Industry Review Project

Submitted in partial fulfillment of the requirements for the award of the

Degree of Bachelor of Business Administration

Of Christ deemed to be University

By

K. Ashmeka (1820681)

Dikshitha S Jain (1820671)

Monika Dhinwa (1820672)

Under the guidance of

Prof.Rameesha Kalra

Department of Management Studies

2019
 DECLARATION

We, K. Ashmeka ,Dikshitha S Jain and Monika Dhinwa, hereby declare that the
Industry Review Project Report, submitted to Christ deemed to be University, in
partial fulfillment of the requirements for the award of the Degree of Bachelor of
Business Administration is a record of the Industry Analysis done by us during
2019 under the supervision and guidance of Prof. Rameesha Kalra , Department
of Management Studies and it has not formed the basis for the award of any
Degree/ Diploma/ Associate ship/ Fellowship or other similar title of recognition
to any candidate of any University.

Date: 01/09/19

K.Ashmeka (1820681)

Dikshitha S Jain (1820671)

Monika Dhinwa (1820672)

 CERTIFICATE

This is to certify that the industry review project report, submitted to Christ
deemed to be University, in partial fulfillment of the requirements for the award
of the Degree of Bachelor of Business Administration, is a record of the industry
study done by K.Ashmeka , Dikshitha S Jain , Monika Dhinwa during 2019-20,
under my supervision and guidance and the project report has not formed the
basis for the award of any Degree/ Diploma/ Associate ship/ Fellowship or other
similar title of recognition to any candidate of any University.

Date: 01/09/19 Prof.Rameesha Kalra

 ACKNOWLEDGEMENT

We would like to express our profound gratitude to all those who have been
instrumental in the preparation of this project report. We wish to place on record,
our deep gratitude to our project guide Prof.Rameesha Kalra , a highly esteemed
and distinguished guide, for her expert advice and help.

We would like to thank Dr. (Fr.) Abraham V M, Vice Chancellor, Christ

University and Dr. Jain Mathew, Dean Commerce and Management,
DrAmalanathan, S ., Head of the Department, Department of Management
Studies, Christ University, for their support.

Lastly we would like to thank God, our Parents and Friends for their constant
help and support.

K.Ashmeka

Dikshitha S Jain

Monika Dhinwa
 TABLE OF CONTENTS

Page. Nos.

(Starting and
ending page
Chapter Content number)

I Industry Profile 1-13

Company Profile

 Company 1

 Company 2
II  Company 3 14-73

III Research Methodology 74-76

Comparative Analysis
(…of three companies from the industry on a given
IV parameters) 77-92

V Findings and Conclusion 93-95

VI Bibliography and Annexure 96-99

 CHAPTER 1
INDUSTRY PROFILE

1
HISTORY OF THE BANKING INDUSTRY:

BANKING IN ANCIENT INDIA:

The Vedas (2000–1400 BCE) are the earliest Indian texts to mention the concept of usury, with
the word kusidin translated as "usurer". The Sutras and the Jatakas also mention usury. Texts
of this period also condemned usury: Vasishtha forbade Brahmin and Kshatriya varnas from
participating in usury. By the 2nd century CE, usury became more acceptable. The Manu
smriti considered usury an acceptable means of acquiring wealth or leading a livelihood. It also
considered money lending above a certain rate and different ceiling rates for different castes a
grave sin. The Jatakas, Dharmashastras and Kautilya also mention the existence of loan deeds,
called rnapatra, rnapanna, or rnalekhaya.

Later during the Mauryan period, an instrument called adesha was in use, which was an order
on a banker directing him to pay the sum on the note to a third person, which corresponds to
the definition of a modern bill of exchange. The considerable use of these instruments has been
recorded. In large towns; merchants also gave letters of credit to one another.

BANKING IN THE MEDIEVAL ERA:

The use of loan deeds continued into the Mughal era and were called dastawez. Two types of
loans deeds have been recorded. The dastawez-e-indultalab was payable on demand
and dastawez-e-miadi was payable after a stipulated time. The use of payment orders by royal
treasuries, called barattes, have been also recorded. There are also records of Indian bankers
using issuing bills of exchange on foreign countries. The evolution of hundis, a type of credit
instrument, also occurred during this period and remain in use.

BANKING IN THE COLONIAL ERA:

During the period of British rule merchants established the Union Bank of Calcutta in
1929, first as a private joint stock association, then partnership. Its proprietors were the owners
of the earlier Commercial Bank and the Calcutta Bank, who by mutual consent created Union
Bank to replace these two banks. In 1840 it established an agency at Singapore, and closed the
one at Mirza pore that it had opened in the previous year. Also in 1840 the Bank revealed that
it had been the subject of a fraud by the bank's accountant. Union Bank was incorporated in
1845 but failed in 1848, having been insolvent for some time and having used new money from
depositors to pay its dividends. The Allahabad Bank, established in 1865 and still functioning

2
today, is the oldest Joint Stock bank in India; it was not the first though. That honor belongs to
the Bank of Upper India, which was established in 1863 and survived until 1913, when it failed,
with some of its assets and liabilities being transferred to the Alliance Bank of Simla. Foreign
banks too started to appear, particularly in Calcutta, in the 1860s. Grindlays Bank opened its
first branch in Calcutta in 1864. The Comptoir d'Escompte de Paris opened a branch in
Calcutta in 1860, and another in Bombay in 1862; branches followed
in Madras and Pondicherry, then a French possession. HSBCestablished itself in Bengal in
1869. Calcutta was the most active trading port in India, mainly due to the trade of the British
Empire, and so became a banking centre. The first entirely Indian joint stock bank was
the Oudh Commercial Bank, established in 1881 in Faridabad. It failed in 1958. The next was
the Punjab National Bank, established in Lahore in 1894, which has survived to the present
and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian
economy was passing through a relative period of stability. Around five decades had elapsed
since the Indian rebellion, and the social, industrial and other infrastructure had improved.
Indians had established small banks, most of which served particular ethnic and religious
communities. The presidency banks dominated banking in India but there were also some
exchange banks and a number of Indian joint stock banks. All these banks operated in different
segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on
financing foreign trade. Indian joint stock banks were generally undercapitalized and lacked
the experience and maturity to compete with the presidency and exchange banks. The period
between 1906 and 1911 saw the establishment of banks inspired by the Swadeshi movement.
The Swadeshi movement inspired local businessmen and political figures to found banks of
and for the Indian community. A number of banks established then have survived to the present
such as Catholic Syrian Bank, The South Indian Bank, Bank of India, Corporation
Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. The fervour of
Swadeshi movement led to the establishment of many private banks in Dakshin
Kannada and Udupi district, which were unified earlier and known by the name South Canara
(South Kanara) district. Four nationalised banks started in this district and also a leading private
sector bank. Hence undivided Dakshin Kannada district is known as "Cradle of Indian
Banking".

The inaugural officeholder was the British Sir Osborne Smith, while C. D. Deshmukh was the
first Indian governor. On December 12, 2018, Shaktikanta Das, who was the finance secretary
with the Government of India, begins his journey as the new RBI Governor, taking charge from

3
Urjit R Patel. During the First World War through the end of the Second World War and two
years thereafter until the independence of India were challenging for Indian banking. The years
of the First World War were turbulent, and it took its toll with banks simply collapsing despite
the Indian economy gaining indirect boost due to war-related economic activities. At least 94
banks in India failed between 1913 and 1918.

POST INDEPENDNECE:
During 1938-46, bank branch offices trebled to 3,469 and deposits quadrupled to 962 cores.
Nevertheless, the partition of India in 1947 adversely impacted the economies
of Punjab and West Bengal, paralyzing banking activities for months.
India's independence marked the end of a regime of the Laissez-faire for the Indian banking.
The Government of India initiated measures to play an active role in the economic life of the
nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged
a mixed economy. This resulted in greater involvement of the state in different segments of the
economy including banking and finance. The major steps to regulate banking included:

 The Reserve Bank of India, India's central banking authority, was established in April
1935, but was nationalized on 1 January 1949 under the terms of the Reserve Bank of India
Transfer to Public Ownership Act.

 In 1949, the Banking Regulation Act was enacted, which empowered the Reserve Bank of
India (RBI) to regulate, control, and inspect the banks in India.

 The Banking Regulation Act also provided that no new bank or branch of an existing bank
could be opened without a license from the RBI, and no two banks could have common
directors.

NATIONALISATION:
Despite the provisions, control and regulations of the Reserve Bank of India, banks in India
except the State Bank of India (SBI), remain owned and operated by private persons. By the
1960s, the Indian banking industry had become an important tool to facilitate the development
of the Indian economy. At the same time, it had emerged as a large employer, and a debate had
ensued about the nationalization of the banking industry. Indira Gandhi , the then Prime
Minister of India, expressed the intention of the Government of India in the annual conference

4
of the All India Congress Meeting in a paper entitled Stray thoughts on Bank Nationalization.
Thereafter, the Government of India issued the Banking Companies Ordinance, 1969
and nationalised the 14 largest commercial banks with effect from the midnight of 19 July
1969. These banks contained 85 percent of bank deposits in the country. Within two weeks of
the issue of the ordinance, the Parliament passed the Banking Companies Bill, and it
received presidential approval on 9 August 1969.

The following banks were nationalized in 1969:

 Allahabad Bank

 Bank of Baroda

 Bank of India

 Bank of Maharashtra

 Central Bank of India

 Dena Bank

 Indian Bank

 Indian Overseas Bank

 Punjab National Bank

 Syndicale Bank

 UCO Bank

 Union Bank

 United Bank of India

A second round of nationalizations of six more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With
the second round of nationalizations, the Government of India controlled around 91% of the
banking business of India.

The following banks were nationalised in 1980:

 Punjab and Sind Bank

 Vijaya Bank

 Oriental Bank of India

5
 Corporate Bank

 Andhra Bank

 New Bank of India

Later on, in the year 1993, the government merged New Bank of India with Punjab National
Bank. It was the only merger between nationalised banks and resulted in the reduction of the
number of nationalised banks from 20 to 19. Until the 1990s, the nationalised banks grew at a
pace of around 4%, closer to the average growth rate of the Indian economy.

LIBERALISATION:
In the early 1990s, the then government embarked on a policy of liberalization, licensing a
small number of private banks. These came to be known as New Generation tech-savvy banks,
and included Global Trust Bank, which later amalgamated with Oriental Bank of
Commerce, IndusInd Bank, UTI Bank , ICICI Bank and HDFC Bank.

This move, along with the rapid growth in the economy of India, revitalized the banking sector
in India, which has Seen rapid growth with strong contribution from all the three sectors of
banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up, with proposed relaxation of norms for
foreign direct investment. All foreign investors in banks may be given voting rights that could
exceed the present cap of 10% at present. It has gone up to 74% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used
to the 4–6–4 method of functioning. The new wave ushered in a modern outlook and tech-
savvy methods of working for traditional banks. All this led to the retail boom in India. People
demanded more from their banks and received more.

NATURE AND SCOPE OF THE BAKIG INDUSTRY:

Banking activities are considered to be the life blood of the national economy. Without banking
services, trading and business activities cannot be carried on smoothly. Banks are the
distributors and protectors of liquid capital which is of vital significance to a developing
country. Efficient administration of the banking system helps in the economic growth of the
nation. Banking is useful to trade and commerce.

Banking activities are useful to trade and industry in the following ways.

6
  Money deposited in a bank remains safe. Precious articles too can be kept in the safe
custody of bank lockers.

 Banks provide credit facilities to their customers. Customers with bank accounts also
enjoy better credit in the business world.

 Banks encourage the habit of saving and thrift among people. They mobilize savings
and invest them in productive activities. Thus, they help in increasing the rate of savings
and investment in the country.

 Banks provide a convenient and safe means of transferring money from one place to
another and facilitate business dealings/ transactions.

 Banks collect and realize bills, cheques, interest and dividend warrants etc. on behalf
of their customers.

 Banks meet the financial needs of small-scale business units which are located in
economically backward areas.

 Farmers and artisans in rural areas can also avail of bank credit for financing their
activities.

 Commercial banks provide many other services to the general public which include
locker facility, issue of traveler’s cheques and gift cheques, payment of insurance
premium, etc.

SIZE/TURNOVER OF THE BANKING INDUSTRY:

The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49
foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural
cooperative banks, in addition to cooperative credit institutions. In FY07-18, total lending
increased at a CAGR of 10.94 per cent and total deposits increased at a CAGR of 11.66 per
cent. India’s retail credit market is the fourth largest in the emerging countries. It increased to
US$ 281 billion on December 2017 from US$ 181 billion on December 2014.

MAJOR PLAYERS IN THE MARKET:

HDFC BANK:

7
Going by market capitalization, HDFC Bank is the largest bank in India. Its market cap is
pegged at about INR 261,226.94 crore. As of end 2014, the bank boasted of a strong network
of 3,659 branches in 2,287 cities.

STATE BANK OF INDIA:

With a market capitalization of about INR 216,128.73 crore, SBI is the second most-valued
bank in India It and is perhaps the most trusted one, being a state-owned bank. The bank has a
strong network of over 13,000 branches spread across the nation and has about 190 foreign
offices in 36 countries.

ICICI BANK LIMITED:

ICICI Bank is the third largest entity in the Indian banking space, with a market capitalization
of INR 184,547.26 crore.ICICI Bank has a customer base of over 2.5 million and boasts of an
extensive network of 4050 branches across the country. With 12,475 ATMs and assets worth
USD 99 billion, the bank is currently celebrating 60 years of existence. ICICI was formed as a
World Bank initiative in 1955.The bank is headquartered in Vadodara, Gujarat and has an
international presence in 19 countries.

AXIS BANK:
With a market capitalization of about INR 134,685.68 crore, Axis Bank takes its place at the
fourth position among Indian banks. Founded in 1994 as UTI Bank, Axis Bank now has a
network of 2402 domestic branches and 12922 ATMs spread across the nation. The bank also
has seven international offices including the ones in Hong Kong, Singapore, Colombo, Dubai,
Abu Dhabi, and Shanghai.

KOTAK MAHINDRA BANK:

Kotak Mahindra Bank, headed by Mr. Uday S Kodak, and with a market capitalization of INR
109,631.60 crore comes next. Kotak Mahindra Bank is currently poised for a spectacular
growth due to an all-stock merger with ING Vysya Bank. Kotak Mahindra shall now become
the fourth largest private bank in the country in terms of the business done. The combined
banking company will now have a network of 1,214 branches across the country.

8
IDUSIND BANK:
Founded in 1994, Hinduja Group owned IndusInd Bank has a market capitalization of about
INR 50,100.41 crore. The bank employs over 15,500 employees and has a network of 638
branches and 1238 ATMs across the country.With international offices in London and Dubai,
IndusInd Bank is known for its strong remittances business. The Bank has an exceptionally
strong business base in Mumbai, Delhi, and Chennai.

BANK OF BARODA:
Bank of Baroda is another large PSU banking company in India with a market capitalization
of about INR 38601.08 crore. The bank is estimated to have over 5193 branches and 38,737
employees. With a significant presence in about 25 countries, the Bank of Baroda balances out
NRI services with rural and agricultural finance. The bank is one of the major banking
operators in India’s rural sectors.

YES BANK :
Yes Bank was incorporated in the year 2004 by Mr. Rana Kapoor and Mr. Ashok Kapoor, and
currently has a market capitalization of about INR 35,169.20 crore. With a strong network of
about over 630 branches in 375 cities, and with over 1150 ATMs spread across the country,
Yes Bank is among the fastest growing banks of India. The bank employs about 12000
employees and has high ambitions for the years to come.

PUNAB NATIONAL BANK:

Founded in 1894, Punjab National bank is one of the oldest banks in India. Unlike most Indian
banks that have their headquarters in Mumbai or Gujarat, the Punjab National Bank has its
headquarters in Delhi and has a market capitalization of about INR 30312.73 crore.

