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AWARENESS ABOUT OUR BANK

EMERGING TRENDS IN BANKING & BPG 2011-12 14

AWARENESS ABOUT OUR BANK

Brief History:
Bank of Baroda is having a long, eventful and glorious history of more than 103
years. HH Sir. Maharaj Sayajirao-III founded the Bank.
The Bank made a humble beginning in 1908 in a small building in Baroda. On
20th July 1908 Bank of Baroda Limited was registered under the Baroda
Companies Act of 1897, with a paid up capital of Rs. 10 lacs. Soon after
establishment, the Bank extended its operations to three other commercial
centers of Gujarat namely, Surat, Mehsana and Navsari. In 1919, the Bank
crossed the state frontiers by setting up Mumbai Main Office.
In the year 1935 Bank became a scheduled Bank. RBI included the Bank in the
second schedule of RBI and brought under direct control of RBI. The first safe
deposit lockers were provided at Baroda in 1939. At the time of independence
in 1947, Bank of Baroda was a regional bank with 48 branches. However, it
found a place in Indias Fortune Five list of Banks. As many as 10 banks have
been merged with Bank of Baroda during its journey so far:

Hind Bank Ltd (1958)

New Citizen Bank of India Ltd (1961)

Surat Banking Corporation (1963)

Tamil Nadu Central Bank (1964)

Umbergaon People Bank (1964)

Traders Bank Limited (1988)

Bareilly Corporation Bank Ltd (1998)

Benares State Bank Ltd (2002)

TC, Baroda

South Gujarat Local Area Bank Ltd (2004)

Memon Co-operative Bank Ltd. (2011)

Board Of Directors
1.

Shri M.D. Mallya

2.

I) Shri Rajiv Kumar Bakshi

II) Shri N S Srinath
Shri Alok Nigam
Shri Sudarshan Sen
Shri Ajay Mathur
Shri Vinil Kumar Saxena
Shri V.B. Chavan
Dr. Masarrat Shahid
Shri Satya Dev Tripathi
Shri Maulin Vaishnav

:
:
:
:
:
:
:
:
:
:

Chairman
Director
Executive
Executive
Director Director Director
Director
Director
Director
Director
Director

Director

Director

3.
4.
5.
6.
7.
8.
9.
10
.
11 Shri S.S. Bhandari
.
12 Shri Rajib Sekhar Sahoo
.
Mission Statement :

&

Managing

Director
Director
Govt. Nominee
RBI Nominee

To be a top ranking National Bank of International Standards

committed to augmenting stake holders' value through concern, care
and competence.
Our Logo (Baroda Sun) :

Bank introduced the existing logo Baroda Sun w.e.f 6th June, 2005.
It comprises double B letter forms that hold the rays of the rising Sun, we
call this as Baroda Sun. The sun is a representation of what our bank
stands for. It is a symbol of dynamism and optimism.
The sun is the single most powerful source of light and energy. Its far
reaching rays dispel darkness to illuminate everything they touch.
The single colour, compelling vermillion palette (Pantone Code 1655C
Colour combination RGB:255,92,72) indicates hope and energy and
indicates that at Bank of Baroda, we seek to be the source that will help all
our stakeholders realise their goals.
To our customer, we seek to be a one stop, reliable partner who will help
them to address different financial needs. To our employees, we offer
rewarding careers and to our investors and business partners, maximum
return on their investment.

1
Project NAVNIRMAAN Baroda Next :
TC, Baroda

A comprehensive transformation programme called NAVNIRMAAN has

launched by our Bank for its domestic operations on 22 June 2009. The Bank
has partnered with Mckinsey & Company for this programme, which is
centered around our customers and our employees, and has two core
elements Business Process Re-engineering
(BPR) & Organization
Restructuring (OR).
Why Navnirmaan?
1.
2.
3.
4.
5.

Less time spent on relationship management and business development

Low utilization of technology
To reach at no.1 among PSU Banks
High aspirations
In previous 20 years, banking sector underwent sea changes, so, it needs
immediate attention to realign process change.

BPR (Business Process Re-engineering) Main Objectives

Improvement in branch productivity on sales
Best-in-class service levels for customer delight
Redesign of front and back office processes and roles to reduce turnaround
time
Reduction in operating costs

Organization restructuring Main Objectives

Appropriate organization structure and systems to support BPR and be in line with
future business plans, at corporate, zonal and regional offices & at branches
Sustainability of change program through capability building.
Navnirmaan having 5 key elements:
1. Simplified systems and processes at branches and other offices
2. World-class back offices to support branch operations
3. Alternate Channel usage
4. Redefined organization structure and roles
5. Training to Barodians for new roles
Development /Repositioning under Navnirmaan project:
Project Navnirmaan has altogether 18 activities covering both BPR & Organisational
Restructuring, aimed at transforming the Banks branches into a sales & service
centres to make possible a sustained sales growth, superior customer experience
and alternate channel migration.
The most important initiatives covers :
Conversion of all metro & urban branches into Baroda Next branches within a timeline [
over 637 branches rolled out so far ]
Creation of automated & leaner Back Offices like:
City Back Office
Regional Back Office (6 established & 4 in the row).

o
o

TC, Baroda

 Establishment of two Call Centres

Introduction of frontline automation at select branches for customer convenience
Creation of an Academy of excellence.
Total Regions increased to 49.
The initial impact of Baroda Next migration has been found to be rewarding both in
terms of increased customer satisfaction and CASA growth. The said impact has
been sustained at 110 Baroda Next branches recently evaluated on (a) sales and (b)
customer satisfaction.
To sustain sales growth, a new Sales Operating Model has been rolled out in 53
branches in Mumbai, Surat & Baroda.
Out of 15 mid-corporate branches planned, two are already functional and six are
expected to commence the operations soon.
Further centralisation initiatives are under progress to enable the Banks branches
to become a full-fledged Sales-Cum-Service-Outlet.
Banks Hi-tech City Branch in Hyderabad has been transformed into an e-branch.
CRR (Sec 42, RBI Act)
5.50% of net demand and time liabilities, to ensure liquidity and solvency to be kept
with RBI.
SLR (Sec 24 , Banking Regulations Act)
24%
Cash in hand, Gold owned by bank, Balance with RBI/SBI and Investment in
unencumbered approved government securities.
Bank's present BPLR 15.00 %(wef. 01.08.2011)
Base Rate : 10.75 % (wef. 01.08.2011)
Repo Rate Injection of liquidity by RBI - 8.50 %
Reverse Repo Rate Absorption of liquidity by RBI - 7.50 %
Bank Rate

- 9.50 % (wef 13.02.2012)

Major technology Initiatives:

As on 31st Dec 2011, the Banks entire domestic, overseas and RRBs [i.e., five
sponsored RRBs] related operations were on the CBS platform.
Bank has developed IT facilities for online/offline account opening through
Business Correspondents under Financial Inclusion.
Banks retail & corporate customers enjoy several facilities under its Internet
Banking Delivery Channel. The SMS alerts of transactions are also
implemented in the Internet Banking Portal.
Bank has implemented Internet Banking in 11 of its overseas territories ,
notably Oman, Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana, New
Zealand, UAE, Fiji, & UK.

TC, Baroda

Bank has also implemented RaidFunds2India solution in all the major

territories.
Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute
Tier-3 standard & a Disaster Recovery Site in different seismic zones to ensure
uninterrupted banking services delivery to customers.
Banks Mobile Banking (Baroda M-Connect) provides various facilities to its
customers.
Anti Money Laundering (AML) has been implemented in India and 20 of
Banks overseas territories.
Bank has developed an Integrated Global Treasury Solution in its major
territories like U.K., UAE, Bahamas, Bahrain, Hong Kong, Singapore, Belgium,
USA and India to achieve reduced cost of operations & better fund management.
Bank has a centralised SWIFT system for India & its 21 overseas territories.
Internet Payment Gateway has been implemented to facilitate e-commerce
transactions in multi currencies across the globe.
Bank has introduced the facility of Multiple Accounts being linked to a single
Debit Card (verified by Visa, CVV2) and also Mobile Number registration thru
ATMs in CBS for SMS Alerts.
E-tax payments thru ATMs are also facilitated and Mobile ATMs are
introduced in several cities.
To provide safe online banking services to its customers & protect them from
phishing attacks, Bank has implemented a Fraud Management Solution.
Bank has set up two Contact Centres in Lucknow & Baroda to fast addresse the
customer queries & grievances.
Back Office functions have been centralised in the Bank at City Back Offices &
eight Regional Back Offices ( at Baroda, Jaipur, Lucknow, Bhopal, Coimbtore,
Kolkata, Mumbai & Jamshedpur) to improve the delivery of services.
Cash Management Solution is implemented to provide operational support to
customers ALM.
Baroda e-trading in association with India Infoline Ltd.
Roll out of HRMS and Payroll.
Baroda e- Pay - Electronic Utility Bill Payment
Online Loan Application Educational Loan, Home Loan, Car Loan
Launching of Baroda Gift Card
Introduced Visa Platinum Premium Debit Card

Branch Network:
Domestic Branches as on 31st Dec, 2011
Metro

Urban

Semi-Urban

Rural

Total

809

689

957

1,236

3691 (with over 43

million customers

Overseas Branches/ Offices

87 in 25 Countries (Excl. India)

Total ATMs

1838

TC, Baroda

Subsidiaries (Domestic):
Nainital Bank Ltd., BOBCARDS Ltd. ,

BOB Capital Market Ltd.

Associates (Domestic):
Baroda Pioneer Asset Management Company Ltd
India FirstLife Insurance Company Limited
Baroda Uttar Pradesh Gramin Bank
Baroda Rajasthan Gramin Bank
Baroda Gujarat Gramin Bank
Nanital -Almora Kshetriya Gramin Bank
Jhabua-Dhar Kshetriya Gramin Bank
Subsidiaries (Overseas):
Bank of Baroda (Botswana) Ltd.
Bank of Baroda (Kenya) Ltd.
Bank of Baroda (Uganda) Ltd.
Bank of Baroda (Guyana) Ltd.
Bank of Baroda (UK) Ltd.
Bank of Baroda (Tanzania) Ltd
Bank of Baroda (Trinidad & Tobago) Ltd.
Bank of Baroda (Ghana) Ltd.
Representative Offices (Overseas)
Bank of Baroda (Thailand)
Bank of Baroda (Australia)
Associate (Overseas)
Indo-Zambia Bank Ltd.(Lusaka)
SME Loan factories:
With the aim of extending more focused services to the SME Sector, the bank has
carved out a special sale and delivery model for hassle-free and faster sanction of
credit proposal in the SME Sector.
SME Loan Factory is divided into two divisions Central Hub and Sales Hub.
Central Hub to be headed by Head (Credit) and Sales Hub to be headed by Head
(Sales) and sales coordinator both are located in same premises for better liaison
and coordination.
Relationship Managers and Relationship officers are located at strategic
designated Branches in various locations of the city, based on business potential
available in the designated branches and other factors.
Role and Functions
Role of Marketing Team is to generate leads, exploring new customers and
strengthening relations with existing customers.
Role of Credit Hub is to examine / purse leads generated by Marketing Team for
financing. Based on proposals received from successful leads, credit proposals
are processed. Proposals falling under the powers of Head of SME Loan
TC, Baroda

Factory / incharge of Credit Hub will be prepared and sanctioned at the Hub.
And proposals beyond the powers of the Head of SME Loan will be submitted
directly to the sanctioning authorities.
The entire sanction procedure is to be completed within a maximum of 11
working days from the date of receipt of complete information and
disbursement is to be completed within 14 days. In case TEV study is required
the time taken is 20 days.
Urban Retail Loan factories
11. These factories represent sales and delivery model based on assembly line
principle engaging our people and supported by simplified process and
technology.
12. The Retail factories have twin outfits comprising Sales team and Centralised
Processing Cell manned by Banks specially selected and trained employees.
23. Sales executive each out to the door- steps of the customers to provide
services.
34. A team of tele-callers with other functionaries makes the process of availing
loan a hassle free experience for the customers.
4
Composite Loan factories
Bank has moved towards a further innovative step to establish a Composite
Loan Factory at Mangalore, where a prospective as well as our existing borrower
can avail SME and/or Retail loan under one umbrella.
As we are focussing for cross - selling of our products, it is excellent step to tap
the additional business. Because, now we can canvass a SME business of the
firm/company and at the same time, we can go for retail business from the party
in their personal capacities.
SME & RLF CPC:
It is new initiatives under Navnirmaan project, where bank is going to establish
few credit processing centre on pilot basis. The centre will not only go for tapping
business-lead & processing of the same but also complete the documentation,
disbursement & recovery.
Gen-Next Branches
To respond to the needs of the changing demographic profile of the country,
the bank has been endeavoring to customize delivery channels especially for
youth segment. As a part of these efforts, the bank has set up innovative
Gen- Next branches dedicated to youth and young IT professionals at
certain places.
The branch will have youth specific products and will function as a model for
fusion of Hi-tech and High-touch Banking.
TC, Baroda

 The Branch is offering following liabilities and assets products to the

customers:
1. Gen Next SB account facility with AQB of only Rs. 500/
2. Gen Next Suvidha in the form of Recurring deposits
3. Gen Next Life style Loan for purchase of furniture, vehicle, laptop etc.
4. Gen Next Power in the form of OD, 5 times of the net salary income
based on credit rating.
Global Syndication Center & IMBC
11. Banks Global Syndication center at London was set up in 2000. With a view to
tap the growing business opportunities in the Middle East and South East Asia
Region, Bank has decided to start new Regional syndication Centres at (1)
Dubai (2) Singapore and (3) Johansberg.
22. The Bank has started a specialized outfit- International Merchant Banking Cell
(IMBC) at International Div. Mumbai to service the ever growing demand from
Indian Corporates for funds from International markets. IMBC is also active in
funding Merger & Acquisitions of domestic and overseas companies by Indian
Corporates. The IMBC will arrange for syndicated loans, Bonds, FCCBs etc. And
investment banking and advisory services.

Wealth Management Services

1Our Bank as part of customer centric measure initiated Wealth Management
Services to provided our HNI and affluent customer a complete financial solution
at one stop. The service has enabled our customers to buy various investment
products through our branches and is positioning our Bank as One Stop Financial
Super Market.
Under Wealth Management Services currently we are offering 3 rd party products
in Bancassurance, Mutual Fund, e-Trading etc. under tie up arrangement with
various partners.
Segment
Life
Insurance

Name of Tie-up Partner

IndiaFirst Life Insurance Co.
Ltd. (Joint Venture Co. of the
Bank)

General
Insurance

National Insurance Co. Ltd.

TC, Baroda

Products
Unit Linked Insurance Plan
Term Insurance Plan
Endowment Plan
Group Insurance Plan etc.
Baroda Health co-branded
medi-insurance products for
hospitalization expenses
Insurance covered for assets
such as vehicle, business &
8

Mutual
Fund

E-Broking

Baroda Pioneer Mutual Fund

(Joint venture Co. of the Bank)

UTI Mutual Fund

Birla Sunlife Mutual Fund

Reliance Mutual Fund

Sundaram BNP Paribas

Franklin Templeton Investments

Kotak Mahindra Mutual Fund

IDFC Mutual Fund

India Infoline Ltd

industries, live stock etc. from

various risks.
Growth/Equity Scheme
Income / Debt Scheme
Balance Fund
Money Market or Liquid
Fund
Gilt Fund
Index Fund
Tax Saving Scheme
Fixed Maturity Plan
Trading in equity,
commodities and its
derivatives

Other Major tie up / MOU of Bank with other Service providers

EXIM Bank, IDFC and SIDBI for co-financing of projects.
IFCL for infrastructure development finance
Bank of Baroda enters into an agreement with Bombay Stock Exchange for
clearing and settlement
M/s Avenue (India) Pvt. Ltd will enable customers of the Bank to shop opline,
and make payments through Net Banking account.
M/s Techprocess Ltd. For providing online payment solution and direct debit
credit to its customers. This tie-up will enable Banks customers to shop on-line
through Banks e-banking portal and also make utility bill payments like
telephone bills, electricity bills etc.
Car Finance with Tata Motors Ltd., Hyundai Motors India Ltd., Mahindra &
Mahindra Ltd., Maruti Suzuki India Ltd.
Tie up with Kotak Mahindra Old Mutual Life Insurance Ltd. For providing Life
Insurance Cover to Education Loan borrowers and Home Loan borrowers
sanctioned under a special package.
MOU with CGTMSE for extending collateral free loans up to Rs. 100 lacs under
Risk Sharing Facility scheme launched by CGTMSE.

Role of Branch manager in the changing Environments:

1. To move forward to transform itself into a Multi Specialist Bank with large
number of branches brought under CBS, Branch Manager role is changed 360
degree.
2. From largely transaction processing and inward looking role to marketing,
customer actuation and business development role.
3. He has to emerge as role model for the other staff at the branch as an effective
marketing and sales ambassador.
4. To create sales and marketing environment so that front line staff will have e to
don the hat of a salesman.
TC, Baroda

e-Payment of Taxes Enabling Non-Customers and Non-Baroda Connect

Customers :
CBS Branches to open a Current Account, under special scheme code CA 118General Tax Remittance Account (Name of the Branch) & obtain Baroda Connect
ID & Password.
Advantages to Customer: Having no Net banking facility can make e-payment of Taxes
No formalities-Registration , login ID,PW etc
Online check of PAN / TAN / Assessee code
Confirm immediate Tax payment Challan
Instant cyber receipt / counter foil with CIN, Payment details , Name of the
branch
Counter foil can be regenerated
Tax payment for any commissionerate available
On line Tax payment by branch on behalf of any individual , corporate etc
No limit on amount
For customer free
Advantages to Bank / Branch: Rs. 45/- per challan revenue
Attract Non customer-Expand Business
Corporate having many units/brs. different assessee code/PAN/TAN can
pay from single point-need not required separate Bank accounts Internet
banking for each account
Good Non Fund based income source from a single corporate
Chances for cross sell of products to HNI/Corporate
Contact Centre Facility:
Bank has introduced a new delivery channel the Contact Centre(call centre) for
delivery of banking services through TOLL FREE PHONE. The numbers are 1800
22 33 44 OR 1800 102 44 55. Now, Banks customers and members of
general public can call the Banks Contact Centre and seek information on
their accounts, request for banking services, enquire on banks products,
interest rates, etc.
Benefits to the Branches:
Contact centre helps branches by providing customer service over PHONE
without intervention of branches.
Provides information on routine queries such as Account Balance,
transactions, cheque status, product enquiry, interest rate enquiry, gold rate
enquiry, etc. instantly.
Provides guidance to customers on Baroda Connect services. It can also (a)
activate passwords & (b) take request for regeneration of passwords.
TC, Baroda

10

Stops the payment of cheque and can take the request for issuance of cheque
book in respect of RBO covered branches.
Hotlists the Debit Card and takes request for reissuance of PIN or Debit Card.
As the Contact Centers will be able to address most of the common queries
and service requests, Branches will be relieved from such workload and
would be in a position to focus their attention more for business promotion /
development.
Further, Bank proposes to extend functions like (a) Registration of Debit Card
related complaints (cash not dispensed), (b) outbound recovery calls, and (c)
outbound sales calls. The contact centre will work as extended arm of the
branch facilitating marketing and sales of the banks various products.

Benefits to the Customers:

Most convenient delivery channel
Services are available from 8 am to 8 pm
365 days a year, (excluding Independence Day and Republic Day)
Free of Cost. Toll Free Number and hence No Cost
TWO Toll Free Numbers are available to ensure uninterrupted service
Customers are not required to visit branch for any services.
Emergency Services Debit Card Hot-listing is easy, simple, authentic
All service requests are supported by Docket Number, for further enquiry.
Services for all linked accounts are available
Professionally managed and Technology driven services
ASBA (Application Supported by Blocked Amounts)
ASBA is a process developed by the Securities and Exchange Board Of India
(SEBI) for applying to IPO. In ASBA, an IPO applicant's account doesn't get
debited until shares are alloted. Qualified Institutional Buyers (QIBs) are not
allowed to participate in IPOs through ASBA facility.
ASBA process facilitates retail individual investors bidding at cut-off, with single
option, to apply through Self Certified Syndicate Banks (SCSBs), in which the
investors have bank accounts. SCSBs are those banks which satisfy the
conditions laid by SEBI. SCSBs would accept the applications, verify the
application, block the fund to the extent of bid payment amount, upload the
details in the web based bidding system of NSE, unblock once basis of allotment
is finalized and transfer the amount for allotted shares, to the issuer.
ASBA means Application Supported by Blocked Amount. ASBA is an application
containing an authorisation to block the application money in the bank account,
for subscribing to an issue. If an investor is applying through ASBA, his
application money shall be debited from the bank account only if his/her
application is selected for allotment after the basis of allotment is finalized, or the
issue is withdrawn / failed.
It is a supplementary process of applying in Initial Public Offers (IPO), right
issues and Follow on public offers (FPO) made through book building route and
co-exists with the current process of using cheque as a mode of payment and
submitting applications.

Business Figures: At a glance

TC, Baroda

11

Parameter

31.03.2010

Total Global Business

Total Global Deposit
Total Global Advances
Net Profit
Gross NPA (%)
Net NPA (%)
ROAA (%)
CAR
(%)
NIM
(%)

416079
241044
175035
3058.33
1.36
0.34
1.21
14.36
2.74

(Rs. in Crore)
31.03.2011
31.12.201
1
534116
609867
305439
349206
228677
260661
4241.68
1.36
1.48
0.35
0.51
1.33
1.29
14.52
13.45
3.12
2.99

Bank of Baroda is expecting total business growth of about 24 % over last year and
to achieve a total business of more than Rs. 6,50,000 crore at the end of March
2012. Also, bank is going to achieve a domestic credit growth of 20 percent at the
end of the current financial year.

Awards for the Bank

Best Public Sector Bank (PSB) by CNBC-TV18 & MCX
Golden Peacock Award for Excellence in Corporate Governance by
Institute of Directors & World Forum for Corporate Governance received in
London
Dainik Bhaskar India Pride Award for 2011
Most Efficient Bank in Kenya
Best Initiatives in Inclusive Banking FIBC Banking Award
Dun & Bradstreets Leading PSB in Global Business Development
Category
National Award for Performance under SME Business
Award for Best Utilisation of Intellectual Resources
Best Growing Large Bank by Business World-PWC
Business Leadership Award by NDTV- Best PSB in 2011
Award for Excellence in Financial Reporting by ICAI in PSB category
Awards for the Banks CEO (CMD)
Outstanding Financial Professional-2010 by CNBC-TV18 & MCX
Best Banker Award (T. A. Pai Memorial Award) by Karnataka State Open
University
Lifetime Achievement Award by Dainik Bhaskar India Pride Awards
Banker of the Year by Business World-PWC

EMERGING TRENDS IN BANKING & BPG 2011-12

Draft rules for Licensing of New Banks in the Private Sector

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12

The Reserve Bank of India has released the Draft rules for Licensing of New Banks
in the Private Sector, after considering the views and comments of different banks,
NBFCs, other financial institutions and other public to prepare the draft version of
the guidelines for new banking licenses.
As per the RBI data, the main features of the new banking rules are as follows.
1. Minimum 10 years of experiences are required to promote a bank.
2. New banks will be set up only through a wholly owned Non-Operative Holding
Company (NOHC). It has to be registered with the reserve Bank of India.
3. Minimum capital requirement will be Rs 500 crore.
4. NOHC shall hold minimum 40% of the paid-up capital of the bank for a
period of five years from the date of licensing of the bank. Shareholding by
NOHC in excess of 40% shall be brought down to 20% within 10 years and to
15% within 12 years from the date of licensing of the bank.
5. The aggregate non-resident shareholding in the new bank shall not exceed
49% for the first 5 years after which it will be as per the extant policy.
6. At least 50% of the directors of the NOHC should be independent directors to
have proper corporate governance. The RBI should be able to supervise the
banking activities properly.
7. The bank shall open at least 25% of its branches in unbanked rural centres.
RBI has also decided to provide banking licenses to some more corporates to boost
growth and has gathered public and other opinions before finalizing the new rules
for new banking licenses.
Banks urging individual borrowers to buy covers
Banks in the country are urging individual borrowers to secure their loans by
purchasing insurance policies amid growing concerns that non-performing assets
(NPAs) are likely to increase in the country.
The country's banks have enjoyed lower levels of NPAs. However, there are growing
concerns that many borrowers might be unable to replay loans in the coming
months. According to banking officials, both public and private sector banks are
convincing their customers to buy policies to cover their personal loans and
overdraft facilities
RBI relaxes rules to boost inflow of funds to support Rupee
Researve Bank of India has relaxed its regulations to allow companies to borrow
abroad and it also increased interest rates for Indians living aboard in order to help
contain the fall in the Indian rupee.
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13

RBI allows Credit-Default Swaps

Reserve Bank of India has introduced trading in credit- default swaps in India to
attract investors to the country's corporate bond market, a move that would
increase inflows into the country and help control the fall in the rupee. It has also
created rules limiting the scope of the market. The RBI now allows domestic lenders
and units of foreign banks to purchase credit- default swaps contracts to "hedge"
assets and trading positions, according to a notification from the central bank.
RBI scraps limit on mobile transactions
Reserve Bank of India (RBI) has announced its decision to do away with the limit of
Rs 50,000 per customer per day imposed on mobile transactions. The limit on
mobile transactions was imposed in 2009 by the regulator. Under the new rules, the
banks will be allowed to fix their own limit on mobile transactions for customers in
the country. The RBI had issued guidelines on mobile banking transactions in India
in 2008 and had placed certain monetary restrictions on fund transactions.
Banks may reduce rates for bulk deposits
Some banks in the country have indicated that they might reduce rates for bulk
deposits if they raise interest rates on savings account following RBI's deregulation
of interest rates. Indian banks are racing to increase savings account interest rates
in order to attract more customers. However, state-run banks appear more cautious
in increasing their rates.
Damodaran committee recommendations on Customer Service:
The Committee, headed by former SEBI chairman M Damodaran, was set up by the
central bank to look into the issues of customer services and evaluate the existing
system of grievance redressal mechanism prevalent in banks, its structure and
efficacy and recommend measures for expeditious resolution of complaints.
The Reserve Bank of India (RBI) has accepted 88 out of the 230 recommendations
made by the Damodaran committee on customer services. Sources say that the 88
recommendations, where bankers had consensus, include recommendations such
as banks should sell standalone financial products and not bundle it with any other
product, have been accepted by the RBI. Some pending recommendations such as
not imposing pre-penalty on foreclosure of home loan and suggestions made on
mobile and internet banking, RBI will have a discussion with IBA.
Deregulation of Savings A/c interest rate
Recently, the RBI said banks are free to determine their savings bank deposit
interest rate, subject to the following two conditions:
First, each bank will have to offer a uniform interest rate on savings bank deposits
up to Rs 1 lakh, irrespective of the amount in the account within this limit. Second,
for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of
TC, Baroda

14

interest, if it so chooses but should not be discriminated from customer to

customer.
Till date, barring few small banks no any bank has changed the SB interest rate.
Post harvest loan at concessional rate of interest i.e. @7%
For the appropriate growth and development of the warehousing sector in the
country and to bring efficiency in the conduct of warehousing business, the Govt. of
India has introduced a Negotiable Warehouse Receipt (NWR) system in the country
by enacting the Warehousing (Development and Regulatory) Act, 2007. At present,
the concessional crop loans @7% with interest subvention is available to farmers as
a pre-harvest loan. However, in case of post harvest loans against the warehouse
receipts, the farmers are granted loans maximum up to Rs.10 lacs without any
concession in rate of interest. In order to discourage distress sale by farmers and to
encourage them to store their produce in Warehouses, it has been decided by the
Government that the benefit of interest subvention will be available to small and
marginal farmers having Kisan Credit Card for a further period of upto -6- months
on loan against the negotiable ware house receipt for keeping their produce in ware
houses.
In view of the above, branches should charge interest @7% on such post harvest
loans upto Rs 3 lacs, against Negotiable Warehouse Receipt to small and marginal
farmers and include the interest subvention amount in their claims prepared as
above in the format attached.

Banking by the year 2015:

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

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

Specialized niche competitors- Market consolidation will continue, making

the mega banks even bigger. But they will face many competitors including
community banks, industry specialists and non-bank banks that specialize in
providing specific services. Partner-competitor relationships will arise.

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

Regulated transparency- The need to comply with globally enforced

standards of transparency and accountability will force the adoption by banks of
integrated, enterprise-wide systems and processes.

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

technology that supports rapid, accurate decision making and greater
operational flexibility and efficiency. The successful specialists will be those who

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can track and analyze specific customer needs and speedily meet them with
profitable, reliable products.
Even, banks will source products and services from many specialized and bestin-class service providers, including independents and other banks providing
white-label products and services. Innovation in products, processes,
relationships and business models will be the primary path to sustainable
growth.

Installing Off-site ATM as outcome of ATM Sharing

As per the guidelines of RBI, the customer maintaining Saving Bank A/c may
withdraw the money from any Banks ATM, 5 times with ceiling of Rs.10000 per
transaction during any calendar month without any charge. Now, even balance
enquiry also considered as a transaction (towards max.5 free transaction). But for
such transactions certain charge has been prescribed by RBI which is to be paid by
the Customers Bank to the Bank whose ATM is being used. Also, this facility is
available free of cost to only Saving bank a/c holders and other a/c holders may
enjoy this facility @Rs20 per transaction.
So, now individual Bank has to formulate its strategy regarding installation of new
ATMs or sharing of other Banks ATM. This is emerged as a new area of commission
income and even banks are now focusing on other Banks ATM where queue is
there, so that an additional ATM can be installed, just to tap the commission
income.

Dealing with Dishonoured Cheque:

As part of Customer Service guidelines, RBI has framed following Rules to be
followed by banks, in case of dishonour of cheques:
Returning of dishonoured cheques- These instruments should be dispatched to
the customer promptly without delay, in any case within 24 hours.
Procedure for return/ despatch of dishonoured cheques
(i) The paying bank should return such cheques presented through clearing houses
strictly as per the return discipline prescribed for respective clearing house in
terms of Uniform Regulations and Rules for Bankers Clearing Houses.
(ii) In relation to cheques presented direct to the paying bank for settlement of
transaction by way of transfer between two accounts with that bank, it should
return such dishonoured cheques to payees/ holders immediately.
(iii) Cheques dishonoured for want of funds in respect of all accounts should be
returned along with a memo indicating therein the reason for dishonour as
insufficient funds.
Dealing with incidence of frequent dishonour
(i) Banks should introduce a condition for operation of accounts with cheque facility
that in the event of dishonour of a cheque valuing Rs.1 cr and above drawn on
a particular account of the drawer on 4 occasions during the financial year for
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want of sufficient funds in the account, no fresh cheque book would be issued.
Also, the bank may consider closing current a/c at its discretion. However, in
respect of advances accounts such as cash credit or overdraft account, the need
for continuance of these credit facilities and the cheque facility relating to these
a/c should be reviewed by appropriate authority higher than the sanctioning
authority.
(ii) For introduction of the condition mentioned at (i) above in relation to operation
of the existing accounts, banks may, at the time of issuing new cheque book,
issue a letter advising the constituents of the new condition.
(iii) If a cheque is dishonoured for a 3rd time on a particular account of the drawer
during the financial year, banks should issue a cautionary advice to the
customer drawing his attention to the condition and consequential stoppage of
cheque facility in the event of cheque being dishonoured on 4th occasion on the
same account during the financial year. Similar cautionary advice may be issued
if a bank intends to close the account.
RBI tightens salary account opening rule:
The RBI has directed banks to ask for one more proof such as Passport, Driving
licence, PAC card, Voters identity card or utility bills, in addition to the certificate
issued by the employers while opening salaried bank accounts. RBI feels that
insistence on two documents will reduce the chances of misuse of account.
Foreign banks must be locally incorporated:
After the global financial crisis, regulators the world-over are insisting local
incorporation to ensure that local businesses are not hurt if there is another any
such unpleasant event. Incidentally, incase of banks present in India, such
protection is already present, as foreign bank branches are required to maintain
capital locally and meet prudential guidelines on capital adequacy & exposure limit.
Even that, RBI now wants to conversion of foreign bank branches into whollyowned subsidiaries, to exercise better control over the operations of foreign banks
in India.
News having impact on banking:

Postal deptt. gets RBI nod for launch of prepaid debit cards (Rs.1000 to
Rs.50000) & may facilitate withdrawals from ATMs.
RBI granted first licence to Bharti Airtel to offer financial services over cellphone by using the Semi-closed wallet(allows user to pay for goods & services
upto Rs.5000)
RBI now allowed profit-making firms to act as Business Correspondents under
Financial Inclusion Plan.
Finance ministry has recognized the Aadhar number issued by UIDAI as an
officially valid document to satisfy the KYC norms for opening of accounts.

BUSINESS POLICY GUIDELINES: 2011-12

(Indian Branches)
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Bank has adopted the sustainable business model for achieving its corporate goal
year after year. This sustainable business model rest upon four pillars;
A strong and growing CASA base
Well diversified and high quality credit deployment
Continuous improvement in assets quality and
A growing pool of fee based income
All the four components of this business model revolve around customers, be it
customer base, customer reach, customer quality or customer satisfaction. Hence
we have to transform ourselves into a purely Sales & Service Organisation

Corporate Motto for the year 2011-12

Business Growth through Sales and Service Excellence
Must achieve Sales and Service Excellence which is not a destination but the
journey in itself.
Challenge is to catch up with the growing expectations of the customers.
It is important to sell and deliver to the customer the way he wants it.
For achieving this we need to step into customers shoes.
Technology for transaction banking & beyond
We have to scale up the volume of our operations to achieve economies of scale
The multiple platforms of technology need to be integrated to generate
synergies in our business model
Bank is looking beyond transaction banking i.e. relationship banking. Service
excellence can lead us to promote relationship banking

BPG 2011-12-Quantitative Targets

Parameters
Total Business
Total Deposits
CASA Deposits
Average CASA
Retail Term Deposits
Advances
Average Advances
Retail Advances
MSME Advances
Agriculture
Fresh Slippage
Recovery in NPAs
Non-Interest Income (Growth)
Return on Average Assets
New Quality Savings Bank
Accounts
STRATEGIES AND ACTION POINTS

Growth in % p.a.
24% to 25%
22% to 23%
26% to 27%
25%
25% to 26%
25% to 26%
24% to 25%
30%
28%
22%
Less than 1%
Rs500 crs
25%
1.25% to 1.35%
50 lacs

Resource Mobilisation

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Resource Deployment
Financial Inclusion
Non-interest Income
Wealth Management
Alternate Delivery Channels
Asset Quality Management
Organisational Restructuring & BPR
HR & Support Services
To Be Most Admired Bank

RESOURCE MOBILISATION
Focused attention on mobilization of on Retail Time & CASA Deposits
Acquiring new customers across all customer segments and branches.
Well functioning computer system, uninterrupted connectivity, up-to-date
knowledge about the products, ability to service the customer from single
window, management of counters during rush hours, branch ambience and
cleanliness and the attitude of the staff right from Manager to the Messenger
Branches brought under the ambit of Project Navnirmaan must assume
challenging targets.
Special strategies and action plans for mobilizing Recurring Deposits, NRI
deposits and institutional deposits.
Product and Process innovation.
The performance of Branches, Regions and Zones on resource mobilisation
front will be measured and monitored on the following lines:
Growth of total and segmental deposits on weekly average
No. of deposit accounts added along with the amount
Trends in average balance per account qtr after quarter
No. of accounts added in key customer segments like Pensioners, Young
Professionals, Corporate Salary accounts, Govt. Accounts, Trusts etc.
No. of account closed viz-a-viz opened.

RESOURCE DEPLOYMENT
Focus area will continue to be on quality credit expansion and balanced
growth across all segments
Focus on higher volumes and better Turn Around Time (TAT)
WHOLESALE BANKING

Need to canvass new proposals with more exposure in working capital rather
than Corporate/Term Loans
Bank will setup 14 mid-corporate branches to cater to the needs of Corporate
having turnover of upto Rs500crs
Functional Client Service Teams (CST) - CST will focus on acquisition and
deepening through systematic account planning.

MSME BANKING
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Each and every branch will have to generate leads for appraisal and sanction
of proposal through SMELF
Popularization of CGTMSE scheme
Cluster approach in lending to MSME

RETAIL CREDIT
Each and every branch should endeavour to disburse at least 2 housing loans
per month.
Branches will have to help RLFs by generating maximum leads.
Rural & Agri. Banking
Horticulture, organic farming, contract farming, agro-processing, minor
irrigation, dairy, construction of go-downs etc are emerging areas for Agri.
Banking
Concentrating on increasing the private investment on the farms by
individual farmers by focusing on investment credit.
Financial Inclusion
Bank plans to cover 20000 villages by 2013 through;
Branches
BC model
ATMs
Satellite offices
Mobile Banking,
Kiosk Banking
Non-interest Income:
Non-interest income- at least 30% growth during the year
LC/BG business should be given a boost to increase fee based income
Export/Import turnover needs to be improved further
Increasing sale of 3rd party product
Popularisation of on-line trading when it is launched by bank
Treasury should canvass more derivative business
Increase in Govt. Business -at least Rs.100 cr income from Govt. Business
during the year.
Wealth Management
Under WMS the bank presently provides through the network of its branches
various 3rd party products like Life Insurance, Non Life insurance including
Health Insurance, Mutual Funds & Equity Trading under tie-up arrangement
with different partners
Our own Retail e-trading platform under BOB Capital will soon start operating.
Branches must sign maximum customers for e-trading
E- trading to leveraged for getting more SB accounts with higher retained
balances in these accounts

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Alternate Delivery Channels

Maximize enrolment and utilisation of Baroda connect
Customers should be impressed upon to use online RTGS/NEFT etc for fund
transfer to other banks
Average ATM hits to increase at least 300 per day
Maximum enrollment for M connect mobile banking service, when it is
launched by bank
Asset Quality Management
To keep track of each and every account from beginning
Every A/c of Rs. 5 lacs and above should be closely by Branch Head
A/cs below Rs. 5 lacs should be closely monitored by the officer-in-charge
SPTF at RO to keep close watch on each and every account
Deficiencies brought out in PSR and branch inspection should be rigorously
followed up for rectification
Lok Adalats should be organised to maximise recovery
Execution of decrees & Recovery in PWO A/cs
where the notice period is over under SARFAESI Act, steps should be taken for
the possession of the collaterals and realisation of bank dues
Organisational Restructuring & BPR
No. of Regional Offices will increase from 43 to 49 i.e 3 in Uttar Pradesh and 1
each in Northen Zone, Rajesthan Zone and Mah & Goa Zone
All Metro and Urban branches are proposed to be subjected to new model as
per Project Navnirmaan
In these branches all non-customer facing activities are either shifted to
RBO/CBO or re-design the branches leaving more space for the customers
More than 550 new branches will be added during 2011-12
HR & Support Services
Recruitment drive
Migration of customers to alternate delivery channels, reducing staff at
administrative offices, centralisation of MIS returns, avoiding avoidable paper
correspondence, cutting down multiplicity of decision making layers,
automation of various work process
New recruits classroom training to be supplemented by on-the-job training
Existing staff has to play the guardians role
To be the Most Admired Bank
Our Bank should lead the industry by setting an example by achieving
consistent, sustainable and profitable business growth in all key parameters.
A consistent growth on average basis in all segments of deposits and
advances coupled with minimum delinquencies and robust fee-based income
is Banks objective.
The objective is to be achieved by focusing upon customers needs and
preferences and fulfilling them in a cost effective manner.
We not only wish to sell our products but also believe in serving our
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customers and add value to our relationships

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