CHAPTER -1 INTRODUCTION

INTRODUCTION
The word bank it derived from the word bancus or banque that is French. There was other of the opinion that the word bank is originally derived from the German word back meaning oint for which was !taliani"ed into banco. #ut whatever be the origin of the word bank as $rof. %ramchandra %ao says.& !t would trace the history of banking in 'urope from middle ages.& Generally( banks do the business of money they take deposits of moneys from client and give loan to the person who has need of money. #ut in this age( for the convenience of customer( banks provides some other services to their customer such as bankers cheque( overdraft( internet banking( )T* facility( paying of bills( credit card( telegraphic transfer( insurance( demat etc. For a people( it is difficult to keep a very big amount of money in his house safely. +o( people save their money to bank. #ank gives loan to the person who has need of money and gets higher interest on it than the interest of deposit. The margin between the interest of loan and interest of deposit is the income of bank.

EARLY HISTORY OF BANKING

)s early as ,--- #... the #abylonians had developed a banking system. There is evidence to show the temples of #abylon were used as banks. )fter a period of time( there was a spread of irreligion( which soon destroyed the public sense of security in depositing money and valuable in temples. The priests were longer acting as financial agents. The %omans did minute regulations( as to conduct private banking and to create confidence in it. /oan banks were also common in %ome. From these the poor citi"ens received loans without paying interest( against security of land for 0 or 1 years. 2uring the early periods( although private individual mostly did the banking business( many countries established public banks either for the purpose of facilitating commerce or to serve the government. 3owever( upon the revival of civili"ation( growing necessity forced the issued in the middle of the 1, t h century and banks were established at 4enice and Genoa. The #ank of 4enice established in 1156 is supposed to be the most ancient bank. 7riginally( it was not a bank in the modern sense( during simply an office for the transfer of the public debt. !n !ndia( as early as the 4edic $eriod( banking( in most crude from e8isted. The books of *anu contain references regarding deposits( pledges( policy of loans( and rate of interest. True( the banking in those days largely mint money lending and they did not know the complicated mechanism of modern banking. This is true not only in the case of !ndia but also of other countries. )lthough( the business of banking is as old as authentic history( banking institutions have since than changed in character and content very much. They are developed from a few simple operations involving the satisfaction of a few individual wants to the complicated mechanism of modern banking( involving the satisfaction of 0

capital slowly seeking employment and thus providing the very life blood of commerce.

TYPE OF BANKS
%egional %ural #ank 9%%#: ;ationali"ed #ank +tate #ank Group .o<operative #ank $rivate #ank Foreign #ank RESERVE BANK OF INDIA The 3ilton<young commission( appointed in 1=,> has recommended the necessity of centrally empowered institution to have effective control over currency and financial transaction in the county. )ccordingly( the Government had then passed %eserve #ank of !ndia )ct( 1=01 and established the %eserve #ank of !ndia with effect from 1 s t )pril 1=05. The principal aim behind this was to organi"e proper control over the currency management in the interest of country benefits and to maintain financial stability. ?ith this( the %#! mainly looks after the following important functions@ To keep effective control over creation of credits and currency supply To control the #anking transactions of .entral and +tate Governments. To act as .entral administered )uthority of all other #anks in the country. To organi"e control over Foreign .urrency Transaction. To assist for improvement in financial aspect of the country. NATIONALISED BANKS

The #anking .ompany )ct establishes it in Auly 1=>= by nationali"ation of 11 ma or banks of !ndia. The sent percent ownership of the bank is of government of !ndia. STATE BANK GROUP The +tate #ank of !ndia was established under the +tate #ank of !ndia )ct( 1=55( the subsidiary banks under the +tate #ank of !ndia 9subsidiary #anks: )ct 1=5=. The %eserve #ank of !ndia owns the +tate #ank of !ndia( to a large e8tent( and rest of the part is some private ownership in the share capital of +tate #ank of !ndia. The +tate #ank of !ndia owns the subsidiary #anks.

OLD PRIVATE BANK These banks are registered under .ompany )ct( 1=5>. #asic 2ifference between co<operative banks and private banks is its aim. .o<operative banks work for its member and private banks work for earn profit.

NEW PRIVATE BANKS These banks lead the market of !ndian banking business in very short period. #ecause of its variety services and approach to handle customer and also because of long working hours and speed of

services. This is also registered under the .ompany )ct. 1=5>. #etween old and new private sector bank( there is wide difference. FOREIGN BANKS Foreign #ank means multi<countries bank. !n case of !ndia Foreign #anks are such #anks. ?hich open its branch office in !ndia and their head office is outside of !ndia.

>

STATUS WISE BIFURCATION OF BANKS

They are divided into two groups@ +cheduled #anks ;on +cheduled #anks

SCHEDULED BANKS
!n first schedule( government of !ndia notifies the $rimary #anks( which are licensed and whose demand and time liability are not less than 5- crores in 1=B6. Government of !ndia notify the $rimary banks( which are licensed and whose demand and time liability are not less than 1--crores can only qualify to be included in the second schedule since 1==0. ) bank becomes scheduled when it fulfils the followings@ ) grade rating from %#! 2emand and Time /iability over 1--crores. +atisfy the %#! guidelines related to .%% and +/% )s per the norms $riority +ector wise landing benefits of being a +cheduled co<operative are described below@< %#! would provide %ediscounting facility at nominal rate %#! gives remittance facility at par The demerits of becoming a scheduled co<operative bank is that the bank will not get -.5C subsidy from %#! 6

The conferment of scheduled status on the banks has certain advantages like refinance facility( directly industrial finance from %eserve #ank of !ndia. )vail of %eserve #ank of !ndia %emittance facility scheme( accept deposits from local bodies( quasi<government organi"ation( religious( and charitable institutions( guarantees and cheques issued by #anks are accepted by Government 2epartments. )t the same time( it casts greater responsibility on the banks in the maintenance of books of accounts and submissions of returns.

Scheduled ban ! "n Ind"a

+cheduled .ommercial #ank +cheduled .o<operative #ank

NON#SCHEDULED BANKS
The banks( which are not applicable as per the criteria of +cheduled #anks( are called as a ;on<scheduled #anks. These are very small banks.

$a%&' chan(e "n )he c&nd")"&n! ) ma or change in the conditions of operation of the #anks of #engal( #ombay and *adras occurred after 1B>-. ?ith the passing of the $aper .urrency )ct of 1B>1( the right of note issue of the presidency banks was abolished and the Government of !ndia assumed from 1 *arch 1B>, the sole power of issuing paper currency within #ritish !ndia. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. ;one of the three banks had till then any branches 9e8cept the sole attempt and that too a short< lived one by the #ank of #engal at *ir"apore in 1B0=: although the charters had given them such authority. #ut as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches( they embarked on branch e8pansion at a rapid pace. #y 1B6>( the branches( agencies and sub agencies of the three presidency banks covered most of the ma or parts and many of the inland trade centres in !ndia. ?hile the #ank of #engal had eighteen branches including its head office( seasonal branches and sub agencies( the #anks of #ombay and *adras had fifteen each.

Ban &* $ad'a! N&)e Da)ed +,-+ *&' R!.+/

1-

P'e!"denc0 Ban ! Ac) The presidency #anks )ct( which came into operation on 1 *ay 1B6>( brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was( however( terminated( though the banks continued to hold charge of the public debt offices in the three presidency towns( and the custody of a part of the government balances. The )ct also stipulated the creation of %eserve Treasuries at .alcutta( #ombay and *adras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such %eserve Treasuries but the latter could look upon them more as a favour than as a right.

Ban &* $ad'a!

The decision of the Government to keep the surplus balances in %eserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1B6>. The pace of e8pansion witnessed in the previous decade fell sharply although( in the case of the #ank of *adras( it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency. !ndia witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway

11

network e8panded to cover all the ma or regions of the country. ;ew irrigation networks in *adras( $un ab and +ind accelerated the process of conversion of subsistence crops into cash crops( a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais( the hills of )ssam and the ;ilgiris into regions of estate agriculture par e8cellence. )ll these resulted in the e8pansion of !ndiaDs international trade more than si8<fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading( manufacturing and mining activity in the sub<continent. ?hile the #anks of #engal and #ombay were engaged in the financing of large modern manufacturing industries( the #ank of *adras went into the financing of large modern manufacturing industries( the #ank of *adras went into the financing of small< scale industries in a way which had no parallel elsewhere. #ut the three banks were rigorously e8cluded from any business involving foreign e8change. ;ot only was such business considered risky for these banks( which held government deposits( it was also feared that these banks en oying government patronage would offer unfair competition to the e8change banks which had by then arrived in !ndia. This e8clusion continued till the creation of the %eserve #ank of !ndia in 1=05.