CANARA BANK:
Canara Bank is another PSU that has made its mark in the Indian banking sector with a market
capitalization of about INR 18630.10 crore. Nationalised in 1976, the bank has a network of
about 3600 branches spread across the country. With 7599 ATMs, the bank is among the first
PSUs in the country to emphasise on e-banking and online services. Apart from commercial
banking, Canara Bank has also become a strong provider of corporate banking services in India.
GROWTH OF THE BANKING SECTOR:

9
The growth of financial sector in India at present is nearly 8.5% per year. The rise in the growth
rate suggests the growth of the economy. The financial policies and the monetary policies are
able to sustain a stable growth rate. The reforms pertaining to the monetary policies and the
macroeconomic policies over the last few years have influenced the Indian economy to the
core. The major step towards opening up of the financial market further was the nullification
of the regulations restricting the growth of the financial sector in India. To maintain such a
growth for a long term the inflation has to come down further .The financial sector in India had
an overall growth of 15%, which has exhibited stability over the last few years although several
other markets across the Asian region were going through a turmoil. The development of the
system pertaining to the financial sector was the key to the growth of the same. With the
opening of the financial market variety of products and services were introduced to suit the
need of the customer. The Reserve Bank of India (RBI) played a dynamic role in the growth
of the financial sector of India.

GOVERNMENT REGULATIONS :

EXPOSURE LIMITS:
Lending to a single borrower is limited to 15% of the bank’s capital funds which may be
extended to 20% in the case of infrastructure projects. For group borrowers, lending is limited
to 30% of the bank’s capital funds, with an option to extend it to 40% for infrastructure projects.
The lending limits can be extended by a further 5% with the approval of the bank's board of
directors. Lending includes both fund-based and non-fund-based exposure.

CASH RESERVE RATIO AND STATUATORY LIQUIDITY RATIO:

Banks in India are required to keep a minimum of 4% of their net demand and time liabilities
in the form of cash with the RBI. These currently earn no interest. The CRR needs to be
maintained on a fortnightly basis, while the daily maintenance needs to be at least 95% of the
required reserves. In case of default on daily maintenance, the penalty is 3% above the bank
rate applied on the number of days of default multiplied by the amount by which the amount
falls short of the prescribed level. Over and above the CRR, a minimum of 22% and
a maximum of 40% of NDTL, which is known as the SLR, need to be maintained in the form
of gold, cash or certain approved securities. The excess SLR holdings can be used to borrow
under the Marginal Standing Facility on an overnight basis from the RBI. The interest charged

10
under MSF is higher than the repo rate by 100 bps, and the amount that can be borrowed is
limited to 2% of NDTL.

PROVISIONING:
Non-performing assets are classified under 3 categories: substandard, doubtful and loss. An
asset becomes non-performing if there have been no interest or principal payments for more
than 90 days in the case of a term loan. Substandard assets are those assets with NPA status for
less than 12 months, at the end of which they are categorized as doubtful assets. A loss asset is
one for which the bank or auditor expects no repayment or recovery and is generally written
off the books. For substandard assets, it is required that a provision of 15% of the outstanding
loan amount for secured loans and 25% of the outstanding loan amount for unsecured loans be
made. For doubtful assets, provisioning for the secured part of the loan varies from 25% of the
outstanding loan for NPAs that have been in existence for less than one year, to 40% for NPAs
in existence between one and three years, to 100% for NPA’s with a duration of more than
three years, while for the unsecured part it is 100%. Provisioning is also required on standard
assets. Provisioning for agriculture and small and medium enterprises is 0.25% and
for commercial real estate it is 1% (0.75% for housing), while it is 0.4% for the remaining
sectors. Provisioning for standard assets cannot be deducted from gross NPA’s to arrive at net
NPA’s. Additional provisioning over and above the standard provisioning is required for loans
given to companies that have unhedged foreign exchange exposure.

PRIORITY SECTOR LENDING:

The priority sector broadly consists of micro and small enterprises, and initiatives related to
agriculture, education, housing and lending to low-earning or less privileged groups . The
lending target of 40% of adjusted net bank credit (ANBC) or the credit equivalent amount
of off-balance-sheet exposure whichever is higher – has been set for domestic commercial
banks and foreign banks with greater than 20 branches, while a target of 32% exists for foreign
banks with less than 20 branches. The amount that is disbursed as loans to the agriculture sector
should either be the credit equivalent of off-balance-sheet exposure, or 18% of ANBC –
whichever of the two figures is higher. Of the amount that is loaned to micro-enterprises and
small businesses, 40% should be advanced to those enterprises with equipment that has a
maximum value of 200,000 rupees, and plant and machinery valued at a maximum of half a
million rupees, while 20% of the total amount lent is to be advanced to micro-enterprises with
plant and machinery ranging in value from just above 500,000 rupees to a maximum of a

11
million rupees and equipment with a value above 200,000 rupees but not more than 250,000
rupees. The total value of loans given to weaker sections should either be 10% of ANBC or the
credit equivalent amount of off-balance sheet exposure, whichever is higher. Weaker sections
include specific castes and tribes that have been assigned that categorization, including small
farmers. There are no specific targets for foreign banks with less than 20 branches. The private
banks in India until now have been reluctant to directly lend to farmers and other weaker
sections. One of the main reasons is the disproportionately higher amount of NPA’s from
priority sector loans, with some estimates indicating it to be 60% of the total NPAs. They
achieve their targets by buying out loans and securitized portfolios from other non-banking
finance corporations (NBFC) and investing in the Rural Infrastructure Development Fund
(RIDF) to meet their quota.

NEW BANK LICENSE NORM:

The new guidelines state that the groups applying for a license should have a successful track
record of at least 10 years and the bank should be operated through a non-operative financial
holding company (NOFHC) wholly owned by the promoters. The minimum paid-
up voting equity capital has to be five billion rupees, with the NOFHC holding at least 40% of
it and gradually bringing it down to 15% over 12 years. The shares have to be listed within
three years of the start of the bank’s operations. The foreign shareholding is limited to 49% for
the first five years of its operation, after which RBI approval would be needed to increase the
stake to a maximum of 74%. The board of the bank should have a majority of independent
directors and it would have to comply with the priority sector lending targets discussed earlier.
The NOFHC and the bank are prohibited from holding any securities issued by
the promoter group and the bank is prohibited from holding any financial securities held by the
NOFHC.

WILFUL DEFAULTERS:
A willful default takes place when a loan isn’t repaid even though resources are available, or
if the money lent is used for purposes other than the designated purpose, or if a property secured
for a loan is sold off without the bank's knowledge or approval. In case a company within a
group defaults and the other group companies that have given guarantees fail to honor their
guarantees, the entire group can be termed as a willful defaulter. Willful defaulters (including
the directors) have no access to funding, and criminal proceedings may be initiated against

12
them. The RBI recently changed the regulations to include non-group companies under the
willful defaulter tag as well if they fail to honor a guarantee given to another company outside
the group.

THE BOTTOM LINE:

The way a country regulates its financial and banking sectors is in some senses a snapshot of
its priorities, its goals, and the type of financial landscape and society it would like to engineer.
In the case of India, the regulations passed by its reserve bank give us a glimpse into its
approaches to financial governance and shows the degree to which it prioritizes stability within
its banking sector, as well as economic inclusiveness. Though the regulatory structure of India's
banking system seems a bit conservative, this has to be seen in the context of the relatively
under-banked nature of the country. The excessive capital requirements that have been set are
required to build up trust in the banking sector while the priority lending targets are needed to
provide financial inclusion to those to whom the banking sector would not generally lend given
the high level of NPA’s and small transaction sizes. Since the private banks, in reality, do not
directly lend to the priority sectors, the public banks have been left with that burden. A case
could also be made for adjusting how the priority sector is defined, in light of the high priority
given to agriculture, even though its share of GDP has been going down.

FDI POLICIES:

A foreign bank or its wholly owned subsidiary regulated by a financial sector regulator in the
host country can now invest up to 100% in an Indian private sector bank. This option of 100%
FDI will be only available to a regulated wholly owned subsidiary of a foreign bank and not
any investment companies. Other foreign investors can invest up to 74% in an Indian private
sector bank, through direct or portfolio investment.
The Government has also permitted foreign banks to set up wholly owned subsidiaries in India.
The government, however, has not taken any decision on raising voting rights beyond the
present 10% cap to the extent of shareholding.
The new FDI norms will not apply to PSU banks, where the FDI ceiling is still capped at 20%.
Foreign investment in private banks with a joint venture or subsidiary in the insurance sector
will be monitored by RBI and the IRDA to ensure that the 26 per cent equity cap applicable
for the insurance sector is not breached.
All entities making FDI in private sector banks will be mandatorily required to have credit
rating. The increase in foreign investment limit in the banking sector to 74% includes portfolio
investment [ie, foreign institutional investors (FIIs) and non-resident Indians (NRIs)], IPOs,

13
private placement, ADRs or GDRs and acquisition of shares from the existing shareholders.
This will be the cap for any increase through an investment subsidiary route as in the case of
HSBC-UTI deal.

CHAPTER 2
COMPANY PROFILE

14
COMPANY 1
HISTORY OF THE BANK:

The bank, in the beginning, preferred the role of a regional bank and slowly but steadily built
for itself a place in the delta district of Thanjavur. The first branch of the bank was opened
at Mannargudi on 24 January 1930. Thereafter, branches were opened
at Nagapattinam, Sannanallur, Ayyampet, Thirukattupalli, Thiruvarur, Manapparai, and
Porayar within a span of twenty-five years. The bank was included in the Second Schedule of
Reserve Bank of India Act, 1934, on 22 March 1945. It celebrated its Golden Jubilee on 14
November 1954. In 1957, the bank took over the assets and liabilities of the Common Wealth
Bank Limited and in the process annexed to it the five Branches of Common Wealth Bank
Limited at Aduthurai, Kodavasal, Valangaiman, and Jayankondacholopuram. In April 1965,
two other local banks, viz. "The City Forward Bank Limited" and "The Union Bank Limited"
were amalgamated with the bank under a scheme of amalgamation with the resultant addition
of six more branches viz., Kumbakonam-Town, Nannilam,
Koradacherry, Tiruvidaimarudur, and Kottayam. Consequently, the bank's name was changed
to 'Kumbakonam City Union Bank Limited'. In November 1965, the bank's first branch
at Madras was opened at Thiagarajan Nagar. In May 1969, the bank secured the services of
Shri. O.R. Srinivasan, a former Officer of Reserve Bank of India to be at the helm of affairs
as Chairman and Chief Executive Officer which event proved to be a turning point in the
annals of the bank. The first branch outside the state of Tamil Nadu was opened at Sultan pet,
Bangalore in Karnataka in September 1980. Branches were also opened in the twin cities
of Hyderabad and Secunderabad in erstwhile Andhra Pradesh. In tune with the national image
attached to the bank, the bank's name was changed to "City Union Bank Limited" with effect
from December 1987. Taking into account the bank's financial strength, managerial
competence and consistent progress in all spheres of its activities, Reserve Bank of India have
granted an "Authorised Dealers License" to deal in Foreign Exchange business with effect from
October 1990. The bank has introduced computerization in the year 1990 and all the branches
have since been computerized.

15
FOUNDERS OF THE BANK:

 V . KRISHNASWAMY IYENGAR

 S. KRISHNA IYER

 R. SANTHANAM IYER

PRODUCT PROFILE :

CARD :

DEBIT CARD
CUB offers international ATM / Debit Cards to all its customers - CUB ATM / Rupay / Visa /
Master Cards .Shopping using Debit card . The types of Cards offered by CUB - Classic, Gold,
Platinum based on the withdrawal Limits

GIFT CARD
CUB offers Gift cards to all its customers as well as other users (on submission of KYC form).
The gift cards varies from Rs.500 to Rs.10,000 .The card is valid for a period of 12 months.

GENERAL PURPOSE PREPAID CARD

CUB offers General Purpose Prepaid cards to all its customers as well as other applicants on
submitting of KYC form .CUB General Purpose Prepaid cards are issued for a minimum
amount of Rs. 500/- and maximum of Rs. 50,000/- .This card is valid for a period of 12 months
.Once the balance is exhausted money can be reloaded into it .The General Purpose Prepaid
card can also be used as gift for all occasions

TRAVEL CARD
CUB Travel card is a pre-paid foreign currency card that makes your foreign trip totally hassle-
free and convenient. It can be loaded with pre-paid foreign currencies in India by paying in
INR.It is a smart alternative to paper based instruments like Traveller’scheque or currency
notes.
ATM/BNA:

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ATM
CUB Customers / Other bank Customers can use ‘Cardless Withdrawal’ to withdraw money
that is transferred to them by anyone. Generate new PIN for your cards using the ‘Green PIN’
option. Pay College fees in minutes by transferring the required amount using ‘Fee payment’
option available in all ATMs .CUB Mobile registration, Cheque Book requests, PIN change,
Fast cash, Mini statement, Balance enquiry are also available at all CUB ATMs. Fund Transfer
to CUB Accounts

CASH DEPOSIT MACHINES

Cash deposits up to a limit of Rs. 2 Lakhs per transaction can be made 24 X 7 in the Bulk Note
Acceptor (BNA) machines placed outside CUB branches.

LOCKER FACILITY:
Lockers are available in a range of sizes at various CUB branches .Lockers are rented out for
a minimum period of one year .Lockers can be hired by individuals, limited companies,
associations, clubs and trusts .Nomination facility available .Payment option through standing
instructions is available

POINT OF SALE :

PSTN
PoS terminal can be connected to your existing land lines .Optimal solution for swiping Credit
/ Debit cards at a fixed location

GPRS
Movable PoS terminal support by SIM card for reaching out to customers in the outlet .Ideal
for customers in business of restaurants, hotels, clinics and retailers

MPOS
A wireless payment solution for anytime anywhere transaction acceptance. MPoS enables you
to accept transactions on the move from customers by connecting to your mobile phone / tablet
via Bluetooth connection. CUB MPoS mobile APP on the smart phone, to get payments in
business of restaurants, hotels, clinics and retailers

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TECHNICAL SERVICES:

CUB MOBILE (CUB MBANK PLUS)

RTGS / NEFT / Transfers, Intra bank transfers, Utility bill payments, Mobile recharge, Fee
Payment for College / Schools, generate / change Debit card PIN, Card block, Tax payments,
Income Tax E-filing, cordless withdrawal, Deposits opening, Availing Loan Against Deposits
(LAD) and Online Pre-Closure of deposits. IMPS (Immediate Payment Service) from CUB
Mobile banking helps transfer funds instantly and securely to any bank account. IMPS service
is available 24x7, throughout the year including Sundays and on bank holidays.

CUB WALLET
Send money to Anyone, Anytime, Anywhere, pay bills, recharge mobile / DTH and more 24x7
on the move. CUB Wallet can be used by non-CUB Customers and CUB Customers. Features
of Wallet are; load money using all Debit cards, all bank CUB Net, send money (even for non-
CUB customers too), Pay all Utility bill payments, Mobile recharge, Electricity bills, etc.The
sum of credits of a particular month in the wallet account or the balance in the account at any
point should not exceed Rs. 1.00 Lakh for CUB Customers and Rs. 10,000/- for non-CUB
Customers.

ELECTRONIC FUND TRANSFERS

Real Time Gross Settlement (RTGS) - Transfer of funds to any account in any bank branch
enabled for RTGS in a fastest way for remittance of Rs.2 lakh and above. National Electronic
Fund Transfer (NEFT) - Transfer of funds to any account in any bank branch enabled for NEFT
within the same day. Any customer of any branch for any amount.

BILL PAYMENT
CUB InstaBillPay allows to make payments to utilities (Electricity, Telephone, etc.,), Prepaid
Mobile, Post-paid Mobile, DTH, Credit Card, Broadband / Landline, Gas, Insurance Premium,
Gift Cards, Loan Payments, Tax Payments, Subscriptions and Donations. Registered billers,
will be able to view the bill amount and due date. Additionally, you will also receive alerts via
SMS for any biller addition / deletion, receipt of new bill and status of bill payments.

BHIM (BHARAT INTERFACE FOR MONEY)

CUB is now available on BHIM App. CUB customers can add their account on BHIM App
and create their own UPI Virtual Private Address (VPA) .Using BHIM CUB account holders

18
can send or receive money from other UPI users .CUB customers can check current balance of
their bank accounts.

