Part-1 Canara Bank

8/3/2019 Part-1 Canara Bank

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COMPARATIVE STUDY ON HOME LOAN

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a. STATEMENT OF THE PROBLEMb. OBJECTIVE OF THE STUDY

.c. METHODOLOGY

Secondary data collection: The study is purely theoretical; no primary data collection was

required for the project. All the data collected for the study was based on different

sources, like company reports, websites, details provided by the guide, case studies

related to financial inclusion, RBI guidelines, Canara bank reports and initiatives etc

d. LIMITATIONS OF THE STUDY


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PART A


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1. INDUSTRY PROFILEBanking Industry in India

The world economy today is driven by the way the banks in the world perform. The

economical position of the country is also driven by the performance of banks. Banks, by

extending their services to areas hitherto untouched and making themselves accessible to the

common man, have become a part of our lives. The banking institutions in the past performed

very limited functions such as receiving deposits against bank notes and then issuing notes in

the country, as the time advanced and with the progress of commerce and industry, the scope

of banking also expanded .Modern banking institution is a large corporate giant with large

resources and a vast field of activity. Since the nationalization of some big commercial banks in

India in the year 1969, there has been a great surge of banking industry throughout the world

with the growing number of banking offices. The banking business today has become highly

critical and competitive between various classes of banks in offering a greater variety of

services nationally and internationally. With globalization setting in, banks are also modernizing

operations with a view to satisfying modern customers with an aim to improve bank operations

with a view to maintain high standard banking system that involves applications of better

management techniques. In India, class banking has given way to mass banking, bringing in its

fold very large number of customers. Banks are now looked upon as development agents

instead of purveyors of credit to the large industries and big business companies. Apart from

providing credit to trade, industry and agriculture it is also involved in offering pension for

retired employees, government servants and collection of utility bills.

The Indian banking system can be classified into nationalized, private and specialized banking

institutions. The industry is highly fragmented with 30 banking units contributing to almost

50%of deposits and 60% of advances. The Reserve Bank of India is the foremost monitoring

body in the Indian Financial sector. It is a centralized body that monitors discrepancies and

shortcomings in the system .Industry estimates indicate that out of 274 commercial banks

operating in the country, 223 banks are in the public sector and 51 are in the private sector.

These private sector banks include 24 foreign banks that have begun their operations here.


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The Indian banking system is financially stable and resilient to the shocks that may arise due to

higher non-performing assets (NPAs) and the global economic crisis, according to a stress test

done by the Reserve Bank of India (RBI). Significantly, the RBI has the tenth largest gold

reserves in the world after spending US$ 6.7 billion for the purchase of 200 metric tonnes of

gold from the International Monetary Fund (IMF). The purchase has increased RBI is share of

gold holdings from approximately 4% to 6%. In the annual international ranking conducted by

UK- based Brand Finance Plc, 20 Indian banks have been included in the Brand Finance Global

Banking 500. The State Bank of India has become the first Indian bank to be ranked among the

Top 50 banks in the world, capturing the 36th rank, as per the Brand Finance study. The brand

value of SBI increased from US$ 1.5 billion in 2009 to US$ 4.6 billion in 2010.ICICI Bank also

made it to the Top 100 list with a brand value of US$ 2.2 billion. The total brand value of the 20

Indian banks featured in the list stood at US$ 13 billion.


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Following the recent financial crisis, new deposits have gravitated towards the public

sector banks. According to RBI's' Quarterly Statistics on Deposits and Credits of Scheduled

Commercial Banks: December 2009', nationalized banks, as a group, accounted for 50.9% of the

aggregate deposits, while State Bank of India and its associates accounted for 23.4%. The share

of other scheduled commercial banks, foreign banks and regional rural banks in aggregate

deposits were 17.1%, 5.5% and 3% respectively. With respect to gross bank credit,

nationalized banks hold the highest share of 50.6% in the total bank credit, with SBI and its

associates at23.8% and other scheduled commercial banks at 17.8%. Foreign banks and

regional rural banks had a share of 5.3% and 2.5% respectively in the total bank credit. The

confidence of non-resident Indians (NRIs) in the Indian economy is reviving again. NRI deposits

have increased by nearly US$ 47.8 billion on March 2010, as per the RBI is June 2010 bulletin.

Most of this has come through Foreign Currency Non-resident (FCNR) accounts and Non-

resident External Rupee Accounts. Foreign exchange reserves were up by US$ 1.69 billion to

US$ 272.8 trillion, for the week ending June 11, on account of revaluation gains. June 21,2010.

