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Submitted To: Submitted By: Prof. Raj lakshmi Aditi Jain Date: 4/10/10 Roll No. 17
Topic No. 1 2 3 4 5 6 7 8 9 10 11 Particulars Banking Sector in India Public Sector Banks/Private Sector Banks Karur Vysya Bank - Origin Vision & Mission Banks Profile Awards & Accolades Products and Services CRM Activities Technological Innovation Technicals [2008-09, 2009-10] Key Financial ratios Page No. 3 3-4 4 5 5-6 6 7-9 10 11 12 12-13
Report on Karur Vysya Bank Page 2
Banks have played a critical role in the economic development of some developed countries such as Japan and Germany and most of the emerging economies including India. Banks today are important not just from the point of view of economic growth, but also financial stability. In emerging economies, banks are special for three important reasons. First, they take a leading role in developing other financial intermediaries and markets. Second, due to the absence of well-developed equity and bond markets, the corporate sector depends heavily on banks to meet its financing needs. Finally, in emerging markets such as India, banks cater to the needs of a vast number of savers from the household sector, who prefer assured income and liquidity and safety of funds, because of their inadequate capacity to manage financial risks. The commercial banking industry in India started in 1786 with the establishment of the Bank of Bengal in Calcutta. The Indian Government at the time established three Presidency banks, viz., the Bank of Bengal (established in 1809), the Bank of Bombay (established in 1840) and the Bank of Madras (established in 1843). In 1921, the three Presidency banks were amalgamated to form the Imperial Bank of India, which took up the role of a commercial bank, a bankers' bank and a banker to the Government. The Imperial Bank of India was established with mainly European shareholders. It was only with the establishment of Reserve Bank of India (RBI) as the central bank of the country in 1935, that the quasi-central banking role of the Imperial Bank of India came to an end. After independence, the Government of India started taking steps to encourage the spread of banking in India. In order to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank taking over the Imperial Bank of India and integrating with it, the former state-owned and state-associate banks. Accordingly, State Bank of India (SBI) was constituted in 1955. Subsequently in 1959, the State Bank of India (subsidiary bank) Act was passed, enabling the SBI to take over eight former state-associate banks as its subsidiaries. To better align the banking system to the needs of planning and economic policy, it was considered necessary to have social control over banks. In 1969, 14 of the major private sector banks were nationalized. This was an important milestone in the history of Indian banking. This was followed by the nationalisation of another six private banks in 1980. With the nationalization of these banks, the major segment of the banking sector came under the control of the Government. The nationalisation of banks imparted major impetus to branch expansion in un-banked rural and semi-urban areas, which in turn resulted in huge deposit mobilization, thereby giving boost to the overall savings rate of the economy. It also resulted in scaling up of lending to agriculture and its allied sectors. However, this arrangement also saw some weaknesses like reduced bank profitability, weak capital bases, and banks getting Report on Karur Vysya Bank Page 3
burdened with large non-performing assets. To create a strong and competitive banking system, a number of reform measures were initiated in early 1990s. The thrust of the reforms was on increasing operational efficiency, strengthening supervision over banks, creating competitive conditions and developing technological and institutional infrastructure. These measures led to the improvement in the financial health, soundness and efficiency of the banking system. One important feature of the reforms of the 1990s was that the entry of new private sector banks was permitted. Following this decision, new banks such as ICICI Bank, HDFC Bank, IDBI Bank and UTI Bank were set up.
Private Sector Banks
In this type of banks, the majority of share capital is held by private individuals and corporate. Not all private sector banks were nationalized in in 1969, and 1980. The private banks which were not nationalized are collectively known as the old private sector banks and include banks such as The Jammu and Kashmir Bank Ltd., Lord Krishna Bank Ltd etc.5 Entry of private sector banks was however prohibited during the post-nationalization period. In July 1993, as part of the banking reform process and as a measure to induce competition in the banking sector, RBI permitted the private sector to enter into the banking system. This resulted in the creation of a new set of private sector banks, which are collectively known as the new private sector banks. As at end March, 2009 there were 7 new private sector banks and 15 old private sector banks operating in India.
Commercial banking in India can boast of a history of about 200 years. Though one could trace the history of banking back to the 19th century, the beginning of the last century saw the birth of many banks in India, set up by people with vision, commitment and national spirit.
