SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS Banking Requirements for Online Companies and Other Companies UNDERTAKEN AT KOTAK MAHINDRA BANK LTD. INDUSTRY GUIDE Mr. Manas Mehra Chief Manager, Commercial Banking, New Delhi FACULTY GUIDE Dr.Shailender Singh, Associate Professor Amity International Business School - Noida E-Mail: SUBMITTED BY Mr. Raja Gupta, MBA International Business, 1
Transcript
SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL
BUSINESS
Banking Requirements for Online Companies and Other CompaniesUNDERTAKEN AT
KOTAK MAHINDRA BANK LTD.
INDUSTRY GUIDE
Mr. Manas MehraChief Manager,
Commercial Banking, New Delhi
FACULTY GUIDE
Dr.Shailender Singh,Associate Professor
Amity International Business School - NoidaE-Mail:
SUBMITTED BYMr. Raja Gupta,
MBA International Business,Amity University – Uttar Pradesh
SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL
BUSINESS
SUBMITTED BY:Raja Gupta
MBA-IB (2012-2014)
Roll No. : A1802012192
INDUSTRY GUIDE FACULTY GUIDE
Mr. Manas Mehra Dr. Shailender Singh Chief Manager, Associate Professor,
Commercial Banking, Amity International BusinessSchool, AUUP
Kotak Mahindra Bank , New Delhi
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Banking Requirements for Online Companies and Other Companies.
AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDAAMITY UNIVERSITY – UTTAR PRADESH
CERTIFICATE OF REPORTING
This is to certify that Mr. RAJA GUPTA, a student of Post Graduate Degree in MBA ( FINANCE), Amity International Business School, Noida has worked in the KOTAK MAHINDRA BANK LTD, under the able guidance and supervision of Mr.MANAS MEHRA, designation CHIEF MANAGER, Company KOTAK MAHINDRA BANK ( COMMERCIAL BANKING).
The period for which he/ she was on training was for 8 weeks, starting from 6 th
MAY to 6th JULY. This Summer Internship report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.
Signature Signature
(Faculty Guide) (Student)
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ACKNOWLEDGEMENT
I express my sincere gratitude to my industry guide Mr. Manas Mehra Chief
Manager, Relationship Manager- Commercial Banking for his able guidance,
continuous support and co-operation throughout my project, without which the
present work would not have been possible.
I would also like to thank the entire team of Kotak Mahindra Bank , for the constant
support and help in the successful completion of my project.
Also, I am thankful to my faculty guide Dr.Shailender Singh of my institute, for her
continued guidance and invaluable encouragement.
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TABLE OF CONTENT
Chapter No. Subject Page No
1 1.0 Executive Summary 6
2 2.0 2.1 2.2
2.3
Research Methodology 7Primary Objective 8Research Design 9
Limitation 10
3 Critical Review of Literarure 11
4 Industry Profile 13
4.1 Company Profile 52
4.2 Swot Analysis 78
55.1 Data Collection 86
5.2 Primary Data 86
5.3 Secondary Data 87
6 Finding And Analysis 87
7 Recommendations 89
8 Bibliography 91
9 Annexure 92
9.1 b- Graphs
10 Case Study 96
Synopsis 107
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EXECUTIVE SUMMARY
This Project report has been prepared for the Commercial Banking as to see the need and wants of the Companies by the bank, As the company starts the company has to deal with the bank, so our major target was to approach the companies consult to the finance team and fix the meeting with Chief Manager. Each and every company requires a number of banking transaction and also need other financial services. For catering the services to their financial as well as other monitory needs banks have a separate working department known as Commercial Banking.
Second Part of my Project was to approach the new companies By finding them from Ministry Of Corporate Affairs (NAC 21),and to Consult their head team by fixing the meeting with our Chief manager. As the company’s total transaction, Inward outward remittance, how much lesser conversion margins the bank can provide to them.My main Project was to approach as much companies I can , n prepare the question year and collect the data according to the question ,and analyze the situation and condition of the companies that what kind of better services they require from the bank.
Banks are involve in two types of banking
1. Retail Banking2. Commercial Banking
The topic of my internship was Commercial banking. It is done under the name of Transaction Banking Group (TBG)
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INTRODUCTION
Objective
My Objective was to Study the need of financial companies required by banking sector for providing financial services to the industrial sector.and to know their services which they are using from banks, and to understand their current banking arrangement.
The Kotak Mahindra Group:
Kotak Mahindra is one of India's leading financial organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate.
The group has a net worth of over Rs. 6,799 cr and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 6.4 million customer accounts.
As far as commercial banking is concerned it is the significant segment of a bank to handle the company accounts, trade, export, import, foreign exchange, corporate finance, corporate lending etc. Banks provide different services to the corporate entities to make their banking functions easy and feasible.
The objective of an internship is to get the insight knowledge of the topic you have selected for the internship and to learn corporate culture of that
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company with the development of common skills of the entire corporate world.
I had decided to learn how to talk and persuade a person, designated on a managerial profile in a company. In the other words we can say how to open the doors of good prospects for the company. It is very necessary to know the mechanism of building good corporate relation between the company and the clients. As per the nature of work in this domain of banking it is specially focused to retain the client.
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RESEARCH METHODOLOGY
1. Primary and Secondary Objective
Primary Data- Question Year ,Distribution of 70 Question year Out of which 50 where properly accepted and filled by the by the company.
Secondary Data- Collected from Net, From my site supervisor and the Faculty guide
2. Sampling- As I did the sampling for the companies of the Gurgaon Region and I have covered the 0.5% of the total population .
I covered the top Indian companies and Multinational companies.
Time period was 6th May to 6th July
Research Design
This banking requirements Sample design was prepared According to the questionnaire filled by the Company, and to analyse the data according to their requirements, research design is mainly prepared to identify and to analyse the situation of the research that we are conducting,
The research design should be very much clear ase we are going to analyse from our research design and the sample design which we have prepared.
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Limitations
Time constraint: The duration of the project limited the in-depth understanding of
every aspect involved in Finding the Banking Requirements for the
Company.according to the time duration I have to cover the at most companies but
due to lack of time I was able to complete few companies.
Limited scope: The project was carried out within the scope of the company. The
predetermined guidelines given by the corporate office should be strictly adhered to.
The efficacy of the methods followed is still debated in the academic arena.
As the questioner was prepared but the finding was not up to the mark as manyof the
companies where not disclosing their financial matter.
Technicality: The proposals put forward by the technical department of the Banks, to
look forward for the Companies according to their needs, so that the Banks could
launch the new products according to their Organisation
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Chapter-3
Review of Literature
CRITICAL LITERATURE REVIEW
The banking industry has historically been more heavily regulated than other industries. Starting in the1980s, a large number of economies, including both developed and developing countries, carried out extensive liberalization processes, particularly aimed at their banking and financial sectors. A primary goal of the deregulation process is to improve efficiency through the creation of a more competitive operational environment. The enhancement of market forces introduced by deregulation is supposed to lead to efficiency and productivity improvements as banks strive to maintain their market shares and keep profitability. However, the conventional wisdom is not always validated by empirical studies (Berger and Humprey, 1997). 3.1. International evidence on the efficiency and productivity effect of deregulation The majority of studies on the effect of deregulation on the efficiency and productivity of banks have been applied to the U.S banking industry. These studies generally found little or negative cost productivity change (Berger and Humphrey; 1992; Bauer et al., 1993; Humphrey, 1993; Berger and Mester, 1997; Berger and Mester, 2003), but positive profit productivity change or technical productivity improvement (Humphrey and Pulley, 1997; Berger and Mester, 1997; Alam, 2001; Mukherjee et al., 2001, Berger and Mester, 2003). As far as studies outside the U.S are concerned, the results of deregulation were sometimes found to be favourable to productivity growth, as in Norway (Berg et al., 1992), Australia (Avkiran, 2000, Sturm and Williams, 2004), Turkey (Isik and Hassan, 2003), Thailand (Leightner and Lovell, 1998), and Korea (Gilbert and Wilson, 1998). Examples of mixed or unfavourable results of deregulation were found in Portugal (Mendes and
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Rebelo, 1999; Canhoto and Dermine, 2003), Spain (Grifell-Tatje and Lovell, 1996; Lozano, 1998; Kumbhakar et al., 2001). Controversy is not only concerned with whether deregulation stimulates efficiency improvement and productivity growth, but also about the sources of productivity growth. While some studies attribute the growth of productivity to technological progress (Alam, 2001; Mukherjee et al., 2001; Berger and Mester, 1997; Avkiran, 2000; Canhoto and Dermine, 2003; Kumbhakar et al., 2001; Sturm and Williams, 2004) others are in favour of efficiency improvement (Berg et al., 1992; Gilbert and Wilson, 1998; Isik and Hassan, 2003). It is generally found that deregulation has different impacts on different ownerships within a nation. While Sturm and Williams (2004) reported similar TFP change of foreign and domestic banks in Australia during the post-deregulation period (1988-2001), Isik and Hassan (2003) indicated that in Turkey private banks, especially foreign banks, showed the great efficiency improvement form the more liberal and competitive environment than state-owned banks during 1981-1990. A more impressive increase of TFP growth of foreign banks compared to the domestic group was also captured by Leightner and Lovell (1998) in the study of Thai banks for 1989-1994. Although there is a concern about the adverse effect of deregulation on the risk-taking behaviour of market participants, the connection between deregulation and risk-taking has not been systematically jointly investigated in literature. A few related studies did warn that deregulation has the potential to deteriorate banks’ risk position. Demirguc Kunt and Detragiache (1999) reported that financial liberalization exerts an independent negative effect on the stability of the banking based on a study covering 53 countries, Claessens et al., (2001) also found the evidences that domestic banks were forced to take on less creditworthy customers with foreign entry based on a 80-country sample. Moreover, experiences coming from Columbia (Barajas et al., 2000) and Philippines (Unite and Sullivan, 2003) reported result consistent with Claessens et al., (2001). The policy implication is that if deregulation induces more risk taking, it could harm the process of economic growth in the medium- and long-run. There is a need for governments to carefully design the entire deregulation process and put a strong institutional setting in place to curb the possible system negative effect of deregulation on the stability of the banking system (Demirguc Kunt and Detragiache, 1999).
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Chapter-4
INDUSTRIES PROFILE
Transaction Banking Group
The TBG offers cash, liquidity, trade and supply chain solutions to clients who are spread across all the segments/Channels – Corporate banking, financial institutions, emerging corporate group, business banking, retail liabilities and even agriculture to optimize their working capital cycle.
Transaction banking is divided in three parts-
Cash Management Solutions Trade finance solutions
Security Services
Cash Management Solutions
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CMS has three functions
1- Current Account Solutions
2- Receivable Management Solutions
3- Payable Management Solutions
Trade Finance Solutions
Trade Finance Services include
1- Import Solutions2- Export Solutions
3- Domestic Trade Finance Solutions
4- Advisory Services on complex trade transactions
Security Services
It consist
1- Custody and Settlement Services2- PCM Services
3- Fund Accounting
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Commercial Banking has been very profitable for the banks because here one client shares a significant portion of profit. Separate operations and utmost care of this function have proved an efficient tool to satisfy all the banking and financial need of the companies. Banks are specially focusing on building the good corporate relations with the existing clients to retain the client as well as the business provided by them.
