2.1) Internet banking : Internet banking: Also referred to as E-banking, internet banking
is changing the banking industry and is having the major effects on banking relationships.
Almost every bank has a website today and provides for delivery of its products & services
electronically. In true Internet banking, any inquiry or transaction is processed online
without any reference to the branch at any time. Providing Internet banking is increasingly
becoming a "need to have" than a "nice to have" service, and it is soon to become a norm
from an exception due to the fact that it is the cheapest way of providing banking services.
Using e-banking a customer can view account balances & statements, transfer funds
between accounts, create FDs Online, request a DD, pay bills, order a cheque book,
request stop payment on a cheque, apply for and access credit cards, apply for loans and
most importantly gets easy access to complete information about various products and
offers.
2.2) Phone Banking : It use an automated phone answering system with phone keypad
response or voice recognition capability. This feature is known as Interactive Voice
Response System (IVR). With the obvious exception of cash withdrawals and deposits, it
offers virtually all the features of an automated teller machine: account balance information
and list of latest transactions, electronic bill payments, funds transfers between a
customer's accounts, etc. Some banks engage call centres to provide 24*7 services to their
customers, via toll-free numbers. Others connect their customers to phone bankers, but in
this case, the service is only available for particular hours for which phone bankers are
available. Some make use of both i.e. toll-free numbers for some services, and phone
bankers for the ones that require professional assistance. Telephone banking
representatives are usually trained to do what was traditionally available only at the branch:
loan applications, investment purchases and redemptions, cheque book orders, debit card
replacements, change of address, etc.
2.3) Mobile Banking: ICICI was the first bank in India to introduce complete mobile
banking services in the year 2007. Since then, conducting banking operations using the
mobile phone has been fast catching up in the country. It works through a set of text
messages (SMS). With SMS a customer can perform a wide range of query-based
transactions from his/her mobile phone, like funds transfer (within and outside the bank),
enquiry services (Balance enquiry/ Mini statement), request services (cheque book
request), bill payment (utility bills, credit cards),
market index for the same period. Policy makers have made some notable changes in
policy and regulation to help strengthen the sector. These changes include strengthening
prudential norms, enhancing the payments system and integrating regulations between
commercial and co-operative banks. However, the cost of intermediation remains high and
bank penetration is limited to only a few customer segments and geographies. While bank
lending has been a significant driver of GDP growth and employment, periodic instances of
threatened the stability of the system Structural weaknesses such as fragmented industry
structure, restrictions on capital availability and deployment, lack of institutional support
infrastructure, restrictive labour laws, weak corporate governance and ineffective
regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could
seriously weaken the health of the sector. Further, the inability of bank managements(with
some notable exceptions) to improve capital allocation, increase the productivity of their
service platforms and improve the performance ethic in their organisations could seriously
affect future performance.
The second unique feature of Indias banking sector is that the Reserve Bank of
India has permitted commercial banks to engage in diverse activities such as securities
related
transactions, foreign exchange transactions and leasing activities.
EFFECT OF GLOBAL CRISIS ON INDIAN BANKING SECTOR:
India escaped a major and fatal injury to its economy even in the context of a full-blown
global economic crisis. This happened mainly owing to:
was only 5.8%, down from 7.8% for the first half of the year and 9.0% for the previous
financial year 2007-08.
1.
The merger of Chase Manhattan Corporation with J.P. Morgan & Company. The name of
the new company formed as a result of the merger is J.P. Morgan Chase & Company.
The merger of Firstar Corporation with U.S. Bancorp. The name of the resultant entity is
U.S. Bancorp.
The merger of Golden State Bancorp, Inc. with Citigroup Inc. The name of the newly
Merger between IDBI (Industrial Development bank of India) and its own subsidiary IDBI
Bank. The deal was worth $ 174.6 million (Rs. 7.6 billion in Indian currency).
