Commercial Banking Assignment

By: Dinesh Kumar. K (19MBA130)

OF
About the Bank: CSB Bank Limited, formerly The Catholic Syrian Bank Limited, is an
Indian private sector bank with its headquarters at Thrissur, Kerala, India. It is one of the
oldest banks in India. The bank has a network of over 426 branches and more than 257 ATMs
across India. Bank has implemented adequate procedures and internal control systems which
provide reasonable assurance regarding reliability of financial reporting and preparation of
financial statements. Bank is operating in a fully computerized environment with Core
Banking System supported by diverse application platforms for handling special business
such as treasury, trade finance, retail loans, etc. The process of recording of transactions in
each application platform is subject to various forms of control such as in-built system
checks, maker - checker authorisations and independent post transaction reviews etc. The
financial statements are prepared based on computer system outputs. Responsibility of
preparations of financial statements is entrusted to a dedicated unit which is independent of
business. Bank has implemented adequate procedures and internal controls which provide
reasonable assurance regarding reliability of financial reporting and preparation of financial
statements and were operating effectively during the year.
Type of Retail Loans:
1. Personal loans
CSB SALARY PLUS & CSB EASY CASH – CONSUMER & PERSONAL LOANS TO
EMPLOYEES OF REPUTED ORGANIZATIONS
- Employees of reputed organisation with minimum 3 years of confirmed service
- 10 times of gross monthly salary subject to upper ceiling fixed by the bank from time to time.
- Total deductions towards loan repayment including the instalments of the proposed loan
should not exceed 50% of gross salary.
2. Gold loan- General gold loans, Retail trade gold loan, Agricultural gold loans, Overdraft
gold loans, CSB double power.
3. Car loans/ Vehicle loans
- Individuals, Institutions, Firms, Companies
- 80% of on the road cost including Invoice price, Road tax, Insurance Premium and
Registration charges (subject to income wise eligibility).
4. Home loan
- CSB Nivas Loan – For purchase of land and further construction within three years.
- CSB Home Plus Support – A personal loan product which is offered to home loan
customers.
5. Education loan
 CSB Vidhya – For students pursuing studies in domestic institutions. Maximum loan
amount that can be sanctioned is ₹10 lakhs. The repayment tenor is 15 years
(excluding moratorium).
  CSB Study Abroad – For students pursuing studies abroad. Maximum loan amount
that can be sanctioned is ₹30 lakhs. The repayment tenor is 10 years (excluding
moratorium).
 CSB Excellence – For students pursuing studies in top rated institutions. Maximum
loan amount that can be sanctioned is ₹20 lakhs. The repayment tenor is 15 years
(excluding moratorium).

6. Loan against property

LOAN AMOUNT RATE OF INTEREST (P.A)
Above Rs. 25 lakhs 11.99%*
Above Rs. 10 Lakhs up to Rs. 25 Lakhs 12.49%*
Up to Rs. 10 Lakhs 13.49%*

7. Casy cash scheme

 A minimum loan amount of ₹25,000 to a maximum of ₹2,00,000.
 Advance of up to four times the gross salary in case of salaried persons and 40% of
the net annual income in case of others.
 Guarantee of 2 persons for advances below ₹1,00,000.
 Security of property or other tangible assets for advances of ₹1,00,000 and above.
 Repayment in fixed EMIs.
 Tenure of minimum 12 months and maximum of 48 months.
8. CSB Casy Mithra
Personal loan scheme for customers where the sanctioned amount is a multiple of their
salary/income.
Features
 Offered for short tenures of up to 5 years.
 Sanctioned loan amounts vary from ₹50,000 to ₹25 lakhs
9. CSB Personal Loan Schemes
-A rich bouquet of personal loan schemes.
-Profession Plus – For professionals like Engineers, Chartered Accountants, Company
Secretaries, Lawyers and other professionals with at least three years of professional
standing.
-Medi Cash – For graduates in medicine, dentistry, Ayurveda, Homeopathy and, Siddha.
-Personal Loan Scheme – For retired employees of the bank.
-CSB Women Support Scheme – For working women.
-CSB Senior Citizens Personal Support – Personal loans for senior citizens.

