on board induction training program for directly recruited officers

8/12/2019 On Board Induction Training Program for Directly Recruited Officers

1/120

On Boarding Induction

Training Programme

for

Directly Recruited Officers

Name : _______________E.C. No.:__________

Period : From:__________To:_____________

Training Centre : _______________________________

Baroda Academy Inventing Methods for Igniting Minds


2/120


3/120


PREFACE

Congratulations on your appointment in Bank of Baroda, one of the Premier Banking Instituteof India. We are eagerly awaiting your joining Bank of Baroda Family.

While you will undergo a very comprehensive On boarding Induction Programme to make youprofessional Banker, we have prepared this reference material to give you an Overview ofBanking which you may go through during this intervening period.

The reference material is divided into following segments:

Section A- Banking General - Overview of Banking

Section B HR Policy & Service Conditions

Each section is further divided into various Chapters and each Chapter is followed by a fewObjective Questions to Test Your Understanding.

While going through reference material, in case, you have any doubt, please note down andthe same will be clarified to you during your Class-Room training.

It is expected that you will go through this reference material before joining the Bank and theBank will conduct one Objective Test on the first day to Test Your Understanding of thereference material. Various other technical and functional aspects will be dealt in the Class-Room Training.

Wishing you a very successful learning experience and we are eagerly awaiting your joining inthe Bank of Baroda Family.

Kamlesh PatelDGM & I/C PrincipalStaff CollegeBank of Baroda

15/3/2013


4/120


5/120


INDEX

Section/Group Topics PageNo.

1. What do you need to become a Successful Professional Banker 12. Bank of Baroda s Core Values 3A. Banking General1. Overview of Banking 5

2.- Know Your Bank - New Initiatives Taken by Bank- Awards and Accolades

183033

3. Various Laws Relating To Bankers 36

4. Banker Customer Relationship 495. Know Your Customer and Anti Money Laundering Guidelines 59B. HR Policies and Service Conditions1. HR Policies and Service Conditions of Officers 732. HRNes, Payroll, Knowledge Management Portal 107


6/120


7/120

Baroda Academy Inventing Methods for Igniting Mind1

WHAT DO YOU NEED TO BECOME A SUCCESSFUL PROFESSIONAL BANKER?

Role of Bank

Banks serve an essential role in the economic life of the country. The economys health isclosely related to the reliability of its banking system. Banks ensure money and valuablesare safe and provide borrowing and lending services, a variety of accounts, and a lot more.

What does a Banker do?

Bankers are essential professionals that are vital to the function of the bank. Bankersprovide their customers with a variety of services. They help with initial banking requestssuch as opening a checking or saving account and other money handling options. Theyoffer a variety of services such as, deposits, Money transfer, safe deposit locker lending toCorporate, SMEs, Priority Sector and much more. They are trained to answer any

questions that customers have about their banking needs and help customers effectivelymanage their accounts and fund. Bankers strive to provide excellent customer service andestablish good relationships with their customers.

What are the prospects for a career in banking?

Career as a banker is an excellent choice for individuals who feel comfortable handlingother peoples money and giving advice on how to manage it. Career advancements andopportunities are excellent and usually depend on the merits of the individual. Details aregiven in separate Chapter on career progression in Bank ofBaroda.

What Competencies are required for becoming successful Banker

Bankers must have excellent communication and customer service skills and have agenuine interest in working with people. Confidence, motivation, and sales ability are alsoessential qualities in the banking field.

Successful bankers are usually performance-driven, passionate about their work, keen tolearn and eager to accept challenges.

In terms of Knowledge, Skills and Attitude, requirement is as under:

Knowledge:

Knowledge of Banks Products & Services Knowledge of Rules / Regulations Knowledge of Banks Policies / Vision Knowledge of Technology (particularly Finacle andother IT applications of Bank)

Skill Marketing Skills Communication Skills / Soft Skills Managerial Skills Public Relations / Networking Skills Time Management Skills Decision making Skills

Attitude

Business Savvy Techno Savvy


8/120


Customer Savvy Financial acumen Result oriented Process oriented Willingness to assume responsibility

Summary

Basically, as a Bank Officer you should:

Business Savvy Present yourself in smart manner Keep yourself updated with the latest trend and happening in the area of Banking,

Market & Economy (National & International) Display courteous behaviour towards customers, peers, superiors, subordinates Render best customer service during / after business hours with full devotion,

dedication, honesty & integrity


9/120


BANK OF BARODA S CORE VALUES

Our values determine our thoughts and actions. Values acts as internal compass and

therefore provides direction. When common values are chosen and owned by an Individualor a team, it creates a powerful emotional connect. Individuals/teams following core valuesare dynamics and can accomplish miraculous results.

As we grow, our processes and strategies may change, but our values should alwaysremain the same. Our core values should always be the framework from which we make allof our decisions.

Bank of Baroda is practicing following core values:

Customer centricity-Taking Ownership of Customer Service

The ownership of excellent customer service lies with each and every employee

irrespective of role assigned to him/her. We have developed culture of quickresponsiveness as far as customer needs are concerned. Bank of Baroda wants to createa new benchmark in the dissemination of customer service, demonstrating care andconcern that can catapult the standard of our service to create better value for ourcustomers. Inculcating the culture of sales/cross sales and providing personal service hasmade us a great differentiator in the market.

Trust, Transparency and Togetherness

Bank of Baroda strongly believes in these -3- values and all our dealings with our stakeholders i.e. Customers, Employees and Regulators are in tune with these values. We aretransparent in all our dealings. We adopt collaborative approach. We encourage and

Complement each other. We believe in Team spirit . We want to create an environment thatis friendly, warm and exciting. We encourage diversity in ideas, opinions, and points ofview.

We believe that in general, the best ideas and decisions are made from the bottom up,meaning by those on the front lines that are closest to the issues and/or the customers. Therole of a Manager is to remove obstacles and enable his/her direct report to succeed.

Many of the Banks best ideas have been the direct result of inform al interactions outside ofthe office.

We are more than just a team, though we are a family. We watch out for each other, carefor each other, and go above and beyond for each other because we believe in each otherand we trust each other. We work together but we also play together. Our bonds go farbeyond the typical co -workers relationship found at most other organisations.

DEW

Dream Big, Enjoy life and Work hard. These are -3- values followed by all 43000 Barodians.We stretch our goals trusting our potential, we work hard to achieve it and in the process,we enjoy life also.

Commitment to Excellence

Going Extra mile in whatever we do. In whatever role, Barodians do something thatsabove and beyond whats expected. We are not an average B ank, our service is notaverage, and we dont want our people to be average.


10/120


Every One is treated equally/Respecting each Role

Our belief is every role in organization is important and, therefore, every person performing

such role deserves dignity. It is expected that seniors in Organisation will play role ofmentor in grooming young ones and young ones will exhibit due respect to seniority andage. We believe that every person want opportunity to speak their minds and have theirideas, opinions and feelings heard regardless of their gender, age or hierarchy level.

Humility

While we celebrate our individual and team successes, we are not arrogant nor do we treatothers differently from how we would want to be treated. Instead, we carry ourselves with aquiet confidence, because we believe that in the long run our character will speak for itself.

Observing Integrity and Honesty i.e. Walking the Talk and Talking the Walk

We believe in observing integrity at all times . Every Barodian is expected to honor his/herwords/promises. Every Barodian is expected to be trustworthy and honest in words andactions.

Pursue growth and learning

At Bank of Baroda, we think its important for employees to grow both personally andprofessionally. All Barodians endevour to acquire new skill sets, develop leadership traitsand making learning a part of life style to remain more agile in the work space.

We believe that every employee is endowed with immense potential than what theemployee himself/herself realizes. Our goal is to help employees unlock this potential. But it

has to be a joint effort: You have to be ready to face, want to challenge and stretch yourselfin order to make it happen.

We strongly believe that our key human resources need to develop leadership qualities tobuild capacity to outperform the competition.

Embrace and drive changeWe are ever evolving. Part of being in a growing organization is that change is constant.We Barodians embrace it enthusiastically and, perhaps even more important, encourageand drive it.

Although change can and will come from all directions, its important that most of thechanges in the Bank are driven from the bottom up from the people who are on the frontlines, closer to the customers and/or issues.Never accept or be too comfortable with the status quo, because the organisations that getinto trouble are historically the ones that arent able to adapt to change and respond quicklyenough.

Creative and Open-Minded

We approach situations and challenges with an open mind .We never want to becomecomplacent and accept the status quo just because thats the way things have always beendone. We are always seeking adventure and having fun exploring new possibilities. Byhaving the freedom to be creative in our solutions, we end up making our own luck.Passion, Commitment, Competence and determination of Barodians will surely take theBank to greater heights.


