Chapter-II

UNION BANK OF INDIA: A PROFILE

 CHAPTER - H
UNION BANK OF INDIA: A PROFILE

Introduction:
Union Bank of India completed 91 eventful years of service. Over these years,
the bank cares for the common man. The bank was originally incorporated in
Mumbai as “The Union Bank of India Limited” under the Companies Act 1913, on
November 11, 1919. After Nationalization, the name of the bank was changed to
“Union Bank of India”. The Head Office of the bank is situated at 239, Vidhan
Bahavan Marg, Nariman point, Mumbai. The bank is a public sector unit, with
60.85% share capital held by the Government of India and the rest 39.15% of share
capital is held by institutions, individuals and others. The Father of the Nation
Mahatma Gandhi opened this bank in 1921. The bank’s vision should be a shared
vision, i.e. the staff at all levels should actively involve in the transformation process.
Union Bank of India from the beginning had reached Himalayan heights, now ranked
third among the nationalized banks. Its branches spread all over the country and
serving more than 26 million customers. Union Bank of India has come a long way,
fostering India’s dreams. For over nine decades, Bank always put the customer
before all else and made him the centre of our universe. The bank has the habit of
making profits consistently for the last 91 years. On the technology front the bank has
taken early initiatives and 100% of its branches are computerized.

Over the years, Union Bank of India have earned the reputation of being
techno-sawy bank and is one of the front runners amongst public sector bank in the
field of technology. It is one of the pioneer banks, which launched Core Banking
Solution in 2002. Total business of the bank as on 31-3-2010 is ? 2,89,355 crore,
around 2805 branches, 2500 ATMs, 27,772 employees, and 55 regional offices. The
business of the bank is principally divided into three main areas: Corporate Financial
Services, Retail Financial Services and Agricultural Financial Services. Many
innovative products are developed using the technological plat - form.

With its prudent management and good governance, banks non- performing
assets were comparatively lower. In the post-reforms period i.e. from 1993 to 1996,

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the bank had doubled itself in size. The first safe deposit vault was formally opened
-j

on 22 April 1939. The bank worked with Export Credit Guarantee Corporation of
India in encouraging the exporters to insure themselves against buyers default or
exchange difficulties in the buyer’s country. Union Bank of India was one of the
earliest bank to obtain and operate whole turnover export finance guarantee from
ECGC. The bank had several strengths such as a strong branch network evenly
distributed, an extremely good work culture with a fairly standard of customer
services and a history of effective execution of projects.

Union Bank of India is one in top three nationalized banks in India, with
global presence.

> A financial supermarket, with leadership in identified spaces.

> A bank where customers come first.

> A top creator of shareholder wealth through focus on profitable growth.

> A young organization leveraging its experienced workforce.

> The most trusted brand, admired by all stakeholders.

> A socially responsible organization known for best corporate governance.

The Union Bank of India is the first bank to implement CBS at RRBs. CBS
was implemented at two branches of Kashi Gomti, Samyukt Grameen Bank and one
branch of Reva Siddhi Grameen Bank. In this initiative, the bank is providing
implementation, training and hand holding support to the RRBs. Bank is pioneer in
extending high-tech products to customers at metro and rural centers. UBI prepared
its first business plan for 1972-73, aspects covered by the plan were deposit
mobilization, deployment of resources and advances to priority sector. The plan was
designed to cover at great length both personnel planning as well as profit planning. A
lot of thrust was given to loan recovery, especially recovery of irregular, bad and
doubtful accounts of the bank.

Union Bank of India is firmly committed to consolidating and maintaining its

identity as a leading, innovative Commercial Bank, with a proactive approach to the
changing needs of the society. This is because of number of products and services
made available to its valuable customers. Today, with its efficient, value-added
services, sustained growth, consistent profitability and development of new

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technologies, UBI has ensured complete customer delight, living up to its image of,
“GOOD PEOPLE TO BANK WITH”. The key to the success of any organization
lies with its people.

VISION Statement of UBI:

“To become the bank of first choice in our chosen areas by building beneficial
and lasting relationships with customers through a process of continuous
improvement”.

At Union Bank of India they have the vision to be:

• The largest nationalized bank in India, with global presence.

• A financial supermarket, with leadership in identified spaces.
• A top shareholder wealth creator where growth is a passion.
• A young, innovative and adaptive organization leveraging its experienced
workforce.
• A bank where customers are supreme and the brand admired by all
stakeholders.
• An organization that cares for society and demonstrates best corporate

governance.

The following strategies were identified by the bank for achieving the vision:

a) Grow faster -- 5% over the growth rate of peer banks in business.

b) Do things differently -new methods of doing business.

c) Every one to contribute— share the vision and take effort to realize it.

d) Challenge the mind set— proves themselves that they can change.

MISSION Statement of UBI:

❖ To be customer centric organization known for its differentiated customer
service.

To offer comprehensive range of products to meet all financial needs of

customer.

❖ To be a top creator of shareholder wealth through focus on profitable growth.

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 ❖ To be a young organization leveraging on technology and experienced
workforce.

❖ To be the most trusted brand, admired by all stakeholders.

❖ To be a leader in the area of Financial Inclusion.

Organization of Union Bank of India:

Chart 2.1: Organization Chart

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 Organisational Profile of Union Bank of India:

Table 2.1: Organisational Profile of Union Bank of India as on 31.03.2010 is as

follows:

SLNo. Profile parameters

1 Establised 1919

2. Head office Mumbai

3. Shareholding pattern: No. of shares held

Government of India 28,00,00,000 (55.43%)

Non- Residents(FIIs / OCBs / NRIs) 8,81,69,325 (17.46%)

Banks / Financial institutions / Insurance companies 1,98,10,523 (3.92%)

Mutual Funds / UTI 4,42,74,751 (8.76%)

Domestic companies / Private corporate bodies/Trusts 2,32,58,361 (4.61%)

Resident individuals 4,96,04,940 (9.82%)

Total 50,51,17,900 (100)

4 Number of branches 2805

5 Foreign branches 2

6 Number of ATMs 2500

7 Computerisation/ Core Banking Solution (CBS) 100%

8 Number of staff 27772

9 Subdidiaries / Joint venture 2

Source: UBI Annual Reports

Principles of Bank Management:

■ Transparency: Decision taking in all areas are conducted in a transparent
manner. The management at UBI are open, consistent and system driven.
■ Open door: Management is accessible at all times to people and receptive to
ideas and grievances.

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■ Team work and cohesiveness: Collective decision taking and shared
responsibility are the need of the hour.
■ Loyalty to the institution: Management loyalty should solely with the institution.
They do not desire or demand any personal loyalty.

On the business and financial parameters management has drawn a 15- point
action plan to strengthen the position-10 of them will require field initiatives and 5
from corporate level.

Business Objectives of UBI:

‘Customer Service: From customer satisfaction to customer delight Customer
satisfaction can be achieved through constant effort to bring the products and services.
Customer delight is completely the initiative of the individual employee of UBI. In
today’s market place, customer retention is the most crucial task. To meet the retail
competition ensures to keep up to date and competitive products like housing loan, car
loan, utility payment service etc.

‘Profits: It is the quality and not the size of the balance sheet. Identify profit centers
and give them preferred attention in terms of infrastructure, skills, technology and
decision making.

’"'Technology: Technology is the driving force of today’s banking products like

anywhere banking, anytime banking, and funds transfer are to be taken care.

*Re-Setting Manpower: Extended hours of counter- service, relationship

management etc. will enable the customer to realize the untapped productivity of the
bank.

‘Business Strategies: Low cost deposits: Bank’s portfolio of low cost deposits, i.e.
savings and current deposits by identifying ways to improve services to customers.

‘Fee Based Services: Fee based services will bring more income to the bank. They
are to be marked effectively and focused attention for rendering dependable and
timely services.

*Counter Service Efficiency: Counter service options like single window, tellers,
express DD counters and Tele- banking.

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Awards and Commendations of UBI:
Union Bank of India is the proud recipient of many awards and recognition for
its services.

a. On 28th October, 2010 the Dale Carnegie Leadership award for the bank's
transformation initiatives undertaken through project Nav Nirman from Dale
Carnegie Training.

b. In 2010 Association of Business Communicators of India (ABCI) Gold award

for marketing and brand communications. This award is in recognition of the
transformation process undertaken by the bank from ABCI.

c. The prestigious Banking Technology awards 2009 for best user of business
intelligence from IBA-IFCI.

d. The prestigious Skoch-Challenger award 2009 for excellence in capacity

building through innovative concept of 'Village Knowledge Centre' as part of
financial inclusion initiatives.

e. In 2008-09 National awards for excellence in lending to micro enterprises.

f. In 1972-1973 excellent performance award on the exports front by the

Ministry of Commerce, Government of India. That was the first award
received by the bank from an outside agency.

g. In 1985 the bank was awarded first prize in region ‘B’, second prize in region
‘C’ and fourth prize in region ‘A’ by the Reserve Bank of India for
successfully implementation of the official language policy of the
Government in the year 1984.

h. Prestigious Golden Peacock National Training award 1998 for the best
training provider in the country by the institute of directors (2 times).

i. Reserve Bank of India Rajabhasha Shield for the year 1995 to 1996 and 18
offices of the bank were honored for better implementation of official
language policy in their respective Regions.

j. Corporate Excellence award for reputation on 26th June, 2006 from Rotary
International.

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 k. UBI was ranked as the 275th most valuable Global banking brand for calendar
year 2009, up from 351st rank in 2008. The brand value rating for Union Bank
is A+ (A means strong) compared to BB (BB means Average) in previous
year. The ranking is carried by brand value, bank's brand value increased by
148% during the calendar year 2009.

l. 7* Strongest bank in Asia-Pacific Region in 2009, from the Asian Banker.

m. Special citation at FIIA Awards 2009, Singapore for its 100% achievement
through in-house efforts.
n. The Gold Trophy and a Certificate in the Elite class for excellence in
marketing and Brand communication by Association of Business
Communication of India (ABCI)in March 2010.

Table 2.2: Important Milestones of the UBI:

Year Events

1919 Bank founded in Bombay on 11th November 1919.

1921 Bank’s Registered Office inaugurated by Mahatma Gandhi, Father of the

Nation.

1923 Came under the management of Central Bank of India.

1944 Freed from the tutelage of Central Bank of India.

1956 Received licence to deal in all foreign currencies.

1964 Bank’s 100th branch opened at Irinjalakuda in Kerala. Three private sector
banks viz. Perumbavoor Bank Ltd. Catholic Union Bank Ltd. Nadar
Mercantile Bank Ltd. were taken over.

1969 Bank Nationalized along with 13 other leading Banks and Mr. F.K.F.
Nariman became its first Custodian.

1972 Bank’s 500th branch opened at Nalbari in Assam. Implementation of rajya

Bhasha (Hindi) in the banking industry as a whole.

1974 Bank assigned 8 lead districts, 4 in U.P. and 2 each in Kerala and M.P. for
assisting rural development.

1975 Belgaum Bank Limited, a private sector bank was taken over by Union Bank,
adding as many as 40 branches.

1977 Bank’s 1000th branch opened at Chetganj, Varanasi, and U.P.

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1978 Bank became the first Nationalized Bank to publish Annual Report in Hindi
for 1977.

1979 Bank’s Diamond Jubilee Year celebrations inaugurated by RBI Governor, Dr.
J.G. Patel on 11th November, 1979.

1982 Bank received from the President of India, the ‘Government’s National
Award’ for outstanding export performance during 1979-80.

1985 Bank’s 1500th branch opened at Katila in Azamgarh (U.P.) Miraj State Bank
Ltd. with 26 branches amalgamated with the bank from 29“ July, 1985.

1994 Bank’s Platinum Jubilee celebrations held on 11th November, 1994.

1996 Bank’s 2000th branch opened at Tumkur in Karnataka.

1997 Bank’s Deposits crossed the ? 20,000 erore mark.

1998 Bank’s Advances crossed the ? 10,000 crore mark.

1999 Sikkim Bank Ltd. with 8 branches merged with the Bank.

2001 Bank’s total business crosses ? 50,000 crore mark. Staff Training College,
Bangalore acquires ‘ISO 9001’ Certification.

2002 Commercial import and onward sale of Gold to bullion dealers starts.
Depository services started. Cash Management Services launched. Public
issue of 18 crore shares with face value of ? 10/- at premium of ? 6/-
oversubscribed 5.22 times. Shares listed on Bombay Stock Exchange and
National Stock Exchange.

2003 Bank’s major IT initiative-Core Banking Solution- providing Anytime

Anywhere Banking along with Tele Banking launched. Bank starts selling of
non-life insurance products of New India Assurance Company Ltd. and
distribution of Mutual Funds. Offshore Banking Unit opened at SEEPZ++,
Mumbai.

2004 Launched Union e-remit. The bank was among the 7 new entrants to
Forbes- 2000 list of World’s Biggest and Most Powerful Companies.

2005 Bank achieved the landmark figure of total business mix of ? 1, 00,000 crore
as on 31st March 2005. Bank acquired number one position in terms of return
to investors as per study by ASSOCHAM. “Agri. Clinic” “Rural
Development and Self Employment Training Institutes” (RUDSETI) and
“Village Knowledge Centers” (VKC) were introduced to better equip the
rural masses with information of agricultural loan products, innovative
schemes and other information such as prices, weather conditions, etc. The
Bank was among the 30 Indian Companies listed by the Forbes Top 2000
Worldwide Firms.

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2006 Bank launched technology product to enable online payment of fees by
Exporters and Importers to Director General of Foreign Trade (DGFT). Bank
launched online booking for Indian Railway tickets and Indian Airline tickets
for its customers. Bank launched sale of Gold Coins of 99.99% purity. Bank
launched UNION MITR, Financial Education Services at 51 centers.

2007 Bank opened record number of 56 new branches across the country in a single
day, i.e. on 2nd January, 2007. Bank opened its first Bio-metric ATM and
1001st CBS branch in Sivagangai, Tamil Nadu. Bank opened India’s highest
altitude ATM at 14300 ft. High in Serethang, Nathulla, Sikkim. Bank opened
its Representative Office in Shanghai, Peoples’ Republic of China.

2008 First large Nationalized Bank to achieve 100% CBS networking. Joins hands
with KBC Asset Management NV (KBC AM) for form a Joint Venture Asset
Management Company in India. Bank opens full fledged Overseas branch in
Hong Kong. Bank ties up with Wealth Advisors India Pvt. Ltd. and Edelweiss
Securities Ltd. for Wealth management Services. Bank unveils new logo and
launches re- branding initiative. Adjudged as the “Best Bullion Dealing
Bank” for the year 2007-08 by the Bombay Bullion Association. Bank crosses
the ? 2, 00,000 crore mark in total business. U mobile launched. Bank is the
first Public Sector Bank to offer Mobile Banking facility.

2009 Mr. P. Chidambaram, Honorable Home Minister, inaugurated the Bank’s

2501st CBS branch at Banjara Hills, Hyderabad. Bank launched Advanced
call centre at Powai, Mumbai. Bank sponsored Rewa Siddhi Gramin bank
becomes the first RRB in the country to achieve 100% CBS connectivity. The
bank attained second rank in National awards for excellence in lending to
micro enterprises 2008-09.

2010 The bank opened its 5th overseas representative office in London, U.K. in
April 2010. The bank already has 4 representative office in Shanghai,
Beijing in PRC, Abu Dhabi in UAE and Sydney, Australia.

Unique Achievements of UBI:

1. In a single day i.e. on 2nd January 2007, the bank opened 56 new branches
across the country.
2. On 9th March 2007,1000th CBS branch opened at Sivgangai in Tamil Nadu.
3. On 5th November 2007, three new initiatives of the bank were:

• Launching of 12 SME Sarals for speedy processing of MSME loans.

• 32 Retail Asset Branches (Union loan points).
• ‘On-line’ sanction of educational loans and the issuance of Bio - metric
smart cards for hawkers of Mumbai.
4. On 18th February 2008, the bank launched three new technology based services

for the customer’s convenience:

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 • Online fund transfer through RTGS.
• Online application for products.
• Online Grievances Redressal.
5. On 5* September, 2008, launch of two prepaid cards- Gift card and Payroll card,

as both cards were VISA enabled. Gift cards came in denominations ranging
from ? 500 to ? 50000 and were ideal for gifting on all occasions like birthdays,
marriages etc.
6. For the progress achieved in areas of corporate governance, corporate social
responsibilities as well as recognition bank earned the name as the Best Bullion
Dealing Bank for the year 2007-2008.
7. UBI has taken up three unique initiatives for addressing the needs of specific
segments:
(i) Bio-metric card based support to milk powers.
(ii) Remittance facility to migrant labowers.
(iii) Loan to members of primary agricultwe credit society.

UBI Working for the Down-Trodden:

The bank prepares the following schemes to help the downtrodden:

• In 1976 financial assistance to cycle rickshaw pullers.