Commercial Banking operations are very important and should be manage with utmost care because any irregularity, ignorance or mistake can result in a big loss for the bank. The reason of this big loss is that companies deposit and invest huge amount of money in the banks that would be probably equals to hundreds of retail customers. It is very important to retain rather than create the customer. On the basis of my knowledge and experience, i recommend skilled manpower, good corporate relations and utmost good faith to handle commercial banking.
State-owned banks
The Indian banking sector is dominated by 28 state-owned banks which operate through a network of about 50,000 branches and 13,000 ATMs. The State Bank of India (SBI) in the largest bank in the country and along with its seven associate banks has an asset base of about Rs. 7,000 billion (approximately US$150 billion). The other large public sector banks are Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India and IDBI Bank.
The public sector banks have overseas operations with Bank of Baroda topping the list with 51 branches, subsidiaries, joint ventures and representative offices outside India, followed by SBI (45 overseas branches/offices) and Bank of India (26 overseas branches/offices). Indian banks, including private sector banks, have 171 branches/offices abroad.
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SBI is present in 29 countries followed by Bank of Baroda (20 countries) and Bank of India (14 countries).
Private sector banks India has 29 private sector banks including nine new banks which were granted licenses after the government liberalized the banking sector. Some of the well known private sector banks are ICICI Bank, HDFC Bank and Indusland Bank. Yes Bank is the latest entrant to the private sector banking industry.
In terms of reach the private sector banks with an asset of over Rs 5,700 billion (about US$124 billion) operate through a network of 6,500 branches and over 7,500 ATMs.
Foreign banks As many as 29 foreign banks originating from 19 countries are operating in India through a network of 258 branches and about 900 ATMs. With total assets of more than Rs 2,000 billion ( about 44 billion US dollars) they are present in 40 centers across 19 Indian states and Union Territories. Some of the leading international banks that are doing brisk business in India include Standard Chartered Bank, HSBC Bank, Citibank N.A. and ABN-AMRO Bank. In addition, 31 foreign banks (as on September 15, 2006) belonging to 14 countries were operating in India through their representative offices.
Foreign banks operating in India:
1. ABN-AMRO Bank N.V. (24 branches)
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2. Abu Dhabi Commercial Bank Ltd. (2 branches)
3. Arab Bangladesh Bank Ltd. (1 branch)
4. American Express Bank (7 branches)
5. Antwerp Diamond Bank N.V. (1 branch)
6. Bank International Indonesia (1 branch)
7. Bank of America (5 branches)
8. Bank of Bahrain & Kuwait (2 branches)
9. Bank of Nova Scotia (5 branches)
10. Bank of Tokyo-Mitsubishi UFJ Ltd. (3 branches)
11. BNP Paribas (8 branches)
12. Bank of Ceylon (1 branch)
13. Barclays Bank Plc. (1 branch)
14. Calyon Bank (5 branches)
15. Citi Bank N.A. (39 branches)
16. Shinhan Bank (1 branch)
17. Chinatrust Commercial Bank (1 branch)
18. Deutsche Bank (8 branches)
19. DBS Bank ( 2 branches)
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20. HSBC Ltd. (45 branches)
21. JP Morgan Chase Bank N.A. (1 branch)
22. Krung Thai Bank Public Co. Ltd. (1 branch)
23. Mizuho Corporate Bank Ltd. (2 branches)
24. Mashreq Bank PSC (2 branches)
25. Oman International Bank SAOG (2 branches)
26. Standard Chartered Bank (81 branches)
27. Sonali Bank (2 branches)
28. Societe Generale (2 branches)
29. State Bank of Mauritius (3 branches) The Netherlands-based ING Group has taken over the management of the Indian private sector Vysya Bank Ltd. in October 2002 and is operating as ING Vysya Bank Ltd.
Regional banks
Rural areas in India are served through a network of Regional Rural Banks (RRBs), urban cooperative banks, rural cooperative credit institutions and local area banks. Many of these banks are not doing well financially and the government is currently engaged in restructuring and consolidating them. Local area banks were of recent origin and as on March 31, 2006 four such banks were operating in the country.
Financial institutions India has seven major state-owned financial institutions which include Industrial Development Bank of India (IDBI), Industrial and
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Financial Corporation of India (IFCI), Tourism Finance Corporation of India (TFCI), Exim Bank, Small Industries Development
Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) and National Housing Bank (NHB). These institutions provide term loans and arrange refinance. There are also specialised institutions like the Power Finance Corporation (PFC), Indian Railway Finance Corporation (IRFC), Infrastructure Development Finance Company (IDFC) and state-level financial corporations. Non banking financial companies.
India also has a vibrant NBFC sector comprising 13,000 NBFCs that are registered with the RBI and fund activities like equipment leasing, hire purchase etc. Out of the total about 450 NBFCs are allowed by the RBI to collect funds from the public. Large NBFCs have an asset base of about Rs 3,000 billion (about 65 billion US dollars).
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Recent developments:
State Bank of India has acquired 76 per cent stake in Giro Commercial Bank, a Kenyan bank for US$7 million.
Bank of Baroda is planning to acquire a bank in Africa to consolidate its presence in the continent.
Canara Bank is helping Chinese banks recover their huge non-performing assets (NPA).
ICICI bank is in the process of taking over Sangli Bank, a private sector bank based in Maharashtra.
The RBI has recently allowed the Commonwealth Bank of Australia, Banche Popolari unite S.c.r.l. (based in Italy), Vneshtorgbank (Russian trade bank), Promsvyazbank (Russian commercial bank), Banca Popolare di Vicenza (Italian bank), Monte Dei Paschi Di Siena (Italian bank) and Zurcher Kantonalbank (Swiss bank) to set up representative offices in India.
GOVERNMENT REGULATIONS:
Although the banking companies are registered under the Companies Act, 1956 they are regulated by the RBI which grants licence to companies for operating a bank, opening branches and off site ATMs, fixes statutory liquidity ratio (SLR) and cash reserve ratio (CRR), and lays down other conditions for day-to-day operations. The RBI permission is also needed for board level appointments in banks. With regard to interest rates, individual banks are free to fix rates with the
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exception of savings bank rate which is decided by the RBI. The individual banks are free to fix lending rates...
HISTORY OF BANKING IN INDIA
Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dials a pizza. Money has become the order of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
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New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.
Growth of Banking in India
The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the coming years. Based on the projections made in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate. The total assets of all scheduled commercial banks by end-March 2010 is estimated at Rs 40,90,000 crores. That will comprise about 65 per cent of GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade as against the growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that there will be large additions to the capital base and reserves on the liability side.
The Indian Banking Industry can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. As far as the present scenario is concerned the Banking Industry in India is going through a transitional phase.
The Public Sector Banks(PSBs), which are the base of the Banking sector in India account for more than 78 per cent of the total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs),
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massive manpower and lack of modern technology. On the other hand the Private Sector Banks are making tremendous progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the Indian Banking Industry.
In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank are some of the foreign banks operating in the Indian Banking Industry.
Kotak Mahindra Asset Management Ltd &Kotak Mahindra Trustee Company Ltd.
Kotak Mahindra Investments Ltd.
International Subsidiaries
Kotak Mahindra Securities Ltd.
Kotak Mahindra Trusteeship Services Ltd.
Kotak Forex Brokerage Ltd.
As one of the leading players in financial solutions, Kotak Mahindra has a network across 300 cities in India employing around 9600 people. The institution offers services in many forms such as stock broking, mutual funds, life insurance, investment banking and caters to individuals and corporates. The net worth of the group is Rs. 3100 crore and it serves around 2.2 million customers. It also has offices in London, New york, Dubai and Mauritius. The areas in which Kotak Mahindra provides products & services are:
Kotak Mahindra is one of India's leading financial organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate.
The group has a net worth of over Rs. 6,799 cr and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 6.4 million customer accounts.
At Kotak Mahindra Bank, we know how critical it is for your business to have quick and timely access to funds. We also understand how important smooth and seamless banking transactions are for business relationships.
Our Current Accounts have been designed to help you compete effectively in the contemporary business environment. They include a 2 Way Sweep feature that delivers liquidity combined with higher returns.
Documentation
All attestations to be done by Company Secretary/2 Directors/ existing
banker/ registered Chartered Accountant.
Latest (not more than 3 months old) list of all Directors with their Addresses.
Certified "True and Updated" Copy of Certificate of Incorporation.
Certified "True and Updated" Copy of Certificate of Commencement of Business (In case of Public Ltd. Co.).
Certified "True and Updated" Copy of Memorandum and Articles of Association.
Extract of Board Resolution, signed by 2 Directors or Company Secretary with mode of operation & list of authorised signatories with designated powers.
Existing Banker's Verification required, if the Certifying director and authorised signatory is same (In case of Pvt. Ltd. Co.).
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Proof of Form 32 filed along with ROC acknowledgement/Latest printed Balance Sheet giving the names of existing directors, in case of change of Director/s.
Transaction Banking
Kotak Mahindra Bank's Transaction Banking is the process of optimization of receivables and payables while ensuring predictability in the cash flows. In a geographically large country like India, which has a complex financial clearing system, you will find it increasingly challenging to process collections and payments across dispersed business locations. This results in delayed realization and uncertainty in the funds flow resulting in additional borrowing and resultant increased borrowing cost.
Efficient Transaction Banking is about 'getting funds in time', quick transfers, faster realization of local and outstation cheques, easy disbursements, account reconciliation, controlled processes and customized MIS. Transaction Banking eliminates the inherent delays of the traditional funds transfer mechanism, enhancing liquidity and ensuring optimum planning and utilization of funds.
Cash Management Services
The Bank’s Cash Management Services include the following basic components
Collection or Receivables Management Payment or Payables Management
Liquidity and Investment Management Services
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Features & Benefits
Financial Benefits You can reduce interest cost on borrowings by getting access to your funds faster. Additionally you will be able to improve the
firm's liquidity position by realizing cherubs sooner, and also positively impacting the Balance Sheet and Financial Ratios. Operational Benefits You will be able to manage Banking & Treasury functions with a significant reduction in resource-costs as a major part of the Funds and Liquidity Management Functions get outsourced to the Bank.
This clearly stands out as a cost saving device.
Control Benefits Cash Management Services allows you to maintain better control over the various Banking and Treasury related activities, improving turn around time and faster reconciliation. This product also takes care of fraud prevention, security and other controls.
Collection
We collect funds on your behalf from your debtors, such as Retail Investors, Corporate, Institutions etc. These funds can be in the form of Cash, Cheques, Demand Drafts or Pay Orders. The instruments are sent to the appropriate clearing houses and the funds are collected. All the collected funds are subsequently deposited into a central account, the 'Brokers Pooling Account'.
