STUDIES, PANDESHWAR
CERTIFICATE
This is to certify that Mr. Sachin P Mangalore is a student of
First Year M. B. A. 2009-10 of this institution. This project
report Titled “OVER ALL STUDY OF KARNATAKA BANK LTD.,
MANGALORE” has been prepared by him in partial fulfillment
for the requirement of the Master of Business Administration,
to be submitted to Srinivas Institute of Management Studies,
Pandeshwar, under the supervision and guidance of Mrs.
PRITI JEEVAN, faculty of M. B. A.
Guide Principal
Date:
Place: Mangalore
SRINIVAS INSTITUTE OF MANAGAMENT
STUDIES, PANDESHWAR
DECLARATION
Date:
Place: Mangalore
(MR. SACHIN P
MANGALORE)
EXECUTIVE SUMMARY
Methodology :
Data collection is a step in the preparation of project report. The
information is collected in the following manner.
Primary Sources :
Data is collected by the interacting with the bank Managers and
Officers.
Secondary Sources :
The data is collected for report by various records maintained and
standing orders of the banks which help us for preparing this
reports. A lot of data are also collected by referring the annual
reports of bank, financial statement and web site of the bank.
Objectives :
ACKNOWLEDGEMENT
I am very much thankful to Srinivas Institute of Management Studies, Pandeshwar,
Mangalore, for this wonderful opportunity to undertake the Project Study as a part of the
My grateful thanks are due to Prof. P S Aithal. The Principal, Srinivas Institute of
Management Studies for extending the necessary support in the preparation of this project.
deserves all appreciation and thanks for patiently and efficiently guiding me throughout the
preparation of this project and also I am very thankful to other faculty members for their useful
If I forgot to say thanks to Karnataka Bank Ltd, Mangalore, will be a great mistake by
me. So my heartily thanks to The staff, Managing Committee and whosoever helped me directly
or indirectly.
CONTENTS
Faculty,
late 18th century, Tippu Sulthan, was accredited to have conceived the idea of organizing banking
as a part of state machinery for extending credit facilities to the needy at an affordable rates
Corporation Bank, Canara Bank, Syndicate bank, Vijaya Bank and Karnataka Bank. Karnataka
Bank is the only bank which has not been nationalized. Today Karnataka Bank Shares are doing
well in Dalal Street. It is due to far sightedness of founders of Karnataka Bank. KBL is the only
Karnataka Bank Ltd, a leading ‘A1+’ Class scheduled commercial Bank in India, was
incorporated on Feb 18th 1924 with a registered office at Mangalore. The Bank commenced its
business on 23rd May 1924 with an Initial Paid up Capital of Rs. 11,580 contributed by 113
shareholders. Sri.B.R.Vyasaraya Achar was the first president of the Bank. The Banks
Memorandum of Association in its Objective Clause states that the Bank apart from carrying on
the general function of Banking business, would “set apart and appropriate from the annual net
profit towards the general, mental, moral and physical advancement of other beneficial purpose
of the members of the Dravidian Brahmin community, Such sums as may be deemed fit”.
The first three branches of the Bank were at Mangalore Dongerkery, Madras George, and
Udupi Car Street. Sri Kalmadi Gopal Krishna had the distinguishion of becoming the first
Branch Manager. At the end of the Banks first year of operations the Banks deposits stood at Rs.
0.68 Lakhs and advances were Rs. 1.22 Lakhs. The Bank celebrated its Silver Jubilee in the year
1949. In its Silver Jubilee year of operation the Bank earned a net profit of Rs. 0.75 Lakhs with
deposits of Rs. 55.59 Lakhs and Advances of Rs. 39.39 Lakhs. Sri.K.S.N.Adiga became the
chairman of the Bank on 23rd Nov 1958. The First real recognition for the Mangalore based
Bank came in the year 1959 with the Bank being elevated from ‘C’ class to ‘B’ Class. In the
stride of progress and expansion, the Bank got reinforced by the takeover of 3 banks namely
Shringeri Sharada Bank Ltd on 1st April 1960.,Chitradurga Bank Ltd on December 30th 1964,
and Bank of Karnataka Ltd on Dec 29th 1966.,. In the year 1969 the Bank opened its 75 th branch
where its deposits crossed Rs.10 Crore mark to reach Rs. 12.63 Crore, Advances were at Rs.
