APROJECT REPORT ON

“CASH MANAGEMENT & CREDIT APPRAISAL”IN BANK OF INDIA

(A Government of India Undertaking)

Submitted in partial Fulfillment of the requirement

For the Award of Master of Business Administration

LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT& DEVEOPMENT STUDIES

LUCKNOW

UTTER PRADESH TECHNICAL UNIVERSITY

FACULTY GUIDE: INDUSTRY GUIDE:

Dr.Manoj Kumar Mr.Radhe Nigam(chief manager)(Reader),LBSIMDS Mr.R.R.Mishra(Senior Manager)

Mrs.Pushpa Chaudhari(Senior Manager)

Submitted by:

Rupali jaiswal (M.B.A Finance)

S. No.CHAPTER NAME PAGE No.1 Introduction 1

1.1 BOI Star House1.2 Over view about BOI 31.3 Vision, Mission & Quality Policy of BOI 71.4 Future Activities, Future Plans & Business Initiatives 91.5 Emblem 161.6 Bank of India Security System 201.7 BOI Foreign Branch Network & Operations 211.8 Position at a glance 221.9 Factor For Success 23

2 Product & Service Profile of BOI 252.1 List of Product & Service2.2 Deposit & Loan Products2.3 Credit Card Facility2.4 ATM Facility2.5 Credit Counseling Service ABHAY 292.6 New Product & Services (2010) 30

3 Information Technology & BOI 33

4 Opportunities & Challenges before BOI 39

5 Back Office Services of Bank 41

6 Project Work 436.1 Introduction of Cash Management 446.2 Cash Management at a Glance 476.3 Cash Management Trends in Banks 486.4 CMS Indian Scenario 516.5 CMS in BOI 556.6 CMS in Public & Private Sector Banks 596.7 Frame work for effective Cash Management Service 686.8 Cash Management Process 706.9 Benefits & Features of CMS in Nationalized Banks & Private Banks 71

6.10 Swot Analysis of CMS Market 79 Swot Analysis of Competition in CMS Market 80

7 Credit Appraisal 857.1 Stages of Credit appraisal 907.2 Clientele 927.3 Credit delivery 947.4 Segmented approach to lending 97

8 Modes of Credit delivery 99

9 Credit Thrust 102

10 Tenure of credit 110

11 Credit Acquisition 113

12 Appendices 11712.1 Business Mix 11812.2 Total Priority 11912.3 Gross Deposit & Gross Advances 121-12212.4 Profit & Loss A/c 12312.5 Balance Sheet 12412.6 Cash Flow Statement 12512.7 Performance Highlights 12712.8 Awards & Achievement 133

13413 Conclusion

14 Bibliography 136

CONTENTS

Acknowledgement

It is my proud privilege to show my gratitude to my project

guide who is also the Chief Manager of Bank of India Mr. Radhe

Nigam for all his valuable guidance and encouragement that

helped me to complete this project successfully and in time. I

sincerely thank from the bottom of my heart Mr. R.R. Mishra

senior manager (Administrative Department who has given me

an opportunity to study about the topic in his department. I cannot

ignore the help, which I got from Mrs. Pushpa Chaudhari, Senior

manager (credit Department) at BOI. Also I thank the entire staff

members of The Bank of India civil lines branch, Allahabad for

giving me a bagful of information pertaining to the topic. All of them

guided and explained me the concepts of Cash Management in

spite of their busy schedule they were always broad-minded in

helping me with valuable tips pertaining to the subject.

The support from the college and department is always

crucial in completing the project. As well as the unparallel support

rendered by our beloved faculties.

Ultimately I would thank my friends who supported me and

co-operated with me. I have received a valuable support from them

and for that I thank them again.

100 YEARS OF FULFILLINGDREAMS

Relationships beyond banking

Bank of india Star house

HEAD OFFICE-“STAR HOUSE”,C-5, G- BLOCK,

BANDRA-KURLA COMPLEX BANDRA (EAST) MUMBAI

BANK OF INDIA

Bank of India was established on 7th Sep, 1906 by a group of

eminent businessmen from Mumbai. The Bank was 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 Lacs and 50 employees, the Bank has a made a rapid

growth over the years and blossomed into a mighty

institution with a strong national presence and sizable

international operations. At present Net worth of the Bank

surpasses Rs.11100 crores. In business volume, the Bank

occupies a premier position among the nationalized Banks.

The Bank has been the first among the nationalized banks to

establish a fully computerized branch and ATM facility at

Mahalaxmi Branch Mumbai way back in 1989.

The Bank is a Founder Member of SWIFT in India.

The Bank came out with its maiden public issue in 1997.

Total number of shareholders presently is more than 2.25

Lacs.

While firmly adhering to a policy and prudence and cautin,

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 sizable presence abroad, with a network of 29

branches spread in 15 countries.

The Bank has capital stake of 51% in Dai-Ichi Mutual Life

Insurance Company recently established in India, the second

largest Japanese company (6th largest in the World)

company in the field of Life Insurance.

BOI provides a wide range of banking products and financial

services to corporate and retail customers. The bank

provides specialised services for businesses (dealing in

foreign exchange), NRIs, merchant banking, etc.

It also has specialised branches that deal in asset recovery,

hi-tech agricultural finance, lease finance and treasury, and

small scale industries.

BOI is leading player in Retail banking and it was first

nationalised bank to establish fully computerised branch and

ATM facility bank in India

As of 31 March,BOI had 3207 branch and 820 automated

teller machine(ATMs)

Real estate firm DLF Ltd held 39% in DLF Pramerica before

exiting, while Axa is still in a joint venture with the Bharti

group, where telecom is the dominant interest.

Among other players on BoI’s radar, Aegon Asset

Management Co. Pvt. Ltd already has approval from market

regulator, the Securities and Exchange Board of India,

having obtained this for a joint venture with Religare

Enterprises Ltd. However, Religare decided to acquire

troubled Lotus Asset Management in 2008 and opted to go

solo.

Japanese firm Dai-ichi Mutual Life Insurance Co., which

already has an insurance joint venture with BoI, Aviva Plc

and BBVA SA are the other names on the list. None of these

three firms have regulatory clearance to launch mutual

funds.

BoI started a MF business in 1990 and launched six

schemes. It redeemed four of them and transferred two to

Taurus Mutual Fund after offering an exit option to investors

by

BoI 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 international business accounts for around 17.82% of

Bank's total business.

VISION &MISSION OF BANK OF INDIA

VISION

To become the “Bank of Choice” for corporate, medium business

and upmarket retail customers and development banking for small

business, mass market and rural markets.

MISSION

To provide superior , proactive banking service to niche markets

globally, while providing cost – effective , responsive service to

others in our role as a development bank, and in so doing meet the

requirements of our stakeholders.

QUALITY POLICY

Bank of India is committed to become the Bank of Choice by

providing

SUPERIOR

PRO – ACTIVE

INNOVATIVE

STATE OF THE ART

Banking services with an attitude of Care and Concern for the

Customers and Patrons.

Future activities

The following services will be integrated in the existing system :

Prepayment/Payment of Term Deposit.

Debit Card PIN/TPIN request.

Registration for Mobile Banking Process.

Mobile Banking Charges- Utility Payment.

Issue of Term Deposit & Recurring Deposit.

Execution of Standing Instructions.

Issue of Demand Draft/Pay order.

Linking of more than one account to a Debit Card.

Request for regeneration of password for Internet Banking.

Process for registration for e-bill payment (E-pay) & De-mat

Facility.

Request for Duplicate Password for Internet Banking.

Closure of account.

Transfer of accounts.

De-mat accounts & all other related activities.

Way Forward

Customer Acquisition on a wider scale and Inclusive Banking.

Higher profitability and accent on asset quality

Leverage technology to a large extent.

Focus on Mid Corporate segment for higher returns.

To have a branch network of over 3500 branches and 1500

ATMs by March 2011 and enlarge our presence abroad.

Bank of India expects loans to grow 25% and deposits to rise

23%-24% in the year to March 2011.

The Bank has a strong position in financing foreign trade. Over

270 branches provide export credit. The expertise in this area has

enabled the Bank to achieve a leading position in providing export

credit in certain areas like diamond export.

The Bank has identified specialized target groups to develop

core advantage for future growth. The Bank, has specialized

branches comprising of Corporate Banking Branches to undertake

very large credit business, Overseas Branches specializing in

Foreign Exchange Business, NRI Branches which specially cater

to the requirements of Non-Resident Indians, Capital Market

Branches which undertake all activities relating to capital market

such as collection of applications, processing of refund orders,

Merchant Banking etc. Commercial & Personal Banking Branches

cater to the requirements of high net worth customers. Apart from

this, the Bank also has specialized Branches for Asset Recovery,

Small Scale Industries, Hi-tech Agriculture Finance, Lease Finance

and Treasury.

To effectively meet the ever-growing challenges and

competition, the Bank has made a good headway in bringing about

technological up gradation. MIS and critical functions of controlling

offices have been computerized. At present, the operations at

about 3207 branches are totally computerized. 26 branches

operate in partially computerized mode besides these 1019

branches and 31 extension counters are migrated to Core Banking

Solution. New facilities such as, Telebanking, ATM & Signature

Retrieval Systems have been introduced in a progressing manner

to add value to services. Telebanking facilities with Fax on

Demand facility, Remote Access Terminals for Corporate

Customers are now available at many branches. The Bank has

installed ATMs in Mumbai and other centre in the country.

The Bank is a member of the RBI's VSAT Network and has

installed 39 VSATs linking strategic branches/offices. The Bank is

making a paradigm shift from branch automation to bank

automation and is in the process of implementing a Multi-Branch

Banking Project, that facilitates City-wise Connectivity of

Computerized Branches. The Bank is in the process of installing

BOINET, a Wide Area Network for providing a inter- and intra-city

connectivity, as a part of enhancing its decision support system.

The Bank's corporate personality and philosophy are fully

reflected in the emblem, which is a five-pronged Star -- a

harmonious blend of traditional and the functional. The elongated

prong pointing upwards, conveys the Bank's drive to achieve

ascending goals. The Star is a beacon and guide to those in need

of direction.

EMBLEM

The Bank of India emblem epitomizes the corporate

personality and basic policy of the Bank. In conception and design,

it is a harmonious blend of the traditional and the functional.

Within the central circle lies the Bank’s seal – a symbolic and

stylized representation of Mother India, signifying

Bank of India’s continuing consciousness of the legacy of the

national past.

The five prongs of the star represent the Bank’s pragmatic

aspect Banking service extending over five continents .The single

Elongated point, yearning upwards, conveys Bank Of India

unceasing endeavour to achieve ever – ascending goals.

The star has yet another aspect – it is a beacon and guide to

those in need of direction. It symbolizes the Bank’s perpetual

readiness to assist anyone – common man and business man

alike – in steering a course through the contemporary maze of

money affairs.

Last of all, the star has astrological significance : it is a

determinant of times to come. Bank of India sees this as a

commitment – to ensure that the corporate emblem shines as a

harbinger of a bright future for all.

JOINT VENTURE Bank entered into an arrangement with Dai-Ichi Mutual Life

Insurance Company, second Japanese company in the field of

Life Insurance (sixth largest in the world) and Union Bank of India

for setting up a Joint Venture Life Insurance Company with capital

stake of 51%, 26%, and 23% respectively. Formalities for

incorporation of JV Company are in advanced stage.

BRANCH EXPANSION

Bank opened 63 new branches and converted 41 Extension

counters to full-fledged branches. Total number of domestic outlets

is 2845.

INTERNATIONAL OPERATIONS

With the opening of a branch at Antwerp (Belgium),

number of overseas offices stand at 25 spread in 13

countries. Shenzen Representative Office in China was

upgraded as a Branch in March 2007. A new Representative

Office was opened in Beijing (China).

Bank has taken over management of Almana

Exchange House in Doha Qatar. Arrangements with Bank

Azizi, Kabul in Afghanistan made for money remittance to

India.

Bank is holding approval of Reserve Bank of India for

setting up Subsidiaries in Tanzania and Canada, Branches

in DIFC (Dubai) and Dhaka (Bangladesh), and

Representative Offices in Dubai, Johannesburg (South

Africa) and Doha (Qatar).

Bank’s International Operations contribute 20% of

Bank’s total Business.

CORPORATE SOCIAL RESPONSIBILITY Bank as part of its centenary celebrations promoted a Trust,

‘ABHAY’, to offer credit

counseling services, free of cost, with the following objectives:

Advising on gaining access to structured financial

system including banking.

Counseling people who are struggling to meet the

repayment obligations and helping debt.

Resolution

Helping in rehabilitation of borrowers in distress.

Bank has pioneered a Mega Project for Integrated

Development of 129 villages in 78 Districts and 17 States

covering 60,000 households, identified for holistic

development and showcased as Model Villages. The Bank

has so far extended financial assistance over Rs. 150 crores

to the rural households in the identified villages. An

evaluation study conducted in select villages has revealed

that there is 20-25% improvement in the household income

after the implementation of the scheme.