11/120


OVERVIEW OF BANKING

Quick Bites

Indian Banking system comprises Public Sector Banks, Private Sector Banks, ForeignBanks, Cooperative Banks

In India earliest bank started in 1770 named as Bank of Hindostan Reserve Bank of India established in 1935 with paid up capital of INR 5 crore State Bank of India Act passed in 1955. 14 commercial banks were nationalised on July 19,1969 and other six banks onApril

15,1980 Financial sector reforms started in 1991. Narsimhan Committee submitted its first report in 1992.

KYC/AML Act passed in2002. RBI issued draft guidelines on BASEL II in2005 To be acquainted with the Emerging trends in Banking

Evolution of banking:

The word bank relates to the German word banck, which means heap or mound or jointstock fund. From this the Italian word banco , meaning heap of money was coined.

Another school of thought says that the word bank is derived from the word bancus orbanque which means bench. Initially the bankers, viz. the Jews in Lombardy transactedtheir business on benches in the marketplace and bench resembled the bank counters to acertain extent. If a banker failed, his banque/bench was broken up by the public. Hence thework bankrupt evolved. In other words, bankrupt means a person who has lost all hismoney, wealth, financial resources etc.

In India, the earliest bank was starte d in 1770 named as Bank of Hindostan byM/s. Alexander and Company of Calcutta (Kolkata). But it was closed down in the year 1832.However, subsequently three presidency banks were set up, viz. Bank of Bengal in 1809,Bank of Bombay (Mumbai) in 1840 and Bank of Madras (Chennai) in 1843. These werequasi-government institutions incorporated under the charter from local government whichalso contributed to the share capital. They were initially entrusted with the cash balances ofgovernment and management of public debt. In the year 1921, all these banks wereamalgamated into Imperial Bank of India with the deposit and advances figures of INR 73crores and INR 54 crores respectively, spread over nearly 80 branches.

According to Section 5(b) of the Banking Regulation Act, 1949, banking is accepting, for thepurpose of lending or investment, of deposits of money from the public repayable ondemand or otherwise and withdraw by cash, cheque, draft or otherwise. Banking is nothingbut efficiently mobilizing low cost deposits from savers, who otherwise have low returnoptions and then efficiently allocating funds to creditworthy borrowers who have very fewcapital funds to be deployed on any viable project/business proposal/opportunities Section49(A) prohibits any institution, other than banking company, from accepting deposit moneyfrom public for withdrawal by cheque. The overall banking business in the year ofIndependence ie 1947, nationalization in 1969 and the present one, as revealed in Table 1,throw a bi rds eye view of the growth in the banking sector during the 60 years period.


12/120


TABLE 1 (INR in Crs.)Parameters 1947 1969 April 20 10 June,2012

(Approx)Deposits 1,019 4,640 45,06,747 54,34,225

Advances 424 3,572 32,14,742 39,96,976Total Business 1,443 8,212 77,21,489 94,31,201

With increase in the number of bank branches significantly from about less than 100branches in 1947 to around 72,000 in 2009, the total business of the banks has alsoleapfrogged, with Compound Annual Growth Rate (CAGR) of nearly 15 percent for 60 longyears, a creditable achievement by any standard. During the last couple of years, whilemany global; financial institutions failed, in India on account of the stringent regulatorymeasures, we have been able to neutralize the effect of global meltdown in the financialsector.

Reserve Bank of India Established

As recommended by the Indian Central Banking Enquiry Committee, the Reserve Bank ofIndia Act was passed in 1934 and the Reserve Bank of India (RBI) was established in theyear 1935 with fully paid share capital of INR 5.00 crores, in the private sector to regulateissue of bank notes, securities, monetary stability in India and to operate the currency andcredit system of the country for its economic development.Later, after independence in1947, the entire share capital was acquired by the Government of India and the RBI wasnationalized in 1949.

State Bank of India gets its name

In 1955, the State Bank of India (SBI) Act was passed by nationalizing the Imperial Bank ofIndia and SBI was born with the objectives of providing banking facilitated on a large scalein rural and semi-urban areas for various public purposes. Nationalization of Imperial Bankof India heralded the entry of public sector culture into commercial banking in 1959, SBI(subsidiary banks) Act was passed and the following eight banks were formed, viz StateBank of Bikaner, State Bank of Jaipur, State Bank of Indore, State Bank of Mysore, StateBank of Patiala, State Bank of Hyderabad, State Bank of Saurashtra and State Bank ofTravancore.

Bank nationalization Apart from the SBI, 14 commercial banks having deposits of INR 50 crores and above werenationalized on July 19, 1969 and again on April 15, 1980 ,6 banks having deposits of INR200 crores and above were nationalised. Justifying nationalization, the former primeminister, late Indira Gandhi, in a broadcast to the nation, had stated:

At the time of nationalization of banks in the year 1969, the data pertaining to commercialbanks were as shown in Table 2.

Table 2 (INR in crores)Type of Commercial Banks Branches Deposits Advances

State Bank of India 1,569 948 966SBI Associates 893 291 21914 Nationalised Banks 4,134 2,627 1,813


13/120


Total Public Sector Banks 6,596 3,866 2,998Private Banks 1,666 774 574

All Commercial Banks 8,262 4,640 3,572Share of PSBs 80% 83% 84%

Current Composition of banking services

The bulk of India's banking system is made up of the "Scheduled Commercial Banks"(SCBs) which includes both the Public Sector banks (PSBs), in which the government mustretain a stake of more than 51% and the Private Sector banks. The latter include the "OldPrivate sector" banks that have been around for decades and the "New Private sectorbanks that came into existence in the past twenty years during India's financial reforms andinclude newly established banks such as Yes Bank, Axis bank and existing institutions thatwere converted into commercial banks, such as the former development institution ICICIand specialized lenders such as HDFC.

Public Sector Banks hold 74% of Total Assets Privare Sector -19 % Foreign Banks-7 %

BANKS ROLE IN INDIAN ECONOMY

In the economic development of India, banks have played significant role in the followingareas, sectors and fields:

Payment and settlement system through cheque. Capital formation Creation of money/credit Bridging the organized and unorganized sectors. Impetus to rural and semi-urban development. Entrepreneur and small enterprise development. Helping agriculture, small scale industries (SSIs), weaker section, etc. Regulation of national savings. Development of infrastructure through project financing. Maintenance of balance of trade Promotion of export trade. Sectoral development through prioritization of credit deployment/delivery. Catalyst in the social change and rural development. Taking banking system to rural and remote areas and significantly redeeming the

rural populace from the clutches of the private money lenders. Speedy funds transfer. Direct and indirect job opportunities. Minimisation or avoidance of diversion of funds for unlawful activities such as

speculation, hoarding terrorism etc. Removal of regional disparities in the economic development. Helped in implementation of various welfare measures initiated by the government. Reducing the concentration of wealth in the hands of few industrialists.

It was noticed that commercial banks were directing their advances to large and mediumscale industries, ignoring the priority sector such as agriculture, SSI, exports etc. Hencesocial control was brought in with the aim to regulate social and economic life so as to


14/120


obtain the optimum growth rate for our economy and to prevent at the same time,monopolistic trend, concentration of economic power and misdirection of resources.

Private sector banks indirectly motivate the PSBs by offering a healthy competitiveenvironment through:

a. Professional managementb. Healthy competitionc. Encouragement of foreign investmentd. Access to foreign capital marketse. Innovation and expertise

As per the present governor of RBI, all villages having population of over 2,000 havealready been linked to banking/financial services by 2012. Financial inclusion providestremendous challenges and opportunities at the bottom of the pyramid of population and itall depends on the penetrating capacity of the institutions.

Technology adoption

PSBs have fully computerized their branches through core banking solution or centralizedbanking solution. Also banks have introduced Electronic Funds Transfer (EFT), Real TimeCross Settlement (RTGS), cheque truncation, mobile banking, Internet banking, etc. foreffecting and ensuring quick as well as efficient transfer of funds between banks. Innovativebanking through ATMs, phone banking, virtual banking, e-banking, Internet banking, Mobilebanking etc. has come a long way in satisfying the ever increasing needs of the youngergeneration.

Mobile banking is likely to revolutionise the banking practices in India, for the reason thatthere are more mobile subscribers than the combined strength of bank account holders andcredit/debit card users. Therefore, mobile banking has good potential for improving thefinancial inclusion proposition initiated in India. Quite a bit of money would flow wireless onmobile networks, from different strata of populace. Mobile banking is an effective tool tomanage funds at any point of time, wherever one is placed. By simply owning a mobile,anyone can become a bank customer. Banks tap the opportunity to access a whole set ofcustomers who otherwise could not have entered a bank by themselves, without the bankopening a new branch nearby. Mobile banking is actually a graduation from ATM, both ofwhich with adequate security measures are going to revolutionise the banking concept.