Banking Structure


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1)Scheduled commercial Banks:"Scheduled banks in India" means the State Bank of India constituted under the State

Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of

India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted

under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings)

Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank

included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but

does not include a co-operative bank".

a. Nationalized Bank:Nationalized banks have always contributed to boost up the economy of India and

available in a large number. The nationalized banks were established with great purpose

to make wide reach of banking function even in the rural area and offers great benefit

for those who actually get deprived from such service. many banks got the certification

of nationalized bank. Some of these are Canara bank , State Bank of India, and more.

Nationalized banks in India have its own reputation and operated with approximate

53,000 branches and 17,000 ATMs. By the coming of ATMs you can withdraw your

money instantly and this service is available for 24 hours.

b. Private Banks:Private banks in India have a great history and started their service way back. In 1920s,

imperial bank of India formed by the great cooperation by Bank of Madras, Bank of

Bengal and Bank of Bombay. After that Reserve Bank of India came into existence in

1935 and got authority to look after the other banks. It became centre body and got

power to introduce making policy and several new schemes . Today India is a swamped

with many private banks such as International Bank, ING Vyasya Bank, Kotak Mahindra

Bank, SBI Commercial Bank, Karnataka Bank, Kashmir Bank, ICICI Bank and more. Private

Banks in India achieved a milestone for serving people and showed its great

commitment.


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c. Regional Rural Banks:The Government of India set up Regional Rural Banks (RRBs) on October 2, 1975.Initially,

five RRBs were set up on October 2, 1975 which were sponsored by Syndicate Bank,

State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of

India. Capital share being 50% by the central government, 15% by the state government

and 35% by the scheduled bank.

2) Scheduled Co-Operative Bank:Co-operative Banks are organized and managed on the principal of co-operation, self-

help, and mutual help. They function with the rule of"one member, one vote". function

on "no profit, no loss" basis. Co-operative banks, as a principle, do not pursue the goal

of profit maximization. Co-operative bank performs all the main banking functions of

deposit mobilization, supply of credit and provision of remittance facilities .

a. National Federation Co-Operative Bank Limited:NAFCUB is committed to work towards building a strong and viable urban co-operative

banking and credit system across the Country, to strive for level playing field for the

institutions, to be an effective voice of the sector, to work towards eliminating visible

weaknesses and infirmities, to provide the training and other support and to knit the

institutions into a cohesive unit for them to benefit from strength of being in co-

operative system."

i. Rural Co-Operative credit Institution:Rural credit cooperatives in India were originally envisaged as a mechanism

for pooling the resources of people with small means and providing them with

access to different financial services. Democratic in features, the movement was

also an effective instrument for development of degraded waste lands,

increasing productivity, providing food security, generating employment

opportunities in rural areas and ensuring social and economic justice to the poor

and vulnerable.


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y Short Term Structure: State Cooperative Banks. District Central Cooperative Banks. Primary Agriculture Credit Societies.

y Long Term Structure: State Cooperative agricultural and Rural Development Banks. Primary cooperative Agricultural Rural Development Banks.

ii. Urban Cooperative Banks:The term Urban Co-operative Banks (UCBs), though not formally defined, refers

to primary cooperative banks located in urban and semi-urban areas. These

banks, till 1996, were allowed to lend money only for non-agricultural purposes.

This distinction does not hold today. These banks were traditionally centred

around communities, localities work place groups. They essentially lent to small

borrowers and businesses.

3.All India Financial Institution:All India Financial Institutions (AIFIs) - comprises Development Finance Institutions

(DFIs) and Investment Institutions, and they play a pivotal role in the financial market.

Also known as the financial instruments, the financial institutions assists in the proper

allocation of resources by distributing them from those who have a surplus to those

who have fewer resources available. It also assists with ensuring the proper circulation

of money in the economy. The financial institutions act as the intermediary between the

borrowers and the final lenders. They provide safety and liquidity, and ensures earning

on the investments and savings. Post-independence in India, people were encouraged

to save more, which in turn provided the funds for investment to the Indian

government. But there was a huge gap between the supply of savings and demand for

the investment in the country


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a. NABARD:NABARD was established on the recommendations of Shivaraman Committee, by

an act of Parliament on 12 July 1982 to implement the National Bank for

Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit

Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of

India, and Agricultural Refinance and Development Corporation (ARDC).

b. SIDBI:Small Industries Development Bank of India is an independent financial

institution aimed to aid the growth and development of micro, small and

medium-scale enterprises in India. Set up on April 2, 1990 through an act of

parliament, it was incorporated initially as a wholly owned subsidiary of

Industrial Development Bank of India. Current shareholding is widely spread

among various state-owned banks, insurance companies and financial

institutions.

c. EXIM:Export-Import Bank of India is the premier export finance institution of the

country, set up in 1982 under the Export-Import Bank of India Act 1981.