Credit Evaluation

Credit Portfolio: During the period of 2018-19, the Bank’s net advances increased to `
10615.24 crore against ` 9337.36 crore, registering 13.69% growth YoY in the previous
period. The CD Ratio of the Bank stood at 70.19% against 63.56% in the corresponding
previous year.

RETAIL LOANS DISBURSED DURING Q3 (FY 2019-20)

PRODUCT INTEREST RATE RANGE (%) MEAN
Loan Against Property 10.00 - 14.55 12.65
Home Loans 8.95 - 10.55 9.58
Vehicle Loans 9.90 - 10.75 10.63
Education Loans 12.00 - 14.50 13.25
Unsecured Loans 12.00 - 15.75 13.76
Two-Wheeler Loans 9.00 - 25.00 18.52

BASEL Norms: Capital Structure Qualitative Disclosures: As per Basel III guidelines, the
Bank is required to maintain a minimum Capital to Risk Weighted Assets Ratio (CRAR) of
9% {11.5% including Capital Conservation Buffer (CCB)}, with minimum Common Equity
Tier I (CET1) of 5.5% (8% including CCB) as on 31st March 2019. The minimum capital
required to be maintained by the Bank (including CCB) for the period ended March 2019 is
10.875%with minimum Common Equity Tier 1 (CET1) of 7.375% (including CCB of
1.875%). Bank’s capital structure consists of Tier 1 and Tier 2 capital. The major components
of Tier 1 capital are equity share capital, equity share premium, statutory reserves, general
reserves, special reserve (Section 36(i)(viii) of Income Tax Act) and capital reserves and
revaluation reserves (after discounting). Tier 2 capital consists provision for standard assets.
Bank has not issued any Upper Tier 2 bonds or perpetual debt or other innovative
instruments.
Credit Risk: The Credit Risk Management policy is intended for establishing a congenial
environment for augmenting credit with quality, operating under a sound credit granting
process, maintaining an efficient credit administration, measurement and monitoring process.
Credit Rating is mandatory for SME proposals with borrower exposure of Rs. 25 Lakhs and
above having a valid Audited Balance Sheet. Score cards are being used to evaluate retails
loans such as educational loans, personal loans and loan against property. Major part of the
internal rating is carried out by expert rating models provided/vetted by CRIS, the subsidiary
of CRISIL. To ensure strict separation of risk and return, credit hubs are formed in Head
Office and regional offices. Discretion for sanctioning of SME & Corporate loans are vested
with various levels of Credit Approving Committees/Management Committee/Board. In
order to manage Credit Risk, the Bank’s Credit Risk Management Department undertakes
Industry/ Product/Loan profile studies and makes them available for credit operations. The
bank has also set down industry/ sector-wise prudential exposure ceilings to contain/monitor
the risk of credit concentration. The bank has in place various credit risk mitigation measures
such as single borrower and group borrower exposures, exposure to sensitive sectors, bench
mark financial ratios, hurdle rate etc.
Operational Risk: In conformity with RBI guidelines, our Bank has evolved a robust
Operational Risk Management Policy. This policy provides the framework to identify, assess,
monitor, control and report operational risks, which arise out of the failure of internal
processes, people and systems and on account of external events. The policy is implemented
in an uninterrupted, reliable and comprehensive manner across the entire Bank. The bank also
has a board approved Business Continuity and Disaster Recovery policy to manage
disruptions to its operations.
Consumer Credit Regulations

FUNDED FACILITIES

  Nature of Credit Rate of PF

Facility

Up to Rs
Regular facilities- 25,000/- Nil
(a) General (Other than
those specifically Above Rs For new credit facilities and
mentioned below) 25,000/- enhancement in existing working
capital limits (enhanced
portion): 1.00% of loan/ limit
sanctioned subject to minimum Rs 250/-

Above Rs For renewal of existing working

25,000/- capital limits: 0.50% of limit
sanctioned, subject to minimum Rs 250/-

  (b Temporary enhancements/ ad-hoc 0.25% of amount sanctioned without any

) facilities upper ceiling

  (c) UBD (Rubber bills) Rs 100/- per lakh (subject to minimum

 Rs 100/-) for fresh as well as renewal.