BOI Security system

Two-Factor Authentication (2FA)

Two-Factor Authentication (2FA) refers to a security system

where two levels of identity checks are required. It comprises the

current identity check using User ID and Password, and an

additional level using something that you carry which generates a

unique security code commonly known as OTP (One-Time

Password) before an authorized user can gain access to an online

service. These two levels of identity checks help boost security

against Internet Banking crimes. (User ID & Password is basically

“Something you know” and Hardware device “Something you

have”)

(A GOVERNMENT OF INDIA CONCERN)

FOREIGN BRANCH NETWORK

Factors for Success in Foreign countries

Offshore Credit Services

It also provides cross-border loans to joint ventures and

wholly owned subsidiaries of Indian companies. This helps these

Indian companies to secure loans, allowing them to increase their

presence in the EU. The bank facilitates Indian companies in

raising trade finance, letters of credit or project finance for their

business ventures in the EU. This has enabled the bank’s growth,

since many Indian companies are venturing in the EU.

Technology Implementation

The Bank of India has been the leading bank in India to

adopt new technologies to provide better services to its

consumers. The bank has been able to offer high-quality

technology-based products and services to its customers. This has

assisted I in tapping the EU market. The bank has successfully

integrated technology to support applications such as tele-banking,

internet banking, signature retrieval system, fax on demand and

remote access terminal services for its corporate clients. It has

also put in place effective monitoring and control mechanisms to

provide efficient services to its customers

Leveraging Special Services

The Bank of India is strategically targeting Non- Resident

Indians (NRIs). It facilitates NRIs in their personal financial

services needs such as remitting money to India. The bank

provides NRIs the facility of transferring funds to BOI accounts in

India in an efficient and cost-effective manner. Since the EU has a

substantial Indian population, the bank has grown rapidly and has

been successful in the EU. It offers personal and corporate

banking services as well as specialist services, including forex

dealings, loan syndications, etc, to its customers in the EU.

Future Plans

BOI is planning to increase its presence in the EU by

opening new branches and offering complete financial services to

its customers, including guidance for entering the market, loans,

remittances, etc. BOI has plans to open a branch in Antwerp

(Belgium) to cater to the requirements of diamond merchants,

traders and in this segment BOI is market leader in India.BOI will

have 9 branches in the EU to service its customers. BOI also plans

to enhance its services to Indian companies that are investing in

the UK. It has plans to assist them in generating corporate and

project finance for their investments abroad. It plans to increase its

focus on other diversified services, apart from banking services

such as venture capital, merchant banking, etc. The bank also

hopes to leverage IT technology and develop quality products and

services for increasing its reach and gaining competitive

BUSINESS INITIATIVES

To strengthen our internal control system, Project

STAR BOOST has been initiated by the bank to leverage

technology for more effective and focussed audit. With the

launch of this programme bank has established a Back

Office for Offsite Audit and related work and is effectively

making use of CAAT (Computer Aided Audit Tools). The

Audit Exception Reports (AER) are generated in advance

and sent to branches for compliance before commencement

of audit. This process is expected to improve the audit

rating of the branches.

Bank has opened Global Remittance Centre (GRC) at

Mumbai. The inward remittances, SB NRE / NRO Account

opening of NRI customers have been centralized at GRC.

Bank has initiated the process for establishing a hub for the

purpose of handling the documentation part of Trade

Finance portfolio.

Bank has initiated media campaigns on the existing

theme “Relationships beyond Banking”.

For building the brand image and increasing the

visibility and better marketing of various products through

publicity, Bank has also been advertising our products in

newspapers, magazines, television, Hoardings, banners,

bus panels, trains, glow signs at railway stations, events

and sponsorships, leaflets and brochures, etc.

Introduction of Credit Application Processing Systems

through software termed as CAPS which covers all major

credit segments – Retail, Corporate, MSME and Agriculture.

It will be a fully Automated system to improve credit

delivery.

Two new products, “Star Suraksha SB account” and

“Star Benefi t CD account” having unparallel features were

launched on the Bank’s Foundation Day on 7th September,

2009 for improving the CASA business.

To give a boost to SME business, Bank has SME

branches and also SME hubs and Nodal Officers at all

Zonal Centres.

Bank has devised a Composite Loan Scheme for

MSE sector borrowers in Rural / Semi Urban and Urban

areas for maximum exposure of up to Rs. 5 lacs per

borrower. The scheme has unique features like simplified

application cum proposal format, hassle free minimum

documentations, relaxed margin and interest rates, etc.

MOUs have been signed with Tata Motors, M/s.

Piaggio Vehicles Pvt. Ltd., M/s. Asia Motor Works, M/s. JCB

India Ltd., M/s. Mahindra Navistar, M/s. Ashok Leyland Ltd.,

Sonalika Group of companies etc. for financing vehicles /

earth moving equipments.

Credit business is receiving focus through

specialised branches - 29 SME branches, 28 Mid Corporate

Branches2 Large Corporate and 13 Corporate Banking

branches, 36 Commercial & Personal banking branches and

‘Retail Hubs’ at 27 centres across the country working on

the concept of single window for Housing & Personal

finance banking.

To achieve objective of Financial Inclusion,

information technology initiatives implemented and the

concept of business correspondents and facilitators has

been introduced throughout the country.

Other New Initiatives

Technology has been leveraged in some important projects

Financial Inclusion Project – Banking the unbanked Sector

Solar Power Project – Eco-friendly – Technology Power for Rural Areas

V-sat Connectivity Project – Networking / connecting the Rural /Remote locations.

Collaborative Communication –Virtual classroom sessions/ Installation of High definition Audio / Video equipments.

E -learning to revolutionise training.

Installation of Biometric ATMs and ATMs with easy accessibility for the physically handicapped.

Sales Lead Management.

Customer Complaint Management Solution.

Credit Risk Management Project.

Credit application Processing Systems (CAPS).

Anti Money Laundry System.

Human Resources Management Systems.

Opportunities

Recovery in global output and trade is expected to be

strengthened in 2010 and as projected by IMF, output is

expected to grow by 3.9% and trade volume is to expand by

5.8%. Similarly, domestically, India’s GDP growth is

expected to exceed 8 percent in FY 2011 against 7.4 percent

in FY2010.

The industrial sector is growing at over 10 percent and

exports sector has witnessed positive growth trend. These

positive developments provide opportunities for banks to

expand their activities

The pick up in consumption and investment demand and the

Government’s thrust on investment in infrastructure sector

will provide impetus to the bank credit growth.

The stress on inclusive growth and financial inclusion will

create enabling environment for expansion of banking

facilities.

CHALLENGES

With the inflation rising to double digit, which may necessitate

certain restrictive monetary measures, there is expected to be

pressure on interest rate. Among others, the challenge confronting

banking sector during 2010-11, include the following ones:

● Improving NIM by keeping the overall of cost of deposits down

by expanding CASA base and improving yield on advances by

prudent deployment of resources among various portfolios.

● Expansion of credit portfolio, which have shown a deceleration

in growth during 2009-10.

● Pro-active NPA management, by arresting further slippages and

augmenting recovery efforts.

● Ensuring growth in profitability by steady increase in noninterest

income in light of pressure on NIM.

● Increasing capital base to keep pace with the asset growth so

as to maintain a healthy capital adequacy ratio.

LIST OF PRODUCTS AND SERVICES

1. Deposit Products

Savings Bank Account

BOI Savings Plus

Current Deposit Account

BOI CD Plus

Double Benefit Deposit

Fixed Deposit

Short Deposit

Quarterly Income Certificate

Monthly Income Certificate

Recurring Deposit

Foreign Currency Deposit Scheme

FCNR Deposit

Floating Rate Deposit Scheme

Deposit Scheme for Senior Citizens

Special Deposit Product for High Value Deposit Customer

 

 2. Loan Products

Cash credit

Overdraft

Loan against Bank Deposit

Loan against NSC, KVP, LIC policies etc.

Agricultural Loan

SSI Finance

Star SSI Supreme Scheme, Priyadarshini Scheme etc.

Star Home Loan

Star Personal Loan

Star Mortgage Loan

Star IPO

Star Autofin

Star Education Loan

Medimobile Loan

Gold Loan

Bullion Banking Bill Finance

Bank Guarantee

Export Finance

Channel credit

Corporate Loan

Discounting Future Cash Flows

Foreign Currency Swing

3. Other Products and Services

Credit Cards

Debit cum ATM card

Star Cash Management

Depository Services

Safe Deposit Vault

Safe Custody Services

Government Relief Bonds

Retailing of Government Securities

Multicity Cheque Facility

Multi Branch Banking

Telebanking and Fax on demand

Internet / SMS Banking

Corporate Remote Access Terminal

SWIFT

Electronic Clearing Service / Electronic Fund Transfer

CREDIT CARD FACILITY

Bank of India's range of Card Products is an open line of

credit and a useful source of cash, anytime and anywhere.

Bank of India issues a range of following card products.

i) INDIA CARD ( MasterCard)

ii) INDIA CARD ( Visa Gold)

iii) BOI NAVY CLASSIC ( MasterCard)

iv) BOI NAVY GOLD ( MasterCard)

v) TAJ PREMIUM CARD ( MasterCard)

ATM FACILITY

Savings, Current and overdraft account holders, who in

terms of operating instructions are authorised to operate upon their

account singly, are eligible to apply for the ATM card - 'Starlinks

International Debit cum ATM Card'. (Minors and illiterate

accountholders are not eligible.). You may use the card at any of

our ATM centre (list available on our website

www.bankofindia.com) on a 24/7 basis for :

withdrawing cash up to Rs.15,000/- per day (Rs.5000/- at a time)

Transfering balance among accounts

Depositing cash & cheques through ATM

Checking balances in your accounts

Getting a mini statement for your last 5 transactions

Registering a request for a cheque book

The card is also accepted at ATMs under 'Cash Tree', 'Bancs

Network' and all ATMs that display the VISA logo world wide. It

may also be used at selected points of sale .

Credit Counselling Service (Abhay)

I ntroduction Bank of India being a major bank in the public sector always endeavours to strike a viable equilibrium between commercial objectives and social responsibilities. As a reaffirmation of our commitment to the corporate mission, we in our centenary year, started credit counseling services at free of cost to the Common People to enable them to lead a respectable life. The Credit Counseling services were started under the aegis of the Trust "ABHAY " which was launched at the hands of His Excellency President of India Dr. A.P.J . Abdul Kalam at New Delhi on 25th August, 2006. The first center was inaugurated at Mumbai by Dr. Y.V.Reddy, Governor, Reserve Bank of India on 7th September,2006 which was followed by Centres at Wardha in Nagpur and Chennai. The following are the main objectives of the Trust.

• Advising on gaining access to structured financial system including banking

• Creating awareness among the public about financial management

• Counseling people who are struggling to meet the repayment obligations and helping debt resolution

• Helping in rehabilitation of borrowers in

Friendly and timely guidance coupled with related support extended by the counselors will not only mitigate the immediate stress of the trapped individuals and their households, but it will also help to infuse confidence in others who are in distress, irrespective whether they are customers of Bank of India or other Banks. With the common objectives of counseling the borrowers, different focus is being given in metro/urban and rural areas, to meet their different needs. Our endeavour is continuing to be provide more and more social services in the years to come. The relationship we maintain is beyond banking

NEW PRODUCTS & SERVICES (2010)

● All domestic branches are covered under Core Banking

Solution. New domestic branches opened are directly under the

CBS platform. All domestic branches are RTGS/NEFT enabled.

● Call centre facility is made operational as an alternate delivery

channel to a branch set-up which would act as a “Contact” centre

and is a cost effective touch point for customers.

● Bank has launched the Marathi version of its web-site.

● Bank has launched “Welcome Kit” for all new accounts opened

at the select branches of Mumbai, New Delhi, Chandigarh and

Ghaziabad. The kit contains cheque book, ATM card, Pin, TPIN

and internet PIN, the unique feature of which is that the same are

in activated status from the day one.

● A web based Customer Complaint Management System has

been made live from 1st January, 2010 to reduce the response

time.

● Oracle Marketing Online product has been implemented Data

Warehouse for communicating with customers via email. With this

system in vogue, Bank is able to deliver emails overnight to its

customers.

● SMS alert facility has been introduced and provided to all

customers for all debit transactions from delivery channels, all

debit clearing transactions of Rs.25,000 and above, all customer

induced debit transfer and cash payments of Rs. 10,000 and

above, all debit RTGS transactions and acknowledgement on

accepting the cheque book issue request.

● Bank of India is the first PSU Bank in India to implement TWO-

Factor Authentication (2FA) – Star Token for both Retail and

Corporate internet banking customers as an additional security

measure. Bank’s customers enjoy the convenience of “secured”

Anytime, Anywhere, Anyhow hassle free Banking from the comfort

of their homes and offices with a click of a mouse.

● Resetting or Unblocking of Internet Banking login password

can be done using Debit-cum-ATM card PIN.