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Payments
We provide you a payable At-Par Cheque Book, which enables you to issue local cheques at all branch locations of Kotak Mahindra Bank. Our At-par cheque facility helps you to eliminate the hassels of obtaining demand drafts or opening current account at each location. Through our other disbursement solutions, you can also carry out bulk disbursement either through a fax or an email instruction in the form of:
Tailor made solutions to suit all your export needs
Experienced trade finance team that focuses on client requirements
Leverage our global network of correspondent banks
Pre-Shipment Credit
Post-Shipment Credit
Bills & Collection
Inward Remittances
Kotak Mahindra Bank provides a wide range of export related services, assisting the growth of your organization into the overseas market. Our solutions include:
We offer pre-shi pment credit to exporters by way of packing credit, enabling them to finance operations like purchase/import of raw materials or processing and packing of export goods. Exporters can avail of this pre-shipment credit either in rupees or foreign currency.
Post-Shipment Credit
We offer post-shipment credit to exporters, helping them finance export sales receivable for the time lag between shipment of goods and date of realization of export proceeds. Exporters can avail of the following services:
Negotiation/ payment/ acceptance of export documents under letter of credit
Purchase/ discount of export documents under confirmed orders/export contracts etc.
Advances against export bills sent on collection basis
Advances against exports on consignment basis
Advances against undrawn balance on exports
Advances against approved deemed exports
Exporters can avail of this post-shipment credit either in rupees or foreign currency.
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Bills & Collection
We have a strong, experienced trade finance team that focuses on client trade-related requirements, whether domestic or international. This team advises and guides clients on documentation and transactions ensuring:
Quick turnaround times through smooth document processing
Faster payments through constant follow-ups with correspondent banks for timely recovery of funds
Cost effectiveness
Better reach
Excellent trade support
Arrangement of credit reports of overseas parties
Specialised advice on international trade related issues as well as technical issues such as ECM requirements, RBI reporting, new circulars and international developments
We have developed a global network of correspondent banks that enables us to handle large volume collection portfolios. We offer world-class facilities for handling collections related to international trade.
We also handle documents where proceeds have been received by the exporter on an advance payment basis and the actual shipment takes place
later. In such cases, the documents need to be accompanied with an Foreign Inward Remittance Certificate (FIRC) as proof of receipt of the advance payment.
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Inward Remittances
We facilitate Foreign Inward Remittance (foreign exchange received by a person in India through banking channels) and offer convenient modes of operations for quick and easy disbursement.
The facility is extended through arrangements with reputed, correspondent banks located in most countries around the world.
Export
Key Features
Tailor made solutions to suit all your import needs
Experienced trade finance team that focuses on client requirements
Leverage our global network of correspondent banks
Letter of Credit
Bills & Collection
Outward Remittances
Kotak Mahindra Bank provides a comprehensive range of import related services, helping you cover your trading risks.
We offer our customers import financing services through Letters of Credit (L/C) which are well accepted globally and supported by a strong trade finance setup.
We have correspondent banking arrangements with a large number of banks worldwide for this service. Our trade team is equipped to structure solutions for a variety of purchase requirements, ranging from simple L/Cs to revolving L/Cs, bid bonds, Standby L/Cs and other performance guarantees.
Bills & Collection
We have a strong, experienced trade finance team that focuses on client trade-related requirements, whether domestic or international. This team advises and guides clients on documentation and transactions ensuring:
Quick turnaround times through smooth document processing
Faster payments through constant follow-ups with correspondent banks for timely recovery of funds
Cost effectiveness
Better reach
Excellent trade support
Outward Remittances
Our services in this area include:
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Payment of direct Import Bills: Processing and remittances for Import Bills directly received by importers in India.
Advance payment towards imports: Processing and remittances towards advance payment for imports.
Other outward remittances like dividend payouts, ECB payments, royalty, shipping, etc.
Bank Guarantee
Key Features
Experienced trade finance team that focuses on client requirements
Reduces your risks
We offer a wide spectrum of guarantees that address varying client requirements and risk profiles. These include performance and financial guarantees, bid bonds, tender and customs guarantees, etc.
Domestic Trade
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Key Features
Extensive range of trade-related services
Experienced trade finance team that focuses on client requirements
Tailor made solutions to suit all your trading needs
Bills Discounting
Invoice Discounting
Purchase Order Financing
Bill Discounting
Our experienced and dedicated trade finance team is focused on structuring bill discounting products to meet customer needs – be it short term or medium term finance.
In fact, our services go beyond plain bill discounting to encompass a complete range of supply chain management solutions. We aim at increasing the efficiency of the entire cycle, ensuring that transactions are executed speedily and effectively. We will soon offer integrated supply chain services on an electronic platform.
Invoice discounting entails “discounting” an accepted invoice bill for the sale of goods to provide working capital. We offer our clients the dual advantage of simple documentation and absence of collateral requirements. Finance is extended either by crediting the current account of the supplier or by issuing a pay order.
Purchase Order Financing
Purchase order financing is an innovative program where we offer flexible finance to supply chain partners of corporates. This involves “discounting” a contract/ purchase order to help finance the manufacturing cycle for goods ordered by the corporate. This service is particularly useful for vendors with seasonal increases in working capital requirements
Highlights:
Service extended to key vendors identified by the corporate
Pre-shipment loan against Purchase Order from corporate
Corporate pays the bank directly for all supplies by the vendor
We have a state-of-the-art dealing room situated at Nariman Point, Mumbai. The dealing room handles inter-bank transactions and corporate foreign exchange flows generated by the various branches.
Products:
Spot foreign exchange transactions (for value up to two business days)
Forward foreign exchange transactions (for value greater than two business days)
Inward/outward remittances
Derivatives such as Options, Currency Swaps, etc.
Services:
Active dealings in the inter-bank market for major currencies, spot and forwards
Quick and competitive dealing in prices in major currencies
Customised solutions for specific client exposures
Trading recommendations based on technical analysis
Regular fundamental analysis
Established correspondent banking relationships
Research update
Money Market
Key Features
We cater to the treasury requirements of clients across the Inter-Bank, Co-operative bank, Corporate, Pension Fund and Trust sectors.
We also offer the entire spectrum of services involved in the origination and placement of corporate debt.
Our Money Market and Fixed Income Desk is an active player in the Rupee markets and caters to the treasury requirements of clients across the Inter-Bank, Co-operative bank, Corporate, Pension Fund and Trust sectors.
With an active sales force in Mumbai, Delhi, Kolkata, Chennai, Bangalore and Ahmedabad we are equipped to meet client requirements across the country. We also offer the entire spectrum of services involved in the origination and placement of corporate debt.
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Fixed Income Solutions
Short Term Needs: Purchase/ Sale of Treasury Bills, Commercial Paper, Certificate of Deposits
Long Term Needs:
Purchase/ Sale of Government and Corporate Debt
Distribution Needs:
Placement of Debt Issues
Depository Needs:
Constituent SGL Facility
Retail Needs:
Purchase/Sale of instruments in smaller lots is also offered.
Derivative Solutions
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Hedging Needs: Market Maker in the Rupee interest Rate swap market in tenors upto 5 years
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Corporate Investments
Meet your financial goals
At Kotak Mahindra Bank, we recognize that financial needs vary. We have years of experience in helping organizations put together an investment portfolio that works best for them.
Loan facility to the extent of 85% of principal on a deposit term
Attractive interest rates
Interest Rates
Investing your money in a Term Deposit at Kotak Mahindra is a safe, stress-free way to make it grow. A host of features make Kotak Mahindra Term Deposits an excellent investment opportunity:
Automatic rollover:
You can choose to roll over only the principal amount that you deposit or principal plus interest earned (i.e. re-invest the interest). Automatic rollover will be for the same period, at an interest rate applicable on the maturity date
When you reinvest the interest, you get compound interest on the total amount, i.e. rollover of principal plus interest, at the end of the period (quarter or half-yearly)
You can specify, on or before the maturity date, changes in deposit tenure, maturity instructions, payment instructions, principal amount and rollover mode (from principal to principal plus interest or vice versa)
Loan facility is available to the extent of 85% of principal on a deposit term, with a period of minimum of 1 year (as per Kotak Mahindra Bank's conditions)
Mutual Funds
Key Features
Assistance at every step of the investment process
An experienced research team to analyse and research the Mutual Funds available in the market
Portfolio assistance
We work closely with our clients to help them establish a robust framework for treasury solutions and laying down parameters for investment products within the risk/return parameters laid down by the each treasury.
We offer this service to all our customers including Banks, Financial Institutions, Insurance Companies, Large & Mid-size Corporates. Investment products include Mutual Funds, Bank Certificates of deposits, Bonds & debentures, Government securities amongst others.
Identifying investment opportunities involves working closely with our clients to identify their goals and to analyse their investment needs by understanding their risk profiles, liquidity and tax requirements, investment horizons and expectations of returns.
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Our experienced research team analyses and researches the various Mutual Funds available in the market, helping clients make more informed decisions. Our recommendations take into account all relevant factors including the investment philosophy of the Asset Management Company, portfolio quality, risk-adjusted returns and market insights.
Our range of services includes:
Daily NAV updates
Fund Performance Analysis
Monthly Portfolio Analysis
Client Portfolio Monitoring
Debt / Equity Research
Regular News updates
Client Portfolio Monitoring
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BUSINESS BANKING SOLUTIONS
Key Features
Entire range of product offerings
Customised solutions & advisory services
Relationship banking
Documentation
At Business Banking Group we look at providing financial solutions to small & medium size businesses. We have an array of products which cover the working capital and long term financial needs of a business. We also offer trade finance products like Letter of Credit and Bank Guarantees
Product Offerings
Business Banking Group caters to the entire trade & financial requirements of small & medium businesses through comprehensive product offerings. Our individual exposure ranges from Rs 50.00 Lakhs to Rs 30.00 Crores.
Working Capital
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Cash Credit / Overdraft
Working Capital Term Loan
Trade Services
Letter of Credit
Bank Guarantee
Long Term Financial Needs
Term Loan
Loan Against Property
Lease Rent Discounting
Customised Solutions & Advisory Services
We review business requirements based on overall performance and their expansion plans. The relationship managers and the credit team would focus on understanding the business model and related industry dynamics with the customer. Effort is made to understand how the business has grown and what plans do the promoters have. The strength of the team is in understanding the needs of the customer and customizing a solution for him. We also add value to the relationship by offering advisory services and financial restructuring solutions to our customers.
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Relationship Banking
Our dedicated team of Relationship Managers (RMs) located across the country act as ONE POINT CONTACT for our clients. Our RMs maintains a continuous interaction with the clients to understand their immediate and future financial needs.
Awards
2009
Kotak Mahindra Bank was awarded Hewitt Best Employers in India 2009
Kotak Mahindra Bank was ranked in the top 5 of companies with “Best Corporate Governance Practices” in Asia/Pacific - IR Global Rankings 2009.
Kotak Mahindra Bank and Oracle Siebel won the “Best CRM/Applications Project Award 2009” at the IT Implementation Awards 2009 by The Asian Banker.
Kotak Mahindra was adjudged India’s overall the “Best Private Banking Services” award by Euro money 2009.