Centurion Bank and Bank of Punjab. Worth $82.1 million (Rs. 3.6 billion in Indian
currency), this merger led to the creation of the Centurion Bank of Punjab with 235
branches in different regions of India.
BANK RATE
REPO RATE
borrower places with the lender certain acceptable securities against funds received and
agree to reverse this transaction on a predetermined future date at agreed interest cost. It is
known as repurchase rate.
Therefore, we can say that in case, RBI wants to make it more expensive for the banks to
borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks
to borrow money, it reduces the repo rate. If increases the repo rate it will increase general
interest rates throughout the economy. If the repo rate for commercial banks increases they
will pass this onto their own consumers. Higher interest rates have the effect of reducing
spending, investment and economic growth. This will reduce inflationary pressures in the
economy.
4.3 ) REVERSE REPO RATE - This is the reverse of repo rate. It is the rate at which
RBI borrows money from banks. When liquidity or cash floating is excess in banks, RBI
sucks it out by reverse repo by lending securities and taking out money from banks. RBI
uses this tool when it feels there is too much money floating in the banking system.
Banks are always happy to lend money to RBI since their money is in safe hands with a
good interest. An increase in Reverse repo rate can cause the banks to transfer more funds
to RBI due to this attractive interest rates.
4.4) CASH RESERVE RATIO - CRR means Cash Reserve Ratio. Banks in India are
required to hold a certain proportion of their deposits in the form of cash. However,
actually Banks dont hold these as cash with themselves, but deposit such cash with
Reserve Bank of India (RBI), which is considered as equivalent to holding cash with them.
This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by
the RBI and is known as the CRR or Cash Reserve Ratio.
Suppose a bank has total deposits of Rs.100 Bn and is required to maintain a CRR of say
5%. This means that the bank should maintain in current accounts with the central bank or
any other approved bank balances, not less than Rs. 5 Bn. This much amount is impounded
and kept in the free form. And the bank cannot lend this money. This acts as a buffer to the
bank.
11
RBI uses CRR either to drain excess liquidity or to release funds needed for the economy
from time to time. Increase in CRR means that banks have fewer funds available and
money is sucked out of circulation. Thus we can say that this serves duel purposes i.e. it
not only ensures that a portion of bank deposits is totally risk-free, but also enables RBI to
control liquidity in the system, and thereby, inflation by tying the hands of the banks
in lending money. The RBI is empowered to vary CRR between 3% and 20% respectively.
4.5) STATUTORY LIQUIDITY RATIO - It is the amount a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing
credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank
of India) in order to control the expansion of bank credit.
maintain at the close of business every day, a minimum proportion of their net demand and
time liabilities as liquid assets in the form of cash, gold or approved securities. This
percentage is fixed by RBI. The maximum and minimum limits for the SLR are 40% and
25% respectively.
In the above example, suppose the bank is supposed to maintain SLR of 25%, this means
that over and above CRR the bank is expected to keep aside an amount of Rs. 25 Bn. This
will be kept in easy-to encash securities like, treasury bills of the government and any other
approved securities. This again acts as buffer to the bank and prevents the bank from
lending the entire amounts of deposits kept with it by various customers.
TERMINOLOGY
RATE
W.E.F.
Bank Rate
6.00%
29/04/2003
Repo Rate
5.75%
27/07/2010
4.50%
27/07/2010
6.00%
24/04/2010
25%
07/11/2009
Cash
Reserve
Ratio
(CRR)
Statutory
Liquidity
Ratio
12
13
RBI has asked Scheduled Co-operative Banks to draw the ALM structural Liquidity
certain criteria.
RBI has permitted well-managed and financially sound multi-state UCBs to set up onsite
standard definitions for different types of capital. Capital was categorized as Tier I and Tier
II capital. Tier I capital is mainly the permanent capital like equity. Tier II capital is the
supplementary capital like subordinate debt. The norms were successful in improving the
capitalization ratios of the banks worldwide. In India, the banks were required by the
Reserve Bank of India to maintain a higher capital-to-risk-weighted-assets ratio (CRAR) of
9 per cent.