In year 1971 the Bank opened its first branch in the country’s financial capital. The
following year the Bank was elevated to ‘A’ class by the Reserve Bank of India. In its Golden
Jubilee year of its operation the Banks total deposits were Rs. 33.14 Crore and Advances were
Rs. 22.09 Crore with 146 branches. In 1977 Karnataka Bank Ltd., adopted the star symbol as its
unique visual identity symbol. A product of Late Dr. Shivarama Karanth, it symbolizes stability,
discipline, harmony and confidence. The Staff Training College of the Bank was started at
Mangalore Dongerkery on Sept 27th 1977. In 1977 the foreign exchange Business of the Bank
was opened with a separate department was established In Bangalore as central foreign exchange
department which was later shifted to Mumbai (1979). The Bank achieved the target of Rs. 100
crore mark in deposits with the aggregate deposits being Rs. 104.24 crore as on 31-12-1979. In
1980 the Madras George Town Branch celebrated its golden jubilee. In the diamond jubilee year
of the Bank, the deposits of the bank were Rs. 211.34 Crore and Advances was Rs. 122.22 crore
respectively. The Banks Mumbai Borivili branch was declared as the first Model Branch of the
Bank. In 1994-95 the first service branch was opened at Mumbai. The first Industrial Finance
Branch was also opened at Bangalore on 20th March 1995. The first Agricultural Development
Branch of the Bank was opened on 1st April 1995. The Bank entered it into the stock markets on
October 1995 with a public issue of Rs. 81 crore which was over subscribed by about 2.5 times
despite depressed market condition. During the year 2003, the Bank has taken up corporate
agency for marketing the various life policies of Met Life India Insurance Company Ltd.; it has
also taken up corporate agency of Bajaj Allianz General Insurance Co. Ltd for marketing general
insurance products. The banks all round excellence in the twin parameters of growth and stability
has earned it rich laurels in the form of “P1+” rating for certificate of deposits from CRISIL.
Corporate Goal
business turnover of Rs.45,000 crore for the financial year 2010-11. Shri P. Jayarama Bhat,
Managing Director, unveiled the road map for the financial year 2010-11 with business
turnover of Rs.45,000 crore comprising of Rs.27,500 crore of Deposits and Rs. 17,500 crore of
Advances. The Bank which has 464 branches at present is planning to take the number to 480
and also its own ATMs from 217 to 300 by end- March 2011. Thus the Bank has plans to
increase its total number of business units to 780 by March 2011.The Bank is going to focus
Current Performance
Karnataka Bank Ltd. has posted a net profit of Rs.167.12 crore for the year 2009-10. The
business turnover of the Bank has touched Rs.38,166 crore registering a growth rate of 18.74%.
Deposits of the Bank grew from Rs. 20,333 crore to Rs.23,731 crore (16.71% increase) and
advances grew from Rs.11,810 crore to Rs.14,436 crore (22.23% increase) during FY 08-09 &
09-10.
The capital adequacy ratio of the Bank stood at 12.37% under Basel II as at the end of
March 2010. The Board of Directors has recommended a dividend of Rs.4/- per share of Rs 10.
For better administrative control, the Bank opened its 9th Regional Office in Hyderabad
recently.
The Bank introduced quite a number of new varieties of Savings Bank products like KBL
Kishore for students in the age group of 12-18, KBL Tarun for students in the age group of 18-
25, KBL Salary Privilege for salaried persons. The Bank also launched KBL Student Money
plant International Prepaid Card which is safe, secure and stress free to meet course fees, books
purchase, hostel fees, mess bill etc besides KBL Gold Debit Card with unique features like
mobile payments service, Online payment through Debit Card (E-commerce) for bill payments,
All the 464 branches have been networked under core banking solution covering 100%
business. The Bank is which is tech savvy is keen on upgrading its technology-driven offerings
periodically to meet the varying needs and demands of its clients and be above the level of other
The Bank also proposes to introduce the following facilities during the current financial
year.
• Online trading
• Travel Card
• Gift Card
• Smart Card
• POS Terminal
KBL Vidyanidhi is a unique education loan scheme up to 10 Lakhs within India and 20
Lakhs abroad for professional course’s students like graduation and post graduation courses,
Diploma courses, Engineering and Medical courses apart from Veterinary, Law, accounting
courses.
KBL Easy Ride Scheme is a scheme for financing for two wheelers for salaried and
business class persons. Confirmed salaried persons should have a minimum of Rs 4500 pm and
business man of at least one year in business line should have Rs 3500 pm income. The
maximum amount under this scheme is 1,00,000. Repayment period ranging from 36 to 60
KBL Car Loan Scheme is oriented to finance middle/ upper class people who require
luxurious cars at moderate rate of interest. Under this scheme company / firm / trust / association
can avail loan up to 85% of purchase invoice excluding road tax and insurance. For second
hand / used four wheelers Rs 15,00,000 is the ceiling amount. Repayment period for new vehicle
KBL also advances for self earning people by giving loan to commercial vehicles ranging
from Auto rickshaw to JCB. For new vehicle loan will be given up to 85% of the purchase
invoice. For used vehicles loan depends upon the market value. Rate of interest is also attractive.
