Sector Name

Banking

Group Name & Grades

A4

Acknowledgment
 Index

1. Macro analysis
1.1 Sector history
1.2 Current trends and technologies
1.3 Market structure
1.4 Government policies
1.5 Recent M and A’s
1.6 Related terms to the sector

2. Micro analysis
2.1 Company history and corporations associated with it
2.2 Current position of company
2.3 SWOT
2.4 Financial analysis
2.5 4 P’s of marketing
2.6 HR policies and organization structure
2.7 Differentiation strategy
2.8 CSR initiative taken by company
2.9 Awards and significant event
2.10 Career opportunity profile
2.11 Conclusion and suggestion
2.12 Bibliography
 Macro Analysis:-

Sector History-

Banking is primarily the business of dealing in money and instruments of credit. Banks were
traditionally differentiated from other financial institutions by their principal functions of
accepting deposits—subject to withdrawal or transfer by check—and of making loans.

Surely the Government is in

control of the country and its
supply of money? Surely money is
only a symbolic token to facilitate
the production, exchange and
distribution of goods and
services? Not so, say the Third
Positionists, who reject both
   Capitalism and Communism...

A $HORT HISTOR¥ OF
£ANKING

In the old days there was no paper money. The accepted token of exchange was precious metal
minted into coins by the Church and the Crown. Because there was only a limited amount of
gold and silver available, the economic life of the nation had a certain regularity.
An even greater restriction existed throughout Christendom. This was a prohibition against
usury, or charging interest. The Church held it to be a grave sin and the code was upheld by the
civil powers. There were harsh penalties for those who broke the law.

THE SITUATION TODAY

Nowadays banking has become extremely sophisticated but the hidden and usurious mechanism
behind it remains the same. After a big enquiry, hushed up as much as possible, the Bank of
England was nationalised in 1946. In theory control of the Bank of England should then have
passed from a group of private individuals to the British Government, but this is still not the
case. Nationalization only added a thin veneer of respectability.

The British Treasury, in conjunction with the Bank of England’s advisers to the Government,
determines how much paper money and coin will be issued each year. This has to accord with
the wealth of the nation for that year. But because banknotes and coins only account for a tiny
percentage of financial transactions, it makes no difference to the bankers at all. Most financial
transactions are carried out with abstract figures on a computer screen that have no relationship
to real wealth. Everything has to be paid for at interest though – even when it doesn’t exist!

THE NEXT STAGE

The next stage of development for international finance is to get rid of cash altogether. Then the
token accountability of the bankers will disappear along with the cash. Their intention is that
everyone will have to use credit/debit cards for every type of commercial transaction.

Electronic technology, when used this way, and when it is not merely widespread but
compulsory, will give them complete control of every man, woman and child in the world. If you
cannot buy or sell – food, petrol, clothes – without a card you are completely at their mercy. If
you lose the card or it doesn’t work for some reason you will suffer until issued with a
replacement. If you make a protest against some particular injustice they could invalidate your
card. The next time you go to the supermarket your card may not work. You won’t officially
exist!
. LIST OF BANKS WITH YEAR OF ESTABILISHMENT

Bank of Bengal-1 8 0 9

Bank of Bombay- 1840

Bank of Madras- 1843

Allahabad Bank- 1865

Punjab National Bank Ltd. -1894

Canara Bank- 1906

Indian Bank- 1907

Bank of Baroda- 1908

Central Bank of India- 19 11

Bank of Mysore- 19 13

Union Bank of India -1922

Current Trends and Technologies-

The economy can be divided in the entire spectrum of economic activity into the real and
monetary sectors. The real sector is where production takes place while the monetary sector
supports this production and in a way is the means to the end. We know and we accept the
financial system is critical to the working of the rest of the economy. In fact, the Asian crisis of
the nineties, or for that matter what happened in Latin America and Russia subsequently and also
Dubai Crisis have shown how a fragile financial sector can wreak havoc on the rest of the
economy. Therefore the banking sector is crucial and we want to express our views to explore
how this sector can work in harmony with the real sector to achieve the desired objectives. 

     The Banking sector has been immensely benefited from the implementation of superior
technology during the recent past, almost in every nation in the world. Productivity
enhancement, innovative products, speedy transactions seamless transfer of funds, real time
information system, and efficient risk management are some of the advantage derived through
the technology. Information technology has also improved the efficiency and robustness of
business processes across banking sector. 

      India’s banking sector has made rapid strides in reforming and aligning itself to the new
competitive business environment. Indian banking industry is the midst of an IT revolution.
Technological infrastructure has become an indispensable part of the reforms process in the
banking system, with the gradual development of sophisticated instruments and innovations in
market practices. 

IT in Banking 

      Indian banking industry, today is in the midst of an IT revolution. A combination of

regulatory and competitive reasons has led to increasing importance of total banking automation
in the Indian Banking Industry. Information Technology has basically been used under two
different avenues in Banking. One is Communication and Connectivity and other is Business
Process Reengineering. Information technology enables sophisticated product development,
better market infrastructure, implementation of reliable techniques for control of risks and helps
the financial intermediaries to reach geographically distant and diversified markets. 

      The bank which used the right technology to supply timely information will see productivity
increase and thereby gain a competitive edge. To compete in an economy which is opening up, it
is imperative for the Indian Banks to observe the latest technology and modify it to suit their
environment. Information technology offers a chance for banks to build new systems that address
a wide range of customer needs including many that may not be imaginable today. 

      Following are the innovative services offered by the industry in the recent past: 

Electronic Payment Services – E Cheques 

      Nowadays we are hearing about e-governance, e-mail, e-commerce, e-tail etc. In the same
manner, a new technology is being developed in US for introduction of e-cheque, which will
eventually replace the conventional paper cheque. India, as harbinger to the introduction of e-
cheque, the Negotiable Instruments Act has already been amended to include; Truncated cheque
and E-cheque instruments. 

Real Time Gross Settlement (RTGS) 

      Real Time Gross Settlement system, introduced in India since March 2004, is a system
through which electronics instructions can be given by banks to transfer funds from their account
to the account of another bank. The RTGS system is maintained and operated by the RBI and
provides a means of efficient and faster funds transfer among banks facilitating their financial
operations. As the name suggests, funds transfer between banks takes place on a ‘Real Time’
basis. Therefore, money can reach the beneficiary instantaneously and the beneficiary’s bank has
the responsibility to credit the beneficiary’s account within two hours. 

Electronic Funds Transfer (EFT) 

      Electronic Funds Transfer (EFT) is a system whereby anyone who wants to make payment to
another person/company etc. can approach his bank and make cash payment or give
instructions/authorization to transfer funds directly from his own account to the bank account of
the receiver/beneficiary. Complete details such as the receiver’s name, bank account number,
account type (savings or current account), bank name, city, branch name etc. should be furnished
to the bank at the time of requesting for such transfers so that the amount reaches the
beneficiaries’ account correctly and faster. RBI is the service provider of EFT. 

Electronic Clearing Service (ECS) 

      Electronic Clearing Service is a retail payment system that can be used to make bulk
payments/receipts of a similar nature especially where each individual payment is of a repetitive
nature and of relatively smaller amount. This facility is meant for companies and government
departments to make/receive large volumes of payments rather than for funds transfers by
individuals. 
 

Automatic Teller Machine (ATM) 

      Automatic Teller Machine is the most popular devise in India, which enables the customers
to withdraw their money 24 hours a day 7 days a week. It is a devise that allows customer who
has an ATM card to perform routine banking transactions without interacting with a human
teller. In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds
transfer between accounts, deposit of cheques and cash into accounts, balance enquiry etc. 

Point of Sale Terminal 

      Point of Sale Terminal is a computer terminal that is linked online to the computerized
customer information files in a bank and magnetically encoded plastic transaction card that
identifies the customer to the computer. During a transaction, the customer’s account is debited
and the retailer’s account is credited by the computer for the amount of purchase. 

Tele Banking 
      Tele Banking facilitates the customer to do entire non-cash related banking on telephone.
Under this devise Automatic Voice Recorder is used for simpler queries and transactions. For
complicated queries and transactions, manned phone terminals are used. 

Electronic Data Interchange (EDI) 

      Electronic Data Interchange is the electronic exchange of business documents like purchase
order, invoices, shipping notices, receiving advices etc. in a standard, computer processed,
universally accepted format between trading partners. EDI can also be used to transmit financial
information and payments in electronic form. 