In terms of the recent guidelines of RBI, banks which have implemented core bankingsolution may put in place daily/monthly transaction limit depending on banks own riskperception for mobile banking so as to facilitate small ticket transaction. Putting in place astable Unique Identification Number for the growing Indian populace would enable reachingand streamlining of banking through financial inclusion.

Reforms and the way forward

Sound banking system, playing a crucial role in the financial system, stimulated economicgrowth by mobilization of mass savings and allocate efficiently the resources for productiveand consumption purposes. During the last -2- decades in banking, quite a good number ofreforms have been initiated and few more are expected in days to come.


15/120


CONCLUSION

In the past 60 years, Indian banking scenario has dramatically changed benefiting the elite

class through technology leverage and the mass populace below the poverty line (BPL)through financial inclusion.

Nationalization of banks, opening up the sector for private banks during the last decade,thrust given on priority sector lending, export credit, financial inclusion, universal banking,consolidation, takeover, core banking mechanism through technology leverage, etc havepaved way for enlarging the customer base and reach. Population per branch hassignificantly come down during the last 60 years.

Banking services are now oriented to anyhow, anywhere, anytime and any type of bankingas change is the only certainly that would govern banking. Nevertheless, following financialliberalization for the past nearly 2 decades, the deposit pattern has undergone change asthe household sector share in the deposits has been on the declining trend from more than69 percent to less than 59 percent, as revealed in the RBI Report on Currency and Finance.Consequent to the nations commi tment to the World trade Organization, sea change isexpected in the way banks function in the country, as it would be customer friendly andtailor made to suit the needs of various clients. PSBs may lose their market share in thebusiness as one cannot have the cake and eat it too.

The challenges before the banking leaders are to successively drive the socioeconomicagenda of the government and yet at the same time retain the commercial competitiveness.

After a period of full in branch expansion on account of click and mouse banking of newgeneration banks, the PSBs as well as the new generation private sector banks have

turned their attention to brick and mortar banking, either through the organic or inorganicgrowth/expansion. Branch expansion in the remove corners of the country,operationalisation of various developmental and rescue schemes for the common man andensuring their success while improving the overall efficiency are the challenges ahead ofthe banking leaders.

Banks in India can ill-afford to play fast and lose by throwing risk management awaythrough the window. They need to stick to core competencies rather than venture intofinancially engineered derivative products which have resulted in economic downturn in thewestern countries. A banker can only be a banker and if he has to be someone else in thecomplex financial products, he may have to face the same crisis as we see in the US or

Europe. Banking system in India is surviving the onslaught of financial turnmoil, witnessedin US and Europe, mainly because of conservative policies, close monitoring by regulatorand periodical guidance from the RBI and finance ministry.In the next couple of years or so, nearly 50 percent of the banking populace would retire asmost of them were recruited during the nationalization and large scale branch openingperiods. With technology advancement, higher business coverage through core bankingplatform, tendency for outsourcing, the banking personnel strength is expected to slim downdrastically from the present level of nearly 8 lacs and get rationalized.

The growth achieved on account of the spread of banking culture through the length andbreadth of the country during the last 40 years since nationalization and also 63 years sinceindependence is quite unparalleled in the international banking scenario.

Annexure:


16/120


Significant Developments in Indian Banking

Year Development1955 Imperial Bank of India nationalized and renamed as State Bank of India to pave

way for social banking1962 Deposit Insurance Scheme to protect the interest of depositors was introduced

with an amount of INR 1,500/-.1968 Scheme of Social Control over Banks was introduced. National Credit Council

was set up to set lending targets for commercial banks.1969 14 major banks with deposit base of INR 50 crores and above were

nationalized so as to platform for branch expansion. Since then, population perbranch came down drastically from 65,000 in 1969 to around 15,000 in 2009.

1970 Focus was shifted from trade and business to agricultural farm credit and small

industries.1972 Lead Bank Scheme was launched to provide impetus to rural and backwardareas.Differential Rate of Interest with low interest rate on the loans to poor borrowers

DRI scheme was introduced with a direction of 1 percent of credit to be underDRI scheme, 40 percent of which to go to SC/ST sectors, resulting in significantcontribution for business entity towards margin money.

1975 Five Regional Rural Banks (RRBs) set up and formulated.Though Tandon and Chore Committee, scientific lending norms wereintroduced so as to deploy the funds that were scare when credit squeeze wasprevailing and also to ensure that borrowers stake is crystallized.

1976 Regional Rural Bank was set up with the central government, sponsoring bankand the state government contributing 50:35:15 ratio in capital formation.

1978 Deposit Insurance and Credit Guarantee Corporation (DICGC) was established.1979 Integrated Rural Development Programme (IRDP) was launched to benefit the

rural populance.1980 Six more banks were nationalized and class banking changed into mass

banking.20 Point Programme was introduced to ensure efficient production anddistribution of essential goods and services to the community and to raiseincome and standard of living of weaker section.

1982 NABARD and EXIM bank came into existance1983 Scheme for Self Employment for Educated Unemployed Youth was introduced.

1985 Nomination facility introduced

1988 Introduction of capital adequacy requirements as part of Basel Committeenorms.

1989 Service area approach

1991 Financial sector reforms, akin to what is practiced in western countries, wereintroduced.

1992 Securities scam surfaced and shocked the banking sector with the undesirablelink with the capital market.


17/120


1992-1993Rs.

Narasinhman Committee First Report on Financial Sector reformIncome Recognition & Asset Classification (IRAC) norms introduced. Standardassets, non-performing assets (NPAs)- substandard, doubtful and loss assets,capital adequacy, phasing out directed credit programme, deregulation ofinterest rate, slowly waning out the health code system, etc. resulted in banksreporting net loss, depending on certain norms.

1994 Photograph in deposit a/c

1993 Deposit insurance amount raised to INR 1 lac per depositor.1994 Introduced Board for Financial Supervision so as to focus on regulation.1995 Put in place Off-Site Monitoring and Online Supervision (OSMOS) mechanism.1995 Banking Ombudsman

1996 New Private sector banks were allowed entry with certain stipulated minimumcapital funds.

1998 Narsimham Committee: Second Report. PSBs allowed total capital marketthrough public issue of shares.

1999 Asset Liability Management (ALM) concepts were introduced as riskmanagement

2001 Term lending institutions turned into universal banks to share the cake withPSBs.

2002 The Know Your Customer (KYC) norms strengthened to check money

launching.Securitisation & Reconstruction of Financials Assets and Enforcement ofSecurity Interest (Sarfaesi) Act was passed to strengthen the hands of banks inthe recovery of impaired loan assets, without going through the lengthy legalprocess.

2003 The first financial asset reconstruction company, viz. Asset ReconstructionCompany (India) Ltd. (ARCIL) was formed.

2005 RBI issued draft guidelines on Basel II norms released by Bank for InternationalSettlements (BIS) in June 2004.

2007 Final RBI guidelines were issued on Basel II norms for compliance.

2008 Banks with international presence complied with the Basel II norms in March2008RBI set up Financial Literacy and Credit Counseling (FLCC), as a step toencourage financial inclusion concept.

2009 Banks without international presence were also required to comply with Basel IInorms by March 2009.With effect from April 2009, the foreign investors can have stake in banks, up toa maximum of 74 percent, up from, 25 percent.

As part of rationalization of capital market public issue collection, concept of Application Supported Blocked Amount (ASBA) is introduced.


18/120


EMERGING TRENDS IN BANKING

Regulatory Ratio at a Glance:

CRR (Sec 42, RBI Act): 4%, of net demand and time liabilities, to ensure liquidity andsolvency to be kept with RBI. SLR (Sec 24 , B. R. Act): 23%, Cash in hand, Gold owned by bank, Balance with

RBI/SBI and Investment in unencumbered approved government securities. Bank Rate: 8.75 %, Rate at which RBI lends to Banks/FIs. Repo Rate: 7.75 %, Injection of liquidity by RBI. Reverse Repo Rate: 6.75 %, Absorption of liquidity by RBI.

Provisioning requirements for restructured loans

RBI is going to increase the banks provisioning requirements for restructured loans,classified as standard assets and has proposed a five per cent provisioning for all newstandard restructured loans of banks with effect from April 1 in its draft guidelines issued. Italso has proposed a phased increase in provisioning on existing restructured loans to fiveper cent by March 2015.

Earlier, banks had to provide just two per cent for restructured loans but RBI raised theprovisioning by 75 basis points to 2.75 per cent in its second-quarter review of monetarypolicy on October 30, pending issue of final norms on the issue.

