KBL Project 1

8/8/2019 KBL Project 1

1/57


2/57

SRINIVAS INSTITUTE OF MANAGAMENT

STUDIES, PANDESHWAR

DECLARATION

I Mr. SACHIN P MANGALORE, a s tudent o f SRINIVAS

INSTITUTE OF MANAGEMENT STUDIES, PANDESHWAR,

MANGALORE First Year M. B. A. 2009-10 do hereby

declare that this project report Titled “OVER ALL STUDY OF

KARNATAKA BANK LTD., MANGALORE” is my original work and

that it has not previously formed the basis for the reward of

any Degree / Diploma or other similar title.

This project is been prepared by me in partial fulfillment for the

requirement of the Master of Business Administration, to be submitted

to Srinivas Institute of Management Studies, Pandeshwar, Mangalore,

under the supervision and guidance of Mrs. PRITI JEEVAN, Faculty

of Master of Business Administration.

Date:


3/57

Place: Mangalore

(MR. SACHIN P

MANGALORE)

EXECUTIVE SUMMARY

Name of the organization : Karnataka Bank Ltd. Regd office at

Mangalore

Methodology :

Data co l lec t ion i s a s tep in the prepara t ion of pro jec t repor t . The

information is collected in the following manner.

Primary Sources :

Data i s co llected by the in terac t ing with the bank Managers and

Officers.

Secondary Sources :

The data is col lected for report by various records maintained and

s ta nd in g orde rs of t he b an ks w hi ch h el p u s for p re pa ri ng t hi s

repor ts . A lot o f data a re a lso col lect ed by refer ring the annua l

reports of bank, financial statement and web site of the bank.

Objectives :

To study the methodology of loans and advances of the bank.

To study the evaluation and performance of the bank.


4/57

To study the al l f inancial posi t ion of the bank in comparison

with other commercial bank.

To study the deposit mobilisation of the bank.

To study the birth and growth of the bank.

ACKNOWLEDGEMENT

I am very much thankful to Srinivas Institute of Management Studies, Pandeshwar,

Mangalore, for this wonderful opportunity to undertake the Project Study as a part of the

fulfillment of Master of Business Administration.

My grateful thanks are due to Prof. P S Aithal. The Principal, Srinivas Institute of

Management Studies for extending the necessary support in the preparation of this project.

My esteemed guide, Mrs. Priti Jeevan, Faculty in Master of Business Administration,

deserves all appreciation and thanks for patiently and efficiently guiding me throughout the

preparation of this project and also I am very thankful to other faculty members for their useful

tips and encouragement.

If I forgot to say thanks to Karnataka Bank Ltd, Mangalore, will be a great mistake by

me. So my heartily thanks to The staff, Managing Committee and whosoever helped me directly

or indirectly.


5/57

CONTENTS

1. History of Bank 01-04

2. Products and ServicesProfile

05-18

3. Mckensy’s FrameWork 19-24

4. SWOT Analysis 25-30

5. Ration Analysis 31-42

6. Annexure 43-44

7. ComparitiveStatement

45

8. Bibiliography 46


6/57

Submitted By

Mr. Sachin P MangaloreReg. No. 092130454

Under The Guidance of

Mrs. PRITI JEEVAN,

Faculty,

Master of Business Administration.


7/57


8/57

History of Karnataka Bank Money lending in India is an age old profession with a history of about 200 years. In the

late 18th century, Tippu Sulthan, was accredited to have conceived the idea of organizing banking

as a part of state machinery for extending credit facilities to the needy at an affordable rates

Interestingly South Canara in Karnataka is mother of many banks in India viz

Corporation Bank, Canara Bank, Syndicate bank, Vijaya Bank and Karnataka Bank. Karnataka

Bank is the only bank which has not been nationalized. Today Karnataka Bank Shares are doing

well in Dalal Street. It is due to far sightedness of founders of Karnataka Bank. KBL is the only

bank which has captured rural population of Karnataka since 86 years.

Karnataka Bank Ltd, a leading ‘A1+’ Class scheduled commercial Bank in India, was

incorporated on Feb 18th 1924 with a registered office at Mangalore. The Bank commenced its

business on 23

rd

May 1924 with an Initial Paid up Capital of Rs. 11,580 contributed by 113shareholders. Sri.B.R.Vyasaraya Achar was the first president of the Bank. The Banks

Memorandum of Association in its Objective Clause states that the Bank apart from carrying on

the general function of Banking business, would “set apart and appropriate from the annual net

profit towards the general, mental, moral and physical advancement of other beneficial purpose

of the members of the Dravidian Brahmin community, Such sums as may be deemed fit”.

The first three branches of the Bank were at Mangalore Dongerkery, Madras George, and

Udupi Car Street. Sri Kalmadi Gopal Krishna had the distinguishion of becoming the first

Branch Manager. At the end of the Banks first year of operations the Banks deposits stood at Rs.

0.68 Lakhs and advances were Rs. 1.22 Lakhs. The Bank celebrated its Silver Jubilee in the year

1949. In its Silver Jubilee year of operation the Bank earned a net profit of Rs. 0.75 Lakhs with


9/57

deposits of Rs. 55.59 Lakhs and Advances of Rs. 39.39 Lakhs. Sri.K.S.N.Adiga became the

chairman of the Bank on 23rd Nov 1958. The First real recognition for the Mangalore based

Bank came in the year 1959 with the Bank being elevated from ‘C’ class to ‘B’ Class. In the

stride of progress and expansion, the Bank got reinforced by the takeover of 3 banks namely

Shringeri Sharada Bank Ltd on 1st April 1960.,Chitradurga Bank Ltd on December 30th 1964,

and Bank of Karnataka Ltd on Dec 29th 1966.,. In the year 1969 the Bank opened its 75th branch

where its deposits crossed Rs.10 Crore mark to reach Rs. 12.63 Crore, Advances were at Rs.

