3.

1 INDUSTRY PROFILE

3.1. (A) Introduction

The Banking Industry was once a simple and reliable business that took deposits from
investors at a lower interest rate and loaned it out to borrowers at a higher rate.

However deregulation and technology led to a revolution in the Banking Industry that
saw it transformed. Through technology development, banking services have become available
24 hours a day, 365 days a week, through ATMs, at online banking, and in electronically enabled
exchanges where everything from stocks to currency futures contracts can be traded.

The Banking Industry at its core provides access to credit. In the lenders case, this
includes access to their own savings and investments, and interest payments on those amounts. In
the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest
rate.

Banking services include transactional services, such as verification of account details,

account balance details and the transfer of funds, as well as advisory services that help
individuals and institutions to properly plan and manage their finances. Online banking channels
have become a key in the last 10 years.

The collapse of the Banking Industry in the Financial Crisis, however, means that some
of the more extreme risk-taking and complex securitization activities that banks increasingly
engaged in since 2000 will be limited and carefully watched, to ensure that there is not another
banking system meltdown in the future.

3.1. (B) Meaning of Bank

A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and location.
Banks are important players in financial markets and offer services such as investment funds and
loans.
3.1. (C) Definition

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as:

 conducting current accounts for his customers

 paying cheques drawn on him, and

 collecting cheques for his customers

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to customers'
current accounts. Banks also enable customer payments via other payment methods such as
telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making instalment loans, and by investing
in marketable debt securities and other forms of money lending.

3.1. (D) Types of Banks

Central Bank

The Reserve Bank of India is the central Bank that is fully owned by the Government. It
is governed by a central board (headed by a Governor) appointed by the Central Government. It
issues guidelines for the functioning of all banks operating within the country.
Public Sector Banks

 State Bank of India and its associate banks called the State Bank Group
 20 nationalized banks
 Regional rural banks mainly sponsored by public sector banks

Private Sector Banks

 Old generation private banks

 New generation private banks
 Foreign banks operating in India
 Scheduled co-operative banks
 Non-scheduled banks

Co-operative Sector

The co-operative sector is very much useful for rural people. The co-operative banking
sector is divided into the following categories.

 State co-operative Banks

 Central co-operative banks
 Primary Agriculture Credit Societies
 Urban Co-operative Banks
 Land Development Banks

Development Banks/Financial Institutions

  Industrial Finance Corporation of India (IFCI)
 Industrial Development Bank of India (IDBI)
 Industrial Credit and Investment Corporation of India (ICICI)
 Industrial Investment Bank of India (IIBI)
 Small Industries Development Bank of India (SIDBI)
 SCICI Ltd.
 National Bank for Agriculture and Rural Development (NABARD)
 Export Import Bank of India
 National Housing Bank
 North Eastern Development Finance Corporation

3.1. (E) Indian Banking Industry

History

Banking in India originated in the last decades of the 18th century. The first banks were
The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are
now defunct. The oldest bank in existence in India is the State Bank of India, which originated in
the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This
was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of
Madras, all three of which were established under charters from the British East India Company.
For many years the Presidency banks acted as quasi-central banks, as did their successors. The
three banks merged in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India.
 The oldest bank in existence in India is the State Bank of India, a government-owned
bank that traces its origins back to June 1806 and that is the largest commercial bank in the
country. Central banking is the responsibility of the Reserve Bank of India, which in 1935
formally took over these responsibilities from the then Imperial Bank of India, relegating it to
commercial banking functions. After India's independence in 1947, the Reserve Bank was
nationalized and given broader powers. In 1969 the government nationalized the 14 largest
commercial banks; the government nationalized the six next largest in 1980.

Around the turn of the 20th Century, the Indian economy was passing through a relative
period of stability. Around five decades had elapsed since the Indian Mutiny, and the
Social, industrial and other infrastructure had improved. Indians had established small banks,
most of which served particular ethnic and religious communities.

3.1. (F) Current structure of Indian Banking Industry

Currently, India has 96 scheduled commercial banks (SCBs) - 27 public sector banks
(that is with the Government of India holding a stake), 31 private banks (these do not have
government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign
banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to
a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total
assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.

The Indian banking system is financially stable and resilient to the shocks that may arise
due to higher non-performing assets (NPAs) and the global economic crisis, according to a stress
test done by the Reserve Bank of India (RBI).

Significantly, the RBI has the tenth largest gold reserves in the world after spending US$
6.7 billion towards the purchase of 200 metric tonnes of gold from the International Monetary
Fund (IMF) in November 2009. The purchase has increased the country's share of gold holdings
in its foreign exchange reserves from approximately 4 per cent to about 6 per cent.
 Following the financial crisis, new deposits have gravitated towards public sector banks.
According to RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial
Banks: September 2009', nationalized banks, as a group, accounted for 50.5 per cent of the
aggregate deposits, while State Bank of India (SBI) and its associates accounted for 23.8 per
cent. The share of other scheduled commercial banks, foreign banks and regional rural banks in
aggregate deposits were 17.8 per cent, 5.6 per cent and 3.0 per cent, respectively.

With respect to gross bank credit also, nationalized banks hold the highest share of 50.5
per cent in the total bank credit, with SBI and its associates at 23.7 per cent and other scheduled
commercial banks at 17.8 per cent. Foreign banks and regional rural banks had a share of 5.5 per
cent and 2.5 per cent respectively in the total bank credit.

The report also found that scheduled commercial banks served 34,709 banked centres. Of
these centres, 28,095 were single office centres and 64 centres had 100 or more bank offices.

3.1. (G) Feature of Indian Banking Industry

The growth in the Indian Banking Industry has been more qualitative than quantitative
and it is expected to remain the same in the coming years. Based on the projections made in the
"India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report
forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate. The
total assets of all scheduled commercial banks by end-March 2019 is estimated at Rs 40,90,000
crores. That will comprise about 65 per cent of GDP at current market prices as compared to 67
per cent in 2002-03. Bank assets are expected to grow at an annual composite rate of 13.4 per
cent during the rest of the decade as against the growth rate of 16.7 per cent that existed between
1994-95 and 2002-03. It is expected that there will be large additions to the capital base and
reserves on the liability side.
 Figure 3.1: Growth in Indian Banking Assets:

Growth in Indian Banking Assets (US$ Billions)

1200
1000
1000
850
800
616
600 535
448
342 374
400 285
256
200

0
2011 2012 2013 2014 2015 2016 2017 2018 2019

“Indian banking industry assets are expected to reach US$1 trillion by 2010 and are
poised to receive a greater infusion of foreign capital,” says Prathima Rajan, analyst in Celent's
banking group and author of the report. “The banking industry should focus on having a small
number of large players that can compete globally rather than having a large number of
fragmented players."

The Indian Banking Industry can be categorized into non-scheduled banks and scheduled
banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about
67,000 branches of Scheduled banks spread across India. As far as the present scenario is
concerned the Banking Industry in India is going through a transitional phase.

The Public Sector Banks (PSBs), which are the base of the Banking sector in India
account for more than 78 per cent of the total banking industry assets. Unfortunately they are
burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern
technology. On the other hand the Private Sector Banks are making tremendous progress. They
are leaders in Internet banking, mobile banking, phone banking, ATMs. As far as foreign banks
are concerned they are likely to succeed in the Indian Banking Industry.
3.1. (H) Nationalized Banks in India

Nationalized banks dominate the banking system in India. The history of nationalized
banks in India dates back to mid-20th century, when Imperial Bank of India was nationalized
(under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Then on
19th July 1960, its seven subsidiaries were also nationalized with deposits over 200 crores. These
subsidiaries of SBI were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad
(SBH), State Bank of Indore (SBIR), State Bank of Mysore (SBM), State Bank of Patiala (SBP),
State Bank of Saurashtra (SBS), and State Bank of Travancore (SBT).

However, the major nationalization of banks happened in 1969 by the then-Prime

Minister Indira Gandhi. The major objective behind nationalization was to spread banking
infrastructure in rural areas and make affordable finance available to Indian farmers. The
nationalized 19 major commercial banks are Allahabad Bank, Andhra Bank, Bank of Baroda,
Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, CorporationBank,
Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce (OBC), Punjab
and Sind Bank, Punjab National Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India,
United Bank of India (UBI), and Vijaya Bank.