Ban &* B&1ba0

1,

P'e!"denc0 Ban ! &* Ben(al The $residency #anks of #engal( #ombay and *adras with their 6- branches were merged in 1=,1 to form the !mperial #ank of !ndia. The triad had been transformed into a monolith and a giant among !ndian commercial banks had emerged. The new bank took on the triple role of a commercial bank( a bankerDs bank and a banker to the government.

#ut this creation was preceded by years of deliberations on the need for a D+tate #ank of !ndiaD. ?hat eventually emerged was a Dhalf<way houseD combining the functions of a commercial bank and a quasi<central bank.

The establishment of the %eserve #ank of !ndia as the central bank of the country in 1=05 ended the quasi<central banking role of the !mperial #ank. The latter ceased to be bankers to the Government of !ndia and instead became agent of the %eserve #ank for the transaction of government business at centres at which the central bank was not established. #ut it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the %eserve #ank. !t also acted as a bankersD bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the %eserve #ank did not have offices. The bank was also the biggest tendered at the Treasury bill auctions conducted by the %eserve #ank on behalf of theGovernment.

The establishment of the %eserve #ank simultaneously saw important amendments being made to the constitution of the !mperial #ank converting it into a purely commercial bank. The earlier

10

restrictions on its business were removed and the bank was permitted to undertake foreie8changing business and e8ecutor and trustee business for the first time.

I12e'"al Ban The !mperial #ank during the three and a half decades of its e8istence recorded an impressive growth in terms of offices( reserves( deposits( investments and advances( the increases in some cases amounting to more than si8<fold. The advances( the increases in some cases amounting to more than si8<fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. #ut the lofty traditions of banking which the !mperial #ank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in !ndia could perhaps then equal. )ll these enabled the !mperial #ank to acquire a pre<eminent position in the !ndian banking industry and also secure a vital place in the countryDs economic life.

11

S)a12 &* I12e'"al Ban &* Ind"a

?hen !ndia attained freedom( the !mperial #ank had a capital base 9including reserves: of %s.11.B5 crores( deposits and advances of %s.,65.11 crores and %s.6,.=1 crores respectively and a network of 16, branches and more than ,-- sub offices e8tending all over the country.

F"'!) F"3e Yea' Plan !n 1=51( when the First Five Eear $lan was launched( the development of rural !ndia was given the highest priority. The commercial banks of the country including the !mperial #ank of !ndia had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. !n order( therefore( to serve the economy in general and the rural sector in particular( the )ll !ndia %ural .redit +urvey .ommittee recommended the creation of a state<partnered and state<sponsored bank by taking over the !mperial #ank of !ndia( and integrating with it( the former state<owned or state<associate banks. )n act was accordingly passed in $arliament in *ay 1=55 and the +tate #ank of !ndia was constituted on 1 Auly 1=55. *ore than a quarter of the resources of the !ndian banking system thus passed under the direct control of the +tate. /ater( the +tate #ank of !ndia 9+ubsidiary #anks: )ct was passed in 1=5=( enabling the +tate #ank of !ndia to take over eight former +tate<associated banks as its subsidiaries 9later named )ssociates:.

The +tate #ank of !ndia was thus born with a new sense of social purpose aided by the 1B- offices comprising branches( sub offices and three /ocal 3ead 7ffices inherited from the !mperial #ank. The concept of banking as mere repositories of the communityDs savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking sub serving the growing and diversified financial needs of planned economic development. The +tate #ank of !ndia was destined to act as the pacesetter in this respect and lead the !ndian banking system into the e8citing field of national development 15

The #ank is actively involved since 1=60 in non<profit activity called .ommunity +ervices #anking. )ll +#! branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. +#! business is more than banking because we touch the lives of people anywhere in many ways. +#! commitment to nation<building is complete F comprehensive.

TECHNOLOGY UPGRADATION +#!s !nformation Technology $rogramme aims at achieving efficiency in operations( meeting customer and market e8pectations and facing competition. +#! achievements are summari"ed below@
FULL BRANCH CO$PUTERISATION 4FCB!56

)ll the branches of the #ank are now fully to improvement in customer service.

computerised.

This

strategy

has

contributed

AT$ SERVICES6

There are 5,=- )T*s on the )T* ;etwork. These )T*s are located in 16,1

centers spread across the length and breadth of the country( thereby creating a truly national network of )T*s with an unparalleled reach. 4alue added services like )T* locator( payment of fees for college students( multilingual screens( voice over and drawl of cash advance by +#! credit card holders have been introduced.
INTERNET BANKING 4INB56

This on<line channel enables customers to access their account

information and initiate transactions on a ,186( boundary less basis. ,,,5 branches( covering 555 centers are e8tending !;# service to their customers. )ll functionalities other than .ash and .learing have been e8tended to individual retail customers. ) separate !nternet #anking *odule for .orporate customers has been launched and available at 10-5 branches. #ulk upload of data for .orporate( !nter<branch funds transfer for %etail customers( 7nline payment of .ustoms duty

1>

and Govt. ta8( 'lectronic #ill $ayment( +*+ )lerts( '<$oll( !!T G)T' Fee .ollection( 7ff<line .ustomer %egistration $rocess and %ailway Ticket #ooking are the new features deployed.

GOVT. BUSINESS 6 +oftware has been developed and rolled out at 66B5 fully computerised branches. 'lectronic generation of all reports for reporting( settlement and reconciliation of Govt. funds is available.

STEPS6 Gnder +T'$+( the bankDs electronic funds transfer system( the $roducts offered are eTransfer 9eT:( e%ealisation 9e%:( e2ebit 9.*$: and )T* reconciliation. +T'$+ handles payment messages and reconciliation simultaneously. SEFT6 +#! has launched the +pecial 'lectronic Fund Transfer 9+'FT: +cheme of %#!( to facilitate efficient and e8peditious !nter<bank transfer of funds. ,11 branches of our #ank in various /37 .entres are participating in the scheme. +ecurity of message transmission has been enhanced. $ICR Cen)'e6 *!.% .heque $rocessing systems are operational at 1> centre vi". *umbai( ;ew 2elhi( .hennai( Holkata( 4adodara( +urat( $atna( Aabalpur( Gwalior( Aodhpur( Trichur( .alicut( ;asik( %aipur( #hubaneswar and 2ehradun. C&'e Ban n "n(6 The .ore #anking +olution provides the state<of<the<art anywhere anytime banking for our customers. The facility is available at 1-1, branches. T'ade F"nance 6 The solution has been implemented( providing efficiency in handling Trade Finance transactions with !nternet access to customers and greatly enhances the bankDs services to .orporate and .ommercial ;etwork branches. This new Trade Finance solution( 'I!*#!//+( will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year. 16

WAN 6 The bank has set up a ?ide )rea ;etwork( known as +#! connect( which provides connectivity to 1B1= branchesJoffices of +#! Group across 0B5 cities as at 01st *arch ,--B. This network provides across the board benefits by providing nationwide connectivity for its business applications

D"'ec)&'! &n )he Ban 7! Cen)'al B&a'd a! &n 8+!) Dece1be' 9//,

#7)%2 7F 2!%'.T7%+
Cen)'al B&a'd O* S)a)e Ban O* Ind"a 4A! &n +!) A2'"l 9//,5 Sl.N&. Na1e &* D"'ec)&' +hri 7.$. #hatt 1. .hairman +hri +.H.#hattacharyya ,. *2 F ..F%7 0. +hri +uman Humar #ery 1. 2r. )shok Ahun hunwala .5 2r. 2eva ;and #alodhi >. $rof. *ohd. +alahuddin )nsari 6. 2r.9*rs.: 4asantha #harucha B. +hri )run %amanathan =. +mt. +hyamala Gopinath Sec. &* SBI Ac): +;<< 1=9a: 1=9b: 1=9c: 1=9c: 1=9d: 1=9d: 1=9d: 1=9e: 1=9f:

ASSOCIATE BANKS

1B

S)a)e Ban &* Ind"a has the following seven )ssociate #anks 9)#s: with controlling interest ranging from 65C to 1--C. 1. +tate #ank of #ikaner and Aaipur 9+##A: ,. +tate #ank of 3yderabad 9+#3: 0. +tate #ank of !ndore 9+#!r: 1. +tate #ank of *ysore 9+#*: 5. +tate #ank of $atiala 9+#$: >. +tate #ank of +aurashtra 9+#+: 6. +tate #ank of Travancore 9+#T:

)s on 01st march( ,--B the financial information of +tate bank of !ndia is given as under

F"nanc"al De)a"l!
Ca2")al B&''&?"n(! De2&!")! In3e!)1en)! Ad3ance! P'&*")

RS 4"n c'&'e5
-8+.=> <+:>9>.=+ <:8>:=/8.;= +:,;:8/+.9> =:+-:>-,.+; -:>9;.<<

+ource @ balance sheet and profit and loss accounts schedule of state bank of !ndia from annual reports of year ending 01st march( ,--B

1=

Gene'al Sha'eh&lde' In*&'1a)"&n

;umber of shareholders as on 0-.=.,--1 was 5.>1 lacs. The shareholding pattern was as under.

SHARE HOLDERS Reserve Bank of India Non-residents (FIIs, OCBs, NRIs) Banks, FIs including insurance companies Mutual funds !"I #omestic companies private corporate $odies trusts Resident individuals

PERCENTAGES 59.73 % 19.83 % 6.21 % 6.47 % 1.79 % 5.97 %

,-

5.97% 6.47%1.79% 6.21%

19.83%

59.73%

Reserve Bank of India Non-residents (FIIs !"Bs NRIs# Banks FIs in$%&din' ins&ran$e $o()anies *&t&a% f&nds+,-I .o(esti$ $o()anies+)rivate $or)orate /odies+tr&sts Resident individ&a%s

MISSION

To retain the Banks Position as the Premier Indian Financial Services Group, with world class standards and significant Global business, committed to e cellence in customer, shareholder and emplo!ee satisfaction and to pla! a leading role in the e panding and diversif!ing financial services sector while continuing emphasis, on its development banking role"
DR. KALA$ TALKS ABOUT SBI PLAN AND $ISSON

,1

'? 2'/3! @ $resident ).$.A. )bdul Halam on Tuesday chalked out a seven<point action plan for the +tate #ank of !ndia 9+#!: while urging the countryDs premier bank to create a %s. 5(---<crore venture capital fund and hike lending to the farm sector. !n his address at the +#!Ds #icentennial .elebrations here( *r. Halam noted that within the ne8t three years( the bank should raise the credit to the farm and agro<processing sector from 1- to ,per cent of its total loan disbursal. )gricultural growth( he said( was lagging behind while sectors such as manufacturing and services were showing robust increases. ) higher credit disbursal( he said( was essential to hike farm growth to over four per cent as it was a vital requirement for increasing the overall Gross 2omestic $roduct growth to 1- per cent. Gnveiling his plan( *r. Halam asked the +#! to allocate %s. 5(--- crores as venture capital from ,--6<-B for the purposes of funding innovative scientists and technologists for speedier societal transformation. This would include the development of !.T products( software development and software services. The $resident also advised the bank to create and nurture five rural development pro ects( on the lines of the bio<fuel pro ect and seaweed pro ect( as it had the potential to provide employment to 5- lakh persons in the rural areas at the least. *r. Halam also asked the +#! to adopt and innovatively fund at least one lakh sick units in the small<scale sector to infuse the latest technology and turn them into profitable ventures. )nother sector with great potential( *r. Halam said( was medical tourism in which the bank could e8tend funds at competitive interest rates for setting up corporate hospitals which would also serve the rural areas. /ikewise( yet another sector for the bankDs participation( he said( was infrastructure

AWARD@RECOGNITION

+#! has bagged +#! bagged the has awards for the awards for K*ost $referred K*ost $referred #ank& and K*ost #ank& and K*ost preferred brand& preferred brand& for home /oan in for home /oan in CNBC A?aaA CNBC A?aaA .onsumer

.onsumer )wards in )wards in )ugust ,--6 )ugust ,--6

The only The only Indian Bank Indian Banka to $ind to $ind a place in the place in the Fortune Fortune Global '00 Global '00 (ist (ist
,,

SBI is placed SBI is th placed at 70 in Top th at 70 in Top 1000 Banks 1000 Survey Banks by Survey by Banker Banker Magazine !uly Magazine !uly "007 #up "007 $ro% 107 #up last $ro% 107 last year& year&

SBI ranked ) th SBI in ranked ) the in *cono%ics the *cono%ics Ti%es Market Ti%es Market +ap (ist #up +ap (ist #up $ro% '0 last $ro% year& '0 last year&

th

Today SBI,SBI Today +-. SBI,SBI is the +-. is the No/1 No/1 syndicator o$ syndicator o$ do%estic debt do%estic debt in Asia in Asia Paci ic Paci ic . REGION REGION.

No/1 in No/1 in %ergers 0 %ergers 0 -c1uisition -c1uisition 2eals #31 2eals #31 2eals o$ 4S 5 2eals o$ 4S 5 16/7bn& 16/7bn&

S!I is No 1 S!I is No 1 "ro#i$er o "ro#i$er o AGRI AGRI Finance an$ Finance No% 1 an$ in No% 1 in Cre$it Cre$it Lin&in' o Lin&in' o Rs (%)* lacs Rs (%)* lacs SHGS SHGS

SBI is %arket SBI is %arket (eader in (eader in $inancing $inancing SSIs 8ith a SSIs 8ith a %arket share %arket share o$ "69 o$ "69
,0

Rea$ers Rea$ers $i'est +a, $i'est +a, -. Gol$en -. Gol$en A/ar$ or A/ar$ or bein' bein' a0on' t1e a0on' t1e t/o 0ost t/o 0ost truste$ truste$ ban&s in ban&s in

Gp gradation of Gp gradation of ratings by citi ratings by citi groupJ *organ groupJ *organ +tanley +tanley *oodyss +F$ *oodyss +F$

0rd in the 0rd in the Ec&n&1"c Ec&n&1"c T"1e! brand T"1e! brand 'quity %anking 'quity %anking Top 5- most Top 5- most trusted service trusted service brands in the brands in the service sector service sector

CNN I!N CNN I!N net8ork 17 has net8ork 17 has selected shri/ selected shri/ O/./Bhatt as O/./Bhatt as Indian o$ the Indian o$ the :ear Business :ear Business "007 $or sho8ing "007 $or sho8ing ho8 a public ho8 a public sector behe%oth sector behe%oth can $le; its can $le; its %uscle in the %uscle in the $erociously $erociously co%petitive co%petitive Banking sector Banking sector

,1

Bu!"ne!! Bu!"ne!! S)anda'd ha! S)anda'd ha! A?a'ded the A?a'ded the #est #anker of #est #anker of the Eear )ward the Eear )ward to +hri to +hri 7.$.#hatt for his 7.$.#hatt for his initiative to initiative to reenergi"e the reenergi"e the #ank #ank for Asian centre Asian centre for corporate corporate Governance & Governance & Sustainability and Sustainability and Indian Merchants Indian Merchants Chamber has Chamber has awarded the awarded the Transformational Transformational Leader Award 2 ! Leader Award 2 ! to Shri "#$#%hatt to "#$#%hatt for Shri leadership& for leadership& charisma& charisma& inspiration and inspiration and intellectual intellectual sti0ulation or t1e sti0ulation or t1e entire S!I tea0

ORGNISATION STRUCTURE
+<-I=M-N

,5

D$D @ CCO

D$D 4I @ $A5 4L&ca)ed a) H0de'abad5

D$D @ CFO

D$D RURAL RURAL @ @ AGRI AGRI

BUSINESS BUSINESS GROUP GROUP

D$D @ CDO

D$D CORPORATE STRATEGY @ NEW BUSINESS CHIF ECONO$IC ADVISOR

D$D 4IT5

CVO

$D @ GE 4CB5

$D @ GE 4NB5

D$D @ GE 4TRESASURY @ $ARKETS

D$D @ GE 4ASSOCIATES @ +G#+!2!)%!'+

2M2> 2*.4T: M-N-?IN? 2I=*+TO= +@O> +<I*@ @IN-N* O@@I+*= NB> NON B-NAIN?