Government of India launched the institution with a mandate, not just to

enhance exports from India, but to integrate the countrys foreign trade and

investment with the overall economic growth. Since its inception, Exim Bank of

India has been both a catalyst and a key player in the promotion of cross border

trade and investment.

d. IDBI:IDBI Bank Ltd. is a Universal Bank with its operations driven by a cutting edge

core Banking IT platform. The Bank offers personalized banking and financial

solutions to its clients in the retail and corporate banking arena through its large

network of Branches and ATMs, spread across length and breadth of India.


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2.COMPANY PROFILECanara Bank : A good bank is not only the financial heart of the community, but also one

with an obligation of helping in every possible manner to improve the economic conditionsof the common people.

a)Background & Inception of the CompanyCanara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary

and philanthropist, in July 1906, at Mangalore, then a small port in Karnataka. It was started

as' Canara Bank Hindu Permanent Fund' in 1906. This small seed blossomed into a limited

company as' Canara Bank Ltd.' in 1910 with its head office in Bangalore. The Bank has gone

through the various phases of its growth trajectory over the hundred years of its

existence.In1958, the Reserve Bank of India (RBI) ordered Canara Bank to acquire G. Raghu

mathmul Bank,in Hyderabad. This bank had been established in 1870, and had converted to

a limited company in 1925. At the time of the acquisition the bank had five branches. The

growth of Canara Bank was phenomenal, especially after nationalization by the Government

of India along with 13 other major banks in the country in the year 1969. It has attained the

status of a national level player in terms of geographical reach and clientele segments .In

1976, Canara Bank inaugurated its 1000th branch.

Eighties was characterized by business diversification for the Bank. In the year 1985 Canara

Bank opened its first overseas office in London and also established a subsidiary in Hong

Kong, Indo Hong Kong International Finance Ltd and opened its third foreign branch, this

one in Shanghai. It has established in the areas of mutual funds, venture capital and

factoring. It is the First Bank to be conferred with ISO 9002 certification for one of its

branches in Bangalore and is the maiden bank to start Initial Public Offering (IPO). It has

launched internet and mobile banking services. In June 2006, the Bank completed a century

of operation in the Indian banking industry. This eventful journey of the Bank has been

characterized by several memorable milestones. Today, Canara Bank occupies a premier

position in the comity of Indian banks. With an unbroken record of profits since its

inception, Canara Bank has several firsts to its credit.


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These include:

Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of Good Banking Bank is Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing credit card for farmers Providing Agricultural Consultancy Services

Over the years, the Bank has been scaling up its market position to emerge as a major 'Financial

Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India

and abroad.

Canfin Homes Limited Canbank Factors Limited Canbank Venture Capital Fund Limited Canbank Computer Services Limited Gilt Securities Trading Limited Canara Robeco Asset Management Company Limited Canbank Financial Services Limited Canara HSBC Oriental Life Insurance Company Limited

As at March 2011, the Bank has further expanded its domestic presence, with 3564

branches spread across all geographical segments. Keeping customer convenience at the

forefront, the Bank provides a wide array of alternative delivery channels that include over

2000 ATMs- one of the highest among nationalized banks- covering 728 centers, 1959

branches providing Internet and Mobile Banking (IMB) services and 2091 branches offering

'Anywhere Banking' services. Canara bank made a partnership with UNEP to initiate a

successful solar loan programme. It was a four-year $7.6 million effort, launched in April

2003 to help accelerate the market for financing solar home systems in southern India.

Canara Bank had a major IT initiative to network all branches and move them to a single

software platform. Canara Bank chose Flex cube from I-flex solutions as the application.