• Financial assistance to the SC and ST members, for pwchase of sheep and
milch cattle, along with financing for pwchase of bullocks and bullock carts.
• Financial assistance to small and marginal farmers, landless labowers and
released bonded labowers for pwchasing surplus banjar land on lease-cum-
ownership basis in Guntw, Krishna and Parkas districts and 662 beneficiaries
were identified in the first phase.
• On 31st October, 2008 the bank launched an attractive scheme for monthly
savings with flexible installments for systematic investment and secwed return
under the name “Union Monthly Plus”. Within 5 months, the bank mobilizes
28.81 lack accounts with ? 147.65 crore of deposits as of March, 31st 2009.
• The Prime Ministers integrated wban poverty eradication programme (PMI
UPEP) had been launched in January, 1996 and credit was to be extended to
those involved in self employment.

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Information Technology of the Bank:
In consonance with the bank’s long term IT strategy adopted in the year 2000
to address the rapidly changing customer expectations and competition from new
generation banks, the bank has successfully implemented CBS in all branches. Apart
from the migration of all branches to CBS, centralized MIS and other initiatives were
developed and implemented. To provide enterprise- wise comprehensive software
solution for lending processes, transactions and simultaneously paying heed and
attention to important areas such as rating, monitoring, NPA management and MIS in
an integrated manner, Lending Automation Solution (LAS) was implemented at all
branches of the bank.

The bank has implemented Information Security Management (ISM) system

for the data centre, which is ISO 2001; 2005 certified. This certification is the highest
standard of information security for data centers. In addition to Centralized Operating
System (COP), patch management and Anti-virus management has been implemented
to ensure that individual personal computers (PCs) in the bank’s network are not
compromised. The Network Admission Control (NAC) is in place to monitor isolate
and repair PCs that pose security threat to the bank’s network. The bank participated
in the prestigious financial insights innovation awards competition conducted by
Asian financial services congress, Singapore and was awarded the Special Citation for
its 100% Core Banking Initiative.

Nav Nirman - A Transformation Initiative of UBI:

Bank aspires to be a financial supermarket, with leadership in identified spaces
and a bank trusted by customers, shareholders and other stakeholders. Towards this,
the bank launched a transformation process named “Nav Nirman” in June, 2007. The
Nav Nirman initiative gained momentum with investments in branding, technology
and people skills. The importance and change in the context of following
developments:

1) Technology has completely changed the way banking is done today. Hence,
the first reason for change is to redraw the bank’s working system by
leveraging on technology.
2) The demography of the country has undergone rapid change, making India one
of the youngest countries in the world with close to 40 percentage of the

47
 population moving towards 18-35 age groups. Hence, as an organization, the
bank needs to establish connect with this segment, which is the key challenge
in the transformation process.
3) Competition has redefined the market place requiring new skills in marketing,
selling and servicing the clients. With the opening up of Indian economy to
foreign banks, the competition will get intensified further.

Through a historic metaphor “Bank have re-design the aircraft while flying”—
captured the essence of Nav Nirman, that was coined to capture the desired outcome.
Union bank’s position was symbolized by the picture of a small aircraft with limited
flying capability which, if not transformed would come in the way of flying at altitude
in the days ahead. What was required, therefore, was the ability to redesign the
aircraft while in flight. This metaphor sums up the situation of the bank, namely,
requirement or necessity of transforming itself while moving forward without the
luxury of stopping to do so. The entire transformation process was launched under the
title of a project Nav Nirman. The main objective of this project is to convert the bank
into a customer centric organization and to achieve its vision.

Project Nav Nirman had a substantial impact on the working culture of the
bank and largely changed the mindsets of staff members. Substantial gains had been
registered as result of project Nav Nirman. The change was both in terms of products
and processes and the attitude of the people.

Based on the capacities that have built in the first phase of Nav Nirmn
initiatives, the bank has set a new vision in terms of customer experience-“to become
the bank of first choice in chosen areas by building beneficial and lasting relationship
with customer through a process of continuous improvement”. In keeping with this,
bank identified thrust areas in the next phase of initiatives, which will substantially
transform the customer experience with the bank. The goal of the key thrust areas is to
become customer centric organization, to offer range of products.

Key areas of customer centric: 1) Customer service excellence, 2) HR

transformation, 3) Rapid branch expansion, 4) Financial inclusion, 5) Risk
management and 6) Wealth management.

As all unionites will remember, the bank had achieved several milestones as
part of the Nav Nirman project. These included creation of specific business verticals,

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100% CBS roll-out, creation of ULPs and SME sarals and a high visibility branding
campaign that has received tremendous response from the customers and staff and
given the banks a strong foundation for further progress. Bank has now launched ‘Nav
Nirman- the next step’ with an aspiration to become the number one retail bank in
‘customer service excellence’.

Table 23: Progress in various Parameters since launch of Project Nav Nirman

(? In crores)

Parameters 2007 2008 2009 2010

Market share of deposits (percentage) 3.20 3.12 3.44 3.52

Market share of advances (percentage) 3.20 3.12 3.32 3.33

Market share of total business 3.20 3.12 3.39 3.44

(percentage)

Share price movement (?) 103.90 141.00 147.25 292.95

Return on average assets (percentage) 0.92 1.26 1.27 1.25

NIM percentage to average earning 3.40 2.93 3.24 2.71

assets

Return on equity (ROE) (percentage) 17.88 24.70 24.79 23.69

Book value per share (?) 93.60 111.19 137.87 173.38

Earning per share (EPS) (?) 16.74 27.46 34.18 41.08

PE ratio (percentage) 6.21 5.13 4.31 7.13

Price / Book value per share 1.11 1.27 1.07 1.69

Source: UBI Annual Reports

Table 2.3 depicts the overall performance of the bank from the year 2006-07 to
2009-10. The various determinants of these parameters show a year wise
establishment of its growth and development banking business since launch of project
Nav Nirman. The market share of deposits, advances and total business percentage
except in the year 2008 it is sustained. On the other hand the market response to the
movement of share price is too well built The other considering parameters like EPS,
ROE, BV, PE, and ROA are also performed in expectancy level of the management.

49
 As a part of the Nav Nirman initiatives, the bank introduced a software
support system called the Lead Management System in December 2008. The system
enables all the employees of the bank to introduce leads for product and services to
existing and new customers, which are then taken up by the concerned branch
Managers, CRMs, and Marketing Officers for converting them into product offerings.
Lead Management System has thus become an integral part of the working culture in
participative growth of the organization and in enhancing customer relationship value.

“Union Dhara” Journal ofUBI:

Bank’s in house journal ‘Union Dhara’ providing excellence in-house
communication, promoting greater understanding and awareness about the bank and
also providing a medium for bringing their creative talents in the bank. With an
excellent layout, contents and coverage, the in-house journal bagged 8 all India
prestigious awards including one from association of Business Communication of
India (ABC) for the 21st year in succession and third prize from Reserve Bank of
India for best house journal in bi-lingual house journal category.

Union Parivaar People Soft Package:

With the technology support from union parivaar soft package, the personnel
department could effect speedier and timely release of Employee compensation, Staff
welfare benefits, Terminal benefits, staff advances and reimbursements leading to
internal customer delight. The bank is committed to further technology up gradation
for providing better staff services in the days to come.

Inclusive Banking and Union Bank of India:

Inclusive growth has attained a priority in the government’s agenda. Though
the inclusive growth is a broader agenda and has many facets, financial inclusion is
the most important starting point. Unless banks are capable of bringing the vast
section of excluded segment to the financial system, other benefits cannot also
percolate down. Thus inclusive banking emerged as the dominance concern of the
government. In keeping the directions of RBI, Union Bank of India has taken the
following initiatives:

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1. Introduction of “No- Frills” Accounts:

To achieve greater financial inclusion, the bank is making available a basic

banking “No Frills” account either with nil balance or very low minimum balance.

2. Introduction of General Credit Card / Bhumeen Green Card (GCC):

The bank has introduced General Credit Card Scheme for the customers in
rural and semi-urban areas. These cards will operate like Kisan Credit Cards and
hassle free credit. Here, facilities are provided without insistence on security. To
provide easy credit facilities to tenant farmers, oral lessees, sharecroppers, landless
labourers, the bank has also introduced Bhumeen Green Card. These BGC facilities
for those farmers who are unable to give any tangible security in the absence of any
title of land on which they raise crops. To inculcate the habit of group based financing
to tenant farmers, the bank is financing through the mechanism of Joint Liability
Groups.

3. Business Facilitators and Correspondents Model:

To ensure greater financial inclusion, the bank is appointing business

facilitators and business correspondents to offer services at the doorsteps of the
customers. This results in reduction of transaction cost, making outreach a viable
business proposition. The primary school teachers, ex-army personnel, heads of SHGs
having good track record are preferred to be engaged as business facilitators. The
bank has also made tie-ups with various agencies as business facilitators or business
correspondents.

4. Formation of Farmers Club:

Farmers' club is an initiative by Union Bank of India to encourage farmers in

villages. This initiative will help in an overall adoption of better farming practices.
The main objective of this is to provide a platform to the farmers to solve their
problems themselves. Another objective of this is to adopt better farming practices
through dissemination of new practices and improvement of existing practices. Any
farmer can become a member of this club. These clubs are managed by the fanners
themselves with the help of the Bank's rural branches. Farmers clubs are formed for
the development of the farmers through credit, technology transfer, awareness and
capacity building. With a view to retain the existing clients there is a need for

51
strengthening bank customer relationship and for which the bank is encouraging
formation of farmers club.

5. 100% Banking Habit Villages:

Bringing more number of villages as 100% banking habit villages is to be

strengthening by giving them access to banking services atleast through opening a
savings bank account to inculcate the banking habit in rural villages. This offers the
bank an opportunity to tap the large untapped rural market available for financial
services. To provide the banking services to each and every household in the villages,
the bank has initiated the exercise of making the banks command area villages, as
100% banking habit villages.

6. Village Knowledge Centers (VKC):

The bank has introduced the concept of VKCs for mutual benefit of the
farmers and the bank. This is a unique initiative by the bank to empower the local
population in the rural areas. VKCs are small units attached to rural branches of the
bank. Each centre is equipped with a computer with internet facility. An official of the
bank acts as a relationship manager to the local population. Farmers are encouraged to
seek information on market prices, agricultural practices, weather conditions etc. This
helps the farmers to improve productivity of his farm. The farmers clubs and other
initiatives help the farmers to increase their earning capacity.

Village Knowledge Centre (VKC) serves as information dissemination centre,

providing latest information or knowledge in the field of agriculture starting from
crop production to marketing. “VKC in-charge” looks after the operations of the
VKC. For contribution to nation building, UBI has taken various initiatives to
promote inclusive growth and to achieve sustainable development. First VKC of the
bank was setup in May-2005. For this initiative the bank has been awarded die
prestigious “Skoch Challenger Award” in March-2007 presently the bank have more
than 200 VKCs across the country. For all round socio economic development of
villages, more than 100 villages across the country have been adopted through
selected VKCs under "Union Adarsh Gram” project.

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How Union Bank VKCs Function:
Inclusive growth is achieved by empowering rural community with
information, knowledge and access to better livelihood opportunity. VKCs work as a
relationship manager between the bank and the farmers.

For Improving Agriculture:

1. Imparting knowledge on new development, improved methods of

cultivation/technologies in the field of agriculture.
2. Dissemination of weather data and agro climatic conditions, latest information
on prices of agriculture produce to farmers.
3. Imparting knowledge on diversification of agriculture and developing farm
based enterprises.
4. In the command area of a VKC by increased income levels and higher
standards of living.

For Community Development:

1. Formation of at least five Self Help Groups and at least one to two farmers
club in the command area of VKCs.
2. Providing information about various Government sponsored schemes.
3. Coordinating with various Government departments for development
activities.
4. Enable the group to graduate economically for taking up income generating
activities and increasing their credit absorption capacity.

For Financial Inclusion:

1. Providing financial counseling to at least five rural people in a day for better
management of their financial needs.
2. Making command area villages as 100% banking habit villages.
3. Informing farmers about various schemes/products of the bank suiting their
specific needs.
4. Ensure that every family in the command area villages has atleast one active
bank account.

53
Village Knowledge Centre Portal:
To support the activities of VKC, UBI has launched “Village Knowledge
Central Portal” in the bank internet. VKC Portal can be accessed for the following
information:

• Past 24 hours weather report and today’s weather forecast.

• Weather Forecast for the next 5 days.
• Weekly crop advisory.
• Kissan call centre.
• Market Prices of agriculture commodities.
• Latest technologies in the field of agriculture.
• Animal husbandry.
• Farm-based enterprises.
• Model bankable projects.
• Government schemes related to agriculture.
• Websites of state agriculture departments.
• Websites of agricultural institutes.
• Website of Ministry of rural development.

7. Financial Literacy:

The success of financial inclusion depends on the extent of financial literacy.

As part of as financial stability, there is need for financial literacy. Financial
education is a supportive activity to financial inclusion. The bank has also taken steps
to address another vital requirement i.e. financial education. The bank’s success with
VKCs has enabled the bank to setup financial education services centers.

Union bank of India took proactive steps towards the goal of financial
inclusion and offered a number of products. Up to 31 March, 2010 bank opened 44,
14,417 no-frill accounts. Bank has also taken up the assignment of making payment
of wages under Mahatma Gandhi National Rural Employment Guarantee Scheme
(NREGS) and payment of pension under Social Security in Andhra Pradesh, Madhya
Pradesh and Kerala. The bank has enrolled 20,33,597 beneficiaries across the country
at the end of March, 2010. Bank has adopted both, branch and branchless models.
About biometric smart-card, bank provided biometric cards to 1,46,849 Hawkers

54
living at Dharavi and Andheri in Mumbai and Karaikudi in Tamil Nadu and
Chandigarh city. Bank set up 13 Rural Self- Employment Training Institutes
(RSETIs) in all its Lead Districts like Emakulam, Iddukki, Varanasi, Mau, Azamgarh,
Ghazipur, Jaunpur, Bhadohi, Chandauli, Samastipur, Khajaria, Reva, Singrauli and
Sidhi. The main objective of these institutes is to train youths in rural and semi-urban
areas to take up self-employment ventures, to conduct various vocational and human
resources development training programmes and to provide consultancy services etc.

The Bank, as a good corporate citizen, has stepped into the arena of
counseling the common man to help them and lead a decent and honorable life in the
future days to come. The bank takes this as a privilege to shoulder the social
responsibilities as a noble service of mankind. With all good intensions, the bank is
helping the individual who is burdened with problems of debt. Financial education
services are provided at these centers to all strata of the society in a friendly
atmosphere and free of cost. In many cases, there is a lack of awareness not only
about products and services but also about where to go for help to get the information.
At Union Bank of India counseling centers, any individual can discuss his problems
and get solutions in the form of information or advice. Complete confidentiality is
assured to the individual. There are countless people in search of guidance from an
authenti!^ source and the bank through its counseling centers will fit into this role,

even to those who are not its customers. Benefit will be given equally on all those
who seek help. The counselor acts as a friend indeed to any person approaching him
for guidance.

8. Union Mitr:

Union Mitr is specially designed for the rural population. It facilitates financial
education to all strata of people. Union Mitr has been launched initially in the rural
areas and will subsequently be taken to other areas of the country. As part of bank’s
corporate social responsibility initiative to create financial awareness, bank has
established 90 Union Mitr Centers. On 11 November, 2006 the bank celebrated the
88th Foundation Day in great style at the Shanmukhananda auditorium in Mumbai. On
this day, the bank launched ‘Union Mitr’ for Financial Education Services at 51 rural
centers across the country. The objective of ‘Union Mitr’ is to spread financial
literacy among rural folks, counsel them on various issues related to credit,

55
availability as well as use of financial products/services, savings and investment
avenues and guide diem about management of existing debt.

9. Union Adarsh Gram (UAG)

Village Adoption Scheme:

The bank has adopted 101 villages across the country for the UAG Endeavour.
The officers of the VKCs in consultation with the branch manager and regional
manager have identified a backward village near their command area and have
prepared a credit cum development plan for the village for basic needs in rural
infrastructure, production, investment and consumption needs, besides banking.

Development Activities Undertaken:

1. Banking Habit Among Villagers:

The banking habit in the village was almost non-existent and the villagers used
to fall prey to the greedy hands of money lenders for all their financial needs. With
continuous motivation and knowledge transfer from the branch people to the villagers
about the merits of having bank accounts, now large number of families has No-Frills
accounts with our bank branch with sizeable balances.

Union Bank of India prepares the project of improving the living conditions in
select villages under the project Union Adarsh Gram Yojana. In 4 lead districts viz.
Emakulam, Idukki, Azamgarh, Jaunpu, bank has achieved 100% financial inclusion,
as of March, 2010. Bank also has 5 financial literacy and credit counseling centers.
These are located at Varanasi, Azamgarh, Chandauli, Jaunpur and Mau, all in die state
of Uttar Pradesh. The bank extended micro-credit through specialized products like
Bhagya Clean Loan and Saubhagya deposit-linked loan under branchless banking to
meet the needs of hawkers repayable in weekly / fortnightly installments.