In the year 1980, the second phase of nationalization of Indian banks took place, in which
7 more banks were nationalized with deposits over 200 crores. With this, the Government of
India held a control over 91% of the banking industry in India. After the nationalization of banks
there was a huge jump in the deposits and advances with the banks. At present, the State Bank of
India is the largest commercial bank of India and is ranked one of the top five banks worldwide.
It serves 90 million customers through a network of 9,000 branches.
 3.2 COMPANY PROFILE

Company: “Bank of India”

3.2. (A) Introduction

Bank of India being a major bank in the public sector always endeavours to strike a
viable equilibrium between commercial objectives and social responsibilities.

3.2. (B) History

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 as on 31 march 2019, 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 nationalized banks to establish a fully computerized
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 offices) 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.

3.2. (C) BOI’s Established History

1906: Founded by a group of businessmen in Mumbai

1946: First Indian bank to open a branch outside India in London

1950: First Indian bank to open a branch in Japan

1969: Nationalized along with 13 other banks when BOI had 207 branches in India
and 12 branches abroad

1989: Established BOI Shareholding Ltd, a JV with Stock Exchange Mumbai (BSE) to
manage the clearinghouse activities of BSE

1997: Maiden public issue in February diluting GOI share to 76.53%

2003/ 04: Ranked as India’s most trusted service brand among all national banks,
consecutively for three years by AC Nielsen ORG- MARG

2004: Ranked 25th among India’s Top 500 companies by Dun & Bradstreet

2007 -09: Net Profit of INR 11.23 bn for 2006-07 ,INR 20.09 bn for 2007-08 and INR
30.07 bn surpassed land marks of INR 10 bn , INR 20 bn and INR 30 bn
respectively.

3.2. (D) Mission & Vision

Mission
 "To provide superior, proactive banking services to niche markets globally, while
providing cost-effective, responsive services to others in our role as a
development bank, and in so doing, meet the requirements of our stakeholders".

Vision

"To become the bank of choice for corporate, medium businesses and upmarket
retail customers and to provide cost effective developmental banking for small
business, mass market and rural markets"

3.2. (E) BOARD OF DIRECTORS

Shri. Alok Kumar Misra

Chairman & Executive Director
(From 05.08.2009)

Bank of India, Head Office,

Star House, C-5, ‘G’ Block,
Bandra-Kurla Complex,
Bandra (East),
Mumbai - 400 051

Alok Kumar Misra has taken over as the Chairman and Managing Director of Bank of India with
effect from 5th August, 2009. Shri Misra was the Chairman & Managing Director of Oriental
Bank of Commerce prior to the present assignment. Shri Misra held the post of the Executive
Director of Canara Bank from 24th March 2006 to 3rd June 2007 and the Chairman & Managing
Director of Oriental Bank of Commerce from 4th June 2007.
 Shri B. A. Prabhakar
Executive Director
(From 15.10.2008)

Bank of India, Head Office,

Star House,
C-5, ‘G’ Block,
Bandra-Kurla Complex
Bandra (East),
Mumbai - 400 051

Shri B. A. Prabhakar, is the Executive Director of the Bank w.e.f. October 15,2008. Prior
to the present assignment, he was General Manager with Bank of Baroda looking after Treasury
Operations. He is a Chartered Accountant and a B. Com from the University of Mysore. He
joined Bank of Baroda as a direct recruit officer in 1977. He has worked extensively in the areas
of credit, operations and treasury in Bank of Baroda. He has served as the Chief Executive of
Bank of Baroda’s operations in United Kingdom.

Shri Prakash P. Mallya,

Shareholder Director
(From 25.10.2008)

Pratosh 46, 2nd Cross,

Panduranga Nagar,
Bannerghatta Road,
Bangalore – 560 076
 Shri Prakash P. Mallya is an economist and a career banker. He is M.A. (Economics) and
UGC Research Fellow, worked on Ph.D. Thesis at Gokhale Institute of Politics & Economics,
Pune from 1971-73. He is Ex-Chairman and Managing Director of Vijaya Bank and Ex-
Executive Director of Syndicate Bank. He is Shareholder Director of the Bank, for a period of 3
years from October 25, 2008.

