Emotional Intelligence Project

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1.1INTRODUCTION TO THE STUDY

THEORETICAL FRAMEWORK:

Emotional Intelligence is

"the capacity for recognizing our own feelings and those of others, for

motivating ourselves and for managing emotions effectively in others and

ourselves."

Emotional Intelligence (EI), often measured as an Emotional Intelligence Quotient

(EQ), describes an ability, capacity, skill or (in the case of the trait EI model) a self-

perceived ability, to identify, assess, and manage the emotions of one's self, of others,

and of groups. It is a relatively new area of psychological research. The definition of

EI is constantly changing.

Origins of the concept

The most distant roots of Emotional intelligence can be traced back to Darwins early

work on the importance of emotional expression for survival and second adaptation.

In the 1900s, even though traditional definitions of intelligence emphasized cognitive

aspects such as memory and problem-solving, several influential researchers in the

intelligence field of study had begun to recognize the importance of the non-cognitiveaspects. For instance, as early as 1920, E. L. Thorndike, used the term social

intelligence to describe the skill of understanding and managing other people.

Similarly, in 1940 David Wechsler described the influence of non-intellective factors

on intelligent behaviour, and further argued that our models of intelligence would not

be complete until we can adequately describe these factors. In 1983, Howard

Gardner's Frames of Mind:The Theory of Multiple Intelligences introduced the ideaof multiple Intelligences which included both Interpersonal intelligence (the capacity

to understand the intentions, motivations and desires of other people) and

Intrapersonal intelligence (the capacity to understand oneself, to appreciate one's

feelings, fears and motivations). In Gardner's view, traditional types of intelligence,

such as IQ, fail to fully explain cognitive ability. Thus, even though the names given

to the concept varied, there was a common belief that traditional definitions of

intelligence are lacking in ability to fully explain performance outcomes.

As a result of the growing acknowledgement of professionals for the importance and

relevance of emotions to work outcomes, the research on the topic continued to gain

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momentum, but it wasnt until the publication of Daniel Goleman's best seller

Emotional Intelligence: Why It Can Matter More Than IQ that the term became

widely popularized. Nancy Gibbs' 1995 Time magazine article highlighted Goleman's

book and was the first in a string of mainstream media interest in EI. Thereafter,

articles on EI began to appear with increasing frequency across a wide range of

academic and popular outlets.

Fig. 1.1 Components of EI

Defining emotional intelligence

There are a lot of arguments about the definition of EI, arguments that regard both

terminology and operationalizations. One attempt toward a definition was made by

Peter Salovey and John D. Mayer (1990) who defined EI as the ability to monitor

one's own and others' feelings and emotions, to discriminate among them and to use

this information to guide one's thinking and actions.

Despite this early definition, there has been confusion regarding the exact meaning of

this construct. The definitions are so varied, and the field is growing so rapidly, that

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researchers are constantly amending even their own definitions of the construct. Up to

the present day, there are three main models of EI:

Ability EI models

Mixed models of EI

Trait EI model

1.1.1 The ability-based model

Salovey and Mayer's conception of EI strives to define EI within the confines of the

standard criteria for a new intelligence. Following their continuing research, their

initial definition of EI was revised to: "The ability to perceive emotion, integrate

emotion to facilitate thought, understand emotions and to regulate emotions to

promote personal growth."

The ability based model views emotions as useful sources of information that help

one to make sense of and navigate the social environment. The model proposes that

individuals vary in their ability to process information of an emotional nature and in

their ability to relate emotional processing to a wider cognition. This ability is seen to

manifest itself in certain adaptive behaviors. The model proposes that EI includes 4

types of abilities:

1.Perceiving emotions the ability to detect and decipher emotions in faces,

pictures, voices, and cultural artifacts- including the ability to identify ones own

emotions. Perceiving emotions represents a basic aspect of emotional intelligence, as

it makes all other processing of emotional information possible.

2.Using emotions the ability to harness emotions to facilitate various cognitive

activities, such as thinking and problem solving. The emotionally intelligent person

can capitalize fully upon his or her changing moods in order to best fit the task at

hand.

3.Understanding emotions the ability to comprehend emotion language and to

appreciate complicated relationships among emotions.

4.Managing emotions the ability to regulate emotions in both ourselves and in

others.

Measurement of the ability-based model

Different models of EI have led to the development of various instruments for the

assessment of the construct. While some of these measures may overlap, most

researchers agree that they tap slightly different constructs. The current measure of

Mayer and Saloveys model of EI, the Mayer-Salovey-Caruso Emotional Intelligence

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Test (MSCEIT) is based on a series of emotion-based problem-solving items.

Consistent with the model's claim of EI as a type of intelligence, the test is modeled

on ability-based IQ tests. By testing a persons abilities on each of the four branches

of emotional intelligence, it generates scores for each of the branches as well as a total

score.

Central to the four-branch model is the idea that EI requires attunement to social

norms. Therefore, the MSCEIT is scored in a consensus fashion, with higher scores

indicating higher overlap between an individuals answers and those provided by a

worldwide sample of respondents. The MSCEIT can also be expert-scored, so that the

amount of overlap is calculated between an individuals answers and those provided

by a group of 21 emotion researchers.

Although promoted as an ability test, the MSCEIT is most unlike standard IQ tests in

that its items do not have objectively correct responses. Among other problems, the

consensus scoring criterion means that it is impossible to create items (questions) that

only a minority of respondents can solve, because, by definition, responses are

deemed emotionally 'intelligent' only if the majority of the sample has endorsed them.

This and other similar problems have led cognitive ability experts to question the

definition of EI as a genuine intelligence.

1.1.2 Mixed models of EI

The Emotional Competencies (Goleman) model

The model introduced by Daniel Goleman focuses on EI as a wide array of

competencies and skills that drive leadership performance. Goleman's model outlines

four main EI constructs:

1.Self-awareness the ability to read one's emotions and recognize their impact

while using gut feelings to guide decisions.

2.Self-management involves controlling one's emotions and impulses and

adapting to changing circumstances.

3.Social awareness the ability to sense, understand, and react to others' emotions

while comprehending social networks.

4.Relationship management the ability to inspire, influence, and develop others

while managing conflict.

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Fig.1.2 Different dimensions and their sub-parts

Goleman includes a set of emotional competencies within each construct of EI.

Emotional competencies are not innate talents, but rather learned capabilities that

must be worked on and developed to achieve outstanding performance. Goleman

posits that individuals are born with a general emotional intelligence that determines

their potential for learning emotional competencies. Goleman's model of EI has been

criticized in the research literature as mere pop-psychology.

Measurement of the Emotional Competencies (Goleman) model

Two measurement tools are based on the Goleman model:

1) The Emotional Competency Inventory (ECI), which was created in 1999 and the

Emotional and Social Competency Inventory (ESCI), which was created in 2007.

2) The Emotional Intelligence Appraisal, which was created in 2001 and which can

be taken as a self-report or 360-degree assessment.

