Banking industry overview

A Bank is a financial institution that accepts monetary deposits and

then uses the capital to lend to businesses or individuals. Banks use this process to
make a profit on the capital raised through collecting deposits then raising the
interest rates on the money it lends therefore increasing the amount of return it
receives on its investment. Banks can be categorized further by stating that they
connect individuals or businesses with capital in touch with clients that need
capital.

The Banking industry is a highly regulated sector the world over and in
the majority of countries the government has control overall in terms of sanctions
or guidelines that banks must adhere to. Banks within European countries such as
Germany have traditionally held large stakes in industrial businesses however in
the United States of America it is illegal for Banks to have a stake in any other
company other than one involved in financial services. There is a set of global
standards outside of independent countries guidelines named Basel II issued by the
Basel Commission on Banking Supervision.

Financial institutions have been in existence for thousands of years

with the first records of banks being sometime around three thousand B.C. It is
likely that these 'financial' institutions predate the invention of money and were
used initially for the deposit of crops, spices, livestock then eventually precious
items such as gold. These structures were more than likely religious houses or
temples as at that time the buildings were well made, constantly attended, so
therefore the safest place to store anything of value.

The oldest surviving bank today is the Monte Dei Paschi Di Siena in
Italy which has been in existence since 1472. The largest bank in the world (2010)
is the Industrial and Commercial Bank of China Ltd which was founded in 1984.

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 The health of the banking sector has a direct connection to the state of the
economy as can be seen clearly with the near global recession experienced by
many countries from late (circa) 2007 up until the present day (2010). This recent
financial crisis has been attributed to unsustainable lending practices by financial
institutions and more specifically the United States mortgage-backed securities
which had associated risks that were impossible to detect.

The growth in the Indian Banking Industry has been more qualitative than
quantitative and it is expected to remain the same in the coming years. Based on the
projections made in the "India Vision 2020" prepared by the Planning Commission and the
Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of
banks is likely to decelerate. The total assets of all scheduled commercial banks by end-
March 2010 are estimated at Rs 40, 90,000 crores. That will comprise about 65 per cent of
GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are
expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade
as against the growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is
expected that there will be large additions to the capital base and reserves on the liability
side.

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 The Indian Banking Industry can be categorized into non-scheduled
banks and scheduled banks. Scheduled banks constitute of commercial banks and
co-operative banks. There are about 67,000 branches of Scheduled banks spread
across India. As far as the present scenario is concerned the Banking Industry in
India is going through a transitional phase.

The Public Sector Banks (PSBs), which are the base of the Banking
sector in India account for more than 78 per cent of the total banking industry
assets. Unfortunately they are burdened with excessive Non Performing assets
(NPAs), massive manpower and lack of modern technology. On the other hand the
Private Sector Banks are making tremendous progress. They are leaders in Internet
banking, mobile banking, phone banking, ATMs. As far as foreign banks are
concerned they are likely to succeed in the Indian Banking Industry.

In the Indian Banking Industry some of the Private Sector Banks operating
are IDBI Bank, ING Vyasa Bank, SBI Commercial and International Bank Ltd,
Bank of Rajasthan Ltd. and banks from the Public Sector include Punjab National
bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank among others.
ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank
are some of the foreign banks operating in the Indian Banking Industry.

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 Canara bank profile

Widely known for customer centricity, Canara Bank was founded by

Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906,
at Mangalore, then a small port in Karnataka. The Bank has gone through the
various phases of its growth trajectory over hundred years of its existence. Growth
of Canara Bank was phenomenal, especially after nationalization in the year 1969,
attaining the status of a national level player in terms of geographical reach and
clientele segments. Eighties was characterized by business diversification for the
Bank. In June 2006, the Bank completed a century of operation in the Indian
banking industry. The eventful journey of the Bank has been characterized by
several memorable milestones.

Canara Bank’s rating reflects its strong market position, adequate

capitalization levels, and comfortable liquidity profile. The rating also factors the
bank’s business profile that is supported by a good resources position, as well as its
better asset quality as compared to its peers. Crisil also considers the Government
of India’s (GoI) majority ownership of Canara Bank to be a positive rating factor.
The bank’s earnings profile is characterized by moderate although improving
profitability.

Strong market position: Canara Bank ranks among the top five banks
in the country, in terms of size of both deposits and assets. As at March 31, 2002,

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Canara Bank had a market share of 5.32 per cent of total deposits and 5.13 per cent
of total advances of all scheduled commercial banks (SCBs). It is one of the few
national players in the banking industry with a network of more than 3000
branches spread all across the country. Canara Bank’s strong market position is
underpinned by its nationwide presence and its large and diversified balance sheet.
This strong market position gives Canara Bank significant advantages in raising
resources, besides bringing in diversity of assets.

Adequate capitalisation levels: Canara Bank’s capital position is

characterised by a moderate Tier I capital ratio, reasonably large capital base, and
comfortable networth coverage of net non-performing assets (NPAs). At 7.85 per
cent as at March 31, 2003, Canara Bank’s Tier I capital adequacy ratio is moderate
and is comparable with that of the better public sector banks. Canara Bank’s
reasonably large capital base of Rs 41.49 billion as at March 31, 2003 provides
comfort against large asset-related shocks. The net worth coverage for net NPAs at
2.85 times provides substantial comfort to its existing capital position.

Good resource and liquidity profile: Canara Bank’s good resource

profile accrues from its large and geographically well-diversified deposit base
(which emanates from its national presence), healthy resource mix, and steady
growth in deposits. Further, a significant proportion of the bank’s branches (42 per
cent) are in the semi-urban and rural areas, which provides it with a relatively
stable source of funds, given the limited presence of the new private sector banks
in these areas.

Canara Bank’s liquidity position continues to be comfortable, and is

supported by a steady growth in deposits, access to the inter-bank call money
market, and investments above regulatory requirements in highly liquid
Government Securities.

Today, Canara Bank occupies a premier position in the comity of

Indian banks. With an unbroken record of profits since its inception, Canara Bank
has several firsts to its credit. These include:
 Launching of Inter-City ATM Network

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  Obtaining ISO Certification for a Branch
 Articulation of ‘Good Banking’ – Bank’s Citizen Charter
 Commissioning of Exclusive Mahila Banking Branch
 Launching of Exclusive Subsidiary for IT Consultancy
 Issuing credit card for farmers
 Providing Agricultural Consultancy Services

Over the years, the Bank has been scaling up its market position to emerge
as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored
institutions/joint ventures in India and abroad.  As at March 2010, the Bank has
further expanded its domestic presence, with 3043 branches spread across all
geographical segments.  Keeping customer convenience at the forefront, the Bank
provides a wide array of alternative delivery channels that include over 2000
ATMs- one of the highest among nationalized banks- covering 728 centre’s, 1959
branches providing Internet and Mobile Banking (IMB) services and 2091
branches offering 'Anywhere Banking' services.  Under advanced payment and
settlement system, all branches of the Bank have been enabled to offer Real Time
Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT)
facilities.

Not just in commercial banking, the Bank has also carved a distinctive
mark, in various corporate social responsibilities, namely, serving national
priorities, promoting rural development, enhancing rural self-employment through
several training institutes and spearheading financial inclusion objective.
Promoting an inclusive growth strategy, which has been formed as the basic plank
of national policy agenda today, is in fact deeply rooted in the Bank's founding
principles. "A good bank is not only the financial heart of the community, but also
one with an obligation of helping in every possible manner to improve the
economic conditions of the common people". These insightful words of canara

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bank founder continue to resonate even today in serving the society with a purpose.
The growth story of Canara Bank in its first century was due, among others, to the
continued patronage of its valued customers, stakeholders, committed staff and
uncanny leadership ability demonstrated by its leaders at the helm of affairs. The
bank strongly believe that the next century is going to be equally rewarding and
eventful not only in service of the nation but also in helping the Bank emerge as a
"Global Bank with Best Practices". This justifiable belief is founded on strong
fundamentals, customer centricity, enlightened leadership and a family like work
culture.

Awards and achievements

Received during 2008-09

 Conferred 'First Rank' in India's Best Banks awards under the category
'Strength and Soundness' for 2006-07 by a survey conducted by Ernst & Young.

 Best Performing Bank under Rural Employment Generation Programme,

(REGP) of Khadi and Village Industries Commission (KVIC), in South Zone for
the year 2007-08, instituted by the Ministry of MSME, Government of India.

 Golden Peacock National Training Award 2008 for excellence in training.

 Global HR excellence in Training, an award conferred by the Asia Pacific

HR Congress, the largest rendezvous of HR Professionals, at its Employer
Branding Talent Management Congress held on 22nd and 23rd August 2008,
Delhi.

 Best Corporate Social Responsibility Practice Award, instituted by BSE,

NASSCOM and Times Foundation.

 The Bank won two Silver Corporate Collateral Awards for Best Corporate
Ad in the Print Media and Best Corporate Film on Corporate Social Responsibility
at the Public Relations Council of India Awards 2009.