● Transaction under taken through Credit Card can be viewed

through Internet Banking channel.

● Provision to make online bid-cum-application for Application

Mobile Banking Services extended to all retail internet banking

customers.

Mobile banking which includes features like Balance enquiry, last

five transactions, Cheque status, Funds Transfer and Mobile

Payments.

● Bank has joined National Financial Switch (NFS) which enables

customers to access more than 50,000 ATMs across the through

owned as well as shared ATMs network.

● Technology has been leveraged in some important projects like

Financial inclusion project for Banking the unbanked sector, Solar

Power Project which is Eco-friendly for Technology Power for

Rural Areas, V-sat Connectivity Project – Networking / connecting

the Rural / Remote locations.

● Bank launched “Star Abhilasha Biometric Smart Cards” in

Nagpur, Maharashtra in February, 2010.Installation of Biometric

ATMs and ATMs with easy accessibility for the physically

handicapped is being established Supported by Blocked Amount

(ASBA) IPO issues by Retai internet banking customer.

INFORMATION TECHNOLOGY AND BANK OF INDIA

TECHNOLOGY PRODUCT & SERVICES

Bank of India has been pioneer in launching key initiatives in areas

of Products, Distribution, Technology, International Operations and

Risk Management. Our Bank aims at strengthening customer

relations, diversifying delivery channels, increasing international

capabilities and services, and strengthening revenue streams from

diversified sources. Our Bank has redefined banking services with

hi-tech services. The theme of "Relationships beyond Banking"

has helped in creating & cementing a niche in the minds of our

clientele.

Branch Automation

Bank completes implementation of 100% Core Banking Solution in

all its 3023 branches.

Listing of CBS branches Automated Teller Machines (ATMs)

Bank is having its own 487 ATMs (both on-site & off-site). The

Bank is member of Cash tree and BANCS network. The Bank is

the Settlement and Nodal Bank for Cash tree ATM network having

13 member Banks and BANCS network having 14 member banks.

The Bank has also entered into bilateral agreement with State

bank of India and its associates. Our Bank has joined National

Financial Switch (NFS) which enables our Customers to access

more than 35,000 ATMs across the country.

ATM Locator Solar Power Systems

Solar Power Systems implemented in 147 Rural / Semi

urban branches where there is acute shortage of Power or

high load-shedding periods. We plan to extend in another

100 branches / administrative offices during the year 2009.

Financial Inclusion

IT enabled FINANCIAL INCLUSION SOLUTION has been

successfully implemented in different states of India, viz.

Gadab (rural) branch of Raigad Thane Zone, Puttur in

Hyderabad Zone, districts of Lucknow in U.P and Budhni in

Sehore District, Bhopal in M.P. Expansion of the solution in

these centers is in full-swing.

Teller Cash Dispensers

Installation of Teller Cash Dispensers is in progress at

identified branches. It will reduce wait-time, enhance the

productivity of Tellers and also help in accurate dispensing of

Cash.

Star Connect Internet Banking Services

Bank’ customers enjoy the convenience of “secured”

Anytime, Anywhere, Anyhow hassle free Banking from the

comfort of their Homes & Offices with a mouse click.

Features like Statement of Account – View, Enquiring status

of cheques, Request for a cheque Book, Transfer of funds

including third party transfer within the networked branches

etc.

Interbank Fund Transfer

Online Interbank Fund Transfer made easy and convenient.

Now, you can transfer funds ONLINE across banks, through

our StarConnect Internet Banking Services, using RTGS/

NEFT facility, WITHOUT ANY CHARGES.

Star Connect Retail

Star Connect Corporate

Technology Product & Services BOI Star e-Pay

Customers can register for Auto-pay or on-line payment of

various utility services like Telephone Bills, Electricity Bills,

Mobile Bills, Insurance premia, Credit card Bills and

subscription payments to certain magazines, Mutual fund

applications and certain other agencies. The benefits being:-

No more late payments.

No more queues.

No more hassles of writing and depositing of cheques.

e-Payment of Direct & Indirect, Central Excise & Service Tax

Tax Payment made Easy. Pay your Direct & Indirect Central

Excise, Service Tax, Custom duties online from the comforts

of your office or home, avoiding queues and last minute

rushes.

Star e-Share Trade

Bank’s customers are provided with a fast, easy, transparent

and hassle-free way to trade in shares. Customers can

invest in shares traded on Stock Exchanges without visiting

or calling the share brokers, track settlement cycles, delivery

instructions for purchases and sales.

RTGS / NEFT

Remittance of funds for inter-bank transactions / customers

transactions utilising the RBI’s RTGS infrastructure through

our networked RTGS / NEFT enabled branches. 2100+

branches are RTGS enabled & 2000+ branches are NEFT

enabled.

Star e-Remit Service

An effective way to transfer money from any bank account in

the United States to anyone in India. The facility can be used

for all personal US dollar remittance from anywhere in USA

to India.

DGFT Online e-Payment

A safe, secure and convenient mode of license fee payment

to Directorate General of Foreign Trade, Ministry of

Commerce, Government of India, through the Internet

without visiting the Bank.

Online Booking of Indian Airlines Ticket / Spice Jet

Travel Ticket booking made easy. Select your flight, provide

necessary details and pay through Bank of India Internet

Banking.

Online Booking of Indian Railway Ticket

Railway Ticket booking made easy. Select your train, provide

necessary details and pay through Bank of India Internet

Banking.

Online Application for Education loan

On Line facility available for submission of Education Loan

application.

Online Utility Payments

Online facility for payment of Utility bills and other payments

viz. MTNL, Reliance Infocomm, BSNL (select circles), Tata

Indicom, Vodafone, Idea, Airtel, MSEB, Reliance Energy,

Mahanagar Gas, Tata Sky, BSES Rajdhani, BSES Yamuna,

NDPL Delhi, VSNL, LIC etc.

SWIFT

Our bank also facilitates services to its customers through

SWIFT, thereby providing a cost-effective financial

processing & communication services of assured quality,

integrity, reliability for International funds transfer and other

financial transactions.

STAR CASH MANAGEMENT

A product specifically for corporate customers. It offers fast-

track cheque collections, speedier release of funds and

profitable funds management at a reasonable cost.

ECS (Debit & Credit)

BOI offers its customers a faster and easier method of

effecting payments by direct debit to the customer’s account

in case of utility payments, credit card bills etc. ECS is also a

preferred method of credit in respect of dividend warrants,

interest warrants, refund orders, salary pensions.

BACK OFFICE SERVICES OF BANK

Delegation of powers Bank will ensure that authorities at various levels will

be empowered with adequate powers to take prompt

decisions with regard to sanctioning of loans and advances,

issuance of guarantees, settlement of claims of deceased

depositors, issuance of duplicate demand drafts, deposit

receipts, other claims and administrative matters concerning

customer service.

Reorganization

In order to facilitate quick decision-making and to suit

the changing requirements, the organizational structure has

been revamped. More specialized branches like Personal

Banking Branches, Corporate Branches, Small Scale

Industries Branches, Hi-tech Agricultural Finance Branches,

Housing Finance Branches, Capital Market Branches,

Overseas and NRI Branches have been opened at important

centers.

Transparency and secrecy

Bank will ensure that there would be transparency in all

business operations at all stages. Customers will be

educated about the various products and facilities available.

A uniform strategy will always be adopted to eliminate any

possibility of discrimination on caste, creed and religion or

economic status of the clients. Secrecy norms will be

simultaneously observed to protect the interests of our

customers.

Surveys by outside agencies

All steps will be taken by bank to improve Customer

Service and enhance customer satisfaction. Towards this

end, bank services will be got evaluated through outside

reputed marketing agencies with a view to assessing the

quality of services extended at the branches and to ensure

that bank customer service match the expectations of bank’s

various clientele.

Introduction of Cash Management

Manage your cash flow and liquidity effectively and efficiently

Cash Management Trends

in Banks of India

Traditionally having a paper-based clearing system involving not

only high processing cost but security risk, cash management in

India has certainly undergone a paradigm change. From a product-

centric approach, the focus for almost all banks today has shifted

emphatically to the customer. And success is all about bringing the

maximum possible delivery channels to the prospect's doorstep.

In the rapidly transforming world of business, banking faces its

biggest challenge yet - constant change. With every bank seeming

to offer service possible, efficiency coupled with innovative value

added solutions have emerged as the key business differentiators

that affect a bank's bottom line. Confronted with shrinking

deposits/margins, rising customer expectations and intensifying

competition, banks must at all times strive to be a step ahead of

industry standards. At the same time, they cannot lose sight of

credit risk, a natural by-product of the increasingly complex

relationships in today's dynamic markets.

For some time now, technology has been the key driving force

behind every successful bank. In such an environment, the ability

to recognise and capture market share depends entirely on the

bank's competence to evolve technically and offer the customer a

seamless process flow. The objective of a cash management

system is to improve revenue, maximise profits, minimise costs

and establish efficient management systems to assist and

accelerate growth.

Today a corporate treasurer's dilemma is multifaceted. With more

movement towards the regional/central liquidity management in

the complex structure of rules and regulations, further complication

is caused by taxation issues.

corporate treasurer needs as VOC - Visibility of funds, Optimised

returns on funds, and Control over receivables and payables.

Treasury can face a number of issues related to the slow

movement of funds, locked working capital, loss of float income,

high cost of funds, time consuming reconciliation and manual

processes. In India the cash management business primarily

involves collections and payments services.

Cash Management Solutions Offered

Account reconciliation services Balancing a chequebook for a very large business can be quite a

difficult process. Banks have developed a system to overcome this

issue. They allow companies to upload a list of all the cheques

whereby at the end of the month, the bank statement will show not

only the cleared cheques but also uncleared ones.

Positive pay

An effective anti-fraud measure for cheque disbursements. Using

the cheque issuance data, updated regularly with cheque issuance

and payment, the bank balances all cheques offered for payment.

In the case of any discrepancies, the cheque is reported as an

exception and is returned.

Balance reporting services

Balance reporting provides help in procuring a company's current

banking information from its accounts. With this service the banks

can offer almost all types of transaction-specific details on

activities related to payment like deposits, cheques, wire transfers

etc. It also helps in an effective and efficient management of

regular cash flow.

Lockbox

Facilitates the cash improvement where, instead of being delivered

to business address, customer payments are delivered to a special

post office (PO) box. It is only the customers' payments that are

delivered in the PO box and the company's own bank collects the

amount and delivers them to the banks of the customers. The bank

of the customers opens and processes the payments for direct

deposit to the bank account. Lockbox contents regularly removed

and processed.

CASH MANAGEMENT AT A GLANCE

CASH MANAGEMENT

For any organization, cash is the lifeblood that keeps the business

going. That is why, increasingly, Cash Management has been

gaining importance with organizations that view the services as a

crucial part of their corporate strategies.

Cash Management is Efficient Management of cash

(Outflows/Inflows) to improve liquidity and returns while

implementing adequate control and managing risks.

Cash Management can generally be defined as the efficient

utilization of cash through coordinated management of payments,

collections and cash balances. The objectives are to reduce costs,

enhance control and optimize returns as well as reduce the

inventory holdings.

Traditionally, cash management involved personalized services

offered by the bank's staff to the company's treasurer via mails,

telephone, calls, faxes etc or visits to the bank initiated

transactions. But with the advent of computer technology, cash

management services have been automated to a large extent.

Many banks now allow their corporate customers to perform online

inquiries and transaction services (payment, collection and liquidity

management) through PC or Internet via a web interface. With

such a system in place, a company can perform most of the cash

management functions themselves without relying on a bank staff

to act as the executor of their requests

Cash Management helps the organization in :

Properly timing the disbursements

Some payments must be made on a specified or legal date, such

as Social Security payments. For such payments, there is no cash

management decision. For other payments, such as vendor

payments, discretion in timing is possible. Government vendors

face the same cash management needs as the Government. They

want to accelerate collections. One way vendors can do this is to

offer discount terms for timely payment for goods sold.

Eliminating idle cash balances

Every Rupee held as cash rather than used to augment revenues

or decrease expenditures represents a lost opportunity. Funds that

are not needed to cover expected transactions can be used to buy

back outstanding debt (and cease a flow of funds out of the

Treasury for interest payments) or can be invested to generate a

flow of funds into the Treasury’s account. Minimizing idle cash

balances requires accurate information about expected receipts

and likely disbursements.

Ensuring timely deposit of collections

Having funds in-hand is better than having accounts receivable.

The cash is easier to convert immediately into value or goods. A

receivable, an item to be converted in the future, often is subject to

a transaction delay or a depreciation of value. Once funds are due

to the Government, they should be converted to cash-in-hand

immediately and deposited in the Treasury's account as soon as

possible.

Monitoring exposure and reducing risks

The Banks have the responsibility to use timely, reliable, and

comprehensive financial information and systems. To that end,

banks encourage to improve their cash management practices by

using electronic funds transfer (EFT) whenever cost effective,

practicable, and consistent with statutory authority. So there is a

need to monitor the exposure and reduce the risk.