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Kotak Credit Cards- Kotak Royal Signature’s card is chosen “Product of the Year” by Nielsen who surveyed 40,000 consumers.
Kotak Life Insurance plans were rated amongst the best in the industry for a second year in a row in the annual ULIP Ranking carried out by Outlook Money.
Outlook Money awarded the 1st Rank to Kotak Platinum Advantage Plan in Type II ULIPs category.
Outlook Money awarded 4th Rank to Kotak Long Life Wealth Plus plans in the Type I ULIPs category, concluding that “Kotak Life has a product portfolio which delivers what customers want.”
Kotak Life Insurance plans were rated amongst the best in the industry for a second year in a row in the annual ULIP Ranking carried out by Outlook Money.
Kotak Securities- Best Brokerage Firm in India - Asia money, 2008
Kotak Securities- Selected “Business Super brand India 2008
Kotak Securities - “India Equity House of the Year 2008” award from IFR Asia
Kotak Securities - “Best Equity House in India” by Finance Asia in 2008
Kotak Securities - “Best Equity House in India” by Asia money in 2008
Kotak Securities - “Best Brokerage and Best Analyst (Sanjeev Prasad) in India” in the Asia money 2008 Brokers Poll
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Kotak Investment Banking was awarded the “Best Domestic Investment Bank 2008” by Triple A Asset Asian Awards
Kotak Investment Banking was ranked “Best Investment Bank in India” by Global Finance in 2008
CHAPTER-4
COMPANY PROFILE
Our Story
The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited.
1985
The company was incorporated on 21st November 1985 under the name Kotak Capital Management Finance Ltd. The Company has been promotedby Mr Uday S Kotak, Mr S.A.A Pinto and Kotak & Company. The company obtained the certificate of commencement of business on 11th February
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1986 and the Existing promoters were joined by Mr Harish Mahindra and Mr Anand Mahindra. The company's name was changed on 8th April 1986 to its present name Kotak Mahindra Finance Ltd.
The Company deals in Bill discounting, leasing and hire purchase, corporate finance, management of fixed deposit mobilisation, financing against securities, money market operations, consumer finance, investment banking and clients' money management.
1990
3,08,770 No. of equity shares subscribed for by the promoters, directors, 3,41,230 No. of equity shares allotted as rights as on 28.3.89. 19,50,000 shares issued as bonus (6,50,000 shares in prop. 1:1 as on 29.7.89 and 13,00,000 shares in prop. 1:1 as on 27.2.91).
1991
An application was made to SEBI for approval for setting up a Mutual Fund trust and an asset management company. The newly set up Corporate Advisory Services Group received several mandates for advice on mergers and acquisitions and re-structuring.
The Company's newly established Foreign Exchange Risk Management Service carters to the vast potential demand for price risk management.
The Company established itself as a major leasing and hire-purchase company and as a source of finance for purchasers of automobiles.
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1992
In January, the Company offered and allotted 15,50,000 - 14% secured partly convertible debentures of Rs 90 each for a total value of Rs 13.95 crores in the following manner:
(i) 2,00,000 debentures to promoters, directors, etc.
(ii) 77,500 debentures to employees (including working directors)/workers on preferential basis
(iii)12,72,500 debentures to Indian public through prospectus.
Additional 30,000 debentures to promoters, directors, etc., 9,500 debentures to employees and 1, 93,000 debentures to Indian public were allotted to retain oversubscription.
As per the terms of debenture issue, a portion of Rs 45 of each debenture of Rs 90 was to be converted into 1 equity share of Rs 10 each at a premium of Rs 35 per share as on the date of allotment of the debentures. Accordingly 17,82,500 No. of equity shares allotted as on 25th February, 1992, being the date of allotment of the debentures.
The non-convertible portion of Rs 45 of each debenture would be redeemed at par in three equal instalments of Rs 15, Rs 15 and Rs 15 at the end of the 7th, 8th and 9th year respectively from the date of allotment of the debentures.
In April, the Company has raised Rs. 18 crores by issue of Commercial Paper which has been awarded P1 + rating by Credit Rating and
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Information Services of India limited (CRISIL) indicating highest standards of safety.
1993
During February, the Company issued 69,82,500 Rights equity shares of Rs 10 each at a premium of Rs 15 per share in proportion 1:1 (all were taken-up). Additional 13,950 shares were allotted to those who had applied for additional shares.
The Company issued through a Prospectus 44,00,000 No. of equity shares of Rs 10 each for cash at a premium of Rs 140 per share of which the following were reserved for allotment
(i) 1,30,000 shares to promoters, directors, their relatives etc.
(ii) 25,000 shares to Foreign/Indian Financial Institutions (all were taken up). Of the remaining 50,000 shares reserved for allotment on a preferential basis to employees (only 34,600 shares taken up). Another 5,55,000 shares to
NRIs were reserved on non-repatriation basis (all were taken up).
Balance 36,40,000 shares, along with 15,400 shares not taken up by employees', were offered for public subscription.
At the 8th Annual General Meeting held on 28th September the Company has reserved 61,22,000 No. of equity shares of Rs 10 each for cash to be
allotted at such issue price as may be decided by the board to Foreign Institutional Investors and/or, Foreign and/or Indian Pension and/or Mutual and/or other Funds and/or Institutions, Banks, Companies, Bodies and/or individuals and/or Groups of Individuals.
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The Company's newly set up Corporate Advisory Services Group received several mandates for advice on mergers and acquisitions and re-structuring and some have already been executed with success.
1994
The Company entered into a Memorandum of Understanding with KB Currency Advisors Inc. USA to market their Foreign Exchange Fund Management Programme. 183,65,500 Rights equity shares issued in prop. 1:1. 11,800 No. of equity shares forfeited.
The Company has received the approval of Securities and Exchange Board of India (SEBI) for setting up a Mutual Fund.
1995
The Company issued 4,00,000 - 17% Secured Redeemable Non-convertible Debenture of Rs 2500 each including 96000 - 16% NCDs reserved for NRIs/URB (only 9510 taken-up). Unsubscribed portion of 90 debentures issued to the public. These are redeemable at par on 7.3.2001 with an option for early redemption up to a maximum of 5% of the issue amount every year.
The Company entered into a joint venture agreement with Ford Credit International Inc. (FCI), a subsidiary of Ford Motor Credit Co., USA.
It was proposed to finance all non Ford Passenger cars.
Kotak Mahindra Capital company became a subsidiary of the Company.
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1996
The Company's operations were affected by the liquidity crunch, scarcity of resources, sluggishness in the capital markets and the overall deceleration of economic growth.
The Company has entered into a MOU with the Chubb Corporation, New Jersey, U.S.A., one of the largest American Insurance firms, to develop a Joint Venture dedicated to the conduct of causality and property insurance business in India.
The Company has invested a sum of about Rs 200 lacs in Matrix Information Services private Ltd. (Matrix), a company formed for providing comprehensive value added information to business and general users. Matrix is a wholly owned subsidiary of the company.
The Company has divested its entire holding of 20,00,070 No. of equity shares of Rs 10 each of Kotak Mahindra Securities Ltd. (KMSL) and 20,00,000 ordinary shares of US $ 1 each of Kotak Mahindra International Ltd.
Hamko Financial Services Ltd., Kotak Mahindra Securities Ltd., provides of broking services to institutional and corporate clients, Kotak, Mahindra Asset Management Company, Kotak Mahindra International Ltd., an offshore company and Kotak Mahindra (UK) Ltd., are all subsidiaries of the Company.
The Company's public issue of 400000 16-17% Secured Redeemable Non-Convertible Debentures of Rs.2500 each for cash at par aggregating Rs.100 cr in January.
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1997
In recognition of the Company's prudent funds management, CRISIL has assigned a rating of AA+ to the Company's public issue of Non-Convertible Debentures and P1+ for all short term borrowings upto Rs.35000 lacs.
Kotak Mahindra Finance Ltd., has decided to venture into health insurance business.
Kotak Mahindra Finance has launched a new consumer finance product called Kotak Mahindra K-Value.
Hamko is a 100 per cent subsidiary of KMFL and investment in it was structured to avoid limitations of Section 372 under the Companies Act.
The company has diversified into various activities for which it has set up subsidiaries including broking, capital market activities, auto finance, etc.
1998
Kotak Mahindra Asset Management Company Limited (KMAMCL) launched its mutual fund schemes in December.
The Company it would launch its mutual fund with two schemes --
1- KGilt
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2- Unit Scheme and K30 Unit Scheme.
Kotak Mahindra Finance, is a joint venture with Goldman Sachs.
1999
The `FAA' (pronounced `F double A') rating assigned to the fixed deposit programme of Ford Credit Kotak Mahindra (FCKM) has been reaffirmed.
With the allotment to the Company of 50,000 equity shares of Rs. 10 each by Kotak Mahindra Trustee Company Limited (KMTCL) on 12th May.
2000
Kotak Mahindra Finance Ltd (KMFL) and Chubb Corporation of the US have decided to call off their joint venture for entering the general insurance business in India.
The Company has decided to set up a venture capital fund with an initial corpus of Rs. 100 crore.
KMFL has set up a new asset reconstruction division to offer recovery management services to players in the financial services industry.
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The Company Issue of 9,182,500 No. of Equity Shares of Rs. 10/- each for cash at a premium of Rs. 90/- per share aggregating Rs. 918,250,000 to the Equity Shareholders of the Company on Rights basis in the ratio of one equity share for every our equity shares held on 15th February.
Mr. K.K. Sheth has resigned effective from May 8.
Kotak Securities an affiliate of Kotak Mahindra Finance Ltd., has launched electronic broking services for retail investors.
Kotak Mahindra Finance is in talks with foreign insurers for a joint venture in the life insurance business.
The Company has proposed to start-up capital of Rs 150 crore in its life insurance joint venture with Old Mutual, the UK based financial services group.
The Company proposes to make the necessary applications to the RBI and the Insurance Regulatory and Development Authority for entering the life insurance business.
OM Kotak Mahindra Life Insurance Company, the recently formed joint venture company of Kotak Mahindra Financeand Old Mutual Plc has filed
its application for approval of life insurance license on 1st September.
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Kotak Mahindra Finance Ltd has been assigned Ind AAA rating (indicating highest credit quality) for its Rs.510 million medium term borrowing programme.
Fitch India has assigned a rating of Ind AAA to the Rs 51-crore medium term borrowing program of Kotak Mahindra Finnance Ltd for high credit quality and negligible risk factor.
2001
The Company recommended a swap ratio of 25 shares of KMFL for every share of Pannier Tradings which has a 75 per cent equity stake in Kotak Securities.
The Bharath Petroleum Corporation Ltd (BPCL) has decided to part ways with Kotak Mahindra, one of the leading domestic financial services company, in its convenient store venture In & Out.
2002
KMFL's business has seen a fast growth with the total disbursement of commercial vehicle loan of the company in the last fiscal was tuned to Rs. 250cr.
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RBI has given in-principle approval to Kotak Mahindra Finance Ltd to convert itself into a bank, thereby becoming the first ever non-banking finance company converted into a bank.
Mr Uday Kotak says, there won't be any fish capital infusion in the bank in the near future.