According to the new draft norms released, banks and financial institutions will have toachieve 3.75 per cent provisioning on existing standard restructured loans by March 31,2014 and provide five per cent for all recast loans by March 31, 2015.

RBI said the new provisioning requirements might put pressure on banks, but the centralbank will take into consideration stakeholders views before finalising the guidelines. TheRBI has called for comments on the draft guidelines on or before February 28.

Separately, RBI Deputy Governor told that the central bank was in dialogue with marketparticipants over a possible move to align the held-to-maturity ratio with the statutoryliquidity ratio. Currently, the held-to-maturity ratio is 25 per cent and the statutory liquidityratio is 23 per cent.

Banking laws amendment bill, 2011

The government introduced a bill in the Lok Sabha that seeks to align voting rights inprivate banks with shareholding, enhance the central bank's regulatory powers over banksand give greater freedom to state-run banks to manage their capital.The Banking Laws (Amendment) Bill 2011, proposes to raise the ceiling on voting rights ofshareholders of nationalised banks from 1% to 10%. The higher voting rights will help thegovernment attract capital in state-run banks. It also empowers state-run banks to issuebonus shares and make rights issues to raise capital for expansion and meet regulatoryrequirements. For private sector banks, it removes the voting right restriction of 10% andaligns it with actual shareholding. The amendments will also enhance the regulatorypowers of the Reserve Bank of India (RBI) and enable nationalised banks to increase ordecrease their authorised capital with approval from the government and the RBI. Thesebanks have a capital ceiling of 3,000 crore. In addition, the Bill proposes to confer powersupon the RBI to impose conditions it deems necessary while granting approval foracquisition of 5% or more share capital of a banking company.


19/120


The amendment will also empower the banking regulator to seek information andreturns from associate enterprises of banking companies besides inspecting them.

Guidelines for Licensing of New Banks in the Private Sector The Reserve Bank of India issued the final guidelines for new bank licences, allowing anytype of company to apply for a permit, paving the way for new banks after nine years. RBIsaid it would allow applications till July 1. No specific industry was barred from applying,although draft rules issued in August 2011 had barred real estate companies andbrokerages.

But the central bank has put stiff conditions. For example, the guidelines said a promotergroups business model should not be misaligned with the banking model and its businessshould not potentially put the bank and the banking system at ri sk on account of groupactivities which are speculative or subject to high asset price volatility.

NEW LENDER GUIDELINES:

RBI said successful applicants have a year to set up a bank. The new banks must make a stock market listing within three years. It said the aspirants will have to set up non-operative financial-holding companies

(NOFHC), which should hold a minimum 40 per cent of the equity capital in the bank.This has to be reduced to 20 per cent within 10 years and 15 per cent in 12 yearsfrom the date of start of business. An NOFHC will be registered as a non-bankingfinancial company with RBI and will be governed separately.

At least half the director s at such holding companies shouldnt be connected to thefounder groups, RBI said. Entities, groups should have a record of soundcredentials and integrity, be financially sound with a successful track record of 10years.

The minimum equity capital required for setting up a bank under the new rules is Rs500 crore. Foreign shareholding shouldnt exceed 49 per cent in the first five years.

The new banks must open at least a fourth of its branches in rural areas acondition, many experts said, almost impossible to achieve.

RBI said applicants meeting the eligibility criteria might not get a permit. Feedback on theapplicants will be sought from enforcement and investigative agencies, it said. Public sectorentities will be allowed to apply for a licence. The draft norms had talked about private

sector entities only. Companies that have expressed interest in setting up banks includeL&T Finance Holdings, Aditya Birla Financial Services, Shriram Transport Finance, TataCapital, Reliance Capital and Bajaj Finserv., Religare Enterprises and Mahindra FinancialServices.

Banks urging individual borrowers to buy covers

Banks in the country are urging individual borrowers to secure their loans by purchasinginsurance policies amid growing concerns that non-performing assets (NPAs) are likelyto increase in the country.

The country's banks have enjoyed lower levels of NPAs. However, there are growing

concerns that many borrowers might be unable to replay loans in the coming months. According to banking officials, both public and private sector banks are convincing theircustomers to buy policies to cover their personal loans and overdraft facilities
http://www.business-standard.com/content/general_pdf/022313_01.pdfhttp://www.topnews.in/banks-urging-individual-borrowers-buy-covers-2356880http://www.topnews.in/banks-urging-individual-borrowers-buy-covers-2356880http://www.business-standard.com/content/general_pdf/022313_01.pdf


20/120


RBI scraps limit on mobile transactions

Reserve Bank of India (RBI) has announced its decision to do away with the limit of Rs

50,000 per customer per day imposed on mobile transactions. The limit on mobiletransactions was imposed in 2009 by the regulator. Under the new rules, the banks willbe allowed to fix their own limit on mobile transactions for customers in the country. TheRBI had issued guidelines on mobile banking transactions in India in 2008 and hadplaced certain monetary restrictions on fund transactions.

Banks should have to reduce their bulk deposits

Recently, RBI has instructed the banks to shed off their bulging bulk deposit portfolio.Some banks in the country have started including BOB for which even they may reducerates for bulk deposits. This move will help the banks to go for the race to increasesavings account interest rates in order to attract more customers. However, state-runbanks appear more cautious in increasing their rates.

Damodaran committee recommendations on Customer Service:

The Committee, headed by former SEBI chairman M Damodaran, was set up by thecentral bank to look into the issues of customer services and evaluate the existingsystem of grievance redressal mechanism prevalent in banks, its structure and efficacyand recommend measures for expeditious resolution of complaints to strengthen theBanking Code and Standard Board of India (BCSBI) further.The Reserve Bank of India (RBI) has accepted 88 out of the 230 recommendationsmade by the Damodaran committee on customer services. Sources say that the 88

recommendations, where bankers had consensus, include recommendations such asbanks should sell standalone financial products and not bundle it with any otherproduct, have been accepted by the RBI.

Tightening Shadow Banking activities:

The Reserve Bank of India (RBI) is looking at shadow banking activities closely andhas tightened the regulations accordingly. Next on the agenda is increasing thesurveillance on shadow banking.

According to RBI, the unprecedented increase in shadow banking was a reason for theglobal financial crisis of 2008. Strengthening regulations on such businesses have beenaddressed in the Basel-III norms, proposed to become applicable from 2017-18.Lately, non- banking finance companies (NBFCs) have attracted the central banksattention for various reasons. RBI said, We are pro-NBFC, but it being essentially apart of the shadow banking system, it has to be tightened under Basel- III norms.

According to the draft, banks would get time up to March 2017 to meet capitaladequacy norms. Basel implementation has been made longer to ensure leastdisruption, as banks earnings are likely to come under pressure due to the highercapital requirements. Banks would need to raise productivity to protect return on equity.RBI has set up a committee to look into ways of developing a fixed rate loans model inthe current interest rate environment.

Deregulation of Savings A/c interest rate

Recently, the RBI said banks are free to determine their savings bank deposit interestrate, subject to the following two conditions:
http://www.topnews.in/rbi-scraps-limit-mobile-transactions-2350109http://www.topnews.in/some-banks-may-reduce-rates-bulk-deposits-2349083http://www.topnews.in/some-banks-may-reduce-rates-bulk-deposits-2349083http://www.topnews.in/rbi-scraps-limit-mobile-transactions-2350109


21/120


First, each bank will have to offer a uniform interest rate on savings bank deposits up toRs 1 lakh, irrespective of the amount in the account within this limit. Second, for savingsbank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it sochooses but should not be discriminated from customer to customer.

Till date barring few small banks, no any bank has changed the SB interest rate.

Banking by the year 2015:

The survey was conducted by IBM research unit on future banking scenario, whichrevealed five key trends that will determine market success in 2015:

Customers take control- Customers will be smart, informed and savvy users offinancial services. They will only be interested in service providers that can meettheir very specific individual needs.

Specialized niche competitors- Market consolidation will continue, making themega banks even bigger. But they will face many competitors includingcommunity banks, industry specialists and non-bank banks that specialize inproviding specific services. Partner-competitor relationships will arise.

A new workforce- The need for productivity and efficiency will create newlabour and work practices. But there will also be intense competition to attractand retain talent.

Regulated transparency- The need to comply with globally enforced standardsof transparency and accountability will force the adoption by banks of integrated,enterprise-wide systems and processes.

Sharply focused technology- The enabler of all this change will be technology

that supports rapid, accurate decision making and greater operational flexibilityand efficiency. The successful specialists will be those who can track andanalyze specific customer needs and speedily meet them with profitable, reliableproducts.