Cash Management Services - Indian Scenario

The need for cash management aroused two decades ago in the

mid eighties when the Indian corporates were facing various

problems like the uncertainty as to when funds would be made

available to them, the problem of long transit period between

banking cheques and receiving funds, long period of

administrative work in banking cheques and tracking progress

and reconciliation problems regarding uncertainty of inflows and

lack of details on each credit to the account.

It is important to review the Indian scenario in this regard. As we

are all aware, that the banks’ desire for funds has lost because of

the slowdown. Despite the offer of very soft terms corporates are

refusing to borrow, while bank deposits have been ballooning.

Compelled to service the burgeoning liabilities, but unable to lend

hastily and allow their non-performing assets (NPAs) to grow,

bankers are forced to compete for the handful of safe bets among

their borrowers. Banks chose to use the opportunity to refocus

their activities, seeking clearly defined identities in terms of

services and customer segments. Most of them concentrated on

cleaning up their books by peeling down their NPAs. All of them

are attempting for freezing of costs, improving operational

efficiencies, and boosting productivity. The strategy of the banks,

which are performing well, is to use fee-based services to

maintain their earnings growth. With interest rates falling, non-

interest income is, unsurprisingly, the fastest-growing component

of the banks’ total income. Fee-based activities will complement

though not substitute the core business of lending. With rising

interest rates too, Corporate and others are not willing to borrow,

fee-based services play again an active role in boosting a Bank’s

total income.

It is gratifying to note that a number of banks in India are offering

wide-ranging cash management services to their corporate

clients. All the three categories of banks viz., nationalized banks,

private banks, and foreign banks operating in India are active in

the cash management segment. SBI, PNB, Corporation, ICICI

Bank, HDFC Bank, Centurion Bank of Punjab and ING Vysya

Bank, are some of the active Indian banks in this segment. Citi

Bank, Standard Chartered Bank, ABN Amro Bank, BNP Paribus,

and HSBC are the foreign banks operating in India, which are

prominent among the cash management services providers.

Indian banks are offering services like electronic funds transfer

services, provision of cash related MIS reports, cash pooling

services, collection services, debit transfer services, guaranteed

credit arrangements, sweep products, tax payment services,

receivables and payables management. Foreign banks operating

in India are offering regional and global treasury management

services, liquidity management services, card services, electronic

banking services, e- commerce solutions, account management

services, collection management services, cash delivery

management services and investment solutions. Banks realized

that if they do not offer the services required by corporate

customers it would result in a net loss of clientele, returns and

goodwill. Banks in India need to continuously monitor

international trends in innovations taking place in providing cash

management services and swiftly offer similar services to their

corporate clients.

The Reserve Bank of India is taking a number of initiatives, which

has facilitated the active involvement of commercial banks in the

sophisticated cash management segment. One of the pre-

requisites is to ensure faster and reliable mobility of funds in a

country and to have an efficient payment system. Considering the

importance of a robust payment system to the economy, the RBI

has been taking numerous measures since mid Eighties to

strengthen the payments mechanism in the country. Introduction

of computerized settlement of clearing transactions, use of

Magnetic Ink Character Recognition technology, provision of

inter-city clearing facilities and high value clearing facilities,

Electronic Clearing Service Scheme , Electronic Funds Transfer

scheme, Delivery vs. Payment for Government securities

transactions, setting up of Indian Financial Network are some of

the significant initiatives which highlight the seriousness with

which the Reserve Bank has taken up the reforms in Payment

systems. Introduction of a Centralized Funds Management

System, Securities Services System , Real Time Gross

Settlement System and Structured Financial Messaging System

are on the top priority items of the agenda to transform the

existing systems into a state-of-the-art payment infrastructure in

India by the Reserve Bank. The current vision envisaged for the

payment systems reforms is one, which contemplates linking up

of at least all important bank branches with the domestic payment

systems network thereby facilitating cross border connectivity.

With the help of the systems already put in place in India and

which are coming into being, both banks and corporates can

exercise effective control over the cash management.

Cash Management ServicesIn BOI

The menu of cash management services offered by banks is

indeed diverse and tempting. The services broadly fall under

collection services, disbursement services, information and control

services, services related to electronic data interchange

commercial web banking services, sweep services, fraud detection

solutions, global trade solutions and investment solutions.

Collection Services accelerate receipt of payments from sales and

quickly turn them into usable cash in accounts. Disbursement

Services make efficient payments by reducing or eliminating idle

balances in company’s accounts. Information and Control Services

receive the data and provide the management capability needed to

monitor company cash picture, control costs, reconcile and audit

bank accounts, and reduce exposure to fraud. Financial Electronic

Data Interchange is a computerized exchange of payments

between a company’s business and its customers and vendors.

Commercial Web Banking Services give a wide range of services

from any Internet connection, which can help streamline banking

process quickly and efficiently. Sweep Services maintain liquidity

and increase earnings without having to actively monitor accounts

and move money in and out of them. Information reporting

solutions assist companies, which need to receive account data

that is timely, precise, and easy to access and interested in

initiating online transactions. Investment solutions help to minimize

excess balances and maximize return on available funds

Collection of cheques

Local Cheques & Upcountry cheques at places where Bank’s branches exist.

Upcountry cheques at places where Bank’s branches do not exist.

Instant credit as per arrangement on any day before realization.

Customized MIS, including outstanding entries at any time.

Pooling is possible ,including multiple pooling.

Single point reference for any detail/data.

Courier Pick-Up from Customer’s Collections.

Post Dated Cheques Collection:

Post–dated cheques (PDC’s) vaulted, dispatched to drawee center three days in advance collected.

On due dates and credited to account on due date or next day.

Tracking of customer’s invoices with PDC’s possible.

Auto Reconciliation.

Unpaid/Returned PDC’s also properly tracked and

accounted.

All other advantages of collections.

Payments

Centralized or Remote printing of payments (Cheques/Pay

Orders/DDs/IWs/DWs/Ros-with

facsimile signatures)

Printing of Cheques on continuous stationery.

Interface with RTGS/NEFT/ECS.(Linkage to e-modes)

Correspondent Banking

Issue of DDs by branches*of Correspondent Bank.

Funding before issue/upon payment.

Auto Reconciliation.

17

Genera

l:

Customized MIS of data in whichever way desired.

Interface between Finacle and CMS Software

CANARA BANK

CORPORATE CASH MANAGEMENT SERVICES (CCMS)

The speedier Corporates are, its easier for them to address the

challenges of globalization. Corporate Cash Management Services

(CCMS), an innovative service offered by Canara Bank for speedy

collection of cheques and other instruments, places Corporates on

a faster- track. In more ways than one-such as definite funds flow,

better cash management and deployment of funds, better

monitoring of funds flow, optimum allocation of funds and effective

planning of investment functions

WHAT IS CCMS :

An innovative service specifically tailored to meet the

requirements of

Corporates/Business houses/Partnership firms.

Speedy collection of outstation cheques and other

instruments.

Pooling of funds at designated centers.

More importantly, providing funds to the Corporates as per

their need.

•Customized MIS reports.

WHAT CANARA OFFER :

Under CCMS they offer the state of the art technology products.

SUPERFAST SERVICE - Local cheque collection services

FASTRACK SERVICE - Upcountry cheque collection services

BULK COLLECTION SERVICE - Bulk cheques collection services

Under 'SUPERFAST SERVICE', agents or offices of Corporates

can deposit the cheques to be cleared in the local clearing and

funds will be pooled at any pooling branch designated by the

Corporates.

Under 'FASTRACK SERVICE', agents or offices of Corporate can

deposit the cheques drawn onoutstatio n centers and proceeds will

be pooled at any pooling branch designated by Corporate. Under

'BULK COLLECTION SERVICE', agents or offices of Corporate

can deposit their bulk (large number) instruments of small value to

be cleared in the local clearing and funds will be pooled at any

pooling branch designated by the Corporate

PRIVATE BANKS

ICICI BANK

Collection Products Local Cheque Collections

One of the largest network spanning over 488 locations.

Courier pick-up can be provided.

Process flow can be structured to suit the company’s

requirements.

Upcountry Cheque Collections

Coverage of over 3919 locations with tie-ups with

correspondent banks

Capability to process cheques drawn on any location in

India.

Assured credit given with funds pooled at any ICICI Bank

location. Instrument level tracking of

instruments to ensure faster realization.

Cash Collections

Cash Collection from dealers and business associates on

behalf of companies.

Cash pick-up facility in 28 locations.

Customized MIS for cash collection.

Payment ProductsAnywhere Banking

Cheques issued payable at par at various ICICI Bank

locations .

Single account to be operated at any ICICI Bank branch for

this facility.

Ideal for small value, large volume payments.

Fund Transfers

Online transfer of funds between accounts maintained with

any branch of ICICI Bank.

Issue of Bulk Demand Drafts/ Pay orders

Capability to issue Bulk Demand Drafts/Pay Orders on

various ICICI Bank and correspondent bank locations

Capability to accept online requests from the customers

Capability to print beneficiary advice and despatch

Remote printing facility

Simple process with a low turnaround time and delivery .

Cheque Writing

Cheques can be issued on behalf of companies.

Capability of processing large volumes of cheques in a

short turnaround time.

Capability of printing facsimile signatures.

Capability to print beneficiary advice and despatch.

Ideal for bulk payments such as pension payments, gratuity

payments.

At Par Payments

Services can be availed for the ‘at par’ payment of dividend

warrants /interest warrants/ refund

order/redemption payments/brokerage payments

Simplified and streamlined procedures ensuring smooth

process flow Online validation of

instruments before payment ? Regular reconciliation

statements provided by the bank

Covering over 100 major locations through own network (90%of

the payments) Arrangement with correspondent banks thereby

covering over 200 locations through instruments based payments•

ECS credit facility at all available locations.

HDFC BANK

Payment Services

HDFC Bank can structure a number of Payment products to suit

the corporates needs.

Payable at par chequebook

This product enable the corporate to issue local cheques at all

HDFC Bank branch locations through one chequebook thereby

eliminating the hassles of obtaining demand drafts or opening

current account at each location.

At par facility for statutory payments

HDFC Bank branch locations - cover over 80% of shareholders /

beneficiaries for most of

their clients. Hence reconciliation, query resolution and pricing are

superior.

In order to provide adequate coverage, HDFC Bank also provides

100 locations of their correspondent bank. However, there is

sustained reduction in dependence on correspondent bank due to

continuously increasing branch network.

The maximum limit on warrant can be mutually agreed upon -

substantially reducing draft costs and efforts. It also has Ability to

meet the customer’s requirement of large number of drafts in a

short time at very competitive rates.

An At Par chequebook is provided on branch locations, after

revalidation thereby eliminating

the need for Demand Drafts on branch locations.

Pay Quick

This product caters to the customers requirement of large

volume of Demand Drafts/Pay orders

at over 1617 HDFC Bank and correspondent bank

locations.

It provides the Option to forward data in soft copy form

(floppy) in a secure environment.

It gives Easy data transferability from the Corporate office to

HDFC Bank.

Multiple payment instructions through one file.

Upload option for bulk issuance resulting in quick and error

free delivery.

Payment instrument to include payment details.

Facility to mail to beneficiary directly. Also the committed

courier turn around time enables you to make payments as

close as possible to the payment date - resulting in additional

cost savings.

Various value added MIS

One Stop dedicated Service Desk at our Centralized Cash

Management Operations Unit

for prompt attention to your queries

Extensive coverage - over 500 locations.

Status of DD - paid / unpaid - can be provided on HDFC

Bank location on a case-to-case

basis.

Collection services

HDFC Bank’s Collection services are aimed at ensuring quick

realization of local and outstation cheques and providing the funds

in a central collection account. This enables the corporate to

manage their funds flow position most effectively from a central

location. This service can be availed with/without a current account

with HDFC Bank.

Local cheque collection

This product provides quick realization of local cheques deposited

at the same location. This product is available at all locations of

HDFC Bank ("SPEED") and over 292 locations of their

correspondent Bank ("RAPID").

Outstation Cheque Collections

This product enables the customer to deposit outstation cheques

drawn on any HDFC Bank location at any HDFC Bank location

("SPRINT"). Similarly, cheques drawn on over 928 locations of

their correspondent bank ("EXPRESS") can be deposited at any

HDFC Bank locations.

Transfer Cheque Collection

This product provides quick realization of local/outstation cheques

drawn on any branch of HDFC Bank Ltd. This product is available

at all locations of HDFC Bank ("HDFCTRF") locations.

Clean collection

Cheques drawn on any locations, which are not covered, by HDFC

Bank or their correspondent bank are also collected at any of their

locations and proceeds credited to Customers account as soon as

credit is received by HDFC Bank.

HDFC Bank's comprehensive MIS includes :

Daily report of deposits made at various locations.

Location wise report

Credit Forecast report

Monthly cumulative report - date wise / location wise.