The Bar-On model of Emotional-Social Intelligence (ESI)

Bar-On (2006) developed one of the first measures of EI that used the term Emotion

Quotient. He defines emotional intelligence as being concerned with effectively

understanding oneself and others, relating well to people, and adapting to and coping

with the immediate surroundings to be more successful in dealing with environmental

demands. Bar-On posits that EI develops over time and that it can be improved

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through training, programming, and therapy. Bar-On hypothesizes that those

individuals with higher than average E.Q.s are in general more successful in meeting

environmental demands and pressures. He also notes that a deficiency in EI can mean

a lack of success and the existence of emotional problems. Problems in coping with

ones environment are thought, by Bar-On, to be especially common among those

individuals lacking in the subscales of reality testing, problem solving, stress

tolerance, and impulse control. In general, Bar-On considers emotional intelligence

and cognitive intelligence to contribute equally to a persons general intelligence,

which then offers an indication of ones potential to succeed in life. However, doubts

have been expressed about this model in the research literature (in particular about the

validity of self-report as an index of emotional intelligence) and in scientific settings .

While other approaches have been proposed this approach is still the most widely

used worlwide and has the most published scientific papers supporting it.

Measurement of the ESI Model

The Bar-On Emotion Quotient Inventory (EQ-i), is a self-report measure of EI

developed as a measure of emotionally and socially competent behavior that provides

an estimate of one's emotional and social intelligence. The EQ-i is not meant to

measure personality traits or cognitive capacity, but rather the mental ability to be

successful in dealing with environmental demands and pressures. One hundred and

thirty three items (questions or factors) are used to obtain a Total EQ (Total

Emotional Quotient) and to produce five composite scale scores, corresponding to the

five main components of the Bar-On model. A limitation of this model is that it

claims to measure some kind of ability through self-report items. The EQ-i has been

found to be highly susceptible to faking.

1.1.3 The Trait EI model

Petrides proposed a conceptual distinction between the ability based model and a trait

based model of EI. Trait EI is "a constellation of emotion-related self-perceptions

located at the lower levels of personality". In lay terms, trait EI refers to an

individual's self-perceptions of their emotional abilities. This definition of EI

encompasses behavioral dispositions and self perceived abilities and is measured by

self report, as opposed to the ability based model which refers to actual abilities,

which have proven highly resistant to scientific measurement. Trait EI should be

investigated within a personality framework. An alternative label for the same

construct is trait emotional self-efficacy.

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The trait EI model is general and subsumes the Goleman and Bar-On models

discussed above. Petrides et al. are major critics of the ability-based model and the

MSCEIT arguing that they are based on "psychometrically meaningless" scoring

procedures.

The conceptualization of EI as a personality trait leads to a construct that lies outside

the taxonomy of human cognitive ability. This is an important distinction in as much

as it bears directly on the operationalization of the construct and the theories and

hypotheses that are formulated about it.

Measurement of the Trait EI model

There are many self-report measures of EI, including the EQi, the Swinburne

University Emotional Intelligence Test (SUEIT),the Schutte Self-Report Emotional

Intelligence Test (SSEIT), a measure by Tett, Fox, and Wang (2005). From the

perspective of the trait EI model, none of these assess intelligence, abilities, or skills

(as their authors often claim), but rather, they are limited measures of trait emotional

intelligence (Petrides, Furnham, & Mavroveli, 2007). The Trait Emotional

Intelligence Questionnaire (TEIQue) is an open-access measure that was specifically

designed to measure the construct comprehensively and is currently available in 15

languages.The TEIQue provides an operationalization for Petrides and colleagues'

model that conceptualizes EI in terms of personality. The test encompasses 15

subscales organized under four factors: Well-Being, Self-Control, Emotionality, and

Sociability. The psychometric properties of the TEIQue were investigated in a recent

study on a French-Speaking Population, where it was reported that TEIQue scores

were globally normally distributed and reliable.

The researchers also found TEIQue scores were unrelated to nonverbal reasoning

(Ravens matrices), which they interpreted as support for the personality trait view of

EI (as opposed to a form of intelligence). As expected, TEIQue scores were positively

related to some of the Big Five personality traits (extraversion, agreeableness,

openness, conscientiousness) as well as inversely related to others(alexithymia,

neuroticism).

Criticism of the theoretical foundation of EI

EI is too broadly defined and the definitions are unstable

One of the arguments against the theoretical soundness of the concept suggests that

the constant changing and broadening of its definition- which has come to encompass

many unrelated elements had rendered it an unintelligible concept:

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"What is the common or integrating element in a concept that includes: introspection

about emotions, Emotional expression, non-verbal communication with others,

empathy, self-regulation, planning, creative thinking and the direction of attention?

There is none."

Other critics mention that without some stabilization of the concepts and the

measurement instruments, meta-analyses are difficult to implement , and the theory

coherence is likely to be adversely impacted by this instability.

EI cannot be recognized as a form of intelligence

Goleman's early work has been criticized for assuming from the beginning that EI is a

type of intelligence. Eysenck (2000) writes that Goleman's description of EI contains

assumptions about intelligence in general, and that it even runs contrary to what

researchers have come to expect when studying types of intelligence:

"Goleman exemplifies more clearly than most the fundamental absurdity of the

tendency to class almost any type of behaviour as an 'intelligence'... If these five

'abilities' define 'emotional intelligence', we would expect some evidence that they are

highly correlated; Goleman admits that they might be quite uncorrelated, and in any

case if we cannot measure them, how do we know they are related? So the whole

theory is built on quicksand: there is no sound scientific basis".

Similarly, Locke (2005) claims that the concept of EI in itself is a misinterpretation of

the intelligence construct, and he offers an alternative interpretation: it is not another

form or type of intelligence, but intelligence--the ability to grasp abstractions--applied

to a particular life domain: emotions. He suggests the concept should be re-labeled

and referred to as a skill.

EI has no substantial predictive value

Landy (2005) has claimed that the few incremental validity studies conducted on EI

have demonstrated that it adds little or nothing to the explanation or prediction of

some common outcomes (most notably academic and work success). Landy proposes

that the reason some studies have found a small increase in predictive validity is in

fact a methodological fallacy incomplete consideration of alternative explanations:

"EI is compared and contrasted with a measure of abstract intelligence but not with a

personality measure, or with a personality measure but not with a measure of

academic intelligence." Landy (2005)

In accordance with this suggestion, other researchers have raised concerns about the

extent to which self-report EI measures correlate with established personality

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dimensions. Generally, self-report EI measures and personality measures have been

said to converge because they both purport to measure traits, and because they are

both measured in the self-report form. Specifically, there appear to be two dimensions

of the Big Five that stand out as most related to self-report EI neuroticism and

extraversion. In particular, neuroticism has been said to relate to negative

emotionality and anxiety. Intuitively, individuals scoring high on neuroticism are

likely to score low on self-report EI measures.

The interpretations of the correlations between self-report EI and personality have

been varied and inconsistent. Some researchers have asserted that correlations in the .

40 range constitute outright construct redundancy, while others have suggested that

self-report EI is a personality trait in itself.

Criticism on measurement issues

Ability based measures are measuring conformity, not ability

One criticism of the works of Mayer and Salovey comes from a study by Roberts

et.al. (2001), which suggests that the EI, as measured by the MSCEIT, may only be

measuring conformity. This argument is rooted in the MSCEIT's use of consensus-

based assessment, and in the fact that scores on the MSCEIT are negatively

distributed (meaning that its scores differentiate between people with low EI better

than people with high EI).