Traders, commission agents, distributors, authorized dealers, stockiest can avail loan 20%
of the projected turnover with a limit of 25 Lakhs rate of interest is also depends upon utilization
of fund on daily basis. Hence beneficiary can reduce the burden of interest if he utilizes the fund
rationally.
For professionals like Doctors of any branches, Lawyers, Engineers, C.As have the
opportunity to develop their profession by enriching their professional materials like Scanning
machine, Lab equipment, furnishing their business premises, computer software and digital
subject to ceiling of 5 Lakhs for the purpose of purchase of house hold articles, children’s loan,
KBL K-Power is a scheme oriented on people for who are having a fixed income like
pension, rent etc., He must be an account holder in the bank. The branch manager fixes the limit
up to Rs 25000 and special feature of the scheme is that the loanee can withdraw money through
ATM as and when required in multiple of Rs 1000/-. Maximum repayment period is 12 months
unless renewed.
Any individual, HUF Kartha or Partnership firm can enjoy the K INSTA loan from Rs
Salaried person who are having minimum salary of Rs 6000 pm, Business men,
Professional, self employed can utilize the benefit of loan called KBL APNA GHAR. It makes
the reality of everybody’s dream of having own house or making it furnished luxuriously.
Salaried class people are eligible up to 60 times of latest drawn salary, business people 3 times of
their net annual profit. Maximum availability of loan for construction is 50 Lakhs and 10 Lakhs
TAX PLANNER:
Under this deposit scheme depositor can earn interest on money invested and get benefit
of Income Tax up to 1 lakh rupees U/s 80 C of the Income Tax act 1961. Under regular deposit
scheme tax benefit is not there. Minimum deposit period is 5 years. Comparatively tax planner
scheme is very ideal since in other investment U/s 80 C minimum repayment period is 6 years
quarterly. In simple words interest on interest is the main theme of the scheme. The minimum
period is 6 months to 10 years. The rate of interest changes according to the market condition at
FIXED DEPOSITS:
The bank receives fixed deposits from 15 days to 10 years at attractive rate of interest. In
case of emergency loan can be availed at low rate of interest on loan amount. In case of urgency
fixed deposit amount can be encashed before maturity by sacrificing 1 or 2 % on availed rate of
interest.
SOULABHYA DEPOSIT:
Depositor can withdraw deposits in multiples of Rs 1000 without affecting rate of interest
CUMULATIVE DEPOSIT:
This scheme is suitable for those who can not invest in lump sum and are having regular
income. This is ideal because a small monthly savings becomes large sums at the time of
maturity and can be utilized for future plans such as education, marriage etc., the minimum
Foreign currency in USD, GBP and Euros may be deposited. This account can be
opened as a current account only. The account carries no interest with it and there is no minimum
amount for opening the account. Foreign exchange acquired in the form of currency notes,
traveler’s cheques, gifts, honorarium received outside India, gifts received from relatives and
earnings through the export of goods and services can be credited to this account.
NRI SERVICES:
Wide range of Deposit schemes for Non-Resident Indians. It includes Non Resident
Rupee Account (NRE), Foreign Currency Non- Resident (Bank) Scheme (FCNR[B]) and Non
Resident (Ordinary) Account (NRO) with very attractive and competitive rates. Resident Foreign
Senior Citizens above age of 60 are eligible to get 0.5 to 1% extra rate of interest on
deposits than regular deposit holders. This is kind of giving respect to senior citizens by bank.
Karnataka Bank offers a variety of Saving Bank deposit accounts, ideally designed to suit
KBL Kishore - SB Account for the students between the age of 12 years and 18 years.
KBL Tarun - SB Account with Any Branch Banking for the students between the age of 18
years and 25 years.
KBL Salary Privilege - SB Account for salaried Persons with the convenience of Any
Branch Banking.
SB GEN (General) - SB Account with added benefits and Any Branch Banking Facilities.
stipulated minimum balance in SB A/c. The coverage ranges up to 2 lakh for death and Rs
CURRENT ACCOUNT
Karnataka Bank presents Power Packed KBL Current Account with Five options to suit
Features:
Multi Branch Banking facility is a value added service to bank customers taking
'at par' facilities for Savings Bank and Current account with structured schedule of services and
charges. Now the customer can access his account at all branches of the Bank.