USSD (UNSTRUCTURED SUPPLEMENTARY SERVICE DATA)

Works on Unstructured Supplementary Service Data (USSD) channel .CUB customers can
avail this service by dialling *99# .Key services offered under *99# service include, Fund
Transfer, Balance Enquiry, Mini Statement and other services

BHARAT QR
CUB is live on Bharat QR a common Quick Response (QR) code standard supporting Visa,
MasterCard and RuPay cards .CUB customers can use their smart phones to make payments
through the CUB Mobile App by using Scan & pay option without swiping in the PoS machine

BBPS (BHARAT BILL PAYMENT SYSTEM)

CUB is live on BBPS, CUB customers can use BBPS for all kinds of bill payments .This
payment system builds an interoperable service through a network of agents, enabling multiple
payment modes along with instant generation of receipts of payments .It would connect the
utility service companies on one end and all payments service providers on the other

AEPS (AADHAAR ENABLED PAYMENT SYSTEM)

CUB customers can use AEPS system to perform financial and non-financial transactions
(Balance Check, Cash Deposit, Cash Withdrawal, Aadhaar to Aadhaar Fund Transfer) through
the banking correspondent using AADHAAR

CUSTOMER CARE :
Qualified personnel available at our branches to provide personalized service to the customers.
Investment advice, update on new products and services and need based banking services at
your doorstep.

DEMAT SERVICES:
 Demat account opening
 Dematerialisation
 Rematerialisation
 Off-market and Market Delivery execution

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 Pledge and Hypothecation instructions
 ASBA functions ( Application Supported by Blocked Amount ) for IPO/Right issue
 Providing electronic credit in respect of securities allotted by issuers under IPO or
otherwise.
 Receiving on behalf of demat account holders non-cash corporate benefits, such as,
allotment of bonus and rights shares in electronic form or securities ensuing upon
consolidation, stock split or merger/amalgamation of companies.
 Transmission of securities
 Online delivery Instructions thro SPEED-e ( facility provided by NSDL) for POA holders

INSURANCE POLICIES :
 Star insurance health policy
 Family health optima insurance policy
 Star medi classic insurance
 Star super surplus insurance policy
 Star senior citizen red carpet policy

CLIENT/CUSTOMER PROFILE :
Since the industry given is the banking industry the customer profile is vast .locker facilities
would cover people who are willing to save their documents , valuables , jewellery and will
concentrate more on the richer sections of the society . thedemat accounts would attract stock
market enthusiasts . the client profile in general would include a lot of people in the general
public and other people who are willing to be associated with the bank.

ACHIEVEMENTS OF CITY UNION BANK:

 City Union Bank Ltd. received award in recognition of excellent performance in RuPay
from National Payments Corporation of India (NPCI).
 E. F. Schumacher, author of the bestseller Small Is Beautiful: A Study of Economics
as if People Mattered (1979), was hugely impressed by the manner CUB has woven
his idea into its business.
 Its clientele comprises micro, small and medium enterprises; it has exposure to retail
and wholesale trade with granular asset profile that includes short- and long-term loans
to the agricultural sector. Priority advances grew 19 per cent to Rs 10,272 crore, making

20
 up 55.27 per cent of the bank’s net credit compared to the regulatory floor of 40 per
cent.
 Gross advances grew 17 per cent to Rs 21,253 crore, but the yield on advances was
down a tad to 12.83 per cent (from 13.18 per cent).
 While both gross and net non-performing assets (NPA) were up at 2.41 per cent (from
1.86 per cent) and 1.53 per cent (from 1.30 per cent), respectively, part of the reason
can be attributed to the asset quality review undertaken by the Reserve Bank of India
in the third quarter of fiscal ’16.
 Loans to MSMEs (micro, medium and small enterprises) result in lower NPAs. They
are additionally collateralised by residential property and personal guarantees
predominantly into single-banker relationships with minimal exposure to consortiums,
and multiple-banking arrangements or to infrastructure.
 CUB restructured 30 borrowable accounts amounting to Rs 18 crore that were affected
in Chennai floods. The total restructured standard advances stood at Rs 204 crore,
which was 0.96 per cent of its gross advances.
 The bank has of late spoken of moving out of the Cauvery Delta to widen its footprint,
but the bulk of its 525 branches is still in southern India (469 branches), of which 359
are in Tamil Nadu.
 It has just introduced CUB-Lakshmi, a robot that uses artificial intelligence to greet
customers, answer queries and can be used as a limited teller.

ORGANISATIONAL STRUCTURE:
1) Board of directors
2) Senior executives
3) General managers
4) Deputy general managers
5) Assistant general managers
6) Area managers
7) Branch manager
8) Employees

PRESENT MARKET SHARE:

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The current share price of city union bank is 193.15. The market capitalization is 14180.30
crores. According to June 2019 the income on investment was 141.08 crores.

Interest on balance with RBI is 16.99. The interest/discount on advanced bills are 868.62
crores. the bank has reported a gross non-performing asset of 1076.22 crores.

PRESENT TURNOVER OF CITY UNION BANK:

The present turnover of city union bank is 3767.17 crores. out of which the other income is
514.39 crores and the total income is 4281.11 crores.

PROPOSED PLAN FOR GROWTH AND EXPANSION:

The performance of the City Union Bank over a period of 10 to 15 years, has always kept the
efficiency and profitability parameter as the top goals and had never been like say running
behind the size .So in last 15 years, they had shown return on assets of 1.5% every year and
return on equity, they used to have up to 20% but it got to somewhere 15% to 16% after they
went for the capital raising.
They will continue to be a south centric bank as they move forward for the next three to five
years. they are very clear and categorical that they are not very strong bank in terms of the third
party distribution or other fee based income. they measure the performance by what is called
as other income. Other income basically will be comprising of all their core fee income plus
the profit what they book on the treasury and the profit what they get from the write back and
written off assets and all other assets put together.

TAX DISPUTES :

THIS WAS A DISPUTE ARISES IN THE CITY UNION BANK OF TRICHY . THE
COURT APPEALS ARE GIVEN BELOW AS FOLLOWS:
The short point which arises in this batch of civil appeals is whether interest earned by the
assessees-banks on dated Government securities was liable to be assessed under section 2(7)
read with Section 4 of the Interest Tax Act, 1974. there is a basic difference between loans and
advances on the one hand and investments/securities on the other. This difference is indicated
in the provisions of the Income tax Act, the Companies Act as well as the Bank Regulation
Act.

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These aspects have been discussed in detail in two decisions of the Bombay High Court,
namely Discount and Finance House of India Ltd. v. S.K. Bhardwaj, CIT reported in
MANU/MH/0628/2002, as also in another decision of the Bombay High Court reported in
MANU/MH/0629/2002 in the case of CIT v. United Western Bank Ltd. It is not in dispute that
the revenue has accepted the aforesaid two judgments of the Bombay High Court. For the
forestalled reasons there is no merit in the civil appeals filed by the department. The same are
dismissed No order as to costs."
Learned counsel for the appellant submitted that this Court's decision related to the interest on
government securities only. Learned counsel for the assess submitted that in the instant case
the interest earned was on government securities. The stand is denied by learned counsel for
the appellant. Let the Tribunal examine the factual position as to whether the interest involved
in the present case is on government securities. If that be so, the ratio of the decision in
Corporation Bank's case (supra) will apply to the facts of the present case and if the interest
earned is not solely on government securities, the ratio of the decision will not apply.
The appeal is disposed of accordingly. the company also faced another dispute with the income
tax department once agin in 2010 From the beginning we have tied up ourselves with the Life
Insurance Corporation of India and we are having a reasonably good tie up and we used to
continue with them as we move forward. They are also one of our shareholders who supported
us during our initial period of capital raising.
We expected that we should be growing between 15%-18% for the financial year ending 31st
March 2017 but because of the demonetization issues, in the third quarter we had a negative
growth. So we ended up the year between 12% to 15% growth rate for the financial year 31st
March 2017. This year we expect we should be growing between 15% and 18% and things
should start moving up from this particular point of time.

LITIGATION:
The case is cyber hacking. International cyber criminals attacked the systems. The hackers
entered illegally and made three transactions. since the risk management system was very
robust, they could immediately catch it with about three transactions and less than 2 million

23
and they could retrieve or block two of the three cases that went to three different countries.
since the reconciliation system is very robust, they also identified those transactions and
immediately contacted the respective bankers. Wherever the money was with the bank, they
could trace it and wherever the money had got credited to the customers’ accounts, they had
to take the legal steps and that is how they could almost retrieve or block two of the three
transactions and one payment which went to China is under litigation. they are taking steps at
the highest level with the support of the government to retrieve the money.

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FINANANCIAL INFORMATION:
BALANCE SHEET :

25
26
CASH FLOW STATEMENT:

PROFIT AND LOSS STATEMENT

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28
LOCATION/PLACE OF BUSINESS:
ANDHRA PRADESH.

 ADILABAD
 ANANTAPUR
 ANATAPUR
 CHITTOOR
 EAST GODAVARI
 GUNTUR
 HYDERABAD
 KADAPA
 KARIM NAGAR
 KHAMMAM
 KRISHNA
 KURNOOL
 NALGONDA
 NELLORE
 NIZAMABAD
 PRAKASAM
 RANGA REDDY
 SRIKAKULAM
 VISAKHAPATNAM
 VIZIANAGARAM

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 WARANGAL

 WEST GODAVARI
CHHATTISGARH
 RAIPUR

DELHI
 DELHI
 NEW DELHI

GUJARAT
 AHMEDABAD
 BHARUCH
 BHAVNAGAR
 JAMNAGAR
 KUTCH
 RAJKOT
 SURAT
 VADODARA
 VALSAD
HARYANA
 FARIDABAD
 GURGAON
HIMACHAL PRADESH
 KULLU
KARNATAKA
 BANGALORE RURAL
 BANGALORE URBAN
 BANGLORE
 BELGAUM
 BELLARY
 BENGALURU
 DAKSHINA KANNADA

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 DAVANGERE
 DHARWAD
 HASSAN
 MYSORE
 RAICHUR
 SHIMOGA
 TUMKUR

KERALA
 ALAPPUZHA
 ERNAKULAM
 KANNUR
 KOLLAM
 KOTTAYAM
 KOZHIKODE
 PALAKKAD
 PATHANAMTHITTA
 THIRUVANANTHAPURAM
 THRISSUR
MADHYA PRADESH
 BHOPAL
 INDORE

MAHARASHTRA
 AMRAVATI
 AURANGABAD(MH)
 KOLHAPUR
 MUMBAI
 NAGPUR
 NASHIK
 PUNE
 RAIGAD
 THANE

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ODISHA
 KHURDA
PUDUCHERRY
 KARAIKAL
 PONDICHERRY

PUNJAB
 AMRITSAR
 CHANDIGARH
 JALANDHAR
 LUDHIANA

RAJASTHAN
 AJMER
 BARMER
 BHILWARA
 JAIPUR
 JODHPUR
 KOTA
 PALI
 UDAIPUR
TAMIL NADU
 ARIYALUR
 CHENNAI
 COIMBATORE
 CUDDALORE
 DHARMAPURI
 DINDIGUL
 ERODE
 KANCHEEPURAM
 KANCHIPURAM
 KANYAKUMARI
 KARUR

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 KRISHNAGIRI
 KUMBAKONAM
 MADURAI
 NAGAPATTINAM
 NAMAKKAL
 PERAMBALUR
 PUDUKKOTTAI
 PUDUKOTTAI
 RAMANATHAPURAM
 SALEM
 SIVAGANGA
 THANJAVUR
 THENI
 THIRUVALLUR
 THIRUVARUR
 THOOTHUKUDI
 TIRUCHIRAPPALLI
 TIRUNELVELI
 TIRUPPUR
 TIRUVALLUR
 TIRUVANAMALAI
 TIRUVANNAMALAI
 TIRUVARUR
 TUTICORIN
 VELLORE
 VILLUPURAM
 VILUPPURAM
 VIRUDHUNAGAR
TELENGANA
 HYDERABAD
 MAHABUBNAGAR
 WARANGAL

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UTTAR PRADESH
 ALLAHABAD
 KANPUR
 LUCKNOW
 VARANASI
WEST BENGAL
 KOLKATA

JOINT VENTURES / TECHNOLOGY TRANFERS:

Few years ago the city union bank planned a joint venture with the Lankan bank. It is a 50-50
JV and it would help potential entrepreneurs and SMEs to help access funds for capital
expansion which they have not reached so far.It is (the joint venture) in the initial stage as they
are waiting for regulatory approvals and expected to take at least six months of time, they have
some investment expertise and it’s better to have another partner, citing reasons for the tie-up.

MERGERS/ACQUSITIONS:

Engineering major Larsen & Toubro acquired nearly a 10 per cent stake in the Kumbakonam-
based City Union Bank for Rs 45 crore. The company will subscribe to the preferential
allotment of 2.66 million equity shares, representing a 9.99 per cent stake in the post-issue
equity of the bank, at Rs 169 apiece. The City Union Bank board approved the issue of
preferential shares to L&T. The City Union Bank stock closed at Rs 170.70 on the BSE, 4.88
per cent higher than yesterday’s close of Rs 162.75. The proposed move of L&T is aimed at
leveraging the strength of the bank and L&T’s financial services firm L&T Finance. “Also, it
provides an investment opportunity in the banking sector, which has been doing well for quite
some time,” said an L&T executive. The 102-year-old bank, formerly known as Kumbakonam
Bank, manages over Rs 3,500 crore in deposits and its advances portfolio increased by Rs 537
crore in the 2006 financial year.

CEO PROFILE:

Dr. N. Kamakodi is serving as MD & CEO of the Bank from May 2011. He is a Bachelor of
Technology in Chemical Engineering, an MBA from Chinese University of Hong Kong,
Ph.D. in e-Banking and a CAIIB. He joined the Bank as DGM in the year 2003 was elevated

34
to the post of GM in 2005 and later as Executive Director in 2006. He has excellent academic
background and also acquired hands on experience on the overall operations of the Bank. His
area of interest in research are business , banking , finance .

NO OF EMPLOYEES:

The company approximately has 4,517 employees working with them currently .

BUSINESSES IN NO COUNTRIES:

The bank is currently located only in India. It has a total of 650 branches across the country.
The headquarters is located in Kumbakonam ,Thanjavur, Tamil Nadu.

COMPANY 2

DCB Bank

HISTORY

DCB bank has doubled the branch network presence over the past two years to 331 branches
from 160 branches in 2015. The Bank has come a long way from humble beginnings in the
1930s, in Mumbai from a series of Co-operative bank mergers with the Ismailia Co-operative
Bank Limited and the Masalawala Co-operative Bank respectively. These 2 banks later merged
to form Development Co-operative Bank, that changed to Development Credit Bank after it
was granted the scheduled bank license by the Reserve Bank of India in May 1995.
Development Credit Bank Ltd. went on to successfully offer shares to the public by an Initial
Public Offering (IPO) in 2006.
It’s promoter and promoter group the Ag Khan Fund for Economic Development (AKFED) &
Platinum Jubilee Investments Ltd. holds below 15% stake. AKFED is an international
development enterprise. It is dedicated to promoting entrepreneurship and building
economically sound companies. DCB Bank Limited is the new name of the Bank, changed
with due regulatory approval in January 2014. Ismailia Co-operative Bank Limited and the

35
Masalawala Co-operative Bank came into existence in the year 1930s. In due course Diamond
Jubilee Co-operative Bank Limited merged with Ismailia Co-operative Bank Limited. After a
certain period of time, Citi Cooperative Bank Limited with Development Co-operative Bank
Limited, which was later converted into a joint stock banking company, the Development
Credit Bank Limited on May 31, 1995. There were about 1400 cooperative banks in India in
the 1990s and a few of these co-operative banks were granted permission by RBI to convert
into scheduled commercial banks. The bank, over the years, expanded its operations beyond
the different states like Gujarat, Maharashtra, Andhra into the states of Haryana, Karnataka ,
Tamil Nadu, Union Territories of Daman and Diu & Dadra & Nagar Haveli and the National
Capital Territory of Delhi. DCB branches include Agra, Ahmedabad, Ambala Cantt,
Aurangabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Coimbatore, Dehra
Dun, Delhi NCR, Gandhinagar, Gurugram, Hyderabad, Indore, Dewas, Jabalpur, Jaipur,
Jalandhar, Jodhpur, Kanpur, Kochi, Kolkata, Lucknow, Ludhiana, Mumbai, Meerut, NOIDA,
Panjim, Patna, Pune, Surat, Trichy, Udaipur, Vadodara, Visakhapatnam. It is also focused in
expanding in tier 3 to tier 6 towns in Madhya Pradesh, Maharashtra, Odisha and Telangana.,
Andhra Pradesh, Gujarat, Haryana, Chhattisgarh and Karnataka. The banks target market is
mainly small business owners/self-employed/small business segment. DCB’s Bank services
and products range from loans for medium and small enterprises to medium enterprises and
Mid Corporate customers, to loans for individual needs such as home loan, commercial vehicle
loan ,loan against gold, and small business loan. Agri & Inclusive Banking from DCB Bank
includes tractor loan, dairy and farm loan warehouse finance, loan against gold, loan against
warehouse receipt, loans for microfinance organisations amongst other products. They opened
DCB Sahyog at Dediapada in Gujarat exclusively for microfinance, which provide direct credit
facilities to microfinance borrowers through relationships with MFIs in the region. They
launched a 24x7 Customer Care Centre. The Bank formed a strategic alliance with HDFC Ltd
for marketing their Home Loan products. The Bank had been empanelled as a clearing and
settlement banker with the National Commodities & Derivatives Exchange (NCDEX) in
addition to the Multi Commodity Exchange (MCX). DCB Bank Savings Accounts yields
attractive value such as cash back option and personalised account number. Additionally, DCB
PayLess secured credit card is a credit builder card. The Bank is active in the online and digital
banking space with DCB on the Go - instant mobile banking, telephone banking. SMS banking,
The bank also distributes Life Insurance, Mutual Fund Products, General insurance, Health
insurance to existing and new customers.In FY 2014, the bank launched Indias first co-branded
prepaid card for disbursal of small loans by Janalakshmi Microfinance.