The bank has tie up with National Dairy Development Board (NDDB) for
facilitating accurate and prompt payment to the milk pourers through bio-metric card
technology. This provides a complete end to end solution to the milk pourers for all
their payment and financial needs. UBI started with 1000 milk pourers in Nanded has
now with about one lakh pourers across 6 locations in Maharashtra, Gujarat, Andhra
Pradesh and Uttar Pradesh through 491 touch points and with a total disbursement of

56
? 340 crore. The bank introduced 2 customized medium term loan products to provide
comprehensive financial solution:

1. Kamadhenu for purchase of milch cattle.

2. Kalpataru for other dairy related needs.

Union Bank of India has introduced specially designed remittance facility for
the urban poor. At present, bank is covering two money-moving corridors, namely (a)
Mumbai Eastern U.P. and Bihar corridor, (b) Delhi- Eastern U.P. and Bihar corridor.
About 3 lakh customers were enrolled and amount remitted is ? 112 crore involving
2.4 lakh transactions. Bank also extended inclusive banking to the members of
Primary Agricultural Cooperative Societies (PACS) in the state of Andhra Pradesh.
The PACS are not in a position to meet the demand of the farmer members for
cultivation of crops and other investment finance in agriculture. In February, 2008 a
pilot project was initiated by the bank at Nizamabad District of Andhra Pradesh with
an initial outlay of ? 2 crore. Later on, this was extended to Chittoor and East
Godavari districts with outlay of ? 20 crore for crop loans and ? 1 crore for vehicle
loans called Kisan Chakra. Now bank extended ? 11 crore of loans to 3,000 farmers of
58 PACS. As its next stage, bank is extending this to 650 PACS covering around 1.25
lakh farmers with an outlay of ? 500 crore. The bank has been implementing SHGs
model in rural areas and JLG (Joint Liability Group) model in urban areas. Bank has
formed SHGs and credit-linked over one lakh SHGs so far, about 80% of which are
women beneficiaries.

Bank has been constantly innovating product lines and adopting new-age
technology to make the services easily accessible, transparent, secure and even more
efficient. Bank initiatives in the area of financial inclusion bring several unbanked
areas into the banking fold, determination to create more and more 100% banking
habit villages. Introduction of biometric cards for the language challenged, special
financial offerings and credit for people below the poverty line.

The branch and the village panchayat had taken a mandate that all these
reform works which have taken place till date is just a small beginning and would act
as inspiring steps. This is required to keep up the tempo of development work in the
future to make the village as a model for ail other 101 Union Adarsh Grams. The
future plans like constructing roads for easy accessibility, solar lighting for continuous

57
supply of electricity, continuous supply of portable water, community toilets for better
hygiene, a permanent shed for Village Panchayat Meetings, all the villagers having
reasonable income and lifestyle and education for all. The Village people were so
touched by the development work carried out by Union Bank of India that they had
put up a welcome board at the entry of the village which reads 'Union Adarsh Gram -
Nagepur, Welcomes You'.

Nokia and Union Bank of India join hands for Mobile Inclusion
Initiatives:
Union Bank of India together with Nokia recently announced the commercial
launch of “Union Bank Money Powered by Nokia” across India. The services
specifically targets users, who do not have a bank account today, by providing access
to financial services through their mobile phones and driving financial inclusion.
Technology is a great enabler for banking services and UBIs partnership with Nokia
will help them offer ‘Any Time Any Where’ financial services to consumers across
the country. Union Bank Money will be the single largest network in India to provide
mobile financial services to consumers in urban as well as rural areas to tap the
unbanked population.

Network and Distribution:

The business is grouped under various verticals and well defined “Business
Strategic Units. Bank has a network of more than 2500 service outlets which includes
specialized branches for MSME (SME SARALS), coiporate credit, union loan points
for retail products etc. Bank has representative offices in Abu Dhabi and Shanghai
and is in the process of opening its office in Sydney, Australia. A full fledged
overseas branch was opened in Hong Kong. To serve the varied banking needs of the
NRIs, bank has placed number of Marketing Officials at various centers in UAE and
Shanghai. Bank has planned to deploy more number of Marketing Officials at many
other places. Bank plans to open 500 new branches for which it has received licences
from RBI. The bank will accelerate its presence in the global market space at key
locations in the next two years as part of the vision strategy.

Network expansion has been an important all-round growth of the bank. The
bank has a well and widely spread network of branches in India. All these branches
are under Core Banking Solution (CBS). During 2008-09, the bank opened 197

58
branches. This included up gradation of 48 extension counters. Area wise position of
the branches of the bank or growth of bank branches of UBI in Rural, Urban, Semi
Urban, and Metropolitan.

Table 2.4: Position of the Number of Branches of the Bank

(In Number)

Year Rural Semi Urban Urban Metropolitan Total

843 459 468 366 2136

1999-2000
(39.47) (21.49) (21.91) (17.13) (100)

846 447 423 340 2053

2000-2001
(41.21) (21.77) (20.60) (16.56) (100)

843 340 423 417 2023

2001-2002
(41.67) (16.81) (20.91) (20.61) (100)

810 452 421 337 2020

2002-2003
(40.10) (22.38) (20.84) (16.68) (100)

794 457 426 343 2020

2003-2004
(39.31) (22.62) (21.09) (16.98) (100)

795 465 445 346 2051

2004-2005
(38.76) (22.67) (21.70) (16.87) (100)

795 479 452 356 2082

2005-2006
(38.18) (23.01) (21.71) (17.10) (100)

751 519 490 446 2206

2006-2007
(34.04) (23.53) (22.21) (20.22) (100)

761 556 536 508 2361

2007-2008
(32.23) (23.55) (22.70) (21.52) (100)

563 607 625 762 2558

2008-2009
(22.01) (23.73) (24.43) (29.79) (100)

804 742 657 602 2805

2009-2010
(28.66) (26.45) (23.42) (21.46) (100)

Source: UBI Annual Reports

Note: Figures within parentheses denotes the percentages ofthe respective figure to the respective row totals.

59
 The above table 2.4 clearly indicates that, it holds the Government policy of
increasing the branches in rural areas. Its branches in rural areas are in the increasing
trend up to 2002, afterwards it is in fluctuating trend. This also indicates that out of
the four classifications in branches the whole rural branches only has the major part to
add in its expansion. The other areas of branch expansion is in fluctuating trend.

Diversification:
Union Bank in partnership with Bank of India and Dai-Ichi of Japan has
formed a subsidiary for distribution of life insurance products. Bank has signed an
agreement with Belgian KBC group for setting up a joint venture AMC in India.
Union Bank has signed MOU with NSIC for training and setting up incubation cum
training centers to promote first generation entrepreneurs in MSME segment. Bank
has announced opening 100 specialized business banking branches across the country
to focus exclusively on MSME sector with turn around time of 2 weeks for sanction
of proposals. Bank has launched mobile banking facility i.e. “U mobile”, which
facilitates limited transactions and other services through mobile phones.

Dividend history of UBI:

Table 2.5: Dividend History

(In Percentage)
SL No. Financial Year Rate of Dividend Date of Payment
1. 2002-2003 21% 02-07-2003
2. 2003-2004 20% (Interim) 17-02-2004
3. 2003-2004 15% (Final) 07-07-2004
4. 2004-2005 20% (Interim) 03-03-2005
5. 2004-2005 15% (Final) 27-06-2005
6. 2005-2006 35% (Final) 23-06-2006
7. 2006-2007 15% (Interim) 24-01-2007
8. 2006-2007 20% (Final) 03-07-2007
9 2007-2008 40% 08-07-2008
10. 2008-2009 50% 03-07-2009
11. 2009-2010 55% 09-07-2010
Source: UBI Annual Reports

60
 Table 2.5 shows that the history and the type of dividend payment and its rate
of dividend. The bank has attained to create value of its shareholders since from 2002-
03 to 2009-10. On the other hand it has reached the peak level of payments of
dividend i.e., 55% in 2009-10. The bank timely announces its interim payments to
shareholders. The soundness and the market response to the timely announcement of
dividends show to the profitability and business worthiness.

Banks Philosophy on Corporate Governance:

Union Bank of India has tradition of good corporate governance practices.
Bank has corporate governance policy in place and laid down code for its Directors on
the Board and its Core Management comprising of all General Managers. The bank
has laid emphasis on the cardinal values of fairness, transparency and accountability
for performance at all levels, thereby enhancing the shareholders value and protecting
the interest of the stakeholders.

The bank considers itself as trustee of its shareholders and acknowledges its
responsibility towards them for creation and safeguarding shareholders wealth.
During the year under review, the bank continued its pursuit of achieving these
objectives through the adoption and monitoring of corporate strategies, prudent
business plans, monitoring of major risks of the bank’s business and pursuing the
policies and procedures to satisfy its legal and ethical responsibilities.

Grievance Redressal Policy:

Bank has set a vision to emerge as number one bank in terms of customer
experience. Towards this end, bank remain alert and sensitive to customer complaints
and uses it as a tool for removing deficiencies in service at all levels. The policy also
takes into account the increasing touch points where standard of customer service gets
impacted significantly. Hence, all the delivery channels viz., ATMs, Phone Banking,
Mobile Banking, Internet Banking will be given due importance in redressing
shortcomings based on customer feedbacks. Likewise, channels like call center and
online complaints will be given added focus both in receiving as well as redressing
customer grievances. The adoption of banking codes and standards plays a greater
responsibility of the bank to meet higher standard of customer expectation. Bank will
use customer education, customer awareness and transparency as tools for reducing
grievances and enhancing customer satisfaction.

61
Internal Mechanism to handle Customer Complaints /
Grievances:
(a) Three Tier Grievance Redressal System:

The bank will have public grievances mechanism functioning at three levels
i.e. Branch, Regional and Central office level. All complaints received at every level
will be immediately acknowledged and dealt appropriately. The bank also have an
online grievance redressal mechanism whereby grievances can be lodged online and
are attended as per the time schedule with an inbuilt escalation process by which the
complaint get escalated to higher offices in case of non fulfillment within time. The
facility has been provided to customer to register the complaint on-line for speedy
redressal. Call centre is another avenue to record complaints and deficiencies in
service. Calls to call centre are processed through a well laid down fulfillment work
flow within a committed time and escalation provision.

(b) Nodal Officer and other Designated Officials to Handle Complaints and
Grievances:

Bank appoints a nodal officer in the rank of General Manager who is

responsible for implementation of customer service and complaint handling for the
entire bank. At field level, Regional Heads will be designated to handle complaints /
grievances in respect of branches falling under their control.

(c) Mandatory Display Requirements:

As per mandatory requirements the bank provides the following;
• Complaint / suggestion box at each office of the bank.
• Complaint books and registers to customers to register their complaints.
• Compliant form along with the name of the nodal officer.
• Appropriate arrangement for receiving complaints and suggestions.
• The name, address and contact number of Nodal Offieer(s).
• Contact details of banking ombudsum of the area.
• Code of bank’s commitments to customers / Fair Practice code.

62
Committees on Customer Service in Bank:
Customer Service committee of the Board:

The committee is headed by Chairman and Managing Director. There are 8

members including the CMD in the committee. Other than CMD, there are two EDs,
one RBI Nominee Director, one Shareholder director, one workmen employee
director and two part time non-official directors. This committee review the
functioning of the committee on customer service including compliance with the
recommendations of the Committee on Procedures and Performance Audit of Public
Services (CPPAPS). The Committee suggests innovative measures of enhancing the
quality of customer service and improving the level of customer satisfaction for all
categories of customers at all times.

Standing Committee on Customer Service:

The standing committee on customer service is chaired by the Managing

Director / Executive Director of the bank. Besides five senior executives of the bank,
the committee also have two eminent non-executives drawn from the public as
members. The functions of the committee’s are as under:

• Evaluate feedback on quality of customer service received from various

quarters.
• Look into the simplification of procedures and practices prevailing in the
bank, with a view to safeguard the interests of common persons,
• Review the practice and procedures prevalent in the bank and take necessary
corrective action on an on-going basis.
• Submit report on its performance to the customer service committee of the
board at quarterly intervals.

Code of Bank’s Commitment to Customers:

Bank is proud to be member of the banking codes and standards board of India
(BCSBI). As a member of BCSBI, bank has adopted the code of bank’s commitment
to customers. Under this code bank have the following key commitments:

• To act fairly and reasonably in all the dealings with customers.

• To help customers to understand how the financial products and services

work.

63
 • To help customers to use their accounts / services.

• To deal quickly and sympathetically with things that go wrong.

• To treat all personal information of customers as private and confidential.

• To publicize die code.

• To adopt and practice a non-discrimination policy.

Accordingly bank have to display the comprehensive notice board in branches

and keep the booklets, pamphlets, brochures containing relevant information on
codes, policies, interest rates, and rules of business in the branch and make them
available to customers. The members of Union Bank of India family should remain
well informed on BCSBI code and follow the same in letter and spirit.

Interaction with Customers:

The bank recognizes the customer’s expectation / requirement / grievances
through personal interaction with customers by bank’s staff. Customer day is
observed by all the branches on 15th of every month where customers can lodge their
complaints personally and have their redressal on the spot. Many of the complaints
arise on account of lack of awareness among customers about bank services, such
interactions will help the customers to appreciate banking services better.

Account of Illiterate and Visually Challenged Persons:

The bank also allows the illiterate persons to open savings bank and term
deposit account. For this purpose his thumb impression is obtained on the account
opening form. The account of such person may be opened provided he/she calls on
the bank personally along with a witness who is known to both the depositor and the
bank. Normally, no cheque book facility* is provided for such savings bank account.
At the time of withdrawal / repayment of amount of deposit and/or interest, the
account holder will affix his / her thumb impression or mark in the presence of die
bank’s officials who is verifying the identity of the account holder. The bank explains
the need for proper care and safe keeping of the passbook etc. given to the account
holder. The bank allows all the banking facilities including cheque book facility,
ATM facility, and locker facility etc., to the visually challenged persons.

64
Bank's General Lien:
Bank has the right to retain all the goods or any property of the depositor until
all the claims of holder i.e. bank are satisfied. The right of lien is conferred to the
Banker under Sec 171 of Indian Contract Act.

Training System of UBI:

The training is the core of human capital. Traditional banking skills should be
converted into new competencies so as to remain relevant. The starting point of
modem training system in banks requires identifying the various competencies for
operations, sales and services, customer service, newer areas like risk management,
project finance, financial inclusion etc. The design and execution of training depend
upon the competencies mapped. Training plays a vital role in enabling staff members
at all levels to prepare themselves to meet the challenges of today and tomorrow.
Training helps staff members to refresh knowledge and learn new skills, training can
be effective only if it is integrated with the day to day functioning of the bank.
Training system of the bank started to make an impact and make its presence felt even
beyond the bank, only after the establishment of the staff college at Bangalore.

There are 7 staff training centers located all over India- Luknow (Uttar
Pradesh), Gurgaon (Delhi), Ahmadabad (Gujarat), Powai (Maharashtra), Aluva
(Kerala), Bhubaneswar (Orissa) and Bhopal (Madhya Pradesh),. The Mother college
at Bangalore oversees the functioning of the activities at all these centers. All the
centers put together provide a training capacity of 11 channels to train 290 persons on
any given day. At staff college Bangalore, this capacity scales up to 16 channels and
421 persons per day.

Training in Union Bank is a bank-wide responsibility managed centrally by

the Apex Unit - Staff College, Bangalore - in close consultation with business units. A
high-powered committee of top executives i.e. Chairman, Executive Directors, and
General Managers - meets once in six months to review the training activities and
provides directions for the way forward. The Principal of staff college, Bangalore, is
the member-secretary of this committee. The training in Union Bank has a history of
5 decades. As early as 1962, the bank's staff college was established at Bombay to
take care of the training requirements. Initially there was only one channel. Now there
are 19 channels with a capacity to train 500 persons at a time. Facilities provided for

65
the trainees are holistic and both the class room and residential arrangements are
uniform throughout The main objectives of UBI training system are to provide
training for all the staff i.e. from housekeepers to executives in the highest cadre. The
bank also utilizes external training facilities offered by reputed organizations like
NIBM, BTC, CAB, BIRD, RBI, MDI, and also overseas training establishments like
Harvard business school, London school of economics etc.

The training mission is to promote the culture of continuous learning for the
development of the individual and the bank, to ensure that UBI is a learning
organization. Training programme includes Induction level programs, Programme on
promotions, Reinforcement programme, Re-skilling programmes, Management
education and Leadership development programmes. Training programmes aimed at
attitudinal changes and behavioral improvements of the staff, apart from workshops,
conferences, seminars and symposia held at regional locations. A beginning has been
made in distance learning via UBI-net and video conferencing.