Payment Services:
• Multicity Cheques
• Funds Transfer
Collection Services:
•
Any where Cash Deposit- By self only
•
Collection of out station cheques
•
Any where Deposit of cheques for collection
Other Facilities:
• Internet Banking
• Demat Account
The Bank which has 217 ATMs at present is planning to take the number to 300 by the end-
March 2011. In a major step towards ushering in convenience-Banking for the Customers,
Karnataka Bank has entered into ATM sharing arrangement with NPCI-NFS and Cash Tree
ATM network. Even though bank has only 217 ATMs it can give service to its clients around
Debit Cards:
It is issue by KBL where by one can purchase goods at different places and also can
withdraw cash through ATM in India and abroad. For this card they have given the name
Money Plant. It enables the customer to go any where without taking any cash.
Debit card can be used as a credit card with credit facility of maximum limit of Rs.
E-commerce
KBL Debit card has the privilege of e-commerce i.e. purchasing online nationally and
internationally through internet. This helps the card holders to purchase a rail, bus, plane tickets.
Even this card can be used to pay electricity bill, telephone bill, water bill, municipal taxes,
income tax etc., and this saves precious time and avoid long ques of the customers.
NET BANKING
KBL also racing with modern method of banking and of future planning. Net banking is
one step in this regard. Through net banking the customer can transfer money from his account
to another account. Net banking facilitates the customer to transfer funds free of cost or
negligible charges. This also helps in faster transfer with safety of funds. There are little chances
of fraud as in the case of cheques / demand drafts. The important benefit of Net banking is that
fund is transferred instantly hence he saves interest if the receiver has taken loan. Net banking
works 24x7 method. Hence account holder can enjoy the benefit by sitting in the home only.
Bank offers online service to their customers like balance enquiry, requests for Cheque books,
recording stop-payment instructions, balance transfer instructions, account opening and other
forms of traditional banking services. KBL also provides special facility to importers and
exporters by way of Trade Finance Facilities such as Import/ Export Credit facilities, Requests
MOBILE BANKING
Karnataka Bank offers Mobile Banking facility to all its Bank customers. Karnataka
Bank Mobile Banking enables their customers to bank while being on the move.
MCommerce:
Karnataka Bank in association with M/s Pay Mate India Pvt Ltd (Pay mate) offers
customers the convenience of paying for utility bills, mobile recharge, movie tickets, online
purchases, retail shopping and much more at over 15,000 merchants directly from their mobile.
• Mobile payment facility will be an additional facility to their customer for making
• On registration for Mobile Payment solution, the customer will be enabled to make
secured payments directly from their registered mobile phone, authorized by using their
ATM PIN.
• At present the facility will be extended to customers subject to a daily cap of Rs.50,000/-
per customer for transaction involving purchase of goods/services (as per RBI
guidelines).
MONEY TRANSFER
RTGS is a payment system in which both processing and final settlement of fund transfer
instructions take place on real time basis. It is a gross settlement system where fund-transfers are
settled individually, i.e. without netting debits against credits. RTGS effects final settlement
continuously and the settlements are immediate, final and irrevocable. Each Bank branch
participating in the RTGS is identified by a unique Indian Financial System Code (IFSC).
With the advancement of the Technological changes in the Banking industry the RTGS
introduction has become a boom in settling the interbank funds instantaneously. The Customer
can avail this facility and make instantaneous transfer of funds to beneficiary`s account
Karnataka Bank became a member of Real Time Gross Settlement (RTGS) System from 16th
July 2004 and has been settling Inter-Bank transactions in Mumbai since then. Money Quick
services can be accessed by customers which uses RTGS service. This Money Quick facility
The minimum amount for interbank funds transfer facility for customers under Money Quick is
for Above Rs.5 lakh is Rs.50/- per transaction plus service tax. Service Charges for Inward
A strategic arrangement with Western Union Financial Services Inc. of USA facilitates
COMPETITORS INFORMATION
All the banks in India are competitors for the Bank. In banking business every other
bank is the competitor. However Karnataka Bank has to race with the following banks due to the
1) Corporation bank
2) Vijaya Bank
3) Syndicate Bank
4) Canara Bank
The reasons for the above banks to treat them as competitors are as follows
• Since all the above banks originated in Karnataka, majority of them in South Canara
have focused on rural population and Karnataka Bank is not an exception. According
to a survey by Reserve Bank of India banking facility in rural Karnataka is double
• Since all the above banks are nationalized banks and their fund and other
infrastructure facility are more Karnataka Bank has to compete hardly. Moreever
incomparable. Automatically bank has to reach the customers with their new
Advantages
competitors. Service with smile is the motto of the Karnataka Bank. Bank has
• Competitor’s man power strength is huge. Sometimes this makes them to difficult
to run the institution smoothly. It is known fact that there is no cordial relationship
the efficiency of these banks are decreasing. KBL due to limited human man power
in comparison with above banks has the power of taking decision fastly and
rationally.