Market Structure-

1. State Bank of India (SBI)

 :: STATE BANK OF INDIA :: Safe Banking With SBI ::

Headquartered in Mumbai, India, sbi is the biggest bank in asia. ... State Bank of India Logo,
Click here to view State Bank of India website

2. HDFC Bank

 http://www.hdfcbank.com/
Personal Banking Services | HDFC Bank offers a wide range of personal banking services, NRI
Services and finance products including savings and current

4. ICICI Bank
 ICICI Bank | Personal Banking | NRI Banking | Corporate Banking | Business Banking
Welcome to ICICI Bank - ICICI Bank provides personal banking, NRI banking and corporate
banking

5. Punjab National bank (PNB)

 Welcome to Punjab National Bank - the name you can BANK upon
Indian bank with 3850 branches spread throughout the country. Offer Retail Banking services
to all customers

6. UTI Bank (AXIS Bank)

 Axis Bank | Personal Banking, Corporate Banking, NRI Banking, Priority Banking
Axis Bank( previously UTI Bank) Provides information about services offered, interest rates,
branch and ATM locator, corporate banking, and downloadable forms

7. Hongkong & Shanghai Banking Corp(HSBC)

 Credit cards, home loans, business banking and more | HSBC Bank India
Whatever your banking needs – from accounts to convenient credit cards to a home loan or
business account, HSBC India is the best around. Apply today.

8. Kotak Mahindra Bank

 http://www.kotak.com/
Kotak's International Business With a presence outside India since 1994, the international
subsidiaries of Kotak Mahindra Bank Ltd. operating through ...

9. Sundaram Bank

 Sundaram Finance Group

Sundaram Finance( SF ) is a leading Non Banking Finance Company ( NBFC ) in India. SF
Group offers a diverse portfolio of products and services including Car and Commercial Vehicle
and Equipment Finance, Deposits, Mutual Fund Schemes, Investment sche

10. Oriental Bank of Commerce

  http://www.obcindia.co.in/
Avail ATM, Internet Banking, Telebanking and SMS Alert Services from any Branch of the
Bank. | 24 hrs Card Assistance Centre - Toll Free BSNL No

Government Policies-

The policies of the central government since the beginning of the 1990s have had direct and
indirect effects on farmers’ welfare. The economic reforms did not include any specific package
specifically designed for agriculture. Rather, the presumption was that freeing agricultural
markets and liberalising external trade in agricultural commodities would provide price
incentives leading to enhanced investment and output in that sector, while broader trade
liberalisation would shift inter-sectoral terms of trade in favour of agriculture. However, there
were changes in patterns of government spending and financial measures which also necessarily
affected the conditions of cultivation. In particular, fiscal policies of reducing expenditure on
certain areas especially rural spending, trade liberalisation, financial liberalisation and
privatisation of important areas of economic activity and service provision had adverse impact
on cultivation and rural living conditions.

The neo-liberal economic reform strategy involved the following measures which specifically
affected the rural areas:

• Actual declines in Central government revenue expenditure on rural development, cuts in

particular subsidies such as on fertiliser in real terms, and an the overall decline in per
capita government expenditure on rural areas.

• Reduction in public investment in agriculture, including in research and extension.

• Very substantial declines in public infrastructure and energy investments that affect the
rural areas, including in irrigation.

• Reduced spread and rising prices of the public distribution system for food. This had a
substantial adverse effect on rural household food consumption in most parts of the
country.
 • Financial liberalisation measures, including redefining priority sector lending by banks,
which effectively reduced the availability of rural credit, and thus made farm investment
more expensive and more difficult, especially for smaller farmers.

• Liberalisation and removal of restrictions on internal trade in agricultural commodities,

across states within India.

• Liberalisation of external trade, first through lifting restrictions on exports of agricultural

goods, and then by shifting from quantitative restrictions to tariffs on imports of
agricultural commodities. A range of primary imports was decanalised and thrown open
to private agents. Import tariffs were very substantially lowered over the decade. Exports
of important cultivated items, including wheat and rice, were freed from controls and
subsequent measures were directed towards promoting the exports of raw and processed
agricultural goods.

In terms of fiscal policies, the reduced spending of central and state governments was the
most significant feature. Due to tax reforms, the tax/GDP ratio declined at central level. Central
transfers to state governments also declined. State governments were forced to borrow in the
market and other (often international) sources at high interest rates. As a result, the levels of debt
and debt servicing increased in most of the states. In recent years, most state governments were
in fiscal crisis and did not have funds for capital expenditures. This has been especially important
since state governments are responsible for areas critical for farmers such as rural infrastructure,
power, water supply, health and education. Meanwhile, at the central government level, capital
expenditure declined as a share of national income, and all public expenditure directed towards
the rural areas fell both as a per cent of GDP and in real per capita terms.
Trade liberalisation in agriculture accelerated from the late 1990s, in tune with WTO
agreements, and involved liberalisation of export controls, liberalisation of quantitative controls
on imports and decontrol of domestic trade. Quantitative restrictions on imports and export
restrictions on groundnut oil, agricultural seeds, wheat and wheat products, butter, rice and
pulses, were all removed from April 2000. Almost all agricultural products are now allowed to
be freely exported as per current trade policy.
The impact of trade liberalisation on farmers’ welfare works through various channels
such as volatile prices, problems in imports and exports, impact on livelihood and other
employment opportunities, etc. For farmers, perhaps the single most adverse effect has been the
combination of low prices and output volatility for cash crops. While output volatility increased
especially with new seeds and other inputs, the prices of most non-foodgrain crops weakened,
and some prices, such as those of cotton and oilseeds, plummeted for prolonged periods. This
reflected not only domestic demand conditions but also the growing role played by international
prices consequent upon greater integration with world markets in this sector. These features in
turn were associated with growing material distress among cultivators.

In a closed economy, lower output is normally accompanied by some price increase. Therefore,
coincidence of lower production with lower terms of trade was very rare until recently. The
pattern of lower prices accompanying relatively lower output reflected the effect of the growing
integration of Indian agriculture with world markets, resulting from trade liberalisation. As both
exports and imports of agricultural products were progressively freed, international price
movements were more closely reflected in domestic trends. The stagnation or decline in the
international prices of many agricultural commodities from 1996 onwards meant that their prices
in India also fell, despite local declines in production. This was not always because of actual
imports into the country: the point about openness is that the possibility of imports or exports can
be enough to affect domestic prices at the margin.

An additional issue for farmers was that, even as the uncertainties related to international price
movements became more directly significant for them, progressive trade liberalisation and tariff
reduction in these commodities made their market relations more problematic. Government
policy did not adjust in ways that would make the transition easier or less volatile even in price
terms. Thus, there was no evidence of any co-ordination between domestic price policy and the
policies regarding external trade and tariffs. For example, an automatic and transparent policy of
variable tariffs on both agricultural imports and exports linked to the deviation of spot
international prices from their long-run desired domestic trends, would have been extremely
useful at least in protecting farmers from sudden surges of low-priced imports, and consumers
from export price surges. Such a policy would prevent delayed reactions to international price
changes which allow unnecessarily large private imports. It would therefore allow for some
degree of price stability for both producers and consumers, which is important especially in
dominantly rural economies like that of India.
 In the absence of such minimal protection, Indian farmers had to operate in a highly
uncertain and volatile international environment, effectively competing against highly subsidised
large producers in the developed countries, whose average level of subsidy amounted to many
times the total domestic cost of production for many crops. Also, the volatility of such prices –
for example in cotton – has created uncertain and often misleading signals for farmers who
respond by changing cropping patterns. In Andhra Pradesh, it has directly affected the groundnut
farmers due to palm oil imports. Import of fruits also and other commodities also affected the
farmers. With increased trade liberalisation, reduction in cereal consumption became very
pronounced. Also exports of items like cotton have increased volatility in supplies of cotton raw
material, which have adversely affected handloom and power loom weavers whenever yarn
prices have increased significantly due to export of cotton.
Financial sector liberalisation in developing countries has been associated with measures
that are designed to make the Central Bank more independent, relieve financial repression by
freeing interest rates and allowing financial innovation, reduce directed and subsidised credit, as
well as allow greater freedom in terms of external flows of capital in various forms. India’s
financial liberalisation strategy involved all of these measures to varying degree.
Financial liberalisation measures, including reduced emphasis on priority sector lending
by banks, which effectively reduced the availability of rural credit, and thus made farm
investment more expensive and more difficult, especially for small farmers. In addition to
declining credit-deposit ratios in rural areas, the shift of banks away from crop lending and term
lending for agriculture, the reduction in the number of rural bank branches and less manpower
for rural service provision all meant that the formal sector was unable to meet the requirements
of cultivators, who were forced to turn to private moneylenders (who were often also input
dealers and traders) in more exploitative relationships.

II. State government policies over the past decade

Agriculture is a state subject and therefore state governments have more responsibility in
agriculture development. For the past decade, the state government in Andhra Pradesh not only
participated in but aggressively pushed liberalisation policies, and also neglected agriculture. In
addition, however, it was also crucial in accelerating the deregulation and privatisation which
also marked the central government’s approach. The primary role of the public sector enterprises
was to protect the public from the adverse impacts of market forces and provide them with goods
and services at reasonable (and frequently subsidised) prices. The primary beneficiaries of this
system were expected to be the poor segments of the population. But the state government in
Andhra Pradesh systematically reduced the role of public investment, intervention and
regulation, and expected private activity to deliver more favourable outcomes.
Because of the decline in public investment in agriculture, fixed capital formation in
agriculture (which had recorded high growth in the 1980s) declined in absolute terms in the
1990s and thereafter. The area under public sources of irrigation, e.g., canals declined in the
nineties due to deceleration in public investment and public neglect of traditional water sources.
No new major irrigation project was taken up in the last nine years and several pending projects
were not completed.
More than 10,000 Water Users’ Associations (WUAs) have been formed, of which about
80 per cent are in the minor irrigation sector. However, the bulk of the area covered is under
canal irrigation. Irrigation charges were increased by more than three times from 1997. Even so,
the surface water rates at best cover maintenance charges, whereas in the case of lift irrigation
the farmer also bears the full capital cost of the well or bore. The effective rate of collection
remains low at around 64 per cent, possibly because WUAs have not yet been made fully
responsible for collection of water charges, making the process fully democratic and
accountable. Another notable development was that the works were executed by WUAs
themselves at lesser cost instead of getting them done by contractors. But the vested interests lost
no time in adjusting to the new situation by presidents of the WUAs acting as contractors. This
and other malpractices invited the wrath of farmers who in several cases used the provision in the
Act for recall of the presidents. WUAs are not found to be effective in respect of tank irrigation
due to insufficient allocations. In the case of watersheds, the state government followed the
extensive approach of thinly covering many watersheds instead of the intensive approach of
covering few watersheds, which made many watersheds ineffective. The state government also
spent lot of funds on the ‘neeru-meeru’ programme which had some successes but generally did
not yield the desired results, again because of the reliance on private contractors and corrpution.
Because of decline in surface and tank irrigation, ground water use has increased significantly
increasing costs for farmers and bringing down the water table in most parts of the state. Power
reforms increased the cost of power in the state. Although farmers paid only a flat rate (which
increased from Rs. 50 to Rs. 300), they had to incur heavy losses in terms of erratic power, low
voltage and burning of motors.
There was also a neglect of research and extension. The intensity of government investment in
agricultural research and education in the state (at 0.26 per cent of its agriculture GDP during
1992-94) was lower than for the other three southern states and was just around half of that for
All India (0.49 per cent for centre and states together). Public expenditure on extension, which is
borne by the state government, declined in absolute terms in the nineties. It was only 0.02 per
cent of the state’s GDP during 1992-94, as against the All-India average of 0.15 per cent. There
was an attempt to privatize extension services. As a result of these policies, extension services
are currently in bad shape in the state. With the virtual breakdown of the extension machinery
and lack of access to institutional credit, small and marginal farmers became increasingly
dependent upon the private trade for credit and extension services. At the same time such agents
were subject to less regulation than before, leading to circumstances in which resource-poor
farmers became victims of exploitation by such agents.
By the late 1990s, the looming agricultural crisis was recognised to be substantially the
consequence of inadequate agricultural services, including extension, reliable seed supply,
quality pesticides, machinery, proper soil survey-testing, soil conservation, market information
and market intelligence. However, despite this, the state government of that time refused to
recognise this or take palliative measures. A 'Working Paper' of the Department of Agriculture
(1999) stated that government could act only as a facilitator and no public investment would be
made in providing these services. Referring to the vast gap in agricultural extension, because of
unfilled vacancies which at that time accounted for more than one-fourth of the sanctioned posts,
it was declared that the state "doesn't have resources to employ any more extension workers",
and so it was proposed that the entire cadre of agricultural extension officers be wound up.
"Without any additional financial burden to the state", the extension services would be promoted
through the private sector through a system of registration of unemployed grantees or retired
employees, who would offer these services for a fee. Qualified graduates would be encouraged to
become licensed dealers of fertilizers, pesticides and seeds. The burden on the AP Seed
Corporation would be reduced by making the private sector more accountable through
appropriate MOUs. The hiring of agricultural machinery would be encouraged through the
corporate sector, NGOs and others. Soil survey, soil conservation, collection of market
information were to be “encouraged to be developed in private sector with appropriate policy
incentives".
With this approach of the state government, it is not surprising to find that many public
institutions affecting agriculture were systematically eroded or destroyed. Some important
government corporations and cooperative institutions in the state were closed, allowed to run
down, or simply handed over to the private sector. These institutions, such as A.P. Irrigation
Development Corporation, A.P. Agro-Industries Corporation, A.P. Seeds Development
Corporation, Cooperative Sugar Factories, Cooperative Spinning Mills played an important role
in helping the farmers. The running down of these institutions also affected the farmers
adversely.
Similarly, privatisation of extension and the health sector have had adverse consequences for
farmers. In the delivery of health and education, the reductions in spending and reduced quality
of public services has led to the increase of private sector activity which has created segmented
markets for rich and the poor. Higher income groups have moved to private sector while the state
has been offering services at usually much lower standards of efficiency and quality to the lower
income groups. This impact has been felt strongly in the health and education services and has
translated into an equity issue. The poor have also been affected by higher drug prices.

Keeping in view the main objectives of the 73rd Constitutional Amendment Act, the
Government of Andhra Pradesh passed the A.P. Panchayat Raj Act in 1994. But the actual
performance so far in terms of genuine decentralisation / devolution to the local bodies has been
far from satisfactory. In the functional domain, the present status in AP shows that it transferred
functions in respect of 16 subjects of which 5 subjects with funds and only 2 subjects with
functionaries have been transferred to the local bodies. This performance is much worse than in
Karnataka, Kerala and West Bengal. Moreover, a majority of the line departments in AP have
not been brought under the control of the Panchayati Raj bodies. Only the relatively less
important functions have been transferred to the local bodies. Some observers have argued that
the proliferation of different local organisations led to confusion regarding responsibilities and
resource control, and effectively weakened the panchayats.
III. Recent policy measures of the state government since May 2004
The new state government in Andhra Pradesh has recognised the magnitude of the agrarian crisis
and has already made clear its intention to redirect state policy bearing in mind the need and
interests of farmers. The Cabinet Sub-Committee Report on the causes of farmers suicides
indicates that the government is already aware of the main forces behind the crisis and the
policies required. There are a number of positive measures which the state government has
already instituted, which deserve to be noted. 1. Relief package to families of farmers who have
committed suicide: The state government has announced the provision of an ex-gratia amount of
Rs. 1 lakh to the family of a deceased farmer and Rs. 50,000 towards liquidation of farm debt.
This is not only an important welfare measure in its own right, but is necessary to indicate the
degree of concern of the state and to bring some confidence to the rural community. Field visits
by the Commission confirmed that in most areas visited, the package was being implemented
carefully and sensitively. However, two problems need to be noted: (a) There is currently no
budgetary provision for this package, which means that the amount has be taken by the District
Collector from other resources available to her/him. This is clearly not a desirable outcome and
needs to be rectified. (b) The process of identifying the genuine cases has meant that many
suicide cases are effectively excluded. Also, the focus on farm-related causes only has excluded
others who have suffered economically because of the generalised rural distress, such as
weavers, carpenters and others.
2. Help Lines: In order to reduce the despair and feelings of helplessness which have associated
with the suicides, Help Lines have been established in each district, where grievances of farmers
are recorded and help is extended as far as possible.
3. Free power: The first important policy measure of the state government when it came to power
was the sanction of free power to all agricultural connections and the waiver of power dues
worth Rs. 1300 crores. This was important in immediately alleviating some of the extreme
distress of cultivators especially in borewell-dependent lands, whose problems had been
aggravated by the hike in power rates.
4. Moratorium on loans: Keeping in view the extreme nature of the crisis, a bill was passed in the
state assembly providing for a moratorium for 6 months on private money lenders. In addition,
the two-year moratorium on institutional credit recovery by commercial banks as declared by
Government of India was sought to be implemented.
5. Focus on institutional credit: There was a conscious drive to ensure increased credit from the
banking institutions to farmers. In consequence, Rs. 7010 crores was disbursed during kharif
2004, nearly Rs. 2000 crore more than the previous year. There was rescheduling of the bank
loans of 7.93 lakh account holders, amounting to Rs. 1608.21 crores, which was converted to
terms loans. The State Level Banking Committee constituted a sub committee to consider
strategies for timely and adequate credit and the formulation of village credit plans from Kharif
2005. It need hardly be added that, while these are all very positive measures, institutional credit
remains very inadequate.
6. Stamp duty exemption: In order to reduce the costs of borrowing for small farmers,
registration fees and stamp duty have been exempted for loans sanctioned up to an amount of Rs.
1 lakh for small and marginal farmers. Following an earlier request of the Commission, this
move has now been widely publicised.
7. Crop insurance: The state government has written to the Government of India proposing
reforms in the existing National Agricultural Insurance Scheme, including restoration of 50 per
cent of premium subsidy to small and marginal farmers, enhancement of indemnity levels to 80
per cent, reduction of premium rates to 2 per cent for cereal crops and 3 per cent for commercial
crops and payment compensation in two spells for kharif and rabi crops.
8. Control of seed supply: The State Cabinet has approved a new State Seed Regulation Bill
2004 to regulate production and sale of seeds. It is hoped that this will reduce or eliminate the
supply of spurious seeds and reduce other problems. Even before this, a special drive was taken
up in October 2004 to regulate the quality of inputs, which also involved seizure of supplies of
spurious seeds and other inputs. This is also immediately necessary to restore confidence among
farmers.
9. Rs. 31 crores has been sanctioned for establishment of seed and fertiliser testing labs in all
districts, seed villages and revival of public sector seed farms.
10. A comprehensive Bio-fertiliser bill to induce eco-friendly fertiliser usage mechanism is being
actively considered by the state government.
11. The Chief Minister has written to the central government, Government of India, requesting
that the import duties on cotton and palm oil should be increased in order to protect cotton and
groundnut farmers in the state. While no action has been taken thus far, it is to be hoped that the
central government will take note of the seriousness of the matter and respond favourably.
12. The Chief Minister has also requested the central government to direct the Cotton
Corporation of India not to collect transport charges from cotton farmers in Andhra Pradesh.
This recommendation has been accepted.
13. The state government has lifted the ban on new recruitment of Agricultural Officers imposed
by the previous state government. Orders have been issued for recruitment of 270 Agricultural
Officers and 491 Agricultural Extension Officers to fill up the vacant posts.
14. The state government has launched a drive to redistribute government lands of 1 lakh acres
by 26 January 2005, and promised to continue the drive subsequently.
15. The state government has given priority to irrigation development. In the first phase, works
worth approximately Rs. 8,000 crores are being taken up.
16. A separate Ministry has been created for rain-shadow areas, to focus on the problems of
drought-prone regions.
These have all been necessary and important measures, and have certainly alleviated the worst
effects of the crisis for the farmers in the state. However, the crisis in agriculture is so deep and
widespread, that in spite these positive measures, the conditions of farmers remain precarious, as
evidenced by the continuing suicides despite various relief measures. Much more will be
required to make material improvements in the conditions of farmers. In particular, the
destruction of various rural institutions has been so complete that it will take time and effort to
rebuild them and generate new ones that can serve the farmers and rural workers. Since the state
government has already indicated its commitment to work for the betterment of the rural
community and already taken several positive steps, the Commission is confident that it will also
undertake all the necessary measures in the short term and medium term.