Corporate Social Responsibility (CSR):

yz-.zr
Corporate social responsibility (CSR) is directly linked to the core business of
the bank. It encompasses as to how the bank adds social, environmental and economic
value in all its activities to make a positive, sustainable impact on both the society and
the business. Banks whose corporate office was inaugurated by Mahatma Gandhi,
bank has been proudly following his footsteps in serving the society.

The Bank showed its social concerns in many ways:

1. Donated ? 6 lakh to Cochin child foundation for assistance of under privileged

children.

2. Donated ? 11 lakh to Ramakrishna Mission, Nagpur for building with a

Vivekananda Vidhyarthi Bhavan

3. ?20 lakh to Bhagwan Mahaveer Viklang Sahayata Samithi for providing

artificial limbs to 3,000 physically challenged people.

4. The bank gave ? 50 lakh each to the states of Karnataka and Andhra Pradesh for
helping flood victims when that assistance was desperately needed.

5. The Union Bank social foundation trust disbursed ? 67.77 lakh as grants to its
Union Adarsh Gram for carrying out various infrastructural developmental

66
 activities for the upliftment in the lifestyle of villages and family. It approved
the adoption of 50 schools in its lead districts to fulfill the educational needs of
the children.

6. On 23rd January, 2010 National Girl Child Day, the bank has initiated a
programme to adopt girl children in the 101 ‘Adarsh Gram’. Under this
initiative, the bank adopts girl children and takes the responsibility of all
necessary financial commitments till their high school level.

7. The bank has earmarked 1% of its profits for social projects which can facilitate
visible change in the society and environment in which the bank operates.

8. Bank contributed ? 1.50 crore to the Maharashtra Chief Minister’s Relief Fund
for flood relief and rehabilitation.

9. On 26 July, 2005 when flash floods hit Mumbai, and there were widespread
destruction to human life and property, the bank announced financial assistance
to its employees affected by the disaster.

10. The branch has provided a water cooler to provide safe and cold drinking water
for all the school going kids and a large number of other villagers.

Caring for the Sick:

The bank has helped various Hospitals by providing Ambulances. The bank
not only understands the critical health issues but also propagates the same to the
village folks by conducting regular health camps and blood donation camps in various
centers across the country.

Caring for the Society:

a) Bank introduced an insurance scheme 'Janashree Bima Yojana' with the co­
operation of LIC to the women members of credit linked Self Help Groups.

b) Introduced 'Aam Aadmi Bima Yojana' for the hawkers who have availed loans
from the bank thorough biometric card loan product.

c) During various natural calamities, Union Bank has always extended a helping
arm to the affected areas by providing financial support.

Employee Participation:

67
 UBI not only involves itself in CSR but also makes the employees enthusiastic
about the work they are doing. The involvement of the employees is very important in
running a successful CSR program. So, bank motivates the employees by conducting
various workshops, from time to time, to establish healthy linkages between all
members of a multi-stakeholder and multi-sector society. All employees of the bank
play an important role in the economic growth of the country. In addition to driving
economic growth, their active participation has a direct effect on poverty alleviation
through the bank's own policies and practices. The bank employees contribute
personally for funding a number of community marriages which take place annually
at the village.

Union Bank Social Foundation:

For the social and economic welfare and upliftment activities, the bank
established a trust called Union Bank Social Foundation which was registered in
March, 2006 under the Indian Trust Act. The objectives of the trust are to foster
initiatives and to act as catalyst in socio- economic development individually as well
as with the co-operation of institutions and development agencies. On 22nd
November, 2006 the bank signed an MOU with the Ministry of Railway for setting up
the Bank’s ATM at 66 Railway Stations across the country. Interest- free loans were
sanctioned to staff members. Bank also provided shelter and food / refreshments to
staff members.

Union Bank Experience:

Bank has defined 5 core beliefs for ‘Customer Service Excellence*.

1. “Identify and consistently deliver at key moments of truth for each customer
segment”. Examples of ‘Moments of Truth’ are as follows:

• Account opening.

• Customer complaint.

• Cash transactions.

2. “Build loyalty through emphasis on softer dimensions of customer experience and

through an effective on-boarding program for new customers”. Examples of softer
dimensions and on-boarding program are as follows:

68
 • Quality of advice, empathy and degree of professional intimacy.

• 30/60/90 day welcome program to assess customer satisfaction after

opening; address issues and capitalize on cross-sell window.

3. “Streamline the multi-channel experience by undertaking a customer back redesign

at all key touch points” Examples of redesigned processes are as follows:

• Branches with shorter (or no) queues.

• Call centre with little to no wait time.

4. “Empower frontline through capability building and shifting mindsets to believe in

Customer Comes First”. Examples of capability and shifting mindset are as
follows:

• Introducing targeted training programs.

• Establish a reward and recognition system.

5. “Align organization model to deliver distinctive customer experience and measure

service excellence through metrics beyond satisfaction”. Example of new roles
and.measuring service excellence are as follows:

• Creating new roles and responsibilities.

• Developing regular programs to track and measure progress automated
customer surveys.

To crystallize the core beliefs, the bank has undertaken the following six
initiatives:

S Roll-out “Branch of the future” model.

S Streamline call centre, ATM and other alternate channel operations.

S Launch a change management programme to sustainably scale up initiatives.

S Establish a customer care unit.

S Institute adequacy of customer service excellence.

S Create a world class customer intelligence unit.

The objective of the union experience branches is to improve customer

experience by freeing up branch resources for customer facing activities and by
enhancing branch sales effectiveness. The remodeled branches are designed with the

69
aim to take customer experience to the next level. The changes introduced in the
branch format and processes are accompanied by changes in the roles of branch staff
as under:

• Branch Assist (BA) Is the first point of contact for customers entering the branch
and will facilitate their banking needs.

• Customer Service Representative (CSR) Is the single point of contact for all
sales and service related requests.

• Sales and Service Head (SSH) Lead the team of customer service representatives
and Branch assist and attend to customers for enhancing relationship value.

• Operations Head (OPH) Is lead the operations team to choreograph back- office
activities and ensure smooth processing of all requests.

• Universal Teller (U.T.) Is an enhanced cashier, he is responsible for all types of

cash transactions and remittances that have take place at the front desks of the
branch. \

The staff in the Union experience branches is carefully allocated these roles,
based on their strengths and skills.

Key Elements of Union Experience Branches:

Union experience branches enabled with the following types of frontline
automation:

• Self Service Passbook Printer (SSPB): An automated printer which requires

the customers to simply feed his/her passbook into the machine in order to get
the passbook updated.

• Queue Management System (QMS): Paper based token system to manage

customer traffic.

• Cheque Deposit Machine (CDM): Accepts cheques and provides images

receipt to the customer.

• Teller Cash Dispenser (TCD): Device which enables cashiers, especially at

branches where high value cash withdrawals happen, to dispense cash quickly.

70
 • Phone Banking Terminal (PBT): Phones installed in branches for customers,
specifically to contact the banks call centre instantly.

• Point of Sale Terminal (POS): Apparatus for card swiping normally used for
merchandise purchase, now at union experience branches, will facilitate cash
deposit mid payment.

U Mobile more than just a Mobile:

U Mobile is a secure and convenient way to get certain banking facilities and
services anywhere and anytime. It offers services like balance inquiry, mini statement,
fund transfer within bank or interbank, stop payment of cheque, airline ticketing,
mobile recharge and many more. The ever growing mobile users will surely
appreciate this mobile banking facility. For this one requires an active operative
account may be it is Saving Bank (SB), Current Deposit (CD) or Over Draft (OD), an
active ATM card and a mobile handset. In application based U Mobile, data moves in
an encrypted format and is highly secured and the amount of fund transferred per day
is f 50000. A happy and convenient banking can be experienced through U Mobile.

Customer Service Excellence and Union Bank of India:

"Customers want recognition, value, quality and respect for their
patronage” UBI can boast of its proud association with the father of the Nation,
Mahatma Gandhi who inaugurated its registered office in 1921 in Mumbai. According
to Mahatma Gandhi, “The customer is the most important visitors to the bank,
customer is not depending on the bank. Bank’s are dependent on the customers. He is
not an interruption in the bank’s work. He is the purpose of it. Customer is not an
outsider and he is a part of the bank. Bank’s are not doing him a favor by serving him.
Customer is doing favor by giving an opportunity to do so”. And this great bank never
fell short of the expectation of customers throughout its glorious 91 years of period.
Whatever the great visionary of the Nation said about the importance of the customer
in business, the whole world echoes it today. “Customer is the boss”, “Customer is the
king”, “Customer is god”, etc. are the phrases coined for defining the customer.

To serve the customers with passion and dedication is of primary importance.

It comes only when bank take ownership of what they do. The great philosophy and
experience of project Nava Nirman is guiding the bank to achieve the goal of

71
becoming the best customer centric bank through changes of the mindset of the
people, banks delivery process and implementing customer friendly technology. UBI
now equipped to implement their four brand promises i.e. Value for Money, Choice of
Channels, Turn around Time and Transference in offering the customers delight.

Union Banks Four Brand Promises:

1. Value for Money:

At UBI, they ensure that every customer finds a substantial higher value for
money. The banking products and services provide a higher value compared to the
price, the customer perceives to pay for them.

2. Choice of Channels:

Providing multiple channels of delivery is the second promise that the bank
makes to its customers. The multiple channels of delivery such as traditional branch
banking, ATMs, Mobile banking, Phone banking and Internet banking gave the
customers freedom to, the way they want to.

3. Turnaround Time:

The bank also promises to provide a definite timeline for every product that it
offers whether it is an education loan, home loan or a simple debit card pin number,
the bank always provides prompt service to its patrons.

4. Transparency:

Transparency in every service and product offered is the fourth brand promise.
Transference ensures that there is no fine print or opaqueness in the banks product
offerings.

Key Areas of Operations:

The business operations of UBI can be broadly classified into the key income
generating areas such as Retail Banking, International Banking, Agri-Banking and
Treasury operations. The functioning of some of the key divisions is enumerated
below:

72
 Chart 2.2: Key business areas of the bank:

Source: UBI Annual Reports

a) Retail Banking:
Retail banking segment is growing rapidly in the Indian banking industry.
Every bank wants to grow in this particular segment because of the higher margins.
UBI is also showing a strong growth in this business segment. The retail banking
business provides financial products and services to its retail customers. The bank
provides housing, retail trade, automobile, consumer goods, education and personal
loans. Deposit services, such as demand, savings and fixed deposits, for its customers.
In addition, UBI distribute products such as global debit cards and global credit cards.
The bank also provides utility services like bill payment, distribution of third-party
products, including mutual fund products, general and life insurance policies.
b) International Banking:
The bank is having correspondent relationship with 314 leading international
banks at all major international centers. The bank has Rupee Drawing Arrangement
(RDA) with 24 international banks and 17 exchange houses. The bank has launched
an on-line remittance product for immediate credit to the accounts of the customers.
The bank had a robust growth in International Banking Business.
Bullion Business: The bank is one of the leading players in the precious metal market
offering range of financial products relating to gold like metal loans to exporters,
domestic jewelers manufacture, gold towards, sale of gold on outright basis, etc. The
bank has been adjudged as “Best Bullion Dealing Bank” by the Bullion Association
of Mumbai.
Overseas Operations: In line with the bank’s vision to be global player with presence
in overseas market, bank has drawn its plans for overseas expansion in a phased
manner. The bank’s first representative office at Shangri, People’s Republic of China
was opened on 18th May, 2007. Representative office at Abu Dhabi, UAE was opened
on 1st December, 2007. These representative offices undertake liaisoning and advisory
services for the Indian customer as well as overseas corporate apart from developing
the relationship with exchange houses.

73
c) Corporate Banking:

The corporate banking segment offers various types of loans, fee-based

products, services to large corporate, small and medium enterprises (SMEs) and to the
agriculture sector. In order to give a boost to the SME segment and to agriculture
lending, the bank set up SME cells and adopted cluster-centric approach for
agriculture lending in areas with rich potential for such activity. The bank has
experimented with new delivery models for credit, including setting up low cost rural
ATMs. The bank also focused on micro-finance business as a convenient distribution
channel for its rural as well as low income customers.

d) Treasury:

Besides the traditional role of liquidity management and maintenance of

statutory requirements like Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio
(CRR), treasury operations focused on judicious investments, derivative transactions
for hedging customers’ financial exposures as well as its own balance sheet
exposures. Bullion trading also played an important role in treasury operations and
products like metal loans and gold forwards were popularized. The bank has a well
laid down treasury policy and risk management systems for undertaking such
transactions.

Human Resources:
The total employee strength of the bank at the end of March, 2010 is 29,419.
The bank added 405 employees during the year ended March, 2010. Viewed from a
certain perspective this could have a negative connotation as, for example, when it is
compared to the age profile of customers of the banking industry. A mature age
profile is not wholly negative. Experience is a great asset and then organization does
not face problems of attrition through resignations. UBI had moved 750 staff
members into marketing. Recently, additional 750 staff in its branches has been
assigned the role of customer care officials. These officials work exclusively on
relationship building and marketing through the branch. The bank aims to have
approximately 2,000 staff members in marketing team.

74
 Table 2.6: The Manpower Position of the Bank
Year Officers Clerks Sub staff Total

1999-2000 10366 6887 939 18192

2000-2001 8794 13499 5751 28044

2001-2002 7600 12556 5666 25822

2002-2003 7580 12585 5541 25706

2003-2004 8745 11315 5570 25630

2004-2005 8696 11319 5630 25645

2005-2006 9897 9993 7093 26983

2006-2007 11531 8742 7263 27536

2007-2008 11342 8896 6930 27168

2008-2009 12659 8840 7515 29014

2009-2010 13149 8572 7698 29419

Source: UBI Annual Reports.

Table 2.6 indicates the manpower position of the bank. The total manpower
position of the bank from 1999-2001is in increasing trend. In the year 2002 it reduced
from 28044 to 25822 and thereafter it is in increasing trend

Strength / Opportunities of UBI:

The growth for UBI in the coming years is likely to be fueled by the following
factors:
• Continued effort to increase low cost deposit base would ensure improvement in
NIMs and hence earnings.

• Increasing retail thrust would lead to higher business growth.

• Strong economic growth would generate higher demand for funds pursuant to
higher corporate demand for credit on account of capacity expansion.

• The bank is working on a business process reengineering exercise to optimize

CBS gains.

• Greater focus on profitable segments, exclusive cadre for corporate clients.

• Cluster-based approach to develop SME accounts.

75
Weakness / Threats of UBI
The risks that could ensue to UBI in time to come are as under:

• UBI is currently operating at a low CAR of below 11.5 %. Insufficient capital may
restrict the growth prospects of the bank going forward.

• The age profile of die employees is in the range of 47-48 years. Viewed from a
certain perspective this could have a negative connotation as, for example, when it
is compared to the age profile of customers of the banking industry. It has been
estimated that 55% of the customer population today come from the age group
below 25 years. Today relationship building is very important and hence staff with
a higher age profile might experience difficulties in relating to the younger
segment.

• Stiff competition, especially in the retail segment, could impact retail growth of
UBI and hence slowdown in earnings growth.

• Slow down in domestic economy would pose concern over credit off-take, there
by impacting earnings growth.

76
 Key Financial Indicators of UBI:
Table 2.7: Key Financial Indicators of UBI

SL
Particulars 2006 2007 2008 2009 2010
No.

1. Total Deposits (?in crore) 74094.30 85180.22 103858.64 138702.83 170039.74

Total Advances (Tin

2. 53379.96 62386.43 74348.29 96534.23 119315.3
crore)

3. Total business (Tin crore) 127474.3 147566.7 178206.9 235237.1 289355

Business per employee

4. 4.36 5.09 6.20 6.94 8.53
(? in Crore) (Average)

Gross profit per employee

5. 5.77 7.70 10.03 11.20 13.18
(? in Lakh)

Net Profit per employee

6. 2.66 3.25 5.39 6.28 7.47
(? in Lakh)

Business per branch

7. 53.29 59.94 67.52 74.61 84.49
(? in Crore) (Average)

Gross Profit per Branch

8. 0.70 0.91 1.09 1.20 1.30
(? in Crore)

Net Profit per Branch

9. 0.32 0.38 0.59 0.68 0.74
(? in Crore)

10 Earning per Share (in ?) 14.58 16.74 27.46 34.18 41.08

Book Value per Share (in

11. 80.77 93.60 111.19 137.87 173.38
Rupees)

Net NPA to Advances

12. 1.56 0.96 0.17 0.34 0.81
percentage
13. Credit deposit ratio 75.50 76.46 75.55 73.22 73.71

14. Net Profit (? in Crore) 675.18 845.39 1387.03 1726.55 2074.92

15. ROA Percentage 0.76 0.82 1.12 1.07 1.06

16. Dividend Percentage 35 20 40 50 55

Source: UBI Annual Reports.

77
 The total business of the bank stood at ? 2.89 crore as on March 31, 2010, as
against t 2.35 crore as on March 31, 2009, an increase of 23.01%. The business
growth was broad based with contribution from retail and corporate customers, both
on assets and liabilities side. The bank posted a total income and net profit of
? 15,277 crore and ? 2.075 crore respectively for the financial year ended March 31,
2010 as against ? 13372 crore and ? 1727 crore respectively in the previous year. The
earning per share (EPS) ratio showed improvement to ? 41.08 as against f 34.18 in
the previous year, while cost to income ratio declined to 40.66% as against 41.81% in
the previous year.

Shareholding and Liquidity:

Union Bank of India is promoted by the Government of India. As of March
2010, Government of India held 55.43% share in the bank. Other major shareholders
in the bank include Foreign Institutional Investors (Fils) with 19.9%, Indian financial
institutions (8.8%) and Indian public held just 15.9% of the stock.

Top Ten Shareholders of the Bank:

Table 2.8: List of Top Ten Shareholders of the Bank as on 31-03-2010

SI. No. Name No. of Shares Percentage to
Capital
1. President of India 28,00,00,000 55.43
2. Life Insurance Corporation of India 1,64,31,866 3.25
3. HDFC Standard Life Insurance Co. Ltd. 1,18,97,624 2.36
4. LIC of India Money Plus 1,01,21,458 2.00
5. Variable Insurance Products Fund III - 76,99,690 1.52
Midcap Portfolio
6. Merrill Lynch Capital Markets Espana 76,63,929 1.52
S.A.S.B.
7. FID Funds (Mauritius) Ltd. 54,29,026 1.08
8. Life Insurance Corporation of India - 41,29,038 0.82
Profit Plus
9. ICICI Prudential Life Insurance Co. Ltd. 39,11,643 0.77
10. Sloane Robinson LLP A/C SR Global 38,00,000 0.75
(Mauritius) Ltd. (Class B-Asia)
Total 35,10,84,274 69.50
Source: UBI Annual Reports.

Analysis of Income Statement:

78
 Historical Net Interest Income of the Bank:

Union Bank of India has reported a modest performance since the past few
years as compared to its private banking peers. Interest income of the bank grew at a
CAGR of 301% for the period from 2000-2010 and stood at ? 13,302 crore at the end
of Mar 31,2010. During the same period, interest expense rose by a modest CAGR of
286% due to restructuring of its liabilities. This resulted in a CAGR of 338% in net
interest income. The bank continued this growth momentum in 2010 to register an
impressive year-on-year improvement in financial performance. Total interest income
accrued during 2009-10 was ?13302 crore as against ? 11889 crore in the previous
year recording a growth of 11.88%. Despite the continuous need to keep interest rates
competitive, the volume of growth in advances resulted in interest income on
advances contributing the major share with an income. Interest expenses on deposits
and borrowings stood at ?9, 110 crore which showed an increase in growth rate of
? 12.80% over the previous year level of? 8076 crore.

Table 2.9: Net Interest Income Maintaining Growth Path

(? In crore)

Relative Relative Relative

Interest Interest Net Interest
Year Growth Growth Growth
Income Expenses Income
Rate Rate Rate
1999-2000 3315 - 2358 - 957 -

2000-2001 3733 12.61 2514 6.61 1219 27.38

2001-2002 4018 7.63 2679 6.56 1337 9.68
2002-2003 4306 7.17 2808 4.81 1498 12.04
2003-2004 4516 4.88 2780 -0.99 1736 15.89
2004-2005 4970 10.05 2905 4.50 2065 18.95
2005-2006 5864 17.99 3489 20.10 2375 15.01
2006-2007 7382 25.89 4592 31.61 2790 17.47
2007-2008 9447 27.97 6361 38.52 3086 10.61
2008-2009 11889 25.85 8076 26.96 3813 23.56
2009-2010 13302 11.88 9110 12.80 4192 9.94
Source: UBI Annual Reports

Bank’s net interest income improved to ? 4192 crore in 2009-2010 from ?

3813 crore in 2008-09, thereby registering a growth of 9.94%. The increase is

79
attributed to the substantial increase in interest income arising from volume growth in
advances. Despite the healthy growth in net interest income, the decline in net interest
margin to 9.94 % as of March, 2010. The fall in yield on investment also contributed
to decline in the net interest margin.

Chart 2.9: Interest Income and Interest Expense Trends for the Bank

Interest Trends for the Bank

14000
12000
10000
8000
6000 ■ Interest Income
4000 ■ Interest Expenses
2000 ■Net Interest Income
0

80
 Table 2.10: Profitability Indicators of UBI

Net
profit Relative Relative Relative Relative
ROAA ROAE
Year Growth EPS (?) Growth Growth Growth
(? in (%) (%)
Rate Rate Rate Rate
crore)

1999-2000 101.24 — 3.00 — 0.31 — 5.80 --

2000-2001 155.47 53.56 4.60 53.33 0.42 0.11 8.41 2.61

2001-2002 314.13 102.05 9.29 101.96 0.75 0.33 14.90 6.49

2002-2003 552.69 75.94 13.95 50.16 1.16 0.41 21.53 6.63

2003-2004 712.05 28.83 15.47 10.90 1.32 0.16 27.36 5.83

2004-2005 719.06 0.98 15.64 1.10 1.10 -0.22 22.90 -4.46

2005-2006 675.18 -6.10 14.58 -6.78 0.84 -0.26 16.55 -6.35

2006-2007 845.39 25.21 16.74 14.81 0.92 0.08 17.88 1.33

2007-2008 1387.03 64.07 27.46 64.04 1.26 0.34 24.70 6.82

2008-2009 1726.55 24.48 34.18 24.47' 1.27 0.01 24.79 0.09

2009-2010 2074.92 20.18 41.08 20.19 1.25 -0.02 23.69 -1.1

Source: UBI Annual Reports

Despite the improved earnings over the years, some of the banks profitability
indicators like Return on Average Assets (ROAA) and Return on Average Equity
(ROAE) seem to have deteriorated. This is primarily due to sharp rise in assets for
expansion purpose. The return on average assets declined from 1.3% in Financial
Year 2004 to 0.84% in Financial Year 2006, while the return on average equity
decrease from 25.2% in Financial Year 2004 to 16.5% in Financial Year 2006.

81
 Maturity Pattern of Assets and Liabilities

Table 2.11: Maturity Patterns of Assets and Liabilities as on 31.03.2010

(? In crore)

Foreign Currency
Maturity Pattern Deposits Advances Investment Borrowings
Assets Liabilities

Day 1 1131 2134 1 386 1382 672

2 to 7 Days 7368 2798 1634 686 118 464

8-14 Days 1776 2838 74 117 38 9

15 to 28 days 1532 4032 697 303 116 49

29 days to 3 12169 15598 1107 1650 854 596

months

Over 3 months and 9776 6512 4775 2107 1009 713

up to 6 months

Over 6 months and 33001 16327 4166 899 1110 293

up to 1 year

Over 1 year up to 41182 42170 1954 390 725 698

3 years

Over 3 years and 7352 9707 4771 448 262 480

up to 5 years

Over 5 years 54752 17201 35227 462 92 5241

Total 170040 119315 54403 7449 5707 9215

Source: UBI Annual Reports

Table 2.11 indicates the maturity pattern of assets and liabilities as on 31st
March 2010. More than 5 years maturity period of deposits, advances, investments,
foreign currency assets and borrowings are more as compared to less than 5 years.

82
 Total Expenses of UBI:
Table 2.12: Total Expenses of UBI

(? In crore)

Total Interest Operating Provisions and

Year Contingencies
Expenditure Expended Expenses
1999-2000 3513 (100) 2358 (67.12) 865 (24.62) 290(8.26)

2000-2001 3533(100) 2514(71.16) 818(23.15) 201 (5.69)

2001-2002 4200(100) 2679(63.79) 966 (23.00) 555 (13.21)

2002-2003 4578 (100) 2809(61.36) 1018(22.24) 751 (16.40)

2003-2004 4527(100) 2780(61.41) 1084 (23.95) 663 (14.65)

2004-2005 5016 (100) 2905 (57.91) 1257 (25.06) 854(17.03)

2005-2006 5683 (100) 3489 (61.39) 1403 (24.69) 791 (13.92)

2006-2007 7223 (100) 4592 (63.57) 1476 (20.43) 1155(15.99)

2007-2008 9147(100) 6361 (69.54) 1593 (17.42) 1193 (13.04)

2008-2009 11645(100) 8076 (69.35) 2214(19.01) 1355(11.64)

2009-2010 13202(100) 9110(69.00) 2508 (19.00) 1584(12.00)

Source: UBI Annual Reports

Note: Figures within parentheses denotes the percentages ofthe respective figure to the respective row totals.

The above table indicates that, the total expenditure and its classification. In the
study period, out of the total expenditure, interest expended portion is more than 55
percent. The remaining portion of total expenditure is expended for operating
expenses and provisions and contingencies. The increase in expenses has been lead by
raise in interest expenses. Expansion of business leads to increases in expenditure.
During the study period total expenditure is increasing.

83
Total Income ofUBI
Table 2.13: Total Income ofUBI
(? In crore)

Interest Income Other Income

Year Total Income
Earned

1999-2000 3614(100) 3315(91.73) 299 (8.27)

2000-2001 4045 (100) 3733 (92.29) 312(7.71)

2001-2002 4514(100) 4015 (88.95) 499(11.05)

2002-2003 5130 (100) 4306 (83.94) 824 (16.06)

2003-2004 5347(100) 4516(84.46) 831 (15.54)

2004-2005 5736(100) 4970 (86.65) 766 (13.35)

2005-2006 6358 (100) 5864 (92.23) 494 (7.77)

2006-2007 8068(100) 7382(91.50) 686 (8.5)

2007-2008 10534(100) 9215 (87.48) 1319(12.52)

2008-2009 13372 (100) 11889 (88.91) 1483 (11.09)

2009-2010 15277(100) 13302 (87.07) 1975 (12.93)

Source: UBI Annual Reports

Note: Figures within parentheses denotes the percentages ofthe respective figure to the respective row totals.

The above table indicates the total income and its classification. Out of the
total income, income earned is more than 80 percent. The remaining portion of total
income is from other income. The bank has taken several initiatives to generate
income. As and when the total business of the bank increases, the total income of the
bank also increases. Over the study period the total income of the bank is increasing
year after year.

84
 Table 2.14: Total Interest Income, Total Interest expenses and Interest spread to
Average working funds

(In percentage)

Total
Interest
Total Interest
Relative Relative Spread / Relative
Interest Expenses
Year Growth Growth Average Growth
Income / Average
Rate Rate Working Rate
/AWF Working
Fund
Fund

1999-2000 10.46 — 7.44 — 3.02 —

2000-2001 10.49 0.03 7.06 - 0.38 3.43 0.41

2001-2002 9.96 - 0.53 6.65 - 0.41 3.31 - 0.12

2002-2003 9.20 - 0.76 6.00 - 0.65 3.20 - 0.11

2003-2004 8.43 - 0.77 5.19 - 0.81 3.24 0.04

2004-2005 7.96 - 0.47 4.65 -0.54 3.31 0.07

2005-2006 7.49 - 0.47 4.46 -0.19 3.03 -0.28

2006-2007 8.08 0.59 5.03 0.57 3.05 0.02

2007-2008 8.35 0.27 5.76 0.73 2.59 -0.46

2008-2009 8.78 0.43 5.96 0.2 2.82 0.23

2009-2010 8.04 -0.74 5.51 -0.45 2.53 -0.29

Source: UBI Annual Reports

The above table indicates that, year-wise total interest income to average
working funds, total interest expenses to average working funds and interest spread
i.e., total interest income minus total interest expense to average working fun

85
 Table 2.15: Total Non-Interest Income and Operating Expenses to Average
Working Funds

(in percentage)

Total Relative Relative

Operating
Growth Rate Growth Rate
Year Non-Interest Income/ Expenses/Average
Working Fund
AWF

1999-2000 0.94 — 2.73 —

2000-2001 1.08 0.14 2.86 0.13

2001-2002 1.24 0.16 2.39 - 0.47

2002-2003 1.76 0.52 2.17 - 0.22

2003-2004 1.55 -0.21 2.02 - 0.15

2004-2005 1.23 - 0.32 2.01 - 0.01

2005-2006 0.63 -0.6 1.79 - 0.22

2006-2007 0.75 0.12 1.61 - 0.18

2007-2008 1.20 0.45 1.44 -0.17

2008-2009 1.09 -0.11 1.63 0.19

2009-2010 1.19 0.1 1.52 -0.11

Source: UBI Annual Reports

The above table indicates the year-wise total non interest income to average
working funds and total expenses to average working funds and their growth
percentages. In non interest income to Average Working Fund, the positive growth
percentages indicates the well spread and establishment of the interest generation. On
the other hand the operating expenses to Average Working Fund only there are two
positive growth percentages, indicates the sluggish movement.

86
 Table 2.16: Cost to Income Ratio

(In percentage)

Cost to Income Relative Growth

Year
Ratio Rate

1999-2000 68.86 —

2000-2001 66.56 -2.3

2001-2002 52.66 -13.9

2002-2003 43.82 -8.84

2003-2004 42.26 -1.56

2004-2005 44.42 2.16

2005-2006 48.90 4.48

2006-2007 42.45 -6.45

2007-2008 38.17 -4.28

2008-2009 41.81 3.64

2009-2010 40.66 -1.15

Source: UBI Annual Reports

This table indicates the cost to income ratio i.e., operating expenses to non
interest income plus interest spread. The growth percentage is in fluctuating trend.
The movement of growth percentages is both positive and negative. The cost to
income ratio is at the beginning of the years is good. From 2002-03 onwards there is
reduce speed in the percentage. The growth is improved in the year 2003-04 to 2005-
06. Cost to income=Operating Expenses divided by (Non-Interest Income + Interest
Spread).

87
 Table 2.17: Operating Profit and Net Profit to Average Working Fund

(in percentage)

Operating Net Profit / Relative

Relative
Year Profit/Average Average Growth
Growth Rate
working fund Working Fund Rate

1999-2000 1.24 — 0.32 __

2000-2001 1.44 0.2 0.44 0.12

2001-2002 2.16 0.72 0.78 0.34

2002-2003 2.79 0.63 1.18 0.4

2003-2004 2.77 -0.02 1.33 0.15

2004-2005 2.52 -0.25 1.15 -0.18

2005-2006 1.87 -0.65 0.86 -0.29

2006-2007 2.19 0.32 0.92 0.06

2007-2008 2.34 0.15 1.26 0.34

2008-2009 2.28 -0.06 1.27 0.01

2009-2010 2.21 -0.07 1.25 -0.02

Source: UBI Annual Reports

This table indicates operating profit to average working fund and net profit to
average working funds. The average ratio of operating profit as a percentage of
average working funds for 1999-00 to 2009-10, which is fluctuating with positive
trends and it is stable to around 2. This is an encouraging trend. The income of fund is
based it comes from investments rather than advances. Similarly the net profit stable
to around 1 and the growth is continued.

88
 Table 2.18: Capital Adequacy Ratio (Basel I)

(In percentage)

Year Capital Adequacy Ratio Tier I Tierll

1999-2000 11.42 (100) 6.66 (58.32) 4.76(41.68)

2000-2001 10.86 (100) 6.19(57.00) 4.67 (43.00)

2001-2002 11.07(100) 6.16(55.65) 4.91 (44.35)

2002-2003 12.41 (100) 6.86 (55.28) 5.55 (44.72)

2003-2004 12.32 (100) 6.47 (52.52) 5.85 (47.48)

2004-2005 12.09(100) 6.07 (50.21) 6.02 (49.79)

2005-2006 11.41 (100) 7.32(64.15) 4.09 (35.85)

2006-2007 12.80 (100) 7.79 (60.86) 5.01 (39.14)

2007-2008 12.51 (100) 7.45(59.55) 5.06 (40.45)

2008-2009 12.01 (100) 7.40 (61.62) 4.61 (38.38)

2009-2010 12.51 (100) 7.91 (63.23) 4.60(36.77)

Source: UBI Annual Reports

Note: Figures within parentheses denotes the percentages ofthe respective figure to the respective row totals.

This table indicates the capital adequacy ratio in percentage. This table also
shows that, Tire I and Tire II are the classification of this capital adequacy ratio .