The Karur Vysya Bank Limited, popularly known as KVB, one such endeavour, was set up in 1916 by two great visionaries and illustrious sons of Karur, the Late Shri M A Venkatarama Chettiar and the Late Shri Athi Krishna Chettiar to inculcate the habit of savings and provide financial assistance to traders and small agriculturists in and around Karur, a textile town in Tamil Nadu. Though the bank started with a seed capital of Rs.1 lakh, it has withstood innumerable changes and challenges in the past few decades and has profitably emerged as one of the leading banks in India without compromising on its fundamentals. Report on Karur Vysya Bank Page 4
The bank is professionally managed and guided by the Board of Directors drawn from different fields with vision, experience, knowledge and business acumen.
Shedding its inherent regional flavour, the bank has now spread its wings far and wide with over 320 branches in 13 States and 3 Union Territories in order to gain a pan India presence. The bank has been conducting its affairs meticulously to conform to all the prudential norms and exacting statutory regulations. KVB has consistently maintained strong fundamentals with a higher percentage of Capital Adequacy Ratio than mandated by the RBI. KVB has also been generating profits and rewarding its stakeholders with handsome dividends since inception. VISION DELIGHT CUSTOMERS CONTINUALLY BY BLENDING TRADITION WITH TECHNOLOGY TO DELIVER INNOVATIVE PRODUCTS AND SERVICES AT AFFORDABLE RATES THROUGH A PAN INDIA BRANCH NETWORK. MISSION
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Adapt technology to introduce innovative products and services as well as increase the value of products on an on-going basis and provide them at reasonable rates. Expand branch network to reach the top business centres, besides unbanked and under banked areas in the country; Strengthen the financials through effective deployment of funds and ensuring financial discipline while adhering to the regulator's guidelines Update the knowledge and skills of the human capital to provide quality customer support.
Ranked as the Best Mid-sized Bank by Business Today – KPMG for 2009 Was rated as the Most Efficient Small Bank by Business Today – KPMG and as the No. 1 old private sector bank by Financial Express – Ernst & Young for two years in succession (2006 & 2007) Ranked by The Banker, London among the TOP 100 Banks of the world for the year 2009 (One among 32 Indian Banks featuring in the list). Also one of only 6 Indian Banks featured in the list of top performers under Return on Assets Awarded the "Banking Technology Excellence Awards - 2008" for Best use of IT for Customer Service in Semi-Urban and Rural Areas and the "Banking Technology Excellence Awards - 2009" - Special Award – Best IT Infrastructure
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Management, 2009 by Institute for Development and Research in Banking Technology, Hyderabad Awarded the Gold CIO Award in the more than Rs. 1000 cr. category of the Enterprise Connect Awards ’09 instituted by CIOL (Cybermedia India Online Limited)-Dataquest recognizing the “leadership combined with vision and mission in deploying information technology for business benefits through pioneering and innovative use within and outside the organization” Received the CFBP Jamnalal Bajaj Award for Fair Business Practices in the Financial Sector Category. The award has been instituted by the Council for Fair Business Practices, Mumbai based on evaluation parameters like customer satisfaction, customer communication, employee motivation, social conscience, corporate social responsibility and compliance with laws.
KVB is one of the earliest banks in the country to achieve full networking of its branches under Core Banking Solutions, offering services through multiple delivery channels. Some of the noteworthy accomplishments of KVB are:
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Any Branch Banking Multicity Account facilities for both current and savings bank customers. Internet Banking On line utility bill payments facility through Billdesk On line shopping facility through CC Avenues e-commerce facilities backed with the safety of Verified by VISA Mobile Banking Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities at all branches VISA Debit card facility with a card base of over 1.70 million On-line rail and air ticket booking using KVB VISA Debit card VISA enabled Gift Card Access to over 335 KVB ATMs and over 13000 domestic ATMs under the VISA / NFS / MITR /Axis bank cluster and over 1 million VISA ATMs worldwide Card to Card and Card to account transfer of funds through KVB ATMs Payment of institutional fees through ATMs Payment for air tickets (Kingfisher) through KVB ATMs Mobile top up facility at KVB ATMs 24 X 7 toll free professional help desk services for all ATM, Internet Banking, Mobile Banking and e-commerce transactions.
