1(For Internal Circulation Only)

BRANCH MANAGERS KIT

Compiled by

K.V. NANDKISHORE, AGM & FACULTY (Mktg.) &I.S.RAO, AGM & FACULTY (HR)

STATE BANK STAFF COLLEGEHYDERABAD

JULY 2010

2Preface to Branch Managers Kit

It has been widely acknowledged, not only in the State Bank of India, but in the entire

Banking Sector in India, that the Branch Manger or Branch Head plays the most critical

and challenging role in sustaining and developing business. He/ She is also the key

motivator and leader who channelizes all the resources available to towards rendering

excellent customer service, promoting business development and profit growth. The task

of the Branch Manager is multifarious, demanding knowledge, skills and requisite

attitudinal orientation. He/ She must be updated on knowledge of instructions regarding

systems, procedures, rules, regulations, risk mitigation, environment, marketing, etc.

Today, thanks to technology, knowledge is available very easily, at the click of the

mouse, but the Branch Manager may not find time to access different sources to meet

the multiple requirements of his role. A need has been felt for a compendium of

important information/ instructions, in the area of general management, useful

specifically to the Branch Manager. State Bank Staff College has endeavored to bring

out a compendium of such useful instructions/ information in the form of a Branch

Managers Kit. I am glad that the College has been successful in bringing out this kit,

which I am sure will help the Branch Managers in performing their roles more effectively.

I place on record my appreciation of the Sr. Faculty and Faculty of State Bank Staff

College, Hyderabad who have contributed to the Branch Managers Kit. I also appreciate

the co-operation rendered by the Faculty of State Bank Institute of Information and

Communication Management (SBIICM), Hyderabad to the College in this endeavor.

Strategic Training Unit, Mrs. Mahpara AliCorporate Centre, Chief General ManagerHyderabad (Learning and Development)

3FOREWORD

State Bank of India is today the largest financial conglomerate in the country offering a wide

range of financial services and products. Despite competition from Foreign and Private Banks, it

remains the market leader and has in recent times forayed into new areas of business in

response to the changing paradigm. Employees are required to continuously adapt to the

changing environment. With over 12000 branches spread over the length and breadth of the

country, the Branch Manager in such a large organization is expected to be an effective leader,

whether it is on the heights of Himalayas or on the sea shores of Kanyakumari or in the thick

jungles of Nagaland or in the hot deserts of Rajasthan. The role of the Branch Manager is

complete in itself, and calls for multi-dimensional skills and competencies.

To the customer, and the general public, the Branch Manager represents the face of the Bank.

Public opinion about a Bank depends to a very great extent on their experiences with the

Branch Manager. For his team of staff members, he is the leader, who has to have a vision for

his small unit, set goals and objectives to realise the vision, and gently but firmly guide his team

into the valley of achievement. He is, as well, a dependable extended arm of the Regional

Manager, through whom, the controller is able to translate into reality his expectations from the

Branch. To the peer level groups of Banks and financial institutions in his area, B.M. represents

his Bank. The role of the Branch Manager is thus a multifaceted role, requiring varying

approaches to the different segments of society with whom he has to interact, calling for a high

degree of versatility.

The demands of the job on him are many. Not only is he the Business Manager, he is also the

Administrator, Planner, HR, IR and PR man for the Bank at the field. He is responsible for

business development and marketing, maintaining high order of customer service, efficiency in

accounting, compliances vis-a-vis the regulatory authorities and the Banks own instructions,

while at the same time ensuring good quality of assets.

A first-time Branch Manager may well be daunted by the prospect. We, at the State Bank Staff

College, Hyderabad, have attempted to collate some of the essential reading material that a

Branch Manager must know, in the form of this book, which we have named the Branch

Managers Kit. The focus has been on operational risk, with inputs in soft skills, marketing and

Core Banking Solution. Suggestions for improvement are welcome from one and all.

4I appreciate the efforts of Sarvashri R. Ganesh, DGM & Sr. Faculty (MD); K.V. Nandkishore,

AGM & Faculty; and I.S. Rao, AGM & Faculty in compiling and updating this book. I also

appreciate the efforts of 20 Branch Managers and two Asst. General Managers from Hyderabad

Circle and 33 Branch Managers from all over India who participated in two pilot programmes

conducted at Staff College in the months of May and June 2010, for their valuable feed-back/

suggestions and their value addition to the contents. We are thankful to the Director, Joint

Director and the faculty of SBIICM, Hyderabad for actively cooperating with us and for their

valuable contributions.

State Bank Staff College USHA R. NAIRHyderabad PRINCIPALJuly, 2010

5CONTENTS

S.No. Topic PageNo.

1 TAKING OVER OF ASSIGNMENT 62 BRANCH MANAGER DRILL 103 INDICATIVE CHECK LIST FOR BRANCH MANAGERS 124 BRANCH MANAGERS DAILY DRILL ON CBS 165 BRANCH MANAGER : POINTS TO PONDER 186 KNOW YOUR CUSTOMER 327 BANKING OMBUDSMAN SCHEME 368 CITIZENS CHARTER BANKING CODES & STANDARDS BOARD OF INDIA 409 EFFECTIVE FUND MANAGEMENT 43

10 PERFORMANCE BUDGETING 4511 PREVENTIVE VIGILANCE 4912 PREVENTIVE VIGILANCE : CHECK LIST 5313 DOS AND DONTS ISSUED BY RESERVE BANK OF INDIA 6114 AN OVERVIEW OF RFIA AND TIPS TO INCREASE YOUR SCORE 6415 AREAS IN CBS, ATM ,INB & ADVANCES TO BE LOOKED INTO WHILE

ASSUMING CHARGE AS BRANCH MANAGER 67

16 IMPORTANT EOD REPORTS RELATING TO GENERAL BANKING OPERATIONS 7217 IMPORTANT EOD REPORTS RELATING TO ADVANCES & NPA 8018 NPA MANAGEMENT TIPS 8519 LEGAL TIPS ON NPA MANAGEMENT 9020 EXECUTION OF DECREES : ORDER 21 CPC 9221 CUSTOMER FOCUS 9822 THE DIFFERENTIATORS 10223 HANDLING ANGRY CUSTOMERS - A FEW TIPS 10424 RETAIL BANKING AN OVERVIEW & MARKETING TIPS 10525 EIGHTEEN SKILLS FOR MANAGERS 11426 TIME MANAGEMENT 11627 BUSINESS ETIQUETTE 12228 EMOTIONAL INTELLIGENCE (El) 12829 TEN HABITS OF PEOPLE WITH HIGH EQ 13230 TRAINING INTERVENTIONS AT BRANCHES 13331 ANNEXURE I : FORMAT OF DISATSTER RECOVERY & BUSINESS

CONTINUITY PLAN136

32 ANNEXURE II: BRANCH MANAGERS MONTHLY CERTIFICATE 15433 ANNEXURE III: HANDING OVER/ TAKING OVER LETTER COS 330 16634 ANNEXURE IV: RELIEVING BRANCH MANAGERS CERTIFICATE COS 331 167

61. TAKING OVER OF ASSIGNMENT

The Branch Manager being overall in-charge of the branch, the responsibility of businessdevelopment, staff development, proper housekeeping and image building rests with him. Thefollowing procedure may be adopted for taking over charge of a Branch Manager.

1) Go through the Inspection Report, Verification Audit Report, Statutory Audit Report, RBIInspection Report and other audit reports, if any. A perusal of all audit reports will giveyou a feel of the total branch. Note down the irregularities and ascertain their presentposition by discussing with the outgoing Branch Manager, wherever possible in personor over phone and if necessary with the branch staff.

Carefully go through the observations made in GHSI (Group Heading of SeriousIrregularities) of last Inspection Report and cross check them with relevant records.

Examine the ratings awarded to various core-parameters/ sub-parameters in the lastInspection and Audit Report. This will help you in identifying the deficiencies in thefunctioning of the branch.

2) Pursue the items to be scrutinised in Relieving Branch Managers Certificate(Reproduced in this booklet) and ask the outgoing Branch Manager to facilitateverification of items relevant in the branch.

3) For taking over of branch advances, ask for balancing of outstandings in variousaccounts with Loan Balance file. Check the maintenance of advances data, such asinspections, drawing power, stock statements and despatch of control returns. Whereapplicable, for knowing the correctness and safety of advances, the following checklistmay be adopted:

a) Are all limits sanctioned under proper authority?

- Verify the sanction letter and/or proposal regarding the sanction of limitsby the appropriate authority.

b) Where sanctioned under discretionary powers, have they been duly reported tothe next higher authority?

- Verify the control returns register and office copies of control returns.

c) Are the outstandings within the permissible drawing power? Verify the stockstatements and Drawing Power Register.

d) Are all the loan accounts classified properly? Verify that all loan accounts bearperiodic asset classification under authentication, and backup registers/returnscontaining approval of appropriate authority are being maintained at the branch.

7e) Are drawing powers adequately backed by assets?

- Carry out the Inspection of the securities pledged/hypothecated to theBank as primary security. ( on a random basis internally)

- Take the set of terms and conditions of relative sanction for verification.- Verify the stocks hypothecated to the bank with the latest stock statement.- Check whether Banks name boards (with emblem) indicating the charge

are prominently displayed.- Meet all important borrowers and discuss their units affairs/problems.

f) Is the collateral security properly secured, i.e., properly charged to the Bank?

- Verify the original title deed (sale deed/lease deed with approved map incase of house property) with the particulars recorded in title deed registerand connected papers, i.e.

i) Lawyers opinion report in regard to clear and marketable title,

ii) Non-encumbrance certificate,

iii) Urban Land Ceiling Certificate.

iv) Necessary permissions from appropriate authority like permission fromthe government agencies for mortgaging the leasehold property.

v) Standard letters from customers confirming deposit of title deed, at thenotified centre.

vi) Affidavit of the depositor of title deed (mortgagor) that he/they is/are thebona fide owner(s) of the property, and that no other claimant is there,and all the taxes have been fully paid. In this connection verify the latesttax receipt, i.e. wealth, property, municipal tax, etc.

- Verify the implementation of Circular instructions relating to equitablemortgage, (formalities relating to creating of equitable mortgage varyfrom one state to another state).

- Verify the ledger accounts and the transactions being put through it.

4) Verify the security documents relating to advances/loans and verify whether they areappropriate, current and enforceable. Each account should be checked with thedocuments execution register, term loan ledger, relative file and daily list. See that alldocuments are adequately/ properly stamped. Alterations must be duly authenticated bythe executants.

5) Position regarding follow-up of items outstanding in Recalled Asset accounts should beascertained. Verify suits filed or decreed, and also ascertain the position of periodicalreview/renewal of accounts. There is need to prepare a suitable action plan to clear therelative arrears, if any, within a reasonable time after taking over.

86) Verify the Demand, Collection and Balance Register and Inspection Cards for theagricultural loans. Understand the cropping pattern of the area(s).

7) Arrange for balancing of the outstanding bills with the respective bills accounts in theGeneral Ledger of the system. Verify the documents held under BBRs, LBCs and DBRRwith the related registers. See that the documents are lodged properly and kept after dueacceptance by the drawee. Verify whether the due dates are properly diarised in thedaily list, and that the branch is following the procedure of advising nonpayment andrecovery of unpaid bills with interest on due date. The details of returned bills shouldalso be advised to the Controlling Authority.

8) Ascertain that a register with appropriate particulars of receipt and disposal is beingmaintained at the branch for all lOA/DRC/Agency Clearing enquiry memos (includingcaution memos).

9) Check the check signal apparatus and code books. The duplicate check signalapparatus should be opened and resealed after checking, and returned to the strongroom if it is not already surrendered to the LHO. Check signal apparatus and code booksshould be kept under lock and key during the day but in the fireproof safe over night.

10) Check the Branch Documents entered in the Branch Document Register andMiscellaneous Securities Register (which secure the Banks interests), including theinsurance of Banks and customers properties and valuables. The fixed assets registershould also be checked.

11) Check the securities held at the Branch pending disposal. Check the balance of stampsheld in the stamp account. Obsolete, unusable forms should be sent to appropriateauthority for refund, under advice to Controlling Authority.

12) Arrange for withdrawal of duplicate keys for verification from the neighbouring branch.After verification it should be released and re-deposited. The fact of withdrawal shouldbe duly recorded in the branch key register and advised to the Controlling Authority.

13) Read the approved memorandum of protective and security arrangements. Verifywhether the relative instructions are translated into the local language and read,understood and signed by all members of the staff. Here, there is a need to minutelyexamine the security arrangements prevailing at the branch. Ensure that the securityarrangements prescribed by the Controlling Authority and the suggestions made by theSecurity Officer during his visit to the Branch are being meticulously implemented.

14) Check and note the emergency arrangements to be followed in the event of suddenincapacitation of the Branch Manager. Protective and security arrangements, includingfire protective systems notices, locking up arrangements, Police patrolling, emergencyalarm bells and lights should also be adequate.

915) Refer to the relative books and ensure that the Branch Managers monthly certificate(Annexure II) depicts the true picture of positions obtaining at the branch. This will helpyou in getting a feel of the branch.

16) Study the P form, Branch Dossier (which provides the data for Branch Budget andbudget assumptions) and Disaster Recovery/ Business Continuity Plan (Annexure I).Make realistic plans for achieving the budgeted goals; discuss the problems andpotential with the outgoing Branch Manager and staff members.

17) Verify whether the records are properly kept at the branch. Issues from records shouldbe noted systematically and access to record-room should be regulated.

18) Ensure that deposit accounts kept are efficiently maintained and the balancing is up-to-date and periodicity is regular. Check whether the interest provisions for various depositaccounts are being made at the branch regularly/accurately.

19) Verify the availability of various Acts (Central/State) and Circulars for reference.

20) Verify whether the Customer Service Committee Meetings and Customer RelationProgrammes are being held at stipulated intervals under advice to the controllingauthority.

21) Verify the customer call cards. Prepare an ABC analysis of customers, classifying theminto different categories, based on their business dealings with the Bank and value ofconnections. Also note down the names of the important Govt. and Public Officials in thearea (with a view to meet them at the earliest).

22) Verify the documents relating to branch and its premises, viz., approved maps/ leasedeed/ title deeds/ licenses and their validity. If the premises are taken on lease/ license,check the rent receipts etc.

23) Verify insurance of cash, cash in transit, fixed assets, gun licenses, ammunition, fireextinguishers, anti termite treatment, time lock on strong room, security alarms,communication system with nearest police station, etc.

24) Visit local police station, senior police authorities and other important governmentofficials in the town.

25) Once taking-over is complete send the following three certificates to ControllingAuthority:

a) the handling-over and taking-over letter on form COS-330 (Annexure-III)b) the Relieving Branch Managers certificate on form COS-331 (Annexure IV) andc) the Cash Verification Report on form COS-45.

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2. BRANCH MANAGERS DRILL

DAILY

In the morning:

Please ensure that:-

BOD is done well before the start of business hours Visit customer area to see whether all the customer amenities like water, water filters,

water coolers, lights, fans, air coolers, air conditioners, wash rooms, broachers,vouchers, signboards, furniture, drop-box etc are in order and adequate.

Check the complaints/ suggestion box. Check all the security systems/ electrical wirings/ fire extinguishers, etc. are in order. Check whether the security guards are on duty with gun, if applicable. Check whether

the guns are loaded and sufficient ammunition is available with them. Get all the vouchers of previous day, scrutinize and do second crossing. Scrutinise all checked reports and at random check at least one of the checked VVRs. Read the e-Mails received at the branch and initiate suitable steps. If the e-mail is

received from an outsider, acknowledge receipt immediately pending final disposal. Physical Cash in ATM is agreed with Cash Balance figures of ATM switch Centre,

Belapur. Follow-up pending items, if any, against request/instructions received for internet

Banking Reports/ VVRs are ready for delivery Verify the Roster Register to ensure that all the reports have been delivered and

acknowledged for checking. The VVRs and other reports are checked properly and vouchers are cancelled by

checking officials properly

Check and scrutinize:

Exception and Control Reports Irregular Excess Drawings Daily Report

Before EOD:

Online Checking no Queue / Batches should be pending Referral no item should be pending Verification of System Suspense Accounts Verify that Branch Cash Balance as per the BGL and CGL account agrees with Physical

Cash

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MONTH END:

Verify and Ensure: BMs Monthly Certificate with Annexure for CBS has been sent Outstanding entries in Sundry, Suspense, IBIT, B.Chq, and other BGL accounts for

prompt reversal Verify the following: P Form Report, Staff Accounts Service Tax is paid before the due date TDS is remitted before the due date

AT PERIODIC INTERVALS:

Ensure that

Officials & employees are adhering to the security norms meticulously The staff members are aware of the IS Security instructions. Reports are filed properly and preserved as per the Banks Instructions Adequate stock of paper, toners, CDs etc. are available at a short notice Employees and officials are trained Scanning of all Customers Signature is done at the branch/ LCPC

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3. INDICATIVE CHECKLIST FOR BRANCH MANAGERS

Hardware: Details of machines with location and number to be maintained in a Register AMC to be done before the expiry date Insurance to be renewed before expiry date Preventive Maintenance of computer/UPS/AC/ generator Cleaning arrangement once in a fortnight

Software: Only Banks authorised software Symantic Endpoint Protection antivirus software is loaded and up to date in the Server

and all PCs Keep watch against Un-licensed/Pirated software All software licenses & media in safe place Input forms for users right are authorised by you and these forms are given a numerical

sequence User IDs of transferred/retired employees should be transferred/ deleted, as the case

may be, immediately. No user is having any rights on CBS, which are not approved by you

Password: Passwords are kept secret by all users and never shared with others Ensure that the passwords of official / generic IDs pertaining to INB / ATM, etc., kept in

sealed covers is preserved in Branch Documents.

Security: Post EOD Signal Dat backup to be obtained and preserved as per extant instructions. Verify all the system room registers periodically Disaster Recovery Plan and Business Continuity Plan approved by the controller are on

record and circulated to all the staff members concerned. All committees as per the BCPare functional and also meeting at the stipulated intervals.

Data Input Procedure: An operator makes entry in the system only on the strength of Vouchers or Input Forms Vouchers/ Input-Forms are stamped with Partition Number and initialed by operators

after posting

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On Line Checking, Verification and referral batches are done by officers immediatelyafter data entry by operators

Introduce the Missing Voucher Register and Error Rectification Register

Checking of VVRs and other Reports: Roster Register is maintained by Manager (Services) /Manager (Accounts) Reports are distributed through Report Distribution Register Voucher packets of the day are prepared properly, and kept ready for checking officials All VVRs and other reports are checked promptly and regularly All mistakes detected during checking of VVRs / Reports are rectified before next EOD

INDICATIVE CHECKLIST FOR MANAGER OF DIVISIONS

Input Forms are prepared by operators and used for all Non-Financial transactions inyour division.

Cheque Referred and Returned Register is used for payments resulting Limit Excessand payments in Dormant/Inoperative Accounts.

All Stock Statements received are entered in the system or sent to CPC. All errors/mistakes found out in VVR checking are entered into the error register and

corrected entries made immediately. There is No Missing Voucher. If any, enter immediately into missing vouchers register

and ensure preparation of dupl. voucher immediately VVR Checking Official cross the vouchers himself and ensures rectification of any wrong

entry found at the time of checking. All Computer Operators & Supervisors are following good security Practices necessary

for the computerized system. Monitor checking of all other Reports generated by the system. After checking of

Reports & VVRs scrutinize them regularly. Authorisation is done promptly just after the entry is made and no entry remains

unauthorized at day end. The supervisors clear referral batches promptly. There are no pending queues of any transactions. There is no outstanding in System Suspense Accounts at day end.

INDICATIVE CHECKLIST FOR PASSING OFFICIALS:

All vouchers are passed after due scrutiny. All Vouchers should have Partition Stamp, Queue / Batch & Journal Number with the

initials of Operators / passing officer Input Forms are prepared and signed by the authorized official for all Non-Financial

Transactions Cheque-Book Issue, if any, should be done by the operators and delivered to the

customer. Input forms will be prepared by operator and after duly authenticated by theconcerned official.

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Vouchers are available for all the financial transactions entered in the system. Protect your password. Change your password frequently. All Queues and batches are to be authorized after verification with the respective

vouchers as early as possible. Verify that there is no unchecked item and there is no pending batch before the EOD. While checking please ensure that mandatory fields (displayed in aqua marine colour)

are verified carefully (Account Number, Amount, Cheque Number etc.) Any deviation calling for Supervisory override to be checked with care.

CHECK POINTS FOR VVR CHECKING

VVRs are checked and error rectification entry, if any is made before EOD. Rectification of wrong entry, if any, is the responsibility of VVR checking official. Error Rectification Register is in use in the Branch. In case of any missing voucher, enter in Missing Voucher Register. All value-dated transactions are to be dealt with additional care and caution. On receipt of the VVR from Manager (Services), verify the VVR with the vouchers. If there is no voucher found for an entry, missing voucher to be traced. Enter the same in

Missing Voucher Register and if necessary obtain the duplicate voucher. Any transactionwithout any supporting voucher should be a suspected entry and must be dealt withaccordingly.

User ID & Checked ID to be perused. Transactions with unusual IDs are to be examinedwith extra care.

VVRs after checking should be signed on each page.

Please check carefully:

All advances have Correct Interest Rates. . There is no Credit Interest Rate in C/A, CC, and ACC accounts. All accounts with debit balances have Debit Interest Rates. Verify whether correct Transaction Type was used for Cheque Transaction.

*****

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16

4. BRANCH MANAGERS DAILY DRILL ON CBS

SLNO AREA ASPECTS TO BE LOOKED INTO

1 BOD PROCESS Ensure that the BOD Process is completed well before commencement ofthe days working hours and shadow files are successfully uploaded

2 SERVICE DESK Log into the Service Desk to check for any announcement made by CBD,Belapur. Any relevant information/announcement to be printed andcirculated amongst all the operating functionaries of the branch. Also toverify, from the relative register and screen-prints for all the Users in thebranch, if there is any outstanding Service Desk Request.

3 REPORTS Verify/ensure that all the reports for the previous day have been received. Ifany report has not been received, ITS department at L.H.O. may becontacted for obtaining the same. All reports are to be printed and checkedas per allotment made through suitable office order. The Branch Managerhas to ensure that the reports are checked on day-to-day basis andcorrective action, if any, has been initiated.The Branch Manager should scrutinise the checked reports, particularly thefollowing: Voucher Verification Report Credit Balance in Expense A/c GL DAYBOOK Daily Report on Accounts Opened & Closed GLCNTR Report of High-Value Transactions GLCOMP TDS Daily Report Failed Standing Instructions Report Monthly TDS deducted Audit BGL Accounts Age wise Report Exception Reports List of Non-zero Intermediary Accounts ATM Suspense Postings Report List of Segment wise INCA List of User Report Delayed Stock Statement CC/OD and Loans Balance File Irregularity Reports in respect of advances Probable NPA Report & List of NPA Accounts DDP Outstanding & DDP Control Purchase List of Accounts due for revival Pending Collection

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4 CASH To ensure that the physical cash balance agrees with the BGL and CGLcash balance before the EOD signal is sent for the day. Differences, if any,to be followed up with the Cash Officer/Accountant forrectification/reconciliation

5 EOD Ensure that all EOD checks are complied with, before sending the EODSignal. Call for the EOD signal screen print to confirm that the EOD signalhas been sent properly, with the message Host EOD flag successfullyupdated appearing at the bottom of the screen. Register meant forrecording EOD/BOD timings to be checked

6 USER

MANAGEMENT

(a) Ensure that a suitable officer is designated for User Management.(b) Users to be created on written instructions from the BM and screen printof the Service Desk request to be scrutinised for correctness.(C) Register(s) maintained for User Management User Id Register; Signon Reset Register; Forced Closure Register; etc., to be scrutinised.(d) To ensure that IDs of Users Transferred from the Branch are transferredand those of retired employees are deleted.(e) Reiterate the importance of maintenance of Password Secrecy by allUsers at the branch.

7 OTHER AREAS (a) Verify or seek confirmation from the official concerned that the positionof Customers Signature Scanning is up-to-date or specimen signaturecards are sent to LCPC concerned.(b) Verify the Calendar for the next month and ensure thatHolidays/Sundays are declared correctly as Non-Working days.(c) Ensure that the rectification carried out in CIS data are invariablyincorporated in the CBS also.(d) Reports for all the days to be preserved by copying to a separatefile/folder on a separate PC.(e) Monitor for Host Data Synchronisation to be run at regular intervals toensure that changes made, if any, in the CBS are updated in the Branchserver.

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5. BRANCH MANAGER: POINTS TO PONDERCAPSULES

I) CUSTOMER SERVICECustomer is the most important visitor on our premises. He is not dependent on us. Weare dependent on him. He is not an interruption on our work. He is the purpose of it. Heis not an outsider on our business. He is a part of it. We are not doing him a favour byserving him. He is doing us a favour by giving us an opportunity to do so.

- Mahatma Gandhi

To reflect our commitment to provide excellent customer service, we have introduced acode of fair banking practice called Towards Excellence to be followed by the branchesin our relations with personal banking customers. The code has been written to promotefair banking practice and improve the service standards at the branches. It is subjectedto regular review to ensure that it has continuing relevance to customers needs, whichevolve with time.

Areas of Concern

However, the customer service at our branches still not at the desired level. In spite of allthe efforts taken by the Bank to improve the customer service, we are faced withdeclining market share and poor quality business. The areas of concern are:

Extremely conscious of his rights Demands service of a very high standard Prepared to switch loyalties Expects best products & service Quality of Service Manner of delivery Price competitiveness

Fluctuating Market Share

Over the years we have seen our market share fluctuate in almost all categories ofbusiness. Our competitors have, at times, been able to grow faster than us, and perhapstaken away the business, which would have otherwise come to us. The reasons for thiscould be:

Poor service Delayed response Inflexibility Rude behaviour

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Customer Expectations

Ours is a service industry. A natural question to ask is - What does a customer expectfrom us? Our customer expectations transcend beyond products. It is therefore,imperative for us to adapt our systems and procedures as well as our thinking tomanage the customers expectations. His expectations are broadly as follows:

He is well received and listened to properly He is properly guided and doubts cleared Bank personnel are present at their desks/counters well in time The premises are clean and well organized There is warmth and understanding His letters/queries are promptly attended to and communicated

Fulfilling Customer Expectations:

Customers satisfaction will normally be influenced by the interactions with our Front Linestaff. It is necessary that the customer is fully satisfied with the prompt service andcourteous behaviour of our Front Line Staff. To achieve this we have to ensure that theFront Line Staff:

Have up to date knowledge of systems/procedures/schemes Show basic courtesies Listen carefully to what the customer has to say

Customer Service in the Bank

The bank has over the years institutionalized a certain set of guidelines, systems, andprocedures to be followed, to show that we care for the customer. The followingstructured fora are put in place towards this end.

Customer day - 15th of every month Customer Relations programme - monthly/quarterly Customer Service Committee meeting - monthly/quarterly Branch Management Committee Meeting - at desired frequency Customer service improvement plan Customer Grievances Redressal mechanism at Branch/ZO Customer service audit for compliance with Goiporia committee

recommendations Complaint cum Suggestion Box Upkeep of premises Customer conveniences Convenient layout for smooth work flow Motivate frontline staff for providing excellent customer service Update job cards and arrange for periodical briefing Improve skill/knowledge and reorient attitude of staff through structured on-site

training

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Complaint Management

It is well documented that complaints are only a feedback for improvement. A customercares to complain because he wants to continue with the Bank. If not he would ratherquietly move over to some other bank. Every complaint is an opportunity to reinforce ourcommitment to the customer, which results in greater customer loyalty. The major areasunder complaints are:

ATM transactions Delay in collection is the single largest component This is closely followed by opening/operation/transfer of accounts and delays in

remittances Staff misbehaviour accounts for 4% of the complaints can be managed by Identifying and following up complaint prone branches Conducting survey of branches on complaint management and redressal system Identifying and rewarding complaint free branches Taking steps to achieve zero complaint status

Achieving Customer Delight

The ultimate objective of a service industry would have to be achieving customer delightfor its customers. It means offering more than what a customer normally expects. Topractice customer delight, we need to understand the customer and do that little extrafor him. We endear a customer by our concern for him, and expressing it in every littlething we do for him.

Leverage technology to the fullest extent Provide single window service Provide ATMs at strategic places convenient to the customer Have data base of the top customers of the branch and be in touch with them for

their banking needs

POINTS TO PONDER

The Customer pays our salary. We exist because of him. Service delayed is service denied A smile costs nothing and works wonders with customers. Three sweetest words - Please, Thank you and Sorry will do wonders All gossip and no work breeds inefficiency Winners dont quit, quitters dont win Winners keep, losers weep Win an argument: Lose a customer 96% dissatisfied customers do not complain, they simply quit

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Why customers quit

1%die 3% move away 5% form other associations 9% for competitive reasons 14% because of product dissatisfaction 68% of the customers quit because of our attitude of indifference towards them

Majority of the customer expectations are reasonable Handle difficult customers with tact Customer satisfaction is profit; Everything else is overhead Customer complaints are like burning embers, extinguish them instantly However insignificant the complaint may be, it may be occurring due to some systems

deficiency. Try to rectify them before it results in fraud or in any other major loss to theBank

Managing complaints is everybodys business One satisfied customer will bring you 100 more One dissatisfied customer will prevent 1000 prospects coming to you If you are not meeting your customers regularly, you are creating dissatisfied customers > Every customer is essential for the well being of the organization > Customer

complaints should not be taken as an unwanted nuisance Listening to complaints helps to keep small complaints from turning into big ones Handling complaints are opportunities for learning/improving Major areas of concern (as per analysis of complaints received by the Bank for the half

year ended. Main causes of complaints are :

Lack of job knowledge Shortfall in delivery system vis-a-vis expectations of the customers Deviation from/non-compliance of laid down system & procedures

ACTION POINTS

Do the staff members occupy their desks 15 minutes before the business hours? Do all staff members wear their identity cards? Is the branch premises kept clean with all customer amenities? Is the layout convenient for smooth work flow? Do you know the names of the top 10 customers? Have you met them recently? Are the top clients of the branch being invited to the Customer Relationship Programme? Are your holding Customer Service Committee meeting regularly? How many ideas emanated from the CSC meetings in the last 6 months and what

actions have been taken? Are the Customer Help Line telephone numbers being prominently displayed? As a Manager have you displayed your own email id to receive complaints? Do you use emails for communication? Do you maintain list of VIP customers? Do you have list of VIP non customers? Have you met the VIP non customers and tried to win them to our books?

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Is the Booklet on Code of Fair Banking Practices available to the customers at yourbranch?

Are the staff aware of the contents of this booklet? Are the staff being counseled to ensure that there is no case of misbehaviour? Are the complaints redressed within the time limit of 14 days? Do we express regret while settling a complaint? Are the complaints promptly acknowledged? Do you visit the complainant? Are the statement of accounts and renewal notice of TDRs being sent in time? Are outstanding items under collections followed up regularly? Is the dispatch section working without disruption? Are the pensioners getting their pension staggered over 3 to 4 days to avoid rush at the

counters? Is a check list of the formalities relating to advances made available to applicants in one

go by you? Is the register for recording applications for loans and advances received / disposed of

being maintained by you? Are the ATMs being operationalised and kept in readiness during all hours? Are Job Cards being used to equip the staff with knowledge about the products and

processes? Is there a Grahak Mitra counter at the branch with a staff strength of more than 30? Do you accept small denomination currency and exchange mutilated and soiled notes? Have you given wide publicity to the facility of Nominations? Are the dishonored instruments returned to the customer the same day? Have you displayed the time norms? Do you offer immediate credit of outstation cheques up to Rs. 25000/- in personal

accounts? Do you credit the interest on account of delayed remittances and collections without a

request from the customer ( as per our cheque collection policy)? Are the staff familiar with the provisions of the Consumer Protection Act 1986? Are you aware that a complainant can approach the Banking Ombudsman only if his

complaint has not been redressed within 2 months? What is the quality of customer service at each of your branch? Can we move towards EXCELLENCE at all our counters? Whose responsibility is it to move in this direction?

II) BUSINESS ORIENTATION

The Three ways to improve profits

i) BUSINESS GROWTHii) ELIMINATION / REDUCTION OF NPAsiii) REDUCTION OF COSTS

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i) Business Growth

Action Points

Are you having information on the market share of the Branch in your Area, andthat of your competitors operating in the Area? If not, how do you propose to goabout it? For example, this data is available with the lead bank of the area.

Several business leads emerge daily from newspaper, magazines are othersources. Do you provide your officers/staff with business leads and thereafterfollow-up their efforts?

Do you personally go with your Officers to visit prospective clients?

Have you identified thrust areas for your branch and prepared draft budgetaccordingly?

Is your branch in touch with other branches of ours operating in the area forexchange of information and cross selling of products? (For e.g. a RNW branchcan provide credit leads to a MCG branch or a CAG branch borrowers personalbanking needs can be met by the RNW branches.) In other words, is your Branchdoing cross selling? Is this being discussed at any meetings?

Captive branches offer tremendous scope for P Segment business. Has thepotential been exploited to the fullest by your captive branch?

Government Business gives excellent income by way of commission, withoutdeployment of funds by the Bank. Is excellent liaison being maintained withGovernment Departments, Private / Public Sector Organisations, Institutions,Trusts, Societies, etc. by you as well as Zonal Office functionaries ? Have yourbranch conducted a Customer Relationship Program for this category ofcustomers?

Is the Branch dossier updated at your branch and is it being put to use forbusiness development? (Market mapping)

Are business levels and budget being communicated by you to all the staff? Inother words, have we moved from the Branch Managers Budget to the BranchBudget?

Have one or two officials with sound product knowledge been identified at thebranch exclusively for marketing? Are they submitting reports for each of theirvisits? Is there follow-up of such reports?

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Are the frontline staff at your branch conversant with various products of theBank, especially those best suitable for the Branch environment? (They are thepeople who can sell them effectively across the counter.)

Satisfied customers are our best selling agents. Is your Branch making use ofthis valuable resource for marketing? Are we appealing to / encouraging ourcustomers to introduce new accounts?

ii) Elimination/Reduction of NPAs

It is the primary duty of the Branch Manager to initiate action for recovery in all NPAaccounts irrespective of whether they became NPA during their tenure or otherwise.

Effective credit management which includes timely renewal/review of facilities,supervision, follow-up and documentation.

. Restructuring of facilities when signs of sickness are visible.

Timely rehabilitation where feasible.

Where rehabilitation is not possible, compromise to be encouraged.

Timely filing of suits and constant follow-up with advocates.

Verification of assets at periodical intervals even where suits are filed.

With the help of external agencies, identify undisclosed properties of theborrower/guarantors and file for attachment before judgement.

Seize the assets hypothecated/pledged for eventual sale without allowingdeterioration in quality of assets after seizure.

Accounts parked in AUCA not to be forgotten and they should get same attentionas if they are in PB/RD accounts.

Write-off accounts where absolutely no recovery is possible.

Execution of recovery certificates/decrees expeditiously.

Reduction of NPAs is a priority area identified by the Chairman. Controller mustrender all possible assistance throughout the Cell. Functionaries including jointdialogue with the borrower for NPA recovery.

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III) Reduction of Costs

In a falling real estate market scope exists for re-negotiating the rent of branchpremises at the time of renewal of lease. Alternatively, shifting of branchpremises can be thought of without compromising on poshness of locality,surroundings, decor, etc. Recommending periodic increase in rent without takinginto account prevailing market rates should not be resorted to.

Thorough scrutiny of estimates for repairs, maintenance, provision of newfurniture and fittings must be done at the Zonal Office level. (L1 could be lowerstill!)

Wastage / misuse of stationery, stocking of excess stationery is to be looked into,

A cost reduction of 1 0% across the board on travel, electricity, telephones/ fax,etc. must be effected.

Have you thought of managing with optimal level of staff? This alone can result insubstantial cost savings. Have you seriously thought about staff reduction /redeployment wherever warranted with a view to visibly improving Business perEmployee?

III) TECHNOLOGY

Has computerisation resulted in improving your customer service? If not WHY? Has computerisation helped in increasing business? If yes, Can it be quantified? Has the staff been redeployed following computerisation? Computerisation entails large investment and there should be a commensurate

return. Return on IT investments should come from - More customers More business Higher margins New business Reduced costs Reduced frauds

Has Computerisation helped in facing the competition? Is your ATM located at strategic and convenient location? Can we not extend the full range of services provided by the ATMs?

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With computerisation in place can we now move towards single windowapproach to transactions?

ACTION POINTS

BUSINESS PROMOTION

Do you have note-counting machine? Have specimen signatures being captured in the system and retrieved for on-line

verification?

Do you make use of the E-mail facility in communicating with the ZO/customer? Are Pass Book Printer are in working condition? Are the statements of accounts being dispatched to the customers regularly

without their having to ask for it?

TECHNOLOGY UPKEEP

Are all officers and clerical staff using the Computer System trained / being sentfor Computer training programmes regularly?

Are they being sent for special training programmes whenever necessary? Is the capacity of the server adequate for the level of transactions? Are non-financial input forms being used as prescribed? Are the project officers resourceful in solving the problems at a short notice? Has there been a system breakdown or failure recently? Are you satisfied with the timeliness and quality of service provided by the

vendors? Do you have all the approved software packages developed by the Bank from

time to time? Are these the latest versions / releases from C & L project? Are there outstandings in Systems Suspense Accounts? Are they being followed

up? Does the Branch Cash Balance in the system agree with the Actual Cash

Balance Are audit trails generated normally, without being force updated? If force

updated, are the reasons looked into and rectified? Are all reports being checked? Are reports checked for correct flag values? Are all the irregularity reports being followed-up for rectification? Do you have the booklets issued on how to check reports and use them to train

new incumbents?

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COMPUTER SECURITY

Are all the prescribed registers for the computerised system maintained properlyand being periodically scrutinised by you?

Are Pass Books kept in safe custody and their usage strictly controlled? Are back- ups being taken regularly as laid down? Judiciously and maintaining the appropriate registers in this regard. Are users advised of their User ID by means of an Office Order in a register

against acknowledgement? Is access to system room strictly controlled and Access Register maintained? Have you documented and approved the Disaster Recovery Plan for your

branch? Does it include firm arrangements for offsite storage of backups? Do you maintain the list including telephone numbers of service providers /

vendors who can attend to complaints at short notice? Are the UPS and Power Supply Systems satisfactorily maintained? Are fire extinguishers placed near the system room and in working order? Are

you supplied with smoke detectors?

TECHNOLOGY INITIATIVES IN THE BANK:

Migration of customers to alternative channels like ATM/ INB/ Mobile Banking,etc.,

Swift connectivity What is the quality of service being extended? What is the impact on the customer service? What are the deficiencies

observed? Any suggestions for improvement? Are the ATM cards distributed to customers securely? Is non-delivery of cards being followed? Are ATM facilities spruced up and made attractive, so that customer prefer ATM to customer service? Are the addresses and other particulars in Branch Locator correct? MICR cheque processing centres. Has the MICR processing helped in the efficiency of Service Branch? Internet banking Is Internet banking helping in building customer relationship? Is it being increasingly seen as preferred service channel? Has CINB facility been given to all corporates?

Technology initiatives must result in improved customer services, optimum utilization ofstaff and a quantum jump in business along with meticulous compliance of Banksinternal as well as statutory requirements. Technology is an investment. The Bank mustget a return on its investment.

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IV) PEOPLE

To convert your Branch as a Model Branch Action Points on the Five core areas of yourOperation

For a service industry, its People are the most important assets. A motivated anddisciplined workforce can achieve wonders in the market place. Simultaneously, anorganisation has also to think of the continuous - development & welfare of its peopleand instill in them the necessary commitment for the goals of the organisation. A fewaction points to impart in our people a sharp competitive edge are given below.

Action Points

I) Motivation

Every employee is an ambassador of the Bank. Has this message percolated tothe grassroots level? Are staff members so developed to fulfill this role?

Do you know the names of all your staff members and do you really know themwell?

Are you accessible not only to your officers, but to all members of the staff at thebranch whenever they seek such an access?

Do you communicate clearly to all the staff members through formal/ informalmeeting about goals, results etc to be achieved?

Do you encourage your officers to act as Leaders and provide them adequatesupport?

Is the staff working in your branch aware of Multiple Rewards and RecognitionScheme and Alertness Award?

Is good work done by the officers/staff recognised through felicitationprogrammes?

How do you make staff members add value to the Customer RelationsProgramme and other such official functions in the branch?

When the staff members come to you with problems, are you actively involved inhelping them reach solutions or do you put them on to the other officers in theBranch for them to sort out the problems by themselves?

Do you ensure that good work is appreciated orally as well as in writing? (Anappreciation letter from you, or the AGM or the GM can work wonders inmotivating an employee)

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Do you ensure that silver jubilee awards for having completed 25 years of serviceare given on time? (Without the employee asking for it!)

Do you ensure that increments are sanctioned well on time so that the recipientcan draw the same on the month when it becomes due?

Do you think it necessary to empathise with staff members who are in distress?What personality traits are required from your side to empathise with them?

II) Discipline/Control

Are all letters received are seen by you before being sent to the concernedofficer?

Do all your meetings end up in action planning?

Do you pull up erring staff?

Do your officers have your full support when they initiate action against erringstaff?

Do you ensure adequate discipline in the Branch?

Have you taken stock of all disciplinary cases/vigilance cases in you Branch andevolved an action plan for speedy disposal? It may just be possible that a goodno. of cases can be cleared at AGM/DGMs level itself.

Ill) Development

Have you been encouraging formation of Quality Circles in your branch underyou control?

Do your Officers work as a team

What steps have you taken to ensure that your staff/officers in the branch keepthemselves updated with the latest schemes of the Bank and those of ourcompetitors? Do you encourage your officer/staff to be a resource person formarketing

Do your branch is active In Branch Training Forums, which encouragedissemination of knowledge by the staff among the staff? Is a complete set of allcirculars available and accessible in the branches?

Do you encourage your officers to take award staff members along with themwhile making customer calls?

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Are you ensuring that Need Assessment is done every year for the purpose oftraining your staff? (This is not theoretical. It is possible of being achieved withgood results)

Do you have up to date information regarding the various trainings, which theofficers in the branch have attended? Is similar data available in respect of all thestaff members?

Do you ensure that job rotation of the staff is done on a regular basis? This canbe a good measure for prevention of frauds.

Do you keep your employees well informed of all the changes that are takingplace in the organization and in the market place?

Do you share your expectations with the staff in the Branch and also tell themhow well they are doing from time to time?

Are you ensuring proper placements based on the developmental needs of theemployee/officials, his past experience and the training attended?

Is the Visiting Faculty Scheme being made good use of by your branch?

Do you interact with all cadres of staff in the Branch or confine yourself tosupervising staff?

Do you take interest in the career progression of staff in the Branch by arrangingtraining, encouraging in-branch study group for promotion, CAIIB etc.?

As a Branch Manager, while writing AARs it is imperative that you know yourofficers Well (you are reporting on them) and at least know by acquaintance theofficers whose reports you are reviewing.

The self-appraisal is an opportunity given to the official to write about what hehas done (or not done!) during the year. As far as possible you must try andinsist that every official submits his self-appraisal and on time.

At an opportune moment e.g. meeting of officers would you like to address themon How to write AAR and other allied issues?

Do you devote sufficient time and energy while writing annual appraisal reports ofyour employees?

Are you ensuring timely submission of AARs?

In case of mid-year transfers, are you insisting on a feed back report from theprevious Branch?

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IV) Welfare

Are Officers/staff members advised their leave balances every year?

Do you ensure that staffs in the branch are provided various facilities/ benefits towhich they are entitled? (non provision of simple things like furniture, brief case,scholarship etc. are major irritants) Delay in matters relating to staff welfare likepayment of medical bills etc. should be strictly avoided

Have you ensured that your branch have good ambience, comfortable layout andadequate furniture and amenities to provide good working conditions?

Are staff amenities adequate at your branch?

V) Commitment

Ownership and Commitment to the organisation, to the branch, to the taskcannot be extracted or demanded. It has to be built. How do we go about it?

Do you have a clear vision for your Branch? Have you shared it with yourofficers/staff?

Have our Vision, Mission and Core Values been communicated to the officers/employees?

Is every employee aware of the performance of his branch vis-a-vis otherbranches in the region? There must be a competitive element involved.

As a BM, have you thought of rewarding your best performing officer/staff zerocomplaint officer/staff etc.?

Do you give congratulatory messages to staff on their getting promotions?

How do you react while coming across disillusioned and alienated staff in theBranch? Do you go beyond merely listening to him/her?

Do you make it a point to attend every retirement function in your lie branches?

Do you share the success stories of other officers with your officers/ staff members

Remember that it is not the effort of an individual but the endeavour of the team thatbrings success. The team leader, while leading from the front, has to harness, co-ordinate & channelise the skills, experience & potential of the people for that ultimategoal called success.

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6. KNOW YOUR CUSTOMER

(Crusade against Money-Laundering)(Implementation of Obligations of Commercial Banks)

Guidelines on Know Your Customer norms and Cash transactions

Taking into account recent developments, both domestic and international, the followingguidelines reinforce earlier instructions on the subject with a view to safeguarding banks frombeing unwittingly used for the transfer or deposit of funds derived from criminal activity (both inrespect of deposit and borrowal accounts), or for financing of terrorism. The guidelines are alsoapplicable to foreign currency accounts/transactions.

Know Your Customer (KYC) guidelines for New accounts

The following KYC guidelines will be applicable to all new accounts with immediate effect

1. KYC Policy

Know Your Customer (KYC) procedure should be the key principle for identification ofan individual/corporate opening an account. The customer identification should entailverification through an introductory reference from an existing account holder/a personknown to the bank or on the basis of documents provided by the customer.

2. Customer identification

The objectives of the KYC framework should be two fold, (i) to ensure appropriatecustomer identification and (ii) to monitor transactions of a suspicious nature. Banksshould obtain all information necessary to establish the identity/legal existence of eachnew customer, based preferably on disclosures by customers themselves. Typicallyeasy means of establishing identity would be documents such as passport, drivinglicense etc. However where such documents are not available, verification by existingaccount holders or introduction by a person known to the bank may suffice. It should beensured that the procedure adopted does not lead to denial of access to the generalpublic for banking services.

3. Know Your Customer procedures for existing customers

Banks are expected to have adopted due diligence and appropriate KYC norms at thetime of opening of accounts in respect of existing customers. However, in case of anyomission, the requisite KYC procedures for customer identification should be gotcompleted at the earliest.

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4. Ceiling and monitoring of cash transactions

The extant RBI guidelines on the subject are as under:

(i) Banks are required to issue travellers cheques, demand drafts, mail transfers,and telegraphic transfers for Rs.50,000 and above only by debit to customersaccounts or against cheques and not against cash. Further, the applicants(whether customers or not) for the above transactions for amount exceeding Rs.10,000/- should affix permanent (Income tax) account number on theapplications. Since KYC is now expected to establish the identity of the customerand as the issue of demand draft etc. for Rs.50,000 and above is by debit toaccount, the requirement for furnishing PAN stands increased uniformly toRs.50,000/-.

ii) The banks are required to keep a close watch of cash withdrawals and depositsfor Rs.10 lakhs and above in deposit, cash credit or overdraft accounts and keeprecord of details of these large cash transactions in a separate register.

(iii) Branches of banks are required to report all cash deposits and withdrawals ofRs.10 lakhs and above as well as transactions of suspicious nature with fulldetails in fortnightly statements to their controlling offices.

5. Risk management and monitoring procedures

In order to check possible abuse of banking channels for illegal and anti-nationalactivities, the Board should clearly lay down a policy for adherence to the aboverequirements comprising the following:

a) Internal Control Systems

Duties and responsibilities should be explicitly allocated for ensuring that policiesand procedures are managed effectively and that there is full commitment andcompliance to an effective KYC programme in respect of both existing andprospective deposit accounts.

b) Terrorism Finance

RBI has been circulating lists of terrorist entities notified by the Government ofIndia to banks so that banks may exercise caution if any transaction is detectedwith such entities. There should be a system at the branch level to ensure thatsuch lists are consulted in order to determine whether a person/organizationinvolved in a prospective or existing business relationship appears on such a list.

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c) Internal Audit/Inspection

(i) An independent evaluation of the controls for identifying high valuetransactions should be carried out on a regular basis by the internal auditfunction in the banks

(ii) Concurrent/internal auditors must specifically scrutinize and comment onthe effectiveness of the measures taken by branches in adoption of KYCnorms and steps towards prevention of money laundering. Suchcompliance report should be placed before the Audit Committee of theBoard of banks at quarterly intervals.

d) Identification and Reporting of Suspicious Transactions

Banks should ensure that the branches and controlling offices report transactionsof suspicious nature to the appropriate law enforcement authorities designatedunder the relevant laws governing such activities. There should be well laid downsystems for freezing of accounts as directed by such authority and reportingthereof to the controlling office and head office. Being matters of sensitive nature,there must be a quarterly reporting of such aspects to the audit committee of theboard or the board of directors.

e) Adherence to Foreign Contribution Regulation Act (FCRA), 1976

(i) Banks should also adhere to the instructions on the provisions of theForeign Contribution Regulation Act, 1976 cautioning them to openaccounts or collect cheques only in favour of association which areregistered under the Act ibid by Government of India. A certificate to theeffect that the association is registered with the Government of Indiashould be obtained from the concerned associations at the time ofopening of the account or collection of cheques.

(ii) Branches of the banks should be advised to exercise due care to ensurecompliance and desist from opening accounts in the name of bannedorganizations and those without requisite registration.

f) Record Keeping

Financial intermediaries should prepare and maintain documentation on theircustomer relationships and transactions to meet the requirements of relevantlaws and regulations, to enable any transaction effected through them to bereconstructed. In the case of wire transfer transactions, the records of electronicpayments and messages must be treated in the same way as other records insupport of entries in the account. All financial transactions records should beretained for at least five years after the transaction has taken place and should

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be available for perusal and scrutiny of audit functionaries as well as regulatorsas and when required.

g) Training of staff and management

All institutions must, therefore, have an ongoing training programme so that staffare adequately trained for their roles and responsibilities as appropriate to theirhierarchical level in complying with anti-money laundering guidelines and forimplementing KYC policies consistently.

h) These guidelines are issued under Section 35 (A) of the Banking Regulation Act,1949 and any contravention of the same will attract penalties under the relevantprovisions of the Act.

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7. BANKING OMBUDSMAN SCHEME

The Banking Ombudsman Scheme, 1995 was notified by RBI on June 14, 1995 in terms of thepowers conferred on the Bank by Section 35A of the Banking Regulation Act, 1949 (10 of 1949)to provide for a system of redressal of grievances against banks. The Scheme sought toestablish a system of expeditious and inexpensive resolution of customer complaints. TheScheme is in operation since 1995 and has been revised during the years 2002 and 2006. TheScheme is being executed by Banking Ombudsmen appointed by Reserve Bank at 15 centrescovering the entire country.

2. GENERAL PARTICULARS ON THE SCHEME

2.1 The word Ombudsman in general means a grievance man, a public official who isappointed to investigate complaints against the administration. He is to intervene for theordinary citizen in his dealings with the complex machinery of the establishment.

2.2 In India, any person whose grievance against a bank is not resolved to his satisfaction bythat bank within a period of one month can approach the Banking Ombudsman if his complaintpertains to any of the matters specified in the Scheme. Banking Ombudsmen have beenauthorized to look into complaints concerning (a) deficiency in banking service (b) sanction ofloans and advances in so far as they relate to non-observance of the Reserve Bank directiveson interest rates, delay in sanction or non-observance of prescribed time schedule for disposalof loan applications or non-observance of any other directions or instructions of the ReserveBank as may be specified for this purpose, from time to time, and (c) such other matters as maybe specified by the Reserve Bank.

2.3 The Scheme envisages expeditious and satisfactory disposal of customer complaints in atime bound manner. The Banking Ombudsman on receipt of any complaint endeavours topromote a settlement of the complaint by agreement between the complainant and the banknamed in the complaint through conciliation or mediation.

For the purpose of promoting a settlement of the complaint, the Banking Ombudsman has beenallowed to follow such procedures as he may consider appropriate and he is not bound by anylegal rule of evidence. If a complaint is not settled by agreement within a period of one monthfrom the date of receipt of the complaint or such further period as the Banking Ombudsman mayconsider necessary, he may pass an Award after affording the parties reasonable opportunity topresent their case. He shall be guided by the evidence placed before him by the parties, theprinciples of banking law and practice, directions, instructions and guidelines issued by theReserve Bank from time to time and such other factors, which in his opinion are necessary inthe interest of justice.

