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“Modern banking system manufactures money out of nothing” is what is said about banking by Josiah Stamp, former director of the Bank of England. Banking Industry has undergone a major change in the way business is transacted. There has been considerable innovation and diversification. Banks havenow engaged in the areas of merchant banking, leasing, factoring,credit cards, mutual funds etc. by setting up their subsidiaries. In India, since the last four decades, tremendous changes have taken place in the banking industry. Banks have shed their traditional functions and have been innovating, improving and coming out with new types of services to cater to the emerging needs of their customers. Massive branch expansion in the rural and underdeveloped areas, mobilization of savings and diversification of credit facilities to neglected areas like small scale industrial sector, agricultural and other preferred areas like export sector have resulted in the widening and deepening of the financial infrastructure and transferred the fundamental character of class banking into mass banking.
Today, we are having a fairly well developed banking system with different classes of banks: The RBI as the fountain head of the system Public sector banks Private sector banks- old and new generation Foreign banks Regional banks and co-operative banks.
But the major challenges faced by banks today are how to cope with competitive forces and strengthen their balance sheet. Banks are groaning with the burden of NPAs. It is rightly felt that if not recovered, these will eat into the very vitals of banks. Another major anxiety is the high transaction cost of carrying NPAs in their books.
Department of MBA, PESIT
Priority Sector Analysis
The Indian banks are subject to tremendous pressures to perform as otherwise their very survival would be at stake. IT plays an important role in the banking sector as it would not only ensure smooth passage of inter-related transactions over the electric medium but will also facilitate complex financial product innovation and product development. The application of IT and e-banking is becoming the order of the day with the banking system heading towards virtual banking. As an extreme case of e-banking,World Wide Banking (wwb) on the pattern of World Wide Web (www) can be visualized. That means all banks would be interlinked and individual bank identity, as far as the customer is concerned, does not exist. Customers would be able to do all their banking operations sitting in their offices or homes and operating through internet.
Banking landscape is changing very fast. Many new players with different muscle powers are entering the market. The Reserve Bank in its bid to move towards the best international banking practices will further sharpen the prudential norms and strengthen its supervisor mechanism. There will be more transparency and disclosures. India‟s banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be. While the burden for this change lies mainly with bank managements, an enabling policy and regulatory framework will also be critical to their success. The importance of banking sector is immense in the progress and prosperity of any state or country. The economic progress and prosperity comes from the well-rounded development and an impeccable banking management. Banks are expected to play a very useful role in the economic development and the emerging market will provide ample business opportunities to harness. HRM(Human Resources Management)is assuming to be of great importance. As banking in India will become more and more knowledge supported, human capital will emerge as the finest assets of the banking system. Ultimately banking is people and not just figures.
Department of MBA, PESIT
Priority Sector Analysis 2. COMPANY PROFILE:
2.1. BACKGROUND AND INCEPTION:
The small seed of Canara Bank, founded as 'Canara Bank Hindu Permanent Fund' in 1906, by late Sri. Ammembal Subba Rao Pai, a philanthropist, blossomed into a limited company as 'Canara Bank Ltd.' in 1910 and became Canara Bank in 1969 after nationalization. FOUNDING PRINCIPLES: To remove superstition and ignorance To spread education among all to sub-serve the first principle To inculcate the habit of thrift and savings To transform the financial institution not only as the financial heart of the community but the social heart as well To assist the needy To work with sense of service and dedication To develop a concern for fellow human being and sensitivity to the surroundings with a view to make changes/remove hardships and sufferings. Canara Bank has gone through the various phases of growth over the hundred years of its existence. Growth of the Bank has been phenomenal, especially after nationalization in the year 1969, attaining the status of a national level player in terms of geographical reach and customers segments. Today, Canara Bank occupies a premier position in Indian banks. With an unbroken record of profits since its inception, Canara Bank has several firsts to its credit. These include: Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of „Good Banking‟ – Bank‟s Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing credit cards for farmers Providing Agricultural Consultancy Services
Department of MBA, PESIT
Priority Sector Analysis
Over the years the Bank has been scaling up its market position to emerge as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad. As on June 2010, the Bank has further expanded its domestic presence. It has 3212 branches spread across all geographical segments. Keeping customer convenience at the forefront, the Bank provides a wide array of alternative delivery channels that include over 2150 ATMs- one of the highest among nationalized banks.The bank serves a clientele base exceeding 38 million.As on December 2010, the bank's total business had crossed Rs 4.53 lakh crore and it posted a net profit exceeding Rs 1,000 crore each for the three consecutive quarters during FY11. Canara Bank‟s share is traded at the BSE at the rate of Rs.612. Under advanced payment and settlement system, all branches of the Bank have been enabled to offer Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities.
The Bank has also carved a distinctive mark, in various Corporate Social Responsibilities, namely serving national priorities, promoting rural development, enhancing rural self-employment through several Training Institutes and spearheading theFinancial Inclusion objective. Promoting an inclusive growth strategy, which has been formed as the basic plank of national policy agenda today, is in fact deeply rooted in the Bank's founding principles. "A good bank is not only the financial heart of the community, but also one with an obligation of helping in every possible manner to improve the economic conditions of the common people". These insightful words of the founder continue to resonate even today in serving the society with a purpose. The growth story of Canara Bank in its first century was mainly due to the continued patronage of its valued customers, stakeholders, committed staff and remarkable leadership ability demonstrated by its leaders at the helm of affairs. The bank strongly believes that the next century is going to be equally rewarding and eventful not only in service of the nation but also in helping the Bank emerge as a "Global Bank with Best Practices". Sound founding principles, enlightened leadership, unique work culture and remarkable adaptability to changing banking environment have enabled Canara Bank to be a frontline banking institution of global standards.
Department of MBA, PESIT
Priority Sector Analysis
2.2. NATURE OF THE BUSINESS CARRIED:
Canara Bank offers services such as: Personal Banking - Savings and Deposits, Loan Products, Consultancy Services, Depository Services; Corporate Banking - Cash Management Services, Merchant Banking Services, IPO Monitoring Services; NRI banking - Remittance facilities; Priority andSME credit - Social Banking. Canara Bank, with the objective of offering One-Stop Banking Mart for the customers, forayed into diversified business activities by opening subsidiaries during late 1980s. Today, the Bank functions as a Financial Supermarket with as many as nine subsidiaries/sponsored entities/joint ventures in diversified areas which are: 1. Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited 2. Canara Robeco Asset Management Company Limited (CRAMC) 3. Canbank Financial Services Limited (Canfina) 4. Canbank Computer Services Limited (CCSL) 5. Canara Bank Securities Limited (CBSL) 6. Canbank Factors Limited (CFL) 7. Can Fin Homes Limited (CFHL) 8. Canbank Venture Capital Fund Limited (CVCFL) 9. Commercial Bank of India LLC(CBIL)
Department of MBA, PESIT
Department of MBA.2. higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking.3. PESIT Page 6 . MISSION: To provide quality banking services with enhanced customer orientation. QUALITY POLICY: To provide total banking services to all customers. asset quality. 2.3.3. VISION AND MISSION: 2.3. 2. VISION: To emerge as a „Best Practices Bank‟ by pursuing global benchmarks in profitability. To continually review and improve the processes for TOTAL CUSTOMER SATISFACTION by implementing quality management system requirements as per IS/ ISO 9001.3. operational efficiency. risk management and expanding the global reach.1.Priority Sector Analysis 2.