3.2. (F) INVESTOR PROFILE / SHARE HOLDING PATTERN (%)

Table 3.1: Investor profile / Share holding pattern
Jan 19 Sep 19 Dec 19
Promoter (Govt. of India) 64.47% 64.47% 64.47%
Foreign Institutional Investors 14.06% 17.25% 16.68%
Financial Institutions / Banks 2.38% 0.37% 0.16%
Insurance Companies 9.03% 9.85% 10.16%
Mutual Funds 1.91% 0.68% 0.86%
Bodies Corporate 1.29% 0.71% 1.02%
NRIs / Foreign 0.50% 0.52% 0.52%
Indian Public 6.36% 6.15% 6.13%
Total 100.00% 100.00% 100.00%
Total Foreign Holding: 17.20%

3.2. (G) SHREHOLDING PATTERN OF INSTITUTIONAL INVESTORS

(Domestic) As on 31st December 2019
 Table 3.2: Shareholding pattern of institutional investors
No. of Shares % of Shareholding
LIC 4,01,66,520 7.65
GIC &its subsidiaries 1,21,97,001 2.32
MUTUAL FUNDS 45,27,767 0.86

ECGC 9,86,111 0.19

NATIONALISED BANKS 5,24,996 0.10

3.2. (H) BUSINESS MIX

Table 3.3: Total Deposits of Bank of India (INR in Bn)

Deposits December 18 March 19 December 19

India 1471.88 1594.87 1750.82
Foreign 245.36 302.22 309.2
Global 1717.24 1897.09 2060.2

Figure 3.2: Total Deposits of Bank of India

Table 3.4: Total Cash Deposits of Bank of India (INR in Bn)

 Cash Deposits Dec 18 Mar 19 Dec 19
Cash Dep. 462.9 486.37 567.14
AGGR. Dep. 1458.58 1581.21 1736.28

Figure 3.3: Total Cash Deposits of Bank of India

Table3.5: Total Gross Advances of Bank of India (INR in Bn)

Gross Advances Dec 18 Mar 19 Dec 19

India 1085.41 1153.54 1227.62
Foreign 275.69 293.77 341.91
Global 1361.1 1447.32 1569.53

Figure 3.4: Total Gross Advances of Bank of India

(INR in
Table 3.6: Growth in Average Business Bn)

Dec 18 Dec 19
 AVG. Deposits 1679.85 2023.58
AVG. Advances 1313.07 1510.87
AVG. Investment 439.46 668.31
AVG. Working 2017.19 2440.44
AVG. Borrowings 88.14 123.53
AVG. Networth 103.89 122.54

Figure 3.5: Growth in Average Business

(INR in
Table 3.7: Deposits Category wise (Domestic) Bn)
 Metro 991.25 57%
Urban 337.88 19%
Semiurban 214.58 12%
Rural 207.11 12%

Fig 3.6: Deposits Category wise (Domestic)

(INR in
Table 3.8: Credit Category wise (Domestic) Bn)
 Metro 837.26 68%
Urban 186.51 15%
Semiurban 92.76 8%
Rural 111.09 9%

Figure 3.7: Credit Category wise (Domestic)

3.2. (I) STRATEGIC INVESTMENTS/ALLIANCES/JOINT VENTURES

  Promoter & the largest share holder of a leading Indian Primary Dealer – Securities
Trading Corporation of India Limited (STCI).
 The Bank manages clearing & settlement operation of Bombay Stock Exchange
through its subsidiary BOI Share Holding Limited.
 In India, the bank has strategic investments in:
– Leading commodity exchange (MCX)
– Financial intermediaries (CDSL/NCML)
– Asset Reconstruction company (ASREC)
– Credit Information Bureau (CIBIL)
 Acquired P.T. Bank Swadeshi TBK in Indonesia (76% stake)
 Established 100% subsidiary in Tanzania - BOI (Tanzania) Ltd.
 Overseas Joint Venture - Indo Zambia Bank Limited
 Joint Venture Insurance Company with Dai-Ichi Life Insurance Company and Union
Bank of India
 5 RRBs with 35% stake