  (d Housing Loans 0.50% of loan amount

)

  (e) Non funded facilities 50% of rates applicable to funded

facilities

Priority Sector Lending: Catholic Syrian bank serves the society by lending under Priority
sector advances. Bank could achieve the stipulated targets under Priority sector advances.
Priority Sector Advance extended by our Bank stood at ` 3804.09 crore at the end of March
2019, constituting 40.71% of Adjusted Net Bank Credit. This is against the mandated target
of 40% prescribed by Reserve Bank of India. PSLC Agriculture category to the tune of `
198.00 Crore and PSLC General Category to the tune of ` 400.00 Crore has also been sold.
Total agriculture advance stood at ` 1956.35 crore at the end of March 2019, constituting
20.94 % of Adjusted Net Bank Credit, against the mandated target of 18% as prescribed by
RBI.
SME Banking: Term Loans- long-term funds to support growth, be it capacity expansion,
product diversification, plant modernization or other similar requirements. The repayment
obligations are on the basis of the estimated cash flow of your business. These loans are
secured against the fixed assets acquired through the loan and secondarily against suitable
collateral security wherever required.
Working capital loans: These are given in the form of cash credit/ overdraft for purchase of
raw materials and for meeting working capital gaps.
Export Finance - can be taken for procuring raw materials, manufacturing/processing,
packaging and shipping goods; as Pre-shipment Credit against firm order and/or as Letter of
Credit. Finance is provided either in Indian or foreign currency.
Import Finance: Import finance is available to importers of goods - raw materials and capital
goods.
Letter of Credit- Apart from fund based working capital facilities, we provide a range of Non-
Fund Based facilities such as Letter of credit, Bank Guarantees, Solvency certificates, etc.
Generally provided for 3-6 months depending upon your trade cycle.
Buyers’/ Suppliers’ Credit: Our Bank arranges buyers’/suppliers’ credit through overseas
banks/ correspondents to help reduce cost for importers as per the RBI guidelines.
Commercial Vehicle Loans: Commercial vehicle loans are provided for purchasing and
upgrading business related transportation of our SME customers.
 Deposits
General Fixed deposit (Income Scheme)
 Minimum amount for opening account is Rs.100/-. Accounts may also be opened in
odd sums.
 Deposits are accepted for periods of 7 days.
 Interest is paid quarterly at the full value of interest. The same is paid monthly at the
discounted value of interest.
Features
 The maximum period for which term deposits are accepted is 10 years
 Nomination facility available
Cumulative Deposit
 The account can be opened with a minimum monthly remittance of ₹100 or multiples
thereof. Remittances may also be in odd sums.
 Account can be opened for a minimum period of 6 months and in multiples of 3
months.
 The maximum period for which term deposits are accepted is 10 years.
Benefits: Enables depositors to build up a sizeable corpus in a regular, systematic
manner.