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 Table 2.19: Gross Profit, Net Profit and Business per Employee of UBI

Business per Relative Gross Profit Relative Net Profit per Relative
Year Growth per Employee Growth Employee Growth
employee (in
Crore) Rate (in Lakhs) Rate (in Lakhs) Rate

1999-2000 1.35 1.29 — 0.33 —

—
2000-2001 1.83 35.56 1.82 41.09 0.55 66.67

2001-2002 2.15 17.49 3.37 85.16 1.22 121.82

2002-2003 2.50 16.28 5.07 50.45 2.15 76.23

2003-2004 2.86 14.40 5.79 14.20 2.78 29.30

2004-2005 3.46 20.98 6.13 5.87 2.81 1.08

2005-2006 4.36 26.01 6.28 2.45 2.66 -5.34

2006-2007 5.09 16.74 7.70 22.61 3.25 22.18

2007-2008 6.20 21.81 10.03 30.26 5.39 65.85

2008-2009 6.94 11.94 11.20 11.67 6.28 16.51

2009-2010 8.53 22.91 13.18 17.68 7.47 18.95

Source: UBI Annual Reports

Table 2.19 Indicates that, business per employee, Gross profit and also Net
profit per employee and their growth percentages. The table also indicates that, the
relative growth rate in case of business per employee is fluctuating. The Gross Profit
and Net profit per employee are increasing year after year.

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 Table 2.20: Gross Profit, Net profit and Business per Branch

(?in crore)

Relative Relative
Business per Relative Gross Profit Net Profit
Year Growth Growth
Branch Growth Rate per Branch per Branch
Rate Rate

1999-2000 19.26 — 0.18 -- 0.05 —

2000-2001 23.48 21.91 0.25 38.89 0.08 60.00

2001-2002 27.41 16.74 0.43 72.00 0.16 100.00

2002-2003 31.78 15.94 0.65 51.16 0.27 68.75

2003-2004 36.35 14.38 0.73 12.31 0.35 29.63

2004-2005 43.35 19.26 0.77 5.48 0.35 0.00

2005-2006 53.29 22.93 0.77 0.00 0.32 -8.57

2006-2007 59.94 12.48 0.91 18.18 0.38 18.75

2007-2008 67.52 12.65 1.09 19.78 0.59 55.26

2008-2009 74.61 10.50 1.20 10.09 0.68 15.25

2009-2010 84.49 13.24 1.30 8.33 0.74 8.82

Source: UBI Annual Reports

Table 2.20 indicates that, year wise Business per branch, Gross profit and Net
per branch and their growth percentages. Table also indicates that, -business per
branch is in increasing trend that leads to increase in gross profit and net profit.

Analysis of Service - Mix:

The primary functions of commercial bank are ‘borrowing’ and ‘lending’ of
money. Besides these two main functions, bank also undertakes a variety of other
activities. These activities involve services offered by banks to help the account
holders. Such activities include collection of cheques, dividend, warrants, etc. on
behalf of customers as well as effecting transfer of funds, remittances by mail and
telegram. In order to attract customers and make banking services effective, banks
always make efforts to diversify their activities. Such diversification takes place by

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way of new service activities and schemes for the customers. These services offered
by banks are generally known as agency services. These are also termed as
nonbanking, general utility, and miscellaneous services.

Customer service is the service provided in support of a bank’s core products.

Customer service often includes answering questions; handling complaints. Customer
service can occur on site or it can occur over the phone or the Internet. Quality
customer service is essential for building cordial customer relationship. Banking
being a service industry, a lot depends on efficient and prompt customer service.
Customer service is the most important duty of the banking operations. Prompt and
efficient service with smile will develop good public relations reduce complaints and
increases the business. The customer is the kingpin in growth of commercial banks.
Only those institutions which work according to the needs of customers will flourish.
Quality, Consistency and Durability at low price are the main expectations of the
customers.

Supplementary Functions / Services of the Bank:

The commercial bank renders number of ancillary services to the customers
along with the main functions i.e. accepting deposits and lending funds. These
services are known as supplementary services. Ancillary services supplement the
main functions of the Commercial Bank. These ancillary services are generally non­
banking in nature.

Union Bank of India renders different banking services to the customers. Cash
Management Service and Depository Services are the new service initiatives of the
bank. For rendering depository services bank has tie up with Central Depository
Services Limited (CDSL). Distribution of insurance product and gold import are the
other services of the bank. The bank has tie up with New India Assurance for non-life
products and also tie up with HDFC Standard Life for life insurance products. At the
end of March 2010, the bank has 2805 branches spread across India, employed 27,772
people and its ATM network is growing rapidly.

Reasons or Importance of Customer Service:

• Changing customer expectations: Today the customer is more demanding
and more sophisticated than the customer thirty years back.

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 • The increased importance of customer service: Customer service is a
competitive weapon to meet the requirements of customer demand and
expectations. This customer service differentiates their products and services.

• The need for a relationship strategy: To ensure that a customer service

strategy, customers should be formulated, implemented and controlled. It is
necessary to give the customer a central role.

The key areas of customer’s services to be attended timely and regularly are as
follows:

1. Submission of statement of accounts to customers.

2. Updating of pass books.

3. Teller system efficiency.

4. Cleanliness and Upkeep of premises.

5. Intermediate credit for institution cheques.

6. Advance intimation to customers for rewards of Term Deposits Receipts on

maturity.

7. Punctuality of staff.

8. Handling and Maintain of complaint register.

General Banking Services of UBI:

Following are the services provided by the bank to the retail, corporate and
rural customers:

1. Debit Cards:

A debit card is a personal card provided to the customers by the bank. A debit
card is a plastic card which provides an alternative payment method to cash when
making purchases. This card enables the holder to withdraw money or to have the cost
of purchases charged directly to the holder’s bank account. Union Bank of India
introduced the international debit card. This is a unique card issued to the customers,
which allows its users to withdraw cash from around 60000 ATMs in the country and
over 1 million ATMs across the globe. These cards can also be used to make purchase
at all merchant locations and on line website. UBI is issuing international debit card

93
which is having visa logo. Savings and current account customers can also obtain an
international debit card. Using the international debit card, the customers can access
their savings and current accounts at any VISA-accredited merchant establishment or
ATM machine, allowing them to purchase goods at retail outlets and withdraw cash
from ATMs in India and abroad.

Features of International Debit Card:

• Multiple account access- customers can access up to three accounts linked to a

single card.
• Free insurance is available against accidental death i.e. ? 2 lakh for principal
card holders and ? 1 lakh for add on card holders.
• Lost card liability is restricted to ? 1,000 from the time of reporting.
• 24 hours listing facility is available.
• Cash withdrawals are possible at specified merchant location.

Table 2.21: Charges and Fees on the Debit Card

Withdrawal Limit ATM- ? 25,000 per day

Shopping limit Point Of Sale (POS)- ? 25,000 per day

Number of transactions 10 per day

Currency conversion charges 2.50 percentage transaction amount

Withdrawal from other bank ATM Free up to 5 transactions per month 20

plus service charges from 6 transaction

Withdrawal from ATM abroad 125 plus 2.5 percentage currency

conversion charges

Annual fee ? 100 plus service tax from 2nd year

Card replacement fees ? 100 plus service tax

Regeneration of PIN ? 25 plus service tax

Source: Annual Reports

Table 2.21 indicates that, different charges and fees charged on the customers
debit cards by the Bank. Different charges and fees charged on different categories of
transactions.

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2. Credit Cards:
A credit card is part of a system of payments named after the small plastic
card issued to users of the system. It is a card entitling its holders to buy goods and
services based on the holders promise to pay for these goods and services. This card
allows the customers to ‘revolve’ their balance, at the cost of having interest charged.
UBI provides a VISA international credit card. The Union Card is available in
Classic, Silver and Gold varieties. The cards are with varying levels of credit limit and
benefits. The Union Card is accepted worldwide at merchant establishments where the
VISA logo is displayed.
Features of International Credit Card:
• Interest free credit facility ranging for a period of 20 days to 50 days.
• Global acceptability at over 30 million visa outlets.
• Cash advance 10 percent credit limit within overall limit.
• Spending limit is 25% of gross income with minimum limits.
• Lost card liability restricted to 1,000 from the time of reporting the loss.
• Multiple account access the customer get 3 accounts linked to the card.
3. Depository Services:

The bank launched the depository services in Mumbai in Feb. 2002 and made
a modest beginning by opening 700 accounts. This is a depository service platform for
the individual retail customers in connection with the holding of debt and equity
securities. Bank earns fees for maintaining the accounts as a depository participant of
Central Depository Securities Limited (CDSL), and for services. Through the
depository service scheme, the customers at any of the networked CBS branches are
able to hold securities in dematerialized (or "demat") form. A depository is an
organization which holds the securities of investors in the electronic form and
provides services related to transactions in securities.

Table 2.22: Depository Services

Generating Number
Year Number of Centers
of Accounts
2002-2003 14 700
2003-2004 26 12,000
2004-2005 43 22,000
Source: Annual Reports

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 Table 2.22 indicates that number of depository centers and generating number
of accounts. The table also shows that, increases in number of accounts through this
depository service.

Benefits of Depository:
• Eliminates the risks associated with physical certificates like loss, theft,
mutilation, forgery etc.
• Transfers shares immediately.
• There is no stamp duty on transfer of shares.
• Reduces the cost of transactions.
• Reduces the handling of large volume of papers.
• No bad deliveries.

Services Provide by Depository:

• Opening and Maintenance of Accounts.

• Dematerialization.
• Settlement of trades in electronic securities.
• Maintenance of shares.
• Pledging of shares.
• Rematerializing.
4. Collection Services:

All the branches UBI have the facility of collecting financial instruments
including cheques, drafts, warrants, refund orders and bills from customers.

5. Bill Payments and other On-Line Products:

The Bank offers utility bill payment services. This helps the customers to pay
their utility bills through standing payment instructions. This facility is available at
metro and mini-metro centers, such as Mumbai, Delhi, Chennai, Kolkata, Bangalore,
Hyderabad, Ahmadabad and Pune. In addition, Internet banking customers are also
offered various on-line products such as railway reservations, the facility for payment
of telephone bills, LIC premium, Hutch telephone bills and Reliance Energy bills etc.
Under utility payment services, the bank launched “UNION BILL PAY” scheme on
25 April, 2003 at Mumbai and further extended the services to 7 more cities. This is

96
a value added service given to the customers by the bank for payment of their utility
bills without any charges.

Union BiU Pay:

Union bill pay facility is an extremely convenient bill payment service to the
customers. The scheme is launched in association with India Ideas Company Limited
i.e. “Bill Desk”. Under this service facility, the bank’s customers can pay their various
bills. These payments made are debited to the respective customers account without
any cheques, standing in ques etc. Following are the payments made through this
type of service;

1. Electricity

2. Telephone

3. Mobile phones

4. Insurance premium

5. Gas

6. Charities

All type of customers like SB account, Current account, and Overdraft account
holder can use this type of service. There is no minimum balance required for using
this type of service. This service is offered by the bank free of cost. This type of
service helps the customers to save the time, effort, and cost involved in making these
payments. For this service, the customer has to register once for the Union bill pay
service by completing the application form. Following are the ways to make
payments under union bill pay.

a. Auto Pay:

The customer has to give the standing instruction for making payments. Bank
will get an electronic copy of the customer bill every month. The bill amount will be
debited to the customer account and paid to the biller. As usual, the customer will
continue to receive the bills at home. The customers can issue stop payment in writing
at least 5 days before the due date.

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b. On Line Pay:

The customer make the payment through internet. Customer see the bills
through the bank website and issue payment instruction from any of their bank
account Here, the customer account will be debited and money will be paid to the
biller. Customer can also register online through bank’s website for the service, add
new billers that the customer want to pay and receive email reminders, confirmations
etc. for the transactions.

5. On-Line Trading:

Union Bank of India has launched Union On-line Trading service on 25th
November, 2005. The on line trading service is provided to the banks customers who
invest as well as trade in shares. This service is also providing to the prospective
customer engaged in these securities. The fund settlement would be done through
customer’s savings account or current account. For availing this type of service, the
customer is required to have his DEMAT account with the bank apart from SB and
CD account. The product is launched in tie up with one of the leading brokers i.e.
Sharekhan. For this service, the customers are required to open an on-line trading
account with designated broker.

This service facilitating funds and securities settlement through an e-payment

gateway, e-depository gateway, online trading service, and the customers are required
to open savings or current accounts for funds settlement and a dematerialized
securities account for securities settlement. Other value-added services like on-line
applications for IPO securities, viewing status of dematerialized accounts, market
information and research on selected stocks through the M/s Sharekhan Ltd. website.

6. On-Line Booking of Railway Tickets through Internet Banking:

Bank launched on-line railway reservation service in January 2005. Using

these service customers can purchase railway tickets and it is debited to their
accounts. The Bank has established an e-payment gateway with IRCTC for this
purpose. Under these arrangements with IRCTC, the IRCTC remains the key service
provider, responsible for delivery and correctness of tickets. The bank facilitates on­
line payment for these tickets.

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7. Clearing Bank Services:

The capital market cell of the bank is a clearing bank member of BSE and
NSE. Through these services, bank generates business from brokers for capital
market activity as well for their fund and non-fund based line-of-credit requirements.
UBI is also acting as a clearing bank for the bullion trading activities of the Mumbai
Commodities Exchange (MCX).

8. Union e-Demat:

Union e-demat offers customers online access to their demat account through
a single log-in to its internet banking service. This service is given to the customers
free of cost. For availing this type of service customer’s need to have the access to the
internet banking service of the bank. This helps the customers to;

1. See their Account details.

2. See their demat holdings.
3. See billing details.
4. Loss of slip report.
5. Request for slip book.
6. Get the statement of account for a period.

9. Tele Banking and Internet Banking:

Banking services are also available through tele banking and internet banking.
Internet banking services can be availed of by all retail and corporate customers.

Table 2.23: Net Banking Service

(In Number)

Year Net Banking Services Relative Growth Rate

2006 16,000 -

2007 41,000 156.25

2008 191,000 365.85

2009 3,65,000 91.10

Source: Annual Reports

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 Table indicate that, the customer base of internet banking has increased from
1,91,000 accounts as on 31st March, 2008 to 3,65,000 accounts as on 31st March,
2009, a growth of 91.10 percentage.

Government Development Services:

a. Collection of Taxes:

Bank accepts all types of Direct taxes like Income tax, Gift Tax, Wealth tax,
Corporate tax, Interest tax, Expenditure tax, Estate tax, Duty tax etc. Both customers
as well as non-customer can deposit the taxes. Assesses while remitting amounts
should use the prescribed ehallen from duly completed in all respects. The remittances
can be made either by cash, cheque or draft. UBI is one of the first public sector banks
to launch e-payment for central excise and service tax in May, 2005. The Bank is also
authorized to collect the state sales tax, or VAT, in the states of Maharashtra, Delhi,
West Bengal and Uttar Pradesh and is seeking to obtain accreditation from all the
State Governments.

b. Distribution ofDeposit Products of the Government ofIndia:

Bank is authorized to distribute RBI Bonds, handle public provident fund

accounts, Senior Citizens Savings Scheme Accounts and other deposit products of the
Government of India through the authorized branches across the country.

c. Ministerial Accounts:

Bank is accredited to handle the accounts of the Ministry of Labour, the

Ministry of Environment and Forest, the Ministry of Science and Technology and the
Ministry of Planning. The Bank also undertakes the sub-treasury business of the state
governments in the states of Maharashtra, Andhra Pradesh, Madhya Pradesh,
Karnataka and Assam through selected branches.

d. Payment ofPension:

Bank is authorized to make payments to Central Civil Pensioners, Railway,

and Defense, Telecom pensioners, central freedom fighters and pensioners of various
State Governments. For these services bank gets commission. The bank has
implemented centralized pension processing cell (CPPC), about 14000 central civil
pensioners are benefited.

100
e. Public Provident Fund (PPF):

PPF scheme is a statutory scheme of the central Government of India. This

scheme is for 15 years. Rate of interest is 8% compounded annually. The minimum
deposit is ? 500 and maximum is ? 70,000/- in a financial year. One deposit with a
minimum amount of ? 500 is mandatory in each financial year. This scheme is
operated in select authorized branches of the bank. Bank has obtained a licence for the
franking of stamps at selected branches in Maharashtra and Gujarat. The franking
services are offered to all the corporate and retail customers, and also to the outside
customers at these branches.

f. Union Life Guard Scheme (ULGS):

Due to inability to meet the medical expenses many persons lost their life. The
Union Bank of India has extended its hand to help the card holder under the scheme
by meeting their medical expenses. Union Life Guard Scheme was launched in the
year 2002.This type of services are provided by the bank through tie up arrangement
with selected hospitals.

g. Union Insured Recurring Deposit Scheme (UIRDS):

The Union Bank of India has introduced a unique deposit scheme under the
brand name of ‘Union Insured Recurring Deposit Scheme’. This is a cumulative
deposit scheme with life insurance benefit to the account holder to the extent of
maturity value of the deposit.

h. Union Express Remittance Scheme (UERS):

NRIs or Exchange houses are looking for remittance facilities. The

remittances are mainly in the form of drafts, which are received by the beneficiaries
after a lapse of time i.e.10 to 12 days from the date of purchase. To avoid this, Union
Bank of India introducing a new scheme called “UNION EXPRESS’-remittance
scheme on 20.05.2002.This scheme helps in speedy payment to the beneficiaries.
Under this scheme Pay orders, DD, Authority cheque, Local branch advice will be
sent through specially appointed couriers to have the same delivered within the
prescribed time frame.

The time frame for delivery is depend on the category of the centers to which
the delivery has to be affected. The centers have been divided into 3 categories.

101
1. “A” Category centers-Drafts PO, Authority cheque, Local branch advices are
delivered within 24 hours of receipt of remittance from the Exchange house.
2. “B” Category centers- delivery is effected within 48 hours.
3. “C” Category centers- represents other centers where the minimum time to reach
the payment orders is 72 hours.

Other Services of UBI:

The bank has introduced a bouquet of new services for the benefit of
customers.

1. Distribution of Insurance Products:

The Union Bank of India introduced distribution of insurance products during

the year 2002-2003. The bank is a corporate agent for marketing of life insurance
product of HDFC Standard Life Insurance Company (HDFC SLIC). The HDFC SLIC
life insurance products are marketed through all the branches with the help of trained
marketing officers. In addition, HDFC, SLIC has developed a customized product for
the bank's customers, not requiring any financial or medical underwriting. This helps
the bank to reach the rural masses. Bank also market non-life insurance products of
New India Assurance company Limited (NIAC), including insurance against fire,
burglary and other risks to assets, such as plant and machinery, stock-in-trade and
fixed assets, motor vehicle insurance, household insurance and personal accident
insurance. The non-life insurance products are marketed to all the deposit and loan
account customers. These services are also provided to employees of the bank.

Table 2.24: Distribution of Insurance products

Aggregate Premium
Year Number of Policies
(? in crore)

2002-2003 11034 7.19

2003-2004 16845 13.20

Source: Annual Reports

Table 5.2 indicates that number of policies and aggregate premium under
distribution of insurance products. The table also shows that there is an increasing
trend in distribution of insurance products.

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2. Cash Management Services (CMS):

In the globalised scenario of banking, it is the need of the hour to determine

the alternative means of generating revenue to the banks. For generating new revenue,
the bank focus on a major shift from interest based income to fee based income.
Existing clearing systems are delay in process. Corporate customers expect quick
clearances and credits. CMS reduces the cost of funds to corporate and improves fee
based income of banks. CMS is a fee-based product. The charges vary from location
to location depending upon whether it is a RBI or SBI center and the day of credit
decided by the Corporate. The Cash Management services offer a new avenue to
generate fee based income. CMS is a service for collection or payments of funds on
behalf of corporate client along with value addition in the form of MIS. Cash
management services were introduced by the bank in 2002.

The main feature of the product is to accelerate collections and ensure efficient
cash flows. CMS is a banking service to corporate and other organizations having
requirement to collect cheques and instruments from several centers. Funds are
collected at a single business unit. The payments requirements at several centers with
a single center origination is also the business target for the payment of CMS. Only
the CMS designated branches of UBI will deliver the product.

Client’s satisfaction under CMS is made through providing prompt and

courteous service, completing day-to-day assignments within the deadline, and
maintaining excellent liaison with corporate and their dealers. Understanding the
changing needs of the Corporate and ensuring positive response in quick time.

Banks Different" CMS” product:

Union bank of India launching two products under CMS:

1. UNION SPEED-CoUections:

The cash management under Union speed-collection helps the large or

corporate client to collect their cheques or instruments from several centers and pool
them into their account. The client will enter into a CMS agreement with the Union
Bank and collect all their funds in less time. The products offered under union speed-
collection are as follows:
(a) High value clearing.
(b) Local MICR clearing.

103
 (c) Outstation collections (Urban).
(d) Outstation collections (Others).

2. UNION SPEED-Payments:

The cash management under Union speed-payments, the amounts is paid to

several people or firms in different locations required by the coiporate client. The
products offered under union speed payments are as follows:

a) Direct credit to SB or CD account.

b) Demand draft payable at specified drawee centre depending on desired mode of
payment.
c) Local pay-order.
d) Regular periodical payments for purchases.
e) Other regular or periodical payments.
f) Payments of Salaries.
g) Payments of Interest of deposits or bonds.
h) Payments of Dividend.
i) Refund orders-Excess subscriptions of IPOs.

The advantages of CMS to the corporate customers are faster realization of

instruments, better funds management, optimum utilization of funds, lower- cost of
services / transaction, collection of funds at sources of origin, faster and easier
transfer of funds to locations of choice, centralized control of receivables and
disbursals, cash forecasting and scheduling and reduction in cash balance.

3. Bullion Trade:

The Union Bank of India has operationalised “Bullion Trading” in one branch
in Mumbai. This was launched in the year 2002-2003. Import of gold commenced in
the year 2002. Bank was able to sell about 2.5 tones under KG bars and 57200 TT
bars worth about ? 485 crore. During the year 2007-08 the bank was one of the
leading players in the precious metals market, offering various financial products
related to gold. Currently, the bank is offering a range of products including metal
loans to exporters and domestic jeweler manufacturers, gold forward and sale of gold
procured on consignment basis.

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 Table 2.25: Bullion Trade

Number of TT Total Amount of Number of

Year
Bars Business(in crore) Centers

2006-2007 32,626 kg. 2639 10

2007-2008 33,897 gold 3079 150

2008-2009 45,073 gold 5365 150

Source: Annual Reports

Table number 2.25 indicates that, the bullion trade service provided by the bank. It
also shows that, the bullion service provided by the bank is increasing year after year.

4. Mutual Funds:

The Union Bank of India launched the distribution of mutual funds in the year
2002-2003. Bank’s strategy is to increase the fee-based revenue and leverage the
branch network. Bank has secured Association of Mutual Funds of India (AMFI)
approval to distribute mutual fund products in accordance with SEBI guidelines. Bank
has tie up with DSP Merrill Lynch Asset Management, HDFC Mutual Fund, UTI
Mutual Fund, Principal Mutual Fund, Reliance Mutual Fund (Western India only) and
Cholamandalam Mutual Fund (Southern India only), for distribution of mutual fund
products. In addition, bank has also authorized to market the mutual fund products of
several asset management companies. Bank earn fees for the distribution and sale of
these funds.

Miscellaneous Services for the depositors:

Following are the miscellaneous services for the depositors :

a. Issuance of remittances on behalf of the account holders.

b. Collection of outstation cheques deposited by the account holders.
c. Offers deposit scheme specifically for senior citizens whereby higher and
fixed rate of interest is offered.
d. Issues credit card / debit card / ATM card to the account holders.
e. The facility for accepting standing instructions for payment of insurance
premium, rent, club and other subscriptions, school fees, etc.
f. The bank accepts stop payment instructions given by depositors in respect of
cheques issued by them and which have not been paid.

105
Safe Deposit Lockers Service:

The bank provides safe deposit locker facility at number of branches with
lockers of different sizes of lockers. These lockers are given on hire for a period of
not more than 3 years at a time. The allotment of lockers will be subject to availability
and as per the waiting list. Compliance with other terms and conditions attached with
this facility.

Customer’s dissatisfaction in the banking industry is mainly due to delays in

handling transactions across the counter in collections, update of passbooks, supply of
statements of accounts, etc. Failure to provide prompt and efficient customer service
leads to reduction in the number of customers. To reduce customer’s dissatisfaction
the following improvements in the customer services may be carried out by the bank.

1. Personal relations with customers will improve customer satisfaction. ‘Service

with smile’ should be the motto of every bank employee.

2. Rapid customer services should be provided through automation of work and

simplification of procedures.

3. ATM’s may be introduced in all the branches of the banks, based upon the volume
of transactions. This shall facilitate non-stop banking.

4. Credit and Debit Card Services should be provided to the customers. There must
be a link service with all the banks and branches if possible to facilitate the
customer and the business organizations.

5. E-mail service made freely available at all banking centers.

6. Foreign Exchange transactions are to be extended to all the branches to facilitate

trade and industries.

7. Need based schemes may be introduced because all the customers are not
/

homogenous in their needs.

8. The bank staff must be trained to understand the customer’s psychology, so they
may provide customer service in a qualified manner.

9. Educating the customers will increases better utilization of banking services.

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Service to Agriculture / Farm Sector:

Under farm sector, bank services are available for poultry / dairy development,
production credit, farm mechanization, minor irrigation, land development, purchase
of land, etc.

Training Service of UBI:

Union bank of India has established two Rural Development and Self
Employment Training Institutes (RUDSET) in the lead districts i.e. Emakulum
(Kerala State) and Varanasi (Uttar Pradesh State). UBI also established Rural
Development Foundation at Maharashtra. In these institutions bank provide training
for skill upgradation as well as consultancy services to take up self employment
ventures.

Customer Care and Relationship Management Service:

Union Bank of India has introduced a number of marketing and customer

service centers. These are to maintain a high standard of customer service for their
clients:

1. Customer Complaints Management - Bank has a customer complaint

management system. This system allows the customer to log complaints and to
address them promptly and efficiently.

2. Citizens' Charter - Bank has a citizens' charter. This outlines the banks code of
conduct in relation to the customers. This document is available to customers at
the branches and on bank’s website.

3. Customer Education Material - Bank creates the materials in booklet and

brochure format. These materials provide the product information, its features and
delivery channels available to the customers.

4. Grievance Redressal - The Bank has a transparent and effective procedure for
redressal of customer grievances. Bank attempt to redress customer grievances at
the point at which they arise, primarily at the branch level. However, in the event
that a customer is not satisfied with the Branch Manager's response, the customer
may raise the matter with the Regional Office, the Zonal Head or the Corporate
Office. Bank endeavor to acknowledge complaints immediately and seek to
redress the grievance to the satisfaction of the customer quickly.

107
Grievance Redressal Service of UBI:

1. If the customer have any grievance / Complaints, approach the branch or use
the banks online grievance redressal system.
2. Grievance redressal machinery functioning at three levels i e. Branch,
Regional and Central office level. All complaints received at every level is
immediately acknowledged, redressed and final reply is also given to the
complainants.
3. Under the online system there are five levels of escalation- from loading
complaints by the complainant on website till final satisfactory settlement of
customer grievance.

Under the online grievance redressal system a person can visit the website
www.unionbankofindia.co.in. And enter the grievance / complaints in the form hosted
on the website under “Grievance online” by filling basic details like Name, Address,
E-Mail ID, Mobile No, Branch Name, and details of complaint. Once this page is
submitted, the visitor get an online acknowledgement containing a reference number,
which the complainant can always quote for all future correspondence with the bank.

5. Fair Practice Code - Bank has adopted the comprehensive Fair Practice Code.
Important characteristics of the code include;

a. Sets standards for fair banking practices while dealing with customers. It provides
valuable guidance to customers for their day-to-day operations.

b. The code applies to products provided to customers across the counter i.e. over the
phone, by post, through interactive electronics devices, through the Internet or
through any other method.

c. The code promises the customers that the Bank will act fairly and reasonably in all
its dealings. Code helps the customer to understand how the banks products and
services work.

d. The code also emphasizes the importance of addressing difficulties quickly and
sympathetically.

e. The code provides guidance to customers in respect of the banking facilities

normally available and what the customer can expect from the Bank.

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f. The code provides information about the process for grievance redressal
machinery, other avenues for redressal of grievances and where the customer can
obtain more information about the code.

6. Standing Committee - As per the guidelines of RBI, the Union Bank of India has
constituted the standing committee. The standing committee consists of senior
executives and two ex-officio members. The objective of the Committee is to explore
avenues for simplifying procedures in order to improve the bank's customer service.

7. Non-Resident Indian Financial Services:

Bank offer foreign currency accounts to NRIs. Bank offer various products for
facilitating remittances from NRIs. Banks actively seek banking business from Non-
Resident Indians (NRIs) by offering different types of deposit accounts and related
services in accordance with RBI guidelines like: a) Non-resident ordinary account; b)
Non-resident (external) Rupee account; and c) Foreign currency non resident account
(Banks).

Other Services to the Customers:

1. Electronic Fund Transfer (EFT):

Electronic Fund Transfer (EFT) is a scheme introduced by RBI to help banks

to offer their customers. This is a facility of transfer of funds from account to account
from one bank branch to another in places where EFT service is available EFT is
presently restricted to 15 centers where RBI offices are located.

2. Electronic Clearing Service (ECS):

ECS is a retail payment system for bulk payment services. Here, the facility of
payments from one to many and receipts that are from many to one. ECS (Credit) and
ECS (Debit) are the two components of ECS. It is a mode of electronic funds transfer
from one bank account to another bank account using the services of a clearing house.
This type of service is available at 67 major centers in the country.

The clearing and settlement transactions under ECS service takes place at the
respective centers. A centralized facility is available at RBI. The volume of
transactions through ECS is increasing during the last few years. The average monthly
volume of transactions through ECS has reached to 14 million. All individuals having

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savings bank, current deposit or cash credit are eligible for this service. The following
table provides the statistics of transactions processed through ECS mode.

Table 2.26: Electronic Clearing Service

(Volume in Lakhs and Account in crore)

Year ECS (Credit) ECS (Debit)

Volume Amount Volume Amount
203 10228 79 2254
2003-2004
2004-2005 401 20180 153 2921

2005-2006 442 32324 360 12986

2006-2007 690 83273 752 25441

Source: Annual Reports

Table 2.26 indicate that, the electronic clearing services of the Bank. It also
shows that, the volume of transactions through electronic clearing services is
increasing year after year.

• ECS (Credit):
Here, the payments of beneficiaries are undertaken in bulk. The institution
remitting the payment is debited and the payments remitted to beneficiaries account
should be credited. This type of services is used in payment of dividend to investors,
payment of salaries of employees by institutions etc. For this purpose, the company
rendering the service must have the bank account details of the beneficiaries.
• ECS (Debit):
Here, the collection of payments by the accounts of customers of the utility
company. Under this type of service, the accounts of the utility Company, in different
banks are debited and the same transferred to the utility company accounts.

3. National Electronic Funds Transfer (NEFT):

National Electronic Funds Transfer (NEFT) service is the electronic funds

transfer system. Here, the customer can transfer funds to other bank accounts. This
NEFT facility is available in more than 63,000 branches across the country. National
Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to
facilitate transfer of funds from one bank branch to any other bank branch in the
country. Using online NEFT, customers can transfer their funds at their convenience.

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This is a simple, secure, safe, fastest and cost effective way to transfer funds.
Customer can remit any amount using this NEFT service.

The facility is also available through online mode for all internet banking and
mobile banking customers. For corporate customers, bulk upload facility is also
available at branches. Under this type of service, the money will be credited to the
beneficiaries account on the same day or at the most next day in case the message is
sent during the last batch of settlement. UBI offers NEFT facility to its customers
through all its branches. No such charges for customers availing services at branches
in North East States. Customer can use this facility between 9am to 7pm on all
weekdays and between 9am to 1pm on Saturday.

Particulars required for NEFT service are as follows:

• Indian Financial System Code (IFSC) of the beneficiary bank or branch.

• Name of the beneficiary.
• Full account number of the beneficiary.

Table 2.27: Charges for NEFT Transaction

SI. No. Transaction Amount Charges

1. Up to ? 1 lakh ? 5 per transaction

2. More than ? 1 lakh ? 25 per transaction

Source: Annual Reports

Table no. 2.27 indicates that, the different charges levied on the beneficiaries
for NEFT service. It also shows that, the charges are different for different trasactions.

4. Real Time Gross Settlement System (RTGS):

Real Time Gross Settlement is the fastest mode of transfer of money through
bank. It is a mechanism where transfer of money takes place from one bank to another
in ‘real time’ and on ‘gross basis’. Settlement in ‘real time’ means payment of
transaction is not subjected to any waiting period. The transactions are settled as soon
as they processed. ‘Gross settlement’ means the transaction is settled in one to one
basis without bunching with any other transaction. Under this type of service money
transfer takes place in the books of the Reserve Bank of India, the payment taken is
final and is irrecoverable. This is primarily for transfer of large amount of money. The

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minimum amount of transfer should be ? 2 lakh. RTGS is presently in more than
45000 bank branches. Customers can remit any amount using RTGS.

The facility is also available through online mode for all internet banking and
mobile banking customers. For corporate customers, bulk upload facility is also
available at branches. RTGS remittance service for customer transactions is available
from 9am to 3.30pm on all weekdays and between 9am to 11pm on Saturday. No such
charges for customers residing at branches in North East States.

Particulars required for RTGS facility are as follows:

• Indian Financial System Code (IFSC) of the beneficiary bank or branch.

• Full account number of the beneficiary.
• Name of the beneficiary.
• Bank or Branch details.