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Financial landmarks of the bank:
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Total business of the bank was at Rs. 32946.85 cr. with total deposits at Rs. 19271.85 cr. and total advances at Rs. 13675 cr. as on 31.03.2010. KVB is the first Tamilnadu based private sector bank to cross the milestone figure of Rs. 30000 cr. total business. The net profit of the bank for the year was Rs. 336.03 cr. The net owned funds of the bank are Rs. 1619.98 cr. The bank has a Capital Adequacy Raito of 14.49% (Basel II) as against the RBI stipulated norm of 9%. The bank has one of the lowest net NPA ratios in the country @ 0.23%. The bank has been earning profits since inception and has been declaring dividend uninterruptedly. The bank has declared 100% dividend since 2003-04. For 2005-06, 2007-08, 2008-09 and 2009-10, the dividend was 120%
Products and Services:
Prestige savings account Freedom Saving Account Students Saving Account
Personal loan Home Loan
Debit cards Gift cards Travel cards
Thirumagal Thirumana Thittam Fixed Deposits Senior Citizen Deposits Gayathri Cash Certificate KVB Manimala KVB TaxShield
Health Insurance Travel Insurance Household Insurance Motor Vehicle Insurance Motor Insurance Shop keeper Package policy Insurance
Loan for Working Professionals Regular Savings Loan for Account business Rainbow Savings Education Account Loans Yuva Shakti Vehicle loans Savings Account
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Smart Savings bank Account No frills account
Demat Account India:
Karur Vysya Bank is a registered member (Depository Participant) of National Securities Depository Ltd. (NSDL). Karur Vysya Bank has been enrolled as a Depository Participant by NSDL; India's first depository. You can avail of all your depositoryrelated services and maintain a Demat Account in India by just opening an account with NSDL through Karur Vysya Bank.
As part of their financial planning process customers explore various financial instruments while arriving at their investment decisions. Acknowledging this requirement, KVB offers a range of financial services under one roof. Since Mutual Funds is a desired investment option of the customers, KVB has entered into tie-ups with leading Mutual Fund AMCs for the convenience of customers so that they can enjoy the experience of convenience banking. The entire range of schemes of the following AMCs are available at KVB's counters: Birla Sunlife Mutual Fund Franklin Templeton Mutual FUnd LIC Mutual Fund Reliance Mutual Fund SBI Mutual Fund Sundaram BNP Paribas Mutual Fund
For Corporate Current Account
Features Current Accounts may be opened by proprietary concerns, Partnership firms, Joint Hindu Families, Private and Public Limited Companies, Public Corporations,
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Societies, Clubs, Associations or Trusts, Executors and Administrators, Temples and Government Departments. • Internet Banking, Mobile Banking facilities are available. Terms and conditions Minimum balance to be maintained in Current Account is Rs. 3000/-. Penalty will be levied for non-maintenance of minimum balance. • Customers should provide satisfactory introduction, address and ID proof in order to comply with KYC norms. • Sufficient balance should be maintained in the account at the time of issuing cheques.
Multicity Current Account
Features and Benefits Several services available at par or at concessional rates. The monthly average balance maintained in the account for a month will determine the concessions that will be available to the customer in the succeeding month. For instance, if the MAB maintained in the account for a month is Rs. 1,00,000/-, the benefits pertaining to that balance will be available to the customer during the subsequent month. Should the balance drop or increase during the ensuing month, the benefits pertaining to that balance will accrue to the customer during the succeeding month.
The following type of NRI Accounts are offered by Karur Vysya bank NRE Rupee Accounts (Savings Bank & Current Accounts). Non-Resident Ordinary Account (Savings Bank & Current Accounts) FCNR Deposits NRO Deposits NRE Deposits
For Agricultural Purpose
Vehicle loans ID cards for credit Schemes
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Farmers two wheeler loans Green harvester Green trac
Green card Green plus card
Kishan mitra scheme KVB Happy kishan
Branch and ATM network: KVB has been using its ATMs to deliver multiple services beyond mere cash dispensing. Card to card / card to account transfer of funds and payment for air tickets of Kingfisher are other services made available through ATMs. The bank has a branch network of 335 and an ATM network of 376. The bank plans to add another 50 branches by the end of the financial year 2010 -11 Internet Banking Facility: Internet banking is available to all individuals, including both resident and nonresident Indians and Hindu Undivided Families as well as to Partnership firms and Corporates. You can perform all your routine banking activities online conveniently and comfortably from wherever you are. KVB’s Internet Banking is available with the security of Double Factor Authentication, which is a combination of a 4 digit PIN and a random number generated by an RSA token. The customer can make both financial and non-financial transactions through our Internet Banking Service. For joint accounts, the primary account holder alone can make financial transactions, provided all the account holders authorize the primary account holder to do so. While a TPIN will be provided to individuals to carry out financial transactions, they can avail of a crypto token, if they so desire. Bill payments Facility: KVB has entered into an arrangement with Billdesk and CCAvenue, two leading agencies that provide a bill payment facility. Both Billdesk and CCAvenue are tied up with over 3000 merchant establishments. The utility bill payment facility allows you to pay:
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Telephone bills Electricity bills Insurance premium
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Mutual fund investments
In addition to this you can also pay for:
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Credit card dues Travel and ticketing reservations Cable, DTH & Internet Service providers Other Miscellaneous payments for Cinema Ticket Booking, Donations, etc.
