance.
The above members elect one Chairman and one Vice-Chairman from among them. The day- to-day affairs of the bank are looked after by the Managing Director deputed from the co-operative department in the cadre of joint Registrar of co-operatives. Under him one General Manager the employee of the bank elevated by promotion looks after the entire activities of the bank. One Executive officer deputed from the co-operative department in the cadre of Deputy Registrar looks after the agricultural and non-agricultural credit. He works under the control of the Managing Directors.
The powers and duties of the board of directors are
1. To control the paid staff and look into their appointment, suspension, punishment and removal.
2. To convene general meetings.3. To raise funds, sanction loans and recover debts.4. To sanction contingent expenditure,5. To supervise and manage the affairs of the bank and6. To fix credit limit of the Societies in the recommendation of
the Registrar.
The Executive Committee consists, vice-chairman, Treasurer and a paid Secretary. Usually the Registrar of co-operative deputy one of the his subordinate officers to serve as the Secretary of the Bank.
The General Body is the supreme authority and it meets at least once a year. Ex-ordinary general meetings may be convened by the Registrar of Co-operatives or by the Board of Management of the bank. Every member has only one vote. All questions are decided in the presence of all members. Usually the General Body meets for the following purposes.
1. To elect the directors.2. To examine the statement of accounts audit reports and declare the
dividend. Agricultural3. To amend the bye-laws, and4. To admit any new members or to consider the expulsion of any one
from membership.
5. MEMBERSHIP
The bank has been primarily organized to provide credit and to extend guidance and technical assistance to primary agricultural co-operative banks without affecting their autonomy and independent character. The bank also acts as financing agencies to all types of societies such as weavers societies, industrial co-operatives, consumer stores and employees societies. So they all become member of the bank. Once peculiar feature of the bank is that individuals were also admitted as members in the initial years, because induction of individual members with reputation could repose confidence in the minds of the investing public and creditors. At the instance of All Indian Rural Credit Survey Committee (1954), the process of elimination of individual members was introduced in the most of the makes in bid to make them fully co-operative bank also admission of individual membership has been stopped.
From 1991-92 onwards, the bank has only “A” class members consisting of representatives of co-operative institutions and Tamil Nadu Government “A” class Members who form a part of the General body of the bank. They are eligible to vote and to get dividend. Individuals are admitted as Associate Members and they could avail of only jewel loan, consumer loan and the like. A nominal amount as entrance fee is collected from them.
State Bank of India is the largest banking and financial services company in India by revenue, assets and market capitalisation. It is a state-owned corporation with its headquarters in Mumbai, Maharashtra. As of March 2012, it had assets of US$360 billion with over 13,577 outlets including 157 overseas branches and agents globally. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks — Bank of Calcutta and Bank of Bombay —to form the Imperial Bank of India, which in turn became the State Bank of India. The Government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI has been ranked 285th in the Fortune Global 500 rankings of the world's biggest corporations for the year 2012
SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 18,324 branches, has the largest banking branch network in India. SBI has 14 local head offices situated at Chandigarh, Delhi, Lucknow, Patna, Kolkata, Guwahati (North East Circle), Bhuwaneshwar , Hyderabad, Chennai , Trivandram, Banglore, Mumbai, Bhopal & Ahmedabad and 57 Zonal Offices that are located at important cities throughout the country. It also has 157 branches overseas.
SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes. Also, SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bank is main competitors
Some Important Statistics : (Amount in Lacs) Parameter March
2012June 2012
No. of Regional Offices 4 4No. of District Covered 8 8No. of Branches (as on 31 March 2012)
228 228
No. of Branches in Core Banking
228 228
No. of employees 1019 1011Total Deposits (as 31.03.11) 20,03,96 21,03,40Total Advances (as on 31.03.2011)
11,67,93 11,90,62
No. of Kisan Credit Card Issued 22,14,11 No. of Self Help Group 16,757 Profit before Tax 9,49 Per Branch Business 13,91Per employee Business 3,11Per Branch Profit 2.33Per employee Profit 0.93
ORAGANIZATIONAL STRUCTURE OF THE STATE BANK
OF INDIA
CORPORATE
CENTER
BUSINESS GROUP
Chairman
DMD & CFO
DMD & CCO
DMD & CDO
DMD (I &MA)
DMD (I)
MD &
GM (CB)MD & CE (NB)
DMD & GE (IB)
DMD & GE (A&S)
Deputy General Manager (Module)
AGM – Operation Manager MIS (Direct Branches)
Chief Manager Advances, Rehab.Cum.NPA Mgt. Cell
Chief Manager Gen. Banking / Budgeting & Per. Mon.etc.