36
VISION
Our vision is to be the most innovative and responsive neighborhood bank in India serving
entrepreneurs, individuals and businesses.
VALUES

Treat everyone with Dignity Respect

Do What is Right Ethical

Be Open & Transparent Fair

Sense of Urgency, Passion & Energy Dynamic

Go the Extra Mile, Find Solutions Stretch

Improve Continuously Excellence

Play as a Team, To Win Teamwork

Support the Society Contribute

FOUNDER’S PROFILE

Its promoter and promoter group the Aga Khan Fund for Economic Development (AKFED) &
Platinum Jubilee Investments Ltd. holds below 15% stake. AKFED is an international
development enterprise. It is dedicated to promoting entrepreneurship and building
economically sound companies. As an international development agency dedicated to
promoting entrepreneurship and building economically sound enterprises in the developing
world, the Aga Khan Fund for Economic Development (AKFED) often works in parts of the
world that lack sufficient foreign direct investment. AKFED operates as a network of affiliates
with more than 90 separate project companies employing over 47,000 people. It had revenues
of US$4.3 billion in 2017, but because of its development ethos, it reinvests all profits in further
development. AKFED often works in collaboration with local and international development
partners to create and operate companies that provide goods and services essential to economic
development. These range from banking to electric power, agricultural processing, hotels,
airlines and telecommunications. AKFED also works with governments to help promote the
creation of enabling legal and fiscal structures that encourage the growth of the private sector.

37
At the invitation of several governments, AKFED has helped critical industries to make the
transition to market economies through the privatisation process. These include industries such
as banking, power generation, tourism, manufacturing and the agricultural sector, in countries
as varied as Uganda, Tajikistan, Pakistan and Afghanistan. AKFED’s approach emphasises the
development of local human resources over time, including managerial, technical, marketing
and financial skills. Other characteristics of this approach include providing essential seed
capital to launch projects in those sectors and countries where attracting investment is difficult.
AKFED takes a long-term view in order to build viable, self-sustaining and profitable
companies. It also participates in the management of companies in which it invests with the
aim of preparing companies for broader ownership by local interests.
PRODUCT LINE

DCB Bank's products and services range from loans for Small and medium enterprises and
Mid Corporate customers, to Loans for individual needs such as home loan, loan against gold,
commercial vehicle loan and small business loan. Agri & Inclusive Banking from DCB Bank
includes tractor loan, loan against gold, warehouse finance, loan against warehouse receipt,
dairy and farm loan, loans for microfinance organisations amongst other products.

TYPES OF SAVINGS ACCOUNT AT DCB BANK

Savings Account Types at DCB Bank
The bank has prepared a well framed order which includes striking services to each of its
customers. Here are the different types of saving accounts which can be considered by the
individual based on his/her needs.

Elite Account
You can call Elite Account by DCB Bank as a unique account specified for privileged
customers. With this savings account comes powerful benefits wrapped in innovative services.
For example, the account holder has the liberty to select any number as the bank account digits
based on his/her preference.

Privilege Account
Privilege Account is a savings account that offers maximum convenience and yields to the
account holder. You are required to manage a minimum balance of INR 5 lakhs. However, the

38
flexibility to maintain this balance across savings account, mutual funds or fixed deposits
acquired via DCB Bank is a wonderful option.

CashBack Account
If you make a purchase using a CashBank card (debit) offered by DCB Bank, there is a chance
to get a cashback reward close to INR 6000 in a duration of 12 months. Keep a note that, this
benefit is available only to DCB customers managing a CashBank account.

DCB Classic Account

This is an account that is quite simple to manage and ensures a large list of profits. Moreover,
DCB Classic Account holds typical features present with an ordinary savings account. The
customer needs to maintain a minimum balance of INR 5000, with transactions being processed
quite conveniently.

Account for Family Savings

You can count it as an apt account for a family oriented person. Family Savings bank account
presents a complete banking solution including greater facilities through the bank accounts of
different family members, managed with DCB Bank. Do remember that, under this interesting
scheme, a minimum of two and maximum of five family members are made eligible. As per
DCB Bank, the required minimum balance can either be maintained in a particular account or
a group of family accounts.

Shubh-Labh Account
The bank recognizes that account opening is indeed an auspicious event to each customer.
Hence, in order to make this event more profitable and memorable for the concerned customer,
the bank offers a reward with respective transactions that are made using this account.

Minimum Balance Necessities for Savings Account

For maintaining a DCB savings account, the minimum balance that has to be kept intact
depends on several factors such as savings account type, deposit term, etc. Therefore, these
might vary from one type to another type of savings account. You can check the bank’s official
website for learning about the minimum balance scale in a precise manner.

DCB BANK PERSONAL LOAN FEATURES

39
• Total flexibility associated to end use
• Personal Loan online application
• Limited documentation and swift approvals
• Tenure for loan ranging between 1-5 years
• There is no need for collateral
• Simple loan payment facilities with DCB include standing instruction, postdated cheques
and ECS.

PERSONAL LOAN ELIGIBILITY CRITERIA

• It is vital to note that, salaried employees, private and public sector employees, salaried
doctors, employees from government sector including central and local organizations are
termed eligible for accessing a personal loan from DCB Bank.
• Age Criteria: It is required for the applicant to be 21 years (minimum) of age. Further,
maximum age at the time of loan maturity is required to be 60-65 years.
• Basic Documentation: One must possess valid documents consisting of ID proof, residence
proof, income proof etc., for accessing a personal loan.
• Salary condition: The applicant must earn a minimum monthly income of INR 15,000. For
self-employed as well as business candidates, it is required to showcase a steady income
together with profit records.

POLICIES
1. Dividend Policy- The Board of Directors of the Bank shall declare / pay dividend only after
compliance with the applicable provisions the Companies Act, 2013 and Rules framed
there under (as amended), Banking Regulation Act, 1949, Circulars issued by RBI from
time to time in this regard, SEBI (LODR) Regulations,2015, Articles of Association of the
Bank and such other regulatory compliances, as may be required from time to time.
2. CSR Policy- The Bank’s thrust area is in keeping with the Government of India’s Swachh
Bharatinitiative. The Bank shall, in every financial year, contribute a statutory minimum
amount of at least 2% of its Average Net Profits made during the three immediate preceding
Financial Years for the CSR Expenditure. The Bank shall allocate 2 days per employee per
Financial Year to be spent on “CSR Activities”. The 2 days will be paid leave for each

40
 employee to actively contribute and volunteer personal time on “CSR Activities” approved
by CSR Committee of the Board approved.
3. Whistle blower Policy- The primary focus area of the Whistle Blower Policy aims at
building a successful whistle-blower mechanism, the one which is fair and non-vindictive
and easily accessible to all, so that the frauds/potential frauds are detected and controlled
at a nascent stage. The Policy also provides for adequate safeguard against victimisation of
Directors/ employees who avail of this mechanism. The policy also provides the
complainants direct access to the Chairman of the Audit Committee of the Board, in
exceptional cases.
4. Archival Policy for maintenance of data / information on website of Bank-Pursuant to the
requirements under Regulation 30(8) of the SEBI (LODR) Regulations, 2015, DCB Bank
Ltd. (The Bank) shall disclose on its website all such events or information which have
been disclosed to stock exchange(s) under this regulation , and such disclosures shall be
hosted on the website of the Bank for a minimum period of 5 years Furthermore, the Bank
will host the aforementioned information on the website in archive for a further period of
3 years.
CLIENT PROFILE

CB Bank’s business segments are Retail, micro-SME, SME, mid-Corporate, Agriculture,

Commodities, Government, Public Sector, Indian Banks, Co-operative Banks and Non
Banking Finance Companies (NBFC). DCB Bank has approximately 600,000 customers. DCB
Bank also serves a client base of NRI customers from over 100 countries across the world.

41
ORGANISATIONAL STRUCTURE

BOARD COMMITTEES

Audit Committee Capital Raising Committee

Mr. Nasser Munjee - Chairman

Mr. Ashok Barat - Chairman Mr. S. Sridhar
Mr. AltafJiwani Mr. AltafJiwani
Mr. Imran Contractor Mr. Ashok Barat
Mr. ShaffiqDharamshi Mr. Imran Contractor
Mr. MuraliNatrajan

42
 Audit Committee Capital Raising Committee

Corporate Social Responsibility Committee Credit Committee

Mr. Nasser Munjee - Chairman Mr. S. Sridhar - Chairman

Mr. S. Sridhar Mr. C. Narasimhan
Ms. Rupa Devi Singh Ms. Rupa Devi Singh
Mr. Imran Contractor Mr. Amin Manekia
Mr. MuraliNatrajan

Customer Service Committee Executive Committee

Mr. Amin Manekia - Chairman Mr. Nasser Munjee - Chairman

Mr. Jamal Pradhan Mr. Iqbal Khan
Mr. S. Sridhar Mr. Imran Contractor
Mr. AltafJiwani Mr. AltafJiwani
Ms. Rupa Devi Singh
Mr. MuraliNatrajan

Fraud Reporting and Monitoring committee IT Strategy Committee

Mr. Ashok Barat - Chairman Mr. C. Narasimhan - Chairman

Mr. AltafJiwani Mr. Imran Contractor
Mr. C. Narasimhan Mr. Iqbal Khan
Mr. Jamal Pradhan Mr. Jamal Pradhan
Mr. Murali Natarajan Mr. R. Venkattesh (Head Op., Tech. & HR)

Nomination & Remuneration Committee Risk Management Committee

Mr. S. Sridhar - Chairman Mr. Imran Contractor - Chairman

Ms. Rupa Devi Singh Mr. Ashok Barat
Mr. AltafJiwani Mr. C. Narasimhan
Mr. Amin Manekia Mr. Amin Manekia
Mr. Nasser Munjee Mr. Murali Natarajan

Stakeholders’ Relationship Committee Wilful Defaulters Review Committee

Mr. Imran Contractor - Chairman Mr. MuraliNatrajan - Chairman

Mr. AltafJiwani Any one of the following;
Mr. Amin Manekia Mr. AltafJiwani
Mr. Ashok Barat
Mr. Imran Contractor
Mr. S. Sridhar
Ms. Rupa Devi Singh

PRESENT MARKET SHARE AND TURNOVER

The company’s market price per share currently is 199.9 and has a market capitalisationof
6198crores. The company’s revenue stands at 2076.15 crores (2017).
QUICK FACTS:
• The Bank’s Profit After Tax was at INR 96 Cr. in Q4 FY 2019 as against INR 64 Cr. in Q4
FY 2018, an increase of 50%
• The Bank’s branch network increased to 333 branches as on March 31, 2019.

43
• Net Advances grew to INR 23,568 Cr. as on March 31, 2019 from INR 20,337 Cr. as on
March 31, 2018 a growth rate of 16%
• As on March 31, 2019, the Bank grew Deposits by 18% to INR 28,435 Cr. Retail CASA
& Retail Term Deposits continued to provide a stable resource base to the Bank.
• Gross NPA ratio stood at 1.84% as on March 31, 2019 as compared to 1.79% as on March
31, 2018.
• Net NPA ratio stood at 0.65% as on March 31, 2019 as compared to 0.72% as on March
31, 2018.

PROPOSED PLAN FOR GROWTH AND BUSINESS EXPANSION

It will slow down on its network expansion for the next two years to concentrate on improving
profitability from existing network of around 300 branches. The company has embarked on an
aggressive branch expansion in the last two years (from 198 to 318 now) which will improve
its net interest margin. Over the next three years, it seems the consensus view of the 12 analysts
covering DCBBANK is skewed towards the positive sentiment. Broker analysts tend to
forecast up to three years ahead due to a lack of clarity around the business trajectory beyond
this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate
an annual growth rate from the slope in order to understand the overall trajectory of
DCBBANK’s earnings growth over these next few years.

FINANCIALS
BALANCE SHEET

Balance sheet As at March 31, As at March 31, Increase/(Decrease)

2019. 2018.
Customer Deposits 24046.06 18872.12 5173.94
Inter Bank Deposits 4389.05 5134.74 (745.69)

Total Deposits 28,435.11 24,006.86 4,428.25

[Including Total [6,809.90] [5,840.32] [969.58]
CASA*]
Advances 23,568.00 20,336.69 3231.31
Gross - NPA 439.48 369.03 70.45

44
 Balance sheet As at March 31, As at March 31, Increase/(Decrease)
2019. 2018.
Net – NPA 153.77 146.72 7.05
Provision for 97.11 89.65 7.46
Standard Assets**
Total Assets 35791.83 30222.09 5569.74

Profit & loss For the For the Increase/(Decrease)

year ended year ended
March 31, March 31,
2019 2018
Net Interest Income 1,149.29 995.43 153.86

Non Interest Income 350.16 310.27 39.89

Total Operating 1,499.45 1,305.70 193.75

Income
Operating Cost 852.85 780.73 72.12
Operating Profit 646.60 524.97 121.63
Provisions 140.06 138.80 1.26
Net Profit Before 506.54 386.17 120.37
Tax
Tax 181.17 140.83 40.34
Net profit aftyer tax 325.37 245.34 80.03

*Current and Savings Accounts (CASA)

**Including provision for unhedged foreign currency exposure and provision for specific
Standard Assets.
DIVIDEND
Your Board is pleased to recommend a dividend of ` 1.00 per equity share of ` 10.00 each in
respect of Financial Year ended March 31, 2019.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2019

45
 Year ended Year ended
31.03.2019 31.03.2018

Cash Flow from Operating

Activities

Net Profit after tax for the year 32,53,661 24,53,426

(Refer Profit and Loss Account)

Add: Provision for income tax 18,11,736 14,08,304

(Refer Schedule 18 (12.1))

Net Profit before tax for the year 50,65,397 38,61,730

Adjustments for:

Provisions for Advances 13,06,686 12,92,015

Provisions for Restructured (4,243) 2,243

Advances

Provision for Investments 21,216 61,078

Provision for Standard Assets 74,634 45,972

Provision for Other Assets and (2,121) (22,029)

Contingencies

Depreciation / Amortisation on 4,41,843 5,33,617

Fixed Assets

Loss on Sale of Fixed Assets 2,687 3,977

Amortisation of Premium on 1,76,165 1,70,101

Held-to-Maturity (HTM)
Investments

46
Amortisation of Premium on 11,669 15,838
Acquired Assets

ESOPs Compensation 646 1,496

Cash Flow from Operating 70,94,579 59,66,038

Activities before adjustments
Adjustments for:

Increase/(Decrease) in Deposits 4,42,82,514 4,71,76,514

Increase/(Decrease) in Other 2,94,461 19,92,880

Liabilities & Provisions

(Increase)/Decrease in (1,64,48,716) (42,41,309)

Investments

(Increase)/Decrease in Advances (3,36,27,200) (4,65,00,656)

(Increase)/Decrease in Other (22,90,423) (7,03,290)

Assets

Refund/(Payment) of direct taxes (21,18,607) (13,89,705)

(Including Tax Deducted at
Source

Net Cash Flow (used in) / from A (28,13,392) 23,00,472

Operating activities Cash flow
from Investing activities

Purchase of Fixed assets (7,81,835) (5,95,833)

47
Proceeds from sale of Fixed 17,648 3,741
Assets

Net Cash Flow used in Investing B (7,64,187) (5,92,092)

activities Cash flow from
Investing activities

Proceeds from Issue of Capital 1,05,268 37,62,726

(including ESOPs)

Issue of Subordinated Debt - 45,00,000

Proceeds from Borrowings 6,68,61,341 16,96,66,030

Repayment of Borrowings (5,88,96,410) (16,76,56,998)

Dividend and Dividend Tax Paid (2,78,711) (1,84,913)

Net Cash Flow from Financing C 77,91,488 1,00,86,845

activities

Net Increase in Cash & Cash A+B+ 42,13,909 1,17,95,225

Equivalents C

Cash and cash equivalents at the 2,37,19,847 1,19,24,622

beginning of the year

Cash and cash equivalents at the 2,79,33,756 2,37,19,847

end of the year

Notes to the cash flow statement

Cash and cash equivalent

includes the following:

Cash and balances with Reserve 1,31,72,175 1,13,63,898

Bank of India (Refer Schedule 6)

48
 Balances with Banks and Money 1,47,61,581 1,23,55,949
at Call and Short notice (Refer
Schedule 7)

Cash and Cash equivalent at the 2,79,33,756 2,37,19,847

end of the year

ACHIEVEMENTS
The Bank was rated as the Best Small Bank in India by Businessworld Magna Awards 2017.
DCB Bank was the runner up Best Small Bank in India recognised by Businessworld Magna
Awards 2018. Recently the Bank was conferred the Good Corporate Citizen Award 2017-
2018, by Bombay Chamber of Commerce & Industry. This was in recognition for the activities
actively promoted by the Bank for sustainability and climate change mitigation across India.
A few of the awards include:
1) CSR Summit & Awards of UBS Forum, BFSI Category - DCB Bank was awarded for the
project ‘Participatory Natural Resource Management along Watershed Lines in the Tribal Belt
of South Rajasthan’.
2) Asian Customer Engagement & Forum - ACEF Leadership Awards 2018, Excellence in
CSR, Social Impact Awards - DCB
3) Bank garnered Bronze for Best Environmental Behaviour Change Award - Project :
Participatory Natural Resource Management along watershed lines in the Tribal Belt of South
Rajasthan.

3) Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards - Gold for
Best in house publication in the “Engagement and Communications” category.
24 Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards - Silver for
Best Employee Engagement Scheme in the “Organisational Awards” category.
5) Top 20 BSFI Leaders Award at BFSI Innovation and Technology Summit by Exito.
6) Winner at BIG 50 BFSI Leaders Award Summit by Trescon.
7) NextGen Digital Leader Award at Technology and Innovation Summit by DataQuest.
8) Winner of “CISO Platform 100” Award by CISO Platform.

49
LOCATIONS/PLACES OF BUSINESS
The Bank is present in 19 States and 3 Union Territories. Cities having DCB Bank branches
are Agra, Ahmedabad, AmbalaCantt, Aurangabad, Bengaluru, Bhopal, Bhubaneswar,
Chandigarh, Chennai, Coimbatore, Dehra Dun, Delhi NCR, Gandhinagar, Gurugram,
Hyderabad, Indore, Dewas, Jabalpur, Jaipur, Jalandhar, Jodhpur, Kanpur, Kochi, Kolkata,
Lucknow, Ludhiana, Mumbai, Meerut, NOIDA, Panjim, Patna, Pune, Surat, Trichy, Udaipur,
Vadodara, Vishakhapatnam. DCB Bank is also focussed in expanding in tier 3 to tier 6 towns
in Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra,
Odisha and Telangana.
States where DCB Bank branches are located: Andhra Pradesh, Bihar, Chhattisgarh, Delhi
NCR, Gujarat, Goa, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha,
Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, Uttarakhand and West Bengal.

MERGERS
The Ismailia Co-operative Bank Limited and the Masalawala Co-operative Bank Limited came
into being in the 1930s. Eventually, Diamond Jubilee Co-operative Bank Limited merged with
Ismailia Co-operative Bank Limited. Subsequently in 1981, Ismailia Co-operative Bank
Limited was amalgamated with Masalawalla Co-operative Bank Limited to form the
Development Co-operative Bank Limited. Citi Cooperative Bank Limited later merged with
Development Co-operative Bank Limited, which thereafter was converted into a joint stock
banking company, the Development Credit Bank Limited on May 31, 1995.
In the 1990s there were about 1400 co-operative banks in India and a few of these co-operative
banks were given permission by RBI to convert into scheduled commercial banks.

Development Co-operative Bank was one of 11 such banks that converted themselves into
scheduled commercial banks. Vide their resolution dated January 28, 1995, the shareholders of
Development Co-operative Bank resolved to register as a limited company within the meaning
of Sections 566 of the Companies Act. Development Credit Bank Limited was granted the
certificate of incorporation under the Companies Act and the license to carry on banking
business under Section 22 of the Banking Regulation Act, 1949 on May 31, 1995. At the time
of its conversion to a limited company under the Companies Act, the Bank had a capital of
Rs.73.34 million and net worth of over Rs.1000 million.

50
Since its conversion into a scheduled commercial bank, the Bank has over the years expanded
its operations beyond the states of Maharashtra, Gujarat and Andhra Pradesh into the states of,
Goa, Haryana, Karnataka, Tamil Nadu, Union Territories of Daman and Diu & Dadra & Nagar
Haveli and the National Capital Territory of Delhi. Today, it has a network of 67 branches, 5
extension counters and 101 ATMs across the country.

STOCK MARKET PERFORMANCE-MARKET CAPITALISATION

CEO PROFILE

Murali M. Natrajan occupies the position of Chief Executive Officer, Executive Director &
MD of DCB Bank Ltd. Mr. Natrajan is also Member of Institute of Chartered Accountants of
India.
In the past he held the position of Global Head-SME Banking at Standard Chartered Plc,
Director-Cards Business at Citibank NA (Jakarta Branch), Director-Cards Business at Citibank

51
India Ltd. and Director-Cards Business at Citibank (Hong Kong) Ltd. He received an
undergraduate degree from the University of Delhi.

NUMBER OF EMPLOYEES
The total number of employees working under the bank is 4979 (2017)

BUSINESS IN NUMBER OF COUNTRIES

DCB’s business services are present only in India.

COMPANY 3
KARNATAKA BANK PVT LTD.

HISTORY

Karnataka Bank Limited, a leading 'A' Class Scheduled Commercial Bank in India, was
incorporated on February 18th, 1924 at Mangaluru, a coastal town of Dakshina Kannada

52
district in Karnataka State. The bank took shape in the aftermath of patriotic zeal that engulfed
the nation during the freedom movement of 20th Century India.

Over the years the Bank grew with the merger of SringeriSharada Bank Ltd., Chitradurga Bank
Ltd. and Bank of Karnataka. With over 9 decades of experience at the forefront of providing
professional banking services and quality customer service, we now have a national presence
with a network of 840 branches spread across 22 states and 2 Union Territories. Managed by a
dedicated & professional management team, we have over 8,220 employees, 146000
shareholders and over 10.21 million customers. Today, we have emerged as a leading financial
service institution in India.

In 2000, Karnataka Bank Limited signed a memorandum of understanding with Infosys

Technologies to develop a core banking solution called Finacle. Over 221 branches were
networked up to 31 March 2004. The main motto of this programme is "Anytime/Anywhere
banking". In 2002, the bank concluded a pact with Corporation Bank for sharing its ATMs. A
year later, the bank introduced the Money plant card that allows customers to withdraw money
from any of their Karnataka bank accounts. In September 2003, the bank shifted its head office
from Kodialbail to Kankanady.

FOUNDERS’ /PROMOTERS’ PROFILE:

The founders of the Karnataka Bank were B. R. VysarayAchar and K. S. N. Adiga.

SERVICES
The branches are available in 22 Indian states and 2 union territories. In August 2008, the Karnataka
Bank Limited introduced Quick Remit, a facility to make money transfer easy for Non-Resident
Indians living in Canada, United States, and the UK.The bank also runs a 24-hour Internet banking
service called Money click.

PRODUCT PROFILE:

The Karnataka Bank Limited provides business and personal banking products and services in
India.

The bank operates in four segments:

• Treasury

• Corporate/Wholesale Banking

53
 • Retail Banking

• Other Banking Operations.

It accepts savings and current accounts, cash certificates, fixed and cumulative deposits, non-
resident rupee accounts, ordinary non-resident accounts, and foreign currency accounts; and
offers loan products, such as vehicle, home, education, personal, MSME, mortgage, women
entrepreneur, gold, and other loans, as well as loans against property and fixed deposits.

Other services include life, general, and health insurance products. It provides investment,
remittance and other services. In addition; it offers forex services, which include pre and post-
shipment, export collection bills, export LC advising, inward remittance facility, import letter
of credit, import bill collection, buyer’s credit, and outward remittances. Further, the bank
provides point of sale service for merchant's payment solutions: and KBL e-COLLECT, a fee
payment processing platform, which enables the institution to offer parents and students a
convenient way to pay their fees through a range of payment options. Additionally, it offers
various loans for agriculture; and other services, such as Internet banking, mutual funds, demat
services, locker facility, and funds transfer services.

Products and Services

• PERSONAL BANKING

• BUSINESS BANKING

• AGRICULTURE BANKING

Personal Banking-

1. Savings Account – Privilege Savings Account, KBL SB TASC, KBL SB Salary Schemes
in 3 variants, SB General, KBL Vanita (Women),etc

2. Loans-Vehicle Loans, Home Loans, Loan Against property, KBL Ravi Kiran, KBL Insta
Cash, etc.

3. Term Deposits-Fixed Deposit, Abhyudaya Cash Certificate, Soulabhya Deposit, etc.

4. Cards-Credit Cards, Debit Cards, Deposit only Card, Image Card, Travel Card and Gift
Card

54
5. Digital Banking-Mobile Banking, Internet Banking, KBL Direct Pay, E-Commerce, Missed
Call Banking, IVR Facilities, andATM/E lobby

6. Demat and Online Trading

7. Insurance-Life Insurance, Health InsuranceandGeneral Insurance

8. Investments-Mutual Funds, Atal Pension Yojana (APY), National Pension System,

Pradhan Mantri Vaya Vandana YojanaandSovereign Gold Bond

9. Remittance-Money Transfer, Online Fund RemittancesandRemit2India

10. Other Services-Locker facility, E-filing, E-Hundiandonline shopping

Business Banking-

1. Current Account General

2. Current Premium-Money Pearl, Money Ruby, Money Diamond, Money Diamond Plus,
Money Platinum

3. Digital Banking-This includes Internet Banking

4. Loans-KBL MSME, KBL Commodity Pledge, KBL Contractor Mitra, KBL Mortgage OD
and Women Entrepreneur

5. Forex Services

6. KBL e-COLLECT

7. Merchant Acquiring Services

Agriculture Banking-KBL Agri Gold Scheme, Krishik Sarathi Scheme, Krishik Pushpankura
Scheme, Krishik Sinchana Scheme, Krishik Bhandar, Krishik Godham, KBL Agro Processing
Scheme, KBL Instant Agri Credit Scheme, Kisan Credi Card Scheme

NRI Account Services- Accounts and Deposits, Loans and Advances, Cards, Remittance of
funds from abroad, Value Added Services, General Information and Useful Links

MOBILE BANKING- KBL Mobile Plus App, BHIM KBL UPI App, KBL Apna App,
KBL mPassBook App, KBL Smartz, KBL POS Manager

CLIENT/CUSTOMER PROFILE:

Since Karnataka Bank is a family bank it has focused on the families and they are the bank’s
major clients. The bank has also two special card facility that satisfies the travel and lifestyle

55
requirements of the consumers like KBL Gift card. Variety of savings accounts which cater to
women, children and every individual is offered both in the normal variety and the premium
variety like KBL Vanitha. Several Fixed Deposit schemes are also offered by the company for
investment purposes. Karnataka Bank provides varied loan schemes for individuals cater to the
individual requirement of buying or renovating a house. On-Resident Indians (NRIs) are also
offered banking services by the bank in accounts specially designed for NRIs like Non-
Resident Ordinary Account. These become the clients of the bank. Considering the facilities
provided by the bank the client profile is vast and it concentrates on all sections of society. The
present customer base is 8 million.

ORGANIZATIONAL STRUCTURE:

Karnataka Bank Limited has a network of 843 branches, 1374 ATMs and 330 e-lobbies/mini
e-lobbies across 22 states and 2 union territories. It has 8,275 employees and over 10 million
customers throughout the country. Its shares are privately owned by over 185000 shareholders.

Hierarchical Structure:

MANAGING DIRECTOR/CHIEF EXECUTIVE DIRECTOR

GENERAL MANAGERS

DEPUTY GENERAL MANAGERS

ASSISTANT GENERAL MANAGERS

MANAGERS

EMPLOYEES

Functional Structure:

• Treasury and Accounts, HR and IR, IT, Credit, Legal

56
Scalar chain in a branch:

MANAGER

ASSISTANT BRANCH
MANAGER

OFFICER

SPECIAL ASSISTANT

CLERKS AND CASHIER

SUB STAFF

PRESENT MARKET SHARE AND TURNOVER:

The current market price according to BSE is 78.60 and according to NSE are 78.25.The total
business turnover of the Bank stood at Rs.123280.32 crore as on 31st March 2019,registering a
growth of 11.95 percent as against the turnover of Rs.110123.04 crore as on 31stMarch 2018.

The total assets of the Bank increased from Rs.70373.68 crore to Rs.79045.76 crore recording
a growth of 12.32 percent for the year 2018-19. The market share of the Bank in business
turnover has increased to 0.56 percent as compared to 0.54 percent as on 31st March 2018. The
total deposits of the Bank grew to Rs.68452.12 crore as on 31st March 2019 from Rs.62871.29
crore as on 31st March 2018, registering a growth of 8.88 percent. During the year, low cost
deposits of the Bank, viz., Savings and Current Account Deposits have shown growth of 9.17
percent and constituted 28.06 percent of the total deposits of the Bank as on 31stMarch,
2019.The total advances grew to Rs.54828.20 crore as on 31st March 2019 from Rs.47251.75
crore as on 31st March 2018 an increase of 16.03 percent. The Credit Deposit Ratio increased
from 75.16 percent to 80.10 percent reflecting robust credit growth. The priority sector
advances increased from Rs.20594.27 crore to Rs.21878.22 crore forming 48.05 percent of
Adjusted Net Bank Credit (ANBC) and agricultural advances increased from Rs.6877.51 crore
to Rs.7082.90 crore which, together with eligible deposit under Rural Infrastructure
Development Fund (RIDF), constituted 15.73 percent of ANBC. Lending under various socio-

57
economic schemes has shown satisfactory progress. The total investments increased from
Rs.15444.45 crore as on 31st March 2018 to Rs.16184.99 crore as on 31st March 2019. The ID
ratio stood at 23.64 percent as on 31st March, 2019 as against 24.57 percent as on 31st March,
2018.The gross income of the Bank for the year ended 31st March 2019 stood at Rs.6907.92
croreasagainst Rs.6378.09 crore in the last financial year showing a growth of 8.31 percent.

PROPOSED PLAN FOR GROWTH AND EXPANSION

Karnataka Bank is now in branch consolidation mode by focusing more on ‘business per
branch’. Branches have also been sensitized regarding effective utilization of the premises
space by paying special attention on ‘Minimum Space Maximum Business’. However, they
may reach 1,000 branches, 2,500 ATMs and 250 e-lobbies by the end of financial year 2019-
2020, depending on the business opportunities. Vision-2020’ is an aspirational journey to grow
big, strong and vibrant. Accordingly, Karnataka bank has embarked upon a transformational
journey and envisaged to reach a total business turnover of Rs 180000 crore by 2020 and to
expand the customer base of 13 million from the present 8 million. The task of achieving a loan
book of Rs 80,000 crore as per the Vision 2020 is a challenge. But, they have tremendous faith
in their team and they believe in team work.

They have already started an ’Economic and Statistical Research Cell’ which provides useful
inputs on sun rise/sun set sectors, throws light on perceived risk, growth opportunities as well
as the relative risk etc. Based on these inputs, which is on an on-going process, they will focus
on credit expansion by keeping intact the asset quality as per our growth strategies.

