FinCORE.. State of the Art, Comprehensive New Generation Core Banking.

Indian Enterprises should carry out Business Process Re-engineering to move up the services value-chain

Competitive pressure from other companies in the same field has increased, there is a need to deliver value at less incremental costs and manpower Will help Indian organizations extract better performance from its existing systems and setup and introduce significant improvements.

Why BPR ??

Role of technology in BPR Technology has become more a commodity. in the enterprise and there is not much differentiation between competitors BPR is mainly a business-driven initiative The advantage lies in the way the technology is used Tech savvy enterprises that are able to leverage technology for bettering their business processes can benefit from BPR faster

Which industry derive benefit of BPR The concept of BPR is industry-neutral Medium and large companies in any sector will benefit from BPR Enterprises that have business units spread across several global locations

Steps of begin BPR An organization should take five steps in order to conduct BPR The first step is to identify the key business process in the value chain that have some pain points. and need to be streamlined The second step will be to re-engineer the processes and set measurable goals. The goals may be to increase case-load productivity by 15 per cent, decrease loan processing time by 20 percent. These processes can be performed by an internal team or with consultancy team which provides broad industry perspective

The third step will be to map the new processes against the existing applications and identify new areas of systems integration and functionality. The fourth step will be to devise a change management plan, and an IT plan to implement the changes The final step will be to execute the plans and measure achievement against the goals

Essential ingredients of successful BPR strategy Strong executive sponsorship Clear vision of the desired end-state Ability to execute change management Efficiency of handling IT infrastructure deployments Good skills in technology integration with new business processes

Key Areas Identified for Re-engineering Account Opening Commission / Charges & Interest Application Chequebook maintenance & issue Demand Drafts Clearing functions Outward Clearing Inward Clearing Home Clearing National Clearing High Value Clearing Outstation / Upcountry / OBC clearing Service Branch Collection Services

Standing Instructions ChequePurchase Tax Deducted at Source Other Processes Stop Payment & Revocation Account holds / restrictions & Revocations Account transfers Loans & Advances Pre sanction Post Sanction Documentation Management Key Areas Identified for Re-engineering

Accounting General Ledger Management Information Systems Key Areas Identified for Re-engineering

Account opening a de-centralisedfunction Data Capture inadequate and inconsistent across branches Customer identified as the customer of the Branch and not of The Bank. Customer re-directed number of times for account opening Duplication of efforts Details of account opening written in the account opening register

Account Opening

Current State

Options: Account opening to be a centralized function Account opening to be a de centralisedI.e. accounts to be opened by the branch it self

Centralisedfunction: Customer will be identified uniquely across the bank Branches will be grouped logically under one central location Branches to ensure that all mandatory / necessary data is filled in by the customer on the account opening form. Branches to enter the minimal / mandatory information required for account opening Branches to ensure that all necessary documentation linked to the particular account has been collected from the customer before sending the forms to the central location for account opening Any exceptions to be accompanied by a covering letter duly authorized by the concerned authority Account opening forms collected by the branches to be sent to the particular central location through local branch courier. Initial deposit for account opening to be accepted in cash, transfer or cheques Account Opening Future State

System to check for minimum balance requirements as parameterisedfor the particular type of account , product / scheme All other detailed account information as well as documentation details to be fed by the concerned data entry operators and authorized by the officers at the central location. Each data entry operator to work on quota basis Customer ID will be generated by the core banking system for new accounts. Generation of customer ID is a pre-requisite to any account opening. Existing customer ID to be used in the event the customer already has an account with the Bank Entered information to be checked against the list of black listed customers circu lated by RBI, other 3rdparty agencies, internal (accounts marked by the Bank) for: Account holder Introducer Joint account holders Account holders as well as joint account holders signature and (or) photograph to be captured at the time of account opening Chequebook, credit / debit card, ATM card, PIN Generation, etc. to be issued cent rally and couriered to the customer along with the customer ID and account number. Account Opening Future State

Internet banking, phone banking access request to be forwarded to the concerned authority / department Letter of thanks to be generated by the system for the introducer and to be couriered to the introducers postal address. Turnaround time for the entire process to be approximately 4 working days Account level parameters for add on charges, exemptions etc. to be fixed at the branch level with appropriate authority. In the event of non-availability to mandatory fields, or required documentation the account opening forms to be re-sent to the designated branches De-Centralised function: Accounts to be opened by the branch itself All data entry to be done at the branch itself, Cheque books to be issued by the branch itself Request for debit , credit card, internet banking , phone banking, PIN generation etc. to be forwarded to the respective departments Other processes to be the same as mentioned above in the centralisedfunction Account Opening Future State

Account Opening Future State Account openingProcess Current StateFuture State De-centralisedfunction Datacaptureinconsistentandinadequate Customerre directednumberoftimes Duplicationofefforts Accountopeningtobe: Acentralisedfunction(region wise) Ade-centralisedfunction(branchfunction) CustomertobeidentifieduniquelyacrosstheBank AllrequisitedataasdesiredbytheBanktobecapturedinthesystemforvariousproducts/schem esofferedbytheBank DatacapturetobeuniformacrosstheBankwiththehelpoffielddefinitionsintheCoreBankings ystem AllaccountopeningformalitiestobecompletedbytherelationshipofficerattheAccountopen ingcounter Chequebooks,debitcard,ATMcardetc.tobecourieredtothecustomer Requestforinternetbanking,phonebankingetc.tobeforwardedtotherespectiveauthority/d epartmentforaction Trackcollectionofrequireddocumentationlinkedtoaparticularaccount, product/schemeandmovementofthesame People Requirement Shiftbankstafftocentrallocation Hiredataentryoperatorsatlowcost Centralisationwouldresultinstaffre-deployment Management Decision Optionselection:centralisationv/sde-centralisation Placeforcentralisedlocation(branch,R.O.,newpremisesetc.) Hiringofdataentryoperators/shiftingbankstafftocentralisedlocation. Maximumturnaroundtime(notgreaterthan4workingdays) Dataentryandpaymentlinkedtoquotabasis Supportforbothcentralised/de centralisedfunctioning AccountnumberandcustomerIDuserdefinedcombinations Definefieldsrequiredfordatacaptureforaparticularaccount,product, scheme Movementofcollectedinitialaccountopeningdepositbythebranch Vendor Questions

Many commission / charges to be recovered from the customers not supported No centralisedmodule for defining the methods of calculations of commission, charges and interests System prompts the user to enter charges and accepts what ever is entered May lead to leakage of income May lead to incorrect application of charges / commission leading to customer dissatisfaction Involves manual effort Profit & loss account heads open for posting ; which may be a concern. Interest application program run manually on the due date for various products / schemes Interest amounts can be altered in the system Commission / Charges & Interest Application Current State

Commission, charges, and interest rates / tables to be defined globally for all products and schemes in the core banking solution All income related fields (Commission, charges and interest ) to be globally parameterised. Method of calculation (I.e. tier, slab, flat amount / rate, combination etc. ) to be defined and attached to each type of commission, charge. Method of calculation for interest (I.e. simple, compounding, EMI based, combinations, etc.) to be defined and attached to each product / scheme offered by the Bank. Core banking system to have the option of specifying add on (+ / -) charges, commission / interest amounts / percentages and waivers (if any) with appropriate authority System will check for account level commission , charge and interest parameters at the time of application, and, account level parameters will precede global parameters. Interest rates to be linked to benchmarks (I.e. PLR, LIBOR, MIBOR, not linked etc.) and be automatically updated with the changes in the benchmark rates Direct entries to the P&L account heads to be highly restricted based upon access privileges defined in the core banking solution. Commission / Charges & Interest Application Future State

System to automatically pick up and apply the commission, charges and interest rates as defined in the global parameter file. Users at the branch level to have no rights to modify the commission, charges amounts and interest rates pickup by the system. Interest to be applied to the accounts as per the due dates automatically based upon defined rules. Netting of balances in defined accounts for a particular customer , group of customers, group ID.s to be considered for interest calculation Ability to define commission amounts as a part of total amount to be charges to the customer and internally bifurcate the account based on the actual amount and the commission amount without it being transparent to the customer I.e. exchange rate for USD is Rs. 47.80 this rate also includes some amounts of commission / charges so the system should have the option of specifying the commission amounts e.g. .80 which forms a part of the total exchange rate and account for it separately , so the customer will be debited / credited @ 47.80 but the system will internally bifurcate the entries into exchange rate 47.00 and .80 as commission earned / charges Commission / Charges & Interest Application Future State

Commission / Charges & Interest ApplicationProcess Current StateFuture State Manycommission/chargestoberecoveredfromthecustomersnotsupported Nocentralisedmodulefordefiningthemethodsofcalculationsofcommission,chargesandinte rests Systempromptstheusertoenterchargesandacceptswhateverisentered Interestapplicationprogramrunmanuallyontheduedateforvariousproducts/schemes Interestamountscanbealteredinthesystem Allcommission/charges,interestrates,tablestobemaintainedcentrallyintheCoreBanking solution Methodofcalculationforcommission,chargesandinteresttobedefinedandattachedtoeachty peofproduct/scheme. Branchestohavetheoptionofspecifyingadd on(+/-)charges,commission/interestamounts/pe rcentagesandwaivers(ifany)withappropriateauthority Systemwillcheckforaccountlevelcommission,chargeandinterestparametersatthetimeofap plication,and,accountlevelparameterswillprecedeglobalparameters. Interestratestobelinkedtobenchmarks(I.e.PLR,LIBOR,MIBOR,notlinkedetc.)andbeautoma ticallyupdatedwiththechangesinthebenchmarkrates DirectentriestotheP&Laccountheadstobehighlyrestrictedbaseduponaccessprivilegesdef inedinthecorebankingsolution. Usersatthebranchleveltohavenorightstomodifythecommission,chargesamountsandinteres tratespickupbythesystem. Interesttobeappliedtotheaccountsaspertheduedatesautomaticallybasedupondefinedrule s. People Requirement Seniorstaffproficientintheirrespectivefunctionalareastoberesponsibleforsetting/ch angingtheparameterfiles Stafftobethoroughlyawareoftheimpactofparameterchange Management Decision Allcommission/charges,interesttablestobesetcentrallybyseniorstaffmembers Methodofcalculationforcommission/charges,interesttobedefinedbythesameseniorstaffm embers Powerstobedelegatedtowaivechargesoflevy(+/-)amount/percentagesatthebranchlevel Supportdefinitionofallcommission/charges,interestrates,tablesandmethodofcalculati onasrequiredbytheBankforvariousproducts/schemesofferedbytheBank Supportadd on(+/-)charges,commission/interestamounts/percentagesandwaiversforeachpr oduct/scheme Easeofdefinitionofnewcommission/charges,interestrates,tablesandmethodofcalculatio n Vendor Questions Commission / Charges & Interest Application Future State

ChequeBook Maintenance & Issue Current State A chequesbook is issued upon a written requisition from the customer. Each chequebook contains the requisition form The system prompts for chequesbook charges, the same might not have parameterized globally and accepts any amount that is entered. This may result in income leakage System allows a user to enter duplicate chequenumbers at the time of chequebook s tock entry System accepts alpha series for chequebooks but there is no validation on the alpha series at the time of transaction processing The minimum balance criterion for a particular account is based on the presence of a chequebook issued record in the system and not on whether the customer has requested for the facility at the time of account opening. Duplication of efforts Details of chequebook issued re written in the chequebook issue register.

Personalized Cheque Book Stock of chequebooks to be maintained centrally in the core banking solution based on the number of leaves Cheque book issue process to be centralise Cheque book requisition slips to be collected by the branch and sent to the designated central location Branches to ensure that required details are appropriately filled by the customer on the chequebook requisition slip Core banking system to ensure that duplicate chequenumber are not issued to the particular account across the Bank. Cheque books will be automatically picked up from the stock based upon the number of leaves required and linked to the particular account Core banking system to maintain safety levels of chequebook stock Warning messages to be flagged by the core banking system in the event the stock of chequebooks reaches the minimum safety level. ChequeBook Maintenance & Issue State Future

Cheque book issue charges to be automatically applied in the account as defined in the global parameter file. System will check for account level parameters for ( +/-) charges, account level parameters will precede global parameters. System to support issue of chequebooks with alpha series and validate the same at the time of transaction processing except Inward Clearing Request for issue of chequebook to be enabled through Internet & Phone banking All request for the day to be forwarded from the Internet / Phone Banking systems to the centralisedlocation Non -personalized Cheque Book Branches to maintain an Adhocstock of chequebooks for immediate issuance to the customers The chequebooks maintained at the branches will be from the stock maintained centrally only On issuance of such chequebooks the branch will enter the details of the chequebook in the system Customer to be later sent a personalized chequebook from the central location on intimation by the branch ChequeBook Maintenance & Issue State Future

Cheque Book Maintenance & IssueProcess Current StateFuture State Chequebookissueprocessde-centralised Systempromptsforchequesbookchargesandacceptsanyamountthatisentered. Systemallowsausertoenterduplicatechequesnumbersatthetimeofchequesbookstockentry Theminimumbalancecriterionforaparticularaccountisbasedonthepresenceofchequesbooki ssuedrecordinthesystemandnotonwhetherthecustomerhasrequestedforthefacilityatthet imeofaccountopening. Detailsofchequebookissuedre writteninthechequebookissueregister. Stockofchequebookstobemaintainedcentrallyinthecorebankingsolutionbasedonthenumber ofleaves Chequebookissueprocesstobecentralise Systemtoensurethatduplicatechequenumberarenotissuedtotheparticularaccountacrossth eBank. Corebankingsystemtomaintainsafetylevelsofchequebookstock Warningmessagestobeflaggedbythecorebankingsystemintheeventthestockofchequebooksre achestheminimumsafetylevel. Chequebookissuechargestobeautomaticallyappliedintheaccountasdefinedintheglobalpar ameterfile. Systemwillcheckforaccountlevelparametersfor(+/-)charges,accountlevelparameterswil lprecedeglobalparameters. Systemtosupportissueofchequebookswithalphaseriesandvalidatethesameatthetransactio nprocessingexceptInwardClearing RequestforissueofchequebooktobeenabledthroughInternet&Phonebanking People Requirement Officialsusedfordataentrycanbeusedtoissuechequebooks Burdenonbranchstaffreduced,excessstaffcanberedeployed Management Decision Centralisationofchequebookmaintenance&issueprocess Placeforcentralisedlocation(branch,R.O.,newpremisesetc.) Officialsusedfordataentrycanbeusedtoissuechequebooks Max.turnaroundtime(notgreaterthan4workingdays) Personalisedchequebookstobeonlyissuedcentrally Non personalisedchequebookstobeissuedformthebranchitself Numberofleavesfornon personalisedchequebooks SupportforCentralisationofchequebookmaintenance&issueprocess Stockmaintenanceofchequebooks SupportthroughInternet/PhoneBanking Vendor Questions ChequeBook Maintenance & Issue State

Future

Demand Draft issue, cancellation and purchase supported by the current systems Commission for issue of demand drafts partly manual I.e. cash commission calculated manually The system prompts the user for the charges to be collected for cancellation of the draft and accepts any charge that is entered by the user Interest and charges for purchase of instrument are calculated by the system Demand Draft reconciliation is done by the Inter Branch Reconciliation Department Current reconciliation process is lengthy and time consuming Current systems allow duplicate demand draft numbers to be maintained in the stock Currently there is no system to validate the genuinessof the instrument presented for payment or purchase through the system. Current process of payment of drafts without any system validation is prone to high risk of encashment or purchase of drafts on behalf of fraudulent personnel Demand Drafts Current State

Demand draft stock to be entered and maintained at the central level for all core banking branches Physical draft stock (security paper) to be maintained at the branch for the stock that has been fed in the system (allocated to the particular branch) Core banking system to maintain safety levels of drafts stock Warning messages to be flagged by the core banking system at the branch as well as central level in the event the stock of drafts reaches the minimum safety level. Core banking system to ensure that duplicate draft number are not issued to the particular branch. Drafts to be only issued form the stock entered Drafts to be automatically picked up from the stock entered and linked to the particular account Amounts for commission , charges , fees etc. for issue , cancellation etc. to be maintained centrally Branches to have the parameter to waive off / discount the charges with appropriate authority Demand Drafts Future State

Draft issue charges to be automatically applied in the account as defined in the global parameter file. System will check for account level parameters for ( +/-) charges, account level parameters will precede global parameters. Draft will be automatically printed once the transaction is authorized on single / continuous stationery as desired by the Bank Respective account head will be debited and credited with the respective amounts on line System will automatically generate an Advice of Drawing, which will be printed at the paying branch (the branch on whom the draft has been drawn) On presentment for payment key details (I.e. draft number, amount, date) of the physical instrument will be entered. In the event all the key fields match the details of the draft as entered by the issuing branch, the details of the draft will be displayed at the paying branch The draft will also be validated for Already Encashed , Cancelled , Stale , Post Dated etc. before payment.. On verifying the details of the drafts the payment will be authorized and draft will be paid On authrisingthe transaction the respective account heads will be updated on line with the amounts Demand Drafts Future State

System to support cancellation of drafts and automatically calculate and apply the charges, commission etc. as defined in the global parameter files. Further the system to prompt for the requisite documentation to be collected from the customer for cancellation of the draft System to support purchase / collection of drafts and automatically calculate and apply charges, commission etc. System to support on line customer verification in the event of draft purchase for a customer of the Bank on the core banking solution System to support definition of purchase limits branch wise , user ID wise based upon defined parameters e.g. size of branch, location of branch, core business of the branch etc. System to support payment / collection of drafts on behalf of correspondent banks and track details of the same System to support verification of draft details before payment with the data uploaded in the core banking system received from the correspondent banks System to support issue of drafts on stationery of other Banks, with whom Central Bank has an arrangement and track details of the same System to support reconciliation of drafts issued by correspondent banks on Central Bank and also drafts issued by Central Bank on other Banks with whom Central Bank has an arrangement. System to support bulk issue of drafts through electronic medium upload Demand Drafts Future State

Demand draft issue request to be supported through Internet and Phone Banking All request for the day to be forwarded from the Internet / Phone Banking systems to the centralisedlocation Details of the drafts to be entered in the branch where the customer has an account and the request for printing to be forwarded to the Branch, and all such request to displayed in a separate menu option Account to be debited on-line with the charges , commission , postage etc. once the details of the draft fed in the system at the central location have been authorized Branch to print the drafts after authorization Drafts to be directly couriered by the Branch to the customer Demand Drafts Future State

Demand DraftsProcess Current StateFuture State .DD issue, cancellation and purchase supported by the current systems .Commission for issue of demand drafts partly manual I.e. cash commission calculated manually .Current reconciliation process is lengthy and time consuming .Currently there is no system to validate the genuinessof the instrument presented for payment or purchase through the system. .Current process of payment of drafts without any system validation is prone to high risk of encashment or purchase of drafts on behalf of fraudulent personnel Demanddraftstocktobeenteredandmaintainedatthecentrallevelforallcorebankingbranche s Physicaldraftstock(securitypaper)tobemaintainedatthebranchforthestockthathasbeenf edinthesystem(allocatedtotheparticularbranch) Systemtosupport: IssueofDemandDrafts CancellationofDemandDrafts Purchase/CollectionofDemandDrafts IssueofDemanddraftsonstationeryofotherBanks PaymentofCentralBankdraftsandalsodraftsissuedbyothercorrespondentBanksonCentralBa nk SystemtosupportprintingofdraftsonCentralBank/otherbanksstationeryasdesiredbytheBa nkonsingle/continuousstationery Allcharges,commission,interestandmethodsofcalculationforthesametobedefinedgloball y Systemtosupporton lineupdationofrespectiveaccountheads Autoreconciliationofdrafts RequestforissueofdraftstotobealsohandledthroughInternetandPhoneBanking People Requirement BurdenonInterBranchAccountingdepartmentstaffreduced, excessstaffcanbere-deployed Management Decision Demanddraftstocktobeenteredandmaintainedatthecentrallevelforallcorebankingbranche s Autoreconciliationofdrafts Settingofpurchaselimits Maximumturnaroundtime(notgreaterthan4workingdaysforrequestthroughInternetandPhone Banking) Demanddraftsneednotbeissuedonacustomeronthecorebankingsolution, premiumcanbechargesforimmediatecredit Exploreopportunitiesofnewcorrespondentarrangementsasnowdraftscanbedrawnupon,purch asedandpaidbyanybranchonthecorebankingafterappropriateverificationofthedetailsof thedrafts SupportforCentralisedmaintenanceofdemanddraftstocks SystemtosupportprintingofdraftsonCentralBank/otherbanksstationeryasdesiredbytheBa nkonsingle/continuousstationery SupportthroughInternet/PhoneBanking

Vendor QuestionsDemand Drafts Future State

Volumes 3000 cheques per day All branches do it on their own Power & Manual Encoders are both present Soft Copy for preparing to send to RBI for HV & Inward return Alpha coding is not being used Outward returns cheques & return memos are sent to branches Clearing Outward Clearing(Current State)

Options: Outward Clearing entry and processing to be a centralized function I.e. region wise centralisedat the respective service branch Outward clearing entry to be de centralisedat the branch it self and processing to be centralised

Centralised function: Details of outward clearing to be entered centrally (Service Branch). In case of centralisedentry of outward clearing instruments, branches to only record the total instruments received and the consolidated totals for the particular date. Number of instruments and consolidated totals entered at the branch to be compared by the system at time of entry at the central location. System to highlight and display discrepancies if any ASCII files to be sent to the clearing houses for outward clearing to be generated at the central location branch wise / consolidated. Core Banking solution to be interfaced with the RBI system to download details of instruments to be presented for local clearing and upload clearing effects an d returns (if any). Branches to download the data from the RBI systems and club then together with the outward clearing instruments to be presented Clearing Outward Clearing(Future State)

Service branch to download the details of the instruments presented for clearing from the clearing house web sites / RBI into the core banking solution for reconciliation purposes. Clearing effects to be passed on to the customer as per the clearing dates Returned instruments to be entered in the system at the central location and sent to the respective branches to be handed over to the customers. Cheque return charges to be automatically calculated and applied to the respective accounts upon authorisationof the transaction. De-Centralised function: Details of outward clearing to be entered at the respective branches. Schedule for outward clearing to be printed at the branch and sent to the service branch along with the instruments for processing Other processes to be the same as mentioned above in the centralisedfunction Clearing Outward Clearing(Future State)

Volumes 3000 to 4000 per day Hard Copy & Soft Copy Soft Copy downloaded from the RBI website Cheques& Statements sent to branches Returns sent to RBI in soft & hardcopy, sent between 1600 to 1630 hours Branches Inform the service branch through fax Chequesare retained at the branches Clearing Inward Clearing(Current State)

Inward clearing -Support straight through processing. In the event of non straight through processing the details of the instruments to be entered at the central location (service branch) Service branch to download the clearing details from the clearing house / RBI web site for inward clearing Service branch to verify the physical instruments with the list provided by the clearing house / RBI for inward clearing. Instruments to be marked for Delivered but not listed and listed but not delivered. Instrument details to be uploaded in the core banking system based upon the account number and chequenumber. Core Banking system to check for the validity of the instrument, stop payment instructions etc. All instruments uploaded should be shown as a shadow balance in the system until the signatures on the physical instruments have been verified with the system. The service branch to verify the signatures of the physical instruments with the system. In the event of signatures not matching the instrument to be marked as returned at the service branch and the reason for the same to be captured at the service branch All instruments not marked as returned either by the service branch manually or automatically by the system to be effected in the respective accounts after the batch has been duly authorised. Clearing Inward Clearing(Future State)

The service branch should print a report of all rejected transactions branch wise and send it directly to the branches along with the instruments for further action All rejected instruments should be displayed in a separate menu option at the individual branches along with the reason for the rejection. The branch to verify the list sent by the service branch with the instruments displayed as Rejected The appropriate authority having the relevant authorization powers at the branch to have the option of marking the instrument as Returned or Cleared . All instruments marked as returned should be automatically displayed in the relevant ChequeReturns menu option along with all details of the instruments. System to automatically pick up the charges etc. from the global parameter file as defined and apply the same to the respective accounts. The returned instrument details to updated in the customers profile along with the reason for return. Clearing Inward Clearing(Future State)

Home clearing refers to the chequesdrawn on Bank branches. All home clearing chequesare entered in the system at the respective branch. Such chequesare sent to the service branch along with a non sorted statement The service branch sorts the instruments branch wise and dispatches the same to the respective branches. The service branch sends an advice to the respective branch for all realizations and returns. On receiving the realization advice the branch releases the unclearedeffects and the respective accounts are credited with the amount. All chequesto be passed / returned are entered through the same chequesentry opti on. There is no way to identify chequesto be returned after data enter of the instruments except that the instruments are physically separated from the other instruments May result in returned chequesbeing passed as the officer authorizing cannot differentiate between normal chequesand return chequesthrough the system. Systems prompts the user to enter the charges for returns and accepts any charge that is entered. This may lead to leakage of income or (and) customer dissatisfaction in the event of wrong charge application Clearing Home Clearing (Current State)

Chequesdrawn on Bank customers having accounts in branches that are on the Core Banking solution can be effected immediately. All details of the accounts to debited including the signatures will be visible t o the concerned authority having the requisite access privileges effecting the transaction. Validity of the instrument, stop payment instructions et.c. will be validated by the core banking system for the instrument presented. Instruments can be returned on the spot after validation and the account will be debited with the respective return charges as defined in the global parameter fi le Bank may wish to charge the customer a commission amount for effecting payments on the spot. Chequesissued by Bank customers not on the core banking system will be entered at the branch / directly sent to the service branch for entry, in which case the branch will only enter the consolidated totals of the instruments collected . Number of instruments and consolidated totals entered at the branch to be compared by the system at time of entry at the service branch. System to highlight and display discrepancies if any Service branch to sort the instruments branch wise and sent it to the respective branch via local / domestic courier Clearing effects to be passed on by the service branch to the individual branch to be released to the customer as per the clearing dates Clearing Home Clearing (Future State)

Chequesdrawn on any of the four metros viz. Mumbai , Delhi, Calcutta, Chennai are routed through National Clearing. National clearing chequesare handled through the system The teller enters the chequesfor clearing in the respective time zones. The officer authorizes all chequesentered by the teller. The system automatically picks up the charges for national clearing An unsorted schedule of all chequescollected by the branch under national clearing is generated by the system. The instruments for national clearing along with the schedule are sent to the local service branch The service branch sends an advice to the respective branch for all realizations and returns. Service branch keeps track of the movement of these instruments and is also responsible for reconciliation of the same On receiving the realization advice the branch releases the unclearedeffects and the respective accounts are credited with the amount. Clearing National Clearing (Current State)

Options: National Clearing entry and processing to a centralized function I.e. region wise centralisedat the respective service branch in the event the region has a service branch / any other location in the region which handles the clearing functions of the region National clearing entry to be de centralisedat the branch it self and processing to be centralised

Centralised function: Instruments collected by the branch under national clearing to be sent to the service branch for entry. Collecting branch to enter the number of instruments region wise along with the consolidated totals. Service branch to enter the instruments in the respective branches Number of instruments and consolidated totals entered at the collection branch to be compared by the system at time of entry at the service branch. System to highlight and display discrepancies if any ASCII files to be sent to the clearing houses/ local service branches for nationa l clearing (if any) to be generated at the central location region-wise, in the ev ent the local service branch is not on the core banking solution. . Clearing National Clearing (Future State)

Service branch to send all the instruments collected under National clearing to the respective service branches for presentment Charges, commission, interest to be automatically picked up, as defined in the global parameter file, calculated and applied to the respective accounts once the batch has been authorised. Clearing effects to be passed on to the customer through the service branch as per the clearing dates De-Centralised function: Details of national clearing to be entered at the respective branches. Schedule for national clearing to be printed at the branch and sent to the service branch along with the sorted instruments for processing Other processes to be the same as mentioned above in the centralisedfunction Clearing National Clearing (Future State)

High value clearing is also referred as metropolitan area clearing currently chequesabove Rs. 50,000/ -come under high value clearing. Chequedeposited under high value clearing are realized on the same day High value clearing chequesare handled through the system The teller enters the chequesfor clearing in the respective time zones The officer authorizes all chequesentered by the teller. An unsorted schedule of all chequescollected by the branch under high value clearing is generated by the system. The instruments for high value clearing along with the schedule are sent to the local service branch The service branch sends an advice to the respective branch for all realizations and returns. On receiving the realization advice the branch releases the un-cleared effects and the respective accounts are credited with the amount. Clearing High Value Clearing (Current State)

All instruments collected by the branches under High Value clearing to be entered by the respective branches. Instruments along with the clearing statement / schedule (sorted bank wise) to be sent to the service branch Service branch to generate the ASCII files in the desired format branch wise / consolidated. Effects for high value clearing to downloaded by the service branch from the clearing house / RBI web sites. Effects to be passed on to the customer as per the clearing dates Returned instruments to be entered in the system at the service branch and sent to the respective branches to be handed over to the customers. Chequereturn charges to be automatically calculated and applied to the respective accounts upon authorisationof the transaction. Clearing High Value Clearing (Future State)

Up country / Outstation / OBC clearing clearingis handled through the system The teller enters the chequesfor clearing in the respective time zones The officer authorizes all chequesentered by the teller. The system automatically picks up the charges and calculates the interest amount for upcountry clearing The schedule for upcountry clearing is generated by the system. The instruments for upcountry clearing along with the schedule are sent to the local service branch if there is a service branch in the area of origination of the instrument else the instruments are directly sent to the nearest branch where th e instrument was drawn. The service branch / responding branch sends an advice to the respective branch for all realizations and returns. Service branch / responding branch keeps track of the movement of these instruments and is also responsible for reconciliation of the same On receiving the realization advice the branch releases the unclearedeffects and the respective accounts are credited with the amount. Clearing Outstation / Upcountry Clearing (Current State)

Options: Outstation / Upcountry Clearing entry and processing to a centralized function I.e. region wise centralisedat the service branch. Outstation / Upcountry Clearing entry to be de centralisedat the branch it self and processing to be centralised

Centralised function: All instruments collected by the branches under upcountry clearing to be sent to the central location (I.e.servicebranch) for entry. Collecting branch to enter the number of instruments region wise along with the consolidated totals. Service branch to enter the instruments in the respective branches Service branch to generate the ASCII files in the desired format (if required) branch wise, location / region wise to be sent to the local service branch / nearest branch, in the event the local service branch / nearest branch is not on the core banking solution. Service branch to sent the instruments along with the schedule to the respective local service branch if there is a service branch in the area of origination of the instrument else the instruments are directly sent to the nearest branch where the instrument was drawn. Clearing Outstation / Upcountry Clearing (Future State)

Effects for upcountry clearing to be downloaded by the service branch from the clearing house / RBI web sites or manual intimation. Effects to be passed on to the customer as per the clearing dates Charges, commission, interest to be automatically picked up, as defined in the global parameter file, calculated and applied to the respective accounts once the batch has been authorised. Returned instruments to be entered in the system at the service branch and sent to the respective branches to be handed over to the customers. Cheque return charges to be automatically calculated and applied to the respective accounts upon authorisationof the transaction. De-Centralised function: Details of Outstation / Upcountry Clearing to be entered at the respective branches. Schedule for Outstation / Upcountry Clearing to be printed at the branch and sent to the service branch along with the sorted instruments for processing Other processes to be the same as mentioned above in the centralisedfunction Clearing Outstation / Upcountry Clearing (Future State)

All clearing functions handled by the service branch. Service branch acts as nodal / link branch for government business Service handles processing of payments for interest / dividend warrants Service branch maintains the RBI account for the bank for net clearing effects and is also responsible for reconciliation Currently transaction processing is mainly through manual statements resulting in : Increased manual efforts Reconciliation issues High chances of errors Duplication / redundant processing at various levels (branches, service branch et c.) Duplication of efforts Instrument details re-entered at the service branch for national , upcountry clea ring etc.

Service Branch (Current State)

All clearing functions to be centrlisedat the respective services branches. Service branches to enter information for outward, high value, upcountry clearing and returns. Service branches to encode, bundle and present the instruments for clearing. Services branches to generate ASCII files for clearing data in the desired format to be handed over to the clearing houses / RBI. Service branches to download clearing data from the clearing house / RBI website for inward, outward, high-value clearing. Service branch to reconcile the instruments sent and received, to and from the clearing houses / RBI Service branch to reconcile the instruments sent and received, to and from the branches. Individual branch accounts to be maintained by the service branch for clearing, reconciliation of the same to be done by the service branch Clearing house / RBI account for clearing settlements to be maintained and reconciled by the service branch. Service branch to also handle straight through processing of dividend warrant payments Service Branch (Future State)

Clearing & Service Branch Future State Clearing and Service BranchProcess Current StateFuture State Clearingfunctionsde-centralised Datacaptureinconsistentandinadequate Dataenteredagainattheservicebranchagainfornational,outstation/upcountryclearing Manualreconciliationatthebranchesandservicebranch Lotofmanualeffortsattheservicebranchandbranchesforprocessingofclearinginstruments anddata Timeconsumingactivityatthebranchinvolvinghugeamountofresources Clearingfunctionstobe: Centralised(I.e.entryandprocessingtoacentralizedfunctionforoutwardclearing,nation alclearingandupcountry/outstationclearing,inwardclearing De-centralised(I.e.entrytobede centralisedatthebranchitselfandprocessingtobecentral ised)forhighvalueandhomeclearing Inwardclearingtobestraightthroughprocessing DatatobedirectlydownloadedfromtheRBI/clearinghousewebsiteintothecorebankingsoluti onforstraightthroughprocessingandre conciliationofclearingdata. ASCIIfilesandclearingschedulestobegeneratedbytherespectiveservicebranchesforallbr anchesunderthem Individualbranchaccountstobemaintainedbytheservicebranchforclearing,reconciliatio nofthesametobedonebytheservicebranch Clearinghouse/RBIaccountforclearingsettlementstobemaintainedandreconciledbytheser vicebranch Servicebranchtohandleprocessingofdividendandinterestwarrantpayments People Requirement Shiftbankstafftocentrallocation Hiredataentryoperatorsatlowcost Samestafftobeusedfordataentryofinward,outward,national,upcountryclearing Centralisationwouldresultinstaffreductionatthebranchesandre deployment BurdenonInterBranchAccountingdepartmentstaffreduced,excessstaffcanberedeployed Management Decision Optionselection:centralisationv/sde-centralisation Placeforcentralisedlocation(servicebranch,branch,R.O.,newpremisesetc.) Hiringofdataentryoperators/shiftingbankstafftocentralisedlocation. Maximumturnaroundtime(notgreaterthan15secaninstruments) Dataentryandpaymentlinkedtoquotabasis Maintenanceandre conciliationofbranchclearingsettlementaccountsandRBIclearingsettle mentaccountsbyservicebranch Supportforbothcentralised/de centralisedfunctioning SupportforstraightthroughprocessinganddownloadingofclearingdetailsfromtheRBI/clea ringhousewebsiteforreconciliation MaintenanceandreconciliationofbranchclearingsettlementaccountsandRBIclearingsettl ementaccountsbyservicebranch ConsolidationofthevariousRBIclearingsettlementsaccountsmaintainedbytheservicebran chesonperiodicbasisforoverallfundpositions

Vendor Questions

Collection services include services like collection of taxes, phone bills, elect ricity bills for both customers and non customers of the Bank Collections services currently manual Consolidated accounting entries passed in the branch banking system for collectio ns made during the day Schedule for collections made for various types of collections services prepared manually by the branch Reconciliation at the branch done manually All collections made during a day are sent to the Service branch which is the nod al / link branch along with an advice for the transfer of collection amount Reconciliation of all instruments sent by various branches under a particular ser vice branch is done manually at the service branch. Service branch after reconciliation of the instruments and the collection amounts sent by various branches, remits the proceeds to the parent branch (I.ethe branch whe re the main collection account is held) along with the details of the instruments. Consolidated totals are verified at the parent branch and collection amounts are credited to the collection account Reconciliation of the transaction entries and collection amounts with the collect ion account holders (RBI, customs , excise etc.) is handled at the parent branch All MIS as required by the statutory / regulatory bodies, management etc. prepare d manually Accuracy of MIS is a concern Collection Services (Current State)

Direct & Indirect tax collections, school, university fees collections etc. to be handled at the branches through the respective options Each branch would have separate accounts for different types of collections services offered. Daily the collections made by the particular branch will be entered in the core banking solution by the branch along with all the details of the transactions. At the end of business hours the physical collection instruments (e.g. challanrec eipts) will be sent to the nodal branch along with the schedule of collection The branches will further transfer the collections for the day to the nodal branch as per the collection schedule being sent by the branch to the nodal branch. (Option to define the transfer period of collection funds from the nodal branches to the parent branch and the mode of transfer I.e. automated / manual) In the event of chequepayments the entry will be automatically picked up by the system on the day the chequewas realized and the amount will be automatically transferred from the sundry account to the branch collection account The nodal branch will be responsible for reconciliation of the instruments sent by the branches with the physical instruments and also the amounts transferred by the branches. Collection Services Future State

The nodal branch will also have the facility to upload transaction details received through electronic medium / manually enter required data, for branches not on the core banking solution / manual branches. The nodal branch will be responsible for reconciliation of the instruments sent by the branches with the physical instruments and also the amounts transferred by the branches. The nodal branch will also have the facility to upload transaction details received through electronic medium / manually enter required data, for branches not on the core banking solution / manual branches. Reconciliation and accounting of branches not connected to the core banking solution would be routed through the Inter branch Reconciliation Department. For branches connected to the core banking solution the respective books of accounts will be updated on line on a real time basis. Daily the amounts along with the transaction details would be transferred by the nodal branches to the parent branch. (Option to define the transfer period of collection funds from the nodal branches to the parent branch and the mode of transfer I.e. automated / manual) The parent branch will reconcile the consolidated totals for each type of collection and transfer the collections to the parent account. The core banking solution would keep a track of all collections made to a particular branch as on a particular date along with the details of the transactions. Collection Services Future State

The core banking solution would also calculate the commission receivable (if any) based upon defined rules from the collection accounts for services offered by Central Bank. The commission amounts would be compared by the system with the actual commission received from the collection account holders. Discrepancies if any should be displayed. Reconciliation of the transaction entries and collection amounts with the collect ion account holders (RBI, customs , excise etc.) is handled at the parent branch The parent, nodal / link, as well the originating branch will be able to view all details of the transactions made and the flow of the transactions at the micro l evel at any point in time Collections services will also be offered through Internet Banking to the customers In the event of collections made through Internet Banking the branch will print a report of the same collection account wise for transaction done up to the close of the business hour / cut off time and send this schedule to the nodal / link branch. The branch will consolidate the amounts collected through internet Banking along with the total collections made for the day. The nodal / link branch will also receive a copy of the collection transactions effected in the core baking system up to the close of the business hour / cut off time (as parameterized for the particular branch)through the Internet Banking server branch-wise . Both these reports I.e. one sent by the branch and the other received by the nodal / link branch will be used for reconciliation purposes by the nodal / link branch Collection Services Future State

Collection ServicesProcess Current StateFuture State Collectionsservicescurrentlymanuale.g.taxcollections Consolidatedaccountingentriespassedinthebranchbankingsystemforcollectionsmadeduri ngtheday Scheduleforcollectionsmadeforvarioustypesofcollectionsservicespreparedmanuallybyt hebranch Reconciliationatthebranchdonemanually AllMISasrequiredbythestatutory/regulatorybodies,managementetc.preparedmanually Direct&Indirecttaxcollections,school,universityfeescollectionsetc.tobehandledatth ebranchesthroughtherespectiveoptions Eachbranchwouldhaveseparateaccountsfordifferenttypesofcollectionsservicesoffered. Branchesinaparticularregion,localityetc.tobelinkedtoaparticularnodalbranchandthen odalbranchesinturntobelinkedtoaparticularparentbranch(I.e.thebranchwherethemainc ollectionaccountismaintained) Reconciliationofthecollectionsmadebythevariousbrancheswillbehandledbythenodal/ linkbranch,whereasthereconciliationoftheactualcollectionaccountwillbehandledbyth eparentbranch Systemtosupportreconciliationofindividualtransaction wiseaswellasconsolidatedtransa ction-wise Nodalbranchestohavetheoptionofconsolidationscollectionsmadebynon computerisedbranch esthroughmanualdataentry/directuploadtothesystemifdataisavailableinelectronicfor mat Collectionsmadeonaparticulardaytobeautomatically/manuallytransferredtothenodal/ linkbranchuponauthorisationofallcollectiontransaction,andfromthenodal/linkbranch totheparentbranchuponauthorisationafterreconciliationatthenodal/linkbranch Thesystemwouldkeepatrackofallcollectionsmadeaparticularbranchasonaparticulardatea longwiththedetailsofthetransactions. Theparent,nodal/link,aswelltheoriginatingbranchwillbeabletoviewalldetailsofthetra nsactionsmadeandtheflowofthetransactionsatthemicrolevelatanypointintime CollectionsserviceswillalsobeofferedthroughInternetBankingtocustomers People Requirement AutomationofthecollectionprocessandofferingthesamethroughInternetBankingwouldresu ltinstaffreductionatthebranchesandre deployment Management Decision Periodicityformovementoffundsfromthebranchestothenodal/linkbranchandfromthenodal/ linkbranchtotheparentbranch Reconciliationofallcollectionsmadebythebranchestobedonebythenodal/linkbranch Identificationofthenodal/linkbranch Identificationofthebrancheslinkedtothenodal/linkbranch Abilitytolinkbranchestoanodal/linkbranchandnodal/linkbranchestoaparentbranch Abilitytosupportconsolidationandreconciliationatthenodal/linkbranchesandparentbra nch Abilitytoautomatically/manuallytransferthecollectionmadefromthebranchestonodal/li nkbranchesandfromthenodal/linkbranchestotheparentbranch AbilitytosupportallcollectionservicesasdesiredbytheBankthroughInternetBanking Vendor Questions

Collection Services

Future State

Written mandates are taken from the customers for effecting standing orders Currently the standing instruction module is used for intra branch account transfers mainly for loan installment and RD payments. Payments to be made to beneficiaries outside the branch / other banks etc. are manually maintained in registers The branch has no way to know what standing orders have not been executed on a particular day as the system does not generate any report for Standing Instructions not executed on a particular day. The system has no option to record the receipt of payment made by the customer directly and automatically adjust the next payment dates. So even though the customer has made the payment the system during the next execution automatically recovers all amount due from the date when the standing order was not executed, thus debiting the customers account multiple times even though the payment for the same has been made through some other mode of payment.Asa result of these multiple debits in the account at a single point of time genuine chequesof the customer may bounce for lack of funds, customer may be charged minimum balance charges etc. even though the balance in the account was supposed to be sufficient This causes customer dis -satisfaction and inconvenience to the customer. Further it also results in a lot of manual effort at the branch for problem identification and rectification of the same. Standing Instructions Current State

For other accounts besides loan account where standing instructions are to be effected go unnoticed till the customer complaints about the same as it is not possible for the branch to check all accounts on a daily basis. No check for existence of standing instruction at the time of account closure. So before an account is closed the concerned officer has to go through the standing instructions module to make sure that no active standing instructions are linked to the particular account. Standing Instructions Current State

Standing instructions to be entered by the branch it self in the core banking sys tem. Data fields to be captured would be defined at the central level to ensure consis tency of data and accurate processing of standing orders Proposed standing instruction module to be capable to handle intra branch, inter branch and inter bank transactions. The process of execution of the standing order will automate e.g. day begin, day end etc. Standing instruction module to support generation of desired message formats for inter bank transactions to be passed on to the RTGS / respective systems for direct in ter bank transfers / entries The standing instructions module to support automatic generation of DD / PO.s etc . as per dates defined in the standing instructions module in the desired format, rec over charges / commission for the same as parameterisedin the global parameter files The standing instructions module to support automatic transfer of funds beyond a parameterisedamount for a particular customer / group, between accounts of the s ame branch , across branches, third party accounts The system will automatically generate a list of all standing orders executed / n onexecuted on a particular day along with reasons for non execution of the same. All non executed standing orders will be displayed and can be passed with appropriate authorization, for all other rejected transactions the system will r etry for the number of times specified in the parameter Standing Instructions Future State

All standing orders passed with higher authorizations will not be considered for retry The system will retry to execute the non executed standing orders for the number o f times as specified in the parameter file. As per defined parameters the system will generate appropriate warning letters informing the customer: to make the balance available in the account, informing the customer to make the payment directly upon crossing the number of retries, informing the customer about automatically terminating the standing instruction for non execution of the standing order for x number of consecutive times, informing the customer about termination of the standing order upon reaching the expiry date of the standing order. The system to automatically generate a report as per defined frequency for all in ter branch / inter bank transactions through standing orders giving complete details of the transaction. System to check for existence of standing instruction at the time of account clos ure and display appropriate warning messages for the same. System to support request for standing order instructions through Internet Bankin g, In which case the instructions would be downloaded at periodic time intervals from the Internet Banking server and be fed in the core banking system at a central locat ion handling internet banking transactions. Standing Instructions Future State

Standing InstructionsProcess Current State Future State Currentlythestandinginstructionmoduleisusedforintrabranchaccounttransfersmainlyfo rloaninstalmentandRDpayments. Paymentstobemadetobeneficiariesoutsidethebranch/otherbanksetc.aremanuallymaintain edinregisters Thebranchhasnowaytoknowwhatstandingordershavenotbeenexecutedonaparticulardayasthe systemdoesnotgenerateanyreportforStandingInstructionsnotexecutedonaparticularday . Thesystemhasnooptiontorecordthereceiptofpaymentmadebythecustomerdirectlyandautoma ticallyadjustthenextpaymentdates. Nocheckforexistenceofstandinginstructionatthetimeofaccountclosure Standinginstructionstobeenteredbythebranchitselfinthecorebankingsystem. Datafieldstobecapturedwouldbedefinedatthecentralleveltoensureconsistancyofdataand accurateprocessingofstandingorders Proposedstandinginstructionmoduletobecapabletohandleintrabranch,interbranchandint erbanktransactionsinbaseaswellasforeigncurrency. Theprocessofexecutionofthestandingorderwillautomatee.g.daybegin,dayendetc. Standinginstructionmoduletosupportgenerationofdesiredmessageformatsforinterbanktr ansactionstobepassedontotheRTGS/respectivesystemsfordirectinterbanktransfers/ entries ThestandinginstructionsmoduletosupportautomaticgenerationofDD/PO setc.asperdatesdef inedinthestandinginstructionsmoduleinthedesiredformat,recovercharges/ commissionforthesameasparameterisedintheglobalparameterfiles Thestandinginstructionsmoduletosupportautomatictransferoffundsbeyondaparameterise damountforaparticularcustomer/group,betweenaccountsofthesamebranch,acrossbranche s,thirdpartyaccounts Thesystemwillautomaticallygeneratealistofallstandingordersexecuted/non-executedon aparticulardayalongwithreasonsfornon executionofthesame. Systemtoautomaticallyretryforthenumberoftimesasspecifiedintheparameterfile Systemtogenerateappropriatewarning&terminationlettersbasedonparameterdefinedinthe system Thesystemtoautomaticallygenerateareportasperdefinedfrequencyforallinterbranch/ interbanktransactionsthroughstandingordersgivingcompletedetailsofthetransaction. Systemtocheckforexistenceofstandinginstructionatthetimeofaccountclosure SystemtosupportrequestforstandingorderinstructionsthroughInternetBanking People Requirement Automationoftheprocesswouldresultinstaffreductionatthebranchesasthisfunctioncanbe handledbyanyofficer,noexclusivestaffrequiredforthisprocess. Management Decision Permitinterbranch,intrabranch,interbanktransfersthroughstandingorders Systemparameterstobesetglobally,branchestohavenocontroloverparametersettings Autoterminationofstandingordersbaseduponparametersdefinedinthesystem Abilitytosupportinterbranch,intrabranch,interbankstandingorders Highlyparameterisedsystem Automaticgenerationofwarning&terminationlettersbaseduponparametersdefinedinthesys tem

SupportrequestforstandingorderthroughInternetBanking Vendor Questions Standing Instructions Future State

Chequepurchase supported by the system Chequesare mainly purchased by the Branch for their customers only. In the event the customer is of another branch the customer details are verified over the phone with the branch where the customer has an account. Applicable commission and interest is automatically picked up and displayed by the system as per the parameter set. Chequespurchased by the branch are sent to the service branch for collection along with an unsorted schedule. Upon realization of the instruments the service branch sends an advice to the branch informing them about the realization / return of the instrument. Cheque Purchase Current State

All branches on the core banking can offer this facility to their customers from any branch of the Bank which is connected to the core banking solution. Each branch on the core banking will have the right to access data of all other b ranches connected to the core banking based upon access privileges The core banking solution to maintain the customer history card giving all releva nt details of the customer in a snap shot. The customer account can be directly credited with the amount of the cheque(less deductions I.e. interest , commission / charges etc.) The instrument can be directly posted at the paying branch in the customers accou nt (I.e. the person who has issued the instrument) if the account is on the core banking solution. The system to validate the instrument for Already Encashed , Cancelled , Stale , Post Dated etc. before payment. In the event of any discrepancies in the validations the instrument can be return ed on the spot. In the event the customers account (debit) is not on the core banking solution th e instrument will be forwarded to the service branch for processing. All interest, commission, charges to be automatically calculated and deducted fro m the customers account as defined in the global parameter file. Chequepurchase limits branch wise, user id wise to be defined in the system and the system to validate the same at the time of transactions Cheque Purchase Future State

Cheque PurchaseProcess Current State Future State Chequepurchasesupportedbythesystem ChequesaremainlypurchasedbytheBranchfortheircustomersonly. Intheeventthecustomerisofanotherbranchthecustomerdetailsareverifiedoverthephonewi ththebranchwherethecustomerhasanaccount. Applicablecommissionandinterestisautomaticallypickedupanddisplayedbythesystemaspe rtheparameterset. Chequespurchasedbythebrancharesenttotheservicebranchforcollectionalongwithanunsor tedschedule. Uponrealizationoftheinstrumentstheservicebranchsendsanadvicetothebranchinformingt hemabouttherealization/returnoftheinstrument. Allbranchesonthecorebankingcanofferthisfacilitytotheircustomersfromanybranchofthe Bankwhichisconnectedtothecorebankingsolution. Eachbranchonthecorebankingwillhavetherighttoaccessdataofallotherbranchesconnected tothecorebankingbaseduponaccessprivileges Thecorebankingsolutiontomaintainthecustomerhistorycardgivingallrelevantdetailsoft hecustomerinasnapshot. Thecustomeraccountcanbedirectlycreditedwiththeamountofthecheque(lessdeductionsI.e .interest,commission/chargesetc.) Thesystemtovalidatetheinstrumentfor AlreadyEncashed , Cancelled , Stale , Post Dated etc.beforepayment. Intheeventofanydiscrepanciesinthevalidationstheinstrumentcanbereturnedonthespot. Intheeventthecustomersaccount(debit)isnotonthecorebankingsolutiontheinstrumentwil lbeforwardedtotheservicebranchforprocessing. Allinterest,commission,chargestobeautomaticallycalculatedanddeductedfromthecustom ersaccountasdefinedintheglobalparameterfile. Chequepurchaselimitsbranch wise,userid wisetobedefinedinthesystemandthesystemtovalida tethesameatthetimeoftransactions People Requirement Canbehandledbyanyseniorofficerinthebranchnorequirementofstaffexclusivelyforthispu rpose. Management Decision Permitchequepurchaseforacustomerofanybranchatanybranchonthecorebankingsolution. Setuplimitsforpurchaseinthesystem Definerulesforchequepurchaseacrossbranchesandupdatethebranchoperatingmanualswitht hesame. Abilitytosupportchequepurchaseforacustomerofanybranchatanybranchonthecorebankings olution. Abilitytotrackthemovementofthechequesalongwiththedetailsofthetransactions Abilitytomaintaincustomerhistorycardforon lineverification Abilitytodefinechequepurchaselimits Vendor Questions Cheque Purchase Future State

Customer not uniquely identified in the Branch I.e. all accounts of a customer are not grouped together Account opening not a centralized function each department open their own accounts. No checking of customers records for duplications at the time of account opening Single customer having multiple accounts in the same branch TDS is only deducted from term deposit accounts other accounts like savings are not considered No facility to specify other accounts from which TDS can be recovered. TDS calculated may not be accurate Current systems do not support calculation of TDS Huge amount of manual efforts involved in calculation and recovery of TDS All MIS with regards to TDS prepared manually, which is time consuming exercise and results in huge amount of resources Tax Deducted at Source Current State

Customer to be beidentified uniquely across the Bank through his / her customer ID. All accounts of the customer will be grouped to his / her customer ID Accounts / products, schemes to be defined in the system where TDS is applicable Rules to be defined in the system for calculation and recovery of TDS Tax slabs and rate applicable to be defined globally based upon certain parameters like type of account, type of customer etc. Ability to recover TDS from : One or more deposit accounts of the customer in the same / any other branch on the core banking system Direct deduction at the time of payment of his term deposit System to support recovery of TDS amount along with interest from the customer in the event the Bank has paid TDS on behalf of the customer Generate warning letters / reminder letters for recovery of TDS amounts from the customer or payment of TDS as parameterized in the system Generate Tax certificates in user defined formats for any tax deducted at source. Tax Deducted at Source Future State

Display and print the projected Tax deducted amount at the opening of deposit. The system should consider all the deposit accounts / Term deposits held by the customer with the branch / bank. Generate TDS Return, as of any particular date, to be filed with the tax authorities for Tax deducted from customers, in the format as required by the tax authorities. Capture details of form 15 H, 16 A Automatically recalculate the TDS amount in the event of a premature closure and display the balance payable / recoverable from the customer Support pro -rata calculation of TDS in the event of periodic interest calculation Tax Deducted at Source Future State

Tax Deducted at SourceProcess Current StateFuture State CustomernotuniquelyidentifiedintheBranchI.e.allaccountsofacustomerarenotgroupedto gether Nocheckingofcustomersrecordsforduplicationsatthetimeofaccountopening Singlecustomerhavingmultipleaccountsinthesamebranch CurrentsystemsdonotsupportcalculationofTDS HugeamountofmanualeffortsinvolvedincalculationandrecoveryofTDS TDScalculatedmaynotbeaccurate AllMISwithregardstoTDSpreparedmanually,whichistimeconsumingexerciseandresultsinhu geamountofresources CustomertobebeidentifieduniquelyacrosstheBankthroughhis/hercustomerID. Allaccountsofthecustomerwillbegroupedtohis/hercustomerID Accounts/products,schemestobedefinedinthesystemwhereTDSisapplicable RulestobedefinedinthesystemforcalculationandrecoveryofTDS Taxslabsandrateapplicabletobedefinedgloballybaseduponcertainparametersliketypeofa ccount,typeofcustomeretc. AbilitytorecoverTDSfromoneormoredepositaccountsofthecustomerinthesame/ anyotherbranchonthecorebankingsystem,directdeductionatthetimeofpaymentofhistermd eposit SystemtosupportrecoveryofTDSamountalongwithinterestfromthecustomerintheeventtheBa nkhaspaidTDSonbehalfofthecustomer Generatewarningletters/reminderlettersforrecoveryofTDSamountsfromthecustomerorpay mentofTDSasparameