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Self-Study Report On

A Comparative analysis of financial performance of three public sector banks Bank of Baroda, Punjab National Bank, BANK of India.
Session -2012 Submitted in partial fulfillment of the requirement for the award of

Master of Business Administration

DAYALBAGH EDUCATIONAL INSTITUTE DAYALBAGH, AGRA Under the kind Guidance of Mr. S.P. Bhanot Sir Faculty of social science Dayalbagh Educational Institute Study Centre Ellora, DAYALBAGH AGRA

Submitted by ANURAG KUMAR SINHA MBA 3rd Sem. 11D365


This is to certify that Mr. Anurag Kumar Sinha who is a bonafide student of M.B.A 3rdsemester, Dayalbagh Educational Institute, Dayalbagh Deemed University, Agra has conducted an original academic research entitled A Comparative analysis of

financial performance of three public sector banks BOB,PNB,CANARA BANK under my supervision for the partial fulfillment of
the post-graduate degree program of M.B.A.

To the best of my knowledge and belief, the above said report has been researched and prepared by the above said student.

Date: Place Agra. ... Mr.S.P. Bhanot Sir Faculty of Social science Dayalbagh Educational institute Dayalbagh Agra.



Page no. 4 5 6 7 13 15 18 20 25 26 32

In Indian culture a task is said to be incomplete without the blessings of Almighty and elders. Also acknowledging the work and help of all those who have guided me for the completion of this project on time. T h e c o m p l e t i o n o f a p r o j e c t i s n e v e r a u n i l a t e r a l e f f o r t . I take this opportunity to express my profound sense of gratitude to all those who encouraged, assisted and co-operated in the successful completion of this project. The completion of the project is a milestone in a students life and its execution is inevitable in hands of our guides. I extend my sincere thanks to Mr. S.P. BhanotSir , my project guide, for his support and guidance throughout this project and providing me with structure and for pointing out my ideas that needed more thought. Without his help, this project would not have been successful. I Sincerely wants to convey my thanks to Mr. S.P. Bhanot Sir who provided me with extremely important information regarding the literature,data related to this project and also informed me about websites that would help me with relevant topics. I once again express my heartfelt indebtedness to all a foresaid. Any omission or error in acknowledgement is in advertent. For such oversights and lapses, I tender unconditional apology. The amount of value addition and learning that I have had will definitely stand in good stern in my student life and in my future corporate endeavors. Anurag Kumar Sinha 11D365 MBA-3rdSEM.


The project is an integral part of the MBA course. As a matter of fact, every management student has to go through some practical understanding as to become aware of the real life, business situation and the environment. It gives me a great pleasure to present this project report on the topic A Comparative analysis of

financial performance of three public sector banks BOB,PNB,CANARA BANK Well the project report is an integral part of the
MBA. The project I have undertaken talks about the financial performance. In this report I have put my best efforts to compile the data, to the highest level of accuracy.

I Anurag KumarSinha (Roll No.11D365) do declare that I have successfully completed this Major Project on A Comparative analysis of financial

performance of three public sector banks BOB,PNB,CANARA BANK

for the partial fulfillment of the requirement for the degree of master of business adminstration under the supervision of Mr. S.P. Bhanot Sir. I am submitting my project report on the above mentioned topic which is my original work and is my original work and the conclusions drawn therein are based on the material collected by myself.

Date:20th sep.2012 Place:Agra Anurag Kumar Sinha MBA-3rdSEM 11D365

Banking in India originated in the last decades first banks were The General Bank of
India, which started in 1786, and Bank of Hindustan, which started in 1770; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.

Merchants in Calcutta established the Union Bank in 1839, but it failed in 1840 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to app, particularly in Calcutta, in the 1860s. The Comptoir d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments." 7

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". During the First World War (19141918) through the end of the Second World War (19391945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Years 1913 1914 1915 1916 1917 1918 Number of banks that failed 12 42 11 13 9 7 Authorised capital (Rs. Lakhs) 274 710 56 231 76 209 Paid-up Capital (Rs. Lakhs) 35 109 5 4 25 1

The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:

The Reserve Bank of India, India's central banking authority, was established in April 1935, but was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b) In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India". The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.


Banks Nationalisation in India: Newspaper Clipping, Times of India, July 20, 1969 Despite the provisions, control and regulations of Reserve Bank of India, banks in India except the State Bank of India or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The meeting received the paper with enthusiasm. Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. These banks contained 85 percent of bank deposits in the country. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2010), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

Adoption of banking technology

The IT revolution had a great impact in the Indian banking system. The use of computers had led to introduction of online banking in India. The use of the modern innovation and computerisation of the banking sector of India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. The Indian banks were finding it difficult to compete with the international banks in terms of the customer service without the use of the information technology and computers.


Number of branches of scheduled banks of India as of March 2005 The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendation of this committee was introducing MICR Technology in all the banks in the metropolis in India.This provided use of standardized cheque forms and encoders. In 1988, the RBI set up Committee on Computerisation in Banks (1988) headed by Dr. C.R. Rangarajan which emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further stated that there should be National Clearing of inter-city cheques at Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing online banking. The committee submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA and bank employees' association. In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking Industry (1994)] was set up with chairman Shri WS Saraf, Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all banks with more than 100 branches. Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995) emphasized on EFT system. Electronic banking refers to DOING BANKING by using technologies like computers, internet and networking,MICR,EFT so as to increase efficiency, quick service, productivity and transparency in the transaction.


Number of ATMs of different Scheduled Commercial Banks Of India as on end March 2005

Apart from the above mentioned innovations the banks have been selling the third party products like Mutual Funds, insurances to its clients. Total numbers of ATMs installed in India by various banks as on end March 2005 is 17,642. The New Private Sector Banks in India is having the largest numbers of ATMs which is fold off site ATM is highest for the SBI and its subsidiaries and then it is followed by New Private Banks, Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks of India. BANK GROUP NATIONALISED BANKS STATE BANK OF INDIA OLD PRIVATE SECTOR BANKS NEW PRIVATE SECTOR BANKS FOREIGN BANKS NUMBER OF BRANCHES 33627 13661 4511 1685 242 ON SITE ATM 3205 1548 800 1883 218 OFF SITE TOTAL ATM ATM 1567 4772 3672 5220 441 3729 582 1241 5612 800


Profile of Public sector bank:

Bank of Baroda
Bank of Baroda



Industry Founded Headquarters Area served Key people

Banking, Financial services 1908 Vadodara, India Ahmedabad, India Worldwide M.D. Malaya(Chairman&MD)


Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management 25,800 crore (US$5.15 billion) (2011) 4,433 crore (US$884.38 million) (2011) 355,826 crore (US$70.99 billion) (2011)

Revenue Net income Total assets Website

Bank of Baroda (BoB) is the third largest PSU bank in India, after the State Bank of India and the Punjab National Bank and ahead of Bank of India. BoB is ranked 763 in Forbes Global 2000 list. BoB has total assets in excess of Rs. 3.58 lakhcrores, or Rs. 3,583 billion, a network of 3,991 branches and offices, and about 1,657 ATMs. It plans to open 400 new branches in the coming year. 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, credit cards and asset management. Its total business was Rs. 5,452 billion as of June 30. As of August 2010, the bank has 78 branches abroad and by the end of FY11 this number should climb to 90. In 2010, BOB opened a branch in Auckland, New Zealand, and its tenth branch in the United Kingdom. The bank also plans to open five branches in Africa. Besides branches, BoB plans to open three outlets in the Persian Gulf region that will consist of ATMs with a couple of people. The Maharajah of Baroda, Sir SayajiraoGaekwad III, founded the bank on 20 July 1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalised on 19 July 1969, by the government of India.

International presence
In its international expansion, the Bank of Baroda followed the Indian diaspora, especially that of the Gujaratis. It has significant international presence with a network of 72 offices in 25 countries, six subsidiaries, and four representative offices. Among the Bank of Barodas 85 overseas branches are ones in the worlds major financial centers (e.g., New York, London, Dubai, Hong Kong (which it has upgraded recently), Brussels and Singapore), as well as a number in other countries. The bank is engaged in retail banking via 17 branches of subsidiaries in Botswana, Guyana, Kenya, Tanzania, and Uganda. The Bank of Baroda also has a joint-venture bank in Zambia with nine branches. The Bank of Baroda maintains representative offices in Malaysia, China, Thailand, and Australia. It plans to upgrade its offices in China and Malaysia shortly to a branch and joint-venture, respectively.It also has a large presence in Mauritius with about seven branches spread out in the country. The Bank of Baroda has received permission or in-principle approval from host country regulators to open new offices in Trinidad and Tobago and Ghana, where it seeks to establish joint ventures or subsidiaries. The bank has received Reserve Bank of India approval to open offices in The Maldives, and New Zealand. It is seeking approval for operations in Bahrain, South Africa, Kuwait, Mozambique, and Qatar, and is establishing offices in Canada, New Zealand, Sri Lanka, Bahrain, Saudi Arabia, and Russia. It also has plans to extend its existing operations in the United Kingdom, the United Arab Emirates, and Botswana. The slogan of Bank of Baroda is "India's International Bank".

BOB Capital Markets Ltd. (BOBCAPS) is a SEBI-registered investment banking company based in Mumbai, Maharashtra. It is a wholly owned subsidiary of Bank of Baroda. Its financial services portfolio includes Initial Public Offerings, private placement of debts, corporate restructuring, Business valuation, mergers & acquisition, project appraisal and loan syndication.

Bank of Baroda financials 2012

Sales Rs. 24,695 crores Profits Rs. 4,241 crores Assets Rs. 3,58,397 crores


Punjab National Bank

Punjab National Bank

Type Industry Founded

Public Banking, Financial services 1895

Headquarters New Delhi, India Key people K R Kamath (Chairman & MD) Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management 31,206 crore (US$6.23 billion) (2011) 4,574 crore (US$912.51 million) (2011) 373,786 crore (US$74.57 billion) (2011) 56,928 (2010)


Revenue Net income Total assets Employees Website

Punjab National Bank (PNB) is an Indian financial services company based in New Delhi, India. PNB is the third largest bank in India by assets. It was founded in 1894 and is currently the second largest state-owned commercial bank in India ahead of Bank of Baroda with about 5000 branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th biggest bank in the world by the Bankers Almanac, London. The bank's total assets for financial year 2007 were about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai.

Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore. The founding board was drawn from different parts of India professing different faiths and a varied back-ground with, however, the common objective of providing country with a truly national bank which would further the economic interest of the country. PNB's founders included several leaders of the Swadeshi movement such as Dyal Singh 15

Majithia and LalaHarkishanLal, LalaLalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, ShriPrabhuDayal, BakshiJaishi Ram, and LalaDholanDass. LalaLajpatRai was actively associated with the management of the Bank in its early years. The board first met on 23 May 1894. Ironically, the PNB Website now claims LalaLajpatRai to be the founding father, surpassing RaiMul Raj and Dyal Singh Majithia. 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 has had the privilege of maintaining accounts of national leaders such as Mahatma Gandhi, ShriJawaharLal Nehru, ShriLalBahadurShastri, ShrimatiIndira Gandhi, as well as the account of the famous JalianwalaBagh Committee.


1895: PNB commenced its operations in Lahore. 1904: PNB established branches in Karachi and Peshawar. 1940: PNB absorbed BhagwanDass Bank, a scheduled bank located in Delhi Circle. 1947: At the Partition of India and the commencement of Pakistani independence, PNB lost its premises in Lahore, but continued to operate in Pakistan. PNB had already shifted its registered office from Lahore to Calcutta in June 1947 even before the announcement of the Partition. 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat Bank became Bharat Nidhi Ltd. 1960: PNB again shifted its head office, this time from Calcutta to Delhi. 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. PNB also had one or more branches in East Pakistan (Bangladesh). 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 19 July 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. 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. Since then it has opened a third branch in Leicester, and is planning a fourth in Birmingham. 2008: PNB opened a branch in Hong Kong. 2009: PNB opened a representative office in Oslo, Norway, and a second branch in Hong Kong, this in Kowloon. 2010: PNB received permission to upgrade its representative office in the Dubai International Financial Centre to a branch.

Fortune India 500 Ranking

Punjab National Bank was ranked #26 in the Fortune India 500 ranking of 2011.

Forbes Global 2000 Ranking

Punjab National Bank was ranked #1243 in the Forbes Global 2000.


Bank of India (BOI) is an Indian state-owned commercial bank with headquarters in Mumbai, Maharashtra. Government-owned since nationalization in 1969, It is India's 4th largest PSU bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It has 4157 branches as on 21/04/2012, including 29 branches outside India, and about 1679 ATMs. 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. The Bank completed its first one hundred years of operations on 7 September 2006.

Important Years in BOI History:

1906: BOI founded with Head Office in Bombay. 1921: BOI entered into an agreement with the Bombay Stock Exchange to manage its clearing house.

1946: BOI opened a branch in London, the first Indian bank to do so. This was also the first post-WWII overseas branch of any Indian bank.

1950: BOI opened branches in Tokyo and Osaka. 1951: BOI opened a branch in Singapore. 1953: BOI opened a branch in Kenya and another in Uganda. 1953 or 54: BOI opened a branch in Aden. 1955: BOI opened a branch in Tanganyika. 1960: BOI opened a branch in Hong Kong. 1962: BOI opened a branch in Nigeria. 1967: The Government of Tanzania nationalized BOI's operations in Tanzania and folded them into the government-owned National Commercial Bank, together with those of Bank of Baroda and several other foreign banks.

1969: The Government of India nationalized the 14 top banks, including Bank of India. In the same year, the People's Democratic Republic of Yemen nationalized BOI's branch in Aden, and the Nigerian and Ugandan governments forced BOI to incorporate its branches in those countries.

1970: National Bank of Southern Yemen incorporated BOI's branch in Yemen, together with those of all the other banks in the country; this is now National Bank of Yemen. BOI was the only Indian bank in the country.


1972: BOI sold its Uganda operation to Bank of Baroda. 1973: BOI opened a rep in Jakarta. 1974: BOI opened a branch in Paris. This was the first branch of an Indian bank in Europe. 1976: The Nigerian government acquired 60% of the shares in Bank of India (Nigeria). 1978: BOI opened a branch in New York. 1970s: BOI opened an agency in San Francisco. 1980: Bank of India (Nigeria) Ltd, changed its name to Allied Bank of Nigeria. 1986: BOI acquired Paravur Central Bank (Karur Central Bank or Parur Central Bank) in Kerala in a rescue.

1987: BOI took over the three UK branches of Central Bank of India (CBI). CBI had been caught up in the Sethia fraud and default and the Reserve Bank of India required it to transfer its branches.

2003: BOI opened a representative office in Shenzhen. 2005: BOI opened a representative office in Vietnam. 2006: BOI plans to upgrade the Shenzen and Vietnam representative offices to branches, and to open representative offices in Beijing, Doha, and Johannesburg. In addition, BOI plans to establish a branch in Antwerp and a subsidiary in Dar-es-Salaam, marking its return to Tanzania after 37 years.

2007: BOI acquired 76 percent of Indonesia-based PT Bank Shades. 2011: BOI opened a fully owned Subsidiary in Auckland, New Zealand on 6th October,2011 (Bank of India (New Zealand) Ltd.)

2012: BOI opened a fully owned Subsidiary in Uganda on 18th June, 2012 (Bank of India (Uganda) Ltd.) which was closed its operations in 1972 and sold the operations to BOB.


Performance analysis on following parameters.

Key Financial Ratios

1. Return on Equity
'Return On Equity - ROE' The amount of net income returned as a percentage of shareholders equity. Return on equity measures a bank profitability by revealing how much profit a bank generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as: Return on Equity = Net Income/Shareholder's Equity *100 Net income is for the full financial year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does not include preferred shares. Also known as "return on net worth" (RONW).

2. Return on Asset
'Return On Assets - ROA'
An indicator of how profitable a bank is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a bank's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment". The formula for return on assets is:

Note: Some investors add interest expense back into net income when performing this calculation because they'd like to use operating returns before cost of borrowing.


3. Cost to income
Cost/income ratio
The cost-to-income ratio is a key financial measure, particularly important in valuing banks. It shows a bank's costs in relation to its income. To get the ratio, divide the operating costs (administrative and fixed costs, such as salaries and property expenses, but not bad debts that have been written off) by operating income. The ratio gives investors a clear view of how efficiently the firm is being run - the lower it is, the more profitable the bank will be. Changes in the ratio can also highlight potential problems: if the ratio rises from one period to the next, it means that costs are rising at a higher rate than income, which could suggest that the company has taken its eye off the ball in the drive to attract more business.