As per the 'KBL VISION 2020' document, Bank's total business turnover is projected to
increase in a progressive manner to touch Rs. 1,80,000 Crores with deposits of Rs. 1,00,000
crores and advances of Rs. 80,000 crores by March 2020 from Rs. 77,689 crores [Deposits of
Rs. 46,009 crores and Advances of Rs. 31,680 crores] as of March 2015. Deposits are projected
to grow at a CAGR of 16.80% and advances at a CAGR of 20.35% during the next 5 years.
Under deposits, the Bank will focus on increasing CASA deposits which are expected to
constitute 27.40% of the total deposits by March 2020. Under advances, the focus will be on
expansion of retail and mid corporate credit which would constitute about 70% of the total
advances by March 2020. Bank will maintain the priority sector advances well above the
mandatory level of 40% and will Endeavour to surpass agricultural credit of minimum 18%

58
throughout the 5 year Vision period. CD Ratio is expected to progressively increase so as to
touch 80% by March 2020.The Bank plans to significantly improve its profitability during the
Vision period by focusing on operational efficiency. Net interest margin is projected to touch
3.01% by March 2020 from 2.36% as of March 2015. Cost to Income ratio is expected to come
down from 53.84% as of March 2015 to 42.98% by March 2020.The Bank's CRAR under
Basel III is projected at 12.51% in March 2020 with introduction of additional capital as and
when required during the 5 year Vision period. KBL - VISION 2020 also emphasizes on
rewarding the share holders, besides value creation. Bank’s efforts at maintaining a healthy
credit portfolio will continue and gross NPA and net NPAs are projected to be less than 1.5%
and at 0.60% respectively by the end of Vision period. In order to achieve its ambitious goals,
Bank plans to take forward its digital banking initiative in a big way and increase its service
outlets to 3500 [2500 ATMs and 1000 Brick and Mortar Branches] by March 2020. Bank also
proposes to increase the number of its e-Lobbies to 250 and Regional offices to 16 by the end
of March 2020. Bank expects migration of majority of its customer transactions to self-
servicing digital channels by 2020, by significantly increasing the digital touch points.
Realizing the pivotal role played by human resources in organizational growth, Bank proposes
to bring about significant improvement in its HR practices aimed at honing the skills to usher
in improved productivity and ably supported by HRMS [Human Resources Management
Solution].

Bank aims to become the 'Preferred Bank' of at least 1% of the India's total population and be
among the top three in the peer group."Guided by Vision 2020 and driven by technology,
Karnataka Bank intends to position itself as a most preferred and trusted bank among the peer
group. We are sure that all these measures will help us in realizing our Vision of emerging as
a progressive, prosperous and well governed Bank", said Shri P JayaramaBhat, MD & CEO of
the Bank.

TAX DISPUTES

As on March 31, 2004, certain proceedings against the Bank related to Income Tax matters are
pending in appeal with the Income Tax authorities. The net amount of disputed tax in respect
of these proceedings is Rs.39.38 crores. Also, as on March 31, 2004, Interest Tax demands
amounting to Rs. 0.15 crores and wealth tax demands of Rs 0.17 crores are pending in appeal
with the Tax authorities.

LITIGATION

59
Bank is involved in various civil, criminal, consumer and tax related litigations which are at
different stages of adjudications before various forums. We are involved in litigations for a
variety of reasons, which generally arise in the normal course of business, when we seek to
recover our dues from borrowers who default in payment of the loans or when customers seek
claims against us during the process of recovery of our dues or for other service related issues.

Material Litigation against our Bank:

SL.NO Brief Description No. of Amount Involved

Cases (` in crore)

1 Criminal proceedings 14 Not quantifiable

2 Direct tax matters 6 859.03

3 Indirect tax matters - -

4 Civil Cases 5 Not quantifiable

The criminal proceedings against our Bank inter alia include complaints in respect to wrongful
credit of cheques, breach of trust, cheating and other related cases. We cannot assure you that
the provisions we have made for litigation will be sufficient or that new litigations will not be
brought against us in the future. If we fail to successfully defend these or other claims, or if our
current provisions prove to be inadequate, our business, financial condition and results of
operations could be adversely affected. The Bank intends to defend or appeal these proceedings
and would be required to devote management and 13 financial resources in their defense or
prosecution. It cannot be assured that any new litigation / counter suits will not be brought
against our Bank in the future, in respect to such legal proceedings. If our Bank fails to
successfully defend these or other claims, or if it’s current provisions prove to be inadequate,
our business, financial condition and results of operations could be adversely affected.

The process of Litigation:

The complaint should be sent in a closed / secured envelope super-scribed “Under Protected
Disclosures Scheme” and addressed to the Chief of Internal Vigilance, Karnataka Bank Ltd.,

60
Head Office, Mahaveera Circle, Pumpwell, Mangalore – 575 002. The Whistle blower shall
not write the ‘from’ address on the envelope. The complaint can also be sent by email to
pds@ktkbank.com, if the complainant so wish to. The whistle blower should give his name,
staff no., designation, department / office / branch, etc. and address for communication in the
beginning or at the end of the complaint or in an attached letter. The Whistle Blower should
ensure that the issue raised by him involves dishonest action/ practice detrimental to the interest
of the Bank/ its customers/ shareholders/employees/ public at large. He should study all the
relevant facts and understand the significance of the matter and thereafter having satisfied of
the misdeed or wrongful act make the complaint. The text of the complaint should be carefully
drafted so as not to give any details or clue to complainant’s identity. The details of the
complaint should be specific and verifiable. The Whistle-blower shall, together with the
intimation/ complaint, furnish material if any, which may substantiate his suspicion. The Bank,
however, does not expect the complainant to investigate or prove the issue raised by him, in so
far as the issues are raised in good faith and without malice. In order to keep confidentiality of
the identity, no acknowledgement will be issued to the Complainant on receipt of the
complaint. Anonymous / pseudonymous complaints will not be entertained.

MAINTENANCE OF RECORDS

The CIV will maintain a register of complaints received under the Scheme after assigning a
serial number to the complaint to record the date of receipt, action taken and date of disposal
etc. The complaint shall be brought to the notice of the Managing Director & Chief Executive
Officer immediately on receipt. Complaints under the Scheme, if addressed to and received by
any department/ official other than the CIV, the said sealed cover shall be forwarded to the
CIV with a covering letter marked 'Confidential - Complaint under Protected Disclosure
Scheme'

PROCEDURE FOR ENQUIRY

The CIV, on receipt of the complaint will examine the same and decide on the steps to be
initiated and investigation. On the instruction of the CIV, complaints under the Scheme
received shall be discreetly enquired into immediately by the Vigilance Department. Either as
a result of the discreet inquiry or on the basis of the complaint itself, if the Bank is of the

61
opinion that the matter requires to be investigated further, the Managing Director & Chief
Executive Officer, on recommendation by the CIV, will permit investigation by the Vigilance
Department. The complainants are advised not enter into any further correspondence with the
Bank, in their own interest, to protect their identity. The Bank assures that, subject to the facts
of the case being verifiable; it would take necessary action, as provided under the Scheme. The
Bank will be at liberty to get in touch with the complainant at the address / phone number / e-
mail ID given in the complaint for gathering further information. The Bank may initiate
criminal proceedings against the accused if warranted, and consider initiating any other action
that it deems fit keeping in view the facts and circumstances of the cases. The findings of the
investigation shall be forwarded to the concerned Departments/ Offices for taking measures to
prevent recurrence of such events. Upon investigation, if the Bank is of the opinion that the
allegations are substantiated, the Bank shall take appropriate action against the concerned
officer/ employee. These shall, interalia, include the following:

a) Disciplinary action against the concerned officer/ employee.

b) Appropriate administrative steps for recovery of the loss, if any, caused to the Bank
including fixing of staff accountability

BALANCE SHEET AS ON 31 MARCH 2019

62
CAPITAL AND LIABILITIES

Capital 282,61,76 282,61,75

1
5502,56,53 5127,53,44
Reserves and Surplus
68452,12,58 62871,28,50
2
3325,51,10 815,95,04
Deposits
1482,93,85 1276,26,81
3

Borrowings
4

Other Liabilities and Provisions

5

TOTAL 79045,75,52 70373,67,54

ASSETS

Cash and balances with Reserve Bank of 3411,66,12 3545,82,00

India 6

Balances with Banks and Money at Call and

198,08,73 55,19,34
Short notice
16184,98,87 15444,44,93
7
54828,20,10 47251,75,07
Investments
774,99,60 761,60,21
8
3647,82,10 3314,85,99
Advances
9

Fixed Assets
10

63
 Other Assets
11

TOTAL 79045,75,52 70373,67,54

Contingent Liabilities 6522,22,71 7519,17,65

12
2229,88,31 2407,26,92
Bills for Collection

Significant Accounting Policies

17

Notes on Account
18

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2019

(` Rs in '000s)

Schedule Year ended Year ended

No. 31.03.2019 31.03.2018

Rs. Rs.

I. INCOME
Interest Earned 13
5905,96,22 5423,75,02
Other Income 14
1001,95,57 954,34,43

TOTAL 6907,91,79 6378,09,45

II. EXPENDITURE
Interest Expended 15

64
 Operating Expenses 16 4000,83,59 3566,09,75
Provisions and Contingencies
1457,27,14 1338,82,50

972,57,08 1147,56,42

III.

TOTAL 6430,67,81 6052,48,67

IV. PROFIT
Net profit for the year
477,23,21 325,60,78
Profit brought forward
102,23,21 137,14,27

TOTAL 579,47,19 462,75,05

V. APPROPRIATIONS
Transfer to Statutory Reserve
180,00,00 82,00,00
Transfer to Capital Reserve
Transfer to Revenue Reserve 0 51,05,05
Transfer to Special Reserve u/s 36 (1) (vii) of Income Tax
88,50,00 90,75,00
Act
Transfer from Investment Reserve Account 21,20,05 24,32,39
Transfer to Investment Fluctuation Reserve
0 -24,16,19
Transfer to other funds
Dividend paid- 2018 67,91,23 0
Tax on dividend paid
0 50,00
Balance carried over to Balance Sheet
84,78,23 113,04,29

17,42,73 23,01,30

119,64,95 102,23,21

TOTAL 579,47,19 462,75,05

65
Earnings per share

Basic Rs. 16.89 11.52

Diluted Rs. 16.89 11.52

Significant Accounting Policies 17

Notes on Account 18

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2019

(`Rs in '000s)

Year ended Year ended

March 31, March

2019 31,2018

Rs Rs. Rs. Rs

A CASH FLOW FROM

OPERATING

ACTIVITIES
477,23,98 325,60,78
Net profit after Tax and Extra
Ordinary Items
1,30,56,68 -15,44,98
Add:

Adjustments for : -40,27 22,52

Provision for Tax

Profit on sale of Fixed Assets 54,17,52 50,05,52

842,00,40 1163,01,4
Depreciation on Fixed Assets
including Lease 0

Adjustment charges 62,84,10

Provisions and Contingencies 62,03,35

66
 Amortization of premium on 0 1089,18,43 78,50,64 1338,41,35
Held to
0 2,90
Maturity Investments

Loss on sale to SC/RC amortized

during the

Year

Write-off of Fixed Assets

Operating Profit Before Working

Capital
1566,42,41 1644,02,13
Changes

Adjustments for :

I) (Increase)/Decrease in Advances
-7141,08,23 -
& Other
11038,56,
Assets -851,29,10 74
4403,19,81
ii) (Increase)/Decrease in 4599,17,5
Investments -3589,17,52 2 -621,70,98
iii) Increase/(Decrease) in Deposits,

Borrowings & Other Liabilities 5817,68,2

4

Cash Generated from Operations -2022,75,10 1042,31,15

Less: Direct taxes paid 208,30,53 321,43,27

Net Cash Flow from Operating -2231,05,63 720,87,88

Activities (A)

67
 B CASH FLOW FROM
INVESTING ACTIVITIES
-69,17,33 -91,54,95
Purchase of Fixed Assets
1,63,32 20,79
Sale of Fixed Assets

Net Cash used in Investing -67,54,01 -91,34,16

Activities (B)

TOTAL (A+B) -2298,59,64 629,53,72

C CASH FLOW FROM

FINANCING ACTIVITIES

Proceeds from issue of share

1 1,22
capital (net of

expenses) 2409,54,10 -166,61,20

-102,20,96 -135,95,68
Proceeds from long term
borrowings

Dividend paid (Including Tax on

Dividend)

Net Cash Generated from Financing

Activities(C)
2307,33,15 -302,55,66

Net Increase in Cash & Cash

Equivalents (A+B+C)
8,73,51 326,98,06

Cash & Cash Equivalents as at the

beginning of the year
3601,01,34 3274,03,28
Cash & Cash Equivalents as at the
end of the year
3609,74,85 3601,01,34

Note: 1. The Cash Flow Statement has been prepared under the Indirect Method and figures
of the previous year have been re-grouped wherever necessary.

2. Cash and Cash Equivalents comprise of Cash on Hand, Balances with Reserve Bank of
India, Balances with Banks and Money at Call and Short Notice.

68
ACHIEVEMENTS:

AWARDS-

2019-20

• Bank bags Atal Pension Yojana “Game Changers” award instituted by PFRDA on 01-
07-2019, for achieving 100% of AAPB target for the FY 2018-19.

2018-19

• ASSOCHAM Social Banking Excellence Awards – 2018, under small bank category,
received on 26-02-2019.

o Winner in Technology.

o Runner up in priority sector lending other than Agriculture.

o Runner up in overall best social banking award.

• IBA banking technology Awards – 2019, under small bank category, received on 21-
02-2019.

o Runner up in ‘Most Customer Centric Bank’.

• ’ET NOW - Employee Engagement Leadership Awards’ instituted by ET NOW –

World HRD Congress, in the following categories, received on 16-02-2019.

o Best Employee Engagement in Banking Sector.

o Best Change Management Program.

o Best Learning & Development Strategy.

o Best use of Training in Employee Engagement ‘Best E-Learning module online

award’.
• ”Bank with Best Technology Orientation” and “Best Corporate Social Responsibility
Practices” awards instituted by ET NOW – World BFSI Congress, received on 14-02-
2019.
• Award in Atal Pension Yojana “Perform for Pride” Campaign under Branch Category,
conducted by PFRDA, received on 11-02-2019.

• Award in Atal Pension Yojana “Lead to Leap Award” Campaign, conducted by

PFRDA, received on 16-11-2018.

69
 • ASSOCHAM SMEs Excellence Award – 2018, under “Excellent Service (Private
Sector)” category, instituted by ASSOCHAM, received on 24-10-2018.

• Award in Atal Pension Yojana “Winners Arts of Possible” Campaign 2018-19,

conducted by PFRDA, received on 05-10-2018.

• Award in Atal Pension Yojana “Winners of Winning Wednesday” Campaign under

Branch Category, conducted by PFRDA, received on 05-10-2018.
• Award in Atal Pension Yojana “Winners of Winning Wednesday” Campaign under RO
Category, conducted by PFRDA, received on 05-10-2018.

• Best Performing Bank award in the Atal Pension Yojana ‘People First’ campaign at
Tamilnadu for 100% Branch Activation of APY scheme, conducted by PFRDA,
received on 06-08-2018.

• Best Performing Bank award in the Atal Pension Yojana ‘Icons of Inspiration’
Campaign held from 14-03-2018 to 31-03-2018, conducted by PFRDA, received on
06-08-2018.

• ‘Best MSME Bank Award – Runner Up’ instituted by Chamber of Indian Micro Small
& Medium Enterprises [CIMSME], received on 20-07-2018.
• “Best Performing Bank – Private Bank” category for the Atal Pension Yojana [APY]
performance during 2017-18, received on 12-06-2018.

• STP Award 2017: In recognition of Bank’s outstanding payment formatting and

straight through rate, instituted by Bank of New York, Mellon received on 19-05-2018.

LOCATION AND PLACES OF BUSINESS:

Regional Offices

These offices are located in Bengaluru, Chennai, Delhi, Hubballi, Hyderabad, Hyderabad,
Kolkata, Mangaluru, Mumbai, Mysuru, Shivamogga, Tumkuru, Udupi and Kalaburgi

JOINT VENTURES/TECHNOLOGY TRANSFERS:

70
Karnataka Bank has entered into a memorandum of understanding (MoU) with Daimler India
Commercial Vehicles (DICV) for extending finance to those planning to buy commercial
vehicles manufactured by the company.