Received during 2009-10

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  Best Bank in South Zone Award for the year 2008-09 in respect of lending
under KVIC and PMEGP Schemes. The award was handed over by Dr.Manmohan
Singh, Hon’ble Prime Minister of India.

 The Bank received the Credit Guarantee Approval Certificate issued by

CGTMSE from Shri Pranab Mukherjee, Hon’ble Finance Minister of India.

Bank policies

Grievance Redressal policies

In the present scenario of competitive banking, excellence in

customer service is the most important tool for sustained business growth. Ever
since inception canara bank Bank has attached high priority to customer
satisfaction. Over the years, steps have been taken to come out with a number of
initiative aimed at achieving high standards of customer satisfaction and complaint
free branch network. Customer complaint is part of the business life of any
corporate entity. As a service organization, customer service and customer
satisfaction is the prime concern of the Bank. The bank believe that providing
prompt and efficient service is essential not only to attract new customers, but also
to retain existing ones. This policy document aims at minimizing instances of
customer complaints and grievances through proper service delivery and review
mechanism and to ensure prompt redressal of customer complaints and grievances.
The review mechanism will help in identifying shortcomings in product features
and service delivery.

The Bank's policy on Grievance Redressal follows the under noted principles :

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 Canara bank customers will be treated fairly at all times

 Complaints raised by canara bank customers will be dealt with courtesy and
in time

 Canara bank customers will be fully informed of avenues to escalate their

complaints/grievances within the organization and their rights to alternative
remedy, if they are not fully satisfied with the response of the bank to their
complaints

 Canara bank Bank will treat all complaints efficiently and fairly as they can
damage the Bank's reputation and business if handled otherwise.

 Canara bank employees will work in good faith and without prejudice to
the interests of the customer.

In order to make Bank's redressed mechanism more meaningful and

effective, a structured system will function at Branches/Circle Offices/Head Office,
which will ensure that redressed sought is just and fair and is within the given
frame-work of rules and regulation.
This policy document will be made available at all branches. All the
employees will be made aware about the complaint handling process to ensure
better customer service and general awareness in the bank.

1.1 The customer complaint arises due to

a. The attitudinal aspects in dealing with customers

b. In adequacy of the functions/arrangements made available to the customers

or gaps in standards of services expected and actual services rendered.

The customer is having full right to register his complaint if he/she is not satisfied
with the services provided by the Bank. He/she can give his/her complaint in
writing, orally or over telephone. If customer complaint is not resolved within
given time or if he/she is not satisfied with the solution provided by the bank,
he/she can approach Banking Ombudsman with his/her complaint or other legal
avenues available for grievance redressed.

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 2. Internal Machinery to handle customer complaints/grievances

a. If the customer wants to make a complaint, they will inform :

o Where to make complaint
o How a complaint should be made
o When to expect a reply
o Whom to approach for redressal
o What to do if customers are not happy about the outcome
b. The Bank will inform customers where to find details of procedures for
handling complaints fairly and quickly.
c. If the customer complaint is received in writing, the bank will Endeavour to
send an acknowledgement/a response within a week. If customer complaint in
relayed over phone at canara bank designated telephone helpdesk or customer
service numbertheyshall provide a complaint reference number and keep customers
informed of the progress within a reasonable period of time.
d. After examining the matter,theywill send canara bank final response or
explain whytheyneed more time to respond and shall Endeavour to do so within 30
days of receipt of complaint and will tell customers to take their complaint further
if they are still not satisfied.

COMPLAINT REDRESSAL MECHANISM IN CANARA BANK (Internal Machinery)

AT BRANCH
Resolution of Grievances

Branch Manager will be responsible for the resolution of the

complaints/grievances in respect of customer's service by the Branch. He/she would
be responsible for ensuring closure of all complaints received at Branches. It is
his/her foremost duty to see that the complaint should be resolved completely to the
customer's satisfaction and if the customer is not satisfied, then he shall be provided
with alternate avenues to escalate * the issue if the same is not resolved within the
stipulated period. If the Branch Manager feels that is not possible at his/her level to
solve the problem he/she may refer the case to Regional or Circle Office or Head
Office for guidance. Similarly, if Regional Office/Circle Office finds that they are

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not able to solve the problem such cases may be referred to the Nodal Officer of the
Bank.

* Grievance Escalation System is provided in Page No.5 for the convenience of the
customers

 Suggestion Box and complaint Book are provided in all the branches. Any
written complaint is instantly and promptly acknowledged.

 All branches other than small branches have “May I help you counters ".

 Counter staff are provided with training and additional inputs.

 If counter staff/Supervisor is unable to resolve a grievance, the branch in-

charge intervenes and tries to resolve the issue.

 Customers' Day is observed on 15th of every month. On this day branch in-
charge will make he available at the branch between 3 p.m. and 5 p.m. to meet
customers without any prior appointment.

 Customer Service Committee meetings is held every month at all Branches,

Circle Offices. The sole task of the

 Committee is to find out ways and means to render service to the

satisfaction of the Customers. For this purpose

 Committee will meet regularly at stipulated intervals to discuss in detail the

strengths and deficiencies of the services presently rendered and take steps to
improve it.

 Special Customers' Meet is conducted on special occasions.

 Every year, Customer Fortnight is observed to create awareness among

Public as well as staff for achieving the objective of Complaint free branch
network and also highlight canara bank products and services.

AT REGIONAL OFFICE/CIRCLE OFFICE

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 Divisional Manager / Assistant General Manager hold exclusive charge of
Customer Service Section at Regional Office/Circle office.

 By and large, complaints are redressed within shortest possible time.

 Whenever it is not possible and more cross checking is required, steps are
taken to settle the matter within a reasonable time.

 Divisional Managers(O) / Assistant General Manager(O) visit branches

periodically and submit a report on Customer Service, as per the detailed checklist

 Divisional Manager / Assistant General Manager in-charge of Customer

Service Section, Regional office / Circle Office contact the aggrieved customers as
and when necessary, meet him personally with the Branch Manager, for

 Ensuring timely redressal of the complaint.

 Wherever deficiencies are noticed, accountability is fixed and erring

employees punished; still there may be some aggrieved customers who write to
Head office.

AT HEAD OFFICE

 A full-fledged Customer Service Section is functioning at M&CRM Wing,

Head Office, overseen by General Manager.

 An acknowledgement is sent to the customer immediately on receipt of the

complaint.

 Thorough analysis of the complaints is done and necessary instructions are

given to CO/RO/ Branches for speedy redressal and followed up till final redressal
letter is sent to the complainant duly explaining the decision taken on the
complaint.

 On 15th of every month, Customers' Day is observed between 3 p.m. and 5

p.m. during which canara bank overseeing

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 Executives are available for meeting the public / Customers without prior
appointment.

 Special Customers' Meets are organised for different segments of the

market, viz., Exporters, SSI, NRI, Agriculturists, etc..

 Customer Satisfaction Surveys through In-house as well as by External

agencies are conducted to assess the level of customer satisfaction.

Grievance Escalation System

 Customers can lodge their complaints directly to Branch-in-charge and it

will be the responsibility of the Branch-in-charge to resolve the complaint within 7
days from the date of receipt.

 The Branch-in-charge will analyze the complaint and if need be he/she will
contact the complainant personally and resolve the complaint.

 A complaint redressal letter will be sent to complainant, if the complaint is

resolved at Branch level. The Branch will also send the details of the grievance
received by the at periodical intervals to Regional Office/Circle Office.

 If the Branch-in-charge is not able to resolve the complaint within 7 days,

the complaint will be referred by the Branches to the concerned Regional
Office/Circle along with their comments / replies for further action.

 The complaints referred to Regional Office/Circle Office will be analysed

by Customer Service Section and based on the explanation received from the
Branch, RO/CO will send a suitable reply to complainant.

 If the reply received from the Branch is not satisfactory and if Regional
Office/Circle Office cannot resolve the complaint within 7 days from the date of
receipt of complaints, the same will be referred to Customer Service Section, Head
Office along with their comments/explanations. The Regional Office/Circle Office
will also send the details of the complaints received directly by them and not
settled within seven days to Customer Service Section, Head Office along with
their comments/replies.

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  Customer Service Section, Head Office will analyse the complaint and the
replies received from Branch and Regional Office/Circle Office. On placing the
matter before appropriate authorities a decision is taken on the complaint. A
complaint redressal letter is sent to the complainant from Head Office and suitable
instruction are passed on to Branch, Regional Office, Circle Office for taking
action in the deficient areas.