Ability based measures are measuring knowledge (not actual ability)

Further criticism has been offered by Brody (2004),[29] who claimed that unlike tests

of cognitive ability, the MSCEIT "tests knowledge of emotions but not necessarily the

ability to perform tasks that are related to the knowledge that is assessed". The main

argument is that even though someone knows how he should behave in an

emotionally laden situation, it doesnt necessarily follow that he could actually carry

out the reported behavior.More formally termed socially desirable responding (SDR),

faking good is defined as a response pattern in which test-takers systematically

represent themselves with an excessive positive bias (Paulhus, 2002). This bias has

long been known to contaminate responses on personality inventories acting as a

mediator of the relationships between self-report measures.

It has been suggested that responding in a desirable way is a response set, which is a

situational and temporary response pattern. This is contrasted with a response style,

which is a more long-term trait-like quality. Considering the contexts some self-report

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EI inventories are used in (e.g., employment settings), the problems of response sets

in high-stakes scenarios become clear.

There are a few methods to prevent socially desirable responding on behavior

inventories. Some researchers believe it is necessary to warn test-takers not to fake

good before taking a personality test (e.g., McFarland, 2003). Some inventories use

validity scales in order to determine the likelihood or consistency of the responses

across all items.

Claims for the predictive power of EI are too extreme

Landy distinguishes between the 'commercial wing' and 'the academic wing' of the EI

movement, basing this distinction on the alleged predictive power of EI as seen by the

two currents. According to Landy, the former makes expansive claims on the applied

value of EI, while the later is trying to warn users against these claims. As an

example. Goleman (1998) asserts that "the most effective leaders are alike in one

crucial way: they all have a high degree of what has come to be known as emotional

intelligence. ...emotional intelligence is the sine qua non of leadership". In contrast,

Mayer (1999) cautions "the popular literatures implicationthat highly emotionally

intelligent people possess an unqualified advantage in lifeappears overly

enthusiastic at present and unsubstantiated by reasonable scientific standards."

Landy further reinforces this argument by noting that the data upon which these

claims are based are held in proprietary databases', which means they are unavailable

to independent researchers for reanalysis, replication, or verification. Thus, the

credibility of the findings cannot be substantiated in a scientific manner, unless those

datasets are made public and available for independent analysis.

EI, IQ and job performance

Research of EI and job performance show mixed results: a positive relation has been

found in some of the studies, in others there was no relation or an inconsistent one.

This led researchers Cote and Miners (2006) to offer a compensatory model between

EI and IQ, that posits that the association between EI and job performance becomes

more positive as cognitive intelligence decreases, an idea first proposed in the context

of academic performance (Petrides, Frederickson, & Furnham, 2004). The results of

the former study supported the compensatory model: employees with low IQ get

higher task performance and organizational citizenship behavior directed at the

organization, the higher their EI.

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Fig.1.3 the pyramid structure of EI

Stress is a feeling of emotional or physical tension

Emotional stress usually occurs when people consider situations difficult or unable to

manage. Different people consider different situations as stressful.

Physical stress refers to a physical reaction of the body to various triggers. The pain

experienced after surgery is an example of physical stress.

Stress management involves controlling and reducing the tension that occurs in

stressful situations by making emotional and physical changes.

1.1.4 Assessing stress

Attitude: A person's attitude can influence whether or not a situation or emotion is

stressful. A person with a negative attitude will often report more stress than would

someone with a positive attitude.

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Physical well-being: A poor diet puts the body in a state of physical stress and

weakens the immune system. As a result, the person can be more likely to get

infections. A poor diet can mean unhealthy food choices, not eating enough, or not

eating on a normal schedule. This can cause a person to not get enough nutrients.This

form of physical stress also decreases the ability to deal with emotional stress,

because not getting the right nutrition may affect the way the brain processes

information.Physical activity: Not getting enough physical activity can put the body in

a stressful state. Physical activity has many benefits. A regular physical activity

program can help decrease depression, if it exists. It also improves the feeling of well-

being.Support systems: Most everyone needs someone in their life they can rely on

when they are having a hard time. Having little or no support makes stressful

situations even more difficult to deal with relaxation: People with no outside interests,

hobbies, or ways to relax may be unable to handle stressful situations because they

have no outlet for their stress.

An individual stress management program

Make an effort to stop negative thoughts

Plan some fun

Refocus the negative into the positive

Take a break

Think positively

Social support:

Make an effort to interact socially with people. Even though you feel stressed, you

will be glad to meet your friends, if only to get your mind off of things.

Nurture yourself and others.

Reach out to other people.

Relaxation:

-Learn about and try using one or more of the many relaxation techniques, such as

guided imagery, listening to music, or practicing yoga or meditation. One or more of

these techniques should work for you.

-Listen to your body.

-Take a mini retreat.

-Take time for personal interests and hobbies.

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Fig. 1.4 the dimensions of emotional intelligence

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1.2 OBJECTIVE, NEED, SCOPE & METHODOLOGY

1.2.1 OBJECTIVES OF THE STUDY:

1) To study the emotional quotient level of the employees in the selected private and

public sector banks and test these hypotheses.

HO= There is no significant difference in the emotional quotient level of the

respondents of selected private and public banks.

H1= There is significant difference in the emotional quotient level of the respondents

of selected private and public banks

.

HO= There is no significant difference in the dimensions of emotional intelligence of

the respondents of selected private and public banks.

H1= There is significant difference in the dimensions of emotional intelligence of the

respondents of selected private and public banks.

2) To study pattern of work stress amongst the employees of the selected private and

public sector banks and test these hypotheses.

HO= There is no significant difference in the stress level of the respondents of

selected private and public banks.

H1= There is significant difference in the stress level of the respondents of selected

private and public banks.

3) To analyze the relationship between emotional intelligence and stress level of

employees of the selected private and public sector banks.

4) To study whether work stress experienced by employees varies with:-

(a) Gender

HO= There is no significant difference in emotional quotient level with difference in

gender of the respondents of selected public and private banks.

H1= There is significant difference in emotional quotient level with difference in

gender of the respondents of selected public and private banks.

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(b) Age


age of the respondents of selected public and private banks.

H1= There is significant difference in emotional quotient level with difference in age

of the respondents of selected public and private banks.

(c) Cadre


cadre of the respondents of selected public and private banks.


cadre of the respondents of selected public and private banks.

(d) Educational qualification


qualification of the respondents of selected public and private banks.


qualification of the respondents of selected public and private banks.

(e) Income


income of the respondents of selected public and private banks.


income of the respondents of selected public and private banks.

(f) Tenure


tenure of the respondents of selected public and private banks.


tenure of the respondents of selected public and private banks.

5) To study whether emotional quotient level of the employees varies with:-

(a) Gender

HO= There is no significant difference in stress level with difference in gender of the

respondents of selected public and private banks.

H1= There is significant difference in stress level with difference in gender of the


(b) Age

HO= There is no significant difference in stress level with difference in age of the


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H1= There is significant difference in stress level with difference in age of the


(c) Cadre

HO= There is no significant difference in stress level with difference in cadre of the


H1= There is significant difference in stress level with difference in cadre of the


(d) Educational qualification

HO= There is no significant difference in stress level with difference in qualification

of the respondents of selected public and private banks.

H1= There is significant difference in stress level with difference in qualification of

the respondents of selected public and private banks.

(e) Tenure

HO= There is no significant difference in stress level with difference in tenure of the


H1= There is significant difference in stress level with difference in tenure of the


1.2.2 NEED OF THE STUDY:

Emotional Intelligence is increasingly relevant to organizational development and

developing people, because the EQ principles provide a new way to understand and

assess people's behaviours, management styles, attitudes, interpersonal skills, and

potential. Emotional Intelligence is an important consideration in human resources

planning, job profiling, recruitment interviewing and selection, management

development, customer relations and customer service, and more.

At the individual level, it has been said to relate to academic achievement, work

performance, our ability to communicate effectively, solve everyday problems, build

meaningful interpersonal relationships, and even our ability to make moral decisions.

Given that EI has the potential to increase our understanding of how individuals

behave and adapt to their social environment, it is an important topic for study.

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1.2.3 SCOPE OF THE STUDY:

The study will be limited to the employees of selected banking sector

companies that are HDFC, Standard Chartered, Punjab National Bank and

Oriental Bank of Commerce.

The study is limited to a specific region that is jalandhar region.

The study is confined to find the emotional quotient level and stress level in

the selected banking sector companies that are HDFC, Standard Chartered,

Punjab National Bank and Oriental Bank of Commerce.

1.2.4 RESEARCH METHODOLOGY:

TYPE OF RESEARCH

It is Descriptive study because I have done a systematized data collection to arrive at

conclusions that can be taken for improvement.

It is Quantitative studybecause it is done to gain quantitative understanding with a

small sample and to analyze it thoroughly.

DATA COLLECTION:

1. Primary data: It is obtained by going to the appropriate organizations in the

banking sector companies as per my requirements and the companies taken are

HDFC, Standard Chartered, Punjab National Bank and Oriental Bank of

Commerce. Data will be collected through the means of Standardized

Questionnaires. All the questionnaires will be filled by the respondents of

jalandhar region.

2. Secondary data: Secondary data is collected through authorized Websites,

Journals, magazines & Research papers.

QUESTIONNAIRE:

The questionnaire is structured and non-disguised. It constitutes of 33 questions

considering 2 main parameters which are emotional quotient level have rating from 1-

5 which starts from strongly disagree to strongly agree and stress level have rating

from 1-5 starts from I never feel this way to I always feel this way.

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SAMPLE DESIGN:

Sample size: 100 out of which 25 employees each of HDFC, Standard Chartered,

Punjab National Bank and Oriental Bank of Commerce.

Sampling Unit: Employees of different age, sex, cadre, tenure and income are taken

from HDFC, Standard Chartered, Punjab National Bank and Oriental Bank of

Commerce.

Area covered: Jalandhar region

Sampling technique: Non probability sampling i.e. convenience sampling

Data analysis technique: The technique applied is parametric test (correlation) in

case of testing the hypothesis of testing variable, emotional quotient level and non-

parametric test in case of testing the hypothesis of testing variable, stress level.

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2.1 INTRODUCTION TO THE INDUSTRY

2.1.1OVERVIEW OF THE INDUSTRY

HISTORY

Without a sound and effective banking system in India it cannot have a healthy

economy. The banking system of India should not only be hassle free but it should be

able to meet new challenges posed by the technology and any other external and

internal factors.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct

phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I,

Phase II and Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank

of Bombay (1840) and Bank of Madras (1843) as independent units and called it

Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank

of India was established which started as private shareholders banks, mostly

Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906

and 1913, Bank of India, Central Bankof India, Bank of Baroda, Canara Bank, Indian

Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

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During the first phase the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 banks, mostly small.

To streamline the functioning and activities of commercial banks, the Government of

India came up with The Banking Companies Act, 1949 which was later changed to

Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of

banking in india as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilisation was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after

independence. In 1955, it nationalised Imperial Bank of India with extensive banking

facilities on a large scale specially in rural and semi-urban areas. It formed State Bank

of india to act as the principal agent of RBI and to handle banking transactions of the

Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on

19th July, 1969, major process of nationalisation was carried out. It was the effort of

the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in

the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in

1980 with seven more banks. This step brought 80% of the banking segment in India

under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

1949 : Enactment of Banking Regulation Act.

1955 : Nationalisation of State Bank of India.

1959 : Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits.

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1969 : Nationalisation of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and

immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in

its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee

was set up by his name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being

put to give a satisfactory service to customers. Phone banking and net banking is

introduced. The entire system became more convenient and swift. Time is given more

importance than money.The financial system of India has shown a great deal of

resilience. It is sheltered from any crisis triggered by any external macroeconomics

shock as other East Asian Countries suffered. This is all due to a flexible exchange

rate regime, the foreign reserves are high, the capital account is not yet fully

convertible, and banks and their customers have limited foreign exchange exposure.

On the other hand the Private Sector Banks in India are witnessing immense progress.

They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the

other hand the Public Sector Banks are still facing the problem of unhappy

employees. There has been a decrease of 20 percent in the employee strength of the

private sector in the wake of the Voluntary Retirement Schemes (VRS). As far as

foreign banks are concerned they are likely to succeed in India.

Private sector banking in India received a filip in 1994 when Reserve Bank of India

encouraged setting up of private banks as part of its policy of liberalisation of the

Indian Banking Industry. Housing Development Finance Corporation Limited

(HDFC) was amongst the first to receive an 'in principle' approval from the Reserve

Bank of India (RBI) to set up a bank in the private sector.

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Private banks have played a major role in the development of Indian banking industry.

They have made banking more efficient and

customer friendly. In the process they have

jolted public sector banks out of complacency and forced them to become nore

competitive.

Major Private Banks in India are:

Bank of Rajasthan

Bharat Overseas Bank

Catholic Syrian Bank

Centurion Bank of Punjab

Dhanalakshmi Bank

Federal Bank

HDFC Bank

ICICI Bank

IDBI Bank

IndusInd Bank

ING Vysya Bank

Jammu & Kashmir Bank

Karnataka Bank

Karur Vysya Bank

Kotak Mahindra Bank

SBI Commercial and International Bank

South Indian Bank

United Western Bank UTI Bank

YES Bank

2.1.2PROFILE AND HISTORY OF HDFC BANK

Housing Development Finance Corporation Limited, more popularly known as

HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of

the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first

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banks to receive an 'in principle' approval from RBI, for setting up a bank in the

private sector. The bank was incorporated with the name 'HDFC Bank Limited',

with its registered office in Mumbai. The following year, it started its operations as a

Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches

and over 3275 ATMs across India.

Amalgamations

In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private

sector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC

and Times became the first two private banks in the New Generation Private Sector

Banks to have gone through a merger. In 2008, RBI approved the amalgamation of

Centurion Bank of Punjab with HDFC Bank. With this, the Deposits of the merged

entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and

Balance Sheet size was Rs. 1,63,000 crore.

Tech-Savvy

HDFC Bank has always prided itself on a highly automated environment, be it in

terms of information technology or communication systems. All the braches of the

bank boast of online connectivity with the other, ensuring speedy funds transfer for

the clients. At the same time, the bank's branch network and Automated Teller

Machines (ATMs) allow multi-branch access to retail clients. The bank makes use

of its up-to-date technology, along with market position and expertise, to create a

competitive advantage and build market share. Its shares find a listing on the Stock

Exchange, Mumbai and National Stock Exchange, while its American Depository

Shares are listed on the New York Stock Exchange (NYSE), under the symbol

'HDB'

2.1.3 RECENT ACHIEVEMENTS AND MILESTONES OF HDFC

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class

Indian Bank". They realized that only a single-minded focus on product quality and

service excellence would help them get there. Today, they are proud to say that we are

well on our way towards that goal.