3.2. (J) SERVICES PROVIDED BY THE BANK OF INDIA

Online Services Ancillary Services
 Mobile Banking and Payments  Remittance
 Internet Banking  Star Cash Management Service
 Online Trading in Shares  Safe Deposit Vault
 Pay Bills  Depositary Services
 Book Ticket  Gold
 Tax Payment  Insurance
 Mutual Fund

3.2. (K) LOANS PROVIDED BY THE BANK OF INDIA

  Star Mitra Personal Loan  Star Personal loan
 Star Pensioner loan scheme  Star IPO
 Star Home loan  Star Educational loan
 Star Holiday loan  Star Auto fin
 Star Mortgage loan  Star Mahila Gold loan scheme

3.2. (L) BANK OF INDIA – ACCOLADES, AWARDS & HIGHLIGHTS

National Award for Excellence in Lending to Micro & Small Enterprises 2009-conferred by
Government of India, Ministry of Micro, Small and Medium Enterprises
 Outlook Money NDTV Profit Awards 2009- Best Education Loan Provider –
Runner up
 NDTV Profit Business Leadership Awards 2009 Bank of India adjudged the
“Best Bank” in public sector bank category
 Bank of India has been rated by Economic Times /The Nielsen
company survey “The Most Trusted Brands” (MTB) 2009 as follows:

♣ Under PSU Banking Category –2nd Next TO SBI

th
♣ Under Top Service Brands–8
♣ The Debutant –first time in the Top 100 In the MTB , Bank of India ranked 92nd -
54 rankings ahead of last year rankings (146th Rank during 2008)

 Bank of India has won the TOP PUBLIC SECTOR BANK under BEST BANK
category and OVERALL BEST BANK in the DUN and BRADSTREET
 Bank of India has won the TOP PUBLIC SECTOR BANK under BEST BANK
category and OVERALL BEST BANK in the DUN and BRADSTREET BANKING
AWARDS 2009
 Bank of India is the first major public sector bank to receive ISO27001:2005
certification for its Data Centre and Disaster Recovery centre"
  Bank of India won International Award for Excellence in outsourcing sponsored by
Everest Group & Forbes at New York, USA.
 Bank of India has won a special Award for green IT at CIO 100 event for solar Power
 Bank of India won runners up award in FE India’s Best Bank Awards based on
various parameters like Growth, Profitability, Strength and Soundness, recognise the
exemplary performance of select banks that withstood the recent economic turmoil to
emerge stronger and maximise shareholder value.
 Global Business Mix reaches INR3629 bn(US$77.99bn) as on 31.12.2009
 Total assets of INR 2496bn (US$ 53.64bn) as on 31.12.2019
 Operates 3140 branches which includes 29 branches/offices overseas
 Market Cap of INR 196.94 bn (US $ 4.27 bn) as on 25.01.2020
 The Bank has headroom of INR 87.81 Bn (without disinvestment) to raise capital to
leverage growth opportunities and strengthen its position as a diversified global bank.
The Bank has raised INR 10 Bn in July 2009 and August 2009 through issue of
Upper Tier II Bonds. Further the Bank has raised INR 3.25 Bn in December 2019
through IPDI Bonds and INR 10 Bn through issue of Upper Tier II Bonds in January
2020.
 International business constitutes ~ 17.94% of the total business
 100% domestic business covered under the Core Banking System, spanning over
1920 cities and towns

3.2. (M) COMPOTATORS PROFILE

List of Public Sector Banks in India is as follows:
 Allahabad Bank
 Andhra Bank
 Bank of Baroda
 Bank of Maharashtra
 Canara Bank
 Central Bank of India
 Corporation Bank
 Dena Bank
 Indian Bank
 Indian Overseas Bank  
 United Bank of India
 Vijaya Bank
 Punjab National Bank
 State Bank of Bikaner & Raipur
 State Bank of Hyderabad
 State Bank of India (SBI)
 State Bank of Indore
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Saurashtra
 State Bank of Travancore
 Syndicate Bank
 IDBI Bank