Recent M & A’s-

Bank of India was about to merge with Union Bank of India but due to recession in America, Mr.
P. Chidambaram

Related Terms to Sector-

Absolute advantage: The capability of a nation, entity, corporation, or state to generate a product
or service at a lesser price per unit than the price at which any other unit generates that product
or service.

Accrued Interest: The interest amount collected on purchase of an equity share/ bond or
debenture since the preceding coupon imbursement, excluding the completion date. Accrued
interest is included to the indenture price of a bond contract. There are two ways for computing
accrued interest:

 (a) On the basis of 360-day a year, employed for commercial and public shares
 (b) On the basis of 365-day a year, employed for government shares.

Advance Payment: Compensation made to the indemnified person by the insurance firm prior to
the completion date is called the advance payment. For instance, if the maturity dates of the
claim is premeditated on July 1, 2002 and the insurance firm forfeits the petitioner before the
settlement date, the payment is considered as an advance payment.

Allotment: Distribution of shares or bonds in support of new concerns is termed as Allotment. In

other words securities allocated to associates of a countersigning consortium for the reselling to
shareholders/investors.

Alternative Investments: A phrase indicating to any kind of non-conventional property with

hidden fiscal value that cannot be discovered in an ordinary investment portfolio. Because of the
exceptional features of these investment properties, assessment may arise as an issue.

Amalgamation: Amalgamation or consolidation is the procedure of merging or joining of two

business entities into one new entity. The permutation can be an outcome of one business entity
obtaining the other, uniting of two or more business entities, or either by suspension of
obtainable firms and creation of a new firm to control the merged entities.

Amortization: Also known as diminution, liquidation, or approval of an obligation, Amortization

refers to the amount utilized for meeting that need. In short, it is the distribution of an
approximate amount during various durations, especially for mortgages and other type of
investment which incorporates associated interest or other monetary charges. Amortization is
generally used in determining the investment cost of securities.

Authorized Signer: An individual employed by the account holder to sign and deliver cheques,
demand drafts, receipts or any other form of payment in cash or kind is known as an Authorized
Signer.

Automated Clearing House (ACH): An online money-transfer method established by the

National Automated Clearing House Association is known as Automated Clearing House. This
compensation method transacts in context of payroll, undeviating investment, tariff
reimbursements, customer invoices, tax fee and other payment facilities. The usage of online
payment houses is to assist on

BAD DEBT If a particular bank or creditor fails to recover money from a borrower or a debtor, it
is termed as bad debt. The bad debt is considered as an expense on the part of the bank.
Nevertheless, the bank, in concern, can always opt for legal proceedings to recover the amount
that has been declared as 'bad debt'.

BALANCE TRANSFER
Balance transfer is an option included in the application form of credit card. This option can be
selected afterwards as well. This facility is very useful for the person, who is holding more than
one card. On availing this facility, the user can transfer the balance payable amount to the other
card, if he/she is not able to make full payment that is due on a particular card. Nevertheless, the
person has to make payment of the transferred amount on a scheduled time as stated by the bank
that gave him/her the other card. One needs to pay fee for the balance amount that has been
transferred. The balance transfer facility is useful in reducing interest outgo.

BANK STATEMENT
The savings account holders receive passbook mostly. The passbook helps the account holder to
keep a track over his/her transactions. If the user has not been given a passbook, he/she is sent an
account statement by the bank on regular intervals at the mailing address. The account statement
is nothing but like a passbook features all the transaction details on the person's account for a
particular time period. In order to apply for a loan, one needs to produce a bank statement of the
last 6 months to the concerned lending institution.

BANKING OMBUDSMAN
The banking ombudsman scheme is an efficient and cost-effective forum, which has been formed
to resolve complaints registered by the customers in case of any services provided by the bank.
The central bank of India namely Reserve Bank of India (RBI) has introduced this scheme under
Section 35A of banking regulation Act, 1949. The scheme came into effect in the year 1995. RBI
appoints the banking ombudsman, a senior official, to look into customer complaints in case of a
particular banking service and resolve them. Presently, we have 15 banking ombudsmen. The
offices are mostly found in the state capitals. One can find the address of a particular banking
ombudsman at the bank branch.

BOUNCED CHEQUE CHARGES

A cheque can bounce on several accounts including inadequate cash in the account, signature
mismatch and mismatch between the numerals and words. And if a cheque has bounced or has
been dishonored, the person who had drawn it needs to pay bounced cheque charges in that case.
The charges for the bounced cheque can be compensated by seeking court's assistance. However,
this is allowed only when the cheque has been returned due to insufficient fund in the account.

CASH-RESERVER RATIO
The part of the total deposits that is maintained in cash by the banks is referred to as CRR or
Cash-Reserve Ratio. The banks in India do not keep this part of their deposits with themselves.
They need to submit this amount to RBI or currency chests. RBI has the right to decide on the
minimum ratio of the deposits that need to be maintained by the banks.

CASHBACK
The term 'cashback' is used in case of credit cards. Some of the banks that issue credit cards give
back some money to the card holder, if he/she uses the credit card to make payments at some
particular retailers or merchandise stores. In the credit card statement, the user would get to
know about the amount of cash back offered to him/her. The final amount, that is due on the
credit card, is calculated by subtracting the payments that have been made during the billing
cycle along with the cash back amount.

CVV: Card verification value

CVV is an anti-fraud security feature that helps verify that you are in possession of your credit
card and making the transaction. CVV is usually a three-digit number printed on the signature
panel at the back of your credit card. You need this number when shopping online or over the
phone. You need to be careful with this number as it can make you a victim of fraud. It’s best to
remember this number and blacken it off from your card.

CO-BRANDED CARD
These credit cards are just like any other credit cards and can be availed from retailers or airlines
apart from banks. These cards have some user benefits. A co-branded card user can gain travel
points or avail attractive discounts related to the product. These cards are available in the sectors
like telecom, travel, petrol pump, entertainment and retail. Nowadays, banks are offering co-
branded debit cards also.

CLEARING HOUSE
When a cheque is deposited in the bank, the receiving bank has to actualize the amount from the
drawee bank before it is transferred to the concerned person's account. The drawee bank is
presented with the cheque in the clearing house by the receiving bank. The clearing house is a
main collection area for the banks to deal in financial securities including drafts, cheques and
others. This activity is carried out during working days on daily basis.

COLLATERAL
A loan seeker needs to provide collateral or the security to the lending institution. For example,
in case of education loans, the seeker needs to furnish the lender with the collateral beyond a
fixed amount. A collateral security can be referred to as the security that falls outside the limit of
the loan.

CREDIT APPRAISAL
If a person applies for a particular loan, the lending institution runs a complete check on his/her
credit profile to gather information on residence, age, occupation, service experience and the
years of service as applicable to present job. Among these, the institution will also check if the
person has taken any other loan. This entire process is referred to as credit appraisal.

CREDIT HISTORY
Credit History is a record of an individual's credit payment including borrowing and refunding of
any kind of loans, credit cards, mortgages and any kind of debt that needs to be repaid. The
credit history contains records on open accounts, status of loans and credit card accounts. From
credit history, a lender can know if the borrower had any late payment, bankruptcy or loan
default issues. The Credit Information Bureau India ltd (Cibil) maintains these records and a
lender can gain access to these details from Cibil as credit information report (CIR). A person
needs to pay fee for this.

CREDIT RISK
When a lending institution grants loan to a customer, it assumes this risk. The banks ask for
collaterals from the borrowers because of this risk factor. This risk factor is high in case of
personal loans or any other form of unsecured loans. In addition, in case of secured loans such as
home loans, the lender asks the borrower to share some portion of the risk, giving margin money.
The interest rates are decided depending on credit risk. Interest rates are kept high, if loan
involves high risk factor.

DEBIT CARD/ CREDIT CARD

An ATM-cum-debit card allows an individual to purchase anything for the cash available in
his/her account that is joined with the card e.g. if a person has Rs 5000 in his/her bank account,
he/she can use his card to the maximum limit of Rs 5000 only. On the contrary, credit card helps
the user to do shopping till the assigned credit limit on that particular card.
DEBT-EQUITY RATIO
It helps in calculating the financial leverage of any bank or organization. To measure this, one
needs to divide the total liabilities of the banks by stakeholders' equity. This in turn gives an idea
of the ratio of equity and the debt used by the bank in financing the assets.

DEFAULT
If a person wants to continue his/her credit account, he/she either needs to give equated monthly
installments (EMIS) or pay the due amount on credit account each month within a fixed date. If
the person fails to make payment before the specified date, it is considered as default. It can mar
the credit record of that person.

DOWNPAYMENT/MARGIN MONEY
When a bank asks the borrower to share a part of the credit risk and the payment that is received
from him/her on this account, is referred to as downpayment/ margin money.

DIRECT DEBIT
Also referred to as Electronic Clearing Facility (ECS), direct debit option proves beneficial in
case of servicing of various lines of credit. This is a facility whereby the person empowers
his/her bank to take off a particular amount from his/her account on a particular date every
month. This facility enables a person to make his payments without visiting the lending
institution or bank personally on a frequent basis. However, the person has to be aware of the
fund availability in his account, as the bank is not responsible for intimating its customer when
the amount is debited from his/her account.

DOCUMENTATION CHARGES
The banks or lending institutions require certain documents from the person, who has applied for
a loan, to look into his/ her creditworthiness. The lending institution levies some charges for this
purpose. These charges are known as documentation charges. The documentation charges are
separate from registration charge, stamp duty and lawyers fee.
DORMANT/INOPERATIVE ACCOUNT
If an individual has not made any transactions from his/her account for more than 2 years, a
savings/current account is declared as inoperative or dormant.

Earnest Money: Good assurance amount of money allotted to seal an agreement is known as
Earnest Money. For instance, in case of a contract to buy realty or an assurance fee to guarantee
an advance payment of money by the lender, is referred as Earnest Money. In realty business, the
amount is implied to the buying cost and is paid if the buyer is unsuccessful in following the
terms and conditions of the contract.

EFT (Electronic Fund Transfer): EFT or Electronic funds transfer indicates to electronically
supported systems employed to execute pecuniary operations by electronic means. EFT is used
for a host of concepts such as credit/debit card holder dealings, online payments by the
cardholder, direct investment payroll compensations for some kind of dealing by a company to
its members of staff, online bill payment, electronic Indian and international banking, etc.

Endorsement: Endorsement is a legal word that indicates to the signing of a credential which
permits for the authorized transfer of a transferable amount from one person to another. In
Insurance term, Endorsement is referred to as Rider, which acts as an inclusive prerequisite to an
insurance strategy.

Equilibrium real interest rate: Equilibrium real interest rate is the rate at which the complete
labor employment and manufacturing capability is constant, supported by the performance of the
actual Gross Domestic product in the long run. Equilibrium real interest rate is required as a
yardstick to review whether the considered actual interest rate is profitable or not.

Equity: The discrepancy between the cost of an asset and the sum of money possessed on the
asset is referred as Equity. In other words it is the total sum of money the property owner attains
when the assets are traded.

Expansionary fiscal policy: Guidelines implemented by the government to alleviate the financial
system of the country, particularly, by regulating the levels and allotments of tariffs and
government spending. During the phrase of slow-moving financial system, the government
reduces tax impositions, giving extra privilege to taxpayers to elevate their levels of expenditure.

Expansionary monetary policy: The strategy implemented by the central bank of the country to
control the cost and accessibility of funds and investments. They are implied to endorse
economic objectives of a country either by increasing or decreasing interim interest rates, etc.
When a nation undergoes deflation, the government orders to print more currency and circulate it
in order to support inflation.

FREE CREDIT PERIOD

The free credit period is associated with credit. This period can be extended to 52 days. A person
does not need to pay interest charges during this period, if he/she has made the full payment of
his/her dues.

FIXED RATE
A fixed rate scheme means the interest rate has been specified for the full term of the loan.
However, this scheme is not carried out in reality. The banks or lending institutions feature a
clause that enables them to revise the interest rates after certain period of time. They can also
modify rates, if the value of funds rises considerably.

FLOATING RATE
An interest rate that goes up and down periodically is referred to as the floating rate. Under the
scheme of floating rate, the interest rate is influenced by the Floating Reference Rate (FRR) or
Benchmark prime Lending Rate (BPLR) of the bank. It implies that interest rate of the loan can
change following the variations in FRR and BPLR.

FINANCE CHARGES
Finance charges or overdue interest charges are related to credit cards. These charges are levied
on an individual's account, if he/she has failed to clear the payment of last billing cycle. These
charges vary between 35 and 42% on an annual basis. A person, who has to pay finance charges,
has to miss out on free credit days. He/she has to pay interest on cash advances from the time the
transaction was made until its final settlement.
IFSC: India financial system code

An 11-digit alphanumeric (letters and numbers) code that helps identify bank branches. The first
four numbers represent the bank’s code (alphabetic), the fifth number is a control character (0),
and the next six numbers denote a bank branch. For example, the IFSC for HDFC Bank Ltd’s
Colaba branch in Mumbai reads as HDFC0000085. This code is mentioned on your cheque.
Different banks mention it at different places on the cheque.When sending money through RTGS
or NEFT, you need to know the IFSC of the receiving branch.

Late Charge: A payment evaluated by the lender for a borrower and obtains it after a
premeditated date is termed as Late Charge. Fine is implied for aberrant payments on a credit
after a Grace Period of ten to fifteen days has passed. Late charge is computed as a proportion of
the unpaid balance and is generally eliminated from the outstanding interest of the loan.

Leverage: The utilization of different fiscal tools or loaned capital to elevate the capability of
potential profits from an investment is termed as Leverage.

Leveraged Buy-Out (LBO): The acquirement of a business entity by utilizing considerable sum
of borrowed capital, through bonds or loans, to fulfill the expenses met during acquisition.
Generally, the properties of the company being obtained are utilized as loan securities
incorporating the properties of the obtained firm. The intention of leveraged buyouts is to permit
firms to indulge in money-spinning acquisitions without entrusting a huge amount of money.

Liability: The legal responsibility of the firm that occurs during commercial operations is termed
as liability. These liabilities are met through relocation of fiscal advantages which incorporates
capital, products and services.

LIBOR: The LIBOR is an extensively used yardstick for interim interest rates. It is the rate at
which privileged borrowers from all over the world are competent enough for borrowing money.
LIBOR are also referred to the interest rates allotted for the less favored world's borrowers.
Life of Loan: A loan borrowed from a bank for a certain capital with a precise reimbursement
agenda and a balanced interest rate. Life of a loan is between 1 to 10 years.

LIFFE: London International Financial Futures and Options Exchange (LIFFE) was formed after
the initiation of Chicago Board of Trade and the Chicago Mercantile Exchange. It dealt with
futures, alternatives and products agreements. In the year 2002, it was obtained by Euronext in
order to elevate its existence as a derivatives seller. After the acquisition LIFFE was rechristened
as Euronext.liffe.

Line of Credit: An understanding between a bank and a consumer ascertaining an utmost loan
equilibrium that the financial institution can allow the borrower to retain is known as Line of
Credit. The benefit of Line of Credit in case of ordinary loan is that the borrower is not entitled
to forfeit on behalf of the portion of line of credit that he generally doesn't utilize.

Liquidation: When the operation of a company come to an end or when the company is
considered as bankrupt, then its properties are sold, advance amount is paid to the creditors and
surpluses are circulated to shareholders. In other words Liquidation is referred to any kind of
business deal that equalizes or terminates a short-term or long-term arrangement.

Liquidity risk: The risks arising from the absence of profitability of an investment or deposit that
can neither be purchased nor traded promptly to avert or reduce any kind of loss is termed as
Liquidity risk.

London Clearing House: London Clearing House is an association related with an exchange to
deal with the verification, payment and release of contracts along with satisfying the key
responsibility of ascertaining that the dealings are done in a speedy and well-organized way.

MICR CODE
MICR stands for Magnetic Ink Character Recognition. MICR Code comprises nine digits given
on the white strip in the lower part of the cheque on the right side of the cheque number. This is a
unique code and no two bank branches can have the same set of this code in the nation. It
facilitates the process of cheque clearance. The MICR Code is different from the IFCS code, that
is mentioned on every cheque. This code number is needed in case of RTGS / NEFT transaction.

MINIMUM QUARTERLY BALANCE/QUARTERLY AVERAGE BALANCE

A savings account holder needs to keep a minimum balance in his/her account on monthly or
quarterly basis, as specified by the banks. In case of private banks, the person may have to
maintain higher balance than that of any public sector bank. The public sector banks can ask a
person to maintain a balance of Rs. 500 to Rs. 1000. However, in private sector banks, the
minimum limit for the quarterly balance begins from Rs 5,000.

MORATORIUM PERIOD : The moratorium period can be called a repayment holiday for loan.
If an individual wants to secure disbursement of loan, but he doesn't have EMI or Pre-EMI
provision, he is provided with an option to dish out some amount, as stated in the bank policy.
The moratorium period is contained in the maximum repayment period. An individual has to pay
interest rates during this period.

NET INTEREST MARGIN

Net interest margin measures the success of the bank's decision taken in the area of investment as
in case of debt situation. If the decision of the bank has not been fruitful, it denotes negative
value. Negative value reflects that the interest expenses of the bank were higher than the returns
coming from its investments.

NO-FRILLS ACCOUNT
The apex Indian bank i.e. Reserve Bank of India had issued an Annual Policy Statement 2005-
2006 urging banks to take a look at their present practices to enable disadvantaged sections of the
people to have an easy access to the banking services. These accounts witness limited number of
transactions. A detailed record of the nature and number of such transactions is provided to the
customers beforehand in a precise manner. Nowadays, almost every bank provides no-frills
account to the customers. The central bank of India has made Know Your Customer (KYC)
norms easy to facilitate the opening of a no-frills account.

NEGOTIABLE INSTRUMENTS ACT

Negotiable Instruments Act has been implemented with an aim to infuse faith in the usefulness
of banking operations and trustworthiness in transacting business done through negotiable
instruments. Under Section 138 of the Negotiable Instruments ACT, 1881, a person is prevented
from drawing a cheque, if he/she doesn't have adequate cash amount in the bank account. It also
encourages the concerned person such as holder/payee to take action against it.

NPA
The loans that can lead to a case of default are declared as Non-performing assets (NPAs). If a
person does not pay interest or principal amount for a period of 90 days, the loan is termed as a
non-performing asset.

Obligation: The legal liabilities on a firm or individual to satisfy the conditions of an agreement.
If the liability is not paid, the other party can resort to suitable measures as per the ones
mentioned in the agreement.

Offer Price: Offer Price is referred to the price which a purchaser is eager to acknowledge for a
security. Besides the cost, the offer price usually specifies the sum of the security that the
purchaser is willing to sell it for.

OFEX: OFEX or PLUS Markets Group PLC is a London-based stock exchange which emerged
as a Recognized Investment Exchange in the year 2007. OPEX firms have greater tentative
investments than Alternative Investment Market (AIM) firms.

Open-end credit: A loan which was agreed previously and can be utilized frequently up to a
definite limit is called an Open-end credit. Also known as line of credit, it offers investors and
firms an available amount of cash whenever required.

Open-End Fund: Open-End Fund is a kind of mutual fund which includes no constraints on the
number of shares the fund will allocate. In case of escalating demands, the fund will carry on
allocating shares regardless of the number of investors. They can also be procured back and can
be sold as per the desire of the investor.

Open-end lease: A contract that compels the leaseholder, who make intermittent rent payments,
to buy the rented property at the closing contents of the contract. It is also known as a "finance
lease".
Out of the Money: Out of the Money is a term which is used when the strike value of an option is
greater than the market cost of the principal asset.

Outstanding Check: Checks or demand drafts that have not been delivered to the forfeiting bank
for compensation or the checks which are still waiting to be collected are known as Outstanding
Checks.

Outstanding Debt: Outstanding Debt refers to the due portion of a liability that may incorporate
interest accumulated on the amount held.

Over the counter (OTC): A security dealt in a different perspective other than the recognized
stock exchange like NYSE, AMEX, etc. The term is associated with the stocks that are sold
through a trader, the channel which is different from a federal exchange. It also indicates to the
protection of the obligation and other fiscal tools such as derivatives, which are sold by
merchants.

Overbought: It is referred to certain kind of condition in which the requirement of a specific asset
excessively elevates the cost of the price of a principal asset to such an extent that does not assist
the essentials.

Overdraft: Overdraft is regarded as an immediate expansion of credit from a loan providing

organization. If the borrower has an overdraft bank account, his checks would be covered by the
banks in case if they bounce.

Overdue: Overdue refers to outstanding and more than outstanding amount which is postponed
further ahead the premeditated time of arrival or imbursement.

Oversold: It is a situation in which the cost of the principal property declines rapidly to an extent
of its original value. This situation is generally an outcome of panic selling of goods in the
market.
PAP: Payable at par or MCC: Multi-city cheques

PAP or MCC cheques can be encashed anywhere in India, irrespective of the city they were
issued in. They are treated as local clearing cheques across the country. The amount is credited in
the account the same day and there are no inter-city collection charges associated with a normal
cheques being encashed in another city. A cheque issued at a branch in Chennai, can be encashed
at a branch in Dibrugarh as if it were a local cheque.There would be a notation on the top or the
bottom of a cheque indicating its status as as PAP or MCC cheque. By issuing a PAP or MCC
cheque, you can save demand draft or cheque clearing costs.

PIN NUMBER
A person needs to have pin number in order to gain an access to the ATM. This number is
required, if the person is using credit card, ATM card or ATM-cum-debit card for the purpose of
withdrawing money. Pin number is a set of digits that is sent by the bank to its customer
separately after he/she receives the card. The pin number needs to be kept secret. According to
the experts in banking sector, it is wise to change this number so that any other person apart from
the card holder cannot get access to the holder's account. Some customer service counters of the
institutions ask for pin number. In fact, some retailers also need this number to enable cash
transactions.

PLR/BPLR
PLR stands for Prime Lending Rate and BPLR for Benchmark Prime Lending Rate. PLR/BPLR
is given to the main customers of the lending institution. Mostly, the rates of interest for all retail
loans are connected with PLR/BPLR. However, in some cases, interest rates are dependent on
the floating reference Rate (FRR).

PRE-PAYMENT PENALTY
A person has to bear pre-payment penalty if he/she decides to close the loan amount ahead of
time of its specified expiry date. This penalty is levied on the principal that a person owes to a
lending institution. This penalty saves the lending institution from facing a loss of income
generated through interest rates. Previously, many lending institutions used to levy a pre-penalty,
if the person closed his home loan before the loan tenure. Nowadays, in case of home loans, if a
person has a proof that the money he is using for foreclosure belongs to his own resources, he
can get rid of the pre-payment penalty. However, any other loan apart from home loan is subject
to pre-payment penalty.

PROCESSING FEE
A lending institution levies this fee in order to process the loan application of a person. This fee
can be waived off during festive offers, if the lending institution so decides.

REPO RATE
If any bank faces fund shortage and seeks to borrow some amount from the central bank of India
i.e. RBI, it is charged the Repo rate. If repo rate is reduced, the banks get to avail funds at low
rates.

REVERSE REPO RATE

When Reserve bank of India takes fund from banks, it is charged the Reverse Repo Rate. If
reverse repo rate is raised, it becomes attractive for the banks to lend more money to RBI, as it
accounts for higher interest rates.

SARFESI ACT

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
(Sarfesi) Act was introduced to offer an organized platform to the banking industry so that it can
manage its increasing NPA stocks and also match the pace of foreign financial institutions.

SAVINGS BANK ACCOUNT

A savings account holder of a particular bank can carry out his/her banking transactions on daily
basis. Mostly, these accounts are accessed for non-commercial purposes. Savings account helps
is money withdrawal and cash or cheque deposits. A savings account user gets an easy access to
ATM, mobile banking as well as internet banking.
SECURED LOAN
A secured loan is that against which the lender receives some sort of security from the borrower.
Home loan is considered to be the simplest form of this type of loan. The interest rate on secured
loans is less than the ones charged in case of unsecured loans.

STATUTORY LIQUIDITY RATIO

The Statutory Liquidity Ratio (SLR) is a metric which enables the banks to know the minimum
deposit percentage such as of cash, gold or any other form of security they need to maintain. It
helps in controlling the credit growth in nation.

Time Decay: The changing ratio in an option's cost from the decline in duration to the time of its
termination. In short, it is the process in which the cost of an option premium is worn as
termination advances. It is also known as theta and time-value decay.

Time Deposit: Time Deposit is a saving account or certificate deposit which is possessed for an
allocated duration with the perceptive that the investor can extract it by providing written
application only.

Time Value of Money: Also known as present discounted value, it refers to the concept that the
capital available at a specific duration values much more than the similar cost in the future
because of its prospective income ability. This basic theory of investment states similar concept
provided capital can generate interest and any kind of capital values much more the faster it is
attained.

Total Expense Ratio: A computation of the total value related to controlling and functioning of
an investment organization such as mutual fund is Total Expense Ratio. These values mainly
incorporate organization charges and supplementary expenditures for instance transaction
charges, official charges, assessor fees and other functional expenditures.

Total Return: The profit or loss on an investment that is accrued on two elements: earnings
accrued from interest on dividends and capital expansion in the share value or bond value. Total
Return is generally expressed as a yearly proportion in context of the sum invested.
Townhouse: It refers to a residential unit that encompasses two or more stories and is linked to
other associated units through party hedges. They are generally used in designed unit
improvement which offers grouped or combined lodging.

Transaction: A pact signed between the purchaser and the vendor for the trading of commodities
and services for compensation. The parties taking part in a business deal has a compulsion to
execute their part.

Treasury Bills: Treasury Bills are an interim debt responsibility supported by the government
with a maturity period of below a year. They are subscribed via an aggressive bidding method at
a concession. It indicates that the bond offers income to the holder rather than forfeiting of pre-
set interest payments by the holder.

Treasury Bond: It is a profitable bond with a pre-set interest rate and a maturity period of more
than ten years. The holder is entitled to make interest imbursements after every six months and
the earnings accrued by the holders is only charged at the national level.

Treasury Note: Treasury notes are profitable investments with preset interest rate with a maturity
period between one to ten years. They are widely preferred investments because they offer great
derivative markets that trigger their liquidity. Interest fees on the notes are transacted after every
six months till the investment matures.

Treasury Security: They are bonds which have a maturity level of more than ten years. Also
known as 'the long bond', they uphold capital on a long term basis and pays greater yields to the
depositors.

Trendline: A line on the cost diagram of a security illustrating the general course of the
development of a security in its business operations. Trendlines are used to investigate the cost of
individual securities, like goods, mutual fund, etc.

Treynor Ratio: Treynor Ratio was formed by Jack Treynor which computes surplus income
accrued in comparison to the income which could have been accrued on safe investments for
each unit of market instability.

Umbrella Fund: It is an investment phrase which is used to explain a combined investment

policy presented in a form of one legal entity but incorporates many discrete sub-subsidizes
which are sold as personal investment funds.

Underwriter: A legal entity which governs the unrestricted issuance and allocation of securities
from a conglomerate or other issuing entity is known as an Underwriter. Such kind of entity
works in association with the issuing entity to verify the submission cost of the securities. It
purchases securities from the issuing entity and trades them to depositors through the
underwriter's allocation channel.

Uninsured Deposit: Uninsured Deposits are not covered against losses. They generate greater
interest rate due to absence of cover and the buyer undertakes all risks.

Unit of Trading: It refers to the usual quantity of shares, debentures, goods, equities that
incorporates the lowest unit of buying and selling on an exchange.

Unit Trusts: A non-integrated mutual fund organization that permits accounts to possess assets
and exceed gains via the account holders, other than investing them again into the account.

Universal Stock Futures: An assortment of consistent futures agreements on the shares of

respective firms is known as Universal Stock Futures. The futures agreement is an accord
between the purchaser and the vendor to purchase or trade an allocated number of shares during
any time in the future at a pre-decided cost. The agreement is signed with a cash payment, which
indicates that the stocks are not entitled to be distributed.
 Micro Analysis:-

Company History and Corporations associated with it-

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from
Mumbai. The Bank was under private ownership and control till July 1969 when it was
nationalized along with 13 other banks.

Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees,
the Bank has made a rapid growth over the years and blossomed into a mighty institution with a
strong national presence and sizable international operations. In business volume, the Bank
occupies a premier position among the nationalised banks.

The Bank has 3101 branches in India spread over all states/ union territories including 141
specialised branches. These branches are controlled through 48 Zonal Offices . There are 29
branches/ offices (including three representative offices) abroad.

The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions
Placement in February 2008. Total number of shareholders as on 30/09/2009 is 2,15,790.

While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of
introducing various innovative services and systems. Business has been conducted with the
successful blend of traditional values and ethics and the most modern infrastructure. The Bank
has been the first among the nationalised banks to establish a fully computerised branch and
ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a
Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in
1982, for evaluating/ rating its credit portfolio.

The Bank's association with the capital market goes back to 1921 when it entered into an
agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an
association that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd.
to extend depository services to the stock broking community. Bank of India was the first Indian
Bank to open a branch outside the country, at London, in 1946, and also the first to open a
branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29
branches (including five representative office) at key banking and financial centres viz. London,
Newyork, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for
around 17.82% of Bank's total business.

Current Position of Company-

SWOT-

Financial Analysis-

4 P’s of Marketing-

HR Policies and Organization Structure-

4.b.i The particulars of organization functions and duties The Bank was founded in September 1906 as a
private entity and was nationalised in July 1969. Now, Bank Of India, is a Body Corporate constituted
under The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, with its Head
Office at Star House, Plot No.C-5, G Block, Bandra-Kurla Complex, Bandra East), Mumbai 400 051. The
Bank is doing the business of banking which means the accepting of deposits for the purpose of lending
or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal
by cheque, draft, order or otherwise. In additions to the business of banking Bank is also engaged in other
forms of business as contemplated under Sec. 6 (1) of the Banking Regulation Act,1949.
4.b.ii The powers and duties of its officers and employees
All the officers from JMGS I to TEGS VII grade of the bank, have certain discretionary lending and
administrative powers depending upon their positions. The delegation of such powers of various grades of
officials is decided by Board of Directors of the Bank. These powers are revised periodically, depending
upon the organization's requirement and also Government / RBI guidelines. Whether to sanction a loan or
not, is within the absolute discretion of the concerned sanctioning authority of the bank and such
discretion is exercised, after taking into consideration the relevant facts, circumstances and on merits of
each case.

4.b.iii The procedure followed in the decision making process, including channels of supervision and
accountability.
There is a well defined system in the Bank for decision making process. Lending and administrative
decisions are taken at various levels from JMGS I to Top Executive grade Scale VII and also by
Executive Director and Chairman & Managing Director based on the powers delegated to them by the
Board. Branches receive applications for credit facilities and recommend to the appropriate sanctioning
authority. In the case of major retail loan products applications are processed at branches and Centralised
Credit Processing Cells at select centers.
There is a well defined organizational structure and clear system of accountability based on RBI / CVC
guidelines. All credit decisions approved by any sanctioning authority are reported to the next higher
authority for control purpose. The system of exercising proper delegation of power and submission of
control reports is in place and they are monitored by control officer and through internal inspection.

All the functions of the Bank are subjected to Internal/Concurrent Audit/Statutory Audit as well as
supervision of RBI u/s 35 of Banking Regulation Act 1949, every year.

4.b.iv The norms set by the Bank for the discharge of its functions.
Head Office decides the rates to be offered by the Bank for the deposits, for different tenures which are
displayed in the Bank's website and also at the branches. Regarding the advance, again the Head Office
takes a decision on introduction of various loan products and details of which are also available in the
website as well as at the branches. Head Office also decides about the rates of interest for various
advances which again are available on our website and also at the offices / Branches of the Bank.

4.b.v The rules, regulations, instructions, manuals and records, held by the Bank or under its control or
used by its employees for discharging its functions.

Bank has notified its BOI (Shares and meetings) Regulations 2003 through Gazette Notification dated
22.11.2003 for the information of shareholders and General Public. Those who desire the information on
the issues relating to the said matters may refer to the said
notification.

Bank has its own internal rules and regulations and scheme of delegation that are decided at appropriate
level for the smooth functioning of the Bank. Head office also through its internal circulars periodically
inform the branches of its new schemes, procedures for implementation, changes occurring in the banking
scenario and steps to be taken to move with the developments in the Banking Industry. These are all
meant only for internal circulation of Bank.

4.b.vi A statement of the categories of documents that are held by the Bank or under its control
The documents being obtained at the time of lending are available with branches of Bank. A brief
description of Bank's procedure of lending is already on its website. Bank otherwise maintains register of
share holders and record of proceedings of the Board meeting.

4.b.vii The particulars of any arrangement that exists for consultation with, or representation by, the
members of the public in relation to the formulation of its policy or implementation thereof.

Shareholders can raise issues concerning the policies of the Bank in the Annual General Meetings of the
Bank. Bank also publishes its quarterly and annual results/reports in the Bank's website and in the news
papers at the relevant period which would give a general idea about the Bank.

4.b.viii A statement of the boards, councils, committees and other bodies consisting of two or more
persons constituted as its part or for the purpose of its advice, and as to whether meetings of those boards,
councils, committees and other bodies are open to the public, or the minutes of such meetings are
accessible for public The Bank has following Sub Committees of the Board

Bank also functions through various committees and such committees advise Bank on the various issues.
Bank has the following mainly among other committees :

a) Management Committee of the Board,

b) Audit Committee of the Board,
c) Risk Management Committee,
d) Share Holders'/Investor's Grievances Committee,
e) Committee for Customer Service.

The Public cannot participate in these Committees and the Minutes of the meetings are not accessible to
Public since these are confidential in nature.

4.b.ix A directory of its officers and employees.

The list of Branches and officers posted therein are available with the respective Zones and the Central
Public Information Officer of each Zone has the details of employees of the Zone and Branches under it.
The names and addresses of the Central Public Information Officers are already published on the Bank's
website also.

4.b.x The monthly remuneration received by each of its officers and employees, including the system of
compensation as provided in its regulations
The pay scales of employees of the Bank are fixed by IBA in consultation with Government of India,
Ministry of Finance, New Delhi. The scale of pay of its employees as of now is given below :

Scales of Pay of Officers :

Scale I = Rs.14500 - 600/7 - 18700 - 700/2 - 20100 - 800/7 - 25700

Scale II = Rs.19400 - 700/1 - 20100 - 800/10 - 28100
Scale III = Rs.25700 - 800/5 - 29700 - 900/2 - 31500
Scale IV = Rs. 30600 - 900/4 - 34200 - 1000/2 - 36200
Scale V = Rs. 36200 - 1000/2 - 38200 - 1100/2 - 40400
Scale VI = Rs.42000 - 1200/4 - 46800
Scale VII = Rs. 46800 - 1300/4 - 52000.

Scales of Pay of Clerical Staff :

Rs.7200 - 400/3 - 8400 - 500/3 - 9900 - 600/4 -12300 - 700/7 - 17200 -1300/1 - 18500 - 800/1 - 19300.

Scales of Pay for Subordinate Staff :

Rs.5850 - 200/4 - 6650 - 250/5 - 7900 - 300/4 - 9100 - 350/3 - 10150 -400/3 - 11350.
4.b.xi The budget allocated to each of its agency, indicating the particulars of all plans, proposed
expenditures and reports on disbursements made.
There are no plans and budgets for expenditure of public money disbursements and the provision is not
applicable to that extent to Bank.

4.b.xii The manner of execution of subsidy programmes including the amounts allocated and the details
of beneficiaries of such programmes.

There are no subsidy programmes for lending activities as a whole, except for targets for priority sector
lending on merits of each case. There are schemes for advances of the Bank and the terms and conditions
are available in the Bank's website.

4.b.xiii Particulars of recipients of concession, permits or authorizations granted by it.

There is no system in the Bank for grant of concessions, authorization etc. And the provision is not
applicable to Bank. So there is no material in the Bank relevant to this provision.

4.b.xiv Details in respect of the information available to or held by it, reduced in an electronic form.

As has been stated earlier, Bank's website gives a general information on deposits, advances and other
services rendered by the Bank.

4.b.xv The particulars of facilities available to citizens for obtaining information including the working
hours of a library or reading room, if maintained for public use.

The Public can approach the Central Public Information Officers of the Bank whose names and addresses
are given on Bank's website for information permitted by Law on Bank's products, services and other
particulars.
4.b.xvi The names, designations and other particulars of the public Information officers
The names and addresses of the Central Public Information Officers and the Appellate Authority
designated by the Bank in terms of the Right to Information Act, 2005 is already published on Bank's
website www.bankofindia.com.
Differentiation Strategies-

CSR Initiatives Taken by Company-

Bank of India has always been a pioneer and taken the lead in helping the poor, deprived and
under-privileged sections of society. The Bank’s commitment to the community and society at
large, and its earnestness in pursuing social causes is reflective of its corporate social
responsibility agenda of which FINANCIAL INCLUSION has now assumed considerable
emphasis.

“Why Financial Inclusion?” Is the first question that comes to one’s mind? The answer to that is
“any growth strategy that does not pay attention to the inclusive growth of the millions of the
under-privileged people is not sustainable.” Hence, Bank of India has taken up financial
inclusion as a social cause and is implementing the same as a mass movement. Given the
economic status of the rural people, the spread of the population in remote inaccessible villages
and pockets, the standardised brick and mortar structure cannot possibly cover all the people,
hence the Bank in order to give greater thrust and acceleration to its mission to uplift the
downtrodden sections of the society and enhance scalability, has embarked upon an e-enabled
financial inclusion scheme. This will ensure that excluded and poor people are brought into the
fold of the formal banking system at a rapid pace.

”Banking the unbanked” is also another interpretation of financial inclusion, which involves
delivery of banking services at an affordable cost to the vast sections of the disadvantaged and
low income groups. In fact, financial inclusion has become the buzzword and predominant issue,
drawing the attention of the present day policy makers and officials of Reserve Bank Of India
(RBI). The RBI, has issued a number of directives and initiated several policy changes in order
to bring the unbanked, mostly the poor, the downtrodden and marginalised sections of society
into the mainstream of the formal banking fold.
A few of the measures initiated by include:

 l Simplification of KYC norms for BPL segment;

 Provision of banking services through business facilitators (BFs) and business

correspondents (BCs) in inaccessible rural areas;

 Enhancing the scalability of financial inclusion through electronic connectivity, handheld

devices and biometric smart cards; and,

 Opening ‘no-frills’ accounts for the poor. All this are a pointer towards financial
inclusion as an essential pre-condition for building sustained and inclusive economic
development, ushering in greater economic and social equity and a vital instrument to
bridge the inequality prevailing in society. However, it has to be immortally remembered
that relief measures, subsidy linked programmes and spending on social causes are
excellent, but the same can be sustained only if it is linked to eradication of poverty and
results in economic growth and empowerment of common people.

Even though the path to financial inclusion continues to be daunting without any short cuts, Bank
of India has made big strides in its implementation. The Bank till date has opened 2.5 million
‘no-frills’ accounts. To facilitate access of the banking system to people living in remote pockets
and belonging to backward sections of society, the Bank has leveraged technology through the
system integrator, Integra Micro Systems, and till date issued 80,000 biometric smart cards,
which are voice enabled so as to give a voice message to the illiterate persons, who understand
the language but can neither read nor write.
This has obviated the hurdles and stumbling blocks like cost of transportation, loss of daily
wages and other incidental expenses for the poor people in getting the intended benefit.

Implementation of the Financial Inclusion programme has positively impacted the lives of
millions of under-privileged and deprived people. The benefits that have accrued are immensely
satisfying to the Bank and they include:

 Impacts poverty reduction positively;

 Enables the poor to build assets and thereby reduces their vulnerability;

 Empowers women and enhances contribution to household income, enabling better

control over household decisions;

  Dependence on non-formal, high cost intermediaries reduced;

 Aids greater spending on education and health; and,

 Reduces child mortality and leads to improved health, especially among women.

Extending the banking habit among the less privileged in urban and rural India to wean them
away from unorganised money markets and moneylenders brings in a wholesome enhancement
in the quality of life.

Awards and Significant Events-

 Dun & Brad Street Award for the Best Public Sector Bank Category-2010
 The Second PSU Award 2010 by Dalal Street
 The award of the most efficient Public Sector Bank based on the Operating Proft / Total
number of employees , Growth in operating profit and Balance Sheet Profit
 IBA banking Technology Award 2009 for the Best Business Enablement Initiatives
 National Award for Excellence in Lending to Micro & Small Enterprises
 2009 –Conferred by the Government of India, Ministry of Micro, Small
& Medium Enterprises
  Best Education Loan Provider: Outlook Money –NDTV Profit Awards
 Adjudged the Best Bank in PSU Bank Category in NDTV Profit
 BoI rated by Economic Times/AC Nielsen Survey for „The Most Trusted Brands” (MTB)
 2009 -2ndunder PSU Banks Category (next to SBI)
o 8thin Top Service Brands Secured
o 92ndplace in MTB –an improvement of 54 rankings as
compared to previous year.
 Won the Award for Top Public Sector Bank under Best Bank Category &Overall Best
Bank by D & B Banking Awards 2009.
 First major PSU bank to receive ISO 27001:2005 certification for DataCentre & Disaster
Recovery Centre.
 International Award in Outsourcing –Sponsored by Everest Group &Forbes at New York,
USA.
 Special Award for Green IT at CIO-100 event for Solar Power.
 Runners‟ Up Award –FE India‟s Best Bank Awards

Career Opportunity Profile-

Conclusion and Suggestion-

Bibliography-