• Profit ratio to capital is more due to judicious employment of funds. This is not
• Customers have allergy towards nationalized banks due to poor service, lack of
personal touch, lack of politeness. This makes public to opt for private bank, in this
case Karnataka Bank. But in case of KBL since most of the branches are in
Karnataka and managerial staff is recruited from Karnataka language problem does
not arise to customers. Customers can contact the managers, accountants and solve
competitor banks) recruit managerial staff on all India bases. So it is but inevitable
central govt regarding giving loan to priority sectors even though they are risky and
less remunerative. Loan mela can be seen in nationalized banks and results are
known fact.
rationally.
• Loans waive (Sala manna yojane) scheme is only in nationalized banks. Hence
they loose very much of profit. To some extent depositors have lost confidence
working of the organization. The model was developed by Tom Peter and Robert Waterman,
consultants of Mckensy’s and company. The 7’S Model was first published by them in the article
“Structure is not organization” (1980) and in the books “The Art of Japanese Management”
(1981) and “In search of Excellence”. The McKinsey Consulting Firm identified strategy as
Strategy, structure and systems can be considered the "hardware" of success whilst style,
Companies, in which these soft elements are present, are usually more successful at the
implementation of strategy
It prescribes the formal relationship that should exist among various positions and activities. It is
the duty of the top management to design the organisation structure of an organisation. It is one
of the critical tasks. The designing of the super structure involves issues like division of
organisation tasks and allocation of responsibilities between various departments. The hierarchy
of superior-subordinate relationship are defined by the organisation charts which are formal
documents that indicate the chair of command and the titles that have been assigned to the
managers and other personnel’s. Organization charts indicates the employees position in the
The Karnataka Bank has totally 464 branches an on 31st March 2010.Each Branch is headed by a
branch manger who has the responsibility of overall administration of his or her branch.
planned to open 9th regional office in Hyderabad. Each regional office is headed by an assistant
manager. The Regional offices are responsible for controlling the branches coming under them
and also for implementation of decisions taken at the head office of the bank.
For facilitating easy administration, the bank is divided into different departments with each
department headed by its respective departmental head who are responsible for the overall
administration of their department and also to carry out various activities coming under their
departments by taking the help of executives, officers and staff of their departments. The Board
of Directors occupies the top most position followed by the chairman who is next in the
hierarchy. In the next level of organizational structure there are DGM Human relations and
GM, recovery Legal and RMD, And DGM inspection and Audit.
ATM Counter
It has 217 ATM counters and arrangements with NPCI-NFS and Cash Tree ATM gives service
57000 counters.
2) SKILL
Skills refer to the fact that employees have the skills needed to carry out the company’s
strategies. Skillful employees are the assets of the organization. Skills of the employees may be
improved by giving necessary training to them. The Bank believes that skillful employees
Development of human resource is an important factor for the development of any industry.
Banking is not an exception to that. It involves various aspects like continuous training, rewards
by way of promotion, appreciations etc. The bank HRD policy is guided by the Chinese Proverb
“If you are planning for one year, grow rice. If you are planning for twenty years plant trees. If u
are planning for centuries , develop men”.During the year 2009-2010, 2016 officers, 2302 clerks
and 926 sub staff were given training under various aspects to update/improve the knowledge.
The officers of the bank are also deputed at Bankers Training College, Mumbai, National
3) STYLE
Karnataka Bank Ltd. follows a Top to down style of management. It also works in a participative
style. The decisions are taken by the top management concerning matters related to the
organization. The decisions relating to department matters are taken by the departmental heads.
The bank follows a democratic leadership style which allows the employees to take part in the
decision making process. Employees are free to give any ideas, suggestions etc, for the
betterment of the organization. This will be taken with active consultation with the employees.
4) STRATEGY
external environment. The Karnataka Bank, in order to respond to the changes, has formed the
following action plan with specific reference to product, pricing, and people.
Now a day’s rural population of India are coming fastly under net of banking. KBL knowing this
fact focusing its eyes on rural population which has practice since inception.
Branch manager with the approval of higher ups charge different rates of interest, DD
Commission, Incidental Charges keeping in view of its customer’s potentiality and profitability.
5) SYSTEM
System means formal and informal procedures that govern everyday activities. The decision
making systems within the organization can range from management institutions to structured
computer systems and formal and informal procedure that govern the everyday activities of the
Bank.
The System of the Karnataka Bank Includes. The Bank is one of the few banks in the country
which uses Finical Software which in turn helps the bank to serve its customers more efficiently.