Even, banks will source products and services from many specialized and best-in-class service providers, including independents and other banks providingwhite-label products and services. Innovation in products, processes,relationships & business models will be the primary path to sustainable growth.

Installing Off -site ATM

As per the guidelines of RBI, the customer maintaining Saving Bank A/c may withdrawthe money from any Banks ATM, 5 times with ceiling of Rs.10000 per transactionduring any calendar month without any charge. Now, even balance enquiry alsoconsidered as a transaction (towards max.5 free transaction). But for such transactionscertain charge has been prescribed by RBI which is to be paid by the Customers Bankto the Bank whose ATM is being used. Also, this facility is available free of cost to onlySaving bank a/c holders and other a/c holders may enjoy this facility @Rs20 pertransaction.

So, now individual Bank has to formulate its strategy regarding installation of new ATMs or shar ing of other Banks ATM. This is emerged as a new area of commissionincome and even banks are now focusing on other Banks ATM where queue is there,

so that an additional ATM can be installed, just to tap the commission income.


22/120


RBI tightens salary account opening rule:

The RBI has directed banks to ask for one more proof such as Passport, Driving

licence, PAN card, Voters identity card or utility bills, in addition to the certificateissued by the employers while opening salaried bank accounts. RBI feels thatinsistence on two documents will reduce the chances of misuse of account.

Foreign banks must be locally incorporated:

After the global financial crisis, regulators the world-over are insisting localincorporation to ensure that local businesses are not hurt if there is another any suchunpleasant event. Incidentally, incase of banks present in India, such protection isalready present, as foreign bank branches are required to maintain capital locally andmeet prudential guidelines on capital adequacy & exposure limit. Even that, RBI nowwants to conversion of foreign bank branches into wholly-owned subsidiaries, toexercise better control over the operations of foreign banks in India.

News having impact on banking:

Postal deptt. gets RBI nod for launch of prepaid debit cards (Rs.1000 toRs.50000) & to install ATMs.

RBI allows RRBs to open branches in Tier- II centre without prior approval. Bank-wide portal for best services, where customer can enquire about the

return on deposit, cost of advances, etc. RBI wants to do away with post-dated cheques in all fresh loans and also

debating to put the charge on cash deposits and withdrawals in current

accounts above certain limits by the banks Setting of a Centralised KYC registry Cell for the entire financial sector throughimplementation of UCIC (Unique Customer Identification Coce).


23/120


TEST YOUR UNDERSTANDING

1. RBI was established ina) 1935b) 1940c) 1949d) 1955e) 1950

2. In India financial sector reforms started ina) 1985b) 1988c) 1991d) 1995e) 2000

3. Composition of Indian Public Sector Banks, Pvt Sector Banks and foreign Banks interms of total assets area) 40%,30% &30%b) 50%, 30% &20%c) 60%,30% &10%d) 69%,21% &10%e) 74%,19% &7%

4. IRAC norms stand fora) Income realisation and asset classificationb) Income recognition and asset classificationc) Income recognition and asset consolidationd) Interest realisation and asset classificatione) Iiterest realisation and asset consolidation

5. BCSBI stands fora) Banking company and standard Board of Indiab) Banking codes and standard Board of Indiac) Banking codes and strategy Board of India

d) Banking company and strategy Board of Indiae) Banking codes and supervisory Board of India

Q 1 2 3 4 5 A A C E B B


24/120


Know Your Bank

Quick Bites

Bank of Baroda was established on 20 th July, 1908 at Baroda by ruler of erstwhile BarodaState, His Excellency Maharaja Sayajirao Gaekwad-III.

Ten banks have merged with BOB till date. Our logo, the Baroda Sun reflects our corporate brand identity. As on 28-02-2013, our Bank is having 4171 branches, 56 Regional offices and 13 Zonal

offices in India. We also have one Life Insurance and one Mutual Fund joint venture. We have -98 overseas branches and offices spread over -24- countries. In our International presence, we have -8- subsidiaries and -2- joint venture.

Bank has kick started a comprehensive change programme called Project Navnirmaanfocusing on business process Reengineering . Banks Branches are redesigned as BarodaNext branches with beautiful layouts and more effective roles.

As a part of said project, Bank has also established -51- SME Loan Factories ,and -40-Retail Loan Factories for fast delivery of our products.

To facilitate Financial Inclusion, Bank has established -52- Baroda Grameen PramarshKendras (BGPK) and -47- Baroda Swarojgar Vikas Sansthan (BSVS)

Bank has also undertaken another important Project SPARSH for bringing excellence in HR. In 2011 12 Banks total business grew by 25.9% to Rs 6,72,248 crores and net profit grew

by 18% to Rs 5,006.96 crores. Total Business up 17.1% (y-o-y) to Rs 7,14,051 cro re by end-Dec, 2012

Net NPAs (%) at 1.12% as on 31s Dec, 2012 Total Staff as on 1 st March 2013 42118 in which officers composition 17035.

Our Mission:

Glorious Past:Bank of Baroda made a humble beginning on 20 th July 1908 as Bank of Baroda Limited andwas registered under the Baroda Companies Act of 1897, with a paid up capital of Rs. 10lacs. Ruler of erstwhile Baroda State, His Excellancy Maharaja Sayajirao Gaekwad-IIIfounded the Bank.


25/120


Bank of Baroda has completed long,eventful and glorious journey of morethan 104 years. Bank has record ofmaking uninterrupted profits during allthese years.Soon after establishment, the Bankextended its operations to three othercommercial centres of Gujarat namely,Surat, Mehsana and Navsari.In 1919, the Bank crossed the statefrontiers by setting up Mumbai MainOffice.

Recent Picture of Baroda MainOffice, our Banks Ist Branch

In the year 1935 Bank became a scheduled Bank. RBI included the Bank in the secondschedule of RBI. The first safe deposit lockers were provided at Baroda in 1939.

At the time of independence in 1947, Bank of Baroda was a regional bank with 48branches. However, it found a place in Indias Fortune Five list of Ban ks. During 1953 1958, Bank opened 30 new offices and had become an all-India Bank. As many as tenbanks have merged with Bank of Baroda during its journey so far:

Hind Bank Ltd (1958) New Citizen Bank of India Ltd (1961) Surat Banking Corporation (1963) Tamil Nadu Central Bank (1964) Umbergaon People Bank (1964) Traders Bank Limited (1988) Bareilly Corporation Bank Ltd (1998) Benares State Bank Ltd (2002) South Gujarat Local Area Bank Ltd (2004) Memon Cooperative Bank Limited (2011)

Vibrant Present Our Logo

Our logo, the Baroda Sun is a unique representation of a universal symbol. It comprisesdual B letterforms that hold the rays of the rising sun. The sun is an excellentrepresentation of what our Bank stands for. It is the single most powerful source of light andenergy- its far reaching rays dispel darkness to illuminate everything they touch. The single-colour, compelling vermilion palette stands for hope and energy. At Bank of Baroda, weseek to be the source that will help all our stakeholders realise their goals. To our customer,we seek to be one-stop, reliable partners who will help them address different financial


26/120


needs. To our employees, we offer rewarding careers and to our investors and businesspartners, maximum return on their investment.

We also recognize that our bank is characterized by diversity. Our network of branchesspans geographical and cultural boundaries and rural-urban divide. Our customers comefrom a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face forour brand because it is a universal symbol of dynamism and optimism it is meaningful forour many audiences and easily decoded by all.

Our corporate brand identity is a signal that we recognize and are prepared for newbusiness paradigms in a globalised world. At the same time, we will always stay in touchwith our heritage and enduring relationships on which our bank is founded. By adopting asymbol as simple and powerful as the Baroda Sun, we hope to communicate both.

Board of DirectorsThe constitution of the Board of Directors is governed by the provisions of the BankingRegulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertakings Act,1970, Nationalised Banks (Management & Miscellaneous Provisions) Scheme, 1970, whichsatisfies the requirements of Corporate Governance as envisaged in the Listing Agreement.