Chief Manager Personnel\& HRD Manager Adv. Cell
Manager NPA MGT. / REC.CELL
Manager- Office Language Chief Manager Lead Bank Cell (in a few Modules)
CM Banking Operations
MMGS III – Zonal Office computer Centre
MMGS III – Inter office Reconciliation (Government Accounts Department)
Chief Manager-Office Administration
Medical Officer Premises Officer
AGMs (Region)
Manager- Disc. Pro Cell
Security Officers (Module)
Asst. Manager (Law)
All Branches headed by AGMs
The Bank provides management and organizational structure is sufficient decentralized to provide senior managers decision making responsible within their business units allowing them to continuously improve their management skills. In services of the Indian institute of management Ahmadabad were engaged and on their advice, the modular structure i.e. zonal and regional offices were created under each local zonal head office to handle growth and achieve efficient branch banking. The administrative structure was decentralized by making the controlling offices near to opening offices. In 1994, the bank engaged Mckinsey & co. a firm of leading international consultants to help the bank identify strategies, structure, system etc to face new challenges and retain its eminent position in the Indian Banking Industry. The present structure of bank is the outcome of the comprehensive change programmers all aspects structure, system, process etc. implemented by the bank based on the diagnostic and recommendation of the consultants. In order to exploit the synergies among the various SBUs having close linkages or dealing with the same or integrated groups of customers they have been group together under a few group, each being headed by a senior executive of the rank by Managing Director. Each business group has full profit and loss responsibility for the group and the enjoys a high level of autonomy including control over human and capital resources in order to achieve the group ‘s business goals. The organizational structure of the bank is reviewed at periodic intervals and wherever feasible departments are merged with a view to improve efficiencies. The bank has carried out the exercise at corporate center and is rolling it out at local regional and Zonal office levels.
Corporate center
corporate centre is at the apex level of the organizational structure. It is responsible for long term planning and policy formation. This management of the bank consists of the following members.
Chairman :
chairman is the chief executive officer of the bank central board of Directors. The staff functionaries are in charge of policy planning functions. The group executive have operational responsibility for the SUBs attached
AGM (Retail Asset CPC)
AGM (SE Credit Cell)
Head, Mortgage Sales
Credit Processing Cell (Temporary)
to their groups. All these executive are independently responsible for matters related to their group or staff areas and directly repot to the chairman
Lead Head Office :
Chief General Manager is the top management executive heading the circle. Staff functionaries, network chiefs management committee covers the
following areas : Review of business programmers of the circle. Review of functioning of all department at the local head office. Ensuring compliance with the corporate objective etc
Zonal Office :
DGM is the executive heading the module All personal Banking branches, with AGM incumbency and AGMs in change of regions in the module directly report to the DGM. The zonal Office credit committee is constituted to handle credit proposals relating to sanction of loans as well as matters related to advances such as write off, losses, bad debts, initiation, withdrawal of legal action etc suitable intervals
Regional Office :
Assistant general manager is the head of network branches with incumbency of chief manager and below in a region. The necessary planning support is provided by the sales planners.