PESIT Page 7 . PRODUCT/SERVICES PROFILE: PERSONAL BANKING Savings&Deposits CORPORATE BANKING Accounts & Deposits DepositProducts NRI BANKING PRIORITY & SME CREDIT SME Business Loan Products Canara e-Tax ConsultancyServices One Time Settlement for M&SE DepositoryServices Loans & Advances RemittanceFacilities CED for Women ConsultancyServices Merchant Banking Services Loans&Advances Rural Development CardServices.Priority Sector Analysis 2.Ancillary IPO Monitoring Activity Services InternationalServices Cash Management Agri-Consultancy Agri-Marketing InsuranceBusiness MutualFunds TechnologyProducts Syndication Services SME Marketing RRB Division Social Banking Table 1: Product/Services Profile Department of MBA.4.
Priority Sector Analysis PERSONAL BANKING: DEPOSIT PRODUCTS Fixed Deposits: ANCILLARY SERVICES Safe deposit lockers Canara Visa Classic /MasterCard standard Global Card Kamadhenu Deposits Safe custody services Recurring Deposits Ashraya Deposits Canbank Auto Renewal Deposits (CARD) Canflexi Deposits Savings Bank Account Current Account Floating Rate Deposit Scheme Table 2: Personal Banking CARD SERVICES: MUTUAL PRODUCTS CANARA FUND ROBECO Mutual Fund Products Canara Global Gold Card HDFC Mutual Fund Products Nominations 7day banking Extended banking hours Canara Corporate Card DD shopee Safe deposit lockers Department of MBA. PESIT Page 8 .
Priority Sector Analysis CORPORATE BANKING: ACCOUNTS & DESPOSITS Recurring deposits CANARA E-TAX LOANS & ADVANCES OTHER SEVICES Current deposits Direct Taxes Infrastructure (e-payment: pay direct financing taxes online) Customs payment Working capital through internet finance Export finance Cash management services TUF scheme Fixed deposits Excise and service tax Merchant banking services Kamadhenu deposits Term loans IPO monitoring activity Gold card schemes for Syndication services exporters Table 3:Corporate Banking NRI SERVICES: DEPOSIT PRODUCTS NRE(Non Resident External Rupee) account NRO(Non Resident Ordinary) account FCNR(Foreign Currency Non Resident) account Can shares Rupee drawing arrangement Can mortgage Table 4: NRI Services LOANS AND ADVANCES Housing loan REMITTANCE FACILITIES Canbank Remit money scheme OTHER SERVICES Consultancy services Home improvement loan Can jewel SWIFT Safe custody Bank Western Union Remittance Scheme Safe deposit lockers Nomination facility NRI service centre Department of MBA. PESIT Page 9 .
5. UAE. These are spread over 25 States and 4 Union Territories of the country which are administered through Head Office at Bangalore 34 Circle Offices 2. Moscow(A Joint Venture with State Bank of India) Canara Bank Shanghai Representative Office. Dubai.1. Delhi. Kuwait. Eastern Exchange Establishment. to give the required thrust to foreign exchange business. Bahrain and Oman have DD drawing agreement on Canara Bank.(Management Contract and DD drawing facility on Canara Bank) Al Razouki international Exchange Company. In addition. Shanghai.Priority Sector Analysis 2. Qatar. to supervise the functioning of various foreign departments. many exchange companies situated at UAE. London. Though small in size. CANARA BANK BRANCHES: 2. the Bank's presence abroad has brought in considerable foreign business. The Bank has its presence abroad. Apart from the above Canara Bank has an Offshore Banking Unit at Noida. UK (Branch) Indo Hong Kong International Finance Co Ltd (Subsidiary) Commercial Bank of India LLC. particularly exports and to meet the requirements of NRIs. Department of MBA.2. Doha. ABROAD: Canara Bank established its International Division in 1976. IN INDIA: Canara Bank has 3212 branches spread across all geographical segments. particularly NRI deposits.5.5. as under: Canara Bank. PESIT Page 10 .
37 1. Category # No.93 0.Priority Sector Analysis 2.88 TOTAL 443000000 Table 5:Ownership Pattern 100 Figure 1: Shareholding Percentage Department of MBA. PESIT Page 11 .11 14. of shares Percentage of shareholding 1 2 3 4 5 6 7 Government of India Banks & Financial Institutions Mutual Funds Foreign Institutional investors Bodies Corporate NRIs/OCBs General public 300000000 45931757 4903743 66120225 4101867 339316 21603092 67. OWNERSHIP PATTERN: Canara Bank Share holding pattern is as below: Sl No.08 4.93 0.6.72 10.
was nationalized on 19 July 1969. COMPETITORS: 2.93% 1. Among PSU Banks..93% 2. PNB is marching ahead at a good pace.00 Lac cr. Sir Sayajirao Gaekwad III on 20 July 1908 in the princely state of Baroda.08% 0. by the Government of India. along with 13 other major commercial banks of India.11% 10.88 Lac cr. The bank's total asset is valued atRs.521 Department of MBA. PUNJAB NATIONAL BANK: Punjab NationalBank is the second largest state owned commercial bank in India with about 5017 branches across 764 cities.1.37% 67.5.Its current stock price is Rs. Its current Head Office is in New Delhi. The bank serves around60 million customers.Priority Sector Analysis Shareholding Pattern of Canara Bank Government of India 4. in Gujarat. 2. PESIT Page 12 .4.1122.259 branches and offices.7. a network of 3. The bank. Foreign Institutional Investors Banks and Financial Institutions Mutual Funds 14.72% Corporate Bodies NRIs/OCBs Resident Individuals/HUFs/Trust etc. BANK OF BARODA: Bank of Baroda (BoB) was founded by the Maharajah of Baroda. It was registered on May 19. and about 1.88% 0. 1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore.7.7.2. BoB has total business of Rs.
4.set up in 1906.individual as well as corporate. UNION BANK OF INDIA: Union Bank of India (UBI) is one of India's largest state-owned banks (the government owns 55. Internet facility 5. 2. 2. Its total business is Rs.is a state-owned commercial bank with its headquarters in Mumbai. RO.Priority Sector Analysis ATMs. Its current stock price is Rs. CO 4.7. INFRASTRUCTURAL FACILITIES: Canara Bank has the following Infrastructural Facilities 1. BANK OF INDIA: Bank of India (BoI).3. Real Time Gross Settlement(RTGS) in CBS branches Department of MBA.All of the bank's branches have been networked with its 1135 ATMs.334. Its current stock price is Rs. BoI is a founder member of SWIFT (Society for Worldwide Inter-Bank Financial Telecommunications) which facilitates provision of cost-effective financial processing and communication services. ATM‟s 3. 2. It was started in 1919 and is head quartered in Mumbai. PESIT Page 13 . Its current stock price is Rs. It too is Government-owned since nationalization in 1969.43% of its share capital). Video Conferencing in HO. Its online Telebanking facility is available to all its Core Banking Customers . credit cards and asset management. and is listed on the Forbes 2000.905. CBS Branches 2. It has 3415 branches.3.54 Lac cr.452.7.8. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking.
RECEIVED DURING 2009-10 Best Bank in South Zone Award for the year 2008-09 in respect of lending under KVIC and PMEGP Schemes. Government of India. NASSCOM and Times Foundation.9ACHIEVEMENTS/AWARDS: AWARDS RECEIVED DURING 2008-09 Conferred 'First Rank' in India's Best Banks awards under the category 'Strength and Soundness' for 2006-07 by a survey conducted by Ernst & Young. the largest rendezvous of HR Professionals. instituted by the Ministry of MSME. Delhi. Fire proof cabinet in all CBS branches 2. Treasury and Investment 8. Best Corporate Social Responsibility Practice Award. The Bank won two Silver Corporate Collateral Awards for Best Corporate Ad in the Print Media and Best Corporate Film on Corporate Social Responsibility at the Public Relations Council of India Awards 2009.Manmohan Singh. instituted by BSE. PESIT Page 14 . Automatic fire alarm system in all CBS branches 10.Priority Sector Analysis 6. in South Zone for the year 200708. Hon‟ble Prime Minister of India. (REGP) of Khadi and Village Industries Commission (KVIC). an award conferred by the Asia Pacific HR Congress. Security arrangement 9. Golden Peacock National Training Award 2008 for excellence in training. Global HR excellence in Training. Best Performing Bank under Rural Employment Generation Programme. The award was handed over by Dr. at its Employer Branding Talent Management Congress held on 22nd and 23rd August 2008. Department of MBA. Foreign exchange business 7.
Hon‟ble Finance Minister of India THE BANK’S ACHIEVEMENTS INCLUDE: Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of „Good Banking‟ – Bank‟s Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing credit card for farmers Providing Agricultural Consultancy Services Department of MBA. PESIT Page 15 .Priority Sector Analysis The Bank received the Credit Guarantee Approval Certificate issued by CGTMSE from Shri Pranab Mukherjee.
WORK FLOW MODEL: BOD BOARD OF DIRECTORS HEAD OFFICE CIRCLE OFFICE MANAGER (at branch level) DIRECT LENDING NGOs FACILITATOR INDIRECT LENDING SHG GROUP (consisting of 12-20 members) Department of MBA.10. PESIT Page 16 .Priority Sector Analysis 2.
PESIT Page 17 .993crore) to expand its capital and support expansion plans. Department of MBA.000 population and 2.Pragathi Gramin Bank. The contract is to provide a state-of-the-art. Karnataka. Uttar Pradesh. It also plans to issue a 5.000 by March 2013 under financial inclusion programme: • • About 936 villages with more than 2.5-year benchmark dollar bond. core banking solution for three of Canara Bank sponsored Regional Rural Banks -. FUTURE GROWTH AND PROSPECTS: 1.000population will be covered in 2012-13.Priority Sector Analysis 2. technology-driven. and Shreya Gramin. garnering $442 million (Rs 1. 5. It has signed a five year contract with Wipro Infotech.000 population will be taken up in 2011-12. It plans to issue equity shares to institutional investors. 2. 4. It is in advanced stages of getting banking licenses to operate in Qatar.000 villages with population less than 2.10. Kerala. 3.500 villages with less than 2. a leading provider of IT and business transformation services to drive Canara Bank's Regional Rural Bank (RRB) initiative. Johannesburg and Frankfurt as it looks to ramp up its overseas business and is also applying for a license in New York and is exploring options in Nairobi and Nigeria. South Malabar Gramin Bank.700 villages with less than 2. 7. Canara Bank has plans to cover 12.
Therefore. structure and system can be considered as the “Hardware” of success while style. They can be found in strategy statements. They are highly determined by the people at work in the organization. Companies in which these soft elements are present are usually more successful at implementation of strategy. it is much more difficult to plan or to influence the characteristics of the soft elements. Strategy. consultants at Mckinsey and Co. The hard elements of Mckinsey‟s 7s model are feasible and easy to identify. The seven variables. skill and shared value can be seen as the “software”. they can have a great impact of the hard structures. corporate plans. THE McKINSEY’S 7S MODEL: Mckinsey‟s 7s model provides a useful framework for analyzing the strategic attributes of an organization. PESIT Page 18 . staff. strategies and systems of the organization. organizational charts and other documents.Priority Sector Analysis 3. The Mckinsey‟s 7s model was developed by two persons Tom Peters and Robert Waterman. values and elements of corporate culture are continuously developing and changing. Department of MBA. The four soft S‟s are difficult to describe since capabilities. which the authors term "levers". the soft factors are below the surface. Although. all begin with the letter "S".
Priority Sector Analysis Figure 2: THE McKINSEY’S 7S MODEL Department of MBA. PESIT Page 19 .
the circle office. Each branch manager has been given with certain sanctioning limits to sanction loan amount. principal of scalar chain and other principles of the organization”. Bangalore. if he receives an application for a loan amount which is more than his sanctioning limit then he has to forward the same to next higher authority i. Organization structure of the Canara bank can be seen as 4 folds. PESIT Page 20 . principle of order. The Bank has eighteen wings in the Head Office. STRUCTURE The structure consists of the organization chart and associated information that shows who reports to whom and how tasks are divided up and integrated. In case. The same process is applicable even in the case of circle office and head office. Bangalore. Its organization chart is as follows: Department of MBA. The main structure of the Canara bank as a whole is as follows: Board Head office Circle office Branch Branch Branch Figure 3: Structure From the above chart we can see that the top reporting authority is the Board of directors and the next top authority is Head office. In total there is only one head office which is situated in Town hall. Under the control of each Circle office there are a certain number of branches which has to report about its business/transactions to the circle office. The organization structure of the Canara Bank follows the“principle of unity of command.1.Priority Sector Analysis 3. there are 30 circle offices and 3000 branches.e..
Canara Bank has focused its attention on the “retail lending”. This ensures high recovery and better profitability.The trust on technology has also helped the bank to reduce its operational costs especially the “labor cost”. The strategy in this activity has been to improve the spreads and lending against better assets of better quality. Thus. PESIT Page 21 . It is about planning and setting corporate goals and then defining the steps needed to achieve those goals. Department of MBA.Priority Sector Analysis 3. the bank has adopted the strategy of CBS. CANARA BANK‟S CORPORATE OBJECTIVE: E-efficiency P-profitability O-organizational effectiveness C-customer centric H-hi-tech banking The Bank‟s strategies to achieve their long term vision and objectives are: Retail lending: Canara Bank being one of the foremost banking companies sees retail lending as a very lucrative proposition of the banking business. NPA management: Higher NPA is detrimental to any bank since it erodes the wealth of the shareholders and the interests of the depositors.2. provide better customer service & the match their competitors. In this aspect Canara Bank has a clear strategy that is “lending against assets & aggressive follow up”. this shall help to reduce the NPA in case of default in repayment since the liquidation of the asset would be easier. STRATEGY In simple terms strategy is to plan for the future with set goals and objectives. Core banking solutions: In order to boost business and to enhance the customer service and to have a centralized data regarding customer. Thus.
Department of MBA. THE ENTRY INTERVIEW SYSTEM: Canara bank has the system of “Entry interview” which aims to introduce the new entrants to the history. The entry interview format is only indicative and not exhaustive.Their formal HRD systems consist of: Entry interview Training system Brain storming sessions Study circles Employee suggestion scheme Quality circles 3.Priority Sector Analysis Treasury management: With respect to the treasury management.1. Canara bank has been a pioneer in evolving several systems. culture. Canara Bank‟s strategy is “effective fund management”. 3. SYSTEM: System consists of Formal and informal procedures that govern everyday activity. The various systems introduced by the bank over the years were published in the form of a book entitled “All about HRD systems” in the year 1992. derivatives &Core Banking Solutions. covering everything from Management Information System to the systems at the point of contact with the customer.3. this will help in improving the yield and ability to hedge the market risks by introduction of Real Time Gross Settlement. METHODOLOGY: The details are to be immediately entered in the entry interview format. PESIT Page 22 .3. The same is reviewed and revised and the updated version is “Our HRD systems”. Each of the system devised by the bank has its own characteristics and is the product of research and experience. tradition of the Bank and to show concern for proper settlement of the new entrants at work place and to ensure full devotion to work.
PESIT Page 23 .4. INFORMATION SYSTEM: The Canara Bank has well established Management Information System with three layers that is Lower Level or Operational Level Management Level Top Level or Strategic Level. Staff sections have to ensure the receipt of entry interview report by sending enclosed the formats to posting order itself. models for planning and control and a database for storage. 3.3. Canara Bank is one of the premier banks in the country due to its strong fundamentals and quality customer orientation. which impart various necessary skill sets to its employees. external training in India and abroad. training pedagogy. evaluation of training. Canara Bank has very good training programmes. Staff section concerned has to analyze the same and guide the branches wherever required.Priority Sector Analysis A copy of the report is to be sent to the section concerned at Circle Office. Canara bank provides training to impart skills to their employees in the following functional areas: Department of MBA. management and decision-making functions in an organization using hardware. software. SKILL: Skills refer to dominating capabilities or dominating attributes that distinguish a firm from its competitors. Inspection Wing and HOSA section at HO. programme inputs/ course content preparation. manual processes.2. 3. selection of trainers and their training. interaction of executives with employees. 3. TRAINING SYSTEM: It includes identification of trainees and their training needs. user-machine system for providing information to support operations.3.3. Staff Administration Section at ID Mumbai. Management Information System is an integrated. designing of programmes.
objectives of the training programme. Housing finance 4. the target group and the current and emerging business scenario. Designing of the programmes: This is done on the basis of specific objectives of the programme. bills.Priority Sector Analysis 1. Rehabilitation of sick units 6. promissory notes etc. Trade finance 7. Customer credit 3. Management development programmes 4. Training pedagogy: Pedagogical tools and techniques are determined based on the profile of the trainees. Retail finance 5. Steps taken by Canara Bank to impart necessary skills Identification of trainees and their training needs: It is done at grassroots level by Branch/ section in charge. Handling of cheques. The broadband of training methodology are: 1. Regional offices then consolidate the training needs and submit the same to Circle Office. Case studies Department of MBA. Subject committees have been formed at STC and these committees consist of experts in the functional areas. Relationship banking 8. Customer service 9. Supervisory development programmes 3. hundis. Executive development programme Programme input/ course contents: The preparation of course manual/ material is centralized at STS. Asset liability management 2. PESIT Page 24 . Some training programmes designed are: 1. Induction courses 2. The Circle Office then draws the training plan in consultation with regional Staff Training College and forwards it to the apex college at Bangalore.
Lectures 8. and attitude of the trainees. External training in India and abroad: Besides the in-house training system. etc. 3. skill. MDI. PESIT Page 25 . The subordinates feel free to discuss important matters about the job with their immediate superiors. thus providing a good forum for interaction. Quizzes. APRACA. aptitude and flair for reading. exercises and simulations 4. Group discussion 3.5. In Canara Bank. Department of MBA. Canara Bank management is very strict in following procedural aspects as laid down in memos and circulars issued from time to time and also various manuals. To be precise in Canara Bank “Participative Management / Leadership Style”is followed. IDBRT. NIBM. The cordial relationship among the employees of the bank is maintained. JNID. Audio visuals 7. Evaluation of training: A structured questionnaire is admitted at the end of the programme to assess the quality change in knowledge. oral and written communication skill. ISB. Project assignment and business games Selection of trainers and their training: In-house trainers are selected by a process of interview or by selection based on experience. Presentation 6. track record. superiors have confidence in subordinates. Interaction of executives with employees: In specialized training programme executives from Head Office and Circle Offices are invited for inauguration.Priority Sector Analysis 2. ASCI. At the same time they are very much concerned about the welfare of the employees. STYLE: Style refers to how managers collectively spend their time and attention and how they use symbolic behaviour. Canara Bank identifies and posts employees to many external training programmes both in India and in abroad. Role play 5. conducted by various institutes like IIMs. It refers to pattern of action among the employees of the organization.
delaying. IR matters. Employee suggestion scheme: Canara Bank has employee suggestion scheme (ESS). increasing or decreasing rate of interest. H O executives. services charges. etc. Staff Meeting: Staff meeting is one of the oldest formal HRD systems of the bank being introduced in the year 1982.. Department of MBA. augmenting profitability. The concept basically aims at group synergy. team building. inspection wing. Suggestions relating to enhancing quality of customer services.Priority Sector Analysis Following are some of examples of the Canara Bank‟s schemes where we can find the implementation of the participative management style by Canara Bank. Staff meeting is to be conducted once in a month. which are already engaging banks attention. which aims at kindling innovative spirit of the employees and recognizing their valuable contribution by way of feasible suggestions.. weeding out duplication system and procedures. optimum benefit of computerization are highly acceptable from the employees. Suggestions relating to products/ services or process. family feeling and talent reorganization. etc. are not acceptable by the bank. suggestions relating to delegation of powers. It is the most useful participative forum at branch/unit level enlisting involvement of all the employees in all the cadres in the effective functioning of the branch or office following all the features of the system. commission. preventing frauds. PESIT Page 26 . Features of the system are as follows: All cadres of employees of the bank can participate in this scheme except those working in O & M section. open culture.
3.7. Canara Bank‟s committed and efficient work force include: Technical people Specialist officers Chartered accountants Financial analyst Economist Marketing managers Lawyers Clerical staff Security officers With the growing challenges of liberalized economy.724employees. Study circles and brain storming sessions etc to improve the quality of the staff.6. train them.Priority Sector Analysis 3. the Canara Bank employment at different stages is trained to acquire motivation. Training 2. leadership and knowledge to meet the increased requirements. Quality circles to generate innovative ideas and to discuss and to try to solve problems of various kinds 4. Canara bank has a series of people building HRD initiatives. The present staff strength of the bank is 42. a combination of core values and core purpose. STAFF: It includes the company‟s human resource and how companies develop employees. PESIT Page 27 . Core values are the guiding principles and doctrines that do not require external justification and the company would keep even if business circumstances changes. Employee suggestion schemes and staff meeting to implement participative management in the bank thereby motivating the employees 5. Emphasis is laid on: 1. SHARED VALUES Shared values refers to the underlying attitude of the company. Department of MBA. Executive and management development schemes 3. motivate and shape their basic values.
and an attitude that the organization is part of each employee‟s life. mindset. Oneness while striving to reach the goals. which is unique to it and has made it distinct. PESIT Page 28 . 7. 5. loyalty and belonging. A work culture where family concept is practiced among working people. sacrifice.sacrifice. Acceptability to everyone. help to spread education and improve the quality of life. “Serving to grow and growing to serve”. Helpfulness to others. 6. Customer orientation 5. 8. Open culture 6. Canara Bank’s tradition: 1. Excellence in service. Commitment to the needy. Receptivity to new ideas. 4. Consistency Canara Bank is endowed with a rich tradition and culture. 3. Versatility 7. Commitment to the institution. Focus on and belief in people 3. 9. Social service. 10. Department of MBA. Community perception 8. Spirit of accepting challenge 9. 2. selflessness.Priority Sector Analysis Canara bank staff holds the following common beliefs. Family culture 2. and assumptions that shape how the organization behaves-its corporate culture: 1. The organization climate of Canara Bank is marked by display of belonging. Commitments 4. loyalty.
the bank provides a wide array of services such as networked ATMs. Canara Bank has large number of branches-3212. PESIT Page 29 . Personal banking.. thus. the Staff Training College (STC) at Bangalore with 13 regional staff training colleges (RSTCs) spread across the country to impart necessary skills to the employees to provide quality services to the customers. Tele banking. sometimes a firm will not have the strength to meet the environmental threats. Department of MBA. with 100% computerization of the branches. It is these factors which determine the course of action to ensure the survival of the firm.Priority Sector Analysis 4. The bank offers wide variety of services to the customer. The environment might present many opportunities but a company might not have the strength to exploit all the opportunities. commercial banking. anywhere banking. it will be prudent to give it up and concentrate on such business for which the firm is most competent. Canara bank has a good brand name with an increase in market value of share. Canara bank has been a pioneer in evolving several HRD systems. If a company.. The bank is having 840 branches and 13 administrative units with ISO certification. 4.1. mobile banking etc. The bank has won national HRD award for its HRD practices. finds that it will not have the competence to survive in a particular line of business. SWOT ANALYSIS: Identification of the threats and opportunities in the environment and the strengths and weakness of the firm is the cornerstone of business policy formulation. Canara Bank has a unique training system and an apex college viz. The bank has already carved a niche in providing IT-based services. STRENGTHS: The bank was the first among banks to launch networked ATMs and obtain ISO certification. international banking and NRI services offered by the bank provide the customer a wide range of choice with attractive schemes. Similarly.
The stocks hypothecated to the Bank were not adequately insured/not insured in some cases. OPPORTUNITIES The Growth potentials or the opportunities are very huge as the bank had mainly concentrated on the southern region of the country in its earlier years. The bank can become the world-class global bank by adopting global standards in its services and understanding global requirements. THREATS: Private Banks have started venturing into rural and semi urban areas by giving a severe competition for the bank. 4.2. Majority of Senior and Middle Management is retiring during 2010-2012. Sanction terms and conditions were not complied with in many cases revealing inadequate/ineffective mechanism to monitor and follow-up of such cases. Delay in crystallization of export bills discounted.4. Entry of MNC banks with new and latest technology. Succession planning efforts are not visible for smooth transition and take over. Department of MBA. 4.3. WEAKNESSES: Delay in follow up on various accounts. it takes several years for the bank to get itself updated with the same. PESIT Page 30 . both the central and state governments will be putting in place ambitious plans and programs for infrastructure development. the Bank has been scaling up its market position to emerge as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad. This presents a major opportunity for banks to finance these investments. 4.Priority Sector Analysis Over the years. For the revival of the economy. It has the opportunity to expand its business to other parts of the country wherein it can increase its customer base.
93 21.65 0.13 75.48 0.Priority Sector Analysis 5.18 18.23 Loan to deposit Ratio March-10 March-09 March-08 Total loans/ Total deposits 0. PESIT Page 31 .29 Department of MBA.85 19.18 0.70 Debt coverage ratio March-10 March-09 March-08 Total debt/ Owners fund 18.93 0. ANALYSIS OF FINANCIAL STATEMENT: DPR (Dec 2010) = Dividends per Share = 10 / 73.136 EPS Capital ratio March-10 March-09 March-08 Equity capital/ Total assets 0.74 19.72 0.09 4.09 72.38 Profit And Loss Account Ratios Interest Expended / Interest Earned Other Income / Total Income Operating Expense / Total Income Selling Distribution Cost Composition March-10 March-09 March-08 69.71 4.44 4.15 0.16 = 0.74 0.61 21.
Selling and Distribution cost has been decreased gradually by the year 2010 which is appreciable The Interest expended/ Interest earned has been decreased in the year 2010 when compared to the years 2008 and 2009.Priority Sector Analysis Interpretation: Operating expenses over total income has been increased in the year 2010 which has to be brought down and it can be achieved through efficiency of the management. The Loan to deposit ratio indicates how much the bank is relying on borrowed funds. Department of MBA. at present the ratio has shown a decline indicating that the Bank has reduced its reliance on deposits. PESIT Page 32 . Here. the more the bank is relying on borrowed funds. The debt coverage ratio determines the likelihood that a particular borrower will have the ability to pay back the money sought in loan.Ratio higher than 1 indicates that company‟s earnings is sufficient to absorb indebtedness. Hence the organization is efficient in management. Canara Bank is at a superior situation in this regard. So the higher the ratio.
It helped in understanding the importance of financial inclusion in our country. Department of MBA. LEARNING EXPERIENCE: Canara Bank is a huge organization and getting associated with it was a pleasure. The topic I chose to conduct study is analysis of PRIORITY CREDIT which is a part of the Priority Sector. PESIT Page 33 . The kind of experience I gained in the organization changed my attitude towards public sector banks. The project helped to understand various schemes and initiatives offered by Canara Bank and the significance of the same. And also how the Reserve Bank‟s initiative of financial inclusion has helped hundreds of thousands of people all across India who could earlier barred from financial services. The project work undertaken at Canara Bank helped to get an insight into one of the much talked about issue today-financial inclusion: a priority sector initiative. The 2 months in Canara Bank helped me to understand its organization structure. It also made me to aspire to join the organization if I am privileged. and PRIORITY CREDIT in particular.Priority Sector Analysis 6.
7. To find out the growth in those sectors of lending in Canara bank.3 SCOPE OF STUDY: To understand the financial requirements of the sector and various sources and means of finance. Terms and condition of different loans scheme and procedures for sanctions of credit facility. GENERAL INTRODUCTION: 7. To understand the schemes of Canara bank for meeting credit needs of priority sector. Policies of Canara bank to meet the requirements of the various sectors which comes under priority sector. PESIT Page 34 . 7. Department of MBA. The study entitled„PRIORITY SECTOR ANALYSIS WITH SPECIAL REFERENCE TO CANARA BANK‟ gives an insight into the priority sector finance situation. To analyze allocation of funds in the various sectors of priority sector in Canara bank.Priority Sector Analysis 7.2 OBJECTIVES OF THE STUDY: Objectives of the study are: To understand the nature of priority sector.1 STATEMENT OF THE PROBLEM: The study on priority sector in Canara Bank is an attempt to know about the various schemes through which the Bank lends money to public in order to develop the priority sector to ensure smooth running.
5 LIMITATIONS OF THE STUDY: The study is mainly based on the secondary data provided by the bank. RBI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors. Secondary data: Secondary data was collated by Referring to past records of the company and annual reports. Limited for the time span allocated for the project study.6 HISTORY OF PRIORITY CREDIT: The Government of India through the instrument of Reserve Bank of India (RBI) mandates certain type of lending on the Banks operating in India irrespective of their origin. which in RBI's perception would not have had access to organised lending market or Department of MBA. As such it is subject to limitations of the secondary data. Primary data: The information was collected from inside the organization by interviewing the concerned official‟s employees of the organization. 7. Focused only on Canara Bank. Websites.4 METHODLOGY: The data was collated from two main sources mainly: Primary data. Bank journals etc.Priority Sector Analysis 7. The non-availability of relevant information. 7. PESIT Page 35 . Lack of information which is confidential in nature prevented an in-depth study. Secondary data.
Financing Priority Sector in the economy is not strictly on commercial basis as not only the general approach is liberal but also the rate of interest charged on such loans is less. Export finance is. therefore. This type of lending is called Priority Sector Lending. available at a discount of 20% or more on the normal rate of interest to Indian corporate. Part of the cost of this concession is borne by RBI by means of refinancing such loans at concessional rate. Financing of Small Scale Industry. PESIT Page 36 . Agricultural Activities and Export activities fall under this category. Department of MBA. in fact.Priority Sector Analysis could not afford to pay the interest at the commercial rate. Indian Banks. This is also called directed credit in Indian Banking system. contribute towards economic development of the country by subsidizing the business activities undertaken by entrepreneurs in the areas which are considering "priority sector" by RBI. Small business.
Subsequently. On the basis of the recommendations of the Internal Working Group. viz. in the existing policy on priority sector lending including the segments constituting the priority sector. targets and sub-targets. review and recommend changes. it has been decided to include only those sectors that impact Department of MBA.Priority Sector Analysis 8. on the basis of the recommendations of the Working Group on the Modalities of Implementation of Priority Sector Lending and the Twenty Point Economic Program by Banks. if any. set up in Reserve Bank to examine. financial institutions. The description of the priority sectors was later formalized in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971. agriculture and small scale industries. in November 1974 the banks were advised to raise the share of these sectors in their aggregate advances to the level of 33 1/3 per cent by March 1979. OVERVIEW OF PRIORITY SECTOR INDUSTRY IN INDIA: At a meeting of the National Credit Council held in July 1968. Although initially there was no specific target fixed in respect of priority sector lending. Since then. Sub-targets were also specified for lending to agriculture and the weaker sections within the priority sector. there have been several changes in the scope of priority sector lending and the targets and subtargets applicable to various bank groups. all commercial banks were advised to achieve the target of priority sector lending at 40 per cent of aggregate bank advances by 1985. and the comments/suggestions received thereon from banks. it was agreed that banks should aim at raising the proportion of their advances to priority sectors to 40 per cent by March 1985. it was emphasized that commercial banks should increase their involvement in the financing of priority sectors. etc. At a meeting of the Union Finance Minister with the Chief Executive Officers of public sector banks held in March 1980. the Reserve Bank prescribed a modified return for reporting priority sector advances and certain guidelines were issued in this connection indicating the scope of the items to be included under the various categories of priority sector. PESIT Page 37 .. On the basis of this report. public and the Indian Banks‟Association (IBA).
semi-urban and urban Department of MBA. village and cottage industries.1 CATEGORIES OF PRIORITY SECTOR The broad categories of priority sector for all scheduled commercial banks are as under: 1. 4. professional &self-employed persons. medium and long term loans given for agriculture and allied activities directly to individual farmers. as part of the priority sector. Agriculture (Direct and Indirect finance): Direct finance to agriculture shall include short. 2. 3. small road & water transport operators and other service enterprises. handlooms and to cooperatives of producers in this sector. 8. Indirect finance to SSI shall include finance to any person providing inputs to or marketing the output of artisans. Micro Credit : Provision of credit and other financial services and products of very small amounts not exceeding Rs. partnership firms and institutions) up to Rs. Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual farmers without limit and to others (such as corporate. processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed the amounts specified in Section I. retail trade. Small Business / Service Enterprises shall include small business.Priority Sector Analysis large segments of population & the weaker sections. and which are employment-intensive. 50. appended. for taking up agriculture/allied activities. 20 lakh. Small Scale Industries (Direct and Indirect Finance): Direct finance to small scale industries (SSI) shall include all loans given to SSI units which are engaged in manufacture.000 per borrower to the poor in rural. Indirect finance to agriculture shall include loans given for agriculture and allied activities. PESIT Page 38 .
Priority Sector Analysis areas.2 RBI INITIATIVES FOR FINANCIAL INCLUSION: RBI has started the following organizations to fulfill the vision of financial inclusion: Co-operative Movement Setting up of State Bank of India Nationalization of banks Lead Bank Scheme RRBs Service Area Approach Self Help Groups Still failure due to following: Absence of Technology Absence of reach and coverage Delivery Mechanism Not having a Business model Rich have no compassion for poor Department of MBA. Housing loans: Loans up to Rs. Education loans: Education loans include loans and advances granted to only individuals for educational purposes up to Rs. 15 lakh for construction of houses by individuals. for enabling them to improve their living standards. will constitute micro credit. 10 lakh for studies in India and Rs.1 lakh in rural and semi-urban areas and up to Rs. PESIT Page 39 . 8. (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged houses of individuals up to Rs. either directly or through a group mechanism. 6. 5.2 lakh in urban areas. 20 lakh for studies abroad. and do not include those granted to institutions.
ANALYSIS AND INTERPRETATION Table showing advances to all the major sectors in Priority Credit Rs. PESIT Page 40 .in lakhs Small and Marginal Farmers Years Total Priority Total Agricultur e MSME Weaker section Housing Educatio n March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 30937 37844 43203 48763 59310 70757 72753 12032 15521 17996 20144 25052 29656 31179 6591 9852 14175 16316 24180 29558 29063 4423 5613 7528 10809 14631 17823 20012 3083 3981 5187 7679 10208 12634 14596 8083 7989 7022 7516 6941 7700 8236 955 1252 1737 2301 2896 3503 3898 Department of MBA.Priority Sector Analysis 9.
74% Page 41 .78% 16. PESIT 72753 2.Priority Sector Analysis Graph Showing Growth in Total Priority Advances: Total Priority advances 80000 70000 60000 50000 40000 30000 20000 10000 0 Total Priority advances Years March '2006 Total Priority(amt.40% 17.65% 12.25% 3.18% Dec'2011 Department of MBA.40% 11. in lakhs) 30937 Growth rate CAGR March '2007 March'2008 March '2009 March'2010 March '2011 37844 43203 48763 59310 70757 18.
the advances to total priority more than doubled to Rs. Department of MBA. The advances have increased over the years. PESIT Page 42 . 72753 lakhs. As on December 2011.Priority Sector Analysis Interpretation Advances to Total Priority at Canara Bank on March 2006 were Rs 30937 lakhs. From the year 2010-2011 with a 4% increase in the number of accounts there has been a rise of around 19% in the amount sanctioned.
52% 4. PESIT Page 43 . Department of MBA.50% Agriculture advances has seen a constant growth throughout the years.66% 19.Priority Sector Analysis Graph Showing Growth in Total Agriculture Advances: Total Agriculture Advances 35000 30000 25000 20000 15000 10000 5000 0 Total Agriculture Advances Years March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 Interpretation Total Agriculture(amt.75% 10.48% 13.59% 15. Moreover agriculture has been a major source of income to the country‟s poor and has seen a rise of 18% from 2010-2011.88% 4. This is mainly due to the importance of the government and the bank‟s commitment to enrich the outcome obtained by the poor. in lakhs) 12032 15521 17996 20144 25052 29656 31179 Growth rate CAGR 22.
50% 13. PESIT Page 44 .70% 6.62% Department of MBA.10% 30.Priority Sector Analysis Graph Showing Growth in MSME’s: Micro Small and Medium Enterprises 35000 30000 25000 20000 15000 10000 5000 0 Micro Small and Medium Enterprises Years MSME(amt. in lakhs) 6591 9852 14175 16316 24180 29558 29063 Growth Rate CAGR March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 33.12% 32.19% -1.52% 18.
Priority Sector Analysis Interpretation Here also there has been a gradual rise in the amount advanced. RBI has also urged the bank in recent years to fund MSME‟s which promise to contribute largely towards the overall sustained growth of the economy. PESIT Page 45 . This is a good sign indicating the growth in the small and medium enterprises and also a proof of rise in employment opportunities in that segment of the priority sector. Department of MBA.
Priority Sector Analysis Graph Showing Weaker Section Advances: Weaker Section Advances 25000 20000 15000 10000 Weaker Section Advances 5000 0 Years Weaker Section Growth Rate CAGR March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 4423 5613 7528 10809 14631 17823 20012 21.12% 17.35% 26.94% 4.44% 30.24% Department of MBA.91% 10.20% 25. PESIT Page 46 .
Most of the advances in this section was towards their welfare and development. Department of MBA. However in comparison to the other sectors the advances made to the weaker section is quite low. PESIT Page 47 .Priority Sector Analysis Interpretation This category involves the weaker section of the society.
25% 32.56% 4.20% 13.77% 19.45% 24.44% Department of MBA. PESIT Page 48 .Priority Sector Analysis Graph Showing Credit to Small and Margin Farmers: Credit to small and margin farmers 16000 14000 12000 10000 8000 6000 4000 2000 0 Credit to small and margin farmers Years Small and Marginal Farmers Growth Rate CAGR March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 3083 3981 5187 7679 10208 12634 14596 22.51% 23.
This is mainly due to the scope of finance that is made easily available to this section.Priority Sector Analysis Interpretation The growth rate in this section is quite high compared to the other sections. The growth from 2009 is quite high because of the importance given by the bank towards this part of priority credit and also a need for the sustainable development of the poor in the country was stressed by the RBI. Department of MBA. PESIT Page 49 .
77% 6.24% Page 50 .28% 9.86% 6. PESIT 8083 7989 7022 7516 6941 7700 8236 -1.57% -8.Priority Sector Analysis Graph Showing Housing Loan Advances: Housing Loan Advances 8500 8000 7500 7000 Housing Loan Advances 6500 6000 Years Housing Growth Rate CAGR March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 Department of MBA.18% -13.51% -0.
which was the year in which recession started seeping into the country. Department of MBA. However post-recession there has been a rise again in the lending to this sector indicating more money entering the economy also the increase in the purchasing power of the people. It is evident that there was a drop in this sector by 13% in 2008.Priority Sector Analysis Interpretation The advances for housing loan are closely related to the market movements. PESIT Page 51 .
Priority Sector Analysis Graph Showing Education Loan Advances: Education Loan Advances 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Education Loan Advances Years Education Growth Rate CAGR March '2006 March '2007 March'2008 March '2009 March'2010 March '2011 Dec'2011 955 1252 1737 2301 2896 3503 3898 23. PESIT Page 52 .55% 17.72% 4.92% 24.13% Department of MBA.33% 10.51% 20.74% 27.