KMFL informed BSE the FITCH ratings assigned:
Fixed Deposit Programme - Ind AAA
Non-Convertible Debenture - Ind AAA
Mr.Ajay Sondhi has been appointed as the Additional Director of Kotak Mahindra Finance Ltd.
Kotal Mahindra Finance Company has shortlisted i-flex solutions
'Flexicube' and 'Infosys', 'Finnacle' for its core banking solutions.
KMFL has raised 76.22cr by selling securitised commercial vehicle loans to investors.
CRISIL has assigned 'AAA(SO)' rating for Rs.83cr securitization Programme of Kotak Mahindra Finance Ltd.
Mr.Uday Kotak has been appointed as the Executive Vice Chairman and Managing Director of the company.
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Kotak Mahindra Finance Ltd has mobilised Rs.104.89cr , asset-backed securitization of commercial vehicle receivables.
Business Standard and Business Standard digital have ceased to be the subsidiaries of Kotak Mahindra Finance Ltd.
Mr.C Jayaram and Mr. Dipak Gupta are appointed as whole time Directors on the Board of Kotak Mahindra Finance Ltd.
2003
Madison Communications has won the Rs.30cr Kotak Mahindra's media AOR account.
The proposal of changing the name from 'Kotak Mahindra Finance Ltd' to 'Kotak Mahindra Bank Ltd' and the proposal to change the authorized capital from 100,00,00,000 divided into 10,00,00,000 equity shares of Rs.10 each has been approved by the company shareholders.
RBI has granted licence to Kotak Mahindra Finance Ltd to embark on its banking business.
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O & M has got the creative account of Kotak Mahindra Bank, and has said to be working professionally.
Kotak Mahindra Bank has received a lot of interest from portfolio investors, private equity investors and potential strategic investors.
Kotak Mahindra Bank has entered into an ATM sharing agreement with UTI Bank, which would allow KMB's customer free access to around 800 ATM's.
Kotak Mahindra Bank has started its operations in New Delhi by inaugurating a branch Cannaught place office.
Dr.Shankar Acharya has been appointed as the Additional Director to the board of the bank.
The Board of Kotak Mahindra Bank Ltd accepts the resignation of Mr.S.A.A Pinto and Mr.M.R Punja as the Directors of the Bank.
Kotak Mahindra Investment Co Ltd. PCC a subsidiary of Kotak Mahindra Capital Company has constituted itself from a private company to a public limited co. and has changed its name to 'Global Investment Opportunities Fund Ltd'.
Kotak Mahindra bank has unveiled several home finance products options which includes Home loan, Home equity Loan, Home loan transfer and Home improvement loans.
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Kotak Mahindra Bank launches online remittance services called, FUNDStoHOME for Non-resident Indians.
In response to the repo rate cut by the RBI, the Kotak Mahindra Bank has reduced its lending rates in home loans.
Kotak Mahindra Bank Limited has informed that the equity shares of the Bank have been delisted from the Delhi Stock Exchange Association Ltd w.e.f December 10, 2003.
2004
Kotak Mahindra Bank Limited has informed that the Bank's equity shares will be delisted from The Stock Exchange, Ahmedabad with effect from January 20, 2004.
Kotak Mahindra Bank sets up branch in Surat
Kotak Mahindra Mutual Fund has launched Kotak Opportunities, an open-ended equity growth scheme
Kotak Mahindra Bank inks pact with Reuters
2006
-Kotak Mahindra joins hand HDFC Bank to share ATMs.
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Growth of Kotak Mahindra Bank
The journey so far
In October 2005, Kotak Group acquired the 40% stake in Kotak Prime held by Ford Credit International (FCI) and FCI acquired the stake in Ford Credit Kotak Mahindra (FCKM) held by Kotak Group.
In May 2006, Kotak Group bought 25% stake held by Goldman Sachs in Kotak Capital and Kotak Securities.
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Key group companies and their businesses
Kotak Mahindra Bank
The Kotak Mahindra Group's flagship company, Kotak Mahindra Finance Ltd which was established in 1985, was converted into a bank- Kotak Mahindra Bank Ltd in March 2003 becoming the first Indian company to convert into a Bank. Its banking operations offer a central platform for customer relationships across the group's various businesses. The bank has presence in Commercial Vehicles, Retail Finance, Corporate Banking, Treasury and Housing Finance.
Kotak Mahindra Capital Company
Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank. KMCC's core business areas include Equity Issuances, Mergers & Acquisitions, Structured Finance and Advisory Services.
Kotak Securities
Kotak Securities Ltd. is one of India's largest brokerage and securities distribution houses. Over the years, Kotak Securities has been one of the leading investment broking houses catering to the needs of both institutional and non-institutional investor categories with presence all over the country through franchisees and coordinators. Kotak Securities Ltd. offers online
(through www.kotaksecurities.com) and offline services based on well-researched expertise and financial products to non-institutional investors.
Kotak Mahindra Prime
Kotak Mahindra Prime Limited (KMP) (formerly known as Kotak Mahindra Primus Limited) has been formed with the objective of financing the retail and wholesale trade of passenger and multi utility vehicles in India. KMP offers customers retail finance for both new as well as used cars and wholesale finance to dealers in the automobile trade. KMP continues to be among the leading car finance companies in India.
Kotak Mahindra Asset Management Company
Kotak Mahindra Asset Management Company Kotak Mahindra Asset Management Company (KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra Mutual Fund (KMMF). KMMF manages funds in excess of Rs 25,628 crore and offers schemes catering to investors with varying risk-return profiles. It was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.
Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra Old Mutual Life Insurance Limited is a joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Life Insurance helps customers to take important financial decisions at every stage in life by offering
them a wide range of innovative life insurance products, to make them financially independent.
Kotak's International Business
With a presence outside India since 1994, the international subsidiaries of Kotak Mahindra Bank Ltd. operating through offices in London, New York, Dubai, San Francisco, Singapore and Mauritius specialize in providing asset management services to specialist overseas investors seeking to invest into India. The offerings are differentiated India investment solutions that span all major asset classes including listed equity, private equity and real estate. The subsidiaries also lead manage and underwrite international issuances of securities. With its commendable track record, large presence on the ground and a team of dedicated staff in India, Kotak’s international arm is suitably positioned for managing assets in the Indian Capital markets.
Kotak Investment Banking awarded “Best Investment Bank in India” by Global Finance in 2008.
Kotak Mahindra Bank rated “Best Workplaces in India 2008” (study by The Great Places to Work Institute India).
Kotak Investment Banking acts as the exclusive financial advisor to Mahindra & Mahindra Ltd for preferential allotment to Goldman Sachs PIA, investment involving issuance of FCDs during turbulent and volatile market conditions.
Kotak Investment Banking & Kotak Securities jointly awarded “Best Equity House in India” by Asiamoney in 2008.
Kotak Investment Banking is lead manager for the KSK Energy Ventures Ltd Rs 8.3 billion IPO.
Quarter 2
Kotak Investment Banking awarded “Best Investment Bank in India” by FinanceAsia in 2008.
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May 2008 | Kotak Mahindra Bank continues to remain an employer of choice.
Kotak Investment Banking awarded “Best Equity House in India” by FinanceAsia in 2008.
Kotak Investment Banking acts as the manager to the buyback by Abbott India Ltd.
Kotak Mahindra Bank wins Technology Senate Emerson Uptime Championship Award 2008 in the BFSI category.
Kotak Securities is selected “Business Superbrand India 2008” by Superbrands Council of India.
Kotak Investment Banking is the exclusive financial advisor to Mahindra & Mahindra Ltd to form a joint venture with the third largest tractor maker in China – Jiangsu Yueda Yancheng Tractor Manufacturing Co. Ltd.
Kotak Investment Banking is the exclusive financial advisor to Voltas Ltd for acquisition of majority stake in Rohini Industrial Engineers, an EPC company with all-India presence in theelectro-mechanical space.
Kotak Mahindra Bank becomes a CASHnet member.
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Quarter 3
October 2008 | Kotak Mahindra Bank: 200 branches and growing.
Kotak Mahindra Bank crosses 200-branch milestone.
Kotak Investment Banking is the exclusive financial advisor to Wilo SE for delisting of Mather and Platt Pumps Ltd.
Kotak Securities voted the “Best Brokerage in India” and Sanjeev Prasad ranked “India’s Best Analyst” by investors in the Asiamoney 2008 Brokers Poll.
Kotak Investment Banking wins “Best Domestic Investment Bank 2008” award from Triple A Asset Asian Awards.
Kotak Life Insurance - Kotak Platinum Advantage Plan awarded 1st rank in Type II ULIPs category by Outlook Money.
Kotak Long Life Wealth Plus Plans awarded 4th rank in the Type I ULIPs category by Outlook Money, concluding that “Kotak Life has a product portfolio which delivers what customers want”.
Kotak Investment Banking wins “India Equity House of the Year 2008” award from IFR Asia.
Kotak Group raises Kotak India Realty Fund Ltd with commitments of US$281 million.
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Quarter 4
Jan 2009 | Uday Kotak receiving the CNBC TV18 “India Business Leader of the Year” Award.
Uday Kotak wins the CNBC TV18 “India Business Leader of the Year” Award.
Kotak Royal Signature Credit Card voted "Product of the Year" in the credit cards category in the Consumer Survey of Product Innovation 2009 conducted by Nielson. 40,000 people were surveyed in this survey.
Kotak Mutual Fund bags multiple honours at the ICRA Mutual Fund Awards 2009*:
Kotak Liquid - Regular Plan ranked as a Seven Star Fund in the category of “Open-Ended Liquid“ schemes for its 1 year performance till December 31, 2008; Kotak Flexi Debt Fund ranked as a Five Star Fund in the category of “Open-Ended Liquid Plus“ schemes for its 1 year
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performance till 31 December 2008; Kotak Flexi Debt Fund ranked as a Five Star Fund in the category of “Open-Ended Liquid Plus“ schemes for its 3 year performance till December 31, 2008; Kotak 30 ranked as a Five Star Fund in the category of “Open Diversified Equity - Defensive“ for its 3-year performance till December 31, 2008. The Five Star category comprises of funds in the top 10 percentile in performance.
Kotak Mahindra Bank launches Kotak Presidium with President Bill Clinton 2013
Kotak Presidium, a thought leadership speaker series, will feature some of the most
influential achievers from India and around the world. The inaugural Kotak Presidium
was addressed by President Bill Clinton at the National Centre for Performing Arts
(NCPA), Mumbai on April 10, 2013.
Addressing a 700-strong eclectic gathering comprising business leaders,
policy makers and thinkers, President Clinton's speech covered issues as
diverse as philosophy and sustainable behaviours, built around the moral
necessity of developing the ability to relate to an identity that reflects all
of humanity's shared hopes and aspiration.
SWOT ANALYSIS
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Strength
1. Innovative financial products of diverse categories
2. Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to convert to a bank.