The Banking Ombudsman Scheme, 2002

2.4. The Banking Ombudsman Scheme (BOS) 2002 came into effect on 14th June 2002. TheBOS 2002 additionally provided for the institution of a Review Authority to review the BankingOmbudsmans Award, when warranted. A bank against whom an Award was passed, could withthe approval of its Chief Executive, file an application to the Review Authority (Deputy Governor,Reserve Bank of India) to seek a review of the Award. The bank could request for such a review

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only when the Award appeared to be patently in conflict with Reserve Banks instructions and/orthe law and practice relating to banking. The Banking Ombudsmen was also authorized tofunction as an Arbitrator on reference to him of disputes either between banks and theircustomers or between banks. The value of the subject matter of individual disputes underarbitration should not exceed Rupees Ten Lakhs.

The Banking Ombudsman Scheme, 2006

2.5. The Banking Ombudsman Scheme, 2002 was reviewed during the year 2005-06 and wasmodified to reflect the changing needs of the bank customers. The modified scheme, theBanking Ombudsman Scheme, 2006, came into effect from January 1, 2006 with the followingmajor changes:

(i) New grounds of complaints such as credit card issues, failure in providing the promisedfacilities, non-adherence to fair practices code and levying of excessive charges without priornotice were included.(ii) In order to facilitate complaint submission, the application format prescribed was made notmandatory for filing the complaint. Further, complaints can be filed online as well as by sendingan email.(iii) In order to have more control over the functioning of the Scheme, Reserve Bank would fullyfund and staff the Banking Ombudsman Scheme.(iv) The banks are required to appoint Nodal Officers in their Zonal Offices/Regional Offices forthe Scheme.(v) The complainants may also appeal against the Award of Banking Ombudsman. (vi) In orderto enable the Banking Ombudsmen concentrate on the complaints, rather than on arbitration ofinter-bank disputes, the arbitration option rested with the Banking Ombudsman was removed.

Amendment to the Banking Ombudsman Scheme, 2006

2.6. The revised Banking Ombudsman Scheme had witnessed a surge in the inflow ofcomplaints. Along with the complaints, there was increase in the complaint disposals by theBanking Ombudsman Offices as well. However, many appeals against the decisions of theBanking Ombudsman were also received from the complainants. The Banking OmbudsmanScheme, 2006 had allowed appeals from complainants only in the complaints wherein Awardshad been issued. Observing the spate of appeals from complainants against decisions, ratherthan against Awards, an amendment to the Scheme was notified on May 24, 2007 to facilitateappeals from complaints that are relating to matters falling within the grounds of complaintspecified under the Scheme.

Amendment made in 2009 to the Banking Ombudsman Scheme:

2.7 The Banking Ombudsman may reject a complaint at any stage if it appears to him that thecomplaint made is;

(a) not on the grounds of complaint referred to in clause 8 or(b) beyond the pecuniary jurisdiction of Banking Ombudsman prescribed under

clause 12 (5) or(c) frivolous, vexatious, malafide; or(d) without any sufficient cause; or(e) that it is not pursued by the complainant with reasonable diligence; or

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(f) in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience caused to the complainant; or

(g) requiring consideration of elaborate documentary and oral evidence and the proceedings before the Banking Ombudsman are not appropriate for adjudicationof such complaint.

3. SCOPE OF THE SCHEME

3.1 The Banking Ombudsman Scheme, 2002 covered all the Regional Rural Banks in additionto all Commercial Banks and Scheduled Primary Co-operative Banks, which were alreadycovered by earlier Banking Ombudsman Scheme, 1995. There is no change in this regard in theBanking Ombudsman Scheme, 2006.

3.2. As indicated in paragraph 2.5 above, various new grounds of complaints were added withinthe scope of the Banking Ombudsman Scheme, 2006. The important new grounds ofcomplaints added include credit card issues, failure in providing the promised facilities, non-adherence to fair practices code, levying of excessive charges without prior notice and issuespertaining to accepting payment towards taxes and issuing/servicing of Government securities.The grounds of complaints have been enumerated in Clause 8 of the Banking OmbudsmanScheme, 2006.

4. OPERATIONALISATION

Reserve Bank of India operationalised the Banking Ombudsman Scheme by establishingBanking Ombudsman Offices at 15 centres all over the country.

5. CREDIT CARD COMPLAINTS

The complaints relating to credit cards formed the major share of the complaints received at theBanking Ombudsman Offices. The types of complaints received in this regard are enumeratedbelow:

Non-issue of credit cards. Issue of unsolicited cards. Non-despatch of account statements in time. Levy of excessive service charges. Unauthorised debits. Late appropriation of payments made through cheques even though deposited in

time/at drop boxes outside bank premises and levy of late fee in such cases. Excessive late fee and penal charges. Sanction of loan against credit cards on the basis of offers over telephone without

written consent of customer. Refusal to cancel credit card. Refusal to settle insurance claims. Not adhering to settlement terms for settling credit card dues. Wrong reporting of status of cardholder's dues to credit information companies. Failure to note caution / instructions in lost cards.

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Freezing of cards without informing the cardholder. Harassment by recovery officer.

6. REVIEW / APPEAL OF BANKING OMBUDSMAN'S AWARDS

The Banking Ombudsman Scheme, 2002 additionally provided for the institution of a ReviewAuthority to review the Banking Ombudsmans Award, when warranted. The "review' optionwas to be exercised by the banks on grounds that the Award appears to be patently in conflictwith the Banks instructions and/or the law and practice relating to banking. The same waschanged into 'appeal' process in the Banking ombudsman Scheme, 2006.

7. NODAL OFFICERS IN BANKS FOR GRIEVANCE REDRESSAL

The Banking Ombudsman Scheme 2006 mandates that every bank nominate a Nodal Officer inevery region/zone for facilitating the functioning of the Banking Ombudsman Offices. Besidestaking up individual complaints, the Banking Ombudsman offices also periodically review theoutstanding complaints with the nodal officers. Many Banking Ombudsman Offices haveindicated that such a mechanism has yielded good results in resolving the complaintsexpeditiously. It was also clarified during the year that the responsibility of a bank's nodal officesincludes the credit card operations of the bank's subsidiaries.

The Customer Service Department has started the exercise of inviting the officers in charge ofcustomer service departments (grievance redressal officers) of commercial banks for aninteraction and for briefing them about the expectations of Reserve Bank. During the meetings,they are advised to play an effective role in handling customer complaints with care andsensitivity in a timely manner. The requirement for publicizing their service charges and thenames and addresses of their nodal officers prominently in the website and notice boards isalso reiterated.

-------------------------------------------------------------------------------------------------------------------------------'It starts with respect. If you respect the customer as a human being, and truly honourtheir right to be treated fairly and honestly, everything else is much easier.'

- Doug Smith

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8. CITIZENS CHARTERBANKING CODES AND STANDARDS BOARD OF INDIA (BCSBI) AND

ITS CODE OF BANKS COMMITMENT TO CUSTOMERS

With a view to protecting the interest of customers in Banking Sector, the Reserve Bank ofIndia has been taking many initiatives, which include formation of committees and implementingtheir recommendations. The following committees/ schemes played critical role.

R.K. Talwar Committee 1975 Goiporia Committee- 1991 Narsimham Committee 1991 Tarapore Committee - 2003 Setting up of Banking Codes and Standards Board of India February 2006 Revised Banking Ombudsman Scheme -2006

The Committee on Procedures and Performance Audit of Public Services, 2003 (TaraporeCommittee) advocated that there was a need for benchmarking of banking services tocontinuously upgrade them. The Committee concluded that there was an institutional gap formeasuring the performance of banks against a benchmark reflecting the best practices (Codesand Standards). The committee recommended setting up of the Banking Codes and StandardsBoard of India (BCSBI), broadly on the lines of Banking Codes and Standards Board functioningin the U.K.

Accordingly, BCSBI was formed in February, 2006 by registering as an autonomous andseparate society under the Societies Registration Act. It has been formed on the principle thatself regulation is more effective than enforced one. Under self regulation, banks are bound tocomply with their promises lest they lose their credibility. Self regulation increases competitionand consumer is benefited.

The BCSBI is an independent banking industry watchdog to ensure that the consumers ofbanking services get what they are promised by the banks. As on date, 69 Commercial Banksare its members, which include all the major Private/ Foreign/ Public Sector Banks. Apart fromthis, 5 Cubs and 9 Ribs are also its members. The membership is voluntary, but once a bankbecomes a member, the codes released by BCSBI are obligatory on it. Member banks shouldalso make available copies of the codes of the Board to the customers in all their branches.

The BCSBI evolved the Code of Bank's Commitment to Customers first in July, 2006 which wasrevised in August, 2009. It also released a Code of Banks Commitment to Micro and SmallEnterprises on May 31, 2008. BCSBI has commenced its credit counseling services with effectfrom 1st October 2009 for financial education of people by assisting them to organise theirfinancial commitments, control their finances and in drawing repayment plan in consultation withthe concerned bank.

In view of the above, all the bankers should know the commitments made to the customersunder various codes of BCSBI. Let us take a birds eye view of the revised code of Bank'sCommitment to Customers (Aug., 2009). Complete code is available on BCSBIs websitewww.bcsbi.org.in and on customer care tab in the Banks website www.sbi.co.in. State

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Bank of India has adopted the BCSBIs code of Banks Commitment to Customers, as it is, andalso named it Citizens Charter.

The Code does not replace or supersede regulatory or supervisory instructions of RBI andmember banks will comply with such instructions/directions issued by RBI from time to time.Provisions of the Code may set higher standards than what is indicated in the regulatoryinstructions and such higher standards will prevail as the Code represents best practicesvoluntarily agreed to by the banks as their commitment to customers.

As hitherto, the revised code is applicable to:

a. All deposit accountsb. Payment services such as pension, payment orders, demand drafts, electronic transactions, etc.c. Government transactionsd. Demat accounts, equity, Government bondse. Indian currency notes exchange facilityf. Collection of cheques, safe custody services, safe deposit locker facilityg. Loans, overdrafts and guaranteesh. Foreign exchange services including money changingi. Third party insurance and investment products sold through bank branchesj. Card products e.g., credit cards (of banks subsidiaries/companies also), debit cards, ATMcards, smart cards and services, etc.,

Some Key Commitments:

To act fairly and reasonably in all dealings by:

making sure the products and services meet relevant laws and regulations ensuring the dealings rest on ethical principles of integrity and transparency operating secure and reliable banking and payment systems.

To help customer to understand how financial products and services work by:

giving information about them in any one or more of the following languages Hindi,English, appropriate local language

ensuring that advertising and promotional literature is clear and not misleading ensuring that clear information is given to customers about banks products and

services, the terms and conditions and the interest rates/service charges, which apply tothem

giving information on the benefits available to the customer, how customers can avail ofthe benefits, what are their financial implications and whom they can contact foraddressing their queries and how

To help customer use his/ her account or service by:

providing him/ her regular appropriate updates

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keeping customer informed about changes in the interest rates, charges or terms andconditions

displaying in the branches (i) Services provided, (ii) Minimum balance for SB accountsand No-frills accounts and charges for non-maintenance thereof, (iii). Name and addressof the official at the branch/ Zonal/ Regional Office/ Banking Ombudsman to redressgrievance

displaying on the bank website its policies on Cheque Collection, Grievance Redressal,Compensation, Collection of Dues and Security Repossession

To deal quickly and sympathetically with things that go wrong by:

correcting mistakes promptly and cancelling any bank charges that were applied bymistake

handling customer complaints promptly telling customer how to take his complaint forward if he is not satisfied providing alternatives to alleviate problems arising out of technological failures

To treat personal information of customers as private and confidential except in the case of legalrequirement, public interest etc.

To publicise the code, the bank will:

provide customers with a copy of the Code, on request provide new customers with a copy of the Code when they open account make available this Code at every branch and on the banks website ensure that banks staff are trained to provide information about the code and to put the

Code into practice.

To adopt and practice a non-discrimination policy on the basis of age, race, gender, maritalstatus, religion or disability.

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9. EFFECTIVE FUND MANAGEMENT

In the present context of increasing profitability and plugging leakages o, you shouldrequest/involve all members of staff to achieve excellence in U. Management.

Broadly speaking, a bank can be said to be managing its cash efficiently, only if it is able torealise all the amounts due to it without delay, and is not laying out funds without remuneration,unless warranted by statutory provisions governing the working of the Bank.

Remember, inefficient cash management adds to the problems of Treasury and InvestmentManagement Department, at Central Office, which undertakes to deploy the surplus resourcesgainfully in the market to reap maximum revenue.

Dos and Donts relating to Cash Management

1. Currency Transfers: Report currency transfer transactions - both deposits and withdrawalsirrespective of the amounts involved - on the date of the transaction to the currency chest LinkOffice to enable the bank to decide the exact quantum of cash reserves to be kept in ourPrincipal Account with RBI - no more or no less - to move towards the ideal of Zero ExcessReserves. This also helps us in avoiding penal interest charged by RBI for delayed settlementof funds.

2. Government Transactions: Data for different years has shown that, on account of deficitfinancing of budgets of State Governments and Central Government, Government payments foroutweigh the government receipts handled by our offices. It is therefore, in the interest of theBank that Government transactions are settled expeditiously as it poses a potential threat to theBank from cash management point of view. In case of receipt transactions by expeditioussettlement of funds, we can avoid penal interest charged to branch for delayed settlement offunds.

4. RBI Remittance Facilities Scheme: Besides government transactions, the Banks branchesalso handle other transactions under the agency arrangements with the RBI. Drawings made bythe offices of RBI on the Banks branches maintaining currency chests, constitute the majority oftransactions under the RBI Remittance Facilities Scheme. It, therefore, follows that the Bankremains out of funds for a length of time, in respect of such payments, and it is necessary toensure that Encashment Schedules together with paid instruments are despatched the sameday to IOA Department, Bombay.

5. Holding of Cash in Hand: Cash in hand is one of compulsions for carrying on the businessof banking, and the portfolio has moved up with the expansion of the branch network into farflung areas, often without the facility of a Currency chest. Assuming that each one of the officesnot having a currency chest carries about Rs.2.00 lacs per branch as cash balance, then thetotal non-earning asset at whole bank level will be around Rs. 280 crores. (14000 X 200000 =280,00,00,000). Therefore:

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i) currency chest branches should hold minimum balance in Branch Cash Balance Account -technically it should be at the most Rs.499.99.

ii) other branches/extension counters/sub-offices should strive to keep bare minimum handbalances, the surpluses being remitted to link office periodically. Excess cash beyond retentionlimit if retained at the branch for reasons beyond control should be advised to ControllingAuthority and their approval should be obtained.

6. Weekly Abstract: Weekly figures should be transmitted positively on Fridays. Delayedsubmission, repetition or no submission means an aberration in compilation of whole bank DTLdata. This upsets our reserve management drill.

7. Clearing : At centres where the Reserve Bank of India conducts clearing houses, the Bankmaintains a Local Account with it. Any delay in presentation of cheques in local clearing maylead to adverse clearing position acting as a drag on efficient cash management. The problemgets compounded on Saturdays when the adverse clearing position goes on to multiply thedeficit twice over (i.e. for Saturday and Sunday) and retrieval of the position on the daysfollowing, sometimes, becomes a tense exercise.

Therefore, all the cheques received for local clearing should be presented without delay.

8. Sundry Deposit Account : The balances in the Sundry Deposit Account form part of theBanks DTL, and statutory reserves have to be maintained thereon. It is, therefore, in theinterest of the Bank to ensure that no amount other than those in respect of which the bank isactually liable are credited to Sundry Deposit Account.

9. Outstandings in IBIT Account : Scrutinise the outstanding debit entries in the IBIT Account torecover the amounts involved. It is possible that a long outstanding debit entry in the IBITAccount may be the result of a double responding entry passed by you and unless you act fast,it may not be possible to recover the monies paid out twice by you in error. A few outstandingentries may be cross-checked with vouchers/telegrams to ascertain genuineness of the entries.

10. Outstandings in Suspense Account : Outstanding in this account represents funds outlayby the Bank. Recoveries should be made promptly. For this purpose, scrutinise the SuspenseAccount Register every week and endeavour to reverse as many entries as possible during theweek.

11. Interest Due on Borrowers Account/Commission Recoverable on Bank Guarantees, Lettersof Credit Issued etc. represents monies due to the Bank and should be calculated accuratelyand recovered promptly. Inaccuracies or delays affect Banks profitability adversely.

Remember that the delayed application of interest means a loss of interest on interest.

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10. PERFORMANCE BUDGETING

SECTION I - PROCESS

With the keen competition among banks and from other agencies, the choice is betweengrowing faster than others or fading into oblivion. Business growth, market share, business-mix,socio-economic priorities, productivity, stability, product design and review are some of thedimensions of growth. Obviously, all these considerations need careful planning, for whichcollection and use of environmental data is essential.

Goal setting or budgeting for performance is a two-way process. At the macro level, the goalsare set on the basis of macro data and the desired growth for the Bank. At the micro-level thegoals are set on the basis of the Branchs environment, its historical and market share data, itsstrengths and weaknesses, perceived potential and the desired growth. The final business goalsfor various levels are set through a process of macro-micro matching or a budget settlementexercise wherein the unit (the branch or the region of the circle) and its controlling authority sittogether and discuss the differences between their expectations of growth in business and otherrequirements. The aim in this exercise is to set goals which are high enough to induce effort forachieving them but also low enough to be achievable. The settled gro