The advances in this sector is mainly involving advances for foreign education. Department of MBA.Priority Sector Analysis Interpretation This is considered to be the most important and happening sector in the economy. PESIT Page 53 . This is mainly due to the growing need for a better and educated India in the future. The importance and value given to this sector is more evident by the 266% increase in advances given in the last 5 yrs.
PESIT Page 54 .t Financial Inclusion: The finance ministry is all set to increase the agriculture lending target by around 25% in the Budget for 2012-13 despite a sharp increase in the non-performing loans in the sector. small-scale industries and other weaker sections.75 lakh crore in the year before. RBI guidelines require banks to lend 40% of their adjusted net credit to the Priority Sector. The scheme will ensure that the farmers will be able to avail short-term post-harvest loan at &5 as against the prevailing rate of 11-12%. Department of MBA. If the banks fail to meet the target of the Priority Credit lending then they can buy loans of regional rural banks or micro finance institutions.75 lakh crore from 3.r. which includes agriculture. In the last budget the government had increased the target to 4.Priority Sector Analysis BUDGET 2012: The budget for FY2012 lays down the following w.
Also around 90% of the SHG accounts opened are groups formed by women. Canara Bank has also introduced certain technological initiatives for the awareness of financial services.vehicles (or mobile banks) go to places where there are no banks to conduct banking transactions and Canara Gramin Vikas Vahini. With respect to SHGs. This has been due to the ease and convenience which people feel towards opening and operating such accounts. These are Bio Metric Cards. PESIT Page 55 . The No-frills account is one of the initiatives of RBI towards achieving total Financial Inclusion in the country. the General Credit Card scheme has shown a positive increase in the number of accounts created all through the time period. Mobile Bio-Metric ATMs. health.voice enabled device for banking transaction. The growth in Krishi Mitra Card scheme and Debt Swapping scheme has seen negative growth for a while. there has been a considerable increase in the number of SHG accounts opened during the last 3 years.vehicles with the purpose to increase the bank reach coupled with power of information and knowledge on banking products. FINDINGS: The initiatives at Canara Bank as part of their Financial Inclusion program have been successful to a large extent. access their accounts and eventually save money which would earn them interest. Whereas. education. sanitation etc. These schemes have helped beneficiaries cultivate banking habits. This scheme too has been a popular scheme with Canara Bank as the savings account can be maintained with zero balance. The growth in the number of accounts has more than doubled during the 3 financial years taken for the purpose of this study. Growth percentages compared between 2006 and 2011 Department of MBA. The various schemes provided are popular with the target group they were intended at. The Differential Interest Rate scheme has been popular that is why the growth has been notable.Priority Sector Analysis 10.
7. 4. The total lending of small scale lending is increased 77. It‟s about 266%. 9.18% from 20062011.70% in the last 5 years which is a good sign in lending. 6. Higher level of Government interventions will help to maintain macro economy and price stability. 5.Priority Sector Analysis 1. The housing loan is showing a positive growth of 2.42% in the direct agriculture lending from 2006 to 2011. 8. 2. Indirect agriculture also showing hike of 37% and it is boosting the total agriculture lending. Department of MBA.3%post-recession. rest of the sectors are marginally close to the target at acceptable levels. 3. The weaker section lending has a positive figure in growth showing 75. Total lending in priority sector increased in the year 2011 showing a positive growth of 56. PESIT Page 56 .27% compared to 2006. Out of 15 priority sectors 4 sectors have crossed the target for the year 2011. There is also growth of about 59. Highest growth is recorded in the segment of education loan.
4. the composition of the priority sector needs a re-look and review. However. With this end in view. the following items have been considered for being ineligible for priority sector status: Loans to Electricity Boards for reimbursing the expenditure already incurred by them for providing low tension connection from step-down point to individual farmers for energizing their wells Finance for hire purchase schemes for distribution of agricultural machinery and implements. The importance of agriculture in the Indian. Although there is a need to continue with priority sector prescriptions. have come down.Priority Sector Analysis 11. Suitable steps like Re-structuring. There are higher risks of default. resulting in deterioration in the asset quality. 3. and leads to substantial employment generation. some of the extant provisions may need to be revised. a few other segments covering the small borrowers as also a few emerging sectors like development of computer software were added. which satisfy the following criteria. However. Agriculture may. the segments. which were not getting adequate bank credit. Initially. Over the last 3 years repayment rates. were included. benefit small borrowers and involve small loans. therefore. PESIT Page 57 . continue as an important segment of priority sector. Department of MBA. may be considered for inclusion in the priority sector: affect large sections of society. relate to those sectors which face difficulty in getting bank credit. The focus of agricultural lending by banks should be on direct lending. 2. considering that credit flow to some of these sectors has been satisfactory. In this context. Rescheduling and awareness program for better recovery to be undertaken. Reserve Bank has been gradually phasing out the modes of indirect financing by banks under agriculture. particularly where no on-lending to farmers is involved. are of considerable importance to the national economy. Subsequently. sectors of the economy. Suggestions 1.
which are currently treated as indirect finance to SSI. 20 lakh for studies abroad. may be considered for being ineligible for priority sector status: Credit provided to Government sponsored Corporations/organizations for onward lending to weaker sections Loans for setting up of industrial estates 6. All advances granted by banks under special schemes. 7. 8. merchants. Educational loans include loans and advances granted to individuals for educational purposes up to Rs. vendors and the bank to establish win-win deals for all the sectors. Department of MBA. provided they satisfy the above criteria. 10 lakh for studies in India and Rs. if any. In view of the need to provide more direct finance to SSI.Priority Sector Analysis 5. PESIT Page 58 . Setting up of industrial consultancy services will help agriculturists. An SME e-commerce portal may be set up under the Ministry of SSI where the buyers and sellers can meet and transact business. and not those granted to institutions. the following types of lending. introduced for the purpose may also be included under this category.
Canara Bank never looked back on its way of success. A tradition of business excellence blended with social obligation. the latest of which is the "Best CSR Practice Award -2008". the list goes on.000+ dedicate work force. An award. Conclusions: Canara Bank has its own tradition of Excellence. recognitions. The mantra behind all this glory and grandeur is “Together we can” I am proud to present this project on priority sector and advances. PESIT Page 59 . NASSCOM and Times Foundation. Department of MBA. Blessed by the great founder Sri Ammembal Subba Rao Pai. sammans and lots of success stories.Priority Sector Analysis 12. I have made an in depth study on the subject and presenting this report to the best of my capacity and knowledge. I thank the Management and staff of Canara Bank for giving me an opportunity to do this project and for all their co-operations. constituted by BSE. Since its inspection bank had been receiving many awards. The spirit-“Beyond interests a concern” A concern towards society a concern towards its 45. That is why the Canara Bank rules the Indian banking arena with its own unique style.
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