Computer System
Training System
Control System
6) STAFF
Staff means that the organization has hired able people trained them well and assigned them to
the right jobs. Staffs are human resources working in an organization. They are responsible for
carrying out various activities of the organization effectively and efficiently. The Karnataka
Bank has well trained, devoted and skilled staffs who work very hard for the success of the bank.
The number of people employed by the bank stood at 5244 as on 31 st March 2010. The Bank
during the 2009-2010 recruited 122 new officers, 244 clerks, and 134 sub staff. Bank has
excellent industrial relation and there is atmosphere of peace and harmony. Hence business per
employee has improved from Rs 6.49 crore as on 31 March 2009 to Rs 7.27 crore as on 31
March 2010.
Officer Sub-
Clerks Total
s Staff
7) SHARED VALUES
Shared values refer to the guiding concepts, values and aspirations that unite an organization in
some common purpose. They guide employees of any organization towards valued behavior. As
a responsible corporate giant KBL has been responding well over the years through certain
initiatives like participation in social, cultural, educational activities. It has donated large sum to
recent flood victims in North Karnataka. Bank has also sponsored events like medical check-up,
de-addiction programs, and mass marriages etc., intended for the benefit of the society at large.
The Karnataka Bank cherish for the following values
Customer Satisfaction
Honesty in work
Social Responsibility
SWOT Analysis
Strengths
The Bank is professionally managed. The bank is one of the few banks in India which
gives importance to technology in order to serve it customers better it is one of the few
The Banks strengths lie in management capabilities, focused strategy, speedy decision
making.
There is a huge expansion of branches and ATM services by the bank during the last few
years.
The Banks provides good infrastructural facility to it’s to its staff and help them to
Weaknesses
The weaknesses of the bank includes that the bank has majority of the branches in the
The most of the work force are grey haired people resulting in more salary less output.
Sanction terms and conditions were not complied with in many cases revealing
Opportunities
The Growth potentials or the opportunities are very huge as the bank had mainly
concentrated on the southern region of the country in its earlier years. It has the opportunity to
expand its business to other parts of the country wherein it can increase its customer base. The
Bank which has 464 branches at present is planning to take the number to 480 and also its own
Threats
As the bank majority business comes from the south any effect to the economy here
would have an adverse effect on the performance of the bank. The Bank is relatively smaller
when compared to other banks like SBI, HDFC and ICICI Bank and some others. Since it’s a
smaller bank when compared to heavy weights like SBI and corporation Bank the bank is always
under treat of being taken over by other banks. Big fish eats small fish is a reality. After LPG big
bosses conquer small. It is true in case of banking industry also. During 2004 – 09 eight small
banks have been merged with bigger ones. Even a KBL was also under threat of taken over by
one of the leading bank. Being small in size KBL has to struggle to maintain liquidity ratio.
Recent trend of customer switched from local / regional banks to multi national banks. They
admire facilities of those banks and compare them with small banks like KBL. Hence KBL has
to vigilant towards these banks movements. Because of speedy decision power KBL has to
surpass the threat possed by them. Government of India’s economic and fiscal policy is to
minimize competition by closing extra branches which are in loss. So government may take
over / nationalise bank in order to adhere to their policy. Now a days it has been observed that
The credit rating agency ICRA Ltd one of the leading credit rating agencies of the country has
accorded ‘A1+’ rating to the bank’s certificate of deposit programme. Bank has earned a net
profit of Rs. 167.12 crore for the year 2009-10. The total deposit of Karnataka Bank registered a
growth of 16.70% over the previous year. While its advances rose by 22.23% over the previous
Table Showing the performance highlights of the Bank for the year 2008-2010
(Rs. In Crore)
The total business turnover of the bank touched Rs. 38166 crore, an increase of 18.73% over
the preceding.
The fixed and other assets of the bank increased from Rs. 625.54 crore to Rs. 801.88 crore
Total Deposits of the bank grew from Rs. 20333.29 crore as on 31.03.2009 to Rs. 23730.65
The total advances grew from Rs. 11810.05 Crore as on 31.03.2009 to Rs. 14435.68 crore
Total Investment of the bank grew from Rs. 8961.49 crore as on 31.03.2009 to Rs. 9992.05
APPROPRIATIONS
The net profit of Rs. 167.12 Crore which along with a sum of Rs. 0.03 Crore brought forward
from the previous year aggregated Rs. 167.15 Crore is appropriated as under.
2009-2010
Appropriation Rs in crore
Reserves
Total 167.15
DIVIDEND:
Keeping in mind the overall performance of the Bank and the positive outlook for the future the
Board of Directors recommended a dividend of 40% of the reporting year. The dividend payout
ratio for the year stands higher at 32.09% as compare to 27.35% in previous year.