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b)Nature of the business carriedCanara Bank is a Public Sector Company undertaking which is running under the

Administrative Control of Govt of India. The total share capital is Rs 410 crores of which

government capital is300 crores, others Rs 110 crores and, the total business of the

Bank reached 403,986 crore. Canara Bank was ranked at 1299 in the Forbes Global 2000

list. Canara bank offers its services to the industry, NRI is and all the classes of people

such as Personal Banking, Corporate Banking, NRI banking, Priority credit and other

services etc. It has come to the forefront of the commercial and financial services and

established a leadership in the financial services. The Bank has also carved a distinctive

mark, in various corporate social responsibilities, namely, serving national priorities,

promoting rural development, enhancing rural self-employment through several

training institutes and spearheading financial inclusion objective

c) Vision, Mission & Quality PolicyVision

To emerge as a Best Practices Bank by pursuing global benchmarks in profitability,

operational efficiency, asset quality, risk management and expanding the global reach.

MissionTo provide quality banking services with enhanced customer orientation ,higher value

creation for stakeholders and to continue as a responsive corporate social citizen by

effectively blending commercial pursuits with social banking

Quality policy

To remove Superstition and ignorance. To spread education among all to sub-serve the first principle. To inculcate the habit of thrift and savings. To transform the financial institution not only as the financial heart of the

community but the social heart as well.

To assist the needy. To work with sense of service and dedication.


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d)Products and ServicesPersonal Banking Corporate Banking NRI Banking Priority and SME

Credit

Savings &Deposits Account and

Deposits

Deposit Products Schemes

Loan Products Cash Management

Services

Loans and Advances SME Business

Technology

Products

Loans & Advances Remittance

Facilities

RRB Divison

Mutual Funds Syndication Services Consultancy

Services

Agri-Marketing

Insurance Business IPO Monitoring

Activity

Other Services Agri-Consultancy

International

Services

Merchant Banking

Services

Rural Development

Card Services TUF Schemes Social Banking

Consultancy Service Canara e-Tax CED for Women

Depository services One time

settlement for M&

SEAncillary service

Personal Banking

Savings

and

Deposits

Loan Products Credit

services

Consultancy

service

Card

Service

Mutual

fund

Ancillary

Service

Other

service

Current

account

Housing Loan Cash credit

for

Workingcapital

Tax

Assistance

service

Canara

visa

classic

Canara

Robeco

MFProducts

Safe

Deposit

Lockers

Insurance

(Life and

General)

Fixed

Deposits

Home

improvement

loan

Bill

Discounting

Trustee

services

private

and

charitable

Canara

Global

Gold Card

HDFC

MF

products

Safe

Custody

Services

Technology

Products

(ATMs)


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Recurring

Deposits

Canara

Cash(Shares)

Bank

Guarantee

Debenture

Trusteeship

Canara

Corporate

card

7 day

Banking

Depository

Services

Kamdhenu

Deposits

Canara

Mobile(Vehicle)

Loan for

SMEs

Security

Trusteeship

DD

Shoppe

Extended

Banking

hrs

Savings

Bank

Account

Canara Site

loan

Finance to

SSIs

Attorney ship

Saving

Gold

Scheme

Teachers loan Agricultural

loans

Estate &

Will Service

Canara

Champ

Deposit

Scheme

Canara Budget

Canara

Saral

Savings

Account

Canara Pension

Canara

Tax Saver

Scheme

Canara Rent

Ashraya

Deposit

scheme

Canara Jeevan

Canara

Auto

Renewal

Deposit

Canara

Mortgage

Canara

Super

SavingsSalary

Account

Scheme

Doctors Choice

Education loan

Swarna Loan


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Corporate Banking

Accounts &

Deposits

Cash Management

Services

Loans & Advances Other services

Current deposits Super Fast Service Term loans Canara e-Tax

Fixed Deposits Bulk Collection Service Gold Card Schemefor Exporters

TUF Scheme

Kamdhenu Deposits Fast Track Service Infrastructural financing Merchant Bankingservices

Recurring Deposits Working capital Finance IPO Monitoring Activity

Export Finance

Syndication ServicesSyndication Services

NRI Service

Deposit s

Products

Loans and

Advances

Remittance

Facilities

Consultancy

services

Other services

NRE(Non

Resident External

Rupee)

Account Housing

Loan

Canbank Remit

money scheme

NRI

Consultancy

Safe custody

NRO(Non

Resident

Ordinary)

Accounts

Home Improvement

loan

Bank Western

Union Remittance

scheme Swift

Safe Deposit

Locker

FCNR (Foreign

Currency Non

Resident)

Accounts

Can Jewel Nomination

Facility

Can Cash(Shares)

Rupee Drawing

Arrangement

Investments

Can Mortgage Attorney ship

services

Can

Mobile(Vehicle)

NR I Service

Centre

Can Site Facilities

For Returning


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e)Area of OperationOver the years, Canara Bank has a reputation as a top quality service provider to its

customers and it believes in the centricity of its customers. Canara Bank of India has a

network of 3046 branches, spread over 25 States/4 Union Territories of the country.

It has its Head office in Bangalore along with 34 circle offices and 1 international division.

The bank also has international presence in several centers, including London, Hong

Kong, Moscow, Shanghai, Doha, and Dubai. In terms of business it is one of the largest

nationalized commercial banks in India. Canara Bank has international division which

supervises the functioning of its various foreign departments to give the required thrust

to foreign exchange business especially exports and to meet the requirements of NRIs

f) Ownership PatternThe board consists of a whole time Chairman and Managing Director and two executives

director and one director representing Govt. of India and one representing Reserve bank

of India and four part times Non-official Director. Canara bank is a public sector

undertaking (PSU),73.17% of its share his held by Govt. of India and mutual fund/other

institutions 5.75% private corporate bodies 3.33% and public ownership is 17.75%. The

bank is listed NSE, BSE and Bangalore Stock Exchange


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Share holding

pattern as on:

30/09/2011 30/06/2011 31/03/2011

Face value 10.00 10.00 10.00

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

No. Of

Shares

%

Holding

Promoter's holding

Indian

Promoters 300000000 67.72 300000000 67.72 300000000 67.72

Sub total 300000000 67.72 300000000 67.72 300000000 67.72

Non promoter's holding

Institutional investors

Banks Fin.Inst. and

Insurance

42967856 9.70 41855468 9.45 45931757 10.37

FII's 64418232 14.54 68654960 15.50 66120225 14.93

Sub total 112889733 25.48 114314720 25.80 116955725 26.40

Other investors

Private CorporateBodies 7732632 1.75 7201842 1.63 4101867 0.93

NRI's/OCB's/ForeignOthers

421704 0.10 369020 0.08 339316 0.08

Others 723437 0.16 298296 0.07 1175750 0.27

Sub total 8877773 2.00 7869158 1.78 5616933 1.27

General public 21232494 4.79 20816122 4.70 20427342 4.61

Grand total 443000000 100.00 443000000 100.00 443000000 100.00


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g)Competitors InformationCanara Bank being a nationalized bank and a public sector bank is facing a stiff

competition from public sector banks, foreign banks and nationalized banks. The

major competitors of the Canara bank are as follows :-

i. Bank of Indiaii. State Bank of India

iii. Bank of Barodaiv. ICICI Bank.

h)Infrastructural Facilities

Canara bank is located in the centre of the city where the bank has multi-floorbuilding where it has separate partition for all the departments.

The bank is fully computerized and well furnished with air condition facility tothe employees

The bank provides medical facilities to its employees It also provides educational facility to the employees and their children. The bank also provides vehicle faculty or traveling allowances to their

employees. The bank also has provided with quarters facilities to its employees (officers). The bank has established its own training centre to develop the employees

knowledge, skill & attitude

i) Achievements/Awards 'Golden Peacock Award for Corporate Social Responsibility for the year 2007. Canara

Bank is the first PSB to receive the award since its institution in the year 1991

Golden Peacock National Training Award-2007, instituted by the Institute ofDirectors, New Delhi, a pioneer in Quality Revolution.

Conferred the Business Super brands Status for 2008. 'The Organization of the Year Award- for PR Excellence', instituted by Public

Relations Council of India.


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Received during 2008-09Conferred 'First Rank ' in India's Best Banks awards underthe category' Strength and Soundness' for 2006-07 by a survey conducted by Ernst &

Young.

Best Performing Bank under Rural Employment Generation Programme, (REGP) of Khadiand Village Industries Commission (KVIC), in South Zone for the year 2007-

08,instituted by the Ministry of MSME, Government of India.

Golden Peacock National Training Award 2008 for excellence in training. Global HR excellence in Training, an award conferred by the Asia Pacific HR Congress ,the

largest rendezvous of HR Professionals, at its Employer Branding Talent

Management Congress held on 22nd and 23rd August 2008, Delhi.

Best Corporate Social Responsibility Practice Award, instituted by BSE, NASSCOMand Times Foundation

The Bank won two Silver Corporate Collateral Awards for Best Corporate Ad in thePrint Media and Best Corporate Film on Corporate Social Responsibility at the Public

Relations Council of India Awards 2009.

Best Bank in South Zone Award for the year 2008-09 in respect of lending underKVIC and PMEGP Schemes. The award was handed over by Dr.Manmohan Singh,

Honble Prime Minister of India.

The Bank received the Credit Guarantee Approval Certificate issued by CGTMSE fromShri Pranab Mukherjee, Honble Finance Minister of India.

Received during 2011-12

y The Bank was conferred with National Award - 2011 for excellence in the field of Khadiand Village Industries - Best Bank, South Zone for PMEGP.

Corporate Social Responsibility Award-2011 to CANARA BANK


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Priority Sector Performance

A. Priority Sector Advances : Performance as at March 2011B. Highlights of Priority Sector Performance in last 3 years.

y Bank has achieved hat-trick by crossing all mandated, SoI and InternalTargets in Priority Credit.

y Bank has doubled the growth under Agriculture in 2009-10 compared to2008-09.

y The Agriculture disbursement in FY 07-08 was Rs.11443 crore while in itin FY 10-11 Rs. 22374Crores, which is almost doubled in a period of 3

years.

y Education loan stood at Rs.3503 crore, compared to O/s level of Rs.1737crore for Mar 08 more than doubled in 3 years.

y Weaker Sections, SC/ST and Minority advances also more than doubledin 3 years.

C. Priority Sector Lending in last 4 years

j) Workflow Modela) General Managerb) Deputy General Managerc) Assistant General Managerd) Chief Managere) Senior Managerf) Managers and officersg) Single Window Operators (Clerks)


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Board of Directors

SL

NO

NAMES DESIGNATION

1 Shri. S RAMAN Chairman & Managing Director

2 Smt. ARCHANA S. BHARGAVA Executive Director

3 Shri. ASHOK KUMAR GUPTA Executive Director

4 Dr. THOMAS MATHEW Director representing Government of India

5 Smt. MEENA HEMACHANDRA Director representing Reserve Bank of India

6 Shri. G.V. SAMBASIVA RAO Workmen Employee Director

7 Shri. G.V. MANIMARAN Officer Employee Director

8 Shri. KHALID LUQMAN BILGRAMI Part-time Non-Official Director

9 Shri. PANKAJ GOPALJI THACKER Part-time Non-Official Director

10 Shri. SUTANU SINHA Part-time Non-Official Director

11 Shri. P. V. MAIYA Director Representing Shareholders

12 Shri. SUNIL GUPTA Shareholder Director


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k) Future Growth & Prospects The Bank aims to reach an aggregate business figure of Rs.5 lakh crore,

comprising total deposits of Rs.285000 crore and advances of Rs.215000 crore.

The Bank will continue to focus on core business, with the objective ofaugmenting profits and profitability.

Expanding global footprints, the Bank is likely to open a Representative Office atSharjah shortly in addition to RBI approval already obtained in 9 international

centres.

Targets to achieve 100% CBS coverage by June 2011. The Bank has plans to open over 200 new branches during FY2011

Sound performance, better prospects

Canara Bank recorded a 15% yoy growth in operating profit for Q109, but net profit

declined 49% due to marked-to-market (MTM) losses. The Banks total income reached

Rs. 41 bn, driven by a 14.5% growth in income from advances. This impacted the net

interest margin (NIM) favourably. We maintain a buy rating on account of the following

reasons:

a) Growth in NII and NIM:The Bank has recorded a 14% yoy growth in the net interestincome (NII). This was probably on account of 14.5% growth in income from

advances. This growth in NII was a major driver of the 15% growth in the operating

profit this quarter Alongside, the surge in the NII has also improved the NIM from

2.42% to 2.57% qoq.

b) Improvement in asset quality: The Banks asset quality also improved during thequarter. While the gross NPA ratio came down from 1.55% (as on June 2007) to

1.31% (as on June 2008), the net NPA ratio declined from 0.89% to 0.85%.

c) Cost of deposits:A high cost of deposits is a cause for concern as we believe thatthe tightening of the mary policy this quarter has led to a rise in the cost of

deposits. At the same time, the impact of the Banks attempt to shed the high cost

preferential deposits will be reflected in the following quarters.


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3. McKinseys 7-S FrameworkThe McKinsey 7S model was named after a consulting company, McKinsey and

Company, which has conducted applied research in business and industry.

The McKinsey 7S Framework was created as a recognizable and easily remembered

model in business. The seven variables, which the authors term "levers", all begin with

the letter "S".

These seven variables include structure, strategy, systems, skills, style, staff and shared

values.

i. StructureStructure refers to the way in which an organizations business units relate to eachother. For example, a company may use a centralized system where all key decisions are

made at the head office. Like General Manager to the Deputy General Manager and to

Assistant General Manager to the Chief Manager and to Senior Manager to the

Managers and officers and finally to the Single Window Operators (Clerks)

ii. SkillsThe important software for the success any organization is the skills of the employees & of

the management. The Canara bank is having highly skilled employees. The skills of the

organization are:


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Credit Skills:

They face the challenges in improving the asset quality suitable training programs for

upgrading the appraisal & credit monitoring skills, pre-sanction & post-sanction

supervision, including monitoring of stocks, financial statements, etc., will be provided.

The rigor of NPA discipline & provisioning will only increase in the days to come & they

have to equip themselves for this task.

Technology Skills:

Canara bank is having a very good brand equity & loyalty of customers. Bank has already

introduced product like, Tele-Banking, credit cards, ATMs etc., cross selling of other

financial services like insurance, mutual funds, government securities. Increasing non-

fund income, personal segment advances & trades finance in order to improve the

profitability & to make growth in business volumes more sustainable Importance has

also been given to areas like low cost deposits, NPAs/AUCs recovery & reduction in

operating expenses to improve efficiency of their operations.

Operating Skills:

Bank has to increasing non-fund income, personal segment advances & trades finance in

order to improve the profitability & to make growth in business volumes more

sustainable. Importance has also been given to area like low cost deposits, reduction in

operating expenses taken sufficient measures to identify measure, monitor & manage

various risks associated with the Banking business in the areas of credit, interest rate &

liquidity.

iii. StyleThe style of an organization according to the Mckinsey framework becomes evident through

the pattern of actions taken by members of top management team over a period of time.

Leadership Style in Canara Bank It has been observed in the Canara bank that the behavior

of superior towards the subordinate is pleasant. They motivate fresher who are working

under them. The superior tells subordinates what exactly he has to do. The object of the

work is clearly defined to them. Otherwise the superior councils the subordinate, superiors

who act as leaders conduct meetings, discussions, presentation etc, on regular basis and

take suggestions and ideas given by subordinates.


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iv. StrategyStrategy indicates a specific program of action for achieving the organization objectives

by efficiently employing the firms resources. It involves preparing oneself for meeting

unforeseen factors. It is also concerned with meeting the challenges posed by the

policies and actions of other competitors in the market.

v. SystemsTraining System :

The Bank under various categories were imparted training in diverse functional areas

such as assets liability management, consumer credit, housing finance, retail finance

Recovery, trade finance. The Bank adopts its own training system with the help of

their training centers. Training mainly helps with updating skills, knowledge

improvement etc.

Technology System:

The bank has initiated business process re-engineering with an effort to stay at the top

in the competition. It has enabled Core-Banking Service, has its own Cheque Processing

unit, and has initiated installation of ATMs in all the areas .The Bank has taken

necessary steps to implement structured financial messaging system(SFMS) a

modularized software solution for financial message communication in a highly secured

environment.

Recruitment & Selection System:

The sources of recruitment at the organization in the form of both external & internal.

The Bank follows the recruitment & selection processes that are commonly followed by

public sector Banks.

Systems and Procedures:

Many systems and procedures in the Bank were received re-oriented and simplified

during the year without diluting any controls. Noteworthy among the initiatives were

revision/updating of all ten credit manuals, rationalization of entire applications in retail

lending schemes, simplification of documentation against valuable securities,

rationalization of printing supply and usage of forms, pilot implementation of single

window system at select branches revision of DD payment procedures & streamlining .


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vi. StaffThe bank is motivated to harness the unique assets of the human resources for growth

of the institution and to imbibe team spirit for self and mutual development among

banks staff. The bank has made inroads towards establishment of quality circle concept

among its employees. Training & Development Canara bank has been a fore runner in

establishment of its own training college at Bangalore, supported by 13 regional training

centers spread over length & breadth of the country. These centers take care of

knowledge, skill & attitudinal development of the employees.

vii. Shared valuesy Improve market share on rural & semi-urban markets.y Increase number of performing branches and eliminate below performing branches.y To develop competent and vibrant human work force.y To develop the competencies and skills of the employees through training (Internal

&external) and other HRD measures.

y To improve the work environment in the bank through welfare measures and healthyIndustrial relations.

y To encourage employees to share knowledge and information about the variousactivities in the bank through the House Magazine and other publications.

y To encourage employees for implementation of office language in their day to day work.y The wing will continually improve all the processes involved during the performance

of the above functions for Total satisfaction of customer (Internal) by implementing

quality management system requirements of all personal of the Bank as

per IS/ISO9001:2000.


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4. SWOT ANALYSISThe bank had envisioned to not only offer financial services but also fulfill social causes

such as removal of superstitions and ignorance, promotion of habit of saving, providing

assistance to the people in need and develop a sense of humanity among the people.

Strengths

y It is the first bank in India to have launched Inter-City ATM networky It is the first bank to have been awarded ISO Certification for providing credit card

for farmers for the first time in India along with offering Agricultural Consultancy Services

y It has established 3046 branches across the nation as of March of 2010.y It has the maximum number of ATM installations among all the nationalized banks

summing up to more than 2000 of them at 698 centers

y 1959 branches of the bank provide Internet and Mobile Banking (IMB) servicesy Anywhere Banking services are being provided at 2091 of its branchesy All the branches of Canara Bank are enabled with Real Time Gross Settlement

(RTGS)and National Electronic Fund Transfer (NEFT) transaction facilities

y Bank also offers Personal Banking Services, Corporate Banking Services, NRI BankingServices and Priority & SME Credit Services.

Weakness

y Still sticks to most of the traditional banking systemsy Requires training program due to introduction of many new schemes & technologiesy Weak research teamy Staff take time to get adjusted to the new inventionsy Stands 4th position in the nationalized banks ratings


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Opportunities

y To improvise on mutual funds, to lead the banks into MF transactionsy To adapt to the new technological inventions, to stay at the top in the competitive

market

y To provide enough training facilities to the staff, to deliver efficient & effectiveservices

y To provide extra privileges to the customers to maintain & retain customersy To attract customers with good loan offers at very impressive rates, against the

competitors.

y To be aware of the changes in the market, & provide space for instantaneouschanges

Threats

y Establishment of private banks, increasing the competitiony Introduction of new technologies in the new banks with high infrastructurey Innovative interest rates & attractive customer care servicesy Adoption of many technologies & banking systems from abroady Very efficient research team, who are always tracking the new inventions in the

market

y Most of the private banks provide 24hrs facility.


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Balance Sheet of Canara Bank ..in Rs. Cr.

March

2011

March

2010

March

2009

March

2008

March

200712 Months 12 Months 12 Months 12 Months 12Months

Capital and Liabilities:

Total Share Capital 443.00 410.00 410.00 410.00 410.00

Equity Share Capital 443.00 410.00 410.00 410.00 410.00

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 17,498.46 12,129.11 9,629.61 7,885.63 7,701.11

Revaluation Reserves 2,098.36 2,132.68 2,168.16 2,204.86 2,242.87

Net Worth 20,039.82 14,671.79 12,207.77 10,500.49 10,353.98Deposits 293,972.65 234,651.44 186,892.51 154,072.42 142,381.45

Borrowings 14,261.65 8,440.56 7,056.61 2,517.23 1,574.35

Total Debt 308,234.30 243,092.00 193,949.12 156,589.65 143,955.80

Other Liabilities &

Provisions7,804.64 6,977.30 13,488.91 13,438.55 11,651.25

Total Liabilities 336,078.76 264,741.09 219,645.80 180,528.69 165,961.03

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

12Months 12Months 12Months 12Months 12 Months

Assets

Cash & Balances with RBI 22,014.79 15,719.46 10,036.79 13,364.79 9,095.19Balance with Banks, Money

at Call8,693.32 3,933.75 6,622.99 4,513.25 7,278.74

Advances 212,467.17 169,334.63 138,219.40 107,238.04 98,505.69

Investments 83,699.92 69,676.95 57,776.90 49,811.57 45,225.54

Gross Block 4,686.15 4,480.37 4,440.07 4,254.33 4,056.39

Accumulated Depreciation 1,841.74 1,620.99 1,510.61 1,337.46 1,195.04

Net Block 2,844.41 2,859.38 2,929.46 2,916.87 2,861.35

Capital Work In Progress 0.00 0.00 0.00 0.00 0.00

Other Assets 6,359.15 3,216.92 4,060.26 2,684.17 2,994.53

Total Assets 336,078.76 264,741.09 219,645.80 180,528.69 165,961.04

Contingent Liabilities 111,805.73 110,627.02 136,851.39 95,710.87 52,150.75

Bills for collection 29,041.74 21,206.47 25,757.73 25,299.63 15,660.41

Book Value (Rs) 405.00 305.83 244.87 202.33 197.83

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Part-1 Canara Bank

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