Basel II is an international business standard that requires financial institutions to maintain
enough cash reserves to cover risks incurred by operations. The Basel accords are a series
of recommendations on banking laws and regulations issued by the Basel Committee on
Banking Supervision (BSBS). Basel II also requires companies to publish both the details
of risky investments and risk management practices. The full title of the accord is Basel II:
The International Convergence of Capital Measurement and Capital Standards - A Revised
Framework.
The three essential requirements of Basel II are:
1) Mandating that capital allocations by institutional managers are more risk sensitive.
2) Separating credit risks from operational risks and quantifying both.
3) Reducing the scope or possibility of regulatory arbitrage by attempting to align the real
or economic risk precisely with regulatory assessment.
Basel II has resulted in the evolution of a number of strategies to allow banks to make risky
investments, such as the subprime mortgage market. Higher risks assets are moved to
unregulated parts of holding companies. Alternatively, the risk can be transferred directly
to investors by securitization, the process of taking a non-liquid asset or groups of assets
and transforming them into a security that can be traded on open markets.
15
16
MICRO-ANALYSIS
SARASWAT CO-OPERATIVE BANK Ltd.
17
The symbol takes off from our earlier logo and visualizes a hexagon. It is an attempt to
appeal to younger and new customers without alienating the existing ones. The logo
represents two caring hands in the shape of a hexagon. The upper hand is of golden yellow
colour. Yellow is the colour of warmth, sunshine, cheer and happiness. Gold of wealth,
prosperity and ever increasing value. They are the colours of the Sun and symbolize life,
youth and harmony. The lower hand is burgundy red, the colour of excitement, strength
and passion. It symbolizes aggressiveness and in the Indian context, Soubhagya.
18
giant leap forward for the Bank. Bank chose a path of organic/inorganic growth and pace
of growth accelerated .Bank's total business which was around Rs 4000 Crore in 2000
which almost tripled to Rs 15295 Crore in 2007. The Business of the Bank as on 31st
March 2009 had crossed Rs 21000 Crores.
20
Total business of the Bank (i.e. deposits plus advances) crossed the Rs. 21,000 crore mark
for the first time to stand at Rs. 21,029.26 crore as on 31st March 2009 (from Rs.
18,879.13 crore as on 31st March 2008) i.e. a growth of Rs. 2,150.13 crore in absolute
terms and of 11.39% in percentage terms, on a y-o-y basis. The deposits of your Bank
increased from Rs. 11,430.82 crore as on 31st March 2008 to Rs. 12,918.85 crore, while
advances rose from Rs. 7,448.31 crore to Rs. 8,110.41 crore in FY 2008-09.
The profit of the Bank (before tax and exceptional items) has increased from Rs. 231.84
crore to Rs. 315.61 crore i.e. a rise of 36.13%. The net profit after tax, which stood at Rs.
202.26 crore in FY 2007-08, rose to Rs. 241.29 crore after tax and before exceptional items
21
for FY 2008-09 constituting a growth of Rs. 39.03 crore in absolute terms and 19.30 in
percentage terms.
The profit from our foreign exchange business grew from Rs. 63.14 crore in FY 2007-08 to
Sawantwadi.
The first state-of-the-art SME focussed Branch of your Bank was opened at Vikhroli
(West), Mumbai, on 27th April 2009. The second SME focussed branch was opened at
Panjim, Goa on 9th May 2009. Both the branches are specifically meant to cater to Small
Total Business
Net Profit
Indusind Bank
ING Vysa Bank
South Indian Bank
Saraswat Bank
Vijaya Bank
Karnataka Bank
Kotak Mahindra Bank
(Rs in Crore)
37,880
41,341
32,143
21,029
54,535
32,143
32,270
(Rs in crore)
148.34
188.80
194.75
210.79
262.48
266.70
276.09
22
Total Business
Net Profit
(Rs in Crore)
50,579
28,572
55,268
87,072
(Rs in crore)
278.92
303.84
336.91
375.24
23
Profit and loss statement is a period statement and related to curtained period, usually one
year. This tells about the results of operations, either profit or loss, arising out of the
Capital: Capital Indicates the amount of funds contributes by the owner of business to
requirement of fund of business. Similarly, any amount of profit earned in past which is not
distributed to the owner also belongs to owner and become a part of the business.