Board of Directors

Sh S S Mundra Chairman &Managing Director

Sh sudhir Kumar Jain Sh P. Srinivas Sh Ranjan DhawanExecutive Director Executive Director Executive Director

Sh Alok Nigam Sh Sudershan Sen Sh Ajay MathurGovt Director RBI Nominee


27/120


28/120


29/120


(Baroda Corporate Centre, Mumbai)Corporate Office

(Baroda House, Mandvi, Baroda) Head Office

At the apex level, we have Head Office at Baroda and Corporate Office at Mumbai. Whole

India is divided into -13- Zones and -56- Regions as given below:

Sr.No

Name of Zone Name of Regions

1. Greater Mumbai 1. Mumbai Metro North2. Mumbai Metro South3. Mumbai Metro East

2. Maharashtra & Goa 1. Aurangabad2. Goa & Western Maharashtra3. Nagpur4. Pune

3. South Gujarat Zone 1. Baroda2. Bharuch3. Bulsar4. Panchmahal5. Surat

4. North Gujarat Zone 1. Ahmedabad2. Anand

3. Jamnagar, Junagadh & Kutch4. Mehsana5. Rajkot

5. Rajasthan 1. Ajmer2. Bharatpur3. Jaipur4. Jodhpur5. Kota6. Udaipur

6. Northern 1. Delhi Metro I2. Delhi Metro II3. Chandigarh


30/120


4. Indraprasth5. Punjab, Jammu & Kashmir

7. Tamil Nadu & Kerala 1. Chennai Metro2. Kerala3. Tamilnadu

8. Karnataka & AP 1. Andhra Pradesh-I2. Andhra Pradesh-II3. Karnataka

9. Eastern 1. Kolkata Metro2. North East3. West Bengal & Sikkim

10. Eastern U.P. 1. Allahabad2. Faizabad3. Kanpur4. Lucknow5. Sultanpur6. Raibareli7. Varanasi

11. Western U.P. & Uttrakhand 1. Agra2. Bareilly3. Dehradun

4. Haldwani5. Sahjahanpur

12. M.P. & Chhattisgarh 1. Bhopal2. Indore3. Raipur

13. Bihar, Jharkhand & Orissa 1. Bihar2. Jharkhand3. Muzaffarpur4. Orissa

(b) Banks Network: At present the Bank is having total network of 4171 branches in India (as on 28-02-2013).

2732 2853 2926

31003364

3909

4171

0

50 0

10001500

2000

2500

3000

3500

4000

4500

FY07 FY08 FY09 FY10 FY11 May/12 Feb-13

No. of Domestic Branches


31/120


Regional Break-up of Domestic Branches as on 28 Feb 2013

Metro Urban Semi-Urban Rural

889 758 1,132 1,392

We have one State of Art, Specialised Integrated Treasury Branch (SITB) in Mumbai,which is looking after investments, liquidity and forex management for the bank in additionto maintenance of SLR & CRR requirements.

Indian Subsidiaries & Joint VenturesThe Bank has following Indian Subsidiaries:

1. BOBCARDS Ltd.2. BOB Capital Market Ltd.3. The Nainital Bank Limited

The Bank has one Life Insurance joint venture, India First with Andhra Bank and Legal& General of UK.The Bank has one Mutual Fund joint venture called Baroda Pioneer AssetManagement with Pioneer Investments.Our Bank has sponsored following Regional Rural Banks (RRBs):

(1) Baroda Uttar Pradesh Gramin Bank, Raebareli

(2) Baroda Rajasthan Gramin Bank, Ajmer(3) Baroda Gujarat Gramin Bank, Bharuch(4) Nainital Almora Kshetriya Gramin Bank, Haldwani(5) Jhabua Dhar Kshetriya Gramin Bank, Jhabua

International Presence: Sun never Sets in Bank of Baroda
http://www.bankofbaroda.com/subsidiaries_jv.asphttp://www.bankofbaroda.com/subsidiaries_jv.asp


32/120


33/120


Navnirmaan has two main components:

Business Process Re-engineering (BPR) and Organisational Restructuring (OR).

Business Process Re-engineering

Business Process Re-engineering has following objectives: Improvement in branch productivity. Best-in-class service levels for customer delight. Redesign of front and back office processes and roles to reduce turnaround time and

to simplify processes.

Reduction in operating costs.Organizational Restructuring:Organizational Restructuring has following objectives:

Appropriate organization structure and systems to support BPR and in line withfuture business plans.

Sustainability of change programme through capability building.

To accomplish above objectives, following five different types of Back Offices are proposed:

1. Account Opening and Maintenance Lean Service Factory- Regional Back Office

This will accomplish following activities:

Account opening and enrichment Savings and Current Account.


34/120


Generation of debit card request file & i-track number file for internet banking. Personalised cheque book issuance. Printing of customer statements and other intimations. CRM data entry. Changes in customer account details. Account closure. Account opening, renewal and printing of term deposits.

2. Payment Processing Centre -City Back Office

More automation is proposed to be carried out at the existing City Back Offices so thatproductivity of processing of cheques can be enhanced by 60%.

3. Credit Processing Centres - SMELF /Urban Retail Loan Factory

As part of business segmentation and to expedite our delivery mechanism, Bank hasestablished -51- SME Loan Factories and -40- Retail Loan Factories which work onassembly line principal.

4. Business Intelligence Unit -Data Warehouse

Business Intelligence Unit will undertake following activities:

Generation of all MIS from CBS and ASCROM. Analysis of MIS. Communication of MIS to Branches, Regions, Zones and Corporate office.

5. Contact CentreBank has set up two Contact Centres in Lucknow & Baroda to fast address the customerqueries & grievances.

Signature Tune

During the year FY12, your Bank introduced its Brand in Sonic Medium by launching aSignature Tune on the occasion of its Banks Foundation Day on 20th July, 2011. Theprime purpose was to highlight the spirit of the Bank as a vibrant and energetic organizationcomplementing the Logo. Your Bank will draw its mileage in positioning it strongly in theglobal market.

Baroda Academy

Implementation of BPR and OR will requirelearning of new skill sets for the employees.To train the employees on new desiredskills, Staff College, Ahmedabad will beconverted into Baroda Academy.


35/120


Training Structure

Staff College Ahmedabad

Bank of Baroda Institute ofInformation Technology

Gandhinagar

TrainingCentres

Bareilly Baroda Bhopal Chennai Gandhinagar Jaipur Kolkata Lucknow Mumbai

New Delhi Jamshedpur Pune Bangalore


36/120


37/120


CTS was implemented in Chennai, Coimbatore and Bangalore. CTS will be shortlyimplemented in Western Grid also.

Corporate Social Responsibility:Bank of Baroda has been in the forefront for social commitment with its innovativeapproaches and products viz.

1. Baroda Swarojgar Vikas Sansthan2. Baroda Grameen Paramarsh Kendras3. Financial Literacy and Credit Counseling Centres (FLCC)

1. Baroda Swarojgar Vikas Sansthan

There are -47- Baroda Swarojgar Vikas Sansthan, the Bank has set up in 6 States of

Bihar,Uttar Pradesh, Uttarakhand, Rajashthan, Gujarat & Maharashtra for the followingpurpose:

1. To train youth and impart them the knowledge and skill for taking up self employmentventures.

2. To train youth to develop the attitude for working in rural areas, in rural developmentprojects.

3. To assist trained youth, in self employment as far as possible, in obtaining creditfacilities from bank / other financial institution and to assist them in setting up theirventure successfully.

4. To conduct various training programmes (either independent or in-collaboration withother organization connected with rural technology, rural development andentrepreneurship development.

5. To provide counseling and consultancy guidance with all possible help to the youthin the field of Self Employment and Rural Development.

2. Baroda Grameen Paramarsh Kendras

The bank has established -52- Baroda Grameen Paramarsh Kendras as on 31-05-2012where following activities are carried out:

Financial Education and Financial Inclusion Information sharing and problem solving on technical issues Credit counseling Synergy and liaison with other organisations and development activities

3. Financial Literacy and Credit Counseling Centres (FLCC):

Bank has opened Financial Literacy and Credit Counseling Centres as a CSR initiative. Thecentre opened is christened as SAARTHEE amply indicating its basic obje ctive of steeringthose under financial distress and educating to others to avoid financial mess. PresentlyBank has set-up 45 FLCCs

Banks HR Initiatives..

Focused hiring efforts on a sustained basis year on year, to cater to superannuation,sustained business growth and rapid Branch expansion


38/120


Massive skill up-gradation and several structured long induction programmes were carried out forthe new joinees during FY13 to develop various Banking skills, esp. in the specialised areas ofCredit, Forex, Treasury, Soft Skills, etc.

Project Udaan:

A Large scale, comprehensive Leadership Development training programmes conducted

Project Sparsh:

A focused HR transformation project SPARSH has been initiated by the Ban k - to revamp itsexisting HR processes, structures and policies. Various initiatives like Talent management,Succession planning, Creating a Scientific Staffing Model & Manpower Planning,, Developmentand Capability Building, Performance Management, etc. have been undertaken during FY12.

Baroda Manipal School of Banking :

A school is opened as an innovative and new channel of resourcing of trained manpower in theBank. Around 180 students are being inducted into this school every quarter for a focusedgrooming and a one-year full- time PG course in Banking is tailored to the Banks specificrequirements.