4. Gross NPA Ratio

Gross NPA is the amount which is outstanding in the books, regardless of any interest recorded and debited.

5. Net NPA Ratio

Net NPA is Gross NPA less interest debited to borrowable account and not recovered or recognized as income.

6. Capital adequacy Ratio

Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.

Capital adequacy ratios ("CAR") are a measure of the amount of a bank's core capital expressed as a percentage of its risk-weighted asset. Capital adequacy ratio is defined as


TIER 1 CAPITAL - (paid up capital + statutory reserves + disclosed free reserves) - (equity investments in subsidiary + intangible assets + current & b/f losses) TIER 2 CAPITAL -A) Undisclosed Reserves, B) General Loss reserves, C) hybrid debt capital instruments and subordinated debts Where Risk can either be weighted assets ( ) or the respective national regulator's minimum total capital requirement. If using risk weighted assets,

The percent threshold varies from bank to bank (10% in this case, a common requirement for regulators conforming to the Basel Accords) is set by the national banking regulator of different countries. Two types of capital are measured: tier one capital ( above), which can absorb losses without a bank being required to cease trading, and tier two capital ( above), which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.

Business growth

1. Net profit
Often referred to as the bottom line, net profit is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time (usually one year). Also called net income or net earnings.

2. Advances
Advances by commercial banks are made in different forms such as demand loan, term loan, cash credit, overdraft etc. These forms of advances are explained below.

Demand Loan

In a demand loan account, the entire amount is paid to the debtor at one time, either in cash or by transfer to his savings bank or current account. No subsequent debit is ordinarily allowed except by way of interest, incidental charges, insurance premiums, expenses incurred for the protection of the security etc. Repayment is provided for by installment without allowing the demand character of the loan to be affected in any way. There is usually a stipulation that in the event of any installment, remaining unpaid, the entire amount of the loan will become due. Interest is charged on the debit balance, usually with monthly rests unless there is an arrangement to the contrary. No cheque book is issued. The security may be personal or in the form of shares, Govt. paper, fixed deposit receipt, life insurance policies, goods, etc.

Term Loan
When a loan is granted for a fixed period exceeding three years and is repayable according to the schedule of repayment, it is known as a term loan. The period of term loan may extend up to 10 years and in some cases up to 20 years. A term loan is generally granted for fixed capital requirements, e.g. investment in plant and equipment, land and building etc. These may be required for setting up new projects or expansion or modernization of the plant and equipment. Advances granted for purchasing land / building / flat (Apartment house) are term loans.

An overdraft is a fluctuating account wherein the balance sometimes may be in credit and at other times in debit. Overdraft facilities are allowed in current accounts only. Opening of an overdraft account requires that a current account will have to be formally opened, and the usual account opening form completed. Whereas in a current account cheques are honored if the balance is in credit, the overdraft arrangement enables a customer to draw over and above his own balance up to the extent of the limit stipulated. For example, if there is a credit balance of Rs.40,000/- (approx. $890 USD) in a customer's current account and an overdraft limit of Rs. 50,000/- (approx. $1,113 USD) is sanctioned to the party, he can draw cheques up to Rs. 90,000/- (approx. $2,003 USD). There is no restriction, unlike in the case of loans, on drawing more than once. In fact, as many drawings and repayments are permitted as the customer would desire, provided the total amount overdrawn, i.e. the debit balance at any time does not exceed the agreed limit. This is a satisfactory arrangement from the customer's point of view. He need not hesitate to pay into the account any moneys for fear that an amount once paid in cannot be drawn out or borrowed again, unlike in a loan account. As in the case of a demand loan account, the security in an overdraft account may be either personal or tangible. The tangible security may be in the form of shares, government paper, life insurance policies, fixed deposit receipts etc. i.e. paper securities. A cheque book is issued in an overdraft account.

Cash Credit


A cash credit is essentially a drawing account against credit granted by the bank and is operated in the same way as a current account in which an overdraft limit has been sanctioned. The principal advantages of a cash credit account to a borrower are that, unlike the party borrowing on a fixed loan basis, he may operate the account within the stipulated limit as and when required and can save interest by reducing the debit balance whenever he is in a position to do so. The borrower can also provide alternative securities from time to time in conformity with the terms of the advance and according to his own requirements. Cash credits are normally granted against the security of goods e.g. raw materials, stock in process, finished goods. It is also granted against the security of bookdebts. If there is good turnover both in the account and in the goods, and there are no adverse factors, a cash credit limit is allowed to continue for years together. Of course a periodical review would be necessary.

5. Bills Purchased
Bills, clean or documentary, are sometimes purchased from approved customers in whose favour regular limits are sanctioned. In the case of documentary bills, the drafts are accompanied by documents of title to goods such as railway receipts or bills of lading (BOL). Before granting a limit, the creditworthiness of the drawer is to be ascertained. Sometimes the financial standing of the drawers of the bills are verified, particularly when the bills are drawn from time to time on the same drawers and/or the amounts are large.

Although the term "Bills Purchased" seems to imply that the bank becomes the purchaser / owner of such bills, it will be observed that in almost all cases, the bank holds the bills (even if they are indorsed in its favor) only as security for the advance. In addition to any rights the banker may have against the parties liable on the hills, he can also fully exercise a pledgee's right over the goods covered by the documents.

Bills Discounted
Nuisance bills, maturing within 90 days or so after date or sight, are discounted by banks for approved parties. In case a bill, say for Rs. 10,000/- (approx. $223 USD) due 90 days hence, is discounted today at 20% per annum, the borrower is paid Rs. 9,500/- (approx. $211 USD), its present worth. However the full amount is collected from the drawer on maturity. The difference between the present worth and the amount of the bill represents earning of the banker for the period for which the bill is to run. In banking terminology this item of income is called "discount"

3. Deposits
A deposit account is a savings account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These 24

transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited.

4.Total Business


Return on Equity Return on Asset Cost-Income Ratio Gross NPA Ratio Net NPA Ratio Capital adequacy Ratio

PNB 2011 2012

22.13 1.34 41.27 1.79 0.85 12.42 18.52 1.19 39.39 2.39 1.52 12.63

BOB 2011 2012

21.42 1.18 39.87 1.36 0.35 13.02 19.11 1.12 37.55 1.53 0.54 12.95

BOI 2011 2012

15.58 0.82 48.49 2.2 0.91 12.17 13.57 0.72 42.47 2.34 1.47 11.95


Return on Equity
25 20 15 10 5 0 2011 PNB 2012 2011 BOB 2012 2011 BOI 2012 Return on Equity

Return on Asset
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2011 PNB 2012 2011 BOB 2012 2011 BOI 2012 Return on Asset


Cost-Income Ratio
60 50 40 30 20 10 0 2011 2012 2011 2012 2011 2012 PNB BOB BOI Cost-Income Ratio

Gross NPA Ratio

3 2.5 2 1.5 1 0.5 0 2011 PNB 2012 2011 BOB 2012 2011 BOI 2012 Gross NPA Ratio


Net NPA Ratio

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2011 PNB 2012 2011 BOB 2012 2011 BOI 2012 Net NPA Ratio

Capital adequacy Ratio

13.2 13 12.8 12.6 12.4 12.2 12 11.8 11.6 11.4 2011 2012 2011 2012 2011 2012 PNB BOB BOI

Capital adequacy Ratio



(Rs. in crore)

2012 2011
(Rs. in crore)

(Rs. in crore)

(Rs. in crore)

(Rs. in crore)

(Rs. in crore)

Net Profit Deposits Advances Total Business

4433 312899 242106 555005

4884 379588 293775 688861

4242 305439 228676 545339

5007 384871 287377 685885

2489 298886 213096 529315

2678 318216 248833 590210


Net Profit Deposits Advances Total Business 10.1 21.3 21.3 21.1

18.0 26.0 25.6 25.7

7.6 6.5 16.8 11.5



30 25 20 PNB 15 10 5 0 Net Profit Deposits Advances Total Business BOB BOI


Business standard : banking annual November 2011 Business line newspaper Annual report of BOB, PNB, CANARA BANK