Family Welfare Account

 Minimum amount for opening the account is ₹100. Accounts may also be opened in
odd sums.
 Deposits are accepted for a minimum period of six months.
 The maximum period for which deposits are accepted is 10 years.
Benefits
 Interest accrues both on the principal and the interest thereon.
 Nomination facility available
Total Deposits: Aggregate deposits of the Bank at the end of FY2019 stood at Rs. 15123.87
Crore, compared to previous year level of Rs. 14690.65 Crore. This increase is largely on
account of improvement in low cost deposits of the Bank.
CASA position: During the period under review, CASA has grown by ` 239.94 crores,
compared to `276.07 crores in the previous financial year, registering a moderate growth of
6.04%. CASA ratio has however improved from 27.03% in the previous financial year to
27.84% at the end of FY19.
NR Deposits: Aggregate NRI deposits of the Bank at the end of FY19 stood at ` 3762 crore,
compared to previous year level of ` 3782 crore. While the NRI savings deposits have grown
by ` 52.3 crore over previous year. NRI term deposits have de-grown by ` 72.6 crores, which
is mainly attributable to lower rates being offered by the bank for various maturities,
compared to peer group. The moderation in the pricing of term deposits is a conscious call
the Bank has taken to reduce the average cost of funds, as our overall liquidity position
continues to be in surplus.
CIBIL score: Catholic Syrian Bank takes into consideration the current credit score of the
individual and if he/she has any debts or has a poor repayment record. Only if the credit score
of the individual is good enough will he/she be eligible for the loan. The CIBIL score is said
to be 750+ in CSB.
 Know your Credit Status:
CIBIL report is a summary of your present and past credit transactions. Checking your report
regularly also helps report and rectify any discrepancies that have lowered your score through
no fault of your own.
 Makes you Eligible for Loans
Generally, financial institutions and lending platforms consider a CIBIL score of 750 and
above as ideal. Hence, it is important to build credit history and get a score as it makes you
better eligible to apply for credit under great terms. If you have no credit history and no
score, it becomes difficult for lenders to assess your creditworthiness.
The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit
information companies licensed by Reserve Bank of India. There are three other companies
also licensed by the RBI to function as credit information companies. They are Experian,
Equifax and Highmark. However, the most popular credit score in India is the CIBIL score.
Let’s find out what is CIBIL score.
CIBIL Limited maintains credit files on 600 million individuals and 32 million businesses.
CIBIL India is part of TransUnion, an American multinational group. Hence credit scores are
known in India as the CIBIL TransUnion score.
CIBIL Score is a 3-digit numeric summary of your credit history, rating and report, and
ranges from 300 to 900. The closer your score is to 900, the better your credit rating is.

INTEREST RATES AND SERVICE CHARGES ON LOANS AND ADVANCE

BASE RATE 10.25%

MCLR MCLR (W.E.F 01.04.2020)
Overnight MCLR 8.20% p.a.
One Month MCLR 8.30% p.a.
Three Months MCLR 8.60% p.a.
Six Months MCLR 8.70% p.a.
One Year MCLR 9.50% p.a.
The objective behind Insolvency and Bankruptcy Code, 2016 are listed below-
1. To consolidate and amend the laws relating to re-organization and insolvency
resolution of corporate persons, partnership firms, and individuals.
2. To fix time periods for execution of the law in a time-bound settlement of insolvency
(i.e. 180 days).
3. To maximize the value of assets of interested persons.
4. To promote entrepreneurship
5. To increase the availability of credit.
6. To balance all stakeholder’s interest (including alteration). Balance to be done in the
order of priority of payment of Government dues.
7. To establish an Insolvency and Bankruptcy Board of India as a regulatory body for
insolvency and bankruptcy law.
8. To establish higher levels of debt financing across a wide variety of debt instruments.
9. To provide painless revival mechanism for entities.
10. To deal with cross-border insolvency.
11. To resolve India’s bad debt problem by creating a database of defaulters.

12. Improved handling of conflicts between creditors and the debtor

Set a limit between malfeasance and business failure

Macroeconomic downturns losses to be allocated

Conclusion:
Catholic Syrian Bank has reported an Operating Profit of Rs 13.36 crore in FY19 as against
Rs. 74.33 crore in FY18. The decrease was due to increase in operating expenses mainly on
account of incremental provisioning for retirement benefits of employees. Net Interest
Income (NII) increased to Rs 439.95 crore in FY19 as against Rs 384.81 crore in FY18. Non-
Treasury Other Income increased to Rs 127.92 crore in FY19 from Rs. 122.70 crore in FY18.
Your Bank has reported a Net Loss of Rs. 197.42 crore in FY19 as against Net Loss of Rs.
97.47 crore in FY18. The increase in Loss was mainly on account of rise in operating
expenditure and accelerated provision made for NPA and depreciation on investments.
Despite the challenges faced during the period under review, your Bank has remained
capitalised enough and fundamentally strong to absorb these adversities.