Branch Expansion :
The bank has been pursuing a policy of offering services to specific customer segments through specialized outfits with a view to countering the competition from the private and foreign banks. It has 81 personal banking branches at selected centers. The bank has so far opened 9 rehabilitation and recovery branches. In has opened a specialized housing finance branch in Chennai, Diamond branch in Mumbai and Leather branch in Chennai. It has total of 21,500 branches. The Bank has a network of 137 overseas offices spread over 32 countries covering all the time zones. The Bank also maintain comprehensive correspondent relationship with 593 top ranking branches in 127 countries. It has 25,000 ATMs and 99345 offices in India. Telebanking offered by the bank free of charges is operative in 301 branches in 18 cities. Over 31000 customers have registered for the service. Internet banking is provided by 501 branches in 97 cities. The special EFT (electronic fund transfer) schemes was launched by the Bank
from 01-04-2003 in close coordination with RBI to facilitate efficient and expeditious interbank transfer of funds. 29 branches of the bank are participating in the scheme. The bank has two wholly owned subsidiaries abroad-SBI Canada, SBI California and two joint ventures namely Nepal SBI Bank Ltd of Bhutan. The other subsidiaries are SBI international Ltd, Mauritius, indovigeria Merchant Bank Ltd. Besides there are 18 corresponding Banks working as agents of SBI. In our valley there are 46 computerized branches of the bank with 10 extension counters. The State Bank Group which has 13,635 branches has computerized all the branches. State Bank Group has 3,900 networked ATMs comprising over 2,800 ATMs of SBI and 1,100 branches. SBI has five associate banks :
state bank of Bikaner & Jaipur state bank of Hyderabad state bank of Mysore state bank of Patiala state bank of Travancore
HRD Philosophy of the Bank
HRD in State Bank of India is a continuous movement and direction to enable every individual as a member of an effective team and the SBI community, to realize and activate his potential so as to contribute to the achievement of the Banks goals and derive satisfaction thereof. The HRM policy aims at creating a facilitating environment for overall development of people and thereby enabling them to translate their potentials into role related competencies. The Bank recognizes the value of the contribution of the individuals in achieving the corporate objectives. All HR related interventions are based on the philosophy of individual and organizational development. The interventions aim at achieving professional excellence in individual and fostering team work. Some of the HR policies of the Bank as well as areas of concern and where the policies are reviewed and revamped are : Recruitment Policy, Career Systems-consisting of manpower planning, appraisal and promotion and career planning and development inclusive of placement, work planning involving role analysis and performance appraisal system. Performance counseling, job rotation, self renewal system - comprising role efficiency and organizational development and cultural systems, which deal with HRD climate, value system, quality orientation, communication and empowerment. Formal HRD structure emerged in 1979. In order to design a system it was essential to state the values in respect of its people’s area and to describe the aims and
objective of having an HRD system. The values stated were that the Bank should create an enabling culture whereby individuals get an opportunity to grow to their full potential the aims and the objectives fixed by the bank are:
To create a climate of openness and trust To build collaborative culture whereby everyone is an important
member of an effective team to promote human capabilities and competencies in the organization
To bring about integration of the individual and organizational goals To improve the quality of work life.
Based on the above aims SBI adopted the following HRD policies :
Manpower Planning
banks manpower planning is meant to improve the innovative and creative abilities of its people through promoting a conductive climate, enhancing the human touch and improving interpersonal relations. Manpower requirements are assessed at the micro level though overall decisions are made within frame work of government guidelines and corporate perspectives. Branch activity analysis and productivity norms are the basis upon which the assessments are made. Manpower planning in the bank is subordinate to guild lines issued by the Govt. of India and RBI.
Training and Development
Training system enables the employees to take up their assignment and perform tasks with a higher level of confidence and perfection. Training system not only addresses the needs in the areas of knowledge and skills but also looks at the need for change in the attitude of employees. The Training programmes are aligned to the Bank’s business, goals and objective and endeavor of the bank. While exclusive programmes have the customer as the central theme. Eminent specialist in different fields of management, banking, finance, HRM etc are invited for delivering guest lectures to make the programmes more efficient. Training is a key variable in human resources development strategy of he Bank. The bank has constituted “advisory council ” comprising management experts, academicians and the Bank’s senior executives. The advisory council aim at improving the training effectiveness.
Job Rotation :
Developing functional versatility among employees is a must and it is possible only through job rotation. In SBI, the process of job rotation was started from 1989. Along with job rotation, job analysis occupies a central position in the design of HRD activities in SBI. The purpose of role analysis is to reduce role ambiguity of the role- occupant for maximizing his individual contribution to the bank. The bank well designed transfer, promotion and placement policy. The career system in SBI includes career surveys, career information, career monitoring and several career support system like human resources planning, potential appraisal and career.
Employee Welfare
The SBI has introduced a no. of welfare schemes to improve the Quality of the work life of the employees. These schemes include canteen facilities, education scholarship to the children of employees, consumer cooperative stores, housing loans, SBI employees mutual welfare scheme, festival advances, conveyance loans etc.