Long term liabilities: This indicates the liabilities which are to be paid off over long
period of span of time say 5 to 10 years. In practical circumstances, it may consists of long-
Sub liabilities
Authorized Capital
Rs. In Crores
7.12
Building Funds
Reserves
Investment
101.707
24
General Reserve
Bank Deposits
Special Reserve
Central Co-op Banks
1143.08
Saving Banks
Borrowing
Current Deposits
Foreign currency
93.92
Advances
Branch Adjustment
210.72
Bills Receivable
Interest Payable
Bills Payable
Sundries
Profit Earned Past i.e.
In 2007.
TOTAL
20.35
1576.897
Assets:
Debit balances in all the personal and real accounts appear on assets side. Following items
may appear on assets side:
Fixed assets: Fixed assets indicate the value of infrastructure properties acquired by the
business where the benefit received over long period of time. Fixed assets are land,
business.
Current assets: Current assets are the assets which are likely to be converted in the form of
cash of likely to be consumed during the normal operating cycle of a business within a
very short span time say one year. Current assets are stocks, sundry debtors, cash & bank
balances, prepaid expenses.
Balance Sheet As At 31st March, 2008
25
Sub Assets
Land
Rs. In Crores
13.707
Building
Work-in-Progress
Plant & Machinery
Computers
Capital
155.44
Investment
435
Mutual Funds
Govt. Securities
Members Welfare Funds
Short Term Advances
Advances
744.83
Other Assets
227.9
Computer Software
Losses
Non Banking Assets
Bills Receivable
TOTAL
1576.88
Manufacturing accounts: This part of profit and loss accounts discloses the results of
manufacturing operations carried out by the organization. The final results in terms of
manufacturing accounts is a cost of production incurred by the organization.
26
Trading accounts: This part of profit and loss accounts discloses the results of trading
operations carried by organization. The final results in terms of Gross Profit earned by the
organization.
Profit and Loss accounts: This part of profit and loss accounts discloses the final results of
business transactions of the organization. The final results in terms of Net profit earned by
organization.
Profit and Loss appropriation accounts: This part of profit and loss accounts which mainly
applicable to company form of organization, discloses the manner in which the net profit
earned by the organization is appropriated. The amounts of profit not appropriated or
retained transferred to reserves and surplus in balances sheet.
audited
audited
Total Income
Total Expenditure
Gross profit
Provisions
Operating profit before
1177.59
930.81
246.78
14.94
231.84
1499.2
1174.56
325.36
9.75
315.61
tax
Income Taxes
Net Profit
29.58
202.26
74.32
241.29
To bring down the Gross NPA level as also to ensure that substantial new NPAs are not
added, branches were asked to speed up efforts for recovery in respect of overdue accounts
with them. The drive for reduction in NPAs has been hugely successful under the
leadership of Shri P. G. Kamath, Chief General Manager.