8.90 Crore and Net profits were Rs. 3.05 Lakhs.

In year 1971 the Bank opened its first branch in the country’s financial capital. The

following year the Bank was elevated to ‘A’ class by the Reserve Bank of India. In its Golden

Jubilee year of its operation the Banks total deposits were Rs. 33.14 Crore and Advances were

Rs. 22.09 Crore with 146 branches. In 1977 Karnataka Bank Ltd., adopted the star symbol as its

unique visual identity symbol. A product of Late Dr. Shivarama Karanth, it symbolizes stability,

discipline, harmony and confidence. The Staff Training College of the Bank was started at

Mangalore Dongerkery on Sept 27th 1977. In 1977 the foreign exchange Business of the Bank

was opened with a separate department was established In Bangalore as central foreign exchange

department which was later shifted to Mumbai (1979). The Bank achieved the target of Rs. 100

crore mark in deposits with the aggregate deposits being Rs. 104.24 crore as on 31-12-1979. In

1980 the Madras George Town Branch celebrated its golden jubilee. In the diamond jubilee year

of the Bank, the deposits of the bank were Rs. 211.34 Crore and Advances was Rs. 122.22 crore

respectively. The Banks Mumbai Borivili branch was declared as the first Model Branch of the

Bank. In 1994-95 the first service branch was opened at Mumbai. The first Industrial Finance

Branch was also opened at Bangalore on 20 th March 1995. The first Agricultural Development

Branch of the Bank was opened on 1st April 1995. The Bank entered it into the stock markets on

October 1995 with a public issue of Rs. 81 crore which was over subscribed by about 2.5 times

despite depressed market condition. During the year 2003, the Bank has taken up corporate


10/57

agency for marketing the various life policies of Met Life India Insurance Company Ltd.; it has

also taken up corporate agency of Bajaj Allianz General Insurance Co. Ltd for marketing general

insurance products. The banks all round excellence in the twin parameters of growth and stability

has earned it rich laurels in the form of “P1+” rating for certificate of deposits from CRISIL.

Corporate Goal

Mangalore-based Private Sector Bank Karnataka Bank Limited is eyeing a

business turnover of Rs.45,000 crore for the financial year 2010-11. Shri P. Jayarama Bhat,

Managing Director, unveiled the road map for the financial year 2010-11 with business

turnover of Rs.45,000 crore comprising of Rs.27,500 crore of Deposits and Rs. 17,500 crore of

Advances. The Bank which has 464 branches at present is planning to take the number to 480

and also its own ATMs from 217 to 300 by end- March 2011. Thus the Bank has plans to

increase its total number of business units to 780 by March 2011.The Bank is going to focus

more on under banked areas for further branch expansion.

Current Performance

Karnataka Bank Ltd. has posted a net profit of Rs.167.12 crore for the year 2009-10. The

business turnover of the Bank has touched Rs.38,166 crore registering a growth rate of 18.74%.

Deposits of the Bank grew from Rs. 20,333 crore to Rs.23,731 crore (16.71% increase) and

advances grew from Rs.11,810 crore to Rs.14,436 crore (22.23% increase) during FY 08-09 &

09-10.

The capital adequacy ratio of the Bank stood at 12.37% under Basel II as at the end of

March 2010. The Board of Directors has recommended a dividend of Rs.4/- per share of Rs 10.

For better administrative control, the Bank opened its 9th Regional Office in Hyderabad

recently.


11/57

The Bank introduced quite a number of new varieties of Savings Bank products like KBL

Kishore for students in the age group of 12-18, KBL Tarun for students in the age group of 18-

25, KBL Salary Privilege for salaried persons. The Bank also launched KBL Student Money

plant International Prepaid Card which is safe, secure and stress free to meet course fees, books

purchase, hostel fees, mess bill etc besides KBL Gold Debit Card with unique features like

mobile payments service, Online payment through Debit Card (E-commerce) for bill payments,

online shopping-Anytime, Anywhere.

All the 464 branches have been networked under core banking solution covering 100%

business. The Bank is which is tech savvy is keen on upgrading its technology-driven offerings

periodically to meet the varying needs and demands of its clients and be above the level of other

leading private and public sector banks in the country.

The Bank also proposes to introduce the following facilities during the current financial

year.

• Online trading

• Travel Card

• Gift Card

• Smart Card

• POS Terminal

• Special Zero Balance account for women.


12/57


13/57

Products in Advances

KBLVIDYANIDHI (Education Loan Scheme)

KBL Vidyanidhi is a unique education loan scheme up to 10 Lakhs within India and 20

Lakhs abroad for professional course’s students like graduation and post graduation courses,

Diploma courses, Engineering and Medical courses apart from Veterinary, Law, accounting

courses.

KBL EASY RIDE (For Two Wheelers)

KBL Easy Ride Scheme is a scheme for financing for two wheelers for salaried and

business class persons. Confirmed salaried persons should have a minimum of Rs 4500 pm and

business man of at least one year in business line should have Rs 3500 pm income. The

maximum amount under this scheme is 1,00,000. Repayment period ranging from 36 to 60

months in equal or equated monthly installments.

KBL CAR FINANCE (For New and Second Hand Cars)

KBL Car Loan Scheme is oriented to finance middle/ upper class people who require

luxurious cars at moderate rate of interest. Under this scheme company / firm / trust / association

can avail loan up to 85% of purchase invoice excluding road tax and insurance. For second

hand / used four wheelers Rs 15,00,000 is the ceiling amount. Repayment period for new vehicle

is 60 months and 34 months for old / used car.


14/57

VAHANA MITHRA (Finance for Commercial Vehicle)

KBL also advances for self earning people by giving loan to commercial vehicles ranging

from Auto rickshaw to JCB. For new vehicle loan will be given up to 85% of the purchase

invoice. For used vehicles loan depends upon the market value. Rate of interest is also attractive.

KBL VARTHAK (Loan Scheme for Traders)

Traders, commission agents, distributors, authorized dealers, stockiest can avail loan 20%

of the projected turnover with a limit of 25 Lakhs rate of interest is also depends upon utilization

of fund on daily basis. Hence beneficiary can reduce the burden of interest if he utilizes the fund

rationally.