3. Comprehensive Cash Management System
4. Has over 20,000 employees
5. Customer account base of over 2.7 million
Weakness
1. Lesser penetration as being late entrants
2. Low publicity and marketing as compared to other premium banks in the urban areas
3. Very less Branches all over across the India.
4. Should also concentrate on Medium and small scale industries
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Opportunity
1. Increase in Industry banking
2. Explore opportunities abroad by International banking
3. Increase more and more Branches across India and worldwide.
4. Expansion Into New Segments
Threat
1. Economic slowdown
2. Highly competitive environment
3. Stringent Banking Norms
4. Changing Interest Rates
5. Global Economic Condition
GRAPH – 5A
As Per the Survey I Have found that Employees in 11 Companies are above 40Employees in 23 companies are between 30-40Employees in 16 companies are between 20-30
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GRAPH 5 B
As the companies Survey We can see the Turn OverTurnover of 19 Companies is between 0-200 cr
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Turnover of 15 Companies are between 200-500 crTurnover of 12 Companies are between 500-1000 crTurnover of 4 Companies are above 1000 cr
GRAPH 5 C
As per the Companies survey Regarding Loan Facility Taken from any Bank
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46 Companies said they have taken Loan Facility4 Companies said they have not taken any loan Facility
GRAPH 5 D
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As Per the Companies survey the bank which are been used by the companies are3 Companies where using Kotak Mahindra Bank16 Companies where using HDFC bank9 Companies where using ICICI Bank7 Companies where using City Bank15 Companies where using Others Bank
GRAPH 5 E
As per the Company Survey Types of Payments which are been used by the Company
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All the companies mainly uses all types of payments,very few companies uses only cheques and online payments.All the vendor payments , Employees Salary, and other transaction are done through all the modes of payments.
GRAPH 5 F
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As per the companies Survey regarding Companies Operation in India, Abroad, Both.26 Companies have their operation only in India, as they have their different head office and Branches only in India.2 Companies have their Operation in Abroad just they have their Head Office in Gurgaon Region.22 Companies Have their Operation Both in India and Abroad.
GRAPH 5 G
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As per the companies survey regarding Problem they are facing from their current bankOnly 2 Companies said that they are facing problem ,and the remaining 48 Companies said that they are very much happy with their bank, and their services.
CHAPTER 5
DATA COLLECTION
Data collection for the organization was according to the questioner prepared by the Kotak Mahindra Bank, according to the requirements of the company and the problem they are facing from the Current banks, the question was mainly to find out the problem of the banks,
As I have distributed 70 questioner out of which 50 where filled and returned back to me , as I have covered the Gurgaon part during my Internship as we can
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see that most the companies are in Gurgaon region,as the time was two month, but I tried to collect as much data I can.
PRIMARY DATA
Primary data was the questioner which was been made by the Bank and it contain 10 question which was been asked by them to analyze the data,There where around 50 questioner which was been distributed, Data was mainly related to their organization which deals with the finance , and the questioner where been filled by the finance team of the organization.After the collection of the primary data I did the analysis by making the pie chart.
SECONDARY DATA
At the outset of the chapter a strong case is made for studying secondary data before engaging in primary research. The potential benefits of beginning any study with secondary data are outlined, including the prospect that in some cases possession of relevant secondary data may obviate the need for primary research to be undertaken at all. This discussion is followed by an overview of the questions that should be asked when evaluating secondary sources and data in terms of their validity and accuracy. Thereafter, the principal internal and external sources of secondary data are described. The final section of this chapter briefly points towards future developments in the storage and retrieval of secondary data. Mention is made of electronic systems like the Internet and CD-ROMs
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Secondary data may be available which is entirely appropriate and wholly adequate to draw conclusions and answer the question or solve the problem. Sometimes primary data collection simply is not necessary.
It is far cheaper to collect secondary data than to obtain primary data. For the same level of research budget a thorough examination of secondary sources can yield a great deal more information than can be had through a primary data collection exercise.
The time involved in searching secondary sources is much less than that needed to complete primary data collection.
Secondary sources of information can yield more accurate data than that obtained through primary research. This is not always true but where a government or international agency has undertaken a large scale survey, or even a census, this is likely to yield far more accurate results than custom designed and executed surveys when these are based on relatively small sample sizes.
It should not be forgotten that secondary data can play a substantial role in the exploratory phase of the research when the task at hand is to define the research problem and to generate hypotheses.
Secondary sources help define the population. Secondary data can be extremely useful both in defining the population and in structuring the sample to be taken. For instance, government statistics on a country's agriculture will help decide how to stratify a sample and, once sample estimates have been calculated, these can be used to project those estimates to the population
CHAPTER 6
FINDINGS AND ANALYSIS
Findings was on the basis of questioner which was been prepared according to know the problem the companies are facing.Finding was mainly done on the primary basis ,by asking them the question , as 50 questioner where distributed to different companies of Gurgaon region
As we have to know in what type of business the company was into, turnover of the company, which banks they are using and whether they are satisfied with the banks or not.
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Our main focus was on the Remittance and the conversion margin the foreign exchange the how much they charge for the conversion of the currency. And the taken by the bank to convert the currency.
Analysis was that I analyze the questioner through pie chart and I found that the organization are already dealing with some other bank, and related to Kotak Mahindra Bank they replied as it is a very small bank, and do not have much branches. And they are dealing with other banks like HDFC, ICICI, AMERICAN EXPRESS, CITY BANK, etc., but I found that very few companies are dealing with Kotak Mahindra bank, as they are not doing any advertisement, they are unable to approach the companies, and for some of the companies who are dealing with Kotak Mahindra bank they are not happy with the client handling, and the feedback.
Kotak Mahindra should look over for expanding their branches, and should approach the new companies, because if the companies are already dealing with some other banks they do not want to shift to some other banks
As I have visited the new companies and approached them for the meetings they were happy and ready to fix meetings with our chief manager.
Bank should approach the new ventures and the medium and small scale companies also.
CHAPTER 7
Recommendations
After getting the insight knowledge of commercial banking, I would like to recommend the following points
1- The Banks should liberalize their policy to attract new born Companies for promotion of their business.
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2- There should be efficient problem resolving mechanism for corporate clients.
3- There should be proper maintenance of database.
4- The company should be aware with the core competency of the competitors.
5- The company should find out the tactics to beat the competitors in the battle of client creation
6- The core competency should be invincible.
7- They should not discriminate between small, medium and large scale companies.
8- Kotak should reduce the interest rate to approach more companies.
9- They should expand to new segment, or launch the new services according to the organization need.
Kotak Mahindra BankConsolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 373.30 370.34 368.44 348.14 345.67
Equity Share Capital 373.30 370.34 368.44 348.14 345.67
Transfer to Statutory Reserves 379.20 310.81 207.41 188.43
Transfer to Other Reserves 68.04 54.26 40.91 28.06
Proposed Dividend/Transfer to Govt 59.67 51.71 41.25 29.66
Balance c/f to Balance Sheet 3,016.60 2,162.79 1,494.52 965.91
Total 3,523.51 2,579.57 1,784.09 1,212.06
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QUESTIONNAIRE
1. WHAT TYPE OF BUSINESS YOUR COMPANY IS INTO?
Please Specify
2. WHAT IS YOUR TOTAL EMPLOYEES STRENGTH? 20-30 30-40 Above 40
3. WHAT IS YOUR COMPANIES TURNOVER? 0-200cr 200-500cr 500-1000cr Above 1000 Specify….
4. WHICH BANK YOUR COMPANY IS CURRENTLY USING? Kotak Mahindra Bank HDFC ICICI CITY BANK IF Other Specify…
5. DOES YOUR COMPANY HAS ANY LOAN ? YES NO
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6. WHAT TYPE OF VENDOR PAYMENT DO YOU USE? NEFT RTGS CHEQUES ONLINE All of the Above
7. IS YOUR COMPANY OPERATION ONLY IN INDIA OR ABROAD?
INDIA ABROAD BOTH
8. ANY PROBLEM YOU ARE FACING FROM YOUR CURRENT BANK?
YES NO
9. DO YOU USE EEFC ( Exchange Earners Foreign Currency ) ACCOUNT?
YES NO
10.WHAT IS YOUR VOLUME OF REMITTANCE IN EXPORT AND IMPORT?
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CHAPTER- 10
CASE STUDY
Case study on Kotak Mahindra bank.
The onset of the global financial crisis had interrupted India’s growth momentum. After clocking an annual average growth of 8.9% over 2003-2008, India headed into a cyclical downturn in 2008-09. The recovery of the Indian economy started in the 1st quarter of 2009-10 when the GDP growth bounced back to around 6.1% from the previous quarter’s 5.8%. The recovery strengthened significantly especially from the 2nd quarter of 2009-10, driven by a strong momentum in the industrial output and a better performance of the service sector. The monsoon was erratic with June – September 09 period showing a significant shortfall, but despite the widespread drought and relatively poor agriculture production in 2009-10, the Indian economy is expected to grow at 7.2% in 2009-10 as per the advance estimates released by the Central Statistical Organization. The recovery story of the Indian economy is also evident from the side of the Index of Industrial Production (IIP), which was led by the manufacturing sector with the average growth at 10.5% in April 2009 to February 2010 compared to 3.1% in the similar period last year. A sharp recovery in the capital goods segment is also indicative of rising investment demand. Headline WPI inflation remained significantly volatile in 2009-10, and closer to the end of the FY 10, the pace of increase in the prices became a concern. Rising food prices, increase in the prices of domestic petrol and diesel and also a waning of the base effect of the last year accounted for the sharp rise in the Headline WPI inflation. While prices of most of non-food commodities moved in line with the international commodity prices, domestic food prices exhibited contrarian movement in relation to the respective international prices.
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As per the latest monthly data available on WPI, Headline WPI inflation was at 9.9% in March 2010. There are signs that the high food prices are getting transmitted to other non-food items, thereby creating concerns over a more generalized inflation in the months ahead. Consumer price inflation had also been on the rise through 2009-10. In April 2009 CPI-Industrial workers was at 8.70% but this gradually increased to 14.86% in February 2010 after peaking at 16.22% in January 2010. In 2008-09 the monetary policy was prioritized towards arresting moderation in growth and by the end-March 2009, RBI had reduced the CRR and the Repo Rate by 400 bps each (to 5.00% for both) from its peak levels while the Reverse Repo rate was reduced from 6.00% to 3.25%, a drop of 275 bps. In the course of 2009-10 the stance of monetary policy was geared towards supporting early recovery of the growth momentum while facilitating the large borrowing programme of the Government. RBI has been continuously monitoring the inflation and has taken steps during the year to address these. In October 2009, the mandatory SLR requirement was restored back to its earlier level of 25% of NDTL. The CRR requirement was raised by 75 bps on January 29th to end FY10 at 5.75%. On the other hand, the Repo as also the Reverse Repo rates was increased by 25 bps each on 19th March 2010. While the Reverse Repo rate at the end of the FY was at 3.50%, the Repo rate ended the FY at 5.00%. Liquidity conditions remained hugely in surplus in 2009-10 and thus the money market conditions remained largely orderly. The collateralized segment remained the predominant segment of the money market and accounted for more than 80% of its total volume. About 75% of the lending in the collateralized segment was contributed by mutual funds. 10-year G-Sec yields movements can be categorized into 3 distinct phases. In the first phase (April 2009), 10-year G-Sec yield dropped sharply from 7.01% to 6.23%, in the 2nd phase (May-August 2009), benchmark 10-year yield started to increase as the size of primary auctions were higher (from Rs. 12,000 crore to Rs. 15,000 crore) By end-September the 10-year yield rose to 7.17%. In the 3rd phase G-sec yields witnessed ranged trades before exhibiting a hardening bias on the back of lack of OMO purchase auctions in the second half of the FY; consequently the 10-year G-sec yield was at 7.72% by mid-January 2010 and also increased to above 8.0% in early March, 2010. 10-year yield softened to close the FY10 at around 7.85% The weighted average yield of dated securities in H1 of 2009-10 was at 7.18% which increased to 7.72% in H2, bringing the average for the year at 7.36%. The higher weighted average
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yield in H2 was due to the lengthening of the borrowing maturity in H2 to 11.70 years compared to 10.93 years in H1. For the full year 2009-10 the weighted average maturity was at 11.16 years. In 2008-09, the adverse impact of the global financial market turmoil was felt in the form of a reversal of FIIs inflows and decline in long-term and short-term debt flows. As the global financial markets stabilized, flows into the Indian economy through FII, FDI and most of the debt categories improved. Further, the outcome of the general elections created positive market sentiments on reforms and disinvestments, leading to a sharp move up in the equity markets. These led to an appreciation for the rupee against USD, from around Rs. 51 per USD in end-March 2009, ending the FY10 at around Rs. 44.92 per USD.consolidated Financial PerformanceThe improvement in the economic environment in India was more rapid than the developed world. This improvement led to an upturn in the financial services sector and capital markets in India. The Bank and its subsidiaries continue to grow and are progressing well in adding customers, products and reach.Consolidated profit after tax grew 100% to Rs. 1,307 crore. This is the highest yearly profit for the group. As on March 31, 2010, the Group has a distribution network of branches, franchisees, representative offices and satellite offices across 473 cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The group services around 7 mn customer accounts.MDNA.indd 69 5/31/2010 9:04:01 PM70 Kotak Mahindra Bank LimitedDuring the year the Bank won the following awards: Adjudged amongst the Top 25 ‘Best Employers in India 2009’ by Hewitt Associates IDRBT’S Special award for IT Governance & Value Delivery Awarded ‘Best Companies to Work For in 2009’ by Great Places to Work Institute India. IDG India’s CIO 100 ‘Ingenious 100’ award and the CIO 100 ‘Storage Virtualization’ award. Ranked No. 2 in India and among top 30 globally for ‘Best Corporate Governance Practices’ by IR Global Rankings 2010. Awarded ‘Best Local Cash Management Bank’ by Asiamoney 2009.As at March 31, 2010 the Bank has built a network of 249 full fledged branches spread across 145 locations and 492 ATMs. The Bank proposes to double its branch network over the next three years. Kotak Mahindra Capital Company and Kotak Securities reported good financial performance on the back of strong
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capital markets and improved economic environment. The life insurance subsidiary, Kotak Mahindra Old Mutual Life Insurance (KLI) continued its growth momentum and posted significant growth in profits. Assets under management (AUM) as at 31st March 2010 was over Rs. 45,224 crore (approximately USD 10 bn) comprising assets managed and advised by the Group. Of this, equity assets managed / advised by the Group were around Rs. 21,612 crore. The AUM with Kotak Mahindra Mutual Fund (Kotak Mutual) was over Rs. 24,000 crore. consolidated FinancialsRs. crore Income and Profit 2009-10 2008-09 Total Income* 9,985.90 7,180.54 Operating profit 2,413.60 1,277.36 Consolidated Profit after tax (PAT) 1,307.00 652.39 * income is net of sub-brokerage Rs. crore Particulars 2009-10 2008-09 Net Worth After minority Interest 7,910.94 6,522.54 Earnings per share (diluted) (Rs.) 37.28 18.87 Book Value per share (Rs.) 228.09 188.70 Net Interest Margins (NIM’s) % 6.3% 6.1% Return on Average Networth % 18.2% 10.5% Net NPA% excl Stressed assets portfolio 1.14% 1.18% Consol Capital Adequacy ratio% 19.3% 22.5%The consolidated total income was Rs. 9,985.90 crore during FY 09-10 and Rs. 7,180.54 crore in FY 08-09. Other income was Rs. 5,384.74 in FY 09-10 and Rs. 2,813.98 crore in FY 08-09. Consolidated “other income” had three main components: Commission, fees, exchange & brokerage, profit-on- sale of investments and premium on life insurance business. Commission, fees, exchange & brokerage net of sub brokerage increased to Rs. 1,283.67 crore in FY10 from Rs. 1,034.07 crore in FY09, with key drivers being fee income from stock broking business, asset management / advisory fees, core fees from the Bank and investment banking. Premium income from life insurance business grew by over 24% to Rs. 2,849.34 crore. bAnk AnD Its kEy sUbsIDIArIEs: FInAncIAl AnD oPErAtIng PErForMAncE The Bank along with its subsidiaries, offers wide range of financial products and services to its customers. The key businesses are commercial banking, investment banking, stock broking, car finance, asset management and life insurance. The Bank is the central platform for customer relationships across the Group. The banking business model is directed towards maximising revenue generation from customers by offering a wide range of products and services to address all their banking needs. The Bank has four broad business segments: Lending Retail liabilities and branch banking Corporate banking
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(including small and medium enterprises – SME) Treasury and investments MDNA.indd 70 5/31/2010 9:04:01 PM Kotak Mahindra Bank Limited 71 The profit before tax of the Bank for FY 09-10 was Rs. 811. 10 crore and Rs. 426.06 crore in FY 08-09. The profit after tax of the Bank was Rs. 561.11 crore in FY 09-10 and Rs. 276.10 crore in FY 08-09. The break up of segmental results is as follows: Rs. croreSegment 31-Mar-10 31-Mar-09 Treasury and BMU 367.46 129.29 Corporate / Wholesale Banking 385.46 225.34 Retail Banking 61.05 71.28 Sub-total 813.98 425.91 Unallocated Income / (expense) (2.87) 0.15 Profit before tax 811.10 426.06As per BASEL II Capital adequacy ratio of the Bank as at 31st March 2010 was 18.35% (31st March 2009 – 20.01%). Tier I ratio was 15.42%. The advances of the Bank as at 31st March 2010, stood at Rs. 20,775.05 crore (Rs. 16,625.34 crore as at 31st March 2009), showing a growth of 25%. As at 31st March 2010, the net NPAs of the Bank excluding the acquired stressed assets portfolio were at 1.25% of net advances (1.26% as at 31st March 2009). The Net NPAs of the Bank including stressed assets portfolio were at 1.73% of net advances as at 31st March 2010 (2.39% as at 31st March 2009). As at 31st March 2010, the deposits of the Bank were Rs. 23,886.47 crore (Rs. 15,644 crore as at 31st March 2009), showing a growth of 53%. As at 31st March 2010, total deposits comprised of Rs. 4992.13 crore of current account deposits (Rs. 3417.22 crore as at 31st March 2009), Rs. 2,471.00 crore of savings deposits (Rs. 1,700.91 crore as at 31st March 2009) and Rs. 16,423.33 crore of term deposits (Rs. 10,525.86 crore as at 31st March 2008). Advances The break up of the advances of the Bank is given below: Rs. CroreSegment 31-Mar-10 31-Mar-09 A. Lending Commercial Vehicles & construction equipment 3,693.47 3,334.54 Mortgage Loans 4,711.63 3,300.17 Agriculture Finance 3,088.62 2,365.02 Personal Loans 1,314.98 2,261.60 B. Corporate Banking 6,476.13 3,697.11 C. Others 1,490.22 1,666.90 Total Advances 20,775.05 16,625.34retail Assets commercial lending Commercial lending during the year showed impressive growth on the back of robust growth in the sales of commercial vehicles (CV), construction equipments (CE) and tractors. Commercial lending, specifically CV and CE typically follow a lead and lag effect with GDP growth
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figures. CV industry for instance, started showing signs of growth in Q3 of 08-09 and continued to gain momentum with better than expected GDP numbers. As a result of these growth trends, disbursements gained momentum. Operator margins improved through growth in freight rates and contractor order books showed growth. The strain on collections witnessed through last year, has gradually eased as a consequence and is expected to improve further. The tractor industry has also shown impressive growth with total tractor sales expected to touch 4 lacs vehicles for the year 2009-10 as against 3.03 lacs last year. The primary driver has been the increased disposable income of the farmers arising out of the revision in minimum support price of commodities, overall food inflation and better yield despite the delayed monsoon.construction Equipment Infrastructure development has been given a boost in the current year. With the overall project investments increased during this period by over 26% while project implementation improved to 44% from 41%. This has improved sentiments in the Construction Equipment sales. During the last quarter of the year, most of the construction equipment majors have improved their sales across segments. Despite improved sentiments, the payment cycle continued to be long and based on this most of the retail and mid-size operators faced financial crunch. The delinquency in the industry is still continuing as the operators are facing difficulties in bridging the Gap created during the recession period although they are paying their current EMIs. MDNA.indd 71 5/31/2010 9:04:01 PM72 Kotak Mahindra Bank LimitedPersonal Finance and Mortgage business For Personal finance and Mortgage business, the year started cautiously, with focus on leveraging the existing base and cross sell opportunities. The mortgage business started seeing growth because of an upsurge in demand. Lower cost of borrowing has helped in pricing competitively as compared to previous years. Further, the existing liability branch network was also used as an active channel with the contribution from the channel has grown to about 30% of overall disbursements. For personal finance business, there was an opportunity for lenders to capitalise on the latent loan demand in the market, with most lenders still being wary of the low-ticket unsecured segments. In addition, lenders have strengthened and revamped their underwriting norms so that they align with the credit bureau – CIBIL. The collection efficiencies in personal finance business have shown an improvement across all loan bands. With the improvement in portfolio quality indicators, the Bank focused on products in the high ticket
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range. The mortgage business continues to see a great opportunity and the personal finance business will continue to see some consolidation with a focus on high-ticket products. Agriculture Finance Despite the fear of a bad monsoon and rising food prices, the agriculture sector continued to show resilience in repayments. In this backdrop, the agricultural financing continued to show growth and in the process crossed the required 18% of the Net Bank Credit stipulated by RBI. The focus of the Agriculture business continued in activities like Tractor loans, crop loans, agriculture project financing, working capital facilities to agriculture and agro processing facilities where it consolidated its presence in its existing markets. This segment also built up business volumes in fresh segments in the rural sector as part of the financial inclusion initiatives of the bank. corporate banking Corporate Banking reflects Kotak Bank’s strengths in providing corporate clients, a wide array of commercial, transactional and electronic banking products. This was achieved through innovative product development, an integrated approach to relationship management and offers a complete suite of services. The product suite comprise of the traditional bank products such as term loan & working capital and value add services like trade finance, channel finance, foreign exchange, cash management and distribution of third party products. To augment & suit the dynamic & varied needs of customers across segments, the entire range of Debt Capital Market products (syndication, fixed income and structured products) are offered through a team of experienced & highly qualified professionals. During the year, continued focus and a dedicated approach towards the segment has resulted in addition of over 250 clients. So also the bank has been able to increase its product penetration with its existing customers. This has resulted in a significant build up of both, funded and non-funded advances in this segment. branch banking The bank added 32 branches, 77 off site and 28 onsite ATMS this financial year taking the total number of branches to 249, 252 off-site ATMs and 240 on site ATMs. The bank had a debit card base of 829,876 as at March 31, 2010. Total number of deposit accounts as at March 31, 2010 are 11,89,000. As the economy started showing signs of recovery, the business saw increased level of transactions. The advantage of wider network was clearly visible in the CASA growth rates, asset distribution, Mutual Fund & other equity products and insurance penetration. The key initiatives that the Branch Banking business undertook this year can be summarized as under:
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customer service Launched a nation wide project titled “SPIRIT” aimed at improving the overall service levels cutting across all delivery channels – branch, net, contact centre, mobile and ATM. Successfully launched best in class CRM package covering all Service and Sales roles across entire branch network and Contact Centre. Launched two commercial branches in Mumbai on a pilot basis to handle trade transactions. This move is aimed at driving substantial increase in the throughput of the system with reduced times and improved customer service. Product Distribution Launched Privy Program aimed at HNI customers of the bank. This program has several enhanced and enriched features which makes it one of the unique product offering in the market. A comprehensive Private Banking System was launched which shall enable us to offer comprehensive financial planning and advisory services to customers which balances customer’s financial goals with their risk profile. Revised RBI guidelines on ATM usage provided with an opportunity of increasing acquiring income. Capitalizing on this opportunity bank adopted a strategy of almost doubling its off site ATM network. This change also benefited us in improving overall utilization of our ATM network. MDNA.indd 72 5/31/2010 9:04:01 PM Kotak Mahindra Bank Limited 73 significant Alliances Kotak Bank was appointed as a sole Financial Advisor by Overseas Indian Facilitation Centre (OIFC). This provided us an opportunity to partner the Government of India and CII in presenting its product bouquet to NRI / PIOs community across the globe. Succeeded in empanelling itself with Government of Goa, Gujarat and Karnataka for sourcing government business. Succeeded in getting ourselves empanelled with some of the best known names in the country for providing Corporate Salary Product to their employees.Productivity & control Enhanced 2 factor authentication, using SMS / Email, for net banking access significantly increased the customer confidence in using net banking platform offered by the bank on net. Launched bank wide initiative “EUREKA” seeking suggestions from employees aimed at improving productivity, enhancing customer experience, Saving Cost and improved control (HR section). Availability of the Comprehensive Data warehousing and analytic tool (RELIABILITY) across all field roles ensured timely availability of information for decision making.treasury The treasury operated in the following monetary policy environment. The LAF liquidity was comfortable and averaged at above Rs. 1,00,000 crore in
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2009-10. In April 2009, RBI reduced the Reverse Repo and the Repo rate by 25 bps each to 3.25% and 4.75% respectively. However, the stance of monetary policy changed as Headline WPI inflation started to emerge as a problem in the 2nd half of the year. In October 2009, the mandatory SLR requirement was restored back to its earlier level of 25% of NDTL while other sector-specific liquidity measures were withdrawn. In January 2010 CRR was raised from 5.00% to 5.75% while RBI hiked Reverse Repo and the Repo rates by 25 bps each to 3.50% and 5.00% respectively in mid-March, 2010. The Central government’s gross borrowing programme was large at Rs. 4,51,000 crore that exerted some pressure on bond yields. The G-sec yield curve steepened with the 10-1 spread rising to 343 bps intra-year from around 190 bps at the beginning of the year. Given this environment, treasury adopted carry strategy to take advantage of the steep yield curve while capturing intermittent trading opportunity in the fixed income market. The modified duration of the banking book was marginally increased from 1.41 in early April 2009 to 1.51 by end-March 2010, whereby banking book started to produce positive returns. The Primary Dealership desk was able to satisfactorily meet all its bidding and success commitments made to the Reserve Bank of India. Shrinking of spreads of corporate bonds over underlying G-secs coupled with increased FII activity presented numerous opportunities in the corporate bond market which the treasury was able to successfully capitalize. The Balance Sheet Management unit (BMU) of treasury was able to maintain all regulatory obligations like CRR and SLR and successfully managed residual liquidity. The efficient management of residual liquidity resulted in significant reduction in the cost of liabilities and helped in enhancing the spreads. Given the volatility in the currency markets, reinstatement of foreign exchange trading limits was measured and calibrated and the desk was able to produce decent trading revenues. The focus of the treasury continued to be on foreign exchange flow business. There was a healthy increase in the number of transactions and volumes in the foreign exchange merchant business. The treasury also increased its focus on bond and loan syndication markets as part of its Debt Capital Markets (DCM) business. The participation of the treasury in the bullion market was muted due to the high gold prices resulting in lower import of gold into the country. The bank did not participate in the derivative market both on proprietary account and client account as it awaits further clarity on legal, regulatory, accounting and taxation fronts. The treasury and ALCO continued their heightened vigil on liquidity, counterparty and sovereign risks. During the
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year, the focus of the treasury was also on up-gradation of technology platform and re-engineering of various treasury operating processes. kotAk MAHInDrA PrIME lIMItED (car finance, other lending) Kotak Mahindra Prime Limited (KMP) is primarily into car finance, engaged in financing of retail customers of passenger cars and multi-utility vehicles and inventory and term funding to car dealers. In addition to car finance, KMP also carries out other lending activities. Other lending activities include financing against securities, securitization / assignment transactions, purchase of non-performing assets and other loans / services. There was a upsurge in the automobile industry and it registered a healthy growth of 24.89% during FY 09-10 as compared to a decline of 1.7% for FY 08-09. Total unit sales of cars and MUV’s were around 18.6 lac units in FY 09-10 versus 14.9 lac units during FY 08-09. KMP’s advances grew 49% to Rs. 8,379 crs in FY 09-10 from around Rs. 5,615 crs in FY 08-09. KMP continued to focus on maintaining margins in the retail car finance business, fee based income, controlling costs and credit losses, while improving its positioning in the car finance market by scaling up business. KMP has been a part of the car finance industry since more than 19 years. Over this period, it has carved out a niche for itself and is considered a leader in the industry. It has strong relationship with key stake holders in the industry viz. manufacturers, dealers and customers has helped its growth.MDNA.indd 73 5/31/2010 9:04:01 PM74 Kotak Mahindra Bank LimitedFinancial HighlightsThe financial position of KMP for the current and previous financial year is given below:Rs. crore Particulars 2009-10 2008-09 Gross Income 992.06 982.21 Profit before tax 258.87 243.21 Profit after tax 166.41 157.00kotak securities Post the General Election results in the month of May 2010, there was a pick up in the Capital Markets and average daily volumes in FY 09-10 were 57% higher than the year FY 08-09 in cash segment and 27% in derivative segment. This resulted in an increase in the company’s revenues. The national outlet network stood at 1,113 (up from 783) due to the introduction of new Sub-Brokers and new branches. The number of trading accounts added during the year was 66,000. The AUM of portfolio management services funds under management stood at Rs. 2,302 crore as at 31st March, 2010 (Rs. 2,237 crore as at 31st March, 2009). Primary market issuances were back in the Capital Markets. KS was able to maintain its leadership position in mobilization
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for these issues. Kotak Institutional Equities (KIE), a division of Kotak Securities, is one of the leading institutional brokers in India. The division covers secondary market broking and the marketing of Indian equity offerings, including IPOs, FPOs & QIPs to domestic and foreign institutional investors (FIIs). KIE has full financial service capability, which includes derivatives, facilitating market access through affiliates and the distinctive offering of corporate access to investors. KIE has a full-fledged research division engaged in macro-economic studies, industry-and company-specific equity research. KIE research is known for its in-depth modeling, width of coverage and investment insights. In the Asiamoney Brokers Poll 2009, KIE was ranked No. 1 among local brokerages (for the 4th year in a row) and No. 2 in Country Research, Sales Services and Sales Trading across domestic and international brokerages. KIE was also named Best Broker in India by FinanceAsia in 2009. Financial Highlights The financial position of Kotak Securities for the current and previous financial year is given below: Rs. crore Particulars 2009-10 2008-09 Income 837.86 719.87 Profit before tax 403.88 166.77 Profit after tax 260.10 106.48kotak Mahindra capital company limited Kotak Mahindra Capital Company (KMCC) primarily operates as a full service Investment Bank and is also a trading-cum-Clearing Member of the National Stock Exchange on all three segments viz. Cash, F&O and WDM. The year turned out to be a better year for the securities markets fund raising, in sharp contrast to the year before. KMCC delivered improved performance both in terms of business activity and revenues. Strong relationship driven approach helped garner approximately 50% of the fund raising activity in the domestic market. Significant progress has been made on critical strategic initiatives that will drive our business in the years ahead. During the year, KMCC expanded strategic alliance partner list by entering into a co-operation agreement with Renaissance Capital for cross-border M&A advisory. Renaissance Capital is the leading investment bank in the Russia / CIS and Sub-Saharan African regions with market-leading positions in each of its core businesses. Amidst stiff competition, KMCC won the following awards and was ranked high on the equity and M&A league table rankings: Ranked No. 1 in Domestic Fund Raising League Table for FY10 by Prime Database. Ranked No. 1 Book Running Lead Manager in Initial Public Offerings between FY07 – YTD FY10 by Prime Database and also for FY10. Ranked No. 4 in value of announced M&A Transactions in India (inbound + outbound) for Calendar 2009 by Bloomberg. Best Investment
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Bank in India by FinanceAsia, 2009 – for the fourth year in a row. Best Domestic Equity House by Asiamoney, 2009 – for the second consecutive year.In the capital markets, in FY2010, Kotak Investment Banking was the lead manager to thirteen out of the twenty Initial / Follow on Public Equity Offerings (above Rs. 2.5 billion) accounting for ~85% of the total money raised in these Offerings. We have helped companies raise more than Rs. 500 billion in the domestic markets during FY2010.entation.
SYNOPSIS
“ Banking Requirements for Online Companies and Other Companies”
Student’s Name: Raja Gupta
Industry Guide Name: Mr Manas Mehra
Faculty Guide Name: Dr Shailender Kumar
The Project gives a brief overview of the Banking Requirements of the Companies scenario highlighting the past events and future outlook.
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This is followed by the organizational profile of the company under study ie. Kotak Mahindra Bank Ltd. The objective of the project is to gain the need and requirements of the companies which they need from the Bank.
The project is about banking requirements of the Companies in India. The motive of this project was to find out the companies requirements, and the problem they are facing from their current bank. The SWOT analysis has been done to analyze the Banks, and the services provided by the banks.Major finding includes that the Kotak Mahindra Bank have to expand their Branches, and make different strategies to compete other Commercial Banks, as the competition is very high.