Table 2.28: Charges for RTGS Transaction

SI. No. Transaction Amount Charges

1. Up to? 2 lakh Nil

2. From ? 2 lakh and up to ? 5 lakh ? 25 per transaction

3. More than ? 5 lakh ? 50 per transaction

Source: Annual Reports

Table 2.28 indicates that, the different charges levied by the Bank on
beneficiaries for RTGS services provided by the bank.

5. Mobile Banking Services:

U mobile, the bank’s unique mobile banking service is a milestone in the

banking industry. Unlike other mobile banking services, U mobile not only provides
the customers a secure and convenient means of banking, but also allows them to do a
lot more with their mobile phones. This provides the customers a secure and
convenient means of banking from anywhere anytime. These services are available
both on SMS and GPRS. U Mobile is a secured payment channel since the customer
does not compromise with information like the debit card number or pin.

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 Following are the services provided through U Mobile

I. Balance enquiry

II. Mini statement (last nine transactions).

HI. Fund transfer (a)Within the bank.

(b) To other banks (using NEFT platform).

IV. Bill payments.

V. Airline Ticketing.

VI. Movie Ticketing.

VII. Shopping (shopping at the counters, on the move and online hopping).

VIII. Mobile Recharge.

IX. Corporate Fund Transfers.

X. Temple donations fees payments.

XI. Stop payment of cheques.

XII. Cheque status.

XIII. Hotlist Debit Card.

XIV. ATM / branch locator.

XV. Request to bank for Cheque Book.

XVI. Account statement.

XVII. Loans.

XVIII. Debit / Credit card.

XIX. New account / Fixed Deposits.

XX. Communication mode.

XXI. SMS.

XXII. GPRS.

XXIII. WAP.

XXIV. Change activation code / password.

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XXV. Enable / disable transactions.

XXVI. Change service number.

Feedback and complain.

6. Phone Banking Services:

With Union Bank 24x7 phone banking services, the customers can
conveniently conduct various banking transactions by calling the bank’s phone
number. A dedicated call centre ensures that customers get the best of the services
with an assurance of complete confidentiality and safety.

7. Internet Banking Services:

With Union Bank’s 24x7 internet banking, the customers can have an online,
real-time access to their bank accounts. The customers can conduct various banking
transactions by using the internet banking services. The bank initiated another
innovation in the banking industry by introducing the self user creation servicer. With
this feature, the Union Bank customers can register for internet banking, set their own
password and start using the service within 48 hours.

8. SMS Banking Services:

The union bank’s SMS banking service allows a customer to keep a watch on
his account, round the clock. Every debit or credit in the account over a limit desired
by the customer is intimated by an SMS, as and when it happens. So the customer is
always in a position to detect unauthorized access to his account. The customer can
also know his balance and receive mini statements instantly by just sending a SMS.

9. ATMs Services:

With over 35,000 ATMs across India, the bank’s customers can easily transact
and conduct banking transactions.

10. Self Service Lobby Banking Services:

To provide a better banking experience to its customers, the Union Bank of

India has embarked on a comprehensive banking automation project comprising a set
of self-service products and solutions. Through its lobby banking concept, the bank
aims to bring at least 100 ATM kiosks under this project throughout the country. The
lobbies that will be housed in bank premises will accommodate automated passbook

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printers. The customers can withdraw money, deposit cash and get passbook printed
without any human intervention requirements. The kiosks can also be used to book
railway tickets, make bill payments, among other services.

11. Wholesale Banking Services:

Under wholesale banking service, the bank provides different services to large
corporations, mid - sized companies and small businesses. The bank has 19
specialized branches offering wholesale banking services to its clients. This ensures a
prompt delivery of services and a better understanding of the client’s financial
requirements.

12. Corporate Finance Advisory Services:

Through the corporate finance advisory service, the bank provides a holistic
approach in corporate financing. On the basis of the respective corporate strategy and
the specifics of the sector in question, the bank offers tailor - made solutions and
implements them for its clients.

13. Loan Syndication:

Union Bank of India entered into a memorandum of understanding (MOU)

with IDFC and Bank of India for jointly syndicating and financing the large
infrastructure and core industrial projects.

14. Channel Financing:

Through channel financing the bank provides integrated financial and

commercial solution to the entire chain of supply and distribution of the firm financed
by the bank.

15. Wealth Advisors Services:

Union Bank of India has tie up with wealth advisors ‘Edelweiss securities
Ltd.’ to provide wealth management services to its high net worth clients. Here,
Union Bank is offering a whole range of equity and debt investments, wealth
management products and alternative investment options such as structured products,
real estate funds etc. to its clients.

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16. Joint Venture with KBC Asset Management:

Union Bank of India entered in a joint venture with KBC asset management.
The globally active asset manager of the Belgian KBC group, to mark its presence in
the asset management industry. With its knowledge of local investors and the
expertise of KBC asset management, the bank aims to create a joint top asset
management company for retail and corporate investors in India.

17. Services to MSME:

The Micro, small and medium enterprises (MSMEs) have been accepted as a
major engine of economic growth and development. Union Bank is committed to
extend its best services to MSMEs and at a very competitive price.

18. Foreign Exchange Services:

Bank give information on the services, details of exchange rates and other
charges on foreign exchange transactions. If the customer wants to transfer money
abroad, bank will give the information regarding how to do this and other following
information

• A description of the services and how to use them

• The exchange rate applied when converting to the foreign currency
• Details of any commission or charges
• Bank will guide the customer about regulatory requirements or conditions
relating to foreign exchange services offered by the bank as and when
requested by customer.

Foreign exchange services are provided by many banks around the world.
Foreign exchange services include:

• Currency Exchange - where clients can purchase and sell foreign currency
banknotes.

• Foreign Currency Banking - banking transactions are done in foreign

currency.

• Wire Transfer - where clients can send funds to international banks abroad.

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19. Investment Services:

• Asset Management - the term usually given to describe companies which run
collective investment funds. Also refers to services provided by others,
generally registered with the Securities and Exchange Commission as
Registered Investment Advisors.

• Hedge Fund Management - Hedge funds often employ the services of "prime
brokerage" divisions at major investment banks to execute their trades.

• Custody Services - the safe-keeping and processing of the world's securities

trades and servicing the associated portfolios. Assets under custody in the
world are approximately $100 trillion

Other Financial Services of the Bank:

1. Intermediation or Advisory Services - These services are provided to stock brokers
and discount brokers. Stock brokers assist investors in buying or selling of shares.
Primarily internet-based companies are often referred to as discount brokers.

2. Debt Resolution-is a consumer service that assists individuals that have too much
debt to pay off as requested, but do not want to file bankruptcy and wish to pay off
their debts owed. This debt can be accrued in various ways including but not limited
to personal loans, credit cards or in some cases merchant accounts. There are many
services/companies that can assist with this. These can include debt consolidation,
debt settlement and refinancing.

3. Collection of Customer Information Service:

The information collected from the customers should not be used for cross­
selling of services or products by the bank. Banks are not expected to disclose
details/particulars to a third party without the expressed or implied consent from the
customer.

4. Interest Payments Service:

a. Savings Bank Accounts: Interest is paid on savings bank deposit account at
the rate specified by RBI from time to time. In case of savings bank accounts,
till recently, banks paid interest on the minimum balance.

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 b. Term Deposits: The interest on term deposits is calculated by the bank in
accordance with the formulae and conventions advised by Indian Bank
Association.
c. Tax Deducted at Source (TDS): The bank has statutory obligation to deduct
tax at source.

5. Settlement ofDues in Deceased Deposit Account Service:

a) If the depositor has registered nomination with the bank; the balance outstanding
in the account of the deceased depositor will be transferred/ paid to the nominee
after the bank is satisfied about the identity of the nominee.

b) In case of joint deposit accounts where joint account holders do not give any
mandate for disposal, when one of the joint account holders dies, the bank is
required to make payment jointly to the legal heirs of the deceased person and the
surviving depositor. In these cases, delays may ensue in the production of legal
papers by the heirs of the deceased. However, if the joint account holders had
given mandate for disposal of the balance in the account in the forms such as
'either or survivor', 'former / latter or survivor 'anyone of survivors or survivor';
etc., the payment will be made as per the mandate. In such cases, there is no
delay in production of legal papers by the heirs of the deceased.

c) In the absence of nomination, the bank will pay the amount outstanding to all
legal heirs against joint application and on receipt of the necessary documents,
including court order.

6. Stop Payment Facility Service:

The bank will accept 'stop payment' instructions from the depositors in respect
of cheques issued by them. Charges as specified will be recovered.

7. Service of Dormant accounts:

Accounts which are not operated for a considerable period of time (12 / 24
months for savings bank accounts and 6/12 months for current accounts), will be
transferred to a separate dormant / inoperative account status in the interest of the
depositor as well as the bank. The depositor will be informed if there are charges that
the bank would levy on dormant/inoperative accounts. Such accounts can be used
again on an activation request to the bank.

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Services to Different Customer Groups:
Developing and properly categorizing a customer data base forms part of the
core strategy of a bank. A typical bank with a widespread network of branches aims at
serving the following broad customer groups.

• Retail customers;

• Corporate customers;

• International customers;

• Rural customers.

A bank formulates its overall customer strategy to increase profitable business

keeping in mind its strengths and weaknesses. The key strategy components and
trends in each of these customer groups are briefly discussed below.

1. Retail Customers:

With growing household incomes, the Indian retail financial service market
has high growth potential. The key dimensions of the retail strategy of a bank include
customer focus, a wide range of products, customer convenience, widespread
distribution, strong processes and prudent risk management. The fee income that
banks earn while extending commercial banking services to retail customers includes
retail loan processing fees, credit card and debit card fees, transaction banking fees
and fees from distribution of third party products. Cross selling of the entire range of
credit and investment products and banking services to customers is often a key
aspect of the retail strategy.

2. Retail Lending Activities:

There is widespread acceptance by the average consumer of using credit to

finance purchases. Given this background, retail credit has emerged as a rapidly
growing opportunity for banks. Banks also focus on growth in retail deposit base
which includes low cost current account and savings bank deposits. Retail deposits
are usually more stable than corporate bulk deposits or wholesale deposits. Bank’s
offer a range of retail products, including home loans, automobile loans, commercial
vehicle loans, two wheeler loans, personal loans, and credit cards, loans against time

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deposits and loans against shares. Banks also finance to dealers who sell automobiles,
two wheelers, consumer durables and commercial vehicles.

Personal loans are unsecured loans provided to customers who use these funds
for various purposes like as higher education, medical expenses, social events and
holidays. Personal loans include micro-banking loans, which are relatively small
value loans to lower income customers in urban and rural areas. Credit cards have
become an important component of lending to the retail segment in the case of a
number of banks. As the Indian economy develops, it is expected that the retail
market will seek short-term credit for personal uses, and the use of credit cards
facilitate further extension of banks' retail credit business.

3. Lending to Small and Medium Enterprises:

Most of the private and foreign banks have integrated the strategy with regard
to small and medium enterprises with their strategy for retail products and services.
Hence, the retail focus includes meeting the working capital requirements, servicing
deposit accounts and providing other banking products and services required by small
and medium enterprises. Of late, public sector banks are also very active in lending to
this business segment. Banks often adopt a cluster or community based approach to
financing of small enterprises, that is, identifying small enterprises that have a
homogeneous profile such as apparel manufacturers or jewellery exporters.

Free of Charge Services of UBI:

a. Remittances for creation of a term deposit or payment of installment of UIRD

/ cumulative deposit through DD, PO, Cash.
b. Repayment of loans through cash.
c. Safe custody of banks own deposit receipt.
d. Statement of account.
e. Updating of passbook.
f. Issuance of Debit / ATM card.
g. Cash withdrawal from any bank ATM in India.
h. Balance enquiry from any bank ATM in India.
i. Enquiry / Statement of account (downloaded / printed) through Internet /
Telebanking.

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Code of Banks Commitment to Customers Services:
This is a voluntary code, which sets minimum standards of banking practices
for banks to follow when they are dealing with individual customers. This code
applies to all the products and services, whether they are provided by branches or
subsidiaries, agents, over the phone, by post, through interactive electronic devices,
on the internet or by any other method.

Application of Code in the Products and Services :

1. Current accounts, Savings accounts, Term deposits. Recurring deposits, PPF

accounts and all other deposit accounts.

2. Payment services such as pension, payment orders, and remittances by way of

demand Drafts, wire transfers and all electronic transactions e.g. RTGS, EFT, and
NEFT.

3. Banking services related to Government transactions.

4. Demat accounts, equity, Government bonds.

5. Indian currency notes exchanges services.

6. Collection of cheques, safe custody services, and safe deposit locker facility.

7. Loans, Overdraft and Guarantees.

8. Foreign exchange services including money changing.

9. Third party insurance and investment products sold through the branches.

10. Card products including credit cards, debit cards, ATM cards, smart card.

Code of Banks Commitment to Micro and Small Enterprises:

This is a voluntary code, which sets minimum standards of banking practices
for banks to follow when they are dealing with Micro and Small Enterprises (MSEs)
as defined in the Micro and Small Enterprises Development (MSMED) act, 2006. It
provides protection to customer and explains how banks are expected to deal with
customer for day-to day operations and in times of financial difficulty.

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Key Commitments to the Customers of UBI:
1. To actfairly and reasonably with customers by:

a) Providing minimum banking facilities of receipt and payment of cash /

cheques at the Bank’s counter.
b) Meeting the commitments and standards for the products and services.
c) Making sure bank products and services meet relevant laws and regulations
in letter and spirit.
d) Ensuring that bank dealings with customer rest on ethical principles of
integrity and transparency.
e) Operating secure and reliable banking and payment systems.

2. To help customer to understand how bankfinancialproducts and services work by:

(a) Giving customer information in any one or more of the following language -
Hindi, English or the appropriate local language.

(b) Ensuring that bank advertising and promotional literature is clear and not
misleading.

(c) Ensuring that customer are given information about bank products and services,
in terms and conditions and the interest rates / service charges.

(d) Giving information on what are the benefits to customer, how customer can avail
of the benefits, what are their financial implications and whom customer can
contact for addressing their quarries and how.

3. To help customer use customer account or services by:

(a) Keeping customer informed about changes in the interest rates, charges or terms
and conditions.

(b) Displaying in bank branches for customer information.

(c) Displaying in the banks website regarding the policies on Cheque collection,
Grievance redressal, Compensation, Collection of dues and security repossession.

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4. To deal quickly and sympathetically with things that goes wrong by:

• Correcting mistakes promptly and cancelling any bank charges that bank apply
due to their mistake.
• Handling customer complaints promptly.
• Telling customer how to take customer complaint forward if the customer is still
not satisfied.
• Providing suitable alternative avenues to alleviate problems arising out of
technological failures.

5. To treat all customer personal information as private and confidential:

Bank will treat all customers’ personal information as private and confidential
subject to matters mentioned.

Information -Transparency Services of UBI:

Customer get the information of interest rates, common fees and charges
through any one or more of the following modes:

(a) Looking at the Notice Board in the branches

(b) Phoning bank branches or help - lines.
(c) Looking on the website.
(d) Asking bank designed staff / help desk.
(e) Referring to the service guide / Tariff schedule.

General Information to Customers of UBI:

a. Bank gives clear information regarding the key features of the services and
products including applicable interest rates, fees and charges.
b. Bank gives information on any type of products and services which the bank
offer and that may suit the customer needs.

Interest Rates Information Service:

Providing information about the following:

• The interest rates on their deposit and loan accounts.

• In case of fixed rate of interest, details of interest reset clause, if any, in the
loan agreement and the effective date thereof.

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 • In case of floating rate of interest, the reference rate to which their floating
rate will be linked and the premium or discount applied to the reference rate
for determining the rate of interest on their loan. At his reference rate will
remain uniform for customer containing the loan at different points of time.
• Whether the loan agreement will contain a minimum rate of interest clause.
• Whether bank give the option for conversion of customer loan from fixed rate
to floating rate and vice versa and if so, the charges therefore.

Changes in Interest Rates Information Service:

Providing information about changes in interest rates through any of the
following means:

■ Notice of the branches.

■ Annexure to the statement of account.
■ Letters
■ E-mail
■ SMS
■ Website
■ Newspaper

Notification of Tariff Schedule:

1. Fees and Charges:

a) Displaying in branches a notice about the tariff schedule and that customer can
ask to see this free of cost.

b) Providing details about the changes in tariff schedule applicable to the products
and services chosen by customer

c) Providing information about the penalties leviable in case of non-observance /

violation of any of the terms and conditions governing the product /services
chosen.

2. Changes in Fees and Charges:

Any increase or decrease in charges is notified one month prior to the revised
charges being levied / becoming effective.

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Information of Changes to Terms and Conditions;

Changes in terms and conditions will be informed to the customers through

any one or more of the following channels

■ Account Statement / Pass book.

■ ATMs.
■ Notice Board of each branch.
■ Internet, including e-mail and website.
* Newspaper.
■ SMS.

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