The Earning per share and the book value of the share stood at Rs. 13.50 and Rs. 136.80
respectively as on 31st March 2010.
FOREX BUSINESS
During the year, Bank achieved foreign exchange business turnover of Rs. 8605.93 Crore as
against Rs. 7850.65 Crore for the previous year, registering a growth of 9.62%. The advances to
The advances of the bank to priority sectors are shown below in the form of a
table
(Rs. in lakh)
Balance
Number of
outstanding at
Types of Advances accounts at the
the end of the
end of the year
year
a) Agriculture 89091 160916.37
RATIO ANALYSIS
Ratio Analysis is a widely used tool of financial analysis. It can be used to compare the
risk and return relationship of a firm. It is defined as the systematic use of ratios to interpret the
financial statements so that the strengths and weakness of a firm as well as its historical
performance and its current financial conditions can be determined. The term ratio refers to the
numerical or quantitative relationship between two items or variables. The rationale of ratio
analysis lies in the fact that it makes related information comparable.
This ratio is generally expressed as a ratio between Total Advances and Total Deposits. The
ratio is used to determine how much of the total deposits collected from the customers are lent
Total Advances
Total Deposits
(000’s omitted)
Deposits ratio
The total advances in proportion to total deposits have shown a slight decline over the years from
0.6371 in March 2008 to 0.6083 in March 2010. But can also be inferred that there has also been
This ratio is generally expressed as a ratio between Total Investment and Total Deposits. This
ratio is to used to know what proportion of the total deposits are used by the Bank for its
expressed as follows:
Total Investments
Total Deposits
(000’s omitted)
It can be seen in the above table that there has been a steady increase in total advances in
This Ratio indicates the Advances or Loans that were lent by the Bank and which have turned
Net Non-Performing Assets = Opening Balance + Additions during the year – Reductions
Net Advances
NPAs are those advances where the interest and advances have been overdue for more
than 90 days. The above table shows that there has been a steep increase in Non Performing
Assets of Bank from 0.98 as on 31 March 2009 to 1.31 as on 31 March 2010. This shows that
there has been an decrease in the efficiency of the Bank to collect its advances. Bank also written
off 76.13 crore during 09-10 as bad debts.
Return on total assets is the ratio of net profit to total resources. This ratio measures the
Total Assets
(000 Omitted)
Assets
The data reveals that there has been 50% decrease on the return on total assets from 1.2499 as on
Earning per share ratio means Net Profit ratio (after taxes) to subscribed capital. Here is the chart
(000s omitted)
The above data shows that there has been a decline in EPS of the bank from Rs. 19.88 in 2008 to
Rs. 12.47 in 2010. The decrease in the EPS is due to the decrease in net profit and issuance of
LEARNING EXPERIENCE
The in-plant training was for four weeks. I had done my in plant in Karnataka Bank Ltd, Mangalore. As
there was limitation of time, the study is done about the general information regarding the Karnataka
Bank.
In-plant training is really useful to know how class room study is different from practical study. Every
organization before carrying out any task has to perform managerial functions such as planning,
organizing, controlling and directing. Besides usual functions such as wage and salary administration.
I learnt about what is NPA’s in banks, Non Performing Advances means an asset or account of
borrower, which has been classified by a bank or financial institution as sub-standard, doubtful
or loss asset, in accordance with the directions or guidelines relating to asset classification issued
i. Interest and /or installment of principal remain overdue for a period of more than 90 days
in respect of a Loan,
ii. The account remains 'out of order' for a period of more than 90 days, in respect of an
iii. The bill remains overdue for a period of more than 90 days in the case of bills purchased
and discounted,
iv. Interest and/ or installment of principal remains overdue for two harvest seasons but for a
period not exceeding two half years. in the case of an advance granted for agricultural
purpose, and
v. Any amount to be received remains overdue for a period of more than 90 days in respect
of other accounts.
I had learnt about what is an overdue account it means “An account should be treated as 'out of
order' if the outstanding balance remains continuously in excess of the sanctioned limit/ drawing
power. In case where the outstanding balance in the principal operating account is less than the
sanctioned limit/ drawing power, but there are no credits continuously for six months as on the
date of balance sheet or credits are not enough to cover the interest debited during the same
The recovery department of the bank works for the recovery of credit granted to customers.