In the year 2000, they signed a MoU with Infosys Technologies Ltd for implementation of
Finacle, a Core Banking Solution. In the year 2002, they made a pact with Corporation Bank
for sharing ATMs. Also, they made a tie-up with MetLife India for the distribution of
insurance products as a corporate agent. In the year 2003, the Bank took up Corporate
Agency for distribution of products of Bajaj Allianz General Insurance Co Ltd. The Bank
in association with MetLife India launched K-Life a term product designed for SB/current
account holders of the bank. The Bank along with Western Union Financial Services made
tie-up with Bharat Overseas Bank to provide inbound money transfer services. Also, they
inked an agreement with National Financial Switch for ATM connectivity and launched no
frills accounts. In the year 2006, they made a tie up with Franklin Templeton (I) Private
Limited for distribution of their mutual funds. In the year 2007, the Bank signed MoU with
Allahabad Bank, Indian Overseas Bank, Sompo Japan Insurance Inc. and Dabur Investment
Corporation to form a joint venture for undertaking General Insurance business. The Bank
is implementing its most sought after transformation exercise ‘KBL-VIKAAS’ under his
leadership with BCG (Boston Consulting Group) as Transformation Partner.

MERGERS AND ACQUISITIONS:

The bank had, in the 1962-1969 period, made three acquisitions — ShringeriSharada Bank,
Chitradurga Bank and Bank of Karnataka

STOCK MARKET PERFORMANCE:

The current market capitalization is 22.24 B.

CORPORATE TAX PAID SINCE TWO YEARS:

. Tax paid in advance/tax deducted at source (net of provisions) in 2019 is 8808472

Tax paid in advance/tax deducted at source (net of provisions) in 2018 is 9877607

CEO PROFILE:

71
Shri Mahabaleshwara M S took charge as Managing Director & Chief Executive Officer of
Karnataka Bank on April 15, 2017. Prior to this, he was serving as Chief General Manager of
the Bank.

Mr. Mahabaleshwara M.S., MD & CEO of Karnataka Bank has over 34 years of banking
experience both at operational and administrative levels. He has done his Masters in
Agricultural Sciences (M.Sc. Agri), with specialization in Agronomy, from the University of
Agricultural Sciences (UAS), Bengaluru and he is also a Certified Associate of the Indian
Institute of Bankers (CAIIB) and has also done Post Graduate Diploma in Business
Management (PGDBM) from St. Aloysius College, Mangaluru.

He started his career as Researcher & Teacher at University of Agricultural Sciences,

Bengaluru and later on joined Karnataka Bank as Agricultural Field Officer in 1984. Initially
he served at Credit Department of the Bank at Head Office, Mangaluru. He played a key role
in launching KRISHI CARD scheme of the Bank. Later on he headed Banakal, Chickmagalur
ADB (Agricultural Development Branch) and Bengaluru Kasturba Road (Forex Designated)
branches of the Bank and has been the member of the prestigious ‘Chairman’s Club” for 5
times, for his outstanding performance as Branch Head.

On his promotion as Chief Manager and later on as Assistant General Manager he served at
Credit Department and Planning & Development Department of the Bank at Head Office,
Mangaluru. Later on he moved to New Delhi Regional Office as Regional Head, wherein he
played a key role in expanding the foot prints of the Bank in the Northern part of India by
opening good number of branches and subsequently got elevated to the cadre of Deputy
General Manager. During his tenure as Regional Head, Delhi Region was adjudged as the ‘Best
Region’ of the Bank, twice. Further, on account of rapid branch expansion in Northern India,
Bank had also opened a new Regional Office at Kolkata. He also served as Regional Head of
Mumbai Region before being elevated to the Post of General Manager in 2011.

On the 28th of August 2013 he was promoted as Chief General Manager and was overall in
charge of the Departments of Credit, Planning & Development, IT & MIS, Treasury &
Accounts and HR & IR.

72
He played a pivotal role in the Digital Banking & BPR (Business Process Reengineering)
initiatives of the Bank. Further, the Bank is now implementing its most sought after
transformation exercise ‘KBL-VIKAAS’ under his leadership with BCG (Boston Consulting
Group) as Transformation Partner. The Bank has surpassed ‘Rupees One Lakh Seventeen
Thousand Crore Business” milestone under his able leadership.

He also served as the Non–Executive Director on the Board of Universal Sompo General
Insurance Co. Ltd., as the nominee director of Karnataka Bank.

He hails from Malnad Region, Mavinakudige - Thotadur of Chikkamagaluru District of

Karnataka State and has done his early schooling at ‘Govt. Primary & Middle School’
Bashrikatte and Shree Sadguru High School, Bashrikatte, Chikkamagaluru District. Later on
he moved to Bhandarkars College, Kundapura for his Pre - University course and to University
of Agricultural Sciences, Bengaluru for under graduate and post graduate courses.

He is honoured with (i) “Shree KrishnanugrahaPrashasti” by his Holiness Shri

ShriVishweshaTheerthaSwamiji, Pejavar Mutt, Udupi and (ii) “Aryabhata International Award
of 2017” by Aryabhata Cultural Organisation (Regd.), Bengaluru, in recognition of his
praiseworthy contribution to the field of banking. He has been conferred with the prestigious
‘CEO with HR Orientation Award’ at the 27th World HRD Congress summit presented by ‘ET
Now’ in a function held on 15.02.2019 at Mumbai.

NUMBER OF EMPLOYEES:

Karnataka Bank has8,275employees and over 10 million customers throughout the country. Its
shares are privately owned by over 185000 shareholders.

BUSINESS IN NUMBER OF COUNTRIES:

Karnataka Bank is only India Based.

ORGANISATIONAL STRUCTURE:

Executive Committee

Chief Operating Officer - SSHRI BALACHANDRA Y V

Chief Business Officer - SHRI GOKULDAS PAI

73
General Managers -

• SHRI CHANDRASHEKAR RAO B

• SHRI SUBHASCHANDRA PURANIK
• SHRI MURALIDHAR KRISHNA RAO
• SHRI NAGARAJA RAO B

SHRI MANJUNATHA BHAT B K

• SHRI MAHALINGESHWARA K
• SHRI RAMESH S
• SHRI VINAYA BHAT P JS
• SHRI VADIRAJ K A
• SHRI RAJAKUMAR P H

CSR Initiatives

• Karnataka Bank donates Rs 25.00 lakhs to Chief Minister’s Distress Relief Fund of
Kerala State on 01-09-2018

• Bank donates school bus

• Bank supports the landscaping work of the new lawn cum park set up at the premises
of City Civil Court, Bengaluru

• Karnataka Bank donates Rs 25.00 lakhs to Chief Minister’s Relief Fund of Karnataka
State on 03-09-2018

• Donation of sewing machines for livelihood enhancement

• Bank contributes towards reviving water reservoir

• Construction of auditorium of the school

• Installation of solar street lights at Kalasa Town and Balehole

• Donation of steel plates and tumblers to temple

74
 CHAPTER 3
RESEARCH METHODOLOGY

75
RESEARCH METHODOLOGY

OBJECTIVES:

The main objective of this study is to understand and analyse how the banking industry as a
whole works and to get a clear picture of the corporate world. It is done to understand why the
banking industry is vital industry to our economy. A few of the main objectives include:-
1. To study the three different market leaders and other major players involved in the market
as competitors.
2. To understand how the companies as an individuals has been beneficiary for the nation’s
economy and the world.
3. To study and examine the allocation of fund by different market leaders.
4. to study the comparative statement between the different companies on various parameters
like finance.
5. The establishment and foundation of the banking sector.

SCOPE OF THE STUDY:

The scope of the study is huge and massive as the banking industry is the backbone of the
nations economy and offers various career opportunities. We have studied the three companies
in depth with the help of secondary data on how thees companies handle their finances and
how they are working as a whole. There might be a lot of changes in the companies s which
might not be covered in the study which can be minimised by being updated with the same.

METHODOLOGY OF DATA COLLECTION

The entire study is done with the help of secondary data. the secondary data was collected
from:-
1. Various online websites and articles
2. By referring to the annual general reports and past records of the company.

76
LIMITATIONS
1. The study is done merely on the basis of secondary data
2. The various companies may be biased in their approach while publishing the data which
leads to less accuracy of data.

77
 CHAPTER 4
COMPARATIVE ANALYSIS

78
PARAMETERS COMPANY 1 COMPANY 2 COMPANY 3

NAME City Union Bank Development Credit Karnataka Bank

Bank

YEAR 1904 1995 1924

NUMBER OF 4,517 4,979 8,275

EMPLOYEES

BOARD OF 10 12 10
DIRECTORS

CORPORATE a) To make a) Compliance to a) Application of best

GOVERNANCE employees conditions of management practices
accountable corporate governance
b) To be a technology
b) Strict adherence b) Disclosure of savvy
to prudent banking annual report
norms c) Progressive and
c) Fulfilling SEBI prosperous
c)Total requirements
commitment to
follow ethical
practices

CEO Dr.N. Kamakodi Murali.M. Natrajan Shri.Mahabaleshwara M S

AMOUNT OF 73.5 Crores 3095.5 Million 282.62 Crores

SHARE CAPITAL

SHAREHOLDIN a) Foreign a) financial institutions a) Foreign Institutions

G PATTERN institutions
b) N Banks Mutual b) General Public
b) General Public Funds
c)Others
c) Banks, Mutual c)Promoters
Funds d)Financial Institutions
d) General Public
d) Financial e) N Bank Mutual Funds
Institutions e) Foreign Investors

e) others

MAJOR a) Body Corporate a) HDFC Insurance a) Sumantha Kumar

SHAREHOLDER company Reddy
S b) HDFC
TRUSTEE b) Mathews Indian b) Bodies Corporate
Funds
c)LIC Life Insurance
c)Aditya Birla group Corporation

79
 d) Advantage Fund c) LSV Emerging Markets
d)ICICI group

TOTAL SALES 12,529.92 Crores 2,076.15 Crores 5905.96 Crores

MAJOR HDFC bank, Kotak Mahindra Bank, Indian Bank, Union Bank
COMPETITORS ICICI bank, Kotak IndusInd, HDFC, of India , Federal Bank,
Mahindra , Axis IDFC FIRST Bank Dhana Lakshmi Bank,
Bank Lakshmi Vilas Bank ,
Karur Vysya Bank

UNIQUE E wallets , Payless cards for small KRISHI card,Finacle

BANKING innovation labs, businessman
PRODUCTS the rural push

HEADQUARTER Thanjvur , Tamil Mumbai , Maharashtra Mangalore , Karnataka

S Nadu

TOTAL ASSETS 35,270.78 Crores 24,046.37 Crores 78,633.64 Crores

AND
LIABILITIES

MERGERS AND Larsen& Toubro Diamond Jubilee and Shringeri,Chitradurga ,Ba

ACQUISITIONS co , Ismailia co- nk and Bank of Karnataka
operative Bank

CSR Since inception, DCB Bank is proud to

the CUB have installed zerodor The key initiatives
Foundation has waterless urinals at the undertaken were in the
been taking up eponymous Wagah field of education,
causes which are Border Check post, accessibility to safe and
of critical near Amritsar. The clean drinking water,
importance to the gents public toilets health care,
community and its used by tourists are arts/promoting sports,
pioneering work 100% waterless thus rejuvenation of places of
in the field of CSR saving 1.5 to 1.8 liters historical prominence,
has contributed per use. mid-day meal to school
immensely to the children etc
betterment of the
society

AWARDS 5 13 61

LATEST The bank The bank allowed and The Bank in association
PRODUCT introduced a new issued 111750 equity with MetLife
SERVICE system called e shares pursuant to the India launched K-Life a
Lakshmi which terms of the ESOP of term product designed for
the bank.

80
 interacts with the SB/current account
customers holders of the bank

DIVERSIFICATI The bank is Subsidiaries/Branches With an aim to provide

ON located all over diversified financial
India products & services and to
concentrating on maximize value added
the south but it is services to the customers.
continuing
expansion

TRADEMARKS/ Nil Nil The copyright,

COPYRIGHTS trademarks, logos, slogans
and service marks
displayed on the
website(s) are registered
and unregistered
intellectual property rights
of the Bank or of the
respective intellectual
property right owners.
Nothing contained on the
website(s) should be
construed as granting, by
implication, estoppels, or
otherwise, any license or
right to use any
intellectual property
displayed on the
website(s) without the
written permission of the
Bank or such third party
that may own the
intellectual property
displayed on the
website(s).

MARKET 14,907 Crores 61.99 Billion 2,2.24 Billion

CAPITALISATIO
N

GLOBAL / 14 Below 30 13
COUNTRY

MILESTONES Introduction of Recently the Bank was 650 branches reached

Various new conferred the Good
branches and other Corporate Citizen
technology savvy Award 2017- 2018, by
achievements Bombay Chamber of
Commerce &

81
 Industry. This was in
recognition for the
activities actively
promoted by the Bank
for sustainability and
climate change
mitigation across
India.

SWOT ANALYSIS:
CITY UNION BANK
STRENGTH:

• The company has invested a lot in a robust infrastructure, which helps in employees training
and development. since humans are the greatest asset of an organization it is important to work
on their constant learning
• Even though the branches are located only in India they have a healthy branch network present
I the country which gives them a large customer base.
• They are specialist in discovering multibagger stocks
• They have a good track read and excellent corporate governance which helps them to be
successful company till date
WEAKNESS:

• Despite a good branch network, the absence of a global presence is still a weakness for the
branch because it is not established internationally
• Not much recognition, awards, they must work more on their achievements given the
competitive environment.
• The lending rates are not so satisfactory given the terms and conditions of the bank
OPPORTUNITIES:

• Opportunities for expansion and diversification is really high since it is not internationally
established
• Given the technological advancements, smart websites can be introduced so that the customers
are more satisfied
• Since competition is high the banks can give a personalized touch to their clients and make
them feel at home.
• Since they haven’t explored much on mergers and acquisitions, they can indulge into this
division and use the opportunities in this field
THREATS:

82
 • The banking industry has a large number of major players hence the major threat is losing the
customers to the competitors
• The company faces constant threat towards litigation, even after tight security the hackers are
advancing.
• Since the government keeps fluctuating constantly the company faces constant threat from the
end of the government as well
DCB BANK
STRENGTH:
• The bank has an online academy ‘LUMOS’ in which at least 76% of the employees used
at least one module. This is strength as it retains the employees and they feel involved
and updated.
• The company has made CSR mandatory for its employees to contribute 2-3 days
towards the society with pay which helps them to increase their goodwill.
• Customer engagement through musical nights and campaigns with top Indian Navy
personnel.
• The bank continuously invests in ultra-modern technology to gain first mover
advantage.
• 300 branches currently and would add 15-20 branches per year for the next 2-3 years.

WEAKNESSES:
• DCB’splan of going slow on further branch expansion may impact margins in the long
run.
• For the Bank, both GNPA and NNPA have increased steadily. Part of the reason for
increase in NPAs is also because of seasoning of Mortgages, MSME, SME and AIB.
OPPORTUNITIES:

• The SPEAK survey used by the company is an opportunity to get feedbacks and identify
their strengths and ask for improvements, in which about 96% of the employees
participated.
• The growing Indian economy, also the bank focuses on middle class population and
small business segment.
• The emergence of young entrepreneurs
THREATS:

83
 • Interference by Government
• New competitors and nationalized banks raising their bars.
• The growing NPA.

KARNATAKA BANK
STRENGTH:

• Karnataka Bank has achieved a milestone by having 650 branches. It has a network of
843 branches, 1374 ATMs and 330 e-lobbies/mini e-lobbies across 22 states and 2
union territories.
• Since it is a family bank it majorly focuses on Customer Satisfaction
• It has over 8275 employees and around 10 million customers including farmers and
artisans in villages and small towns throughout the country.
• To make money transfer easy for Non-Resident Indians living in Canada, USA and the
UK it introduced Quick Remit Facility.
• 11.95% growth in terms of business turnover
• Market share has increased by 0.56%
• Pioneer in adapting technology driven delivery channels
• The Bank’s Credit Deposit Ratio increased from 75.16% to 80.10% reflecting robust
credit growth.

WEAKNESSESS:

• In terms of ATM’s, branches as compared to bigger banks it has less reach across
country
• Due to lack of advertising it has low brand visibility
• It does not have any branches in other countries
• Weak core operating performance
• Growing NPA which rose to 4.92

OPPORTRUNITIES:

• In areas with good pockets of Indian population they can practice International Banking
• More services in rural areas and establishment of rural banks

84
 • Enhanced spending on infrastructure, speedy implementation of projects, some more
initiatives in consolidation of nationalized Banks and continuation of reforms
• Karnataka Bank Ltd has launched the web tool – ‘Vasool So-Ft’ (Vasool So-Fast) – for
digitalising the NPA (non-performing asset) recovery process of the bank.

THREATS

• The issue of economy slowdown

• They have stringent bank norms
• Spur private investment in these sectors

MCKINSEY’S 7S MODEL:
DCB BANK
STRATEGY:
One of the company’s strategy is to look for alliances with entities that may have similar
business objectives. This helps them to acquire new customers and retain them as well.
STYLE:
There are various leadership styles which a company can adopt like autocratic, democratic or
beurocratic.
STRUCTURE:
The management team consists of a Chairman, 6 directors, 4 Independent directors and one
managing director and CEO.
STAFF:
In FY 2019, the Bank’s headcount went up to 6,134 (5,790 in FY 2018). There was an increase
in hiring through their unique employee referral scheme “LINK” (i.e. 42% in FY 2019 v/s.
32% in FY 2018) and hiring through their internal job posting which went upto 50%. The
candidate portal which was launched in the previous year has now a database of more than
29,000 resumes.
SYSTEM:
It is the procedures and processes which reveal the daily business’ activities and how decision
are made. There are various different systems like systems to monitor fraud activities; mainly

85
risk management system, repository system, CMS system (cash management services) and
other software system for handling loans like BC loans.
SHARED VALUES:
This is the foundation of the company; norms and standards that guide employee behaviour
and company actions. The values highlighted by the company include -
• Treat Everyone with Dignity – Respect
• Do What is Right – Ethical
• Be Open & Transparent – Fair
• Sense of Urgency, Passion & Energy – Dynamic
• Go the Extra Mile, Find Solutions – Stretch
• Improve Continuously – Excellence
• Play as a Team, To Win – Teamwork
• Support the Society – Contribute
SKILLS:
The Bank’s selection of personnel and systems of rewarding performance is aligned to meet
the Bank’s stated key priorities. There is a commitment to training and upgrading of staff skills.
Strong ‘ownership’ of exposures is encouraged, through rewards as well as strong
accountability.

KARNATAKA BANK

STRATEGY:

• The transformation exercise and the timely initiatives towards total transformation of
bank in partnership with Boston Consulting Group (BCG).
• Continuous business improvement is the only business strategy that can provide the
bank with a clear competitive edge and keep you ahead of the fierce competition.
• The bank’s initiatives for growth include locating branches in strategically important
centers.
• The bank has also recruited, trained and placed around 100 marketing officers in
strategically important centers.
• The bank has adopted the strategy of Managing channels instead of Managing
Branches.

86
 • To provide diversified financial products and services to maximize value added
services to customers the bank provides Para banking third party products such as LIC.
• The risk management strategy adopted by your Bank is based on a clear understanding
of the risks and level of risk appetite, which is dependent on the willingness of your
Bank to take risks in the normal course of business
• Bank advocates the need for addressing global environmental issues like global
warming, scarcity of water, encouragement to renewable energy sources etc. not only
through its lending decisions, but also as part of its CSR Strategy.
• To maintain LCR well above the regulatory minimum levels ahead of the stipulated
timelines
• The funding strategy is to achieve an optimal funding mix which is consistent with
prudent liquidity, diversity of sources and servicing costs

STRUCTURE:

Karnataka Bank Limited has a network of 843 branches, 1374 ATMs and 330 e-lobbies/mini
e-lobbies across 22 states and 2 union territories. It has 8,275 employees and over 10 million
customers throughout the country. Its shares are privately owned by over 185000 shareholders.

The Board of Directors includes 11 Directors including the Managing Director.

Hierarchical Structure: 1. Managing Director/ Chief Executive Officer

2. General Managers

3. Deputy General Managers

4. Assistant General Manager

5. Managers

Scalar Chain in a Branch:

Manager Assistant Branch Manager Officer Special Assistant Clerks/Cashier

Sub Staff

Reporting Structure:

87
Head Office Regional Office Branches

Division of Work:

Work is divided into various sections in head office. Each regional office reports to head office
in respective sections. Each branches across various regions report to the concerned regional
office. Within a branch all reports to the branch manager.

SYSTEMS:

• Bank has put in place various risk management systems and practices in line with the
guidelines issued by Reserve Bank of India from time to time. The risk management
strategy adopted by your Bank is based on a clear understanding of the risks and level
of risk appetite, which is dependent on the willingness of your Bank to take risks in the
normal course of business
• To evaluate and review the performance of various business units/products/customers
etc., your Bank has introduced Fund Transfer Pricing (FTP) and Customer Profitability
Management Systems (CPMS) for a better management of risk and return
• The Bank has deployed various Information Security systems such as Application
Firewall, Web Security Gateway, End Point Security systems, Honey Pot systems and
Privilege Identity Management (PIM) to protect its information systems.
• Bank has laid down standards, processes and structure facilitating the implementation
of internal financial control across Bank and ensure that same are adequate and
operating effectively
• Credit process transformation i.e., fine tuned the credit delivery system under Retail
Loans and MSME loans by establishing Regional Loan Processing Centers (RLPC) at
all the Regional Offices the Bank with separate vertical for Sales and Sanction.
• KBL FORCE, a Lead Management System (LMS) which is designed for providing end
to end management of leads
• Revised Performance Management Systems named as ‘KBL RISE’ duly supported by
‘Role Capture’ and ‘Performance Measurement’ tool.
• Bank is actively involved in putting in place system and procedures on banking services
rendered to customers as per the guidelines received from RBI, IBA, and BCSBI from
time to time.
• Management Information System and Core Banking System

88
SHARED VALUES:

i. Sincere, Honest and Trustworthy

ii. Unshakable Integrity
iii. Professional and Smart Breaker
iv. Committed to protect Bank’s interests through legitimate and sustainable business
v. ‘Bank first’ attitude always

STYLE:

The bank believes that Trait, behavioral and situational leadership studies, ability, dynamism,
perceptions, attitudes of bank managers are helpful to manage problems in the banks and hence
improvement in their performance. And the leadership style is more democratic.

STAFF:

The bank provides for Training of the executives and the staff members for reskilling, up
skilling and improved efficiency. There were 3192, 2238 and 12 nominations to various
programs in the category of Officers, Clerks and Sub-staff respectively covering 49.95 percent
of the total staff strength during the year under report. The bank has also implemented the
Protected Disclosure Policy (Whistle Blower Policy) since the year 2007 intended to promote
participation of employees at all levels and detection of corruption, misuse of Office, criminal
offences, suspected / actual fraud, failure to comply with the rules and regulations prescribed
by the Banks and any events/ acts detrimental to the interest of the Bank, depositories and the
public resulting in financial loss/operational risk, loss of reputation etc. Bank attributes the
greatest importance to employee satisfaction and human resource development activities. Bank
deputes its employees to various training and development programs to upgrade their skills and
competencies and contribute towards the growth of the Bank. Bank has maintained cordial
industrial relations and employee discipline. Bank has put in place an institutional mechanism
for protection of women employees at the workplace and adopted a policy pursuant to Section
22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013, providing for protection of women employees against the sexual harassment of
women at the workplace and Redressal of such complaints. The Bank has introduced
Employees Stock Option Scheme through KBL-Stock Option Scheme (ESOS-2018).

SKILLS:

89
Some of the relevant skills are Cash Management, Credit Appraisal, Accounting, and Problem
Solving Skills. The skills required were Marketing, Communication, Time Management, IT
Related skill and Customer service skill. It cannot be denied that training in Soft Skills
(interaction, behavior and judgment) will help in more selling, marketing and customer
satisfaction. The employees of the Bank have all the necessary skill sets to reach the goals and
are committed to their work. Since Banking Industry is service oriented Karnataka Bank has
made efforts to give appropriate training to the staff to improve their skills for efficient service
to customers.

CITY UNION BANK:

STRATEGY:

The key strategy of the bank is to benefit them as well as other merging industries and take
help from them to grow bigger. They even focus of customer satisfaction and giving the
customers a personalized touch and making them feel at home. They are also forward to
diversify their line soon to obtain larger market share.

STYLE:

Since it is the banking style the leadership style followed by the bank is autocratic because they need
to be systematized. But it can also be considered democratic because the mangers and other higher
authorities willing take suggestion from their subordinate and hear out their contributions. The
leadership style is a mix between both autocratic and democratic styles whatever suits the situation.

STRUCTURE:

Board of directors
Senior executives
General Managers
Deputy General Managers
Assistant general managers
Area managers
Branch manager
Employees
This is structure followed by the bank.

90
STAFF:
The main aim of the bank is to train its staff. Since human recourses are the greatest asset of
any organization, they have invested a lot in these functions. The staff is taken care of. They
have proper redressal techniques wherethey can get feedback, staffs are also recognized for the
work that they have done. The staff are constantly given training is various aspects of the
business and improved everyday contributing more to the organization. The employees are also
showing their reciprocity in turn by staying loyal and committed to the organization.

SYSTEM:
They have an exceptional risk management system which is used to protect the bank. all the
employees are systematically connected. they have mobile banking apps and internet banking
for the ease of customers. They have also introduced a new e model which can greet customers.
this shows that company is accepting the new technological changes.

SHARED VALUES:
• Human resources are the greatest asset of any organization
• Customers first
• Feel like home
• Trustworthy
• Sincerity

SKILLS:
The skills present with the employees are communication, problem solving, critical thinking,
cashflow management, marketing, financial managements, cash operations, human resources.
the employees are also given training in various fields in order to utilize their maximum
potential

91
PORTER’S 5 FORCE MODEL FOR THE BANKING INDUSTRY:
THREAT OF NEW ENTRANTS:
Despite the regulatory and capital requirements of starting a new bank, between 1977 and 2002
an average of 215 new banks opened each year according to the FDIC. With so many new
banks entering the market each year the threat of new entrants should be extremely
high. However, due to mergers and bank failures the average number of total banks decreases
by roughly 253 a year. A core reason for this is, what is arguably, the biggest barrier of entry
for the banking industry, trust.
Because the industry deals with other people's money and financial information new banks find
it difficult to start up. Due to the nature of the industry people are more willing to place their
trust in big name, well known, major banks who they consider to be trustworthy.
The banking industry has undergone a consolidation in which major banks seek to serve all of
a customer’s financial needs under their This consolidation furthers the role of trust as a barrier
to entry for new banks looking to compete with major banks, as consumer are more likely to
allow one bank to hold all their accounts and service their financial needs.
Ultimately the barriers to entry are relatively low for the banking industry. While it is nearly
impossible for new banks to enter the industry offering the trust and full range of services as a
major bank, it is fairly easy to open up a smaller bank operating on the regional level.

POWER OF SUPPLIERS:

Capital is the primary resource on any bank and there are four major of capital in the industry.
1. Customer deposits.

2. Mortgages and loans.

3. mortgage-backed securities.

4.Loans.
By utilizing these four major suppliers, the bank can be sure that they have the necessary
resources required to service their customers' borrowing needs while maintaining enough
capital to meet withdrawal expectations. The power of the suppliers is largely based on the

92
market, their power is often considered to fluctuate between medium to high.

POWER OF BUYERS:

The individual doesn't pose much of a threat to the banking industry, but one major factor
affecting the power of buyers is relatively high switching costs. If a person has one bank that
services their banking needs, mortgage, savings, checking, etc, it can be a huge hassle for that
person to switch to another bank.
The internet has greatly increased the power of the consumer in the banking industry. The
internet has greatly increased the ease and reduced the cost for consumers to compare the prices
of opening/holding accounts as well as the rates offered at various banks.

VAILABILITY OF SUBSTITUTES:

Some of the banking industry's largest threats of substitution are not from rival banks but from
non-financial competitors. The industry does not suffer any real threat of substitutes as far as
deposits or withdrawals; however insurances, mutual funds, and fixed income securities are
some of the many banking services that are also offered by non-banking companies. There is
also the threat of payment method substitutes and loans are relatively high for the industry.

COMPETITIVE RIVALRY:
The banking industry is considered highly competitive. The financial services industry has
been around for hundreds of years and just about everyone who needs banking services already
has them. Because of this, banks must attempt to lure clients away from competitor banks.
They do this by offering lower financing, higher rates, investment services, and greater
conveniences than their rivals. The banking competition is often a race to determine which
bank can offer both the best and fastest services, but has caused banks to experience a lower
ROA (Return on Assets). Given the nature of the industry it is more likely to see further
consolidation in the banking industry. Major Banks tend to prefer to acquire or merge with
other banks than to spend money marketing and advertising.

93
 CHAPTER 5
CONCLUSION

94
The Industry Review Project helped us in a lot of ways and we had a detailed study of the
Banks and an overview of banking industry. The banks we studied in detail were in DCB,
Karnataka Bank and the City Union Bank who are major competitors for each other. The study
made us aware of the organizational structure, HR, CSR, Staff, Leadership styles, Strategies,
Systems, Shared Values, and Skills adopted by the respective Banks and studied their strengths
and weaknesses and the potential opportunities and threats to their banks. Their achievements
and how banks constantly adapt new technologies to make it easier for their customers like
Digital Banking. The Bank keeps getting in new products that would help their customers. As
per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and well-
regulated. The financial and economic conditions in the country are far superior to any other
country in the world. Credit, market and liquidity risk studies suggest that Indian banks are
generally resilient and have withstood the global downturn well. Indian banking industry has
recently witnessed the roll out of innovative banking models like payments and small finance
banks. RBI’s new measures may go a long way in helping the restructuring of the domestic
banking industry. The digital payments system in India has evolved the most among 25
countries with India’s Immediate Payment Service (IMPS) being the only system at level 5 in
the Faster Payments Innovation Index (FPII).The Indian banking system consists of 27 public
sector banks, 21 private sector banks, 49 foreign banks, 56 regional rural banks, 1,562 urban
cooperative banks and 94,384 rural cooperative banks, in addition to cooperative credit
institutions (FY17 data). In FY07-18, total lending increased at a CAGR of 10.94 per cent and
total deposits increased at a CAGR of 11.66 per cent. India’s retail credit market is the fourth
largest in the emerging countries. It increased to US$ 281 billion on December 2017 from US$
181 billion on December 2014.
Key investments and developments in India’s banking industry include:

• As of September 2018, the Government of India launched India Post Payments Bank
(IPPB) and has opened branches across 650 districts to achieve the objective of
financial inclusion.
• The total value of mergers and acquisition during 2017 in NBFC diversified financial
services and banking was US$ 2,564 billion, US$ 103 million and US$ 79 million
respectively @.

95
 • The biggest merger deal of FY17 was in the microfinance segment of IndusInd Bank
Limited and Bharat Financial Inclusion Limited of US$ 2.4 billion @.
• In May 2018, total equity funding's of microfinance sector grew at the rate of 39.88 to
Rs 96.31 billion (Rs 4.49 billion) in 2017-18 from Rs 68.85 billion (US$ 1.03 billion) #.

As of September 2018, the Government of India has made the Pradhan Mantri Jan Dhan Yojana
(PMJDY) scheme an open ended scheme and has also added more incentives. The Government
of India is planning to inject Rs 42,000 crore (US$ 5.99 billion) in the public sector banks by
March 2019 and will infuse the next tranche of recapitalization by mid-December 2018.
Enhanced spending on infrastructure, speedy implementation of projects and continuation of
reforms are expected to provide further impetus to growth. All these factors suggest that India’s
banking sector is also poised for robust growth as the rapidly growing business would turn to
banks for their credit needs. Also, the advancements in technology have brought the mobile
and internet banking services to the fore. The banking sector is laying greater emphasis on
providing improved services to their clients and also upgrading their technology infrastructure,
in order to enhance the customer’s overall experience as well as give banks a competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion
by FY2023 driven by the five-fold increase in the digital disbursements. As of the banks we
studied all of these are constantly trying to make their products easier and simpler to use and
contributing a lot as a part of their CSR.

96
DCB BANK :

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Karnataka Bank:

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98
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https://www.cityunionbank.com/

ANNEXURE:

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100