KBL UDYOG MITHRA (Loan Scheme for Professionals)

For professionals like Doctors of any branches, Lawyers, Engineers, C.As have the

opportunity to develop their profession by enriching their professional materials like Scanning

machine, Lab equipment, furnishing their business premises, computer software and digital

library for Lawyers.

KBL Salaried Persons Loan (Scheme for Financing Salaried

Persons)


15/57

Permanent employees are eligible to avail loan up to 10 times of their monthly salary

subject to ceiling of 5 Lakhs for the purpose of purchase of house hold articles, children’s loan,

marriage, medical expenses etc., Maximum repayment period is 5 years.

K-POWER (Personal Loans)

KBL K-Power is a scheme oriented on people for who are having a fixed income like

pension, rent etc., He must be an account holder in the bank. The branch manager fixes the limit

up to Rs 25000 and special feature of the scheme is that the loanee can withdraw money through

ATM as and when required in multiple of Rs 1000/-. Maximum repayment period is 12 months

unless renewed.

KBL INSTA CASH (For Consumption Purposes)

Any individual, HUF Kartha or Partnership firm can enjoy the K INSTA loan from Rs

5000 to 25 Lakhs subject to a maximum period of 5 years.

KBL APNA GHAR (Home Loan)

Salaried person who are having minimum salary of Rs 6000 pm, Business men,

Professional, self employed can utilize the benefit of loan called KBL APNA GHAR. It makes

the reality of everybody’s dream of having own house or making it furnished luxuriously.

Salaried class people are eligible up to 60 times of latest drawn salary, business people 3 times of

their net annual profit. Maximum availability of loan for construction is 50 Lakhs and 10 Lakhs

for renovation. Repayment period maximum 15 years.


16/57

Deposits Schemes

TAX PLANNER:

Under this deposit scheme depositor can earn interest on money invested and get benefit

of Income Tax up to 1 lakh rupees U/s 80 C of the Income Tax act 1961. Under regular deposit

scheme tax benefit is not there. Minimum deposit period is 5 years. Comparatively tax planner

scheme is very ideal since in other investment U/s 80 C minimum repayment period is 6 years

(NSC), 10 years for PPF. Rate of interest is also attractive.

ABHYUDAYA CASH CERTIFICATE:

This is a unique deposit scheme where in interest amount on deposit is compounded

quarterly. In simple words interest on interest is the main theme of the scheme. The minimum

period is 6 months to 10 years. The rate of interest changes according to the market condition at

the time of investment.

FIXED DEPOSITS:

The bank receives fixed deposits from 15 days to 10 years at attractive rate of interest. In

case of emergency loan can be availed at low rate of interest on loan amount. In case of urgency

fixed deposit amount can be encashed before maturity by sacrificing 1 or 2 % on availed rate of

interest.


17/57

SOULABHYA DEPOSIT:

Depositor can withdraw deposits in multiples of Rs 1000 without affecting rate of interest

on remaining amount. Minimum amount of Rs 5000.

CUMULATIVE DEPOSIT:

This scheme is suitable for those who can not invest in lump sum and are having regular

income. This is ideal because a small monthly savings becomes large sums at the time of

maturity and can be utilized for future plans such as education, marriage etc., the minimum

period is 6 months and maximum 10 years. Rate of interest is also lucrative.

RESSSIDENT FOREIGN CURRENCY ACCOUNT:

Foreign currency in USD, GBP and Euros may be deposited. This account can be

opened as a current account only. The account carries no interest with it and there is no minimum

amount for opening the account. Foreign exchange acquired in the form of currency notes,

traveler’s cheques, gifts, honorarium received outside India, gifts received from relatives and

earnings through the export of goods and services can be credited to this account.

NRI SERVICES:


18/57

Wide range of Deposit schemes for Non-Resident Indians. It includes Non Resident

Rupee Account (NRE), Foreign Currency Non- Resident (Bank) Scheme (FCNR[B]) and Non

Resident (Ordinary) Account (NRO) with very attractive and competitive rates. Resident Foreign

Currency (RFC) (Domestic) Account for returning Indians is also available.

SENIOR CITIZENS DEPOSIT SCHEME:

Senior Citizens above age of 60 are eligible to get 0.5 to 1% extra rate of interest on

deposits than regular deposit holders. This is kind of giving respect to senior citizens by bank.

SAVINGS BANK ACCOUNT:

Karnataka Bank offers a variety of Saving Bank deposit accounts, ideally designed to suit

the needs of various segments of the Society.

KBL Kishore - SB Account for the students between the age of 12 years and 18 years.

KBL Tarun - SB Account with Any Branch Banking for the students between the age of 18

years and 25 years.

KBL Salary Privilege - SB Account for salaried Persons with the convenience of Any

Branch Banking.

SB GEN (General) - SB Account with added benefits and Any Branch Banking Facilities.

SB Money Sapphire - A specially Designed SB Account with a Host of Free Facilities.

SB Money Platinum - SB Account Scheme loaded with Maximum Benefits.

INSURANCE LINKED SAVINGS BANK DEPOSIT:

http://www.karnatakabank.com/ktk/kblkishore.htmhttp://www.karnatakabank.com/ktk/kblkishore.htmhttp://www.karnatakabank.com/ktk/kbltarun.htmhttp://www.karnatakabank.com/ktk/kbltarun.htmhttp://www.karnatakabank.com/ktk/kblsalary.htmhttp://www.karnatakabank.com/ktk/kblgeneral.htmhttp://www.karnatakabank.com/ktk/kblsapphire.htmhttp://www.karnatakabank.com/ktk/kblplatinum.htmhttp://www.karnatakabank.com/ktk/kblkishore.htmhttp://www.karnatakabank.com/ktk/kbltarun.htmhttp://www.karnatakabank.com/ktk/kblsalary.htmhttp://www.karnatakabank.com/ktk/kblgeneral.htmhttp://www.karnatakabank.com/ktk/kblsapphire.htmhttp://www.karnatakabank.com/ktk/kblplatinum.htm


19/57

KBL offers free accident insurance coverage to SB account holders who maintain a

stipulated minimum balance in SB A/c. The coverage ranges up to 2 lakh for death and Rs

10,000 for re-imbursement of hospitalization expenses arising out of accident.

CURRENT ACCOUNT

Karnataka Bank presents Power Packed KBL Current Account with Five options to suit

your Business Needs.

Features:

• Cash Deposit at any Branch

• Cash Withdrawal from Any Branch

• Multi City Cheque facility

• Quick Fund Transfers within the Bank

• Fastest way of Inter Bank fund transfers through RTGS /NEFT

• Fast Collection of Cheques - Cheques can be deposited at any branch

• Free registration to Money Click - Internet Banking Facility

•

Free SMS Alert facility

• Free monthly e-statement facility

• Free Cheque Books


20/57

MULTY BRANCH BANKING

Multi Branch Banking facility is a value added service to bank customers taking

advantage of "Core Banking Solution". It is a 'technology driven-anywhere banking' facility and

'at par' facilities for Savings Bank and Current account with structured schedule of services and

charges. Now the customer can access his account at all branches of the Bank.

Facilities available under MBB:

Payment Services:

• Any where Cash withdrawal for self cheques only

• Multicity Cheques

•

Funds Transfer

• Funds Transfer through RTGS/NEFT

Collection Services:

•

Any where Cash Deposit- By self only

•

Collection of out station cheques

•

Any where Deposit of cheques for collection


21/57

Other Facilities:

• Internet Banking

• Mobile Banking (SMS alerts)

• Demat Account

• 'Money Plant' Visa International Debit Card

ANY TIME MONEY (ATM):

The Bank which has 217 ATMs at present is planning to take the number to 300 by the end-

March 2011. In a major step towards ushering in convenience-Banking for the Customers,

Karnataka Bank has entered into ATM sharing arrangement with NPCI-NFS and Cash Tree

ATM network. Even though bank has only 217 ATMs it can give service to its clients around

57000 ATMs with a sharing arrangement.

Different Types of Cards

Debit Cards:

It is issue by KBL where by one can purchase goods at different places and also can

withdraw cash through ATM in India and abroad. For this card they have given the name

Money Plant. It enables the customer to go any where without taking any cash.

Debit card can be used as a credit card with credit facility of maximum limit of Rs.25000/- for 45 days under K Power Scheme.


22/57

Visa Classic Debit Card Visa Gold Debit Card

Money Plant Student Prepaid Card

E-commerce

KBL Debit card has the privilege of e-commerce i.e. purchasing online nationally and

internationally through internet. This helps the card holders to purchase a rail, bus, plane tickets.

Even this card can be used to pay electricity bill, telephone bill, water bill, municipal taxes,

income tax etc., and this saves precious time and avoid long ques of the customers.

NET BANKING

KBL also racing with modern method of banking and of future planning. Net banking is

one step in this regard. Through net banking the customer can transfer money from his account

to another account. Net banking facilitates the customer to transfer funds free of cost or

negligible charges. This also helps in faster transfer with safety of funds. There are little chances

of fraud as in the case of cheques / demand drafts. The important benefit of Net banking is that

fund is transferred instantly hence he saves interest if the receiver has taken loan. Net banking

works 24x7 method. Hence account holder can enjoy the benefit by sitting in the home only.

Bank offers online service to their customers like balance enquiry, requests for Cheque books,

recording stop-payment instructions, balance transfer instructions, account opening and other

http://www.karnatakabank.com/ktk/Classic.jsphttp://www.karnatakabank.com/ktk/Classic.jsphttp://www.karnatakabank.com/ktk/Gold.jsphttp://www.karnatakabank.com/ktk/Gold.jsphttp://www.karnatakabank.com/ktk/StudentPrepaid.jsphttp://www.karnatakabank.com/ktk/Classic.jsphttp://www.karnatakabank.com/ktk/Gold.jsphttp://www.karnatakabank.com/ktk/StudentPrepaid.jsp


23/57

forms of traditional banking services. KBL also provides special facility to importers and

exporters by way of Trade Finance Facilities such as Import/ Export Credit facilities, Requests

for Forward Contracts, Inland Trade, Bank Guarantee etc.,

MOBILE BANKING

Karnataka Bank offers Mobile Banking facility to all its Bank customers. Karnataka

Bank Mobile Banking enables their customers to bank while being on the move.

MCommerce:

Karnataka Bank in association with M/s Pay Mate India Pvt Ltd (Pay mate) offers

customers the convenience of paying for utility bills, mobile recharge, movie tickets, online

purchases, retail shopping and much more at over 15,000 merchants directly from their mobile.

Features of this facility

• Mobile payment facility will be an additional facility to their customer for making

Payment through their mobile for the goods purchased by them.

• On registration for Mobile Payment solution, the customer will be enabled to make

secured payments directly from their registered mobile phone, authorized by using their

ATM PIN.

• Customers can use this facility round the clock.

• This facility is extended to the users free of cost.


24/57

• This facility saves time, avoid hassles of travelling, waiting in long queues to make bill

payment, ticket booking etc.

• At present the facility will be extended to customers subject to a daily cap of Rs.50,000/-

per customer for transaction involving purchase of goods/services (as per RBI

guidelines).

MONEY TRANSFER

REAL TIME GROSS SETTLEMENT (RTGS)

RTGS is a payment system in which both processing and final settlement of fund transfer

instructions take place on real time basis. It is a gross settlement system where fund-transfers are

settled individually, i.e. without netting debits against credits. RTGS effects final settlement

continuously and the settlements are immediate, final and irrevocable. Each Bank branch

participating in the RTGS is identified by a unique Indian Financial System Code (IFSC).

With the advancement of the Technological changes in the Banking industry the RTGS

introduction has become a boom in settling the interbank funds instantaneously. The Customer

can avail this facility and make instantaneous transfer of funds to beneficiary`s account

Karnataka Bank became a member of Real Time Gross Settlement (RTGS) System from 16th

July 2004 and has been settling Inter-Bank transactions in Mumbai since then. Money Quick

services can be accessed by customers which uses RTGS service. This Money Quick facility

provides INTERBANK funds transfer.

The minimum amount for interbank funds transfer facility for customers under Money Quick is

fixed at Rs. 1,00,000.


25/57


26/57

to a survey by Reserve Bank of India banking facility in rural Karnataka is double

than the rest of India.

•

Since all the above banks are nationalized banks and their fund and other

infrastructure facility are more Karnataka Bank has to compete hardly. Moreever

financial strength, human resources, number of branches, ATMs, Capital adequacy is

incomparable. Automatically bank has to reach the customers with their new

facilities and visions.

Advantages

• Since competitors are all nationalized banks service orientation amongst

employees is lacking. Karnataka Bank is encashing that deficiency of their

competitors. Service with smile is the motto of the Karnataka Bank. Bank has

reputation of treating their customers with smile and honour.

• Competitor’s man power strength is huge. Sometimes this makes them to difficult

to run the institution smoothly. It is known fact that there is no cordial relationship

between employees themselves and in between employees and management. Hence

the efficiency of these banks are decreasing. KBL due to limited human man power

in comparison with above banks has the power of taking decision fastly and

rationally.

• Profit ratio to capital is more due to judicious employment of funds. This is not

seen in other banks.

• Customers have allergy towards nationalized banks due to poor service, lack of

personal touch, lack of politeness. This makes public to opt for private bank, in this


27/57

case Karnataka Bank. But in case of KBL since most of the branches are in

Karnataka and managerial staff is recruited from Karnataka language problem does

not arise to customers. Customers can contact the managers, accountants and solve

their problems if any without hesitation. Nationalized Banks (including the

competitor banks) recruit managerial staff on all India bases. So it is but inevitable

that managerial staff do not have knowledge of local language.

• Competitor’s banks have compulsion / directives of following instruction by

central govt regarding giving loan to priority sectors even though they are risky and

less remunerative. Loan mela can be seen in nationalized banks and results are

known fact.

• Risk management in comparison with other banks can be handled fastly

rationally.

• Credit Risk management effective in case of KBL due to small in dimension.

• Cost effective is only possible in smaller institution like KBL.

• Loans waive (Sala manna yojane) scheme is only in nationalized banks. Hence

they loose very much of profit. To some extent depositors have lost confidence

regarding deposit of nationalized bank. So they turn to KBL.


28/57


29/57

Mckensy’s7’s Frame Work

McKinsey & Companies 7S framework provides a useful way of studying internal

working of the organization. The model was developed by Tom Peter and Robert Waterman,

consultants of Mckensy’s and company. The 7’S Model was first published by them in the article

“Structure is not organization” (1980) and in the books “The Art of Japanese Management”

(1981) and “In search of Excellence”. The McKinsey Consulting Firm identified strategy as

only one of seven elements exhibited by the best managed companies.

Strategy, structure and systems can be considered the "hardware" of success whilst style,

staff, skills and shared values can be seen as the "software".

Companies, in which these soft elements are present, are usually more successful at the

implementation of strategy

Chart showing Mckensy’s 7S Model


30/57

1) STRUCTURE

It prescribes the formal relationship that should exist among various positions and activities. It is

the duty of the top management to design the organisation structure of an organisation. It is one

of the critical tasks. The designing of the super structure involves issues like division of

organisation tasks and allocation of responsibilities between various departments. The hierarchy

of superior-subordinate relationship are defined by the organisation charts which are formal

documents that indicate the chair of command and the titles that have been assigned to the

managers and other personnel’s. Organization charts indicates the employees position in the

hierarchy and their relationship within a formal organisation

Structure at Branch level

The Karnataka Bank has totally 464 branches an on 31st March 2010.Each Branch is headed by a

branch manger who has the responsibility of overall administration of his or her branch .

Structure at Regional office Level


31/57

The Karnataka Bank has 8 regional offices spread across the country for better service bank has

planned to open 9th regional office in Hyderabad. Each regional office is headed by an assistant

manager. The Regional offices are responsible for controlling the branches coming under them

and also for implementation of decisions taken at the head office of the bank.

For facilitating easy administration, the bank is divided into different departments with each

department headed by its respective departmental head who are responsible for the overall

administration of their department and also to carry out various activities coming under their

departments by taking the help of executives, officers and staff of their departments. The Board

of Directors occupies the top most position followed by the chairman who is next in the

hierarchy. In the next level of organizational structure there are DGM Human relations and

industrial relations, General Manager, planning and development, GM Credit, GM Treasury,

GM, recovery Legal and RMD, And DGM inspection and Audit.

ATM Counter

It has 217 ATM counters and arrangements with NPCI-NFS and Cash Tree ATM gives service

57000 counters.

2) SKILL

Skills refer to the fact that employees have the skills needed to carry out the company’s

strategies. Skillful employees are the assets of the organization. Skills of the employees may be

improved by giving necessary training to them. The Bank believes that skillful employees

contribute to the Success of the Bank.

Development of human resource is an important factor for the development of any industry.

Banking is not an exception to that. It involves various aspects like continuous training, rewards


32/57


33/57

Branch manager with the approval of higher ups charge different rates of interest, DD

Commission, Incidental Charges keeping in view of its customer’s potentiality and profitability.

5) SYSTEM

System means formal and informal procedures that govern everyday activities. The decision

making systems within the organization can range from management institutions to structured

computer systems and formal and informal procedure that govern the everyday activities of the

Bank.

The System of the Karnataka Bank Includes. The Bank is one of the few banks in the country

which uses Finical Software which in turn helps the bank to serve its customers more efficiently.

The Bank also provides internet facility to its employees

Computer System

Training System

Control System

6) STAFF

Staff means that the organization has hired able people trained them well and assigned them to

the right jobs. Staffs are human resources working in an organization. They are responsible for

carrying out various activities of the organization effectively and efficiently. The Karnataka

Bank has well trained, devoted and skilled staffs who work very hard for the success of the bank.


34/57


35/57

The Karnataka Bank cherish for the following values

Customer Satisfaction

Quick and better Service

Loyal to the Customers

Honesty in work

Social Responsibility


36/57

SWOT Analysis

Strengths

The Bank is professionally managed. The bank is one of the few banks in India which

gives importance to technology in order to serve it customers better it is one of the few

banks which uses finical software’s.

The Banks strengths lie in management capabilities, focused strategy, speedy decision

making.

There is a huge expansion of branches and ATM services by the bank during the last few

years.

The Banks provides good infrastructural facility to it’s to its staff and help them to

concentrate more on their job.

The Bank has introduced various schemes for their customers.

Weaknesses

The weaknesses of the bank includes that the bank has majority of the branches in the

southern region only.

The most of the work force are grey haired people resulting in more salary less output.

Bank has a less number of ATM counter.

Rise in NPA due to error on advance resulting in poor recovery.


37/57

Delay in crystallisation of export bills discounted.

Sanction terms and conditions were not complied with in many cases revealing

inadequate/ineffective mechanism to monitor and follow-up of such cases.

Opportunities

The Growth potentials or the opportunities are very huge as the bank had mainly

concentrated on the southern region of the country in its earlier years. It has the opportunity to

expand its business to other parts of the country wherein it can increase its customer base. The

Bank which has 464 branches at present is planning to take the number to 480 and also its own

ATMs from 217 to 300 by end- March 2011.

Threats

As the bank majority business comes from the south any effect to the economy here

would have an adverse effect on the performance of the bank. The Bank is relatively smaller

when compared to other banks like SBI, HDFC and ICICI Bank and some others. Since it’s a

smaller bank when compared to heavy weights like SBI and corporation Bank the bank is always

under treat of being taken over by other banks. Big fish eats small fish is a reality. After LPG big

bosses conquer small. It is true in case of banking industry also. During 2004 – 09 eight small

banks have been merged with bigger ones. Even a KBL was also under threat of taken over by

one of the leading bank. Being small in size KBL has to struggle to maintain liquidity ratio.

Recent trend of customer switched from local / regional banks to multi national banks. They

admire facilities of those banks and compare them with small banks like KBL. Hence KBL has

to vigilant towards these banks movements. Because of speedy decision power KBL has to


38/57

surpass the threat possed by them. Government of India’s economic and fiscal policy is to

minimize competition by closing extra branches which are in loss. So government may take

over / nationalise bank in order to adhere to their policy. Now a days it has been observed that

relationship between management and staff is detoriating.

SUMMARY OF LATEST ANNUAL REPORT

The credit rating agency ICRA Ltd one of the leading credit rating agencies of the country has

accorded ‘A1+’ rating to the bank’s certificate of deposit programme. Bank has earned a net

profit of Rs. 167.12 crore for the year 2009-10. The total deposit of Karnataka Bank registered a

growth of 16.70% over the previous year. While its advances rose by 22.23% over the previous

year. The other key financial data’s are mentioned below

Table Showing the performance highlights of the Bank for the year 2008-2010

(Rs. In Crore)

Particulars.As on /for the year ended

31.03.2010

As on /for the year ended

31.03.2009

Deposits 23730.65 20333.29

Advances 14435.68 11810.05

Investments 9992.05 8961.49

Total Income 2354.68 2270.55


39/57

Operating Profit 260.84 480.21

Net Profit 167.12 266.70

The total business turnover of the bank touched Rs. 38166 crore, an increase of 18.73% over

the preceding.

The fixed and other assets of the bank increased from Rs. 625.54 crore to Rs. 801.88 crore

recording a growth of 28.19%

Total Deposits of the bank grew from Rs. 20333.29 crore as on 31.03.2009 to Rs. 23730.65

crore as on 31.03.2010, registering a growth of 16.70%

The total advances grew from Rs. 11810.05 Crore as on 31.03.2009 to Rs. 14435.68 crore

as on 31.03.2010 an increase of 22.23%

Total Investment of the bank grew from Rs. 8961.49 crore as on 31.03.2009 to Rs. 9992.05

crore as on 31.03.2010, registering a growth of 11.49%

APPROPRIATIONS

The net profit of Rs. 167.12 Crore which along with a sum of Rs. 0.03 Crore brought forward

from the previous year aggregated Rs. 167.15 Crore is appropriated as under.

Table Showing Appropriation of profits of the bank for the year

2009-2010

Appropriation Rs in crore

Transfer to Statutory Reserves 88.00


40/57

Transfer to Capital Reserves 00.00

Transfer to Revenues and General

Reserves

16.38

Transfer to Proposed Dividend 62.75

Balance Carried to Balance sheet 00.02

Total 167.15

DIVIDEND:

Keeping in mind the overall performance of the Bank and the positive outlook for the future the

Board of Directors recommended a dividend of 40% of the reporting year. The dividend payout

ratio for the year stands higher at 32.09% as compare to 27.35% in previous year .

EARNING PER SHARE / BOOK VALUE

The Earning per share and the book value of the share stood at Rs. 13.50 and Rs. 136.80

respectively as on 31st March 2010.

NET OWNED FUNDS AND CAPITAL ADEQUACY RATIO

The net owned funds of the bank increased from Rs. 1567.03 Crore to Rs. 1832.75 Crore

registering a growth of 16.96%. The capital adequacy ratio decreased from 13.48% as on 31st


41/57

March 2009 to 12.37% as on 31st March 2010 after taking into account the market risk on

investment as per RBI guidelines. The bank has been consistently maintaining Capital Adequacy

Ratio well above the norm of 9% stipulated by the RBI.

FOREX BUSINESS

During the year, Bank achieved foreign exchange business turnover of Rs. 8605.93 Crore as

against Rs. 7850.65 Crore for the previous year, registering a growth of 9.62%. The advances to

export sector increased from 1277.42 Crore to Rs. 1369.12 Crore.

ADVANCE TO PRIORITY SECTOR

The advances of the bank to priority sectors are shown below in the form of a

table

Table Showing Lending of the Bank to Priority Sector

(Rs. in lakh)

Types of Advances

Number of

accounts at the

end of the year

Balance

outstanding at

the end of the

year

a) Agriculture 89091 160916.37

b) Small Scale Industries of

which Export Credit to SSI

units

7603 178362.61

c) Small Business Finance 5450 21909.66


42/57

d) Professional & Self

Employed

2492 29395.56

e) Small road & Water

Transport Operation

6664 15068.92

f) Education loan 4512 9341.95

g) Retail Trade 13014 18556.94

h) Housing Loans 15388 80616.56

i) Other Priority Sector 424 11127.25

Total 144638 525295.82

Export Credit 130871.33

RATIO ANALYSIS

Ratio Analysis is a widely used tool of financial analysis. It can be used to compare therisk and return relationship of a firm. It is defined as the systematic use of ratios to interpret the

financial statements so that the strengths and weakness of a firm as well as its historical

performance and its current financial conditions can be determined. The term ratio refers to the

numerical or quantitative relationship between two items or variables. The rationale of ratio

analysis lies in the fact that it makes related information comparable.

SIGNIFICANT PERFORMANCE INDICATORS:

Total Advances to Total Deposit Ratio:

This ratio is generally expressed as a ratio between Total Advances and Total Deposits. The

ratio is used to determine how much of the total deposits collected from the customers are lent

as loan to public. It can be expressed as follows:

Total Advances


43/57

Total Deposits

Table showing Total Advances to Total Deposits ratio

(000’s omitted)

Particulars. Mar - 10 Mar - 09 Mar - 08

Total Advances (in 000’s) 14435,68,33 11810,04,50 10841,97,46

Total Deposits (in 000’s) 23730,64,88 20333,28,53 17016,19,23

Total Advances to Total

Deposits ratio

0.6083 0.5808 0.6371

The total advances in proportion to total deposits have shown a slight decline over the years from

0.6371 in March 2008 to 0.6083 in March 2010. But can also be inferred that there has also been

a steady increase in the amount of deposits collected by the bank.

Total Investments to Total Deposits Ratio:

This ratio is generally expressed as a ratio between Total Investment and Total Deposits. This

ratio is to used to know what proportion of the total deposits are used by the Bank for its

investments purpose such as Government Securities or Shares of other companies. It can be

expressed as follows:


44/57

Total Investments

Total Deposits

Table Showing the Total Investments to Total Deposits Ratio

(000’s omitted)

Particulars. Mar - 10 Mar - 09 Mar - 08

Total Investments (Rs.) 9992,04,63 8961,48,83 6326,51,86

Total Deposits (Rs.) 23730,64,88 20333,28,53 17016,19,23

Total Investments to

Total Deposits ratio

0.4210 0.4407 0.3717

It can be seen in the above table that there has been a steady increase in total advances in

proportion to total deposits from Rs. 0.37 to Rs. 0.42.

Net Non-Performing Assets to Net Advances

This Ratio indicates the Advances or Loans that were lent by the Bank and which have turned

out to be Non-Performing Advances. It can be expressed as follows:

Net Non-Performing Assets = Opening Balance + Additions during the year – Reductions

during the year.


45/57

Net NPA

Net Advances

Table Showing the Net Non-Performing Assets to Net Advances Ratio

Particulars. Mar 10 Mar 09

Net NPA (Rs in crore) 188.61 116.10

Net Advances (Rs. in crore) 14435.68 11810.04

Net NPA to Net Advances (%) 1.31 0.98

NPAs are those advances where the interest and advances have been overdue for more

than 90 days. The above table shows that there has been a steep increase in Non Performing

Assets of Bank from 0.98 as on 31 March 2009 to 1.31 as on 31 March 2010. This shows that

there has been an decrease in the efficiency of the Bank to collect its advances. Bank also written

off 76.13 crore during 09-10 as bad debts.

Return on Total Assets

Return on total assets is the ratio of net profit to total resources. This ratio measures the

productivity of the total assets of a concern. It indicates the profitability of a business.


46/57


47/57

Number of Equity Shares

Table Showing the Earnings per Share Ratio

(000s omitted)

Particulars. Mar 10 Mar 09 Mar 08

Net Profit available (aft tax) 167,14,81 266,80,25 241,76,47

Number of Equity Shares 133976 121598 121598

EPS (Rs. ) 12.47 21.94 19.88

The above data shows that there has been a decline in EPS of the bank from Rs. 19.88 in 2008 to

Rs. 12.47 in 2010. The decrease in the EPS is due to the decrease in net profit and issuance of

new equity shares of the Bank.

LEARNING EXPERIENCE

The in-plant training was for four weeks. I had done my in plant in Karnataka Bank Ltd, Mangalore. As

there was limitation of time, the study is done about the general information regarding the Karnataka

Bank.


48/57


49/57

date of balance sheet or credits are not enough to cover the interest debited during the same

period, these account should be treated as 'out of order'

The recovery department of the bank works for the recovery of credit granted to customers.

Recovery department will do the job of getting back the loan granted to the customers. if they

fail to repay the loan amount.

As regards to the legal department it is concerned with providing legal advices to various

departments if there is any conflict in the functioning of department.

SUBSIDIARY SERVICE OF KARNATAKA BANK

Demand Draft

Mail Transfer

Telegraphic Transfer

Pay Order

Safe Locker Facility

Safe Custody Services

Multi Branch Banking

The Karnataka Bank Ltd. has rendered lots of subsidiary services to its Customer with

reasonable service charges. Since its inception the Bank has attached high priority to customer


50/57


51/57

The issuing branch should compare the confirmatory received from the paying branch with the

entry made in the Telegram Inward Register and make a not of receipt of the confirmatory

against the entry in the register. If any discrepancy is noticed, it should be immediately followed

up with the other branch for necessary correction.

PAY ORDERS / PAY SLIPS

A pay order or a pay slip is an order by a branch of a Bank drawn upon it self to apply a certain

sum of money to or to the order of the payee named therein. Although, the pay order is almost in

the form of cheque since it is drawn on the branch it self, it is not covered by sections 85A and131 of the Negotiable Instruments Act. The Bank will not therefore get protection in paying a

pay order with a forged endorsement. Similarly, the collecting Bank will also not get protection,

as pay order is not covered by section 131 of the Negotiable Instruments Act.

Payment due from the branch to the local parties / Banks, are also made by issuing pay order.

The commission is to be collected as applicable to local drafts. Where a pay order is issued to

third party at the request of customer, the credit slip meant for DDs / MTs may be used. While

applying a pay order presented through clearing or across the counter for payment or for credit of

an account, it should be scrutinized in all respects as in the case of cheques / drafts.

SAFE DEPOSIT LOCKERS

Provide different sizes for rental purposes. Precaution while giving a locker on rental basis are as

follows.

1. The locker hirer should have an introduced savings or current account with the bank.

2. The branch asks the hirer to fill in and sign a specimen signature card, with his full name,

address, specimen signature and a password or a code word.


52/57

3. The banker specifies the timings of the operations of lockers.

4. Lockers cannot be rented out to a minor, as a minor has no contractual capacity to hire a

locker.

SAFE CUSTODY SERVICE

Traditionally bankers receive valuables such as negotiable securities jewellery and documents of

title to property for safe custody. In fact the origin of Banking in India is said to lie in the fact

that people going on pilgrimage for long periods used a keep their village or town. Being

equipped with safes and storage rooms for the purpose of their business modern bank is naturally

a safe and convenient place to keep valuable in safe custody.

MULTI BRANCH BANKING

Multi Branch Banking is a special facility offered by Karnataka Bank that gives the power to

operate SB or Current Account of account holder through several branches in the cities of

Bangalore, Mangalore, Chennai and Mumbai. Any customer who is eligible to open a SB

account or a Current Account can open the privileged account and avail Multi Branch Banking

facility.

The minimum average balance to be maintained is Rs.5000/- for SB account and Rs.10000/- for

Current Account.


53/57

The Multi Branch Banking acquires power of geographical flexibility in Banking.

MERCHANT BANKING

The RBI has allowed Indian Banks to undertake many ancillary services. In addition to their

main business of banking Merchant banking is among one of the most important businesses now

being undertaken by Banks.

MONEY PLANT ATMs

An account holder can use ATM card to withdraw cash, make balance enquiries and requeststatements, cheque books through ATMs. Money Plant ATMs give "round the clock" access to

account through ATM counters across the country, as well as those ATMs under arrangement

with Corporation Bank.

UTILITY BILL PAYMENT MADE EASY

At Karnataka Bank one can now make telephone bill payments through the bank itself. Now

customers need no longer wait long hours in a queue to pay phone bills.

WESTERN UNION MONEY TRANSFER

A strategic arrangement with Western Union Financial Services Inc. of USA facilitates quick,

reliable and convenient transfer of funds anywhere in the world.

SPEEDY MONEY TRANSFER WORLDWIDE


54/57

The Bank is also a member of the Society for Worldwide Inter Bank Financial Tele

Communication (SWIFT) for expeditious two way transfer of funds and has a wide network of

correspondent Banks in 43 countries around the globe.

THE KRISHI CARD

Karnataka Bank introduced Agricultural credit card known as 'KRISHI CARD' for its former

clientele in the year 1989 it self. It is also now history that the RBI has made KISAN CREDIT

CARDS mandatory for all banks since 1998. It has also extended this facility to the plantation

sector during the platinum jubilee year.

ANNEXURE

Balance sheet of the last three years

Capital and Liabilities

(000s omitted)

March ’08 March ’09 March ‘10

Total Share Capital 121,35,33 121,58,47 133,98,61

Equity Share Capital 121,35,33 121,58,47 133,98,61

Preference Share Capital 0.00 0.00 0.00


55/57

Reserves 1258,25,00 1445,44,23 1698,76,32

Deposits 17016,19,23 20333,28,53 23730,64,88

Borrowings 142,19,55 3,97,28 341,64,03

Other Liabilities & Provisions 801,82,67 953,52,09 1130,11,59

Total Liabilities 19339,81,78 22857,80,60 27035,15,43

Assets

Cash & Balances with RBI 1482,20,59 1364,93,80 1743,09,79

Balance with Banks, Money at Call 139,22,83 95,75,39 62,45,03

Advances 10841,97,46 11810,04,50 14435,68,33

Investments 6326,52,33 8961,48,83 9992,04,63

Fixed Assets 119,77,31 138,48,76 148,07,58

Other Assets 430,11,26 487,04,82 653,80,07

Total Assets 19339,81,78 22857,80,60 27035,15,43


56/57

Comparative Statement

Particulars

Karnataka Bank

Ltd

As on 31st March

2010

Canara Bank

As on 31st March

2010

Vijaya Bank

As on 31st March

2010

Earning Per Share (Rs) 13.50 73.69 11.70

Book Value (Rs) 136.80 305.83 57.97

Capital Adequacy Ratio(%)

12.37 13.43 12.50

Business Per Employee(Crores)

7.27 9.83 9.30

Profit Per Employee

(Lakhs)3.18 7.36 4.38

Net NPA Ratio (%) 1.31 1.06 1.40Advance/Deposit Ratio

(%)0.61 0.72 0.67

Business Per Branch

(Crores)82.25 132.76 89.70

Capital to Reserve Fund

Ratio12.67 34.78 2.78

Total No of Employees 5244 43380 11565

Total No of Branches 464 3043 1158

Total No of ATM outlets 217 2017 435


57/57

Earning Per Share

The above table shows that there is a decrese in Earning per Share of KBL

(13.50) compare to Canara Bank (73.69).

Date post:	09-Apr-2018
Category:	Documents
Upload:	sachin-p-mangalore
View:	221 times
Download:	0 times

KBL Project 1

Documents