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It is extremely gratifying that their efforts towards providing customer convenience

have been appreciated both nationally and internationally.

Following are the list of awards they got in different years:

2009

Asian Banker Best Retail Bank in India Award 2009

2008

Best Bank and Best Cash Management Bank' - Finance Asia Country Awards

for Achievement 2008

CNN-IBN - 'Indian of the Year (Business)'

Nasscom IT User Award 2008 - Best IT Adoption in the Banking Sector'

Business India - 'Best Bank 2008'

Forbes Asia - Fab 50 companies in Asia Pacific

Asian Banker Excellence in Retail Financial Services - Best Retail Bank 2008

Asiamoney - Best local Cash Management Bank Award voted by Corporates

Microsoft & Indian Express Group - Security Strategist Award 2008

World Trade Center Award of honour - For outstanding contribution to

international trade services.

Business Today-Monitor Group survey - One of India's "Most Innovative

Companies"

Financial Express-Ernst & Young Award - Best Bank Award in the Private

Sector category

Global HR Excellence Awards - Asia Pacific HRM Congress: - 'Employer

Brand of the Year 2007 -2008' Award - First Runner up, & many more

Business Today - 'Best Bank' Award

2007

Dun & Bradstreet American Express Corporate Best Bank Award 2007 -

'Corporate Best Bank' Award

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The Bombay Stock Exchange and Nasscom Foundation's Business for Social

Responsibility Awards 2007- 'Best Corporate Social Responsibility Practice'

Award

Outlook Money & NDTV Profit - Best Bank Award in the Private sector

category.

The Asian Banker Excellence in Retail Financial Services Awards - Best

Retail Bank in India

Asian Banker - Our Managing Director Aditya Puri wins the Leadership

Achievement Award for India

2.1.4PRODUCT RANGE OF THE HDFC

Personal Banking

Savings Accounts

Salary Accounts

Current Accounts

Fixed Deposits

Demat Account

Safe Deposit Lockers

Loans

Credit Cards

Debit Cards

Prepaid Cards

Investments & Insurance

Forex Services

Payment Services

NetBanking

InstaAlerts

MobileBanking

InstaQuery

ATM PhoneBanking

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NRI Banking

Rupee Savings Accounts

Rupee Current Accounts

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Quickremit (North America, UK, Europe, Southeast Asia)

IndiaLink (Middle East, Africa)

Cheque LockBox

Telegraphic / Wire Transfer

Funds Transfer through Cheques / DDs / TCs

Mutual Funds

Private Banking

Portfolio Investment Schemes

Loans

Payment Services

NetBanking

InstaAlerts

MobileBanking

InstaQuery

ATM

PhoneBanking

2.1.5 FINANCIAL PERFORMANCE OF HDFC

Financial Performance

The financial performance during the fiscal year 2007-08 remained healthy with total

net revenues (net interest income plus other income) increasing by 50.7% to Rs.

7,511.0 crores from Rs.4,984.7 crores in 2006-07. The revenue growth was driven

principally by an increase in net interest income. Net interest income grew by 50.7%

primarily due to increase in the average balance sheet size by 39.8% and an increase

in net interest margin from 4.0% to around 4.4%. The key driver in volumes was

growth in advances. Margin expansion was contributed by increase in yields across all

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products partially offset by increase in time deposit costs. The other income (non-

interest revenue) increased by 50.6% to Rs. 2,283.2 crores primarily due to fees and

commissions, profit/(loss) on revaluation / sale of investment and income from

foreign exchange and derivatives income. In 2007-08, commission income increased

by 32.7% to Rs. 1,714.5 crores with the main drivers being commission from

distribution of third party mutual funds and insurance, fees on debit/credit cards,

transactional charges/fees on deposit accounts, processing fees of retail assets and

cards, and fees

from trade products. The Bank earned a profit on sale / revaluation of investments of

Rs. 241.8 crores during the year. Foreign exchange and derivatives revenues grew

from Rs. 280.3 crores to Rs. 319.8 crores which largely related to customer

transactions. Of this, 80% of the revenues came from plain vanilla foreign exchange

transactions. Operating (non-interest) expenses increased from Rs.

2,420.8 crores in 2006-07 to Rs. 3,745.6 crores in 2007-08, due to higher

infrastructure and staffing expenses in relation to the expansion in the branch

network, (including branches which were in the process of being set up and would be

commissioned in the June 2008 quarter) and growth in the retail loan and credit card

businesses. Operating cost to net revenues increased to 49.9%, from 48.6% in the

corresponding year. Staff expenses accounted for 34.7% of non-interest expenses in

2007-08 as against 32.1% in 2006-07, due to an increase in staff strength and increase

in average salary levels. A large portion of the increase has been in the direct sales

infrastructure which stepped the pace of

liability and card account acquisitions substantially during the year. Loan loss

provisions and provision for standard assets increased from Rs. 861.0 crores to Rs.

1,216.0 crores in 2007-08 which was broadly in line with the increase in retail loans

and the product mix across various loan products. The Bank also provided Rs. 264.4

-crores as contingent provisions for tax, legal and other contingencies.

Net profit increased by 39.3% from Rs. 1,141.5 crores in 2006-07 to Rs.1,590.2 crores

in 2007-08. Return on average net worth was lower at 16.1% as against the previous

year of 19.4% due to expansion of networth as a result of infusion of over Rs. 3,800

crores of capital during the year. The Banks basic earning per share increased from

Rs.36.3 to Rs.46.2 per equity share. During 2007-08, the Banks total balance sheet

size increased by 46.0% to Rs. 133,177 crores. Total Deposits increased from Rs.

68,298 crores (as of March 31, 2007) to Rs. 100,769 crores (as of March 31, 2008).

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With Savings account deposits at Rs. 26,154 crores and current account deposits at

Rs. 28,760 crores, demand (CASA) deposits were around 54.5% of total deposits as

of March 31, 2008. During 2007-08, gross advances grew by 35.8 % to Rs. 67,582

crores. This was driven by a growth of 38.8% in retail advances to Rs. 39,316 crores,

and an increase of 31.8% in wholesale advances to

Rs.28,266 crores

2.1.6 FUTURE PROSPECTS/ PLANS OF HDFC

The financial system in India has witnessed considerably less turmoil and volatility

than that in advanced economies. Given this scenario, domestic corporates are more

likely to turn to local sources of funding. Cyclical slowdown is unlikely to impact

segments of the economy such as agriculture where a structural shift is under way.

The rural economy has been the greater focus of government policy in recent years,

and significant opportunities lie for banks here where the penetration of credit and

financial products is still relatively low. The central and state governments appear to

be driving an ambitious programme in the infrastructure sectors. The eleventh five

year plan (2007-2012) envisages an investment of USD 500 billion, with

approximately USD 80 billion envisaged for 2008-09 alone. This presents a major

opportunity for banks and financial institutions to finance these investments.

Although growth in retail credit has moderated in the last year, the low penetration

levels of retail credit (estimated at less than 12% of GDP), the shift in demographics

towards a higher proportion of younger working population, the changing attitudes

towards borrowings, higher income levels amongst the growing middle class, and the

large pent-up demand for housing, cars etc., all are well for the long-term, sustainable

growth of retail lending in the Indian market.