Monthly charging statement.

Monthly cheques return statement.

Customized reports as per mutual agreement

Framework for effective Cash Management Service

Companies seek to achieve synergies by implementing a

simplified account structure and through rationalizing the number

of banks used. In advising companies on the optimal account

structure, it is important to bear in mind the nature of company’s

funds flows. The aim is to maximize control, efficiency and returns.

Banks need to work with its clients to ensure that arrangements

are in place to assist them in maximizing returns from an otherwise

idle fund. Experience of local banking regulations and market

practices can ensure client’s preferred structure. Greater

challenges lie in tying together multiple accounts into a cohesive

structure to manage liquidity efficiently, often across numerous

time zones and currencies. To meet the needs of international

corporate and institutional clients, banks should have a wide range

of customized products and services. Often companies should

maintain multiple banking relationships for their cash management.

Movement of funds between accounts across banks is generally

inefficient, costly and time-consuming. Cash status is not readily

available, often causing unnecessary usage of overdrafts or return

of issued checks. Untimely payments can also result in penalty

and other charges. With multiple accounts, account reconciliation

is usually difficult to be kept current, making control virtually

impossible. So for effective cash management there is a need for

multiple banking relationships which is often due to the lack of

comprehensive service offered by a bank, the difficulty in

accessing particular services of a bank, or the varying degree of

efficiency across services of a bank. Many companies, including

medium-sized enterprises, are now implementing Enterprise

Resource Planning (ERP) systems to help manage the accounting

process and gain better control of their cash management.

However, what several have found is that while internal processes

are more automated, the number of staff required to support their

cash management operations has not reduced. Without a

comprehensive cash management solution from a bank, business

finds it difficult to

reach the optimal operational and working capital efficiency level.

Corporate treasurers cannot afford to spend time worrying about

routine payments and collections. So banks have to help clients to

successfully handle the large volumes of corporate client

payments.

So in today's competitive market place, effectively managing cash

flow can make the difference between success and failure. And

so the Banks offer a full range of receivables and payment

services to meet the complex cash management needs.

Payments received from their buyers and made to their suppliers

are efficiently processed to optimize their cash flow position and

to ensure the effective management of their business' operating

funds. The flow of receivables and payables can also be seen

through the web solution.

Cash management process

Collections Payments

Benefits and features of cash management service

Benefits & Features of cash management services

Cash Management services are availed benefits to all from the

manufacturer, retailer, logistics to the supplier as well as global

customer. The following are the benefits provided by various

banks.

Nationalized Banks

Bank has been always aiming to create values for its customers.

Looking beyond traditional banking, the Bank introduced an array

of other products and services to different customer segments.

Cash Management Services is one such solution offered by the

Bank to the Corporate customers. Every organization has

receivables to collect from its dealers/ depots/ customers. Every

revenue collected by the organization gets paid in one form or the

other. Collection And Payment Services (CAPS) provides

customized solutions to corporates' needs in liquidity

management.

The PRODUCT RANGE under the umbrella of CAPS, provide

one point solution to corporates cash

management requirements in the area of receivables and

payables management of the corporates.

The essence of CAPS is Speed, Accuracy, and Efficiency.

Features of CAPS, - evolved in response to corporates' needs -

aim at providing significant TANGIBLE BENEFITS to corporates.

Collection And Payment Services are offered and managed by

specialized exclusive Special Business Units in the form of CAPS

BRANCHES, Payment Processing Centre and FCS HUB using

the state of the art technology.

CAPS - Benefits to Corporates

CAPS ensures not just unlocking of funds in transit, it enhances

liquidity in the Corporate’s system and enables effective funds

management. All these at a very attractive cost structure reducing

the burden on the corporate.

Detailed MIS along with payouts and customized MIS of

corporate needs in soft form either through Mail, floppy, CD ROM

and through Internet eliminates all the hassles of reconciliation

and enables onward integration into corporate system.

Value addition such as courier pick up from clients’ desks enables

operational convenience Collection of service charges at monthly

rests as opposed to check to check charges deduction provides

the operational comfort and reconciliation ease.

Unique payment products under CAPS makes payable

processing very simple with tremendous comforts in the areas of

dispatch of payout instruments, tracking, paid/unpaid status,

confirmation on payouts etc.

Benefits and features of cash management services in private banks

ICICI BANK

BENEFITS TO CORPORATE

ICICI Bank is a leading player in the field of Cash Management

Services (CMS) market.

Their Cash Management Service is technology driven with a

versatile software, hardware and network support. Customized

daily transaction reports and web-enabled reports are offered

regularly to their clients.

CMS solutions are designed to be company-specific allowing a

corporate to efficiently

manage its treasury. Cash management products covers both.

Collections and payments.

ICICI Bank's Cash Management Services also helps the customer

to make optimum use of their working capital, leveraging the float

between faster collections and just-in-time payments.

Their vast network across the length and breadth of the country

uses superior technology based solutions to deliver speedy&

efficient payments. Their solution is to customize to customer

needs.

So the customer can leave the burden of bulk demand drafts and

pay orders, dividend and interest warrants, fund transfers, cheque

writing and more to ICICI Bank. They will also get customized daily

transaction reports and online reports for complete MIS.

At Par Payments – I safe Pay

In this the customers can Make payments through dividend

warrants, interest warrants, refund orders, redemption warrants,

etc. These warrants are payable at par at the centre/locations

selected by them. The customer can avail of this service through

over 300 ICICI Bank locations and 200 correspondent bank

locations. They also get monthly reconciliation statement showing

the account status and unpaid list of warrants on a monthly basis.

I- Safe Pay offers them a complete solution for executing their

payments.

Through different modes including Warrants, Demand Drafts / PO,

ECS, Direct Credit, Swift

Remittances and Foreign DD.

HDFC BANK Benefits to Corporates

If the organisation is multi-locational, managing outstation funds

collections and payments can often be time consuming and

expensive. Delays of days or even weeks in realizing outstation

cheques, constant tracking and follow-up to transfer funds from

outstation collection accounts, uncertainty and delays regarding

information on the fate of cheques etc., are common.

At HDFC Bank they offer a comprehensive range of Collections

and Payments solutions under their Cash Management Services

(CMS) umbrella to meet Corporate needs and put them in control

of their cash position.

HDFC Bank's Cash Management Services will enable the customer:

Lower Interest Costs

Their collection services enable the customer to receive funds

in their main (concentration) account with the bank with a minimum

transit time thereby reducing interest costs.

Improve Liquidity

Saving on transit time enables the customer to realize cheques

and use funds earlier and therefore gives them enhanced liquidity.

Better Accounting and Reconciliation’s

Detailed information on cheques deposited are made available

on a daily / weekly basis/periodically thus simplifying accounting,

reconciliation and query resolution. HDFC Bank also provide

customized MIS as per the customers requirements

Achieve Overall Operational Convenience

HDFC Bank's Collection Services enable the customers to

derive convenience in banking operations thereby facilitating

management of cash positions through a central treasury. Also,

the same may be used for improved control over different business

segments. The advantages of their Collection products can also be

availed without opening a Current Account with HDFC Bank.

Interconnectivity

Experience real-time online banking on E-Net with your CMS

account. E Net is an Internet based software, which allows you to

view current a/c balances, download statements, view CMS

collections, effect payments / receive payments online, plus a host

of other activities.

Centralized Service Desk

HDFC Bank provides a dedicated service desk to ensure that

the queries are resolved quickly and efficiently.

CONCLUSION

The network, technology and the corporate relationship services

provided by all the three sectors are highly sophisticated and good

but the scalability, marketing provided by the Public sector is low in

terms of the Private and MNC sector. As well as the services

provided by the public sector is not fairly good and up to the

standard.

As Cash management is constantly changing to meet the needs of

the corporate treasurer. The challenge for both corporation and

provider is to keep up with developments, technology, changing

regulations and fitting these in with normal business. A changing

regulatory environment, new technology and mergers that expand

the scope of traditional banking are redefining the traditional

treasury management paradigm for both banks and corporations.

Electronic commerce is evolving far beyond simply ordering goods

online or buyer-to- supplier commerce.

In a vast country like India Providing Cash Management Services

do posses a challenge to the Cash Manager as well as the banks.

Considering the present Indian scenario, where Cheques are the

basic form of payment and cheque clearing takes a long time, cash

management services need to devise innovative methods and

means to expedite the clearing to benefit the corporate customer.

As the Indian economy becoming an open market economy,

residents may maintain accounts in other countries and non-

residents may hold In a vast country like India Providing Cash

Management Services do posses a challenge to the Cash

Manager as well as the banks. Considering the present Indian

scenario, where Cheques are the basic form of payment and

cheque clearing takes a long time, cash management services

need to devise innovative methods and means to expedite the

clearing to benefit the corporate customer. As the Indian economy

becoming an open market economy, residents may maintain

accounts in other countries and non-residents may hold accounts

in India. As a result, Indian treasurers may often find themselves

managing cash across geographies and time zones. In India the

transaction types run from the classic paper cheque to the latest

Internet initiated electronic payment. Corporations initiate and

receive paper-based transactions, as well as high value and low

value electronic transactions on a daily basis. Expectations from

new services may not eliminate or fully replace the older traditional

services. Change will be gradual but, probably, it will be firm. Fee

structures for cash management services in India vary from bank

to bank and also from customer to customer. Many banks price the

services based upon the overall relationship, especially for multiple

product solutions. As Indian banks become more consultative and

total solution- oriented rather than product-driven, pricing will

become even more customized. Corporate treasurers will consider

the amount they can save on banking fees and the level of

efficiency in their departments as a sequel to the new cash

management services. After they have negotiated the best

possible price, treasurers then focus on the return on excess

balances. They are no longer content to leave large balances in

return for no fees charged. Treasurers will look for true partnership

with banks to build systems that will take them into future.

Swot analysis of cms market

Importance of Cash Management for a Corporate Entity

There is a need to put in place a specialized cash management

system by Corporates. Good Cash Management is a conscious

process of knowing when, where, and how a company’s cash

needs will occur; knowing what the best sources for meeting

additional cash needs; and being prepared to meet these needs

when they occur by keeping good relationships with bankers and

other creditors. Cash management results in significant savings in

time decrease in interest costs, less paper work and greater

accounting accuracy. Proper cash management creates more

control over time and funds; provides timely access to information;

enables easy employee related payments; supports electronic

payments; produces faster electronic reconciliation; allows for

detection of bookkeeping errors; reduces the number of cheques

issued and earns interest income or reduces interest expense.

Corporations with subsidiaries worldwide can pool everything

internationally so that the company can offset the debts with the

surplus monies from various subsidiaries. The end result will

transform treasury function as a profit-centre by optimizing cash

and put it to good use. Creative and pro-active cash management

solutions can contribute dramatically to a company’s profitability

and to its competitive edge. The ultimate purpose of proper

management of liquidity, needless to emphasize, is to improve the

overall productivity of funds.

How Corporate Select a Bank for Sourcing Cash Management

Services?

Probably, it is important to consider what the companies expect

from their bankers in this regard. It is normally the client-bank

relationship, which is a main consideration in choosing a bank for

cash management. Pricing, obviously, is a very dominant factor.

Making a choice between the local banks and the more highly

priced foreign banks usually depends on how cost savings are

presented by the banks. Multinational corporate with complex

treasury operations admire their respective banks’ expertise and

ability to offer creative solutions. There are some common

requirements related to basic cash management systems.

Flexibility, reliability, security and stability have been cited as vital

parameters for any electronic banking system. The systems should

be tailored to provide pertinent reports and the ability to upgrade

easily in future. The technology should allow real-time cash

management with strategic banking partners. It should integrate

easily with legal framework in place. It should lower operating

costs and resolve disputes quickly by providing secure and legally

enforceable audit trails. It should be capable of reducing risk of

fraud in electronic funds transfers and other treasury activities. It

should also be able to use a low-cost public network infrastructure

like Internet, which eliminates the need for dedicated leased lines.

For instance, availability of requisite bandwidth for Internet

connection is still a problem faced by various financial institutions.

With a highly technology savvy there are several exciting new

opportunities for both user and provider in the cash management

arena. Cash management worldwide is constantly evolving to meet

the needs of the corporate treasurer, take advantage of new

technology and support customers as they move into new markets.

The challenge for both company and service provider is to keep up

with developments in technology and changing regulations and

espouse them to their normal business. The key to success will be

active partnerships between corporations and their providers as no

one will be able to keep up with all developments on their own.

Because of the mounting importance of fee-based financial

services, all banks need to fine- tune their strategies, if they want

to harness the potential in this area. They need to appreciate the

dynamics of the new fee-based market, which is driven by the

growth of the Internet and inter-connect applications.

But it won’t be easy for all banks to capture their share and profit of

the swiftly expanding fee-based market. Taking advantage of the

opportunities and avoiding the threats of unprofitable products,

insufficient customer service, and diverse IT applications entails an

understanding of the market place, the needs and expectations of

the customer and of course the competition. It is an important point

to note that offering fee-based services is no longer a choice today

to the beleaguered banker. It is a desirable compulsion to thrive.