Recovery department will do the job of getting back the loan granted to the customers. if they
As regards to the legal department it is concerned with providing legal advices to various
Demand Draft
Mail Transfer
Telegraphic Transfer
Pay Order
The Karnataka Bank Ltd. has rendered lots of subsidiary services to its Customer with
reasonable service charges. Since its inception the Bank has attached high priority to customer
service. The main motto of the Bank is "Service with a Smile". This motto added full benefits to
Remittance of funds is major subsidiary service rendered by the Bank. It has twin benefits of
The important Subsidiary services rendered by the 'Karnataka Bank Ltd.' are as follows:
DEMAND DRAFTS
Demand drafts are negotiable instruments drawn by one branch upon another branch of the same
Demand draft books supplied by H.O. shall always be held in joint custody, duly entered in the
stock register. It shall bear the name, DPD code and RBI code of issuing branch at the top. If
these particulars do not appear on the draft pads supplied by H.O. these particulars shall be
TELEGRAPHIC TRANSFER
In Telegraphic Transfer funds, are transferred from one branch to another branch by coded
telegraphic massage for payment to the beneficiary of the TT by the drawee branch.
Telegraphic transfers can be made between branches, which have prior arrangements in this
regard. Branches can have reciprocal arrangements for both outward and inward transfer or for
either inward or outward transfer only. The message should also contain the telegram serial
number pertaining to the receiving branch. The coded message should be transmitted through
telex.
The issuing branch should compare the confirmatory received from the paying branch with the
entry made in the Telegram Inward Register and make a not of receipt of the confirmatory
against the entry in the register. If any discrepancy is noticed, it should be immediately followed
A pay order or a pay slip is an order by a branch of a Bank drawn upon it self to apply a certain
sum of money to or to the order of the payee named therein. Although, the pay order is almost in
the form of cheque since it is drawn on the branch it self, it is not covered by sections 85A and
131 of the Negotiable Instruments Act. The Bank will not therefore get protection in paying a
pay order with a forged endorsement. Similarly, the collecting Bank will also not get protection,
as pay order is not covered by section 131 of the Negotiable Instruments Act.
Payment due from the branch to the local parties / Banks, are also made by issuing pay order.
The commission is to be collected as applicable to local drafts. Where a pay order is issued to
third party at the request of customer, the credit slip meant for DDs / MTs may be used. While
applying a pay order presented through clearing or across the counter for payment or for credit of
Provide different sizes for rental purposes. Precaution while giving a locker on rental basis are as
follows.
1. The locker hirer should have an introduced savings or current account with the bank.
2. The branch asks the hirer to fill in and sign a specimen signature card, with his full name,
4. Lockers cannot be rented out to a minor, as a minor has no contractual capacity to hire a
locker.
Traditionally bankers receive valuables such as negotiable securities jewellery and documents of
title to property for safe custody. In fact the origin of Banking in India is said to lie in the fact
that people going on pilgrimage for long periods used a keep their village or town. Being
equipped with safes and storage rooms for the purpose of their business modern bank is naturally
Multi Branch Banking is a special facility offered by Karnataka Bank that gives the power to
operate SB or Current Account of account holder through several branches in the cities of
Bangalore, Mangalore, Chennai and Mumbai. Any customer who is eligible to open a SB
account or a Current Account can open the privileged account and avail Multi Branch Banking
facility.
The minimum average balance to be maintained is Rs.5000/- for SB account and Rs.10000/- for
Current Account.
The Multi Branch Banking acquires power of geographical flexibility in Banking.
MERCHANT BANKING
The RBI has allowed Indian Banks to undertake many ancillary services. In addition to their
main business of banking Merchant banking is among one of the most important businesses now
An account holder can use ATM card to withdraw cash, make balance enquiries and request
statements, cheque books through ATMs. Money Plant ATMs give "round the clock" access to
account through ATM counters across the country, as well as those ATMs under arrangement
At Karnataka Bank one can now make telephone bill payments through the bank itself. Now
customers need no longer wait long hours in a queue to pay phone bills.
A strategic arrangement with Western Union Financial Services Inc. of USA facilitates quick,
Communication (SWIFT) for expeditious two way transfer of funds and has a wide network of
Karnataka Bank introduced Agricultural credit card known as 'KRISHI CARD' for its former
clientele in the year 1989 it self. It is also now history that the RBI has made KISAN CREDIT
CARDS mandatory for all banks since 1998. It has also extended this facility to the plantation
ANNEXURE
Balance sheet of the last three years
(000s omitted)
Assets
Karnataka Bank
Canara Bank Vijaya Bank
Ltd
Particulars st As on 31 March As on 31st March
st
As on 31 March
2010 2010
2010
Earning Per Share (Rs) 13.50 73.69 11.70
The above table shows that there is a decrese in Earning per Share of KBL
(13.50) compare to Canara Bank (73.69).