2.1.2 PROFILE AND HISTORY OF STANDARD CHARTERED

BANK

Standard Chartered Bank is a London based bank, currently operational within over

70 nations with more than 1,700 branches and 73,000 strong workforce as of April

2009. Although the bank is located in Britain, still a huge chunk of its revenues

originate from the continents of Asia, Africa and Middle East.

History

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The Chartered Bank was founded by Scotsman James Wilson following the grant of a

Royal Charter by Queen Victoria in 1853, while The Standard Bank was founded in

the Cape Province of South Africa in 1862 by another Scotsman John Paterson.Both

companies were keen to capitalise on the huge expansion of trade and to earn the

handsome profits to be made from financing the movement of goods from Europe to

the East and to Africa.

In those early years, both banks prospered. Chartered opened its first branches in

Bombay, Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in

1859. With the opening of the Suez Canal in 1869 and the extension of the telegraph

to China in 1871, Chartered was well placed to expand and develop its business.

In South Africa, Standard, having established a considerable number of branches, was

prominent in financing the development of the diamond fields of Kimberley from

1867 and later extended its network further north to the new town of Johannesburg

when gold was discovered there in 1885.Half the output of the second largest gold

field in the world passed through The Standard Bank on its way to London.

Both banks at that time still quite separate companies survived the First World

War and the Depression, but were directly affected by the wider conflict of the

Second World War in terms of loss of business and closure of branches. There were

also longer term effects for both banks as countries in Asia and Africa gained their

independence in the 50s and 60s.

Each had acquired other small banks along the way and spread their networks further.

In 1969, the banks decided to merge, and to counterbalance their existing network by

expanding in Europe and the United States, while continuing their expansion in their

traditional markets in Asia and Africa. All appeared to be going well, when in 1986

Lloyds Bank of the United Kingdom made a hostile takeover bid for the Group.

After having defeated the bid, Standard Chartered entered a period of change. It made

provisions against Third World debt exposure and loans to corporations and

entrepreneurs who could not meet their commitments. It also began a series of

divestments notably in the United States and South Africa, and entered into a number

of asset sales.

Presence in India

In India, the Standard Chartered Bank introduced its first branch in Kolkata on 12th of

April 1858. Later on, when Mumbai took over Kolkata as the financial capital of

India, the bank administration was shifted to Mumbai from Kolkata.

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Currently, the bank offers a wide variety of banking services and products to the

Indian customers under Personal Banking, Private Banking, SME Banking and

Wholesale Banking categories.

The services being offered include Regular Banking Services, Credit Cards, Debit &

Prepaid cards, Loans & Mortgages, NRI Banking Services, Executive Banking and

Insurance & Investment products.

As of April 2009, Standard Chartered bank is located in all the prominent cities of

India, including New Delhi, Mumbai, Kolkata, Bangalore, Hyderabad, Ahmedabad

etc.

Despite its British base, it has few customers in the United Kingdom and 90% of itsprofits come from Asia, Africa, and theMiddle East. Because the bank's history is

entwined with the development of the British Empire its operations lie predominantly

in former British colonies, though over the past two decades it has expanded into

countries that have historically had little British influence. It aims to provide a safe

regulatory bridge between these developing economies.

It now focuses on consumer, corporate, and institutional banking, and on the

provision of treasury servicesareas in which the Group had particular strength andexpertise. The company's return on assets in 2008 was 1.05%, compared to 0.31%

forJPMorgan Chase, 0.37% forHSBC Holdings and 0.14% forCitigroup.

Standard Chartered is listed on the London Stock Exchange and theHong Kong Stock

Exchangeand is a constituent of the FTSE 100 Index. Its largest shareholder

is Temasek Holdings.

Recent alliances and developments

In 2000, Standard Chartered acquiredGrindlays Bankfrom ANZ Bank, increasing its

presence in private banking and further expanding its operations in Bangladesh, India

and Pakistan.[5]Standard Chartered retained Grindlays' private banking operations

inLondon and Luxembourgand the subsidiary inJersey, all of which it integrated into

its own private bank. This now serves high net worth customers in Hong

Kong, Dubai, andJohannesburg under the name Standard Chartered Grindlays

Offshore Financial Services. In India, Standard Chartered integrated most of

Grindlays' operations, making Standard Chartered the largest foreign bank in the

30
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country, despite Standard Chartered having cut some branches and having reduced the

staff from 5500 to 3500 people.

2.1.3 RECENT ACHIEVEMENTS AND MILESTONES OF

STANDARD CHARTERED

Asian Banking and Finance Retail Banking Awards 2008

Best International Bank of the Year

Best Retail Bank - Singapore

Best Core Banking Initiative - Singapore

Best Branch Initiative - Vivocity branch, Singapore

Best Self Service Initiative Singapore

Private Banker International Awards 2008

Outstanding Private Bank in Asia Pacific

2008 Euromoney Awards For Excellence

Global Best Private Bank

Global Finance 2008

World's Best Internet Bank for Africa & Middle-Eas

The Asian Banker Awards

Award for Achievement in Cash Management

2.1.4 PRODUCT RANGE OF STANDARD CHARTERED

1) Consumer Banking

2) Private banking

3) SME banking

4) Wholesale banking

5) Saadiq Islamic banking

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2.1.5 FINANCIAL PERFORMANCE OF STANDARD

CHARTERED

Achieved record income and profits in 2008 despite the difficulties we are seeing in

the external environment.

Operating profit rose 13 per cent to 4.57 billion dollars

Income increased 26 per cent to 13.97 billion dollars

Normalised earnings per share were up one per cent to 174.9 cents

Our tier one capital ratio increased from 8.8 per cent to 10.1 per cent, and core

tier one increased from 6.6 per cent to 7.6 per cent.

The Board is recommending a final dividend of 42.32 cents per share, making an

annual dividend of 61.62 cents, which is in line with statements made at the time of

our rights issue.

2.1.6FUTURE PLANS OF STANDARD CHARTERED

Our continued performance is the result of a disciplined approach to running

the Bank. There are four aspects :-

First, we've stuck to our strategy - we want to be the world's best international bank,

leading the way in Asia, Africa and the Middle East. We do business in markets we

understand intimately, with customers with whom we have long standing

relationships, selling products we understand fully.Second, we have been - and will

remain - very focused on the basics of banking: on liquidity, capital, risks, operational

control and costs. Perhaps because we've always operated in volatile markets, we've

never lost sight of such disciplines. Third, we're open for business. We want to

support our clients as they navigate the economic turmoil. We want to seize the

opportunities arising from the turbulence. Whilst we have taken action in response to

the crisis, we continue to invest for growth.And finally, we've stayed true to our

values and culture. Standard Chartered is a rather different Bank and we want to keep

it like that. We run as One Bank across geographies and businesses. We're focused on

customers not transactions. We're playing the long game. Our values and culture are a

key to our competitive advantage.

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2.1.2 PROFILE AND HISTORY OF PUNJAB NATIONAL BANK

HISTORY

1895: PNB commenced operating in Lahore. PNB has the distinction of being the

first Indian bank to have been started solely with Indian capital that has survived to

the present. (The first entirely Indian bank, the Oudh Commercial Bank, was

established in 1881 in Faizabad, but failed in 1958.) PNB's founders included

several leaders of the Swadeshi movement such asDyal Singh Majithia and Lala

HarKishen Lal,[1] Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri

Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was

actively associated with the management of the Bank in its early years.

1904: PNB established branches in Karachi and Peshawar.

1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle.

1947: Partition of India and Pakistan at Independence. PNB lost its premises in

Lahore, but continued to operate in Pakistan.

1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank

became Bharat Nidhi Ltd.

1961: PNB acquired Universal Bank of India.

1963: The Government of Burma nationalized PNB's branch in Rangoon (Yangon).

September 1965: After the Indo-Pak war the government of Pakistan seized all the

offices in Pakistan of Indian banks, including PNB's headoffice, which may have

moved to Karachi. PNB also had one or more branches in East Pakistan(Bangladesh).

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1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a rescue.

1969: The Government of India (GOI) nationalized PNB and 13 other major

commercial banks, on July 19, 1969.

1976 or 1978: PNB opened a branch in London.

1986 The Reserve Bank of India required PNB to transfer its London branch to State

Bank of India after the branch was involved in a fraud scandal.

1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The

acquisition added Hindustan's 142 branches to PNB's network.

1993: PNB acquired New Bank of India, which the GOI had nationalized in 1980.

1998: PNB set up a representative office in Almaty, Kazakhstan.

2003: PNB took over Nedungadi Bank, the oldest private sector bank in Kerala. Rao

Bahadur T.M. Appu Nedungadi, author of Kundalatha, one of the earliest novels in

Malayalam, had established the bank in 1899. It was incorporated in 1913, and in

1965 had acquired selected assets and deposits of the Coimbatore National Bank. At

the time of the merger with PNB, Nedungadi Bank's shares had zero value, with the

result that its shareholders received no payment for their shares.

PNB also opened a representative office in London.

2004: PNB established a branch in Kabul, Afghanistan.

PNB also opened a representative office in Shanghai.

PNB established an alliance with Everest Bank in Nepal that permits migrants to

transfer funds easily between India and Everest Bank's 12 branches in Nepal.

2005: PNB opened a representative office in Dubai.

2007: PNB established PNBIL - Punjab National Bank (International) - in the UK,

with two offices, one in London, and one in South Hall,Middlesex. Since then it hasopened a third branch in Leicester, and is planning a fourth in Birmingham.

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2008: PNB opened a branch in Hong Kong.

2.1.3 RECENT ACHIEVEMENTS AND MILESTONES OF PNB

Ranked among top 50 companies by the leading financial daily, Economic Times.

Ranked as 323rd biggest bank in the world by Bankers Almanac (January 2006),

London.

Earned 9th place among India's Most Trusted top 50 service brands in Economic

Times- A.C Nielson Survey.

Included in the top 1000 banks in the world according to The Banker, London.

Golden Peacock Award for Excellence in Corporate Governance - 2005 by

Institute of Directors.

FICCI's Rural Development Award for Excellence in Rural Development 2005

2.1.4PRODUCT RANGE OF PNB

Savings Fund Account - Total Freedom Salary Account, PNB

Prudent Sweep, PNB Vidyarthi SF Account, PNB Mitra SF

Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart

Roamer

Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam

Account, Mahabachat Schemes, Multi Benefit Deposit

Scheme Credit Schemes - Flexible Housing Loan, Car Finanace,

Personal Loan, Credit Cards

Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB

Farmers Welfare Trust

Corporate Banking - Gold Card scheme for exporters, EXIM finance

Business Sector - PNB Karigar credit card, PNB Kushal Udhami,

PNB Pragati Udhami, PNB Vikas Udhami

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Apart from these, the PNB also offers locker facilities, senior citizens

schemes, PPF schemes and various E-services.

2.1.5 FINANCIAL PERFORMANCE OF PNB

Though there has been general slowdown in the economy because of adverse global

developments, Banks like PNB have enough opportunity for expansion within &

outside the country and to further strengthen its presence in India, Bank is

penetrating the untapped market through strong focus on inclusive banking and

technology.

PNB is reflecting a healthy capital base; Capital Adequacy Ratio is 13.91 % as per

Basel II in Dec08 of which Tier I Capital is 9.39 %

1. PROFIT & LOSS ACCOUNT

The Net profit (Q3) of the Bank increased by 85.76% to Rs 1005.82 Cr from Rs

541.46 Cr last year. Net Profit of the bank for the nine months ended December

2008 amounted to Rs 2225.31 Cr (y-o-y growth of 47.86%).

Operating profit increased by 82.17 % in the Q3 Dec 08 while the Profit for nine

months ended December 2008 at Rs 4156.20 Cr registered a YOY increase of

49.53%.

For the Q3 2008, Interest Income of the Bank increased by 45.61% and Non Interest

Income has registered an increase of 95.51%.

Q3 Net Interest Income has increased by 38.12% to Rs 1967.35 Cr and on nine

months basis NII has increased to Rs 5124 cr with YOY growth of 27.57%

Cost to income ratio stood at 37.99% in Q3 December 2008 as compared to 48.04%

in Q3 December 2007.

Return on Net worth has improved to 30.92% in Q3 December 2008 from 18.60% in

Q3 December 2007.

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Net interest margin for the Q3 December 2008 has improved to 3.85% as against

3.66% in Q3 December 2007.

Return on Assets [ROA] increased to 1.74% for the Q3 December 2008 as

compared to 1.21% in Q3 December 2007.

2. BALANCE SHEET STRENGTH

The Bank has total assets of Rs 231566.48 Cr as on 31st December 2008, which

reflects increase of 28.87% over the corresponding figure of December 2007.

Total business of the Bank has increased by 33.2% to reach Rs 338574 Cr.

3.FINANCIAL INCLUSION:

Bank has opened 43.18 lakh No Frill accounts so far with an outstanding amount of

Rs.414 crore. Further, 37283 General Credit Cards have also been issued

cumulatively with a total disbursement of Rs. 66.31 crore.The Bank is pursuing

financial inclusion both at geographical and functional levels. Under functional

financial inclusion, the Bank has launched its unique initiatives for bringing

marginalized sections of the society under the purview of financial inclusion. Some

of these initiatives are:

Bank has undertaken five unique pilot projects for financial inclusion

of Rickshaw Pullers in Varanasi, Allahabad and Lucknow.

The bank has been associated with the Financial Empowerment

Scheme of Govt. of Rajasthan under Bhamashah Project to benefit 50 lakh

rural families belonging to BPL/SF/MF/SC/ST category.

The Bank has also been associated with Mother Dairy for bringing

dairy milk farmers of 23 districts in Uttar Pradesh into the banking fold.

A Financial Inclusion project for construction workers at Bangalore

is being implemented.

Bank has initiated distribution of 1 lakh biometric Smart Cards in the

districts Kulu and Mandi in HP as part of its initiative of 100% Financial

Inclusion.

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Under geographical financial inclusion, the Bank is implementing 30

pilot project sites for launching IT enabled financial inclusion through

Business Correspondent/Business Facilitator model, of which, 14 pilot

projects have already been launched. PNBs 8 Farmers Training Centres (FTCs) trained 1.74 lakh persons,

including 27923 women at the end of December 2008.

In recognition to its efforts in financial inclusion, recently PNB has

been awarded with Inclusion Champion of the Year by Skoch Challenger

Awards 2009.

4. INTERNATIONAL EXPANSION

The Bank continues its foray in international markets with 3 overseas branches

(Kabul, Hong Kong and Offshore Banking Unit (OBU) Mumbai); 4 Representative

offices (Shanghai, Almaty, Dubai and Norway) and a subsidiary in London

(PNBIL). In addition to its existing branches, PNBIL has recently opened a branch

at Leicester to cater to the need of large section of people of Indian origin. The Bank

also has a Joint venture with equity and Management Participation with Everest

Bank Ltd., Nepal.

2.1.6 FUTURE PLANS

Bank is in the process of setting up a joint venture bank in

Bhutan.

In addition to its existing branches, the London Subsidiary

will open branch in Birmingham.

Bank has plans to open a subsidiary at Canada, branch in

DIFC, UAE and an OBU at Singapore.

To upgrade Representative office at Shanghai to a branch.

The international operations of the Bank have not been

impacted adversely in the current scenario.

2.1.2 PROFILE AND HISTORY OF ORIENTAL BANK OF

COMMERCE

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Oriental Bank of Commerce, established on 19 February, 1943, in Lahore (then a

city of British India, and currently in Pakistan), is one of thepublic sector banks in

India.Oriental Bank of Commerce made a modest beginning under its Founding

Father, Late Rai Bahadur Lala Sohan Lal, the first Chairman of the Bank.Within

four years of coming into existence, the Bank had to face the holocaust of partition.

Branches in the newly formed Pakistan had to be closed down and the Registered

Office had to be shifted from Lahore to Amritsar. Late lala Karam Chand Thapar,

the then Chairman of the Bank, in a unique gesture honoured the commitments

made to the depositors from Pakistan and paid every rupee to its departing

customers. The foundation of customer service thus laid has ever since remained

Oriental Bank's prime philosophy and has been nurtured well as a legacy by all its

successors, year after year.

Projects - A Handful of Success The Bank has launched yet another people's

participation in the planning process at grass root level essentially to tackle the

maladies of poverty. The Grameen Projects venture aims to alleviate poverty plus

identify the reasons responsible for the failure or success.

OBC is already implementing a GRAMEEN PROJECT in Dehradun District (UP)

and Hanumangarh District (Raiasthan). Formulated on the pattern of the Bangladesh

Grameen Bank, the Scheme has a unique feature of disbursing small loans ranging

from Rs. 75 (US $2) onwards. The beneficiaries of the Grameen Project are mostly

women.The Bank is engaged in providing training to rural folk in using locally

available raw material to produce pickles, jams etc. This has provided self-

employment and augmented income levels thus reforming lives of rural folk and

encouraging cottage industries in rural areas.

OBC launched yet another unique scheme christened 'The Comprehensive Village

Development Programme' on the auspicious day of Baisakhi, the 13th of April 1997

at three villages in Punjab namely Rurki Kalan (Distt. Sangrur), Raje Majra (Distt.

Ropar) and Khaira Majha (Distt. Jaladhar) and two villages in Haryana, namely

Khunga (Distt. Jind) and Narwal (Distt. Kaithal). The pilot launch was a great

success. Emboldened by the success, Bank extended the programme to more

villages. At present, it covers 15 villages; 10 in Punjab, 4 in Haryana and 1 in

Rajasthan. The programme focuses on providing a comprehensive and integrated

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package providing rural finance to the villagers with Village Development as its

focus, thus contributing towards infrastructural development and agumentation of

income for each farmer of the village. The Bank has implemented 14 point action

plan for strengthening of credit delivery to women and has designated 5 branches as

specialized branches for women entrepreneurs

2.1.3 RECENT ACHIEVEMENTS AND MILESTONES OF OBC

Insurance Joint Venture

Joint Venture with Canara Bank and HSBC launched on 16th June 2008 after

getting all regulatory approvals. Marketing of insurance products commenced

through branch network. Expected to add to the non interest income.

Cost of Deposits & Operations

CASA Campaign launched last year continues with increased focus.

During 2008-09, total of 601728 deposit accounts opened including 177942

savings accounts, 77087No-Frill Account, 13923Current Accounts and 332776

Term deposit accounts.

Cost of deposits brought down from 7.27% for the quarter ended March

2008 to 7.05% as on 30th June 2008.

Focus on shift in delivery of services from manual channels to electronic

channels to bring down the cost of operations.

Quality Credit growth

Growth of quality credit through segregated business lines under Large

Corporate, Mid Corporate & SME, Retail credit.

IT Enabled Products- eZ Banking

Younger generation of customers targeted through IT enabled products and services

Online Education Loans

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Online trading of shares

Online payment of taxes OLTAS

E-Shoppe

Internet Banking

Cashmate Cards for students

Instant remittances through electronic channels RTGS/NEFT

Biometric ATMs and Mobile ATMs for financial inclusion

Optimising performance with HR Initiatives

OBC recruits 676 new employees including 340 Clerks, 200 Probationary Officers

and 136 Specialist Officers in the areas of marketing, treasury, corporate credit and

foreign exchange operations.

8594 Employees trained during 2007-08 for upgrading skill set.

2.1.5 FINANCIAL PERFORMANCE OF OBC

Business Growth

Total business grows by 27.04% on YOY basis. Aggregate business reaches

Rs.139271 cr as on 30th June 2008 against Rs.109624 cr as on 30th June 2007.

Deposit grows on YOY basis by 29.06% from Rs.64511 crore as on 30th June

2007 to Rs.83258 crore.

Advances grows on YOY basis at 24.16% from Rs. 45113 crore as on 30th June

2007 to Rs.56013 cr as on 30th June 2008.

Education loan showed a sharp jump of 41.74% at Rs.618 cr as against Rs.436 cr

during the same period last year.

Capital Adequacy

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CRAR as on 30th June 2008 stood at 12.24%.

Profitability

Operating profit grows on YOY basis by 8.80% from Rs.325.11 crore as on 30th

June 2007 to Rs.353.73 crore as on 30th June 2008.

Net Profit grows on YOY basis by 10.03% from Rs.200.42 crore as on 30th June

2007 to Rs.220.52 crore as on 30th June 2008.

Non-interest income grows on YOY basis by 40.55% from Rs.146.20 crore as on

30th June 2007 to Rs.205.49 crore as on 30th June 2008.

NPA Recoveries

Due to targeted recoveries gross NPA of the bank has come down from

Rs.1490.56 crore as on 30th June 2007 to Rs.1222.98 crore as on 30th June 2008

thereby reducing the gross NPA from 3.2% to 2.18% on YOY basis. Net NPA has

come down during the quarter from 0.99% as on 31st March 2008 to 0.96% as on

30th June 2008.

EPS & Business per employee/branch

Earning per share improved from Rs.5.56 as on 30th June 2007 to Rs.8.80 as on

30th June 2008.

Business per employee jumps from Rs.7.44 crore as on 30th June 2007 to Rs.9.47

Cr. as on 30th June 2008.

Business per branch goes up from Rs.85.18 crore as on 30th June 2007 to

Rs.104.87 Cr. as on 30th June 2008.

2.1.6 FUTURE PLANS OF OBC

100 new branches to be opened.

Leveraging technology through new products and services.

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Increasing customer base.

Documents

Emotional Intelligence Project