++O> +<I*@ +O=.O=-T* O@@I+*= +B> +O=* B-NAIN? IB> INT*=N-TION-( B-NAIN?

$ABOR CO$PETITOR
,>

+tate bank of !ndia has been facing great rivalry and ma or competition with other public sector banks and some of private commercial banks. +tate bank of !ndia has many banks as art rival. +ome of its art rival.

L"!) &* 1a%&' c&12e)")&'! &* SBI

I. !.!.! #ank II. #ank of #aroda III. .anara #ank IV. $un ab ;ational #ank V. #ank of !ndia VI. Gnion #ank of !ndia VII. .entral #ank of !ndia VIII. 32F. #ank IC. 7riental #ank of .ommerce.
3ere especially some of the public sector and private sector banks are giving hardcore competition to the state bank of !ndia. +o let us have some of the best banks which is also mentioned above and mentioned below in detail.

ICICI BANK
!.!.! bank stands for !ndustrial .redit and !nvestment .orporation of !ndia. This !.!.! bank is one of the heavyweight banks of private sector of !ndia. !t is providing the core competition to the state bank of !ndia. 'specially in lending money( !nvestment. #ut in profit making state bank of !ndia is standing ahead. )nd when and where social responsibility of concern state bank of !ndia is heading high than any other banks in !ndia

,6

HDFC BANK
32F. stands for 3ousing 2evelopment and Finance .orporation ltd. This is also one of the leading banks of !ndia in private sector. This bank is also providing hardcore competition to all the banks as well as state bank of !ndia #ut we mention earlier that state bank of !ndia is ahead in banking !ndia. +o 32F. bank has to work hard to reach at the milestone achieved by state bank of !ndia.

BANK OF BARODA
#ank of #aroda is also one of the leading public sector banks in !ndia. #ank of #aroda is known as #7#. This $+G bank is also providing the tough competition to all other banks in !ndia. The #7# bank is very renowned banks of !ndia today. !t is very changed and very professionally working public sector banks #7# has got professional in recent time so. !t has to work very hard to achieve position and reputation which are achieved by +tate +ank of !ndia.

,B

$ARKET SHARE IN DEPOSITES AND ADVANCES

#$%& 'F B$#(

ST$T& B$#( 'F I#+I$ *+F- B$#( 5-' B$#( -&#T)$ B$#( 'F I#+I$ 5#I'# B$#( 'F I#+I$ B$#( 'F B$)'+$ B$#( 'F I#+I$ P5#9$B #$TI'#$: B$#( -$#$)$ B$#( I-I-I B$#( 'T*&) B$#(S

%$)(&T S*$)& I# +&'PSITS $#+ $+,$#-&S ./0

12"13 / 1"24 / 1"26/ 1"76 / 7"31 / 6"42 / 6"38 / ;"76 / ;"64 / 42"11 / 33"3< /

T'T$:

422/

MARKET SHARE

1-2-3 B2N4 !F IN.I2 5.F" B2N4 ,"! B2N4

23%

31%

10% 7% 6% 5%

3% 3% 3% 5% 4%

"3N-R2 B2N4 !F IN.I2 ,NI!N B2N4 !F IN.I2 B2N4 !F B2R!.2 B2N4 !F IN.I2 6,N72B N2-I!N28 B2N4

,=

$AIN PRODUCT OF SBI

HOUSING LOAN6
3ome is where the heart isL )t +#!( we understand this better than most M the toil and sweat that goes into buildingJ buying a house and the subsequent pride and oy of owning one. This is why our 3ousing loan schemes are designed to make it simple for you to make a choice at least as far as financing goesL El"("b"l")0 *inimum age ,1 years as on the date of sanction +teady source of income L&an A1&un) )pplicantJ any one of the applicants are aged over ,1 years and upto 15 years M >- times ;et *onthly !ncome 9;*!: or 5 times ;et )nnual !ncome 9;)!:( sub ect to aggregate repayment obligations not '8ceeding 56.5-C of ;*!J ;)! )pplicant9s: aged over 15 years of ageM 1B times ;*! or 1 times ;)!( sub ect to aggregate repayment obligations not e8ceeding 5-Cof ;*!J ;)! $a'("n $urchaseJ .onstruction of a new 3ouseJ FlatJ $lot of land@ 15C $urchase of an e8isting 3ouseJ Flat@ 15C %epairsJ %enovation of an e8isting 3ouseJ Flat@ ,-C

0-

HOUSING LOAN D INTEREST RATES6 In)e'e!) 'a)e! Fl&a)"n( "n)e'e!) 'a)e! 4l"n ed )& S)a)e Ban Ad3ance Ra)e D SBAR56 4SBAR6 +9.><E5 Tenu'e Gpto 5 years )bove 5 and upto 1- years )bove 1- and upto 15 years )bove 15 and upto ,- years Tenu'e Gpto 5 years )bove 5 and upto 1- years Ra)e &* In)e'e!) 42.a.5 ,.--C below +#)% *inimum 1-.65C 1.5-C below +#)% *inimum 11.,5C 1.5-C below +#)% *inimum 11.,5C 1.--C below +#)% *inimum 11.65C Ra)e &* In)e'e!) 42.a.5F 11.5-C 11.65C

$aG"1u1 Re2a01en) Pe'"&d For applicants upto 15 years of age@ ,- years For applicants over 15 years of age@ 15 years

CAR LOAN

01

*ove ahead in life with +#! .ar /oansL !f you have been putting off purchasing that car( we invite you to go through our .ar /oans scheme. /ow interest rates( easy repayment options( total transparency( /ow processing charges( finance to include vehicle registration charges( insurance and one time road ta8. ?ell( what are you waiting forN Aust step in to any of our branches 9more than >---: that offer .ar /oans

or our $ersonal #anking #ranches and give wheels to your desireL Eou can apply for an +#! .ar /oan to purchase@
) new car( eep( *ulti Gtility 4ehicle 9*G4: or +G4 9any make or model: )n old car J eep J *G4 J+G4 9not more than 5 years old:. 9any make or model:

El"("b"l")0 To avail an +#! .ar /oan( you should be !ndividual between the age of ,1<>5 years of age. ) $ermanent employee of +tateJ.entral Government( $ublic +ector Gndertaking( $rivate company or a reputed establishment ) $rofessionals or self<employed individual who is an income ta8 assesses or ) $erson engaged in agriculture and allied activities. ;et )nnual !ncome %s. 65(---J< and above.

Sal"en) Fea)u'e! L&an A1&un) There is no upper limit for the amount of a car loan. !t is limited only by your repaying capacity. ) ma8imum loan amount of ,.5 times the net annual income can be sanctioned. !f married( your spouses income could also be considered provided the spouse guarantees the loan The loan amount includes finance for one<time road ta8( registration and insuranceL

$a'("n Ne?Hu!ed 3eh"cle! 1-<15C when loan is upto %s.> lacs ,-<0-C when loan e8ceeds %s.> lacs

Re2a01en) Eou en oy the longest repayment period in the industry with us. %epayment period for new vehicles@ $aG"1u1 &* ,= 1&n)h!

0,

%epayment period for old vehicles@ Gp to B1 months from the date of original purchase of the vehicle.

SCHE$E FOR LOAN FOR TWO WHEELERS EG"!)"n( In)e'e!) S)'uc)u'e ?.e.*. 8+./8.9//, Fl&a)"n( Ra)e &* In)e'e!) F"Ged Ra)e &* In)e'e!) NOTE6 1,.,5C p.a. 1,.5-C p.a.

Ra)e Re3"!ed In)e'e!) S)'uc)u'e ?.e.*. 9>./-.9//, 1,.65C p.a. 10.--C p.a.

Ra)e

All )he!e "n)e'e!) 'a)e! a'e !ub%ec) )& chan(e: ?")h&u) n&)"ce . The 'e3"!ed "n)e'e!) 'a)e! a'e a22l"cable &nl0 &n *'e!h de2&!")! and 'ene?al &* 1a)u'"n( de2&!")!.

EDUCATION LOAN6
) term loan granted to !ndian ;ationals for pursuing higher education in !ndia or abroad where admission has been secured. El"("ble C&u'!e! )ll courses having employment prospects are eligible. Graduation coursesJ $ost graduation coursesJ $rofessional courses 7ther courses approved by GG.JGovernmentJ)!.T' etc.

A1&un) &* L&an For studies in !ndia( ma8imum %s. 1- lacs +tudies abroad( ma8imum %s. ,- lacs

In)e'e!) Ra)e For loans upto %s. 1 lakh 1-.5-C p.a. For loans above %s. 1 lakh 11.5-C p.a. Re2a01en) Tenu'e %epayment will commence one year after completion of course or > months after securing a ob( whichever is earlier.

00

Place &* S)ud0 !n !ndia )broad

L&an A1&un) Gp to %s. 6.5 lacs )bove %s. 6.5 lacs Gp to %s. 15 lacs )bove %s. 15 lacs

Re2a01en) "n Yea'! 5<6 5<15<6 5<1-

Pe'"&d

Secu'")0 A1&un) Gpto %s. 1 lacs S)ud"e! In Ind"a ;o +ecurity Third $arty )bove %s. 1 lacs to %s. 6.5- lacs Guarantee Tangible .ollateral )bove %s. 6.5- lacs to %s. 1- lacs9!ndia:J security for full %s. 15 lacs9)broad: value of loan %s 15 lacs to %s. ,- lacs OOO S)ud"e! Ab'&ad ;o +ecurity Third $arty Guarantee Tangible .ollateral security of suitable value of loan or third party guarantee Tangible .ollateral security for full value of loan

$a'("n For loans up to %s.1.- lacs @ ;o *argin For loans above %s.1.- lacs@ o +tudies in !ndia@ 5C o +tudies )broad@ 15C

01

HU$AN RESOURCES
4+5 Lea'n"n( @ De3el&21en) #ank has taken up several key initiatives to motivate and retain its manpower. !n order to channeli"e the energy created by the $arivartan campaign( the #ank has launched a /andmark e8ercise for creation of the new 4ision *ission F 4alues statement which will be in place shortly. Eoung officers are being encouraged to take<up management education by way of sponsorship tie<up with the +. $. Aain !nstitute of *anagement. 5- officers have been enrolled in the programme on a trial basis. #ank is strong in the areas of training F development through 1 ape8 level training colleges and 15 learning centres across the country. e<learning pro ect has been launched to enable any where( anytime learning. 495 HR$S For leveraging technology in employee management area( the #ank has started automation of its 3% processes through +)$<'%$<3%*+ software. 7nce fully implemented( it will not only create a central repository of all employees data but also will make available a variety of services( like online request submission and viewing of individual data etc. to all the employees across the +tate #ank group on an online real time basis. 3%*+ will bring efficiency in 3% operations and help the *anagement in making employee related decisions faster. $ensioners of +#!( !#! and )ssociate #anks will also form a part of this initiative and their pension will be processed through 3%*+. 485 Pe'!&nnel $ana(e1en) The #ank has launched $erformance /inked !ncentive +cheme for the #ranch managersJ)G*s9%egion:J 2G*s9*odule: and Team !ncentive +cheme for the staff members of the #ranch. The incentive scheme was launched with the aim of enthusing and motivating the staff members of the #ranch so that the bank is placed in a position to face the competition unleashed due to liberali"ation of economy and maintain its lead over others. The scheme has been successful in enthusing the staff and garnering #usiness for the #ank. 4=5 E12l&0ee! Sha'e Pu'cha!e Sche1e 4SBI ESPS#9//,5 The #ank also launched 'mployees +hare $urchase +cheme along with the %ights issue with the 7b ective of providing incentive to 'ligible 'mployees( to stimulate their efforts towards the continued success of the #ank and to provide a *eans to attract( reward and retain talent in the 05

#ank( to reward eligible employees as also to encourage equity ownership by them. The price was fi8ed at %s.15=-J< 9the face value of 1 share is %s.1-J<: per equity share. The +cheme 7pened on ,B.-0.,--B and closed on 0-.-1.,--B. 4<5 Indu!)'"al Rela)"&n! ) number of 3% initiatives such a payment of $erformance linked incentives to staff( rationalisation of promotion policies and improvement in various staff loan schemes were taken up during the year. +uch initiatives have helped in increasing the motivation level of staff significantly. To meet requirement of staff for an ongoing branch e8pansion programme( separate recruitment e8ercises were undertaken to recruit clerical staff for metroJurban centers( ruralJsemi urban centers and also for marketing. This also helped in reducing the age profile of staff and posting of younger staff at the front line. The process of consultation and discussion with both the staff and officers federations continued during the year. The industrial relations climate of the #ank remained cordial during the year. 4-5 S)a** S)'en()h The #ank had a total strength of 1(6=(,-5 on the 01 st *arch( ,--B. 7f this( 0,.,0C are officers( 1,.B6C clerical staff and the remaining ,1.=-C were sub<staff. 4>5 I12le1en)a)"&n &* Pe'!&n! ?")h d"!ab"l")"e! 4PWD5 Ac) +;;< 7ur #ank provides reservation to persons with disabilities 9$?2s: as per the guidelines of the Government of !ndia and section 00 of the $?2 )ct 1==5. The total number of persons with disabilities who were employed as on 01.-0.,--B was as follows@ 4,5 Re2'e!en)a)"&n &* Scheduled Ca!)e! and Scheduled T'"be! )s on the 01st *arch( ,--B( 01B-, 91=.1,C: of the #anks total staff strength( belonged to +cheduled .aste and 111>- 9>.0-C: belonged to +cheduled Tribes. !n order to effectively redress the grievances of the +.J+T employees( /iaison 7fficers have been designated at all administrative offices of the #ank. +enior officials of the #ank hold regular meetings at periodic intervals with the representatives of +.J+T ?elfare Federation and +.J+T ?elfare )ssociation at .orporate .entre( /37s and Ponal 7ffices. The #ank conducts workshops on reservation policy for +.sJ+TsJ7#.s. +o also( pre recruitment and pre<promotion training programmes are conducted by the #ank to enable +.J+Tcandidates to achieve the prescribed standards to effectively compete with other candidates. 0>

CHAPTER-2 RE3IE4 OF LITERATURE

06

%eview of literature helps a researcher to get acquainted with hisJher selected research problem and also may provide some guidelines in selecting a proper research methodology. !t is also helpful in finding out the research gaps in the e8isting literature. This will help the researcher in fine<tuning hisJher research problem and methodology. )nother advantage of reviewing in the e8isting literature is that in cases where the research problems are similar( the conclusions and findings may be easily compared. This will help the researcher in determining whether hisJher findings are possible or not.

A Re!ea'ch A')"cle en)")led IH&u!"n( C'ed") S")ua)"&n "n E"(h)"e!J b0 Lall V"na0 4+;,=5
3e has focused attention upon formal factor 9$ermanent .onstruction: which served mainly to the 3!G and *!G( the loan meets only 16C of the price of the house( forcing the borrowers to make very large down payments. )lso the price of a typical house was above 0 times the annual families income of the borrowers. !n spite of( the entire system of housing allocation and credit the supply of affordable funds was much smaller than demand. Thus( large growth in urban population and the historically low priority given to housing( supply falls very short of demand and need. Therefore( not only that the volume of saving and investments should increase but also larger volumes of capital should flow into housing. )lso( accessibility and terms and condition of housing credit will determine the long term redistribution performance in housing. The Re!ea'ch S)ud0 en)")led IH&u!"n( "n )he Ne? $"llenn"u16 A H&1e W")h&u) EKu")0 "! Bu!) a Ren)al ?")h Deb)J b0 B&!hua R&!ne' 49//+5 3e studied the prospects of the G.+. housing J mortgage sector over the ne8t several years. #ased on his analysis( he believes that( there are elements in place for the housing sector to continue to e8perience growth well above G2$. 3owever( he believes that there are risks that can materially distort the growth prospects of the sector. +pecifically( it appears that a large portion of the housing sectors growth in the 1==-s came from the easing of the credit underwriting process. +uch easing includes@ The drastic reduction of minimum down payment levels from ,-C to -C. ) focused effort to target the Klow income& borrower. 0B

 The reduction in private mortgage insurance requirements on high loan to value mortgages. The increasing use of software to streamline the origination process and modify J recast delinquent loans in order to keep them classified as Kcurrent&. .hanges in the appraisal process which has led to widespread over appraisal J overvaluation problems. !f these trends remain in place( it is likely that the home purchase boom of the past decade will continue unabated. 2espite the increasingly more difficult economic environment( it may be possible for lenders to further ease credit standards and more fully e8ploit less penetrated markets. %ecently( targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. !ndustry participants in combination with eased regulatory standards and the support of the G+'s 9Government +ponsored 'nterprises: have overcome many of them. !f there is an economic disruption that causes a marked rise in unemployment( the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership( a decline in real estate prices and increased foreclosure e8penses. These impacts would be e8acerbated by the increasing debt burden of the G.+. consumer and the reduction of home equity available in the home. )lthough we have yet to see any materially negative consequences of the rela8ation of credit standards( we believe the risk of credit rela8ation and leverage cant be ignored. !mportantly( a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. !n an effort to keep homeowners in the home and reduce foreclosure e8penses( holders of mortgage assets are currently recasting or modifying troubled loans. +uch policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. 3owever( a protracted housing slowdown could eventually cause modifications to become uneconomic and( thus( credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures. A 'e!ea'ch a')"cle en)")led IH&1e O?ne'!h"2 R"! Be0&nd a Sub2'"1e C'"!"!6 The R&le &* Del"nKuenc0 $ana(e1en)J b0 Bac& $el"!!a B. 49//95 +he concluded that public investment in and promotion of homeownership and the home mortgage market often relies on three ustifications to supplement shelter goals@ to build household wealth and economic self<sufficiency( to generate positive social psychological states( and to develop stable neighborhoods and communities. 3ome ownership and mortgage obligations do not inherently further these ob ectives( however and sometimes undermine them. The most visible triggers of the recent surge in subprime delinquency have produced calls for emergency foreclosure avoidance interventions 9as well as front<end regulatory fi8es:. ?hatever their merit( she contend that a system of mortgage delinquency management should be an enduring component of housing policy. Furtherance of housing and household policy ob ectives

0=

hinges in part. 7n the conditions under which homeownership is obtained( maintained( leveraged( and in some situations e8ited. Given that high leverage or trigger events such as ob loss and medical problems play significant roles in mortgage delinquency independent of loan terms( better origination practices cannot eliminate the need for delinquency management. !n terms of analy"ing this framework( it is tempting to focus on its impact on mortgage credit cost and access or on the absolute number of homes temporarily saved( but her proposed analysis is based on whether the system honors and furthers the goals of wealth building( positive social psychological states( and community development. #ecause those ends are not ine8orably linked to ownership generally or owning a particular home( a system of delinquency management that honors these ob ectives should strive to provide fair( transparent( humane( and predictable strategies for home e8it as well as for home retention. A 'e!ea'ch a')"cle en)")led IH&u!"n( P'&ble1 and Publ"c Ac)"&n6 C&n)"nued Inc&12a)"b"l")0 EG2e'"ence *'&1 a S&u)h Ind"an S)a)eJ b0 $. $ahade3a 49//=5. !n this article( the author has analysed the nature and distribution of the housing problem in Harnataka and e8amined how the state has addressed this issue. !n particular( it considers the strategies adopted during the =-s and identifies a number of failures including the task force on housing. +ome of the ma or weaknesses( pertaining to incidence by type and by rural<urban areas( on approaches( on financial requirements and issue of development and redevelopment are e8amined to propose alternative policy strategies to effectively address the housing problem in the state. From the analysis it is found that Harnataka is not an e8ception to the general rule that housing strategies( which were evolved over decades( have not taken the direction e8pected. #y and large( the sect oral policies pursued were only ad hoc without a clear focus. /ack of comprehensive policy to guide housing development on equity principle together with ad hoc approaches( have failed to deliver housing benefits and develop critical housing inputs on a sound footing with equal opportunities for all need based policy interventions hassle free input delivery mechanism e8isting housing shortage and rural<urban disparities substantially. Gnfortunately( this did not happen. Thus( policy issues like what policies are needed for the state of Harnataka to guide housing development( increasing the housing supply to the poorer and marginali"ed sections( mobili"ing the needed financial resources and a host of other issues in addressing the housing problem emerge. A !)ud0 en)")led IPe'*&'1ance &* H&u!"n( F"nance C&12an"e!J b0 B'a' Ba!1"ndee2 e).al. 49//<5 The ob ectives of this study were@ to study the operational performance( and the financial performance of the selected institutions. The study covers three institutions vi". 32F.( /!. F $;#. The study is based on secondary data that have been collected from the annual reports and web sites of the institutions selected under study. !t covers the period from 1==-<=1 to ,--,<-0. The performance of the selected institutions has been studied by using percentages( compound growths rates and various ratios. Findings of the study are@< 1-

-*$PT&)=1 )&S&$)-* %&T*'+':'G>

11

)&S&$)-* +&SIG#
7ne of the scientific principles of modern management is planning( and if someone wants to conduct a research pro ect effectively and efficiently( then he has to plan the whole research process. This research plan is the argon of the researcher( is called a research design. The word design means to prepare a preliminary sketch or to plan for work to be e8ecuted( and research design would mean to prepare a plan to e8ecute a research report. ! have done my research pro ect mainly used eG2l&'a)&'0 'e!ea'ch !)ud"e! .

& plorator! research studies : -

*eans are also termed as formulative

research studies. The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypotheses from an operational point of view. The ma or emphasis in such studies is on discovery of ideas and insights. )s such the research design appropriate for such studies must be fle8ible enough to provide opportunity for considering different aspects of the problem under study.

1,

SA$PLING DESIGN
SA$PLING UNIT6 The research work is in +asaram and sample would include the
employees of STATE BANK OF INDIA. This may include the recruiter( trainers and the candidates that are interviewed at STATE BANK OF INDIA. SA$PLING SILE6 +ince it would not be possible to study whole of the universe( i.e. the people who are using these products( in this research pro ect so ! will be taking the !a12le !"Ae &* ,/ "nd"3"dual! CUSTO$ERS which would be representing the entire universe or population. SA$PLING TECHNIMUE6 The sampling method is c&n3en"ence ".e. n&n#2'&bab"l")0 )echn"Kue! of sampling and anybody who uses these products respective places.

10

Re!ea'ch &b%ec)"3e!
+ummer !nternship $ro ect gives a practical e8posure and helps in acquiring the on road skills. First and foremost ob ective is to find out the reasons for using of )dvance $roduct from +#!. To find out the services that other bank given to their customer. To generate the leads through the survey. To sort out the prospective leads from the data ! have collected through the survey. To build the relation ship with the customers and to follow up them( make sure that they are satisfied with the product. To maintain good relationship with the corporate employees. To get more references from the customers and generate new leads by following a chain process. To place +#! )dvance $roduct ahead of the competitors. To find out the customer awareness on booming )dvance $roduct market and to find out the using patterns of the people To make the customer aware of the benefits of the product and convince him to go for +#! )dvance $roduct. 11

15

S"(n"*"cance and !c&2e

The geographical scope of the study is restricted to #hubaneswar only with sample si"e of ,--people. )ll the analysis and suggestions are based on the analysis of the both primary and secondary data. There fore the scope of the study revolves around the following aspects@< .onsumer perception towards )dvance $roduct .onsumer awareness about )dvance $roduct scheme and its benefit. )ware the #ank about the customer problems( especially in case of automobile sector.

1>

C&llec)"&n &* da)a

DATA COLLECTION #oth the primary and secondary will be the sources of data collection but in this study the data was collected mainly through primary sources. !n primary sources and +econdary sources we include@

COLLECTION OF DATA

P'"1a'0 S&u'ce

Sec&nda'0 S&u'ce

In)e'3"e? 4"5 4""5

Mue!)"&nna"'e

C&12an0N! %&u'nal

B&& !

P'"1a'0 Da)a6 ! had used Questionnaire and survey as primary data. Sec&nda'0 Da)a@ ! also collected data from internet( maga"ines( ;ewspaper as secondary sources.

BOOKS

Dha'n" !"nhaO SBI Se'3"ce cu!)&1e':U2 a' 2ubl"ca)"&n NEWSPAPER6 ECONO$IC TI$E
In)e'ne) P&')al!6

???.!b".c&1: ???.?" "2ed"a.c&1 ???.!e'3"ce*"n.c&1

16

In*&'1a)"&n &* C&llec)"n( )he Da)a

2etail of #orrower %eason of 2ue amount %eason for become ;$)s .ommitment of #orrowers Gtilisation of Fund )wareness of /oan 2etail of /oan

?e personally contact to each and every defaulter and collect the whole data which mention here for more information we attach Questionnaire here. .ollection of data is the essential part of the research. )s possible as we collect the more data( view of customer( their opinion their problem and analysis those things and try give them better satisfaction bank as well as customer. 2ata collect and bifurcate in different category as per their loan( which ! mentioned earlier( 3ome loan( $ersonal /oan( 'ducation /oan( 4ehicle /oan and +#F.

1B

CHAPTER#= ANALYSIS @ INTERPRETATION

1=

ANALYSIS @FINDINGS
For our +ummer $ro ect we got permission in %)+*'... 2epartment of +tate #ank of !ndia( %a kot. 7ur department is a $rocess department. #ut our main work is to +urvey and %ecovery the ;$)s. This is a 3ead 7ffice and they provide us 2ata of ;$)s account. +tate #ank of !ndia have a > #ranch in %a kot. ?e got a .ombine data of whole branch

S"G B'anch
4ikramgang. +hivsagar *arketing Eard .ommercial #ranch *ain #ranch /akha i %a

Ou' Su'3e0 &n P# Se(1en) &* L&an

'ducation /oan $ersonal /oan 3ome /oan .ar /oan Gold /oan

I have provided near about 250 Account but only 150 NPAs account person can cover and their list are under.

5-

#o"'f Borrowers 151

&du":oan 29

*ome :oan 4

Personal :oan 44

,ehicle :oan 1!

SBF 1"

1BF 13 9% 9e:i$%es 8oan 17 11% 6er.8oan 44 29%

3d& 8oan 29 19%

5o(e 8oan 48 32%

3d& 8oan

5o(e 8oan

6er.8oan

9e:i$%es 8oan

1BF

LOAN PROFILES
#ere$ As per above chart i% &e see that &e %ind that #o'e loan havin( 'ore )e%aulter. No. o% *orro&er in *ome :oan is 78 and Percenta(e is 13 /.

$mount of :oan
#o"'f Borrowers
151

Total $mount 'f :oan

+$0!$ 9$22 51

Total $mount of '?S )ecover!

1$1!$9+$0!+ "0$ $!"2

12000000 10000000 8000000 6000000 4000000 2000000 0

Total O/S, 11796076

Recovery, 3088732

Total O/S Recovery

Total O/S

Recovery

)urin( 'y ,u''er Pro-ect I recovered )s"12,88,<13 and it.s a 3; / o% the total )ebt.

$ccount Become )egular

NO. &* De*aul)e' 151 Re(ula' +" E 42/

)&-',&)> F)'% B'))'@&)S

5,

Edu.L&an 10(B-(=--

Pe'.L&an 110.B--

H&1e L&an 6(6,(55-

Veh"cle L&an 0(=-(51,

SBF 1(0-(=6-

T&)al

8/:,,:>89

Amo !t Recover
1BF 14% 9e:i$%es 8oan 13% 6er.8oan 4% 5o(e 8oan 25% 3d&.8oan 44%

3d&.8oan

5o(e 8oan

6er.8oan

9e:i$%es 8oan

1BF

3ere( as per above chart more amount in Educa)"&n l&an amount is R!.+8:,/:;// and percentage is ==E.

EDUCATION LOAN
N&. &* B&''&?e'! ,= L&an A1). ,(>6(11(500 OH! A1). ,6(>=(-1> Rec&3e' A1). 10(B-(=-E 1=.B>C

HO$E LOAN
N&. &* B&''&?e'! 1B L&an A1). 1(=1(10(>,1 50 OHS A1). >5(>0(=0> Rec&3e' A1). 6(6,(55E 11.6>C

PERSONAL LOAN
N&. &* B&''&?e'! 11 L&an A1). 01(=>(--OHS A1). 11(,B(B11 Rec&3e' A1). 110(B-E 1-.-BC

CAR LOAN
N&. &* B&''&?e'! 10 L&an A1). >=(06(,5OH! A1). 11(-0(,6> Rec&3e' A1). 1(0-(=6E 0=.->C

GOLD LOAN
N&. &* B&''&?e'! 16 L&an A1). 05(>=(B,1 OHS A1). 6(>0(65B Rec&3e' A1). 0(=-(51, E 51.11C

)s per above show that more amount is recovery from Educa)"&n L&an R!.+8:,/:;// but if we see the recover by more share from 3eh"cle! l&an that <+.++ E.

41at ste"s 1a#e been ta&en so ar to sol#e NPAs Proble0s5

#anks need to have better credit appraisal systems so as to prevent new ;$)s from occurring. 3owever( once ;$)s do come into e8istence( the problem can be solved only if there is enabling legal structure( since recovery of ;$)s often requires litigation and court orders to recover stuck loans. ?ith long<winded litigation in !ndia( debt recovery takes very long time.

51

#anks are now working on utili"ing the services of 2ebt %ecovery Tribunals to solve this problem. The government has also mooted the suggestion of an )sset %econstruction .ompany( which will be speciali"ed agency set up for rehabilitating revivable ;$)s 9say( salvaging pro ects which are inherently sound: and recovering funds out of unrevivable ;$)s.

Ot1er Strate'ies
Fi8ing up of budgets for profits and recovery rather than for advances. #udget oriented approach( at times leads to release of credit facilities without ensuring compliance of covenants of sanction. ) suitable mechanism could be drawn at each #ank level to provide monetary benefitsJrecognition to the operating staff particularly for recovery in ;$)sJwrite off cases. $ro ect with old technology should not be considered for finance. /arge e8posure on big corporateJsingle pro ect should avoid. There is a need to shift in $+#s approach from collateral security to viability of the pro ect and intrinsic strength of promoters. Gp gradation of credit skills of the operating staff working in advances department. Timely sanctionJrelease to avoid time and cost overruns.

55

A *'e!h l&& a) Rec&3e'0 P'&ble1

#asically each branch engaged in lending has to plan for recovery of loans disbursed by it. The manager should be familiar with the prospects of recovery through internal and e8ternal factors. Hnowledge about willful defaulters is equally important. Thus three pronged strategy is necessary.

4A5 RECOVERY 6 INTERNAL SOURCES

4a5 C&12u)a)"&n &* de1and
Guidelines suggest that repayment of installments of loans should be fi8ed in such manner( which will coincide with the harvesting of crops or sale of milk or any other farm output proposed to be produced through the bank loan. The demand for crop loans or for installment of term loans should therefore be computed in a manner conducive to the income flow.

4b5 A22'a"!al &* l&an a22l"ca)"&n and 2'e#!anc)"&n !u'3e0!

2uring the initial processing of the proposal( it has to be ensured that the repayment program for an itemRequipment is fi8ed in accordance with the guidelines prescribed by %.#.!. )wareness about %.#.!. guidelines should be increased at the branch level.

4c5 Rec&3e'0 ca12!

5>

The central idea of recovery camp is to bring a ma8imum number of persons together at one place and repay the loans. The recovery camps in addition to effecting recovery create a proper climate for recovery.

4d5 N&n#ban "n( bu!"ne!! da0

This day should be utili"ed fully for field visits and contact with the borrowers

4e5 C&12'&1"!e 2'&2&!al!

!n genuine cases( the banks can consider compromise proposal and a lot depends upon the initiative of the branch manager in utili"ing this facility.

4*5 C&n3e'!"&n!H'e!chedul"n( &* l&an!

There are guidelines for the operating staff of the banks for conversion.Jrescheduling of loans in the areas affected by natural calamities. .rop loans can be made repayable over period of one year in the event of crop loss.

4(5 In)e('a)"&n &* 'ec&3e'0 "n b'anch bud(e)"n(

%ecovery targets should be fi8ed at the time of settlement of branch business budget.

4B5 RECOVERY6 ECTERNAL SOURCES

?herever the states have enacted laws on the pattern of the Talwar *odel #ill( support of the government machinery can be enlisted accordingly. !f the branches prepare village<wise action plans in this regard( it will be still appropriate for the agencies to have a concerted effort towards recovery. 56

The branches may also compile detailed position of defaulters and share the same with the convener banks and government authorities periodically.

4C5 TACKLING DEFAULTERS

To prevent willful default( comprehensive and discrete enquiries( therefore( should be made before disbursing loans to farmers. +ome of the banks have already devised systems of maintaining village dossiers( which comprise names of farmers who do not have good reputation. ) non<willful defaulter is one who generally follows a good cropping pattern and is co<operative to developmental functionaries. 3e generally cares for his own farming business. 7n the other hand( a willful defaulter has an attitude of non<co<operation to developmental functionaries. !n present times( when willful default has gained social acceptability( the branches can initiate steps for devising schemes for giving recognition to good borrowers in various meetings or functions organi"ed by the branches. Further the problems of good borrowers can be studied and their credit needs immediately met. #y doing so( a culture of prompt repayment may develop in the villages and doing so would simultaneously discourage willful default.

5B

PRO6ECT Fin$in's7
From this pro ect it is found that +#! advance product having the 1st place in the market at #hubaneswar( there is a great opportunity to compete with !.!.! #ank F to retain its customer by fulfilling the requirement of customer in +#! advance product. !t has been observed that appro8imately B5C correspondents are using advance product of +#! and 15C are not using any type of advance product of +#! in #hubaneswar. )ll of +#! customers are satisfied with the services provided by the bank. *any of these customers satisfied with the low interest rate and longer repayment period of the advance product. *ost of the customers at #hubaneswar prefer to take loan from +#!. )ppro8imately 10C of advance product users said that the service of +#! in advance product is e8cellent. ) response from customer care is so clear F good. *any customers have no time to call customer care so that they are not able to know about the service F features of +#! advance product. *ost customers are shifted from other banks advance product to +#! because of hidden charges( high interest rate( less repayment period. Government employees are more concern than private employees for advance product.

5=

REASONS FOR HIGHLY USE OF SBI ADVANCE PRODUCT6 /'++ $)$'% ?7%H )TT%).T!4' !;T'%'+T %)T'+ T%);+$)%';.E +!*$/' F F)+T $%7.'++!;G /7;G'% %'$)E*';T $'%!72 QG!.H $%7.'++!;G

CHAPTER#< CONCLUSION @
>-

REC$$ENDATION S

Rec&11enda)"&n6
.ustomer awareness programme is required so that more people should attract towards advance product. !f there are any kind of hidden charges than that must disclose to customer before giving loan to them. +#! must take some steps so that customers can get their loan in time. /ike phone verification by customer care that one customer is got their loan on time or not .!t must be before a certain date so necessary steps can be taken. +#! should more concern about physical verification rather than phone verification so it will avoid fraud or cheating. )dvance product selling agents must not give any type of wrong information regarding advance product.

>1

 For the better service new offers would be require. +#! customer care should more concern about the fastest settlement of customer problems. #efore deducting or charging any monetary charge +#! must consult with customer. )gents should be trained( well educated F proper trained to convince the people about different advance product. !t is the duty of the bank to disclose all the material facts regarding advance product( like interest charged( repayment period( other types of charges( etc. +pecial scheme should be implemented to encourage both customer and agents. The bank should increase the period for repayment of loan. +#! should more focus on %etaining e8isting customers. +#! must focus on +egmentation based on customer knowledge $roduct offering based on customer demand. +#! must take feedbacks of customers regarding features F services.

CONCLUSION
?e are happy to getting opportunity to part of +tate #ank of !ndia and also get opportunity to tackle the ;$)s )ccount. 2uring 7ur +ummer Training we meet 15- clients of bank and get their opinion the their problems. +o( )ccording to that duration we would like to conclude that( )ccount become ;$)s in many way sometimes( +ometimes technical problem( +ome times personal problem but these all problem will be solved by few precautions which earlier we mentioned.

>,

!n any financial institution( ;$)s are inevitable in the loan portfolio. #ut efforts should be made to maintain a reasonable level of ;$)s. Heeping in mind the %#! plan to introduce the concept of K7ne quarter& for identification of ;$)s by ,--1( it is a high time to go in for recovery drive on a war<footing. ?hile doing so( prevention of ;$)s should not be forgotten. These are the ma or challenges before banks which have gone in for 4%+. #ut sincerity and hard work along with professional approach on the part of bank management may help in the fulfillment of challenges. Towards this end( banks have to go long way. !f the nationali"ed commercial banks desire to stand in competition with the private sector banks and the foreign banks( they should over a period of time( be in a position to bring down ;$)s to manageable proportion. *oreover( the government should take measures to facilitate the efforts of the banks in the recovery of the loans which currently taken inordinately long time. !f willful defaulters to delay the repayment of the loan use the #!F% proceedings the relevant legal provision should be appropriately amended. The fact that the ;$)s are gradually going down generates hope about the future of the banks( though we should keep in mind another simple fact that in absolute amount( this has not happened.

BIBLIOGRAPHY
Web S")e!6#
www.sbi.co.in www.rbi.org.in www.google.com

>0

B&& !6#
;G# #usiness bulletin !ndian Financial +ystem

$a(aA"ne @ B&u'nal!6#
The F"nanc"al EG2'e!! 9!ndias #est #anks: Ta)a $c G'a? H"ll 9)ccounting F Finance

>1

Questionnaire
Gene'al In*&'1a)"&n
1: ,: 0: ;ame of the #orrower@<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO /oan )J. ;o. )ddress @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

>5

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO $h.;o. 9%:OOOOOOOOOOOOOOOOOOOOO97:OOOOOOOOOOOOOOOOOOOOOO 1: 'ducation @ < S Graduate S Gnder Graduate S $ost Graduate S 7thers @<S S S S #usiness $rofessional 'mployee Govt J ;on Govt. 7thers

5:

7ccupation

>: Guarantors ;ame F )dd.@< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 6: )mount of /oan B: )nnual !ncome @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

=: ;ame of +alary 2isbursing )uthority @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 1-: 7ther .redit @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 11: 2ate of /oan @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 1,: $urpose of /oan @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

Fac)&'! &* bec&1"n( AHc NPA 4+5 B&''&?e'N! Rela)ed Fac)&'!

>>

10: !nstallment )mount @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 11: ?hen %epayment .ommence@< EesJ;oOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 15: 3ow many !nstallment @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

1>: 2ue date of !nstallment @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 16: %eason for 2ue date of )mount @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 1B: 2iscuss when your First !nstallment 2efault @<Ees J ;o.OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

U)"l"Aa)"&n &* ban l&an

1=: )ny ;otice received for %ecovery ,-: $ersonal contribution @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO @< S Telephonic contact S $ersonal visit

A?a'ene!! &* I12l"ca)"&n! &* N&n Pa01en) &* In!)all1en)!

,1: 2o you Hnow the penal !nterest will be .harged for non<payment of installments on 2ue date @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO 2o you know that the bank can recover the loan by resorting to@ S #anks right to enforce criminal proceedings. E'+J;7 S 2o you know that bank can initiate recovery by sale of mortgaged $roperty without filing a suit E'+J;7 S )ttachment of salary@ E'+J;7 S $ublication of your name as defaulter@ E'+J;7 S sharing of the information among other banks which will affect @ your credibility E'+J;7

,,:

>6

Plan &* Ac)"&n )& Re(ula'"Ae )he L&an

,0: ?hen ?ill you meet )sset verification official %)+*'.. S ?eek S *onth S *ore then *onth ?hen will you %epay the due amount S ?eek S *onth S *ore then *onth

,1:

495 Fac)&'! Rela)ed )& Ban

,5: ,>: $ro ect cost @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Time taken in sanction F 2istribution of /oan @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO ?hether )sset .reated from bank /oan

,6:

@ < Ees J;o

,B:

!ncome generation From the pro ect @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO ?hether reminder +end by bank for the ;on payment ( S ;otice S Telephonic call S $ersonal visit @< @< EesJ;o( !f yes then

,=:

0-:

?hether guarantor is !nform about the 2efault

EesJno

485 O)he' *ac)&'! 01: 0,: ;atural calamities @<OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Govt. $olicy @< OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
>B

00:

$ersonal 3a"ards

@<OOOOOOOOOOOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BB

>=