Financial Figures as on Dec. 2012

Operating Profit up 4.7% (y-o-y) to Rs 6,892 crore Net Profit dn 1.1% (y-o-y) to Rs 3,452 crore - Net Interest Income up 13.1% (y-o-y) to Rs 8,501 crore Total Business up 17.1% (y-o-y) to Rs 7,14,051 cro re by end-Dec2012 Total Advances up 14.8 % (y-o-y) to Rs 2,99,318 cro re by end-Dec, 2012 Total Deposits up 18.8 % (y-o-y) to Rs 4,14,733 cro re by end-Dec, 2012 Net NPAs (%) at 1.12% as on 31st Dec, 2012


39/120


AWARDS AND ACCOLADE S FOR THE BANK IN FY 12

Best Public Sector Bank (PSB) by CNBC-TV18 & MCX Golden Peacock Award for Excellence in Corporate Governance by Institute of Directors &

World Forum for Corporate Governance received in London Dainik Bhaskar India Pride Award for 2011 Most Efficient Bank in Kenya Best Initiatives in Inclusive Banking FIBC Banking Award Dun & Bradstreets Leading PSB in Global Business Development Category National Award for Performance under SME Business Award for Best Utilisation of Intellectual Resources Best Growing Large Bank by Business World-PWC Business Leadership Award by NDTV- Best PSB in 2011 Award for Excellence in Financial Reporting by ICAI in PSB category Fastest Growing Large Bank by Business World-PWC UTV-Bloomberg Financial Leadership Award FM Stars Industry Brand Leadership Award BOBs Brand Ranking has increased by 47 notches in a years time in Top 500 Banking

Brands by The Banker, London Best Bank Award-2012

Awards for the Banks CEO (CMD) Outstanding Financial Professional-2010 by CNBC-TV18 & MCX Best Banker Award (T. A. Pai Memorial Award) by Karnataka State Open University Lifetime Achievement Award by Dainik Bhaskar India Pride Awards Banker of the Year by Business World-PW


40/120


TEST YOUR UNDERSTANDING

1. Bank of Baroda established ona) 20 july 1910b) 15 aug 1908c) 20 july1908d) 26 jan 1910e) 10 aug 1912

2. How many banks have been merged in BoB till datea) 7b) 8c) 9d) 10e) 11

3. No of Regional and Zonal offices area) 56 &10b) 50 & 12c) 60 & 12d) 56 & 13e) 60 & 15

4. No of SME and Retail Loan factories area) 40 & 30b) 51 & 37c) 46 & 37d) 51 & 40e) None of these

5. Business Process Re-engineering does not includea) Improvement of Branch productivity

b) Best in class servicec) Redesign of Back and Front officed) Reducing operating coste) Increasing no of branches

6. Which of the following is not Back Officea) RBOb) CSOc) Contact Centred) Data centre

e) ATM

7. Contact Centres are situated at


41/120


a) Gandhinagar & Barodab) Baroda & Ahemdabadc) Baroda & Lucknowd) Lucknow & Jamshedpure) Mumbai & Banglore

8. Which of the following work is not performed by Contact Centrea) Reply routine queriesb) activate passwordc) Stop payment of chequed) Hotlist Debitcardse) Printing of passbook

9. Where apex training institute Staff College situateda) Bareillyb) Mumbaic) Gandhinagard) Kolkotae) Ahemedabad

10. In Baroda Next Branches which of the following has maximum outbound sales activity

a) UTb) Hostc) CSRd) RLMe) Branch Head

Answers:Q 1 2 3 4 5 6 7 8 9 10

A C D D D E E C E E D


42/120


VARIOUS LAWS RELATING TO BANKERS

Quick Bites

The Banking Regulation Act. The Reserve Bank of India Act. The Negotiable Instrument Act. The Indian Contract Act. The Indian Partnership Act. The Companies Act. The SARFAESI Act

Background:

Bank regulations are a form of government regulation which subject banks to certainrequirements, restrictions and guidelines. This regulatory structure creates transparencybetween banking institutions and the individuals and corporations with whom they conductbusiness, among other things.

Given the interconnectedness of the banking industry and the reliance that the national(and global) economy hold on banks, it is important for regulatory agencies to maintaincontrol over the standardized practices of these institutions. The common objectives ofLaws are:

1. Prudential to reduce the level of risk to which bank creditors are exposed (i.e. to

protect depositors).2. Systemic risk reduction to reduce the risk of disruption resulting from adverse

trading conditions for banks causing multiple or major bank failures.3. Avoid misuse of banks to reduce the risk of banks being used for criminal

purposes, e.g. laundering the proceeds of crime. 4. To protect banking confidentiality.5. Credit allocation to direct credit to favored sectors.6. It may also include rules about treating customers fairly and having corporate social

responsibility.

The Banking Regulation Act, 1949

Banking in India is mainly governed by Banking Regulation Act, 1949. The Reserve Bank ofIndia and the Government of India exercise control over banks from the opening of theBranches to their winding up by virtue of the powers conferred under this statute.

It was enacted to consolidate and amend the laws relating to banking and to provide forsuitable framework for regulating the Banking Companies and covers co-operative banksas well. The Act does not apply to primary agriculture societies, and cooperative landdevelopment banks. The provisions of the act are applicable to banking companies inaddition to other laws, which are applicable to such companies.The Act regulates entry in to banking business by licensing as provided in section 22

thereof. It also put restrictions on share holding, directorship, voting powers and otheraspects of banking companies. There are several provisions in the act regulating thebusiness of banking such as restrictions on loans and advances, provisions relating to rate
http://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Bank_regulationhttp://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Systemic_riskhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Systemic_riskhttp://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Bank_regulationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Government


43/120


of interest, requirements as to cash reserve ratio, provisions regarding audit and inspectionand submission of balance sheet and accounts. The act also provides for control over themanagement of banking companies.

Statutory Liquidity Ratio

According to Section 24 (2-a) of the Banking Regulation Act, every banking company inIndia whether scheduled or non scheduled, is required to maintain in India in Cash, Goldor unencumbered, approved securities an amount of which is not less than 24% of thetotal of its demand and time liabilities in India. This is known as Statutory Liquidity Ratio(SLR).

The Reserve Bank is empowered to increase this ratio. For calculating the SLR, thefollowing liquid assets are taken into account.

Cash in hand in India. Balances in current account with the State Bank of India and its associates. Balance maintained with the RBI in excess of the minimum CRR requirements. Investments in Government Securities, Treasury Bills and other approved securities

in India.

However, the approved securities must be valued at a price not exceeding the currentmarket price. At present SLR is 23%

Reserve Bank of India Act, 1934

The Act was enacted on 6th

March, 1934 to constitute the Reserve Bank of India and hasbeen amended from time to time to meet the demands of changing times. It has thefollowing objectives:

To regulate the issue of Bank Notes. For keeping reserves for securing monitory stability in India and, To operate the currency and credit system of the country to its advantage.

The Act deals with the following:

Incorporation, capital, management and business of the bank. Central banking functions like Issue of Bank Notes, monitory control, acting as

banker to the Government and Banks, lender of last resort etc. Collection and furnishing credit information. Acceptance of deposits by Non Banking Financial Institution (NBFI). Handling Reserve Fund, Credit funds, publication of bank rate, audit and accounts

etc. Penalties for violation of the provision of the act or direction issued there under.

Important Provisions

Scheduled Bank

According to Section 2(e), Scheduled Bank means a bank whose name is written in the 2 nd schedule of RBI Act, 1934 and which satisfies the conditions laid down in Section 42(6), -Paid up capital and reserves of not less than Rs. 5 lac, satisfaction of RBI that the affairswill not be conducted by the bank in a way to jeopardize the interests of the depositor. It


44/120


may be a State Co-operative Bank, a company defined in Companies Act, 1956, aninstitution notified by Central Government for the purpose and a corporation or a companyincorporated by or under any law in force, in any place outside India. Any bank that is notincluded in the 2 nd Schedule of RBI is called Non-Scheduled Bank.

Bank Rate Policy

Section 49 defines it as The Standard Rate at which i t (the bank) is prepared to buy orrediscount bills of exchange or other commercial paper eligible for purchase under this Act.

By varying the bank rate, the RBI can to a certain extent regulate the commercial bankcredit and the general credit situation of the country. The impact of this tool has not beenvery great because of the fact that the RBI does not have a mechanism to control theunorganized sector. Further the money market in our financial system is not fully

developed, so that the Bank rate policy will have if desired impact on the financial system.The present bank rate is 8.75 %

Cash Reserve Ratio

Section 42 defines the Cash reserves of scheduled bank to be kept with RBI. Everyscheduled bank has to maintain with RBI an average daily balance the amount of whichshall not be less than 3% of the total demand and time liabilities and shall not exceed 15%.Presently the CRR is 4.00%

Inspection of Banks:

The most significant supervisory function exercised by the RBI is the inspection of Banks.The basic objectives of inspection of banks are to safeguard the interests of the depositorsand to build up and maintain a sound banking system in conformity with the banking lawsand regulations as well as the countrys socio -economic objectives. Accordingly,inspections serve as a tool for overall appraisal of the financial and managerial systems andperformance of the banks, toning up of their procedures and methods of operation andprevention of serious irregularities.