28
10.3) Marketing:
Business Process Reengineering (BPR) initiative primary objective of this initiative is to
convert the branches into sales and service outfits. India is a huge banking market but the
penetration of Indian Banking is thus one of the lowest in the world. Also a large number
of our branches are functional in Maharashtra State, which has a huge banking business
market of around Rs. 17,00,000/- crore (with aggregate bank deposits of Rs. 8,57,771 crore
and gross credit of Rs. 8,34,701 crore in September 2008). Of these Rs. 17,00,000 crore,
we at Saraswat Bank have a business stake of only Rs. 20,000 crore, which is a miniscule
of merely 1.2% share in the total banking business in the State of Maharashtra. This
provides a huge opportunity to banks including your Bank. In fact, it is on the basis of
these statistics that the bank has planned to do a business of Rs.1,00,000 crore by 2021
under Dr. Adarkar Mission IV of the Bank. All the employees in the branches are being
trained, equipped and instructed to take extra efforts for marketing all the products and
services of the Bank.
29
Saraswat Bank is No. 1 amongst the 1,700 UCBs in the Urban Cooperative Banking Sector
Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in
PSU banks below 51% thus choking the headroom available to these banks for raining
equity capital.
Lack of competitive differential with other offshore centres
Rigid legislation that inhibits business development
OPPORTUNITY:
External conditions that are helpful to achieving the objective(s).
Maharashtra State has a huge banking business market of around Rs. 17,00,000/- crore. Of
these Rs. 17,00,000 crore, Saraswat Bank has a business stake of only Rs. 20,000 crore,
30
which is a miniscule of merely 1.2% share in the total banking business in the State of
Increase in the number of foreign players would pose a threat to the PSB as well as the
private players.
31
you a lump sum on retirement, which is then used to get regular income through an
annuity plan. Given the high cost of living and rising inflation, employer pensions alone
are not sufficient. Pension planning has therefore become critical in today's world.
Savings and Investment Plans
You have always given your family the very best. And there is no reason why they
shouldnt get the very best in the future too. As a judicious family man, your priority is to
secure the well-being of those who depend on you. Not just for today, but also in the long
term. More importantly, you have to ensure that your familys future expenses are taken
care, even if something unfortunate were to happen to you. Our Savings & Investment
Plans provide you the assurance of lump sum funds for you and your familys future
expenses. While providing an excellent savings tool for your short term and long term
financial goals, these plans also assure your family a certain sum by way of an insurance .
Health Plans
Health plans give you the financial security to meet health related contingencies. Due to
changing lifestyles, health issues have acquired completely new dimensions becoming
more complex in nature. It becomes imperative then to have a health plan in place, which
will ensure that no matter how critical your illness is, it does not impact your financial
independence.
EASY PAY:
Here is one more exciting facility the Bank has offered to relieve its customers, our
esteemed client, from spending your valuable time standing in a queue for routine utility
bill payments.
All you have to do is to walk into any of our branch and register yourself under : Easy Pay"
scheme for all your recurring utility bill payments such as Telephone, Electricity Bills,
Cellular Phone Bills, Insurance Premium & many more. Once you are registered all your
future bills will be paid automatically through the bank account with us.
33
CHAPTER: 13 :- 7 Ps OF MARKETING
Basically, the concept of Marketing is given by McCarthy who has classified Marketing
Mix tools of four broad kinds called 4 P's and they are as follows
Product
Price
Promotion
Place
People
Process
Physical Evidance
These marketing mix tools are used by the marketers to influenc their trade channels and
final consumers.
The Saraswat co-operative banks 4P's criteria is followed below
13.1) Product
Sarswat co-operative bank is No. 1 amongst the 1,700 UCBs in the Urban Co-operative
o
o
o
o
o
The bank has adopted the policies of inorganic growth since 2006 for increasing its branch
outlets
From 2009 the bank has been pursuing a mix of inorganic and organic growth for branch
expansion purposes.
The bank has adopted the cluster based approach.
Instead of having an isolated branch, they have 4-5 branches in a far off area.
34
This approach has enabled the bank to cluster presence in western Maharashtra, Goa and
Karnataka.
The bank has planned under Dr.Adarkar Mission 2, to open 70 more branches by 31st
March,2011
The is following the mantra of one branch in every 15 days in programme called
'Ashwamedh'
13.3) Promotion
Promotion of any brand is very necessary; this helps the marketer as well as customer to
In any service industry, cost leadership is critical to the long term success of the
organization.