Managing cash in the emerging milieu will require a new mind-set

of banker and his client.

With a comprehensive cash management solution, companies are

able to compete with low operating and administrative costs, with

more focus on better control of their cash flow and efficient use of

working capital .The right solution can even enhance the

relationships with customers and suppliers by helping them to be

more efficient and reducing non-productive activities .It is therefore

important to select a cash management bank that offers a

complete and proven solution to deliver the results the customers

expect to achieve.

WHAT IS CREDIT APPRAISAL ?

Credit appraisal is a holistic exercise which starts from the time a

prospective borrower walks into the branch and culminates in

credit delivery and monitoring with the objective of ensuring and

maintaining the quality of lending and managing credit risk within

acceptable limits. Details of it will be given under the title Credit

Policy.

DIMENSIONS OF CREDIT APPRAISAL

Management Appraisal

A lot of attention has to be paid to this area, for this is one of the

long term factors affecting the business of the concern. Does the

management have enough experience in the line? What is its track

record? What are the antecedents? Introduced to us by whom?

These are some of the questions that need to be answered before

we can take up any kind of exposure to the concern.

TECHNICAL APPRAISAL

What is the status of technology used? Has a prototype been

developed of the product? What could be the possible economic

life period of the present technology? Is the venture technology

feasible?

COMMERCIAL APPRAISAL

The business has to be commercially viable for us to proceed

further. Is there enough demand in the market? Is the product

accepted in the market? How many substitute products are there?

What about entry and exit barriers? Is there scope for further

growth?

FINANCIAL APPRAISAL

Does the promoter has the capacity to raise finance---- both own

equity and debt? What are the sources of margin? Will the

business generate sufficient funds to service the debt and other

Stakeholders? Is the capital structure optimal?

ECONOMIC APPRAISAL

What is the breakeven level? Will the business post positive net

present value through its economic life? What is the level of cost

/benefit? What is the Internal Rate of Return (IRR)? Will the cost of

funding and operations be well below the IRR?

Answers to all these questions would fall into place in the jig-saw

of credit appraisal when we investigate a credit proposal from the

point of the six C’s viz. Character, Capacity, Condition, Collateral

and Cash flow.

As a prudent Banker the following areas need to be particularly looked into :

CHARACTER

-Antecedents-introduced by whom- Is it a takeover account? In

which case, what does the status report say?- Background

educational professional socio –economic political- Initiative and

Drive.

CAPACITY

- Experience in the activity – track record – planning,

budgeting and review handling –production capacity

capacity utilization- professional capacity to handle men,

material, money and minutes – capacities to handle

contingencies and crises.

CAPITAL

- Extent of stake in business

- Ability to raise finance – both owned equity and debt

- Ability to inspire and sustain investor confidence

- Ability to absorb losses – expected and unexpected

- Structuring and budgeting capital.

CONDITION

- Condition of economy – growing, stagnant or depressed

- Condition of industry – sunrise, Greenfield or sunset

- Numbers of competitors

- Substitutes in the market

- Demand vs. Supply

- Government policies and regulations

- Status of technology

- Availability of manpower, material other resources

- Utility services

- Scalability of activity

- Pollution control and effluent treatment

COLLATERAL

-Risk perception and evaluation

-Financial parameters

Debt/equity ratio

Asset Cover

Interest Cover

DSCR

-Availability, suitability and chargeability of security –MAST

principle

CASH FLOW

-Pattern of cash generation

- Liquidity risk

- Break-even analysis

DCF Technique

NPV

IRR

PV Index

Payback period

-Commercial and economic viability

-Working capital management

When all the six C’s are considered thoroughly, credit appraisal

becomes comprehensive.

As a conclusion process of credit appraisal would begin with

the selection of the proponent. It would involve appraising

the background of the proponent/management, commercial,

technical and financial appraisal. Appraisal of credit facilities

would comprise two distinct segments :

a) Appraising the acceptability of the customer.

b) Assessment of the customer's credit needs.

STAGES OF CREDIT APPRAISAL

1. Interview with the proponent and obtention of application on

Bank’s prescribed format

2. Adherence of KYC norms stipulated by Reserve Bank of

India

3. Obtention and verification of documents/financial

statements according to type of credit facility/ies required as

per Bank’s norms

4. Inspection : Pre sanction Inspection is done by Bank’s

Officials viz. inspection of borrower’s residence, making

inquiries from his area and collect market reports, inspection

of proposed principal and collateral securities. In case of

mortgage of property proposed, a search report is obtained

from Bank’s approved advocate for last 30 years regarding

non-encumbrance of the property, dues on the property,

genuineness of title, peaceful possession and market ability

of property. To ensure the market and distress sale sale

value of the property, Valuation report of the property is also

needed from Bank’s approved Architect.

5. Preparation of credit proposal : The credit proposal contains

the complete information about the proponent’s background,

appraisal of financial & managerial status, technical and

economic viability of the activity and future prospects.

Financial analysis is exercised to justify the required financial

assistance/ to arrive maximum permissible finance as per

Bank’s norms. This Financial analysis is done according to

Bank’s/RBI norms for difference kind of facility/ies. In

specified cases SWOT analysis (strength, weakness,

opportunity and threats) is also done for the proponent’s and

Bank’s financial safeguard. It is responsibility of the

processing officer to mention all the facts relating to

proponent, his/their financials , security proposed and all the

terms and conditions.

6. Sanction of credit proposal : The sanctioning authority goes

through the credit proposal and it is his responsibility to

ascertain the facts of the proposal. If needed he himself

make physical inspection and change/modify the terms and

conditions and finally give sanction within stipulated time

frame of the scheme.

7. A sanction letter is given to the proponent. The sanction

letter contains the type and size of facility and margin

stipulated with all terms and conditions including rate of

interest and charges, Insurance of the proposed security

and periodicity of inspections etc. which is duly

acknowledged by the proponent/s.

8. If the proponent agrees the terms and conditions stipulated

by the bank, he/authorized persons have to execute the

security documents before the Bank’s authorized officer and

finally the account is opened to disburse the facility.

9. After disbursement post sanction inspections are carried out

by the Bank’s official from time to time (as stipulated per

terms of sanction) to ascertain the utilization of funds, for

safeguard of the advance and Bank’s interest in the security.

CLIENTELE

Bank being one of the largest public sector Banks is required

to service a varied clientele having diverse requirements.

This include lending to the poorest of the poor under DRI

lending, other priority sector lending, individuals, partnership

firms, associates of persons, corporates, trusts, large

business houses and groups, undertakings owned by

Central/State Governments, etc.

Having regard to the changing pattern of the lending and the

need to improve return to the stakeholder we need to have a

judicious mix of clientele. In respect of priority sector lending

where there are laid down parameters bank would be guided

by the same. In respect of the others it would be the

endeavour to build up a sound asset base by lending to high

Net worth individuals/firms/corporates with credit rating of

‘AA’ (LC3 to LC4) and above. To ensure that the overall

quality of the Bank's credit exposure is good, it is desirable

that a major portion of the portfolio is in respect of customers

(having exposure of Rs. 1 crore and above) enjoying good

health i.e. risk rating not below “A” (LC5 to LC6). This may be

reviewed annually. It shall be the endeavour of the Bank to

reduce the proportion of non-performing assets to be as low a

level as international standards demand.

Bank considers lending to retail sector as very important in

order to increase the customer base and diversify the

portfolio. Emphasis on retail advances such as personal

loans, education loans, housing loans, mortgage loans etc. is

expected to result not only in better interest spread but is

also expected to improve the overall quality of credit.

Increasing of customer base will benefit the Bank in cross

selling of other products. Separate operational guidelines on

retail sector products have been brought out by the Bank.

Small & Medium Enterprises (SME) Sector constitutes the

growth engine of the economy. The SME lead to

entrepreneurial development and diversification of the

industrial sector, and also provide depth to industrial base of

the economy. With the Services sector dominating the SME

and MNCs outsourcing their various requirements to Indian

service providers, there is tremendous scope for SME

finance. Accordingly, Bank decided to give increased thrust

for lending to SMEs. There is a separate policy for financing

SMEs.

MARKETING

It is proposed that Bank should gradually move over to the

system of marketing credit by an exclusive team trained for

this purpose. This shall be initially put in place in

metropolitan cities and larger towns, and depending on our

experience, extended to other places. It is proposed to cover

the top 50/100 locations (cities, towns, etc.) which account

for about 80% of the Bank's business. Further, separate

teams may be chosen for marketing corporate products and

retail products. The function of marketing team will continue

till obtention and provision of adequate data, providing

indicative inputs on interest rates, charges, securities,

submission of proposals, etc. The processing and monitoring

functions will be assumed by the branch, which will be

acquiring the business. Bank has established marketing

teams at select centres for marketing of various products

including retail credit and credit to SMEs.

It is also proposed that the Bank should adopt a relationship

approach in marketing, offering the whole basket of products

to a client, in particular medium and large corporates. To

this end, the Bank has already posted Relationship

Managers to handle specific clients in its Corporate Banking

Branches.

Credit Delivery through Bank's branches

The Bank may adopt a segmented approach to deliver credit

through specialized/specially identified branches, in order to

develop a focused approach that will develop credit appraisal

skills for speedy credit decisions and disposal of credit, as

given below :

C & P Branches : These branches will dispense loan

against fixed deposits and other paper securities,

personal loans including Consumer Loans, Housing

Loans, Priority Sector Credit including transport

operators, retail trades, small businesses,

professionals & self employed persons, educational

loans, etc.

Housing & Personal Finance Branches : Housing

Finance and Consumer Loans.

SME Branches : All the existing specialised SSI

Branches are redesignated as SME Branches. These

SME branches are required to cater to the credit

requirements of SME segment in these centres while

continuing extending other advances. These branches

would also have adequate operational flexibility to

extend finance/render other services to other

sectors/borrowers.

Agri-Hi-Tech Branches : Hi-Tech Agriculture projects,

large volume agriculture businesses.

Main Branches in cities/towns : Trade finance, small

and medium enterprises – working capital, term loan

requirements.

Corporate Banking Branches : Large volume asset

portfolios above the cut off limits specified in this

regard from time to time. This limit may be fixed

differently for different sectors depending on potential

for such business. If necessary, Large Corporate

Branches may be established in various cities to cater

to the specific credit requirements of Corporates. Mid

Corporate branches may also be established for

providing focus on this segment. The cut off limit for

mid corporate size may also be fixed from time to time.

These branches will cater to the needs of borrowers

with total limits (Fund based + Non-Fund Based) of

more than Rs.25 crores. The existing corporate

branches in these cities will cater to the needs of Mid

Corporate borrowers viz. total limits (Fund based +

Non-Fund based) of more than Rs.5 crores and upto

Rs.25 crores.

The category for the above segmentation is proposed to be

decided by the respective Zonal Manager.

SEGMENTED APPROACH TO LENDING

The present approach in respect of delegation of

powers to different authorities in respect of various credit

facilities offered to customers with modification thereon

effected from time to time will continue. Additionally, it is also

proposed that large volume asset portfolios should

necessarily be assessed/parked either at the identified

larger branches (identified by the ZM for this purpose) or the

corporate banking branches only as per the cut-off limits

specified for Corporate Banking Branches from time to time.

Wherever needed the Zonal Offices will extend support

through the Large Borrowers’ Division to the main branches

as well as specialised branches such as SME Branches,

Personal & Hosing Finance Branches, Overseas Branch,

Agri-Hi-Tech branches etc.

While all branches may consider requests within their

delegated powers for any of the credit products of the Bank,

we propose that specialised branches may be developed for

focussed lending to various segments. This would include

Commercial & Personal (C & P), Housing Finance, Housing

& Personal Finance, SME Branches, Agri-Hi-Tech,

Overseas branches and Corporate Banking Branches (both

Large and Mid corporate Branches) to consider requests in

their specialised areas. Further, certain categories of finance

requiring specialised skills are restricted, as per policy

guidelines for financing, to certain Branches/ Centres like

Film, Infrastructure Projects and Diamond business. This

may be considered for appraisal at only these

Branches/Centres.

This segmented approach is expected to provide both

market and customer focus for ensuring better business

development, better development of expertise and better

customer satisfaction. Towards this end, it is proposed to

develop further on this segmented approach.

The entire credit is identified into five strategic business

units headed by separate General Managers for giving

focussed attention viz.

i) Large Corporate Credit (Rs.25 crores and above)

ii) Mid-Corporate Credit (Rs.5 crores to Rs.25 crores)

iii) SME Credit (upto Rs.5 Crores)

iv) Retail Credit

v) Agriculture Credit

However, presently Credit Policy would be applicable to

borrowers in Large Corporate Credit, Mid-Corporate Credit

and Retail Credit.