The RBIs powers to conduct inspections are contained in various provisions of the BankingRegulation Act, the most important being Section 35. This apart, inspections may benecessary under the provisions of Section 23, 37, 38, 44, 44A, 44B and 45 of the Act.

Audit of Annual Accounts of Banks:

Banks have to close their books of accounts every year as at March 31 st and prepare aBalance Sheet and Profit and Loss account as prescribed in the III schedule of the BankingRegulation Act. These annual accounts are required to be audited by auditors appointed bythe Bank each year with the prior approval of the Reserve Bank of India, as per Section30(1A) of the Banking Regulation Act, in respect of private sector banks.

Section 10(1) of the Banking Companies [Acquisition and Transfer of Undertakings] Act,1970 / 1980 provides for audit of annual accounts of banks in the case of nationalizedbanks.

Negotiable Instrument Act, 1881

The NI Act, 1881 lays down the laws relating to payment of the customers cheques by a


45/120


banker and also protection available to a banker. The relationship between banker andcustomer being debtor creditor relationship, the bank is bound to pay the cheques drawnby his customers. This duty on the part of Bank to honour its customers mandate is laiddown in section 31 of the NI Act. Section 10, 85, 89 and 128 of the NI Act grants protectionto a paying banker.

Important sections of the Act are as under:

Various Sections under Negotiable Instrument Act, 1881

SEC. TERM MEANING3 Banker Banker includes any person acting as a Banker and any post office

savings bank.

4 PromissoryNote

A Promissory Note is an instrument in writing, containing anunconditional undertaking signed by maker, to pay a certain sum ofmoney only to or to the order of a certain person or to the bearer ofthe instrument.

5 Bill ofExchange

A Bill of Exchange is an instrument in writing containing anunconditional order, signed by the maker, directing a certain personto pay certain sum of money only to or to the order of a certainperson or to the bearer of the instrument. Here, the promise to payis not conditional.

6 Cheque A cheque is a Bill of Exchange drawn on a specified banker and not

expressed to be payable otherwise then on demand and it includesthe electronic Image of a truncated cheque & a cheque in theelectronic form.

7 Drawee

Payee

The maker of a Bill of Exchange or Cheque is called the drawer, theperson thereby directed to pay is called the Drawee.The person named in the instrument, to whom or to whose order themoney is, by the instrument directed to be paid, is called the payee.

8 Holder The Holder of a promissory note, bill of exchange or cheque meansany person entitled in his own name to the possession thereof andto receive or recover the amount due thereon from the partiesthereto.Where the bill of exchange or cheque is lost or destroyed, its holderis the person so entitled at the time of such loss or destruction.

9 Holder In Duecourse

Holder in due course means any person who for considerationbecame the possessor of the promissory note, bill of exchange orcheque ,if payable to bearer, or the payee or endorsee thereof, if,before the amount mentioned in it became payable and withouthaving sufficient cause to believe that any defect existed in the titleof the person from whom he derived his title.

10 Payment in

Due course

Payment in due course, means payment in accordance with the

apparent tenor of the instrument in good faith and withoutnegligence to any person in possession thereof undercircumstances which do not afford a reasonable ground for


46/120


believing that he is not entitled to receive payment of the amounttherein mentioned.

11 InlandInstrument

A Promissory Note, Bill of Exchange or Cheque drawn or made in,and made payable in or drawn upon any person resident in (India)shall be deemed to be an Inland Instrument.

13 NegotiableInstrument

A NI means Promissory Note, Bill of Exchange or Cheque payableeither to order or to the bearer.

14 Negotiation When a Promissory note, bill of exchange or cheque is transferredto any person, so as to constitute the person the holder thereof, theinstrument is said to be negotiated.

15 Endorsement When the maker or the holder of the negotiable instrument signs thesame, otherwise than as such maker, for the purpose of thenegotiation, on the back or the face thereof or on a slip of paper

annexed thereto or so signs for the same purpose a stamped paperintended to be completed as a negotiable instrument, he is said toendorse the same is called the Endorser.

16 Endorsementin Blank andFull

If the endorser signs his/her name only, the endorsement is said tobe in blank, and if he adds direction to pay, the amount mentionedin the instrument, or to the order of a specified person theendorsement is said to be in full and the person so specified iscalled the endorsee of the instrument.

20 Inchoatestampedinstrument

Where one person signs and delivers to another person a paperstamped in accordance with the law relating to negotiableinstrument then in force in India and either ,wholly blank or havingwritten thereon an incomplete negotiable instrument, he therebygives prima facie authority to the holder thereof to make orcomplete, as the case may be , upon it a negotiable instrument, forany amount specified therein and not exceeding the amountcovered by the stamp. The person so signing shall be liable uponsuch instrument, in the capacity in which he signed the same, to anyholder in due course for such amount.

21 At Sight /On

presentment /After Sight

In a promissory note or bill of exchange the expressions at sightand on presentment means on demand. The expression after

sight means, in a promissory note, after presentment for sight andin a bill of exchange after acceptance or noting for non acceptance,or protest for non acceptance .

22 Maturity The maturity of a promissory note or bill of exchange is the due dateat which it falls due.Every promissory note or bill of exchange which is not expressed tobe payable on demand, at sight or on presentment is at maturity onthe third day after the day on which it is expressed to be payable.

25 Whenmaturity is aholiday

When the day on which a promissory note or bill of exchange is atmaturity, is a public holiday, the instrument shall be deemed to bedue on the next preceding business day.

26 Minor A minor may draw, endorse, deliver and negotiate such instrumentsso as to bind all parties except himself.

30 Liability of The drawer of a bill of exchange or cheque is bound in case of


47/120


Drawer dishonor by the drawee or acceptor thereof, to compensate theholder, provided due notice of dishonor has been given to orreceived by the drawer as hereinafter provided.

46 Delivery The making, acceptance or endorsement of a promissory note, billof exchange or cheque is complete by delivery, actual orconstructive.

47 Negotiationby delivery

A promissory note, bill of exchange, or cheque, payable to bearer isnegotiable by delivery thereof.

48 NegotiationbyEndorsement

A promissory note, bill of exchange, or cheque, payable to order isnegotiable by the holder by endorsement and delivery thereof.

49 Conversion ofEndorsement

in Blank in tofull

The holder of a negotiable instrument, endorsed in blank maywithout signing his own name by wr iting above the endorsers

signature a direction to any other person as endorsee, convert theendorsement in blank into an endorsement in full.77 Liability of

banker fornegligentlydealing withbill presentedfor payment.

When a bill of exchange, accepted payable at a specified bank, hasbeen duly presented there for payment and dishonored, if thebanker so negligently or improperly keeps, deals with or deliversback such bill as to cause loss to the holder, he must compensatethe holder for such loss.

85 Chequepayable toorder

Where a cheque is payable to order purports to be endorsed by oron behalf of the payee, the Drawee is discharged by payment in duecourse.

87 Effect ofMaterial

Alteration

Any material alteration of a negotiable instrument renders the samevoid as against any one whom is a party thereto at the time ofmaking such alteration and does not consent thereto, unless it wasmade in order to carry out the common intention of the originalparties.

115 Drawee incase of need

Where a Drawee in case of need is named in a bill of exchange orin any endorsement thereon, the bill is not dishonored until is hasbeen dishonored by such Drawee.

123 Chequecrossed

generally

Where a cheque bears across its face an addition to the words andcompa ny or any abbreviation thereof, between two parallel

transverse line, or of two parallel transverse lines simply, either withor without the words not negotiable, that addition shall be deemeda crossing , and the cheques shall be deemed to be crossedgenerally.

124 Chequecrossedspecially

Where a cheque bears across its face an addition of the name of abanker either with or without the words not negotiable, thataddition shall be deemed a crossing, and the cheque shall bedeemed to be crossed specially and to be crossed to that banker.

128 Payment indue course ofcrossed

cheque

Where the banker on whom a crossed cheque is drawn has paid thesame in due course, the banker paying the cheque, and (in casesuch cheque has come to the hands of the payee) the drawer

thereof, shall respectively be entitled to the same rights, and beplaced in the same positio

on board induction training program for directly recruited officers

Documents