The bank has to compete with other banks on the basis of total reduction of all economic
service.
The bank has sustained work of the income and cost council, which helps the bank to offer
services to the customers with lower intermediations costs.
13.5) People
During the FY 2008-09, a total of 2,225 employees, consisting of 1,058 from management
and 1,167 from non-management people working in Saraswat Bank.
Today Saraswat Bank have 250 branches, (i.e. 70 more branches by 31st March, 2011),
13.6) Process
35
Standardization: Bank has got standardized procedures for typical transactions. This is
because of the rules they are subject to. Besides this, each of the branch has its standard
forms, documentations etc. Standardization saves a lot of time behind individual
transaction.
Customization: There are specialty counters at each branch to deal with customers of a
particular scheme. Besides this the customers can select their deposit period among the
available alternatives.
Number of steps: numbers of steps are usually specified and a specific pattern is followed
36
37
38
Saraswat Bank has become a member of the Banking Codes and Standards Board of India.
This board ensures that the Codes so defined by the Bank are implemented in letter and
spirit. For measuring customer satisfaction, a bank- wide Customer Service Audit has been
planned to be commissioned by the Board in the ensuing year.
Industrial Relation:
The Banks human resources have been organised under the two representative bodies viz.
the Officers Association and the Employees Union. The industrial relations with both
these organizations have been very cordial with joint discussions being held with the
Association/the Union for redressing employee issues in an amicable way.
Voluntary Retirement Scheme (VRS):
This year, the Bank launched the VRS for its employees. Around 236 employees from your
Bank (excluding those of merged banks) opted for VRS under the said scheme. Besides, 83
employees of the erstwhile Nasik Peoples Cooperative Bank Ltd., 43 employees of
erstwhile Annasaheb Karale Janata Sahakari Bank Ltd. and at around 100 employees of the
erstwhile Murgharajendra Sahakari Bank Ltd. (i.e. in all 462 employees) opted for VRS
and have been relieved under the Schemes. The Bank acknowledges with gratitude the
sincerity and hard work put in by all these employees during their tenure with the Bank and
wishes the retired employees an eventful and healthy post retirement life.
39
40
41
CHAPTER: 17 :- CONCLUSION
The market is seeing discontinuous growth driven by new products and services that
include opportunities in credit cards, consumer finance and wealth management on the
retail side, and in fee-based income and investment banking on the wholesale banking side.
Given the demographic shifts resulting from changes in age profile and household
income, consumers will increasingly demand enhanced institutional capabilities and
service levels from banks.
With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail
42
CHAPTER: 18 :- SUGGESTIONS
In wake of this, old private sector banks also have the need to fundamentally
strengthen skill levels.
even more imperative is their need to examine their participation in the Indian
banking sector and their ability to remain independent in the light of the
43
Also, the banks healthy ROA (Return of Average Asset) and CRAR (Capital to
Risk Asset Ratio) is a matter of comfort. Having said that, the banks market
share of merely 1.2% in the total banking business in the State of
Maharashtra is our lingering concern. We have a positive view on the bank
with respect to its future growth prospects.
44
CHAPTER: 19 :- BIBLIOGRAPHY
1. History of Banking in India:
http://finance.indiamart.com/investment_in_india/banking_in_india.html
http://www.bseindia.com/downloads/BankingSector.pdf
2. Banking terminology:
http://www.meridianadvantagemember.com/fileuploads/Bank_Terminology.pdf
3. Mergers and Acquisitions:
http://www.economywatch.com/mergers-acquisitions/international/banking-sector.html
http://finance.mapsofworld.com/merger-acquisition/india.html
4. Current position and financial analysis of the bank: Saraswat Banks Annual Report for
the year 2008 and 2009
5. History of the banks and Corporate Social Responsibilities:
http://www.saraswatbank.com/
45