Mobile Alerts: The customer mobile phone can be used to receive intimations via SMS for balance enquiries, transaction enquiries, cheque status enquiries etc. This is possible with mobile alerts, which can be received through most of the service providers, for both GSM and CDMA enabled handsets. E-Commerce / VBV With the e-commerce service the customer can now make transactions over the Internet with added security. With the growing emphasis on security for online transactions, people are looking for the safest and most secure online payment channel. The bank recognized this need and have enabled an additional security mechanism called Verified by Visa (VbyV) to prevent fraud in e-commerce transactions over the Internet. The customer just needs to enter the VbV password in addition to their CVV and card no. to confirm their credibility when they make online transaction payments. It is to ensure that transactions and as secure as possible and the card is not being misused. Transferring Fund Facility: Real Time Gross Settlement (RTGS) is a network technology payment system. The transfer of funds by this mechanism happens instantaneously. Through RTGS, the credit to the beneficiary/payee is given within a few hours. There is no limit to geographical boundaries or clearing houses NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) National Electronic Funds Transfer (NEFT) is another network technology payment system. It ensures quick transfer of funds and is a highly safe and secure mechanism. All fund transfers for amounts less than Rs. 1 lakh are routed through the NEFT system.
KVB has initiated several customer friendly services by harnessing technology for banking operations and provides these services at an “affordable price”. Having migrated Report on Karur Vysya Bank Page 11
to the Core Banking Solution platform in 2005, KVB now provides convenience banking services like Any Branch Banking, Internet Banking, Utility Bills Payment, booking of air and train tickets on-line using VISA Debit Card, VISA Bill payment through Net Banking and Debit card are some of the other initiatives undertaken by the bank. Recently, the bank had been awarded the "Banking Technology Excellence Awards 2008" for Best use of IT for Customer Service in Semi-Urban and Rural Areas by Institute for Development and Research in Banking Technology, Hyderabad. The bank is governed by a set of policies guidelines for the various services in order to ensure complete transparency in its operations. Customers can refer to the relevant policy to understand the bank’s guiding principle on such services. This is a voluntary Code, which sets standards of fair banking practices for member’s banks of Indian Banks’ Association to follow when they are dealing with individual customers. It provides valuable guidance to the branches in their day to day operations. The Code applies to: 1. 2. 3. 4. 5. 6. Current, savings and all other deposit accounts Collection and remittance services offered by the Bank Loans and overdrafts Foreign exchange services Card products Third party products offered through our network
The salient features of the Code are:
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Branches have to act fairly and reasonably in all their dealings with the customers. Branches have to help the customers to understand how our financial products and services work by giving information about them in English/local language. Branches have to deal quickly and sympathetically in handling the customer complaints. Branches have to help the customers to choose products and services which meet their needs. Branches have to give clear information explaining the key features of the services and products Branches have to tell the customer what information we need from him to prove his identity and address to comply with legal and regulatory requirements (i.e. KYC Norms) Branches have to inform the customers to count notes and ensure correctness before leaving the cash counter.
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Technicals [2008-09, 2009-10]
A snapshot of the Bank’s performance under various parameters for the past three financial years is as follows: (Rs. In crores)
Operating Profit Net Profit Interest Expense Interest Income Interest Spread Interest Income / Total Funds Return on Assets Credit Deposit Ratio Capital Adequacy Ratio [Basel-1] Capital Adequacy Ratio [Basel-2] Operating Expense/Total funds
418.02 235.83 1035.68 1446.09 5.34 10.31 250.26 71.72 13.08 14.92 1.53
463.22 336.03 1193.05 1757.94 4.81 10.15 297.60 67.87 12.48 14.92 1.76
The Operating profit of the bank for the year ended 31st march 2010 stood at
Rs.463.22 cr.Compared to Rs.418.02 cr. As at 31st march 2009 registering a growth of 10.81%. The net profit of thebank grew by 42.48% to Rs. 336.03 cr. During the year 2009-10 from the Rs.235.84 reported I n the previous Fiscal. The total income increased by 17.16 % to Rs. 2009.92 Cr. During the year 2009-10 compared to Rs.1711.30 Cr. During the year 2008-09. Report on Karur Vysya Bank Page 13
The interest income for the year 2009-10 improved by 21.57%. The Earning per share of the bank improved by Rs.62.23 as on 31st nmarch from
43.71 as on 31st march 2009. The Certificate of Deposit Programme of the bank for INR20 billion are rated “P1+” by the Credit rating Agency CRISIL for INR 10 billion and another INR 10 billion by ICRA which has assigned the rating “A1+”.
www.kvb.co.in www.moneycontrol.com www.rupeetimes.com
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