Industry profile

Banking Industry has revolutionized the transaction and financial service system worldwide. Through the development in the technology banking services availed to the customers at all times, even after the normal banking hours, on a 24*7 bases. Banking Industry services is nothing but the access of most of the banking related services (such as verification of account details, going with the transaction, etc.) In todays world, progress of online services is available to all customers of concerned bank and can be accessed at any point of time and from anywhere provided the place is equipped with the internet facility. Now-a days, almost all the banks all over the world, especially the multinational ones, provide their customer with Online Banking facility.

Definition Under English common law, a banker is defined as a person who carries on the business of banking which is specified as: Conducting current accounts for his customers Paying cheques drawn on him, and collecting cheques for his customers

Economic function: The economic functions of banks include: 1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customers order. These claims on banks can act as money because they are negotiable and /or repayable on demand, and hence valued at par and effectively transferable by mere

delivery in the case of banknotes, or by drawing a cheque, delivering it to the payee to the bank or cash. 2. Netting and settlements of payments banks act both as collection agent and paying agents for customers and participate in inter-bank clearing and settlement systems to collect, present, be presented with, and pay payment instrument. 3. Credit intermediation-banks borrow and lend back-to-back on their own account as middlemen. 4. Credit quality improvement banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the banks assets and the banks own capital which provides a buffer to absorb losses without defaulting on its own obligation.

Banking channels: Banks offer many different channels to access their banking and other services; A branch, banking centre of financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face services to its customers. ATM is computerized telecommunications device that provides a financial institutions customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs branches, and ATMs are providing a wider range of services to a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customers of the

banks account by feeding in the notes and entering the account number to be credited. Mail is a part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destination around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers. Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity). Online banking is a term used for performing transaction, payments etc.Over the Internet through a bank, credit union or building societys secure Website.

Types of banks: Banks activities can be divided as follows: 1. Retail banking, dealing directly with individuals and small businesses; 2. Business banking, providing services to mid market business; corporate banking, directly at large business entities; 3. Private banking, providing wealth management services to High Net worth Individual and families, and;

4. Investement banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non profits.

Challenges within the banking industry: While banks struggle to keep up with the changes in the regulatory environment, regulators struggle to manage their workload and effectively regulate their banks. The impact of this change is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures across the United States. The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. The management of the banks asset portfolios also remains a challenge in todays economic environment. Loans are a banks primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core.

Profitability of banking industry: A bank generates a profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of the fund the loan interest rate. Historically, profitability from lending activities as been cyclical and defendant on the needs and

strengths of loans customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including services charges on an array of deposits activities and ancillary services (international banking, foreign exchange, insurance, investments, wire transfer, etc.).Lending activities, however, still provide the bulk of a commercial banks income.

Banking in India: Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which are originated the The Bank of Bengal in Calcutta in June 1806. This was one of the three presidency banks, the other to being the Bank of Bombay and Bank of Madras. They merged in 1925 to from the Imperial Bank of India, which, upon Indias independence, became the State Bank of India. For many years presidency banks acted as quasi-central banks, as did their Successors. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After Indias independence in 1947, the Reserve Bank was nationalized and given border powers.

Post- independence: The Government of India initiated measures to play an active role in the economic Life of the nation, and Industrial Policy Resolution adopted by the Government In 1948 envisaged a mixed economy. This resulted into greater involvement of the

state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, Indias central banking authority, was nationalized, and it became an institution owned by the Government of India. 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 may be opened without a license from the RBI, and no two banks could have common directors. Nationalizations: In February 1950, it was decided that all banking companies would be inspected in turn, irrespective of their size and standing and that such inspections would be a regular features of the Reserve Banks supervisory activities. However, despite these provisions, control and regulations, banks in India except the SBI, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19th July, 1969. The GOI issued an ordinance and nationalized 14 largest commercial banks with effect from the midnight of July 19, 1969.
1.

In the context of the wider role assigned to banks following the nationalization, a reorientation of the system of bank inspection was called for. The objectives were the evaluation of the overall performance of each bank in different aspects.

2. The Central Government in consultation with the Reserve Bank constituted the first Board of Directors for each of the nationalized banks on July 18, 1970.

3. After nationalization, the branch licensing policy underwent a major transformation. The Reserve Bank had proposed that application for new offices would be considered after assessing the business potential of the particular locality and whether the area was adequately banked.

Liberalization: In the early 1990s the then Narasimha Rao Government embarked on a policy of Liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as Global Trust Bank (the first of such new generation banks to set up )which later Amalgamated with oriental Bank of Commerce ,UTI Bank, ICICI Bank, HDFC Bank. This move, along with the rapid growth in the economy of India, kick started. Te 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.

Current situation: Currently, banking in India is generally fairly mature in terms of supply, product Range and reach-even though reach in rural India still remains a challenge for the Private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheet Relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the Government. The Stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate- and this has mostly been true.

2. COMPANY PROFILE

a) Background and inspection of the company: Corporation Bank of India, founded in 1906 at the temple town of Udupi, Karnataka is one of the leading public sector banks of India. In 1961, the Bank of Citizen was merged with it and in 1980 the Bank Crop was nationalized. The Corporation Bank India came out with its Initial Public Offer (IPO) in October 1997 and it is the first to publish the results under US GAAP among public sector

banks. In 2004, the Bank Crop became the member of Cash net and shared ATM network managed by Euro net. Nationalized in 1980, Corporation Bank was the forerunner when it came to evolving and adapting to the financial sector reforms. In 1997, it became the second public Sector Bank in the country to enter capital market, the IPO of which was oversubscribed by 13 times. The bank has many firsts to its creditCash Management Services, Gold Banking, m-Commerce, Online approvals for Educational Loans. 100% CBS Compliance and more recently, its pioneering efforts to take the technology to the rural masses in remotest villages through low-cost branchless banking Business Correspondent model. All of which symbolized Banks commitment to customer it provide convenience banking. At Corporation Bank, what motivates the employees is the passion to excel in banking by maintaining hugest standards of service to their customer, backed by innovation products and services which make them one of the leading Public Sector Banks in the country, catering to a wide range of customers- from individuals to corporate clients.

b) Nature of the business carried: Corporation Bank is an organization established in 1906 based on the traditional Indian values of services to community and regarded as one of the well-run Bank in the comity of Public Sector Bank in the country. The Bank has a unique history of 97 years of successful Banking and it stood the test of time by growing steadily offering vast varied and versatile services with a personal touch. Today, its good customer services ,pre-eminent track record in House Keeping, adherence to prudential

Accounting norms, consistent profitability and adoption of modern technology for betterment of customer service have earned the Bank place of pride in the Banking Community. The Bank has been richly endowed with a relatively young, dynamic and efficient manpower, which the key factor of the Banks success. Excellence in performance and uniqueness in customer service Form the central core of the Banks organizational culture.

C) Vision, Mission and Quality Policy: Vision: To excel in banking by maintaining highest standards of service to our customers, backed by innovative products and services which makes us one of the leading public Sector Banks in the country, catering to a wide range of customers-from individuals to corporate clients.

Mission:

Better quality in every service.

Tell people what kind of service they can expect. Make sure people know what to do if something goes wrong. To become a provider of World-Class financial services. To meet customer expectation through Innovation and Technological Initiatives. To emerge as a role model with distinct cultural identity, ethical values and good corporate Governance.

 To enhance Shareholders Wealth by sustained, profitable and financially sound growth with prudent risk management systems. To fulfill national and social obligation as a responsible Corporate Citizen. To create an environment intellectually satisfying and professionally rewarding to the employees.

Quality Policy:
1.

Policy for grievance redressal: This policy document aims at minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to prompt redressal of customer complaints and grievances.

2. Internal Machinery to handle customer complaints/ grievances: the Board would be responsible for the issues such as, the treatment of death of a depositor for operations of his account, the product approval process, the annual survey of depositor satisfaction and the tri-enniel audit of such services. 3. Resolution for grievances: Branch Manager is responsible for the resolution of complaints / grievances in respect of customers service by the branch. 4. Interaction with customers: The bank recognizes the customers expectation / requirement/ grievances can be better appreciated through personal interaction with customers by banks staff. 5. Sensitizing operating staff on handling complaints: Bank is dealing with people and hence difference of opinion and areas of friction can arise. With an open mind and a smile on

the face, the Bank staff should be able to win the customers confidence. d) Product & Services Profile: The important services provided by the bank can be classified as: Personal Services, Investor Services, Corporate Services and NRI Services etc.

Personal Services:
Corp New Gen Students SB account: Only students who have completed 10 years of age and are pursuing regular courses can open these accounts. Existing regular SB accounts of students already opened with the Bank can also be converted to this new account. At the time of opening the account, the student has to furnish a copy of student ID card issued by the school/college.

Corp Pragathi Account: The account can be opened with an initial deposit of Rs. 10/and will provide the account holder the basic banking facilities. No penalty will be levied even if the balance in the account drops below Rs.10/-.

Corp Compassion-Savings Bank: Open an SB Account with corp Bank. The Bank will donate Rs. 10 to the underprivileged for every SB account opened with Bank for a period of 100 days starting from 1st July to 8th October, 2008.

Term Deposits:
Kshemanidhi Cash Certificate KCC: KCC can be opened for a period ranging from 6 months to 10 years. It is Money multiplier deposit where the deposit amount grows rapidly as interest is compound quarterly. Money Flex: The scheme allows you to withdraw your money whenever you please. The deposit can be made for a period ranging from 6 to 120 months. Fixed Deposits: It is the return deposit scheme and interest can be paid at regular made for periods ranging from 15 days to 10 years. Interval viz. monthly, half yearly or yearly.

Corporate Services:
Cash management: Every organization has receivables to collect from its dealers/depots/ customers. Every revenue collected by the organization gets paid in one Form the other. A collection and payment service (CAPS) provides customized solution to corporate needs in liquidity management. Corp Any Time Premium: Corporation Bank has introduced the Corp Any Time Premium facility to pay LIC premium through its ATM network spread throughout the country for its customers, in a tie-up with Life Insurance Corporation of India, its strategic partner. Corp e- cheque:

Corporation Bank launches Corp-e-cheque, facilitating remittance of funds to pre-approved beneficiaries across banks within 48 hours. SME Liquid Plus Scheme: It is introduced to meet the liquidity mis-matched and expenses incurred on account of Research and Development, Product Development, Marketing and Branding, Executing unexpected bulk orders, Stocking the seasonally available raw materials etc.

E-Payment of Direct Taxes:

Features and procedures:
1.

Corp net user involves NSDL Home Page. http://tin.nsdl.com through his Browser.

2. Corp net user clicks on the pay Tax Online link in Home Page of NSDL. 3. User is displayed option to select one of the types of challan among challan 280,281,282 and 283. User selects one of them and clicks submit. 4. User is displayed detail challan screen to enter all challan details except amount. 5. User fills in the required challan details including the bank selection (Corporation Bank) and click on Proceed. 6. All details entered by the user are displayed for his confirmation (submit to the Bank, Edit) after verification of details the server.

Investor Services:

Corporation Bank has set up an Investor Services Department as its Corporate Office at Mangalore. For any assistance regarding dematerialization of shares , share transfer, transmission, change of address, non-receipt of dividend duplicate / missing share certificate and other matters. M/s Karvy Computer share Private Limited, is the share Transfer Agent of the Bank , to whom communication regarding change of addresses ,change in Bank Mandate, transfer of shares, Mandate for ECS etc. could be addressed. The Bank has entered into an agreement with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as an Issuer company for dematerialization of banks shares. Corporation Banks shares are listed on Bombay Stock Exchange Ltd and the National Stock Exchange Ltd. (NSE) and are permitted for trading on stock exchanges in India. The Bank Constituted a committee of the board named as Investors Grievances committee to specifically look in to the redressal of investor grievances. The Committee is chaired by Dr. C. R.Kamath, Non Executive Director, elected by the shareholders.

NRI Services: Corporation Bank offers the entire range of personalized NRI services with a touch of professional expertise laced with an innovative approach and the services are specifically designed to suit the special needs of Non- residents. High level of customers satisfaction is ensured through computerized operations of over 240 branches including extension counters and inter-connectivity between major centers through satellite based communication

system. An elaborate network of branches in NRI belts like Kerala, Goa, Dakshina Kannada, Gujarat, Mumbai, New Delhi etc.

Hi Tech Services:
a.

Corp net-Internet Banking: Corporation Bank, a leading Public Sector Bank in the country lunches Internet Banking for the corporate customer of its Collection and Payment Services [CAPS] i.e., Cash Management Services . The Net Banking Facility was launched by Shri Keshub Mahindra, Chairman, Mahindra and Mahindra ltd. At an impressive function held in Mumbai on 1st January, 2001. In the niche area of Collection And Payment Services , Corporation Bank has leadership presence in the country and A customer, can shop at Internet , do Tele Shopping and purchase at over 3000 merchant establishment across categories and interface which include airlines, retailers etc. On completion of the purchase, the customer will receive an SMS to which he reply to authorize the payment. The customer will also receive a confirmatory SMS after the payment. Caters exclusively to the Cash Management requirements of the corporate. The Bank, within its network, has ten specialized CAPS Branches which are fully automated and currently service over 900 companies.

b.

Mobile Pay: Corporation Bank has became the first nationalized Bank in country to lunch SMS based- Pay by Mobile Service, in association with Pay Mate India Pvt Ltd.All the Corp Banks customers who have been issued Corp Bank ATM cards and Corp Convenience Debit cards can use this Pay by Mobile Services. To start up with the facility, the customer has to

register at any of the Corp bank ATMs of the Bank. The user friendly menu at the ATM will guide the customer to fill in the details along with the mobile number of the customer. On successful registration, the customer will receive a 4 digit PIN though an SMS on his mobile. The PIN number received will be used to authenticate all the future transaction. A customer, now, can stop at Internet, do Tele Shopping and purchase at over 3000 merchant establishments across categories and interface which include airlines, restaurants, retailers etc. On completion of the purchase, the customer will receive an SMS to which he has to reply to authorize the payment. The customer will also receive a confirmatory SMS after the payment.
c.

SMS Banking Facility: Corporation Bank is pleased to inform the introduction of SMS Banking facility for our customers. With the introduction of this facility you can now access your bank account and carry out a variety of banking transaction through your mobile. PUSH based SMS services shall enable the Bank to send information to the customers mobile on the occurrence of certain transaction in the account .PU LL based SMS services allow the customers to request for various information relating to their account besides giving instruction for certain facilities.

d.

Term Finance:

The Bank extends term Loans capital investments being made by the clients on account of expansion of existing enterprise or for establishment of a new enterprise .Term loans are also extended to clients for implementation purposes, to meet nonrecurring expenditure for investments in personal segment such as housing , vehicle purchases, etc.

e) Area of Operation: The corporation bank operates in the whole of India. Presently, the Bank has a network of 1002 Branches, 15 Extension Counters and 19 Currency chests covering 24 states and 2 union territories of the country. The Bank has 1000 online interconnected ATMs spread across the country. The Bank has its presence in 98 centers out of 100 top centers in the country. It has a specialized Branch Network of 157 Branches, which are designed to cater exclusively to the banking needs of different segments like Personal segment, Trade and Commercial Segment, Small Scale Industry, Large and Medium Industrial Units, Non Resident Indians, Housing Sector and Export and Import Segment.

f) Ownership Pattern:

Category and Holdings % Foreign Holdings 11.14 Govt./ Financial Institutions 28.78 Corporate Bodies (not covered above) 0.47 Directors and their Relatives 57.17 Other including Indian Public 2.44

g) Competitors Information: All the companies in the banking industry are the competitors of Corporation Bank. The following banks can be considered as the main competitors: State Bank of India: The Bank has a network of 66 offices/ branches in 29 countries spanning all time zones. The SBIs international presence is supplemented by a group of Overseas and NRI branches in India and correspondent links with over 522 leading banks of the world.SBI s offshore joint ventures and subsidiaries enhance is global stature. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience.

ICICI Bank: ICICI was formed 1955 at the initiative of the World Bank, the Government of India and representative of Indian industry. The principal objective was to create a development financial institution for providing medium- term and long-term project financing to Indian business. The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in 18 countries, ICICI Bank offers a wide range of banking products in the areas of investments banking, life and non life insurance, venture capital and asset management. AXIS Bank: AXIS Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed

new private banks to be established. The Banks Registered Office is Ahmadabad and its Central Office is located at Mumbai. Presently, the Bank has a very wide network of more than 701 branche offices and Extension Counters. The Bank has a network of over 2854 ATMs providing 24 hours a day banking convenience to its customers. Those are one of the largest ATM network in the country. HDFC Bank: The Housing Development Finance Corporation Limited (HDFC) was incorporated in August 1994, with its registered office in Mumbai, India. The Banks target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small and midsized corporate and agri-based business

es. The products of the bank are backed by world class services delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, phone banking, net Banking and mobile Banking.

Syndicate Bank: Syndicate Bank was established in 1925 in Udupi. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid rich dividends. The bank is well equipped to meet the challenges of the 21st century in the areas of information technology, knowledge and competition. The Bank has launched an ambitious technology plan called Centralized Banking Solution (CBS) whereby 500 of our strategic branches with their ATMs are networked nationwide over a 4 years period. Branch network expanded to all states and UTs except Manipur and Daman Diu. Vijaya Bank:

Vijaya Bank has network of 1053 branches,47 Extension Counters and 296 ATMs.[As at 13.06.2008] It has entered several new areas such as credit card, merchant banking , hire purchase and leasing and electronic remittance services. 747- Branches / offices are under RTGs and 746n- Branches/offices are under NEFT.Vijaya Bank is one among the few banks in the country to take up principal membership of VISA International and Master Card International. The driving force behind Vijaya Banks every initiative has been its 11528 strong Dedicated workforce. ABN AMRO: With assets over US $504 billion and an AA credit rating, ABN AMRO Bank ranks among the top 10 banks in the world in size and strength. Our international network companies 3,568 branches and offices in over 320 cities and 76 countries and territories, with over 100,000 highly qualified staff. HSBC Bank: HSBC Bank is the largest bank in Hong Kong and second largest group in the world after. Before moving its headquarter to London in 1990, it was headquartered in Hong Kong. HSBC India is having branches in Ahmadabad, Bangalore , Chennai, Coimbatore, Gurgon , Hyderabad ,Jaipur ,Kochi, Kolkata ,Ludhiana , Mumbai ,New Delhi ,Noida, Pune , Thane ,Trivandrum and of ATMs , integrated call centre and also HSBC e-banking .

h) Infrastructural Facilities: The Bank has a network of 1001 Branches, 15 Extension counters and 19 Currency Chests covering 24 state and 2 union territories of the country. The Bank has 1000 online interconnected ATMs spread across the country. It is a fast expanding national bank with over 1800 service outlets across the nation in 23 state and 2 union territories. Corporation Bank is

present in almost all centers in the country. They have a large presence in major metros in India. Delhi over 150 outlets Mumbai over 140 outlets Bangalore over 50 outlets Hyderabad over 40 outlets All the currency chests of the bank were provided with sophisticated currency note sorting machines, which will help the bank in efficient cash management. The core Banking Solution [CBS] has been implemented in more than 87% of the business of the Bank. Wide Area Network (WAN) connecting all the computerized branches Being a prerequisite for Core Banking to be operational, the project is scheduled To run parallel to the core Banking project. WAN is used for mail messaging, transmission of swift messages, straight through processing of RTGs transaction, accessing eCircular etc. A ll the functional units of the Bank are linked through E-Mail network. The Bank has migrated the mailing solution from the present MS Exchange 2003 and centralizing the exchange servers at two locations viz. Mangalore and Bangalore. i) Achievements and Awards:

One of the Best 200 companies world over outside the US having a turnover under a billion US$- Forbes Global, Hongkong, issue dated 27th October, 2003. Indias Best Public Sector Bank-Business Today KPMG Survey dated 7th December, 2003.

Indias Strongest and Asias Second Strongest The Asian Banker, Singapore dated 15th December, 2003. Indias Best Public Sector Bank-Outlook Money, 15th March, 2004.

One among the Best 200/100 companies in Asia/Pacific and Europe having turnover under a billion US$ -Forbes, Global, Hong Kong dated 1st November, 2004. One among Indias Best Public Sector Banks Business Today, 26th February, 2006.

Gem and jewellaryExports Promotion Council Award successively for 5 years from 1981 to 1985. Shiromani Award 1992 for Banking from Union Minister for Commerce. Best Bank Award for Excellence in Banking Technology from Institute for Development and Research in Banking Technology (IDRBT), Hyderabad (2001). Best Bank Award for Innovative Usage and Application on INFINITE (Indian Financial Network) from Institute for Development and Research in Banking Technology (IDRBT), Hyderabad. Best Bank Award for Delivery Channels from Institute for Development and Research in Banking Technology (IDRBT), Hyderabad (2003). Bank has been rated NO. 1 in Mid-size Banks category in Indias Best Banks 2009 Ranking survey conducted by Business world and Price Waterhouse cooper.

 During 2008, the Bank received the Gold Trophy of the SCOPE Meritorious Award for Best Managed Bank /Financial Institution /Insurance Company. These awards were instituted for the time by Standing Conference of Public Enterprise, to encourage, recognize and reward the excellence achieved. The Bank was also awarded the SKOCH Challenger Award 2008 for customer Relationship Management. The Business today- KPMG study has ranked our bank as Best Bank in quality of assets category. The Bank has bagged the Runner-up award for Best Online and Multichannel Banking Term in the Banking Technology Award 2008 instituted by Indian Banks Association [IBA] and Trade Fairs and Conference International[TFCI].

Major Recognition:

One of the Best 200 companies world over outside the US having a turnover under a billion US$-Forbes Global, Hong Kong, issue dated27th October, 2003. Indians Best Public Sector Bank. Business Today- KPMG Survey dated 7th December, 2003.

Indias strongest and Asias Second Strongest. The Asian Banker, Singapore dated 15th December 2003.

Indias Best Public Sector Bank outlook Money, 15th March 2004.

One among the Best 200/100 companies in Asia /Pacific and Europe having turnover under a billion US$ -Forbes Global, Hong Kong dated 1st November 2004. One among Indians Best Public Sector Banks Business Today 26th February 2006.

j) Work Flow Model

Customer

Savings A/C Current A/C Lockers Demand Draft ATM/Debit

Account Opening

Other Branches

Operations

Other Banks

Transaction

Account Closing

Cash Internet
Customer

Collections Forex

Satisfaction

Document Control, Record control, Security Management, KPI Monitoring, Internal Audit, Mgt Review

k) Future growth and prospectus: During the last couple years, global growth has been above the forecast in almost every region stimulated by strong monetary and fiscal measures. The domestic economic outlook is also bright with the real GDP growth rate surpassing 8% in the current year. Industrial performance also improved considerably. Through the inflation rate is high it is showing the signs peaking out. RBI has suitable changed the countrys regulation framework from tome to time to support Indian financial institution to withstand competitive pressures placed on them by increasing globalization. Governments stake in some PSB is reduced and as a consequence public equity in these PSBs is enlarged. This led to greater responsibility on the bank management since the level of accountability has increased. Pressures of performance and profitability will keep them on their time as the public shareholders expect good performance along with good returns on their equity. The Corporation Bank has already implemented internationally followed prudential accounting norms for classification of assets, income recognition and loan loss provisioning. The scope of disclosure and transparency has also been raised in accordance with international practices. It has complied with almost all the Core Principles of Effective Banking Supervision of the Basel Committee. All the ensure a bright future to the bank.

4. MICKINSEYS 7S FREMEWORK

Introduction: The 7-s model is better known as McKenzies 7s. This is because the two person who developed this model, Tom Peter and Robert waterman, have been consultants at McKenzies &co at that time they published their 7s model in their article structure is not organization(1982) and in their books the Art of Japanese Management(1981) and In search of Excellence(1982). They developed the 7s model to help manager address the difficulty of organizational changes. The model show that organizational immune system and the many interconnected variable involved make change complex, and that an effective changes must address many of these issue simultaneously. According to McKinsey a company strategy is only one of the seven elements of in the successful Business practices. There are 7s elements in this framework such as structure, skill, style, strategy, staff and shared value. The first three elements Strategies, System and Structures are considered as the hardware of the business. The next four elements Style, Staff, Skill and Shared values are called as the software of successes. Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements are feasible and easy to identify. They can be found in strategy statements,

corporate plans, organizational charts and other documentations. The soft elements are related to the administrative and operational aspects of the firms.

Elements of McKinseys 7s models 1. Structure It prescribes the formal relationship that should exist among various positions and activities. It is the duty of the top management to design the organization structure of an organization. It is one of the critical tasks. The designing of the super structure involves issues like division of organization tasks and allocation of responsibilities between various departments. The hierarchy of superior subordinate relationship is defined by the organization charts which are formal documents that indicate the chain of command and

the titles that have been assigned to the managers and other personnels. 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 and General Manager. The board comprises of 12 directors out of which, 9 are non-executive and among themselves 7 are independent directors.

2. Skill Skills refer to the fact that employees have the skills needed to carry out the companys 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 contribute to the success of the Bank. In keeping with organizational growth during the fiscal year, 809 members Of staff were promoted to the higher cadre. Competencies of workforce improve the competitiveness of the organization. Bank has trained 8,153 employees to improve skills and behavioral aspects.

3. Style: It is one of the seven levers which the top management can use to bring about change in the organization. According to MC Kinseys Framework, Becomes evident through the patterns of action taken by the members of the top management team over a period of time.

Corporation Bank 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 departmental heads. Employees are free to give any ideas, suggestions etc, for the betterment of the organization.

4. Strategy Strategy means action a company plans in response to or in anticipation of challenges in the external environment. Corporation bank has planned to offer different debit card variants to cater to the niche segments. Also, the bank proposed to diversify its prepaid card portfolio to meet varied needs of its customers. In the Endeavour to offer unparallel convenience to its customers, the bank shall continue to launch innovative products and services.

5. System System means formal and informal procedures that govern everyday activities. The Bank has well defined control system in all critical areas of operation i.e. corporate credit, Forex , treasury, etc, which are documented and reviewed from time to time. The bank has also a full-fledged internal audit and inspection mechanism through which all branches are complaints, Income leakages etc. the bank has initiated the systems like core banking point of service (pos) terminals, net banking, SMS banking, mobile payment facility etc for the convenience of the customers.

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. Business growth and branch network expansion necessitated fresh recruitment to the extent of 1205 employees during the year. The total staff strength stood at 13,143 on 31st march 2010 compared to 12465 in the previous year. Business per Employee of the Bank was higher at Rs. 12.56 crore compared to Rs. 10.24 crore in June 09. The Net profit per employee of the Bank was higher at Rs. 10.76 lakhs compared to Rs. 8.96 lakhs in June 09. 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. The corporation Bank goes for the following values Customer Satisfaction Quick and better Service Loyal to the Customers Honest in work

5. SWOT ANALYSIS

Strengths: The Bank has implemented Core Banking Solution [CBS] at branches and 192 branches/ units were brought under CBS during the current financial year, thus taking the total number of branches/ units under CBS at 558, covering 87% of business, thus covering 1005 of Banks overall Business. With a view to take banking services to remotest locations, the Bank has in pioneering efforts by launching a branchless banking project. Under this, the Bank uses modern, yet cost effective ICT technologies and services of business correspondents. The people can conduct simple transaction related to savings and loans without visiting the bank branch. There are 105 such locations functioning spread over 5 southern states. All the computerized branches including ECs and ATMs Centers are subjected to Information Systems Audit once in 12 month. Audit of branches migrated to core banking are take up at Core Centre Bangalore and at IT Division, Head Office, Mangalore. During the year 2005-06, Information Systems Auditor 303 branches were entrusted to outsourced firms of chartered accountants. The Bank has a well qualified and experienced team of Law Officers at the Head Office and Zonal offices, which handles matters pertaining to drafting and approval of agreement and memorandum of understanding on behalf of Bank ,preparation of various user manuals, scrutiny of title to immovable properties taken as security, legality involved in the invocation of bank guarantee and various claims and complaints against the Bank and drafting of pleading before courts. The personnel of the Legal Services Division also participate in seminars, meetings organized by the RBI, IBA and others, discussing varied legal matters affecting the banking sector.

Honesty, integrity and efficiency among the staff are the foundation of any organization for its all-round developments. Every organization works on the philosophy of mutual trust and confidence, more so a banking organization. In an organizational set up the roles and responsibilities of each functional division are well defined and documented for better clarity and effectiveness. The Vigilance machinery plays the role of a watchdog so as to ensure that the laid down systems and procedures are not tampered with for any personal gain or benefits. The bank believes in the principles of natural justice and punishing the guilty. Wherever instances of serious violation in the systems and procedures are reported, an investigation is ordered and punitive action is taken. To avoid such action, as a pro-active measure, the Vigilance Department conducts preventive visits and reports on the deviations observed. It also suggests how such violation can be avoided with the collective effort of all.

Weaknesses: The absence of certain strength may be viewed as weaknesses. The weaknesses of Corporation Bank are: The Bank has a centralized operation as a public sector bank. The branches do not have all the authorities. The branches are to be depend the Zonal offices approval for certain deal like heavy amount of loan etc. As do not have all the authorities, for certain transaction it has to depend the zonal offices for approval. This process will take a long time as compared to the new generation banks. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. The Corporation

Bank, as a public sector bank, has to work according to the rules and regulations of the Government.

Opportunities:
Merger and acquisition may pave consolidation among Indian Banks to position them to become universal banks and enlarge its size in line with International Standards. Growth in economy demands more credit which in turn increased the operational income of banks. Integration to global markets expands the position of overseas banking.

Threats:
The Indian economy has shown sustained growth over the last few years with GDP growing at 8.5% in fiscal 2004, 4% in fiscal 2003 and 5.8% in fiscal 2002. During the 2004-05, industrial and agricultural production in India has been variable. Any slowdown in the Indian economy or volatility in global commodity prices, in particular oil and steel prices could adversely affect the banks borrowers and contractual counter parties. Any slowdown in retail loan segments because of slowdown in growth of sectors like Housing and automobiles may have adverse impact on performance. As an emerging market, the Indian system face risks of nature, not typically faced in developed countries. A vagary of monsoon often affects the agriculture sector in India. Banks in India are subjects to detailed supervision and regulation by Regulation Authority viz. Reserve Bank of India. In addition, banks are subject generally to changes in law as well as to change in regulation and Governments policies and accounting principles.

Effectiveness of Recovery Management, Asset Liability Management and Risk Management may have its own impact on performance. Intensive competition, particularly from private sector players and foreign banks are likely to increase further as a result further de regulation and autonomy to public Sector Banks in the financial sector.

Analysis of Financial statement: Summary of latest annual reports: The Bank has put in place a well articulated framework of 3Ps (people, process, products) to identify and execute new initiatives to accelerate business growth on sound and sustainable lines. This framework is also designed to improve customer engagement at all customer touch points. Innovation is actively encouraged. People initiatives include new programmes through counselors etc. process initiatives include centralization of back office function, separation of credit marketing and approved process and feed forward MIS to Branches. New products like Branchless Banking are introduced to implement financial inclusion strategies. The Bank is actively chalking out strategies to take the Bank to higher growth trajectory.

Corporation Bank net profit rises 14.04% in the September 2011 quarter

Corporation Bank net profit rises 14.04% in the September 2011 quarter

Capital Market / 14:26 , Oct 31, 2011

Operating income rises 44.51% to Rs. 3090.74 crore

Net profit of Corporation Bank rose 14.04% to Rs. 401.11 crore in the quarter ended September 2011 as against Rs. 351.73 crore during the previous quarter ended September 2010. Total operating income rose 44.51% to Rs. 3090.74 crore in the quarter ended September 2011 as against Rs. 2138.72 crore during the previous quarter ended September 2010 .

Particular s Sales OPM % PBDT PBT NP

Quarter Ended Sep. 2011 Sep. 2010 % Var. 3090.74 79.07 495.38 495.38 401.11 2138.72 78.23 475.85 475.85 351.73 45 1 4 4 14

Net Interest Income and Margin Net interest income for the fourth quarter of 2011 increased $0.7 million, or 0.9 percent, compared to the same period in 2010. Average earning assets increased by $932.8 million, or 8.8 percent, compared to the fourth quarter of 2010. This increase was due to a $540.4 million, or 10.0 percent, increase in average total securities, including trading securities and a $269.3 million, or 5.8 percent, increase in average loans. Net interest margin decreased 21 basis points to 2.91 percent for the three months ended December 31, 2011 compared to the same quarter in 2010.

Non interest Income and Expense Noninterest income increased $3.0 million, or 3.2 percent, for the three months ended December 31, 2011 compared to the same period in 2010. This increase is primarily attributed to increased trust and securities processing income of $4.8 million, or 10.3 percent, for the three months ended December 31, 2011 compared to the same period in 2010. The increase in trust and securities processing income was primarily due to a $1.2 million, or 8.6 percent, increase in advisory fee income from the Scout Funds; a $0.7 million, or 4.1 percent, increase in fund administration and custody services; and a $2.7 million, or 50.0 percent, increase in fees related to institutional and personal investment management services. Service charges on deposits increased $1.3 million, or 7.3 percent, compared to the fourth quarter of 2010. These increases are offset by

decreased trading and investment banking income of $1.5 million, or 17.0 percent, and decreased bankcard fees of $1.4 million, or 9.5 percent, compared to the three months ended December 31, 2010. Noninterest expense increased $3.7 million, or 2.7 percent, for the three months ended December 31, 2011 compared to the same period in 2010. This increase is driven by higher salary and benefits expense of $1.7 million, or 2.3 percent, and higher other expenses of $3.6 million, or 63.4 percent. Of the increase in salary and benefits expense, approximately $0.6 million, or 36.0 percent, is related to salary and benefits from acquisitions. These increases were offset by decreases in bankcard expense of $1.3 million, or 27.6 percent, regulatory fees of $1.3 million, or 38.0 percent, and equipment expense of $1.1 million, or 9.7 percent, compared to the three months ended December 31, 2010. Our fee businesses continued to be a primary driver of our strong fourth quarter results and year over year earnings growth. Our acquisitions have performed well and contributed strongly to our growth in fee income, said Peter de Silva, President and Chief Operating Officer. For the full year, noninterest income increased $54.0 million, or 15.0 percent, as compared to the same period in 2010. Due to uncertainties in Europe, flows slowed considerably in our flagship international product causing the Scout Funds to experience net outflows of $2.0 million for the quarter. For the full year, the Scout Funds enjoyed over $1 billion in net flows reflecting our strong long-term product performance and distribution capabilities. We closed out the year-end corporate benefits open enrollment season with strong growth in FSA and HSA accounts and balances. We ended the year with almost 2.5 million FSA and HSA accounts and nearly $300 million in deposits. We are pleased with the growth of our various fee businesses and are looking for our fee businesses to be a key driver of growth again in 2012.

Balance Sheet of Corporation Bank

Learning experience:
The training in the head office provided an opportunity to study the various functions of the head office. I also studied the functions of the limitations of the Corporation Bank. It also provided an opportunity to study the various Departments as:

Financial management and accounts Marketing Branch expansion and support services Research and Development Human Resources and Development I also got to know about the committees of the bank as under: 1. Management Committee 2. Audit Committee
3.

Departmental Committee

4. Investor Grievance Committee 5. Information Technology Committee 6. Risk Management Committee 7. Committee to monitor large value frauds 8. Share Transfer Committee 9. Customer Service Committee

Further I studied the various services offered by the bank like Personal Services, Investor services, Corporate Services, NRI Services, and Hi-Tech Services etc.During the course of the study. Finally I gained the knowledge regarding the practical functioning of the banking system.

Chapter -1

General Introduction

PART-B General Introduction

Statement of the problem: CREDIT RISK MANAGEMENT
The project study on Credit Risk Management in corporation bank with special reference to bank credit risk management tools including:

1. Credit Risk& Rating Migration 2. Stress testing

Objectives of the study:

To analyze cause for credit risk in the bank

To study the credit risk management in respect to commercial field of bank To study the measure taken by the commercial limited to contain the problem of credit risk management To study the effects of credit risk on financial health of bank To study the banking functions, operations and services etc To study the overall risk of lending To determine how credit risk management techniques ease in credit risk strategy and with regard to controlling of risk.

Scope of the study:

The study has been done in CORPORATION bank, Head office, Mangalore, to understand analysis and interpret working and functional act of the bank, and also a detailed study on Credit Risk Management has been done. The study includes the interaction of bank system with its customer The introduction, establishment, service and brief history of the bank

The basis understanding of the subject with detail study about the credit risk management Analyze credit risk and cause and effects for the bank

Methodology
The success of any project and the conclusions depends on the data collected. And collected data should be analyzed during the course of study. The study depends on 2 kinds of data, they are 1. Primary data 2. Secondary data

Primary data:
Primary data collection was obtained from Corporation bank, head office Mangalore by directly communicating and discussing with project gain Mr. Mohan Bhat. The topic of Credit Risk Management was conducted through a detail study relating to Credit Risk Rating and Stress testing.

Secondary data:
Secondary data is collected through various magazines, textbook, manuals, related to the subject. And also from the annual report of the bank. This study gives more emphasis on secondary data.

Limitations of the study

Credit risk management involves sensitive issue relating to bank which makes availability of all information with respect to this field is difficult. Because of limited resources and confidentiality of the documents the study of Credit Risk

Management has been limited to theory. And it is very difficult to state exact reasons for variations of figures from year to year.

Chapter- 11

Theoretical Concepts of Credit Risk Mgt.

Credit Risk Management

The goal or credit risk management is to maximize a banks risk adjusted return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in the individual

credits or transactions. The effective management of credit is a critical component of a comprehensive approach to risk management and essential to the long-term success of any bank. The Basel Committee on banking Supervisor, after obtaining comments from central banks, supervisors, banking association and host of interested parties issued in September 2000 comprehensive guidelines on sound principal for Management of credit Risk. The guideline specifically the following areas; Establishing an appropriate credit risk environment Operating under a sound credit granting process Maintaining an appropriate credit administration, measurement and monitoring process; and Ensuring adequate control over credit risk Banks must operate within a sound and well-defined criteria for new credits as well as the expansion of existing credits. Credits should be extended within the target markets and lending strategy of the institution. Before allowing a credit facility, the bank must make an assessment of risk profile of the customer/ transaction. This may include: Credit assessment of the borrowers industry, and macro economic factors. The purpose of credit and source of repayment. The track record/ repayment history of borrower. Assess/evaluate the repayment capacity of the borrower The proposed terms and conditions and covenants Adequacy and enforceability of collaterals

 Approval from appropriate authority