CREDIT DELIVERY

Types Of Facilities

The types of facilities would comprise of Term Loans,

Demand Loans, Overdrafts, Cash Credits, WCDL, Advances

against Bills(both DP/DA) with/without L.C., Channel Credit,

Invoice Discounting/financing, Discounting of future cash

flows/rent receivables and Line of Credit, L/Cs, Guarantees,

Acceptance facilities, CPs, Cash Management Services etc.

Modes for delivery of Credit facilities

The credit requirements may be dispensed by any one of

following modes -

A) Sole Banking Arrangements;B) Multiple Banking;C) Consortium Lending orD) Syndication

Sole Banking

In "AAA" (LC1 to LC2) and "AA" (LC3 to LC4) rated

accounts where we are sole bankers, we should endeavour

to retain such accounts. Borrowers shall normally obtain our

prior approval in case they would like to switch over to

Multiple Banking Arrangement or consortium lending.

Whenever a customer's credit requirements exceed 50%

of the exposure ceiling or Rs.100 crores whichever is higher,

the borrower would be encouraged to scout for another

Bank/institution to share the credit facility/ies under Multiple

Banking, Consortium or syndication arrangement.

As a matter of corporate policy, we may emphasis

financing accounts of "AAA" (LC1 to LC2) and "AA" (LC3 to

LC4) borrowers under sole banking arrangements (subject to

our exposure ceilings). "A" (LC5 to LC6) rated borrowers

shall continue to be financed in the normal course of business

as per Bank's policies.

Multiple Banking

Where we are the sole bankers and the borrower

desires to avail of credit limits from other bank/s without a

formal consortium arrangement, the reasons for the borrower

wanting to shift to another bank should be ascertained and

recorded.

We may decide to permit the borrower to bank

elsewhere provided the borrower agrees to furnish from time

to time details of the various facilities availed from other

bank/s and also provided that the total working capital limits

availed by the borrowers are within a 10% tolerance of the

working capital limits assessed by us. Acceptance of distinct

and separate security or otherwise may be considered by the

sanctioning authority on the merits of each case. In such

cases, Bank's exposure for working capital needs should

normally not exceed 75% of the total working capital

requirements of the borrower. Where it exceeds this limit,

justification for the same shall be mentioned in the appraisal

note.

Consortium Lending

Banks have been given the freedom to frame the ground rules

for lending under consortium arrangement. The ground rules

are given in Annexure I. Addition/ modification in this regard

may be considered and approved by the Credit Risk

Management Committee. In case of accounts where we are

members, we may accept the rules framed by the leader,

provided they do not jeopardise Bank's interest and generally

conform to Bank' policies.

Syndication

A syndicated credit is an arrangement between two or more

lending institutions to provide a credit facility using common

loan documentation. We shall encourage financing under

such arrangements. Bank will also act as syndication leader

whenever such opportunity is spotte

CREDIT THRUST

Priority Sector Lending

The Bank has traditionally been proactively involved in

aggressively lending to the priority sector to fulfil the social

obligations enjoined upon the nationalised sector. The

experience in respect of quality of assets, recovery record,

earnings and expenditure available under this sector is quite

satisfactory. Thus, the Bank will always endeavour to meet the

targets prescribed by GOI/RBI in this regard from time to time.

Presently the same being as follows :

The priority sector target of 40% of net Bank credit.

Exposure to agriculture not less than 18% of net

Bank credit and direct finance to agriculture should

not be less than 13.5% of Net Bank credit.

Exposure to weaker section not less than 10% of

net Bank credit.

Export credit target of 12% of net Bank credit.

DRI not less than 1% of the previous year's total

advances.

Housing loan targets set by RBI from time to time,

presently 3% of the incremental deposits of the

previous year.

Lending under Government sponsored schemes

and schemes formulated by KVIC, SIDBI, etc.

The Bank has in place well laid out policies giving the

entire gamut of Priority Sector Lending including thrust

areas, strategies to be adopted etc. which are reviewed and

revised periodically depending upon the market scenario.

However, to ensure that the lead established by the

Bank in this area is maintained and to continuously garner

viable business under this head, with minimum additional

burden on staff cost, the following areas are identified as

thrust areas :

Maintain/achieve targets laid down for financing

agriculture under special Agricultural Credit plan by

increasing our finance for production as well as

investment credit viz. Irrigation, land development, farm

mechanisation, allied activities, post harvest

management and processing and other direct

advances under agriculture crop loan, loan for farm

mechanisation, dairying, cold storage units and indirect

advance under agriculture.

Under Priority Sector finance we may give thrust for

Housing, rural infrastructure, construction of

godowns/cold storage units, tie up with corporates,

advance against ware house receipts.

We may generally consider extending short term

finance while considering medium term loans to

farmers and vis-à-vis to maintain continued customer

relationship.

We may encourage issue of Kisan Credit Cards to

enable quicker dispensation of credit, whilst

strengthening our short loan portfolio to agriculture and

allied activities and also ensuring timely availability of

adequate credit for investment purpose.

Branches having potential for development of specific

thrust areas/activities may be identified to achieve

specific targets/ objectives.

Innovative/area based schemes, contract farming

schemes may be developed to give thrust to improve

agricultural lending.

We may involve Micro Finance Institutions and NGOs

so as to cover large number fo SHGs from weaker

sections more particularly women from SC/ST

communities, tenant farmers, share croppers, oral

lessees etc.,

Focus on low risk short duration exposures.

Focus on established and well run co-operative

societies, NGOs, corporates who may offer us secured,

big ticket financing on projects falling under priority

sector lending. (This may also fall under indirect

lending).

To proactively canvass tie-up business through various

government bodies like Agricultural Marketing Board,

Coffee Board, Housing Board, etc. in respect of any

project tie-ups undertaken by them like dairy, poultry,

housing, etc.

To tie-up with NBFCs in respect of RTO finances.

To focus on SHGs for financing specified areas like

weaker section, etc.

Under Retail Sector thrust will be given for home Loa,

Star Mortgage Loan, Star Autofin, Star IPO and Education

Loan, Star Personal Loan and Star Holiday Loan and such

other loan products as may be introduced in future.

Lending in addition to Priority Sector

Bank’s credit priorities would be also determined by the

market realities, which are

i. Currently price driven wherein the corporates have

shed their traditional alignment with the bankers merely

due to past connections. The present trend, being

price driven, even in short duration loans ranging

between 90-365 days.

ii. Changed conditions in money supply resulting in the

availability of cheaper credit.

iii. Multiple Bank financing in place of consortium lending.

The approach of the Bank officials also needs to be

moulded towards quick credit appraisal on an

independent basis leading towards quick credit

decisions and disbursements.

iv. Demand and aggressive competition in the retail

segment and SME segment. In order to ensure better

spread as well as for spreading the risk, and encashing

opportunities for cross selling we need to accord thrust

for retail lending and lending to SME.

Keeping in mind the above aspects, the following thrust

areas are identified :

i. Focus on major corporate clients to capture the

price driven short duration loans i.e. between 90 days –

365 days. This will be aimed at ‘AA’ (LC3 to LC4) and

above rated clients.

ii. Emphasis will also be on personal & housing

finance besides trade finance including L/C business.

This segment, historically, has least delinquencies and

offers better spread on interest as well as better spread

of risk.

iii. Thrust will also be on post sale finance both for

supplier and buyer including invoice discounting &

services offering opportunities for fee based income

like syndication, etc.

iv. Increase thrust to SME due to risk dispersal and

also in tune with national importance for economic

development.

v. In respect of corporate finances, the present

approach of corporates towards capital market needs

throws up ample opportunities for financing mergers,

acquisition, takeover, IPO financing, ESOP funding,

etc. It is proposed to selectively enter these areas.

Additionally any new type of credit business with good

potential not specifically mentioned in the policy maybe

considered at H.O. level.

Considering the fact that the distinction between the

role of treasury and the credit department while dispensing

present day credit products is becoming non-distinguishable

due to varieties of new short term products, continuous and

dynamic interaction between the credit and treasury

functionaries is envisaged to ensure that the opportunities for

credit dispensation are seized as and when available.

The exposures should also be effectively linked up with

products like factoring and forfaiting, etc. wherever

applicable to ensure risk free recovery.

While considering term loans wherever feasible, Bank may

consider a take-out financing structure wherever longer tenor is

envisaged such as infrastructure projects.

Low Priority/Negative List

New industries not belonging to the following list can be

considered for Bank finance. The following industries may

not be financed at all :

Industries consuming/producing ozone depleting

substances like Chlorofluoro Carbon (CFC–11, CFC–12),

CFC–113 Carbon Tetrachloride, Methyl Chloroform,

Halons – 1211, 1301, 2402. The sectors in which they

are generally used are Foam Products, Refrigerators and

Air-conditioners, Aerosol products, cleaning applications,

fire extinguishers.

Sugar industries in the co-operative sector should not be

financed except in the following cases :

i) Pledge of sugar with NOC from working capital Banks

wherever applicable.

ii) On lending for basal dose finance to member farmers and

for financing harvesting and transport contractors.

iii) For setting up co-generation plant and ethanol

manufacturing plant after careful and satisfactory

detailed TEV study with the prior approval of M.Com.

iv) Any other case, with the approval of M.Com.

Existing Accounts : The review of existing accounts with or

without additional limits may also be considered by various

delegatees as per their authority.

Operative instructions conveyed from time to time through

various communications like Branch Circular, Circular

Letters, Administrative Circulars etc. will be guiding force for

determining the restrictions/ priorities in lending to specific

industries/ sectors.

**********

TENURE OF CREDIT

Being a commercial bank, operating primarily in the short to

medium term money and capital markets, the Bank should

not assume an unduly large exposure on term credit

facilities. While the matching of term deposits to term loans

and investments will be monitored by the Asset Liability

Committee of the Bank, it is desirable to prescribe a suitable

ceiling on term exposure in relation to the total credit

exposure of the bank. There is increased emphasis on

infrastructure financing especially with the concept of

universal banking gaining ground. The role played by

Developmental Term Lending Institutions in such financing is

diminishing day by day. Bank recognises that the Bank's

share of term loan exposures will be on the rise in view of the

changes in the present lending scenario. However, we

propose that the term exposure of the Bank should generally

not exceed 40% of the total credit exposure of the Bank.

Thus, the aggregate of term exposure in the form of term

loans, deferred payment guarantees, term letters of credit,

non convertible debentures and other investments in

corporate debt instruments (including redeemable preference

shares) should not exceed 40% of the total credit exposure

of the Bank. For the sake of clarity, it may be mentioned that

the above exposure includes those L.Cs/ Deferred payment

guarantees with a tenor exceeding 3 years but not more

than 5 years. Branches should not issue DPG/Open L.C.

with tenor exceeding 5 years without the prior permission of

M.Com.

Although, RBI has clarified for disclosure purpose term loans

as loans with specified maturity in excess of 1 year, for

determining as to what is a term exposure, for the purpose of

monitoring exposure by way of term loans, the cut off point

would be 3 years. Thus, the exposures with remaining

maturity of 3 years and above at any time would be treated as

term exposures. Where Take Out finance is available, the

determination of 3 years would be based on the un-expired

period before funds under take out finance would be available.

For this purpose, a suitable Management Information System

has to be in place.

Having regard to the following reasons, the Bank would

assume term exposures for reasonable maturity periods -

a) The longer the term of the credit, the greater the

uncertainty and the attendant risks.

b) The Bank is essentially in the short term market and is

not expected to assume very long term exposures.

Accordingly, the Bank would assume exposures with an initial

maturity of 10 years or less for industry, trade or business as

also in the personal segment. In the agricultural segment as

also for infrastructure projects, the maximum initial maturity

could extend upto 15 years. In cases where these periods

need to be exceeded, the specific sanction of the sanctioning

authority for such elongated periods must be obtained. Such

cases should also be reported to the Management Committee

on an annual basis where the exposure exceeds Rs. 5 crores.

A further exception could be made in regard to personal loans

for financing houses etc. where a clear cut scheme has been

evolved for granting loans for longer maturity periods.

CREDIT ACQUISITION

Credit Origination

It is proposed that we may accept either primary or secondary

origination of credit, namely by direct acquisition or through take

over. Our policy in this regard is proposed as under :

Primary Acquisition

These are direct credit acquisitions subject to the various

guidelines already in vogue and as amended by this policy. An

asset may be acquired by us as sole banker or through

consortium or multiple banking arrangements or syndication. In

order to enable quicker asset growth with low administration

cost, we may consider entering a consortium/ multiple/

syndication arrangements in respect of assets already

appraised by All India Financing Institutions and other leading

banks on merits based on our fair assessment and acceptability

of the appraisal note as per norms.

Secondary Acquisition

i. Takeover of accounts : We may consider takeover of

sound and remunerative accounts with proper

verification of past records keeping in mind that most

corporates and other entities are no longer bound by

traditional alignment with a bank, due to past

connections. Guidelines in this regard will be laid down

by the Board or Management Committee of the Board

from time to time.

ii. Inter Bank Participation : We may consider taking

exposures by way of inter bank participation either with

risk or without risk, depending upon the circumstances

of each case and liquidity position of the Bank.