Human Resources Information System :
Different aspects of information about individual employees- biographical cultural traits performance records, promotion obtaines, potential for higher positions, critical incidents, placement enjoyed etc are well managed in SBI. The State Bank institute of information and communication management conducts a series of computer based human resources information system course for various categories of employees. HRD policies of the Bank seems to be the ideal order to win competitive battles in globalised environment.
OBJECTIVES OF THE STUDY
The objectives of project are as follows:
To find out the earlier banking structure that prevailed in India.
To assess the various factors that lead to the change in the
Indian banking structure
To assess the impact of all these factors on the banking structure.
To draw a contrast between the old and the new Indian banking
structure.
To determine the various services offered by banks earlier and
currently
To determine the future of Indian Banking Markets
To study the comparison of china banking structure and India structure
To draw conclusions of the impact of the changes in banking sector
RESEARCH METHODOLOGY
Secondary data is the data which is collected for some other purpose.
The data used for preparing the project report was secondary data. It was
collected from various websites, newspapers and books.
Research follows a specific plan of procedure.
Research requires a clear articulation of a goal.
Research is guided by the specific research problem & question.
SCOPE OF STUDY
The project entitled “BANKING STRUCTURE”. The study will focus
on how banking structure is implemented in India, its impact , changes,
concerns with a various parts .
CONCLUSIONS AND SUGGESTIONS
1. The Indian banking can be broadly categorized into nationalized
(government owned), private banks and specialized banking institutions.
The Reserve Bank of India is the apex institution in the Indian banking
system & acts a regulator and a centralized body for monitoring any
discrepancies and shortcoming in the system.
2. Before Nationalisation, banks in the beginning aced severs financial
crisis. During and after World War I, 87 banks were liquidated.
Development of banks in India was characterized by bank failures. After
Independence, the Indian banking underwent a thorough and moral change.
The government of India announced Banking Regulations Act in 1949 to
consolidate and regulate the banking growth in India
3. After Nationalisation, however, growth of banking during the first 3
plan periods resembles that of capitalist growth. There was need for
stimulating the savings and investment to meet the growing demand for
bank credit for economic development. Therefore government focused on
social banking than capitalistic banking. Hence, in February 1961,
announcement of 14 banks was made for the purpose of nationalisation.
Since then, the performance of banking has been remarkable in the many
aspects such as branch expansion, expansion of business, priority sector
advances, development and spread of banking.
4. Currently, banking system has entered into the third phase of development
which is characterized by innovation & diversification in order to meet new
challenges. New services have been started such as merchant banking,
investment banking, housing finance , investment banking, internet
banking, telebanking , branch banking, electronic money transfers, SMS
banking, mobile banking, proxy banking, plastic money such as credit
cards , ATM cards, debit cards, smart cards, etc.
5. Banks have indulged in activities such as service area approach, mutual
funds, housing finance, factoring services, commercial papers, certificate of
deposit, stock invest and other money and capital market instruments.
6. The unleashing of products and services through the net has galvanized
players at all levels of the banking and financial institutions market grid to
look anew at their existing portfolio offering. Banks have been benefited
a lot with the internet and information technology. As a result banks
have become more efficient and cost-effective. Indian nationalized banks
continue to be the major lenders in the economy due to their sheer size and
penetrative networks which assures them high deposit mobilization.
However there is a need to create more awareness regarding social
development. There is need for taking decisive actions .
7. Industry estimates indicate that out of 274 commercial banks operating
in India, 223 banks are in the public sector & 51 are in the private
sector. The private sector bank grid also includes 24 foreign banks.
8. Indian banking market is growing at an astonishing rate, with assets
expected to reach US$1 trillion by 2010. The Indian banking industry is
in the middle of an IT revolution, focusing on the expansion of retail and
rural banking. Players are becoming increasingly customer-centric in
their approach, which has resulted in innovative methods of offering new
banking products & services. Banks are now realizing the importance of
being a big player & are beginning to focus their attention on mergers
& acquisitions to take advantage of economies of scale.
BIBLIOGRAPHY
There was immense need and flow of the information while preparing the
project report which was gathered through various sources mentioned
below:
Websites:
www.rbi.org.in
www.wikipedia.com
Books:
Money , Banking & Finance in India
Indian Banking Managing Transformation
New Paper:
I. The Economic Times