BANKING OMBUDSMAN SCHEME

a. We have displayed on canara bank website and in all canara bank Branches
a notice explaining thattheyare covered by the Banking Ombudsman Scheme, 2006
of the Reserve Bank of India . The copy of the scheme is made available at all the
branches and will be issued to customers at a nominal charge.

b. Within 30 days of lodging a complaint with us, if customer does not get a
satisfactory response from us and if customer wishes to pursue other avenues for
redressal of grievances, customer may approach Banking Ombudsman appointed
by Reserve Bank of India under Banking Ombudsman Scheme, 2006. Salient
features of the Banking Ombudsman Scheme, 2006 are displayed in the branch
notice boards and the scheme itself is displayed on canara bank Website
http://www.canarabank.com/english/scripts/www.canarabank.com If customers
face any difficulty canara bank Staff will explain the procedure in this regard.

2.1. Standing Committee on Customer Service (Constituted on 22.6.2005)

In order to benchmark the current level of service, review the progress

periodically, enhance the timeliness and quality, rationalize the processes taking
into account technological developments and suggest appropriate incentives to
facilitate change on an ongoing basis the Standing Committee on Customer Service
is functioning.

The Committee is having the following functions:

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  Evaluate feedback on quality of customer service received from
various quarters. The committee would also review comments/feedback on
customer service, implementation of commitments in the Code of Bank's
Commitments to customers received from BCSBI and compliance is related to non
compliance with the code.

 The committee would be responsible to ensure that all regulatory

instructions regarding customer service are followed by the Bank. Towards this,
the committee would obtain necessary feedback from Zonal/Regional
Managers/Functional heads.

 The committee would consider unresolved complaints/grievances

referred to it by functional heads responsible for redressal and offer its advice

 The committee would submit report on its performance to the

customer service committee of the board at quarterly intervals.

2.2. Customer Service Committee of the Board (Constituted on 1.8.2004)

This sub-committee of the Board would be responsible for formulation of a
Comprehensive Deposit Policy incorporating the issues such as the treatment of
death of depositor for operations of his account, the product approval process and
annual survey of depositor satisfaction, loan policies and service issues for the
individual as a borrower and the tri-enniel audit of such services. The committee
would also examine any other issues having a bearing on the quality of customer
service rendered. This committee would also review the functioning of the
Standing Committee on Customer Service.

2.3. Nodal Officer and other designated officials to handle complaints and
grievances.

AT HEAD OFFICE

Nodal Officer

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 The Bank has nominated General Manager, Customer Service Section,
M & CRM Wing Head Office, Bangalore as NODAL OFFICER, who is
monitoring the implementation of customer service and complaint handling for the
entire Bank.
Quality Assurance Officer
Deputy General Manager, M & CRM wing, Head Office has been nominated
as the Quality Assurance Officer of canara bank bank who apart from performing
various functions, is also undertaking separate visits to branches to assess the level
of service and interact with customers for initiating necessary action in the
deficient areas.

AT CIRCLE OFFICES
Overseeing Executive of Customer Service Section at Circle Offices are
handling the complaints received directly from customers of that region. Customer
Service Committees are in place in all the Circle Offices to look into
implementation of customer service.

3. Mandatory display requirements

The Bank has made it mandatory to display the following at Branches for the
benefit of canara bank customers:

 Details on appropriate arrangements made for receiving complaints and

suggestions
 The name, address and contact number of Nodal Officer(s)
 Contact details of Banking Ombudsman of the area
 Details of Code of Bank's commitments to customers/Fair practice code

4. Resolution of Grievances

Branch Manager is responsible for the resolution of complaints/grievances

in respect of customer's service by the branch. He would be responsible for

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ensuring closure of all complaints received at the branches. It is his foremost duty
to see that the complaint should be resolved completely to the customer's
satisfaction and if the customer is not satisfied, then he should be provided with
alternate avenues to escalate the issue. If the branch manager feels that it is not
possible at his level to solve the problem he can refer the case to Regional or Circle
Office for guidance. Similarly, if Regional or Circle office finds that they are not
able to solve the problem such cases may be refereed to the Nodal Officer of the
Bank.

4.1 Time Frame

Complaints received will be seen in right perspective and will be analyzed from
all possible angles. Specific time schedule is set up for handling complaints and
disposing them at all levels including branches/Regional Offices/Circle Offices and
Head Office. The Branch Manager will try to resolve the complaint within specified
time frames decided by the Bank.

TIME SCHEDULE FOR REDRESSAL OF COMPLAINTS

Stipulated by Adopted by
 
MOF Bank
General Complaints 30 days 21 days
Complaints forwarded by
21 days 15 days
RBI/MOF MPs/VVIPs
Complaints from PMs office 15 days 7 days

All the complaints received will be acknowledged immediately. In cases

where complaints received would require some time for examination, the same will
be informed to customer through a interim reply.

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 Branches/Regional Offices/Circle Offices will send action taken report on
complaints received at their end to Head Office at the end of every month.

5. Interaction with customers

Customer's expectation/requirement/grievances can be better understood
through personal interaction with customers by Bank's staff. Structured customer
meets will give a message to the customers that the bank cares for them and values
their feedback/suggestions for improvement in customer service. Many of the
complaints arise on account of lack of awareness among customers about bank
services and such interactions will help the customers appreciate the banking
services better. The feedback from customers would be a valuable input for
revising canara bank product and services to meet customer requirements.

6. Sensitizing the operating staff on handling complaints

Canara bank staff will be properly trained for handling complaints. During all
the Training Sessions at canara bank Apex Staff Training College and Regional
Staff Training Colleges, the importance of handling complaints is explained to all
the participants and they are trained to deal with customer complaints. Nodal
Officer for the Bank will ensure that internal machinery for handling
complaints/grievances operates smoothly and efficiently at all levels and he will be
giving feed back on training needs of staff at various levels to the Human
Resources Department.

History of canara bank

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 The late Sri. Ammembal Subba Rao Pai, a philanthropist, established the
Canara Bank Hindu Permanent Fund in Mangalore, India, on 1 July 1906. The
bank changed its name to Canara Bank Limited in 1910 when it incorporated.

In 1958, the Reserve Bank of India ordered Canara Bank to acquire G.

Raghumathmul Bank, in Hyderabad. This bank had been established in 1870, and
had converted to a limited company in 1925. At the time of the acquisition G.
Raghumathmul Bank had five branches.

Significant Milestones
Year  
1st July Canara Hindu Permanent Fund Ltd. formally registered with a capital of 2000
1906 shares of Rs.50/- each, with 4 employees.
1910 Canara Hindu Permanent Fund renamed as Canara Bank Limited
1969 14 major banks in the country, including Canara Bank, nationalized on July 19
1976 1000th branch inaugurated
Overseas branch at London inaugurated
1983
Cancard (the Bank’s credit card) launched
1984 Merger with the Laksmi Commercial Bank Limited
1985 Commissioning of Indo Hong Kong International Finance Limited
1987 Canbank Mutual Fund & Canfin Homes launched
1989 Canbank Venture Capital Fund started
1989-90 Canbank Factors Limited, the factoring subsidiary launched
Became the first Bank to articulate and adopt the directive principles of “Good
1992-93
Banking”.
Became the first Bank to be conferred with ISO 9002 certification for one of its
1995-96
branches in Bangalore
Opened a 'Mahila Banking Branch', first of its kind at Bangalore, for catering
2001-02
exclusively to the financial requirements of women clientele.
2002-03 Maiden IPO of the Bank
2003-04 Launched Internet & Mobile Banking Services
2004-05 100% Branch computerization

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 Entered 100th Year in Banking Service
2005-06 Launched Core Banking Solution in select branches
Number One Position in Aggregate Business among Nationalized Banks
Retained Number One Position in Aggregate Business among Nationalized
Banks.
2006-07 Signed MoUs for Commissioning Two JVs in Insurance and Asset Management
with international majors viz., HSBC
(Asia Pacific) Holding and Robeco Groep N.V respectively
Launching of New Brand Identity
Incorporation of Insurance and Asset Management JVs
2007-08 Launching of 'Online Trading' portal
Launching of a ‘Call Centre’
Switchover to Basel II New Capital Adequacy Framework
The Bank crossed the coveted Rs. 3 lakh crore in aggregate business
2008-09
The Bank’s 3rd foreign branch at Shanghai commissioned
The Bank’s aggregate business crossed Rs.4 lakh crore mark.
2009-10 Net profit of the Bank crossed Rs.3000 crore.
The Bank’s branch network crossed the 3000 mark.

As at March 2010, the total business of the Bank stood at Rs.4, 03,986 crore.

Vision and Mission of canara bank

Vision

To emerge as a ‘Best Practices Bank’ by pursuing global benchmarks

in profitability, operational efficiency, asset quality, risk management and
expanding the global reach.

Mission

To provide quality banking services with enhanced customer orientation,

higher value creation for stakeholders and to continue as a responsive corporate
social citizen by effectively blending commercial pursuits with social banking.

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 Organizational chart

Head office (Bangalore)

Circle office (30)

Branch

Small medium very large large extra large

Chief Manager (perinthalmanna)

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Manager supervisor (manager) Investment
Manager

Deposit Lone section Clearing Account savings bank File DD

Section Section Section section Management Section

Locker section collection section

Gold Lone Other lone

Share holding pattern

As at March 2009, Capital to Risk Weighted Assets Ratio (CRAR)

of the Bank under Basle II stood at 14.10%, well above the 9% regulatory
benchmark. Significantly, the Bank has attained a Tier I capital ratioof 8.01%. The
medium term objective of the Bank is to maintain the CRA ratio above 12%. With
the still undiluted 73.17% Government of India shareholding, the Bank has large
headroom available under Tier I andTier II options to raise capital and support
business growth momentum.

Share holding pattern as on : 31/03/2010 31/12/2009 30/09/2009

Face value 10.00 10.00 10.00
No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
Promoter's holding
Indian Promoters 300000000 73.17 300000000 73.17 300000000 73.17
Sub total 300000000 73.17 300000000 73.17 300000000 73.17
Non promoter's holding

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 No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
Institutional investors
Banks Fin. Inst. and
31485913 7.68 31093879 7.58 29312067 7.15
Insurance
FII's 47581514 11.61 47261996 11.53 42467556 10.36
Sub total 87138037 21.25 86852596 21.18 84138919 20.52
Other investors
Private Corporate Bodies 1983985 0.48 1812978 0.44 2781725 0.68
NRI's/OCB's/Foreign
252308 0.06 242787 0.06 384260 0.09
Others
Others 79645 0.02 166832 0.04 405829 0.10
Sub total 2315938 0.56 2222597 0.54 3571814 0.87
General public 20546025 5.01 20924807 5.10 22289267 5.44
Grand total 410000000 100.00 410000000 100.00 410000000 100.00

Area of operations

a) Banking

Banks act as payment agents by conducting checking or current

accounts for customers, paying cheques drawn by customers on the bank, and
collecting cheques deposited to customers' current accounts. Banks also enable
customer payments via other payment methods such as telegraphic transfer,
EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current

accounts, by accepting term deposits, and by issuing debt securities such as
banknotes and bonds. Banks lend money by making advances to customers on
current accounts, by making installment loans, and by investing in marketable debt
securities and other forms of money lending.

23
 Banks provide almost all payment services, and a bank account is
considered indispensable by most businesses, individuals and governments. Non-
banks that provide payment services such as remittance companies are not
normally considered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial

businesses, and lend most funds to households and non-financial businesses, but
non-bank lenders provide a significant and in many cases adequate substitute for
bank loans, and money market funds, cash management trusts and other non-bank
financial institutions in many cases provide an adequate substitute to banks for
lending savings

b) Financial service

Financial services refer to services provided by the finance industry.

The finance industry encompasses a broad range of organizations that deal with the
management of money. Among these organizations are banks, credit card
companies, insurance companies, consumer finance companies, stock brokerages,
investment funds and some government sponsored enterprises

A "commercial bank" is what is commonly referred to as simply a

"bank". The term "commercial" is used to distinguish it from an "investment
bank," a type of financial services entity which, instead of lending money directly
to a business, helps businesses raise money from other firms in the form of bonds
(debt) or stock (equity).

Foreign exchange services

24
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.

 Wire transfer - where clients can send funds to international banks abroad.

 Foreign Currency Banking - banking transactions are done in foreign

currency. Investment services

 Asset management - the term usually given to describe companies which

run collective investment funds.

 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.

Insurance

 Insurance brokerage - Insurance brokers shop for insurance (generally

corporate property and casualty insurance) on behalf of customers. Recently a
number of websites have been created to give consumers basic price comparisons
for services such as insurance, causing controversy within the industry.
 Insurance underwriting - Personal lines insurance underwriters actually
underwrite insurance for individuals, a service still offered primarily through
agents, insurance brokers, and stock brokers. Underwriters may also offer similar
commercial lines of coverage for businesses. Activities include insurance and
annuities, life insurance, retirement insurance, health insurance, and property &
casualty insurance.
 Reinsurance - Reinsurance is insurance sold to insurers themselves, to
protect them from catastrophic losses.

25
Other financial services

 Intermediation or advisory services - These services involve stock brokers

(private client services) and discount brokers. Stock brokers assist investors in
buying or selling shares. Primarily internet-based companies are often referred to
as discount brokerages, although many now have branch offices to assist clients.
These brokerages primarily target individual investors. Full service and private
client firms primarily assist and execute trades for clients with large amounts of
capital to invest, such as large companies, wealthy individuals, and investment
management funds.

 Private equity - Private equity funds are typically closed-end funds, which
usually take controlling equity stakes in businesses that are either private, or taken
private once acquired. Private equity funds often use leveraged buyouts (LBOs) to
acquire the firms in which they invest. The most successful private equity funds
can generate returns significantly higher than provided by the equity markets

 Venture capital is a type of private equity capital typically provided by

professional, outside investors to new, high-potential-growth companies in the
interest of taking the company to an IPO or trade sale of the business.

 Angel investment - An angel investor or angel (known as a business angel

or informal investor in Europe), is an affluent individual who provides capital for a
business start-up, usually in exchange for convertible debt or ownership equity. A
small but increasing number of angel investors organize themselves into angel
groups or angel networks to share research and pool their investment capital.

 Conglomerates - A financial services conglomerate is a financial services

firm that is active in more than one sector of the financial services market e.g. life
insurance, general insurance, health insurance, asset management, retail banking,
wholesale banking, investment banking, etc. A key rationale for the existence of
such businesses is the existence of diversification benefits that are present when
different types of businesses are aggregated i.e. bad things don't always happen at
the same time. As a consequence, economic capital for a conglomerate is usually
substantially less than economic capital is for the sum of its parts.

26
 USP of the bank

Canara bank having more NRI customers is because they are converting the
foreign currency into the customers account at very low transaction charge.

27
The products and services offered at Canara Bank

Canara Bank offers investment opportunities as mutual funds and insurance.

You also get special facilities like cheque collection and collection of bills along
with ATM, mobile banking, net banking, electronic funds transfer, any branch
banking and anywhere banking facilities

 Savings, Current Account and Deposits

 Loan Products includes Housing loan, Home Renovation loan, Canmahila

(loan for Women), Teachers loan, Car loan and other vehicle loan.

 Insurance Business

 Mutual Funds

 Card Services

 NRI Services

28
 The Canara Bank of India is one of the renowned banks in the country. The
bank provides excellent services and facilities to its customers. Personal Banking,
Corporate Banking, NRI Banking and Priority & SME Credit are some of the
important functions provided by the bank.

Personal Banking

Canara Bank India provides the following services under the Personal Banking
section:-

 Loans

 Home Loan

 Personal Loan

 Loan against Property

 Overdrafts

Corporate banking

Canara Bank provides par excellence services in Corporate Banking as well. These
include,

 Syndication Services

 IPO Monitoring Activity

 Merchant Banking Services

 Accounts & Deposits

 Cash Management Services

 Loans & Advances

 TUF Schemes

 Canara electronic Tax

Apart from these, the Canara Bank also has exciting offers and packages for NRIs.

29
Priority and SME credit

The following facilities are listed under this service:-

 Priority Credit

 SME Business

 SME Marketing Desk

 Regional Rural Banks

 Consultancy Services related to agriculture

 Agri-Business Marketing Desk

 Rural Development

 Entrepreneurship Development for women

 Social Banking

Some of the loans provided by the Canara Bank include;

Bank deposits

 Savings Bank Deposits

 Canara Super Savings Salary A/c

 Canara Flexi A/c

 Current Account

 Savings Bank Gold A/c

 Canara Saral

 Canara Champ

 Can Premium Current Account

Loans and advance

 Housing Loan

30
 Loan for Personal Needs

 Loan for Personal needs of Teaching/Non- Teaching Staff

 Loan for Pensioners

 Loan against Security of Mortgage of Property

 Loan against approved Shares/Debentures/Mutual Funds plantation and

export oriented production units.

FINANCIAL PERFORMANCE

Profits and Profitability

Financial year 2008-09 was marked by a robust performance on the

business front coupled with unprecedented gains in profits and profitability.
Continued buoyancy in core business operations and costs containment helped the
Bank to sustain and enhance the top line earnings

While maintaining a stronger bottom-line.

Net profit reached an all time high of Rs. 2072 crore, signifying
astrong 32% growth y-o-y and substantially higher than Rs. 1565 crore recorded
during the preceding year. Operating profit recorded a 34% growth to reach a level
of Rs. 3964 crore. Return on average assets (RoAA) for the year stood at 1.06%.
Containment of operating expenses was reflected in the ratio of operating expenses

31
 to Average Working Funds (AWF), which was 1.63% as at March 2008, declining
to 1.56% as at March 2009. Cost to Income ratio declined by 493 basis points to
43.61% in 2008-09 from 48.54 %last year. Profit per employee, moved up to
Rs.4.97 lakh compared toRs.3.65 lakh in the previous financial year.

Enhancing Shareholder Value: In conformity with its commitment to

enhance value for shareholders, the Bank showed steady improvement in Earnings
Per Share (EPS) and Book Value. While Book Value increased toRs.244.87 as at
March 2009 as compared with Rs.202.33 recorded for the previous financial, EPS
rose to Rs.50.55 for the year ended March 2009compared to Rs.38.17 a year ago.
A dividend of 80%, amounting to Rs.328 crore, was declared by the Board of
Directors of the Bank for 2008-09.

Key Financial Ratios (%) March 2008 March 2009

Cost of Funds 6.24 6.32

Yield on Funds 8.31 8.73
Cost of Deposits 6.80 6.87
Yield on Advances 10.22 10.79
Yield on Investments 7.89 7.94
Spread as a % to AWF* 2.07 2.41
Net Interest Margin (NIM) 2.42 2.78
Operating Expenses to AWF 1.63 1.56
Return on Avg. Assets (RoAA) 0.92 1.06
Return on Net worth 19.08 22.61
Business per Employee (Rs. in Crore) 6.10 7.80
Profit per Employee (Rs. in Lakh) 3.65 4.97
Book Value (Rs.) 202.33 244.87
Earnings per Share (Rs.) 38.17 50.55
AWF - Average Working Funds

Income and Expenditure Analysis

32
 Resulting from buoyancy in the core operations and lending
toproductive segments, the Banks interest income recorded a y-o-y growthof 21%
to reach Rs.17119 crore compared to Rs.14201 crore recorded during the previous
financial. Interest income was driven by a 30% growth in income from
loans/advances, which accounted for 66% of thetotal income. While non-interest
income increased to Rs. 2311 crore,fee-based income rose to Rs. 1361 crore,
recording a higher growth at18% during the year.

Concerted focus on mobilization of low cost deposits and strong

resistance to high cost preferential rate deposits helped the Bank to contain the cost
of deposits at 6.87% with amarginal rise over March2008 level of 6.80%. Yield on
advances rose by 57 basis points to10.79% as against 10.22% in March 2008.
Interest spread increased to 2.41% from 2.07% as at March 2008.

While interest expenditure increased to Rs.12401 crore, the Bank

reasonably contained its rise in non-interest expenditure at 9.8%. Notably, the net
interest income of the Bank registered a significant33.4% growth to reach Rs. 4718
crore and Net Interest Margin (NIM) also rose by 36 basis points to 2.78% as at
March 2009.

Capital and Reserves

Net worth of the Bank, as at March 2009, stood at Rs.10040 crore

compared to Rs.8296 crore as at March 2008. With the paid-up capital at Rs.410
crore, reserves and surplus increased to Rs.11798 crore. To augment the capital
resources, the Bank raised Rs. 240 crore through the Innovative Perpetual Tier I
Bonds and Rs. 325 crore through lower Tier II Bonds during the year.

(Amt. in Rs. Crore)

Composition of Capital March 2008 Basle II March 2009 Basle II

33
Risk Weighted Assets 1 16220.00 125111.00
Tier I Capital 8148.00 10023.00
CRAR (%)(Tier I) 7.01 8.01
Tier II Capital 7250.00 7623.00
CRAR (%)(Tier II) 6.24 6.09
Total Capital 15398.00 17646.00
CRAR (%) 13.25 14.10

Business and Financial Metrics

Metric (in Billions INR) 2005 2006 2007 2008 2009

Total Interest Income 75.72 87.11 113.64 142.01 171.19
Non - Interest Income 15.44 13.77 15.12 22.13 23.11
Total Revenue 91.16 100.88 128.76 164.14 194.3
Net Profit 11.1 13.43 14.21 15.65 20.72
Net NPA's 0.85% 0.94% 1.12% 0.84% 1.02%
Return on Assets 0.92% 1.01% 0.98% 0.92% 1.06%
Total Assets 1103.05 1328.22 1659.61 1805.29 2196.46
Credit deposit Ratio 59% 65% 69% 70% 74%

Canara Bank Total Revenue and Net Income in the last five years

In FY2009, Canara Bank earned total revenue of Rs. 194.30 billion, a

18.38% rise compared to Rs. 164.14 billion in 2008. This was largely driven by

34
strong growth in its total interest income at 20.55% whereas non-interest income
registered a growth of 4.44% due to the fall in dividend income from the various
subsidiaries and joint ventures.[13] The fee income, however, grew at a healthy rate
of 18%. The other component of non-interest income - trading income, increased
by 55% during the year. [14] The total revenue of the Bank has grown at a [CAGR]]
of 18.94% between FY2005 to FY2009. In FY2009, it’s net interest margin
improved to 2.78% from 2.42% in FY2008 due to increase in yield in advances at
10.79% versus 10.22% in FY2008. However due to large provision on
investments, the bank’s Non-Performing Assets (NPAs) increased to 1.02% in
FY2009 from 0.84% FY2008.

The Total Business (sum of Net advances and total deposits) grew
24.41% to Rs. 3,251.12 billion as at March’09 driven by 28.90% and 21.30%
growth in Net advances and deposits respectively [7]. Growth in deposits mainly
came from term deposits which increased by 22.6% y-o-y to Rs1,294 billion and
CASA deposits grew by 18.4% y-o-y. The Bank's conscious decision to shed
preferential rate deposits by about 24% had a moderating impact on its aggregate
deposits, which grew by Rs. 328.21 billion during 2008-09 to reach Rs.1,868.93
billion. Advances growth has been outpaced the deposits growth, which has led the
bank to increase its credit – deposit ratio from 62.42% in FY2005 to 73.96% in
FY2009[15]. In order to defend the current financial challenges, the bank has taken
few initiatives to expand its credit growth like in order to give a push to automobile
sector, the Bank, besides offering competitive interest rate, has entered into tie-up
arrangements with four major auto-makers in India viz., Hyundai Motor India Ltd,
Swaraj Mazda Ltd, M/s. Maruti Suzuki India and Tata Motors for financing both
commercial vehicles and cars including the recently launched Tata-NANO cars.

In FY2009, the company posted a consolidated net profit of Rs. 20.72

billion, up from Rs. 15.65 billion in FY2008 fueled by improvement in operational
cost efficiency and lower loan provisioning. Its net profit has grown at a CAGR of
17% in the last five financial years. During 2008-2009, the bank has managed to
reduce its cost to income ratio substantially from 48.54% to 43.61%.

35
Canara Bank Total Revenue and Operating Profit Breakdown by
Segment during the year 2008-2009

The Bank has a public holding (other than promoters) of 26.83%,

including 11.22% held by foreign institutional investors. As on March 31, 2009,
promoter shareholding in the bank was 73.17%.

BUSINESS GROWTH

Deposits

Total Deposits of the Bank registered a growth of 21.3% to reach

Rs.1, 86,893 crore as at March 2009. In accordance with the strategic focus, the
Banks core deposits recorded a growth of 37.8%, supported by 55.5% growth in
retail term deposits and 18.6% in savings deposits.

Unrelenting focus on augmenting of low cost resources yielded good

results. The quantum addition in savings deposits was Rs. 6544 crore during 2008-
09, as against Rs.2832 crore in 2007-08. The share of CASA (current and savings
bank deposits) deposits in domestic deposits stood at 30.7%. With a CASA per
branch at Rs.20.55 crore, the Bank continues to be one of the best among the peers.
Pursuing a strategy of broad basing deposit clientele, all the branches together
added nearly 2.2million deposit accounts, taking the total tally under deposit
accounts to 30.5 million.

Advances (net)

36
 The Banks advances (net) witnessed a robust 28.9% growth in 2008-
09 to reach Rs. 1, 38,219 crore. In quantum terms, credit increased by
aboutRs.31000 crore. Responding to emergent credit needs of varied segments of
the economy that evolved during post September2008scenario, the Bank stepped
up credit to all productive segments of the economy like agriculture and Micro,
Small and Medium Enterprises (MSME), exposure to corporate and infrastructure
segments. The number of borrowal accounts, as at March 2009, rose to 4.30
million. Backed by strong growth in advances, the credit to deposit ratio further
improved to 73.96% as at March 2009 against 69.6% in the previous year.

Global Business of the Bank grew by 24.4% to reach Rs. 3, 25,112

crore as at March 2009 as against Rs. 2, 61,310 crore during the preceding year.
Productivity, as measured by business per employee, increased toRs.7.80 crore
from Rs.6.10 crore a year ago, continuing to be one of the best among the peers.
With several enterprise-wide initiatives and measures, the Bank added 2.45 million
clientele during the year.

Retail Lending Operations

Retail lending operations of the Bank regained the growth

momentum during the year. While disbursals under the retail lending stood at
Rs.4558 crore, the outstanding advances rose to Rs. 19798 crore, accounting for
14.66% of the net credit.

(Amt. in Rs. Crore)

Retail Lending March 2008 March 2009 Growth (%)

Retail Lending 17665 19798 12.1

Housing (Direct) 6658 7896 18.6

37
Retail Trade 3789 4451 17.2

Other Personal 7209 7451 3.4

The Bank took several measures during the year to expand retail
credit, including special packages for housing and auto loans. To facilitate speedy
disposal of proposals and credit flow, 21 Centralized Processing Units (CPU) for
housing and personal loans were functioning at major centers apart from a Retail
Asset Hub in Bangalore. This apart, the Bank introduced retail sale of gold coins
through selected branches across the country.

TREASURY AND INTERNATIONAL OPERATIONS

Aggregate investments of the Bank, as at March 2009, were of the

order of Rs. 57777 crore. As a strategy to improve yield on investment portfolio,
the modified duration of the total portfolio was increased from 3.21 to 4.08
through the fresh investments made in long dated and comparatively high yield
coupon securities. The modified duration of the Available for Sale (AFS) portfolio
increased to 1.87 as at March2009 from 1.29 a year ago on account of investments
made in dated securities and reduction of investments in treasury bills. The trading
profit during the year was higher at Rs.675 crore, as against Rs.435 crore in the
previous year. The yield on investments improved to 7.94%vis-à-vis 7.89% a year
ago.

The Bank continues to be an active player in securities market by

participating in Government Securities auctions. The total amount of underwriting
commitment for the year was Rs. 15251 core and received Rs. 8.49 crore as
underwriting commission. During the year, the Bank achieved 95% success ratio as
against mandatory 40% of its obligation as a Primary Dealer.

The Bank is engaged in financing and facilitating foreign trade

through its 16 foreign departments and 128 designated branches across the country.

38
 Foreign Business Turnover of the Bank, as at 31st March 2009, aggregated to Rs.
1, 42,301 crore.

(Amt. in Rs. Crore)

Foreign Business Turnover March 2008 March 2009
Exports 43759 49113
Imports 41765 44182
Remittances 51233 49006
Total Foreign Business Turnover 136757 142301

Outstanding export credit of the Bank moderated to Rs.8967 crore,

compared to Rs. 9162 crore during the corresponding period a year ago, indicating
economic downturn and decline in exports demand.

Across the borders, the Banks presence covered three branches at

London, Hong Kong and Shanghai (opened during the year) and a joint venture
bank, namely, Commercial Bank of India LLC in association with State Bank of
India in Moscow. Canara Bank has also an Offshore Banking Unit at Special
Economic Zone (SEZ) NOIDA, Uttar Pradesh.

The Bank has already obtained approval from the RBI to open 11
branches/offices in Johannesburg, Frankfurt, Muscat, Manama, QFC-Qatar,
Leicester, New York, Sao Paulo, Dar-er-Salam, Tokyo and Sharjah, out of the 21
international financial centers identified for global expansion in the medium term.

39
The Bank is in the process of obtaining regulatory approvals from the host
countries for opening branches in the above centers.

The Banks international operations are supported by a wide network

of 395 correspondent banks, spread across 80 countries. The Bank has rupee
drawing arrangements with 19 exchange houses and 18 banks in the Middle East
for channelizing the remittances of expatriates. The Bank has been managing two
exchange houses viz., Al Razouki International Exchange Company, Dubai and
Eastern Exchange Est., Qatar, under secondment and management agreement
respectively. The Bank, during the year, expanded its arrangement under Remit
Money, a web based product by extending to 11 Exchange Companies/Banks and
continues to have Electronic Funds Transfer (EFT) arrangement with 10 Exchange
Houses/ Banks.

OTHER SERVICES

The Banks Merchant Banking Division handled diverse assignments

as Co-Lead Manager/ Lead Manager/Manager/Arrangers/ Escrow Bankers/
Collecting Bankers. The Bank also handled four specialized assignments of Fair
Valuation of Equity and acted as Issuing and Paying Agents for Commercial Paper
Placements to supplement fee based income. The Bank recorded a gross income of
about Rs. 76 lakh from merchant banking assignments.

The Syndication Group has syndicated/arranged total debt to the tune

ofRs.5217 crore with project cost amounting to Rs.8052 crore. The debt
component of the current projects under placement is to the tune of Rs.2066 crore.
The Group is also having projects to the extent of debt component of Rs. 2065
crore under various stages of syndication. The Group generated a substantial
increase in the fee based income and syndicated/ arranged funds for diverse
projects from manufacturing, logistics, hospitals and hotel sectors.

40
 The Bank has tie-up arrangements in both life and non-life insurance
segments under its banc assurance arm. The Bank earned a commission income of
Rs. 17.91 crore from its newly formed Canara HSBC Oriental Bank of Commerce
Life Insurance Company Limited. The total commission income received from life
insurance business including Aviva life insurance was over Rs. 22 crore. The
Bank is also a Corporate Agent for United India Insurance Company Ltd (UIICL)
for general insurance business since February 2005, from which it earned a
commission income of Rs 5.5 crore during the year.

For the augmentation of non-interest income and to provide various

financial services under one roof, the Bank has entered into corporate agency
agreement with Export Credit Guarantee Corporation of India Ltd. (ECGC) for
soliciting and procuring export credit insurance business.

Corporate Cash Management Services (CCMS) network of the

Bank, covering 94 Operating Centres and 595 Pooling Branches, provides services
related to local and upcountry cheque collection, bulk cheques collection and zero
balance account facility. The aggregate turnover under CCMS amounted to
Rs.1823 crore and income earned was Rs. 1.1 crore during 2008-09.

Under Card Business, the Bank took several initiatives to expand its
credit and debit-cum-ATM card base. The Bank almost doubled its profit under
card business during 2008-09 at Rs. 20.85 crore compared to Rs.10.58 crore in
2007-08.

The Bank is extending depository services from 43 DP Service

Centers spread across 30 cities in the country. Executor, Trustee and Taxation
Services outfit of the Bank provides services like Debenture/Security Trusteeship,
Will and Executorships, Trusteeship, Personal Tax Assistance and Power of
Attorney Services. During the year under review, it secured 11 new
debenture/security trusteeship issues, amounting to Rs.6003 crore and generated
fee-based income of Rs. 2.42 crore.

41
 Under Government Business, comprising Direct and Indirect Tax
collections, payment of pensions to various departments, handling Ministry
Accounts, Postal Transactions and Treasury, collection of Senior Citizens Deposit,
Public Provident Fund Scheme and sale of RBI and Government bonds, the Bank
achieved a total turnover of Rs.40017 crore.

The Bank has been authorized to handle accounts of Department of

Education, Department of Culture, Department of Arts and Department of Youth
Affairs and Sports under Ministry of Human Resources Development (HRD),
Government of India. The Bank has developed a Web-Portal for Ministry of HRD
for e-tracking the funds under the Sarva Shiksha Abhiyan Scheme, which has been
well appreciated by the Ministry.

The Bank has developed the software for formation of Central

Pension Processing Centre (CPPC) for easier calculation, disbursement and
reimbursement of pension payments all over India. Initially, the CPPC will cater to
the needs of the Central and Civil and Defense pensioners and will be set up in
Bangalore for the Bank as a whole shortly.

Agricultural Consultancy Services (ACS) outfit of the Bank handled

more than 104 assignments during the year under review. ACS appraised projects
to the tune of Rs. 233 crore. The notional income earned during the year was about
Rs. 179 lakh. Important assignments handled during the year included
appraisal/viability studies in agriculture and allied activities like floriculture, dairy,
poultry, food processing,

Service and quality policy of canara bank

I.Policy on Collection of Dues and Repossession of Security

This Policy on Collection of Dues and Repossession of Security

(hereinafter called the ‘Policy’) is a non–statutory code adopted by Canara Bank

42
(hereinafter called the ‘Bank’) voluntarily for implementation, which sets
minimum standards for collection of dues and repossession of security.

With the setting up of the Banking Codes and Standards Board of India
mooted by RBI so as to promote good and fair banking practices by setting
minimum standards in dealing with the customers (which term includes
borrower/guarantor/Mortgagor/person having dues of any kind to the Bank,
hereinafter called the 'customer') of the Bank and to increase transparency to have
a better understanding of the reasonably expected services and also to promote a
fair and cordial relationship between the Bank and its customer and foster
confidence in the banking system, the Bank also adopted the Code. This Policy is
issued in accordance with Clause 5 of the said Code adopted by the Bank .

II. APPLICABILITY:
It applies to the Bank and the agents engaged by it for the purpose of
collection, recovery and repossession of securities’, except taking possession and
disposal of secured assets under SARFAESI Act, 2002. This Policy shall come into
force with effect from 01.04.2009.

III. INTRODUCTION:

Canara bank is committed to -

1. Following fair practices especially with regard to collection of dues and

repossession of security.

2. Fostering customer confidence and long-term relationship.

IV. DUES COLLECTION POLICY STATEMENT:

1. Dignity and Respect to customers is canara debt collection policy and they do
not follow policies that are unduly coercive in collection of dues.

2. Bank's dues-collection policy is built on courtesy, fair treatment and persuasion.

43
V. SECURITY REPOSSESSION POLICY STATEMENT:
1. The Policy aims at recovery of dues in the event of default and is not aimed at
whimsical deprivation of the property.

2. The Policy recognizes fairness and transparency in repossession, valuation and

realization of security.

VI. GENERAL GUIDELINES:

All the members of the staff or any person authorized to represent canara bank in
dues collection or/and security repossession would follow the guidelines set out
below:

1. Customer would be contacted ordinarily at the place of his choice and in the
absence of any specified place at the place of his residence in the case of retail
customers and in the place of business or residence as the case may be in the case
of other customers.

2. Identity and authority to represent will be made known to the customer at the
first instance.

3. Customers’ privacy would be respected.

4. The bank is committed to ensure that all written and verbal communication with
its customers will be in simple business language and bank will adopt civil
manners for interaction with customers.

5. Customer calling time will be between 0700 hrs and 1900 hrs, unless the special
circumstances of the customer's business or occupation demands otherwise.

6. Customer's request to avoid calls at a particular time or at a particular place will

44
be honored as far as possible.

7. The bank will document the efforts made for the recovery of dues including the
time and number of Calls and contents of conversation and the copies of
communication sent to customers, if any, will be kept on record.

8. Customer would be provided with all the information regarding dues.

9. Bank would follow all such procedures as required under law for
recovery/repossession of security.

10. All assistance will be given to resolve disputes or differences in a mutually

acceptable and in an ordinary manner as regards dues.

11. Inappropriate occasions such as bereavement in the family or such other

calamitous occasions would be avoided generally for making calls/visits to collect
dues.

12. Demeanor that would suggest criminal intimidation or threat of violence would
be scrupulously avoided.

13. Bank will not initiate any legal or other recovery measures including
repossession of the security without giving due notice in writing. First such notice
will be sent immediately upon default by the borrower or when telephonic
reminders or personal visits fail to yield result. The first notice while giving details
of the amount in default will give 15 days time period for the borrower to clear the
dues and regularize the account. In case the borrower fails to respond within the
given period of time, a second notice will be issued explaining the consequences of
non-payment and the borrower would be given a further period of 15 days to clear
the dues. The consequence of non-payment could include recall of entire loan
amount forthwith. In the event of the failure of the borrower to respond within the
time period, a final notice will be issued after which the bank will be free to initiate
such recovery measures as deemed fit. However, Bank may waive any of the above

45
said notices by recording reason thereof, in case circumstance so warrants.

14. Valuation will be done before sale of the security and sale of security
repossessed by the Bank will be carried out as per law and in a fair and transparent
manner. The Bank will have right to recover from the customer the balance due if
any, after sale of the security. Excess amount if any, obtained on sale of property
will be returned to the customer after meeting all the related expenses and
adjusting any dues to the Bank.

15. After completion of the repossession, the security will be preserved till the
same is disposed of.

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 Canara Bank functional Departments and Operations.

Duties and Responsibilities

Subject to governmental authority - National or State, according

to its charter - the management of any bank is vested in its board of directors. Such
directors are elected by the stockholders. The directors elect the officers, president,
vice-president, cashier and assistant cashier, who are the executive heads of the
institution and are charged with the duty of administering its affairs. The number
of vice-presidents and assistant cashiers depends upon the size of the bank. The
directors may also appoint committees - such as a discount committee, an
executive committee, and an examination committee - that the business of the bank
may seem to require. According to the character of their duties and responsibilities,
bank officers and employees may be classified as (1) executives, (2) tellers, (3)
bookkeepers. Whenever it becomes necessary, on account of volume of business,
to divide the work in a bank into divisions, each employing a group of clerks, such
divisions are organized into departments each having a department head, who is
usually a teller, a head bookkeeper, or perhaps a junior officer. In the very large
banks the executive staff is itself organized into groups, and there may be a vice-
president and one or two assistant cashiers in charge of each important department.
The work of a department in a large bank is nothing more nor less than the work of

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a single man in a small bank apportioned among several men. The departments
into which a medium sized bank is ordinarily divided are as follows:

(1) Receiving Teller's Department (Teller)

Receives, receipts for and proves deposits, distributes checks to
bookkeepers and other departments, prepares exchanges for clearing houses, and
turns cash over to the paying teller at end of day.

(2) Transit Department (Teller)

The transit department may be a subdivision of the receiving teller's
department and was formerly known by other terms, such as correspondence,
foreign check, miscellaneous check or country check department. This department
assorts checks and other cash items payable out of town, indorses them and lists
them on letters addressed to other banks. It gives totals of outgoing or remittance
letters to general ledger bookkeeper at end of day. This department often keeps the
records of exchange charged on out-of-town checks, and of delayed credits on
interest balances made necessary because of uncollected funds deposited.

(3) Paying Teller's Department (Teller)

Pays or certifies checks, is in charge of the signature book or cards bearing
the authorized signatures of all depositors, ships currency, is in charge of the vault
cash, and makes up payrolls.

(4) Note Teller's Department (Teller)

Collects notes and drafts due at the bank or elsewhere in the city. It
is usually in charge of the runners or messenger department, which is a
subdivision, and it usually receives deposits made by other banks, and may
perform the functions of a mail teller.

(5) Collection Department (Teller)

Collects notes, drafts and other "time" items when payable out of town,
and credits accounts of depositors when collections are advised paid.

(6) Loan or Discount Department (Executive)

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 Receives notes submitted for discount or makes loans, figures discount
and interest, and has charge of collateral securing loans.

(7) Credit Department (Executive)

Secures and collects information relating to borrowers, checks
statements submitted by them, and is in charge of credit files, which contain
information as to the reliability, business habits and financial strength of
borrowers.

In the large banks it would be impractical, if not impossible, for the

cashier, in addition to his other duties, to keep track of every local borrower and
the bank may employ a "credit man," who specializes in credits. The next step is
the organization of a credit department, usually in charge of one of the officers of
the bank. The credit department collects and files every available bit of information
concerning people or firms that borrow money. This material consists of financial
reports, press clippings, personal interviews, statements of condition and, in fact,
every item that has even a remote bearing upon the standing of borrowers. It
requires technical training of a high order properly to classify and analyze this
data, but the fundamental idea is to acquire the same knowledge of the true facts
that a country bank cashier has with respect to his neighbor. A simple but practical
definition of credit is "the ability to buy with a promise to pay," in other words, to
obtain present value for a promise to pay in the future. He who has "good credit"
can command either goods or money because of the faith or belief that others have
in his promise. The word "credit" is derived from the Latin "credo." It is not only
essential that the borrower have the ability to pay his note when it is due - he must
also have the desire or inclination to pay. Credit is primarily based upon
confidence which has as its basis three things. First and foremost is character, the
"moral risk" which is indispensable in every case. Then comes capacity, the
borrower's ability and business methods. Thirdly, they have capital which, while
essential, is distinctly secondary to character and capacity, a combination which is

49
very apt to attract capital. The banker, naturally, in selecting his customers knows
that he may be asked to extend credit. He first satisfies himself that the factors of
character and capacity are such as to justify confidence. This information is
obtained from personal knowledge of the borrower, and by information obtained
through other banks, through "the trade" and by agency reports. Trade inquiries are
directed to people selling goods to and competitors of the borrower. If all this
information is satisfactory, the capital factor is studied in the borrower's financial
statement of condition, which balance sheet should be taken off at regular
intervals. It must show a sufficiently "liquid" position to satisfy the banker that his
loan can and will be repaid when due. To show this, there must be an ample
margin of quick assets (those readily convertible into cash) over current liabilities

to enable the borrower, despite any natural shrinkage of values in liquidation,

readily to meet his obligations. This ratio is often called the 2 to 1 ratio, but differs
in proportion according to the character of the business in question. The ability to
loan money wisely and to those who are entitled to it - in short, the ability to
distinguish between a safe risk and an unsafe one - is the quality that marks the
good banker

(8) Analysis or Statistical Department (Executive)

Determine which are profitable and which are losing accounts, makes
monthly reports to officers, is in charge of statistics relating to the bank's accounts
and matters in which the bank is particular. This department is usually found in
city banks. It analyzes the accounts of depositors to rely interested. It is closely
related to the transit department.

(9) General Ledger Department (Bookkeepers)

Keeps the general or control accounts of the bank, and makes up the
bank's statement of condition.

(10) Country Bank Account Department (Bookkeepers)

This department is confined to city banks. It keeps the accounts of other
banks.

(11) Individual Ledger Department (Bookkeepers)

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 Keeps the records of the balances of individual depositors and
figures interest on accounts. It may be subdivided as to kind of accounts (savings,
dealers), in addition to ordinary alphabetical division, and may balance pass-books
or there may be a separate department for this purpose using the statement system.

(12) Auditor's Department (Executive)

This department is responsible for the settlement of the various
departments, reconciles the accounts with other banks, and certifies interest
calculations. In addition to these departments, there are others to be found either in
very large banks or even in small banks operating special features. Among the first
might be noted the coupon department, exchange department, purchasing
department, filing department, interest department, new business department, etc.,
all of which terms are self-explanatory. Among special departments may be
mentioned the foreign exchange department, the bond department, safety deposit
department, special deposit department (securities and valuables stored with the
bank, but not placed in private boxes). In trust companies there is the trust
department, which may have a complete independent organization of its own, with
officers, bookkeepers and other clerks. This department has charge of the trust
accounts.

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 Bank Account Section

A bank account is a financial account with a banking institution,

recording the financial transactions between the customer and the bank and the
resulting financial position of the customer with the bank

Bank accounting consists in making written, permanent records of

every transaction. Every penny must be accounted for. The statement of the bank,
which they have just discussed, shows the general, or control, accounts of the bank,
and the various books of the bank show the detail of these items. It would not be
impossible, but it would be entirely impractical, to enter every figure directly on
the statement of condition. They might imagine an enormous sheet on which the
capital is entered as to the ownership of each share of stock. Instead of total
deposits, the balance of each depositor would appear opposite his name. On the
other side, instead of loans and discounts, there would be an itemized list of the
loans with the names of the borrowers. With such a sheet spread out over a floor
space of great area, they might imagine the clerks crawling up and down the
columns like flies making debits and credits. This is, of course, absurd, but it is

52
precisely what happens, except that the entries are made on books, loose leaves or
cards, and the final results are posted on the statement of condition which is thus
altered day by day.

As in other matters they have mentioned, banks are also alike with
respect to bank accounting, the same principles govern whether the bank is large or
small, national bank or trust company. All the books are a part of the general
books, and the extent to which they are divided depends on the size of the bank.
Division is made to fit the capacity of the clerk. When any part of the work
becomes too burdensome for one man, he may be given an assistant or the books
and records will be further divided, so that two men can do the same thing without
conflicting. In very large banks a clerk may spend all his time listing checks upon a
sheet, or adding up certain columns of figures or doing any one of a thousand
things that must be done in the process of keeping accounts. Unless he is studious
and observant, he loses sight of the fact that his work is a part of the whole, he
becomes mechanical, falls into a rut and banking, instead of being an interesting
employment full of possibilities, is to him mere drudgery. He is standing so close
to the machinery that he allows it to master him instead of broadening his vision by
study and thus mastering his task.

The first principle in bank accounting, as in all other bookkeeping, is

that for every debit there must be a credit, and vice-versa. In accordance with this
fundamental theory the books must always be in balance. As they have seen with
respect to the statement, every dollar of liabilities is accounted for by another
dollar of resources. This is true of every bank. If the institution is large enough to
be divided into departments, such departments are charged with all funds passing
through their hands, and they must show on their records what has become of
every penny. Similarly each clerk, bookkeeper or teller accounts at the end of the
day for each item of cash he has handled. When he has done so he is said to have
"settled," "balanced" or "struck a proof." Every bank clerk has had the experience
of remaining at his desk until a late hour at night checking up his day's work
searching for a difference of a few cents. Often he becomes embittered at what
seems to him a tyranny when the small sum of money involved is considered. The
reason he must settle, however, is not on account of the possible loss of ten cents,

53
but because the most important principle in bank accounting is involved.
"Accuracy first" is a motto that should be framed, figuratively at least, upon the
wall of every banking room.

The books used by a bank are of various kinds and their purpose is
indicated by name. A ledger is a book used to keep a record of balances. To "post"
means to enter in the proper columns either the debits or credits on the ledger, and
the difference between them represents the balance either due by or to the bank.
Most banks are doing away with bound books, especially ledgers, and substituting
cards or loose leaves. This plan enables several men to work on the same records,
which would be impossible if they were bound in a single book. Alphabetical
division is also easier of adjustment and "inactive" accounts can be readily
separated from "active" accounts. Totals of balances can be listed upon adding
machines for proof more easily from loose sheets than from bound books. But
whether bound or not, records of balances are kept upon ledgers.

A journal is a book in which daily transactions are listed in regular order as

to accounts, and the total debit or credit is then posted on the ledgers. Journals, too,
may be loose sheets so that they can be inserted in the carriage of an adding
machine; indeed, machines have been invented upon which both debits and credits
may be written and the machine will automatically subtract or add and print the
new balance. The journal, then, is merely a subdivision of the ledger.

A depositor of the bank wishes his account to be charged and the money
paid to a named payee. The piece of paper upon which he writes this order is a
"check." If he deposits money, he writes the memorandum of the amount upon a
ruled slip of paper and this is the "deposit ticket." Bookkeepers enter debit and
credit records upon their journals directly from these items. Money, however, may
change hands or from one account to another, in other ways; by letter, telegram or
other debit and credit advice. In such cases a "charge ticket" or "credit slip," as the
case may be, is signed or initialed by an officer of the bank, and entry with full
explanation is made upon a book from which record the bookkeeper makes his
entries. This book is known as a "scratcher," "tickler" or a "blotter." The terms
mean practically the same thing. A book, upon which a complete description of a

54
negotiable instrument or transaction is made for a permanent record or for
reference, is called a register. For example, bond register collection register, etc.

All other books, cards, sheets of whatever nature are a part or

subdivisions of these books. Often they become known among the clerks by some
other name descriptive of their general appearance. For instance, the general ledger
scratcher in one bank is known as the "red book," while the collection department
scratcher is the "black book." These names have stuck through generations of
clerks, and a young man going into another bank has been known to ask for the
"black book," and being untrained in accounting, he had difficulty in making
himself understood. Similarly, in New York City banks the pigeonholed desk
where checks are assorted for the clearing house is generally known as the
"clearing house rack." A New York bank clerk visiting a Philadelphia institution
and asking to see the "rack" would probably be shown a hat room.

The records made by one clerk upon one set of books, in a well-
appointed accounting system, go to check the records of another clerk upon a
different set of books. For instance, the paying teller and the receiving teller will
each keep a record of checks cashed or deposited payable within the bank. The
debit postings of the individual bookkeeper would agree with the teller's figures.
Skillful accounting lies in making the fullest possible use of original entries, at the
same time having a check on all figures to guard against either error or fraud.
Many young bank men have materially increased their salaries and rate of
promotion by devising improved accounting methods.

As has been said, every transaction ultimately affects the bank's

statement of condition by debit or credit. Refer again to the outline statement
shown in the preceding chapter. A deposit of $1,000.00 is made, consisting of
$200.00 cash and checks as follows: $200.00 on the bank itself and $600.00
payable in another city. At the end of the day (assuming this to be the only
deposit), on the liabilities side there is an increase of $800.00, all of which appears
in the item "deposits" being the total $1,000.00, less the check for $200.00 which
is charged to the account of the drawer. On the resource side, then, they must have
a corresponding increase of $800.00, and this is made up by an increase in the cash

55
of $200.00 and an increase of $600.00 in the item "due from banks." Or a
transaction may appear on one side of the statement only. The bank has sold
$5,000.00 of the bonds it owns. The bond item of resources would show a
reduction of this amount, and either "cash" or "due from banks" would be
increased, depending whether payment was made in cash or by check. If payment
for the bonds is made with a check on the bank itself, both sides of the statement
are affected, a corresponding reduction in deposits taking place.

Major issues identified

 The signature of the customer those who are providing cheque and other
document are not be identified.
 Employees absenteeism is been seen regularly.
 The waiting time of customer is too long.

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 Suggestions

 Proper guidance and training should be given to the employees on the

operations of core banking system.

 To improve employees and customer relationship by sending messages

through mobile phone when any offer is been provided by bank and also there

birthday the message can be send through mobile phone.

 To reduce employee work load by employing new employees those who

have more experienced and providing key responsible area to them.

 To help the customs and for guiding them a new counter can be opened

 The signatures should be scanned and stored in the computer and then it

should link to their account so that their problems can be solved.

57
 CONCLUSION

The Organizational studies mean the study of organizations from multiple

viewpoints, methods and levels of analysis. The organizational study done in
canara bank perinthalmanna helped to analyze the administrative function of the
organization and also the operations of various departments like, Accounts
Department, Credit Monitoring Department, Corporate Financial Management, I T
Division Department, Integrated Risk Management Department (IRMD),
Inspection and Vigilance Department, Legal Department, Marketing Department,
Personnel Department, Planning and Development, NRI Cell Department,
Secretarial Department, Organization Methods & Compliance Department etc..

Finally I did my detailed study in the Accounts Department and I have

found the policies, process, and functions and the major issues in the department. I

have founded that the bank is presently facing problem of identification of

58
 signature of the customers when they are showing their documents and cheques. So

the bank should take proper steps to solve these problems and they should give

proper guidance to their customers.

BIBLIOGRAPHY

Books

1) C.R.KOTHARI research methodology ,wishwa prakashan Pvt Ltd, new Delhi

2) EDWIN.B.FLIPPO personnel management, M.C. graw hill international edition.

Website

1) Canarabank.com
2) Wikipedia.com
3) Moneycontrol.com
4) Efytime.com

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