Takeover of Accounts

Whilst in the past we have been considering and taking

over working capital limits of proponents from other banks,

we have been very selective/restrictive in taking over term

loans from other banks/financial institutions. However, we

need to consider taking over term loans also as –

i) We may entertain requests from proponents enjoying

both working capital limits and term loan from another

bank. The term loan may be secured by certain

movable/immovable assets. By taking over the term

facilities, we would be in a position to get first charge

on the movable/immovable properties and thereby

better security for the credit limits considered by us.

ii) Our borrower may be enjoying working capital finance

from us. The term finance may have been availed of

from Term Lending institutions. As a cost-cutting

measure or for certain other reasons, the borrower may

prefer to switch over to us. In such case also, taking

over the term loan from the financial institution would

give us better security by getting charge on the

securities charged to the financial institutions.

iii) Some banks, foreign & private are known to originate

and sell assets like loan/WCDL etc. They are on the

market regularly. We may also go in for asset purchase

on merits.

Apart from these there could be instances where we would

like to take over term loan from another bank/financial institution

either to improve our market share or for ancillary benefits that

would accrue to the bank. Therefore, take over of term loans from

Banks/Financial Institutions is accepted as a strategy for credit

expansion. While we may generally consider taking over of term

loans from other banks, we may on merits consider take over from

financial institutions. Take over of working capital facilities may be

approved by an authority that may be delegated such authority by

the Board or Management Committee of the Board. Since the

operational guidelines are subject to market requirements,

branches may be guided by the instructions sent from Head Office

in the matter from time to time

Administrative Clearance

Normally, requests for credit facilities may be initiated at

Branch/Zonal Office/Head Office level as per the instructions

in force. In case of bigger proposals, the same may be

initiated in consultation with the delegatee within whose

powers the limits fall for sanction or General Manager -

Credit at Head Office. No formal administrative clearance is

envisaged for the same. However, the General Manager -

Credit and above may consider prescribing administrative

clearance having regard to certain factors like :

i. A particular industry is facing a down trend/industries

from negative list;

ii. Finer rates of interest, concessions are required to be offered;

iii. Liquidity constraints;

iv. Acceptable deviations from laid down standards; etc.

Bank’s deposits increased by Rs.40,053 crore to Rs.229,762 crore during the year recording a growth of 21.11%.

The growth in domestic deposits was to the tune of Rs.37,098 crore or 23.26% as against previous year’s growth of 27.17%.

Non-Resident Deposits of the Bank stood at Rs.10,616 crore which constituted 5.40 % of aggregate domestic deposits.

Savings Bank deposits grew by 24.67% and Current deposits logged a growth of 35.95%.

The gross domestic credit of the Bank registered a growth of 17.20% from Rs.115,354 crore on 31.03.2009 to Rs.135,194 crocre

The growth rate in the last year was 26.22 %. Robust sanctions / disbursement by Large Corporate, Mid Corporate, SME and Agriculture enabled the growth.

DEPOSIT AND ADVACES CHART OF BOI

Particulars

FY2009 (Full year)

FY2010 (Full year)

Growth Amount

Growth Rate(%)

Global Deposits

189708 229762 40054 21

Global Advances

144732 171317 26385 19

Domestic Deposits (Gross)

159487 196585 37098 23

Domestic Advances (Gross)

115354 135194 19840 18

CASA 48637 61843 13206 27 CASA %age 30.76 31.98 Credit Deposits Ratio 76.29 74.77

PROFIT & LOSS A/C OF BANK OF INDIA FOR DIFFERENT YEARS

Particular 2010 2009 2008 2007 2006 Income Interest Earned 17877.99 16347.36 12355.22 8936.28 7028.70 Other Income 2616.64 3051.86 2116.93 1562.95 1184.38 Total Income 20494.62 19399.22 14472.15 10499.24 8213.08 Expenditure Total Expenditure 5777.47 4316.97 3588.35 3373.83 2803.97 Operating Profit 14717.16 15082.25 10883.80 7125.41 5409.10 Interest Expended 12122.04 10848.45 8125.95 5495.82 4396.72 Gross Profit 2595.12 4233.80 2757.84 1629.59 1012.38 Depreciation 101.29 69.37 73.13 96.73 96.73 Profit Before Tax 2493.83 4164.43 2684.71 1532.86 915.66 Provision for Tax 504.54 795.56 683.77 428.10 199.74 Deferred Tax 248.22 361.52 -8.46 -18.41 14.48 Fringe Benefit Tax 0.00 0.00 0.00 0.00 0.00 Net Profit 1741.07 3007.35 2009.40 1123.17 701.44 Adjustments Below Net Profit

0.00 0.00 0.00 0.00 0.00

Profit & Loss Brought Forward

0.00 0.00 541.76 541.76 220.00

Appropriations 1741.07 3007.35 2551.16 1123.17 379.68 Profit & Loss Carried Forward

0.00 0.00 0.00 541.76 541.76

EPS (in Rs) 33.11 57.18 38.21 23.01 14.37 Book Value (in Rs) 243.41 224.08 167.83 117.71 98.88 Preference Dividend (in Rs)

0.00 0.00 0.00 0.00 0.00

Equity Dividend in % 70.00 80.00 40.00 35.00 30.00 Equity Dividend in (Rs.)

368.00 420.73 210.37 170.85 146.44

Corporate Dividend Tax

60.65 70.81 35.41 25.84 20.28

Contingent Liability 146908.95 133757.32 157583.56 99239.60 88964.55 Extra-Ordinary Items 0.00 0.00 0.04 15.95 0.27

Balance-sheet (crores)

Particulars As at 31st March 2010 As at 31st March 2009

CAPITAL AND LIABILITIES Capital 525.91 525.91 Reserves and Surplus 13704.08 12969.01 Deposits 229761.94 189708.48 Borrowings* 22399.90 15673.18 Other Liabilities and provisions

8574.63 6625.19

TOTAL 274966.46 225501.77 ASSETS Cash and balances with Reserve Bank of India

15602.62 8915.29

Balances with bank and money at call and short notice

15627.51 12845.97

Investments 67080.18 52607.18 Advances 168490.71 142909.37 Fixed Assets 2351.81 2531.94 Other Assets 5813.63 5692.02 TOTAL 274966.46 225501.77

PERFORMANCE HIGHLIGHTS

● Operating profi t Rs.4,705 crore and Net Profi t Rs.1,741crore.

● Capital Adequacy Ratio at 12.94% as against 10%prescribed by

RBI.

● Net Worth at Rs.12,456 crore, grew by 11.78% over March

2009.

● Book Value per share Rs.236.84 (Rs.211.89 previous year)

● Gross NPA ratio at 2.85% as on31.03.2010

● Net NPA ratio at 1.31% as on 31.03.2010

● Total business (Deposit + Advances) reached at Rs. 401,079

crore recording a growth of Rs.

66,639 crore (19.93%). Domestic business grew by 20.72% to

reach the level of Rs.331,779 crore.

● Total deposits increased by Rs. 40,053 crore reached the level

of Rs.229,762 crore, a growth of 21.11%. Domestic deposits

increased by 23.26% to reach the level of Rs.196,585 crore. Share

of low cost deposits in the domestic deposits is 31.75% as on

31.03.2010.

● Gross credit touched Rs.171,317 crore, recording a growth of

18.37% with domestic credit recording a growth of 17.20% to

reach level of Rs.135,194 crore.

● Priority Sector lending constituted 46.39% of Net Adjusted Bank

Credit and the share of Agricultural Credit to Net Adjusted Bank

Credit was

16.24%.

● Credit to SME sector grew from Rs.25,441 crore to Rs.29,568

crore recording a growth of

16.22%.

● Schematic Retail Credit grew by 15.73% from Rs.8,714 crore to

R s.10,088 crore.

Export Credit registered a growth of Rs. 602 crore, i.e.,

9.98% growth over previous year

OTHER HIGHLIGHTS

The Bank crossed milestone of Rs.4,00,000 Cr. of Business

Mix.

CASA Deposits grew by Rs.13,206 Cr. (a growth rate of 27%)

touching a level of Rs.61,843 Cr.; improved from 30.70% to

31.75%.

As many as 31.5 lakh S/B accounts and 1.17 lakh current

accounts opened during the year. Customer base improves by

over 10%.

Domestic network touched 3207 branches and 820 ATMs. 186

branches and 320 ATMs were inaugurated during the year.

28 specialised Mid Corporate Banking Branches were opened.

Syndication desk reactivated and projects involving outlay of

close to Rs. 10,000 Cr. processed.

To aid credit delivery, online Credit Application Processing

System (CAPS) introduced.

Bank achieved 100% CBS status.

To facilitate control and monitoring Computer Aided Audit Tool

(CAAT) launched.

FINANCIAL PERFORMANCE

The Bank recorded an Operating Profit t of Rs. 4,704.77 crore,

(previous year Rs. 5,456.80 crore).

Net Profit t stood at Rs.1,741.07 crore (previous year Rs. 3,007.35

crore). Net interest income grew by 4.67% due to rise in volume of

business mix by 19.93% (from Rs.334,440 crore to Rs.401,079

crore). Non-interest income declined by 14.26% and covered

71.34% of Operating Expenses as against 98.64% in the previous

year.

Financial indicators

Particulars

(Global)

Q4 FY2009

Q4 FY2010

Growth Rate (y-o-y)

FY2009 (Full year)

FY2010 (Full year)

Growth Rate (y-o-y)

Operating

1408 1275 -9 5456 4705 -14

Profit Provisions

597 848 42 2449 2963 21

Net Profit

810 428 -47 3007 1741 -42

Total Income

5278 5248 0.6 19399 20494 6

Total Expenses

3870 3973 3 13942 15789 14

Net Interest Income

1433 1552 8 5498 5756 5

Cost to Income Ratio

36.54 43.96 36.18 43.80

NIM 2.98 2.57 2.97 2.51 ROA 1.50 0.65 1.49 0.70 Capital Adequacy Ratio (Basel-II)

13.01 12.94 13.01 12.94

Asset Quality

The Bank’s Gross NPA Ratio stood at 2.85% and Net NPA ratio at

1.31%. The Provision Coverage ratio is at 65.51%. Amount wise,

Gross NPA stood at Rs. 4882 crore and Net NPA at 2207 crore.

The Bank effected Cash Recovery and Upgradation to the tune of

Rs.825 crore.

Capital

The Bank is well capitalised with Capital to Risk Weighted Ratio

under Basel II of 12.94% against 13.01% in March,2009. Tier I

capital constituted 8.58%. The Bank’s Net Worth increased to

Rs.12,456 crore as against Rs.11,144 crore as on March 31,2009.

Social Objectives and Financial Inclusion

Advances to the Priority Sector touched Rs.52,125 crore,

constituting 46.38% of the Adjusted Net Bank Credit. Credit

to Agriculture Segment went up by 10.75 % to Rs.18035

crore and advances to Micro, Small and Medium (MSME)

went up by 16.21% to Rs.29567 Cr. 5

146 villages have been made as money lender free villages

under Debt Swap Scheme.

Under Financial Inclusion Initiative, the Bank has so far

opened 32.63 lakh

Bank has so far enrolled 412000 accounts for issuance of

smart cards and issued 291000 cards to the customers upto

March 2010.

Bank is also using IT enabled solution on end-to-end basis

using handheld device terminals and biometric smart cards

by adopting Business Correspondent/ Business Facilitator

model as prescribed by RBI.

Technology Initiative

All the branches of the Bank are under CBS and are RTGS

enabled. ATM network has been expanded to 820 as

against 500 in March,09.

Mobile Banking Services has been extended to all retail

internet banking customers. To make internet banking safe

and secure, the Bank implemented 2 Factor Authentication

(2FA) – Star Token for both Retail and Corporate internet

banking customers as an additional security measure.

In recognition of various technology initiatives taken, Bank

has been conferred Winner award in the Best Business

Enablement Initiative Category by IBA.

Bank has launched the web-site in Marathi and is planning

to roll out in other regional languages also.

In order to make credit processing activity faster and more

objective, Credit Application Processing Systems (CAPS)

was introduced which covers all major credit segments –

Retail, Corporate, MSME and Agriculture.

Awards

The second Most Trusted Brands” (MTB), 2009 under PSU

category 2009

NDTV Profit Business Leadership Awards 2009 for Best PSU

Bank

Outlook money NDTV Profit Awards 2009 –Best Education

Loan Provider Runner up

Best Bank under Banking Category by Dun & Bradstreet – Rolta

Corporate Awards 2009

FE-EY Most Efficient Public Sector Bank Awards 2010 by Dalal

Street

Second best performance award in lending to Micro & Small

Enterprises sector by the

Government of India

Bibliography

Bank of India Cash Management Training Programme NotesWebsites

www .Bankofindia. com

www.google.com

www.yahoo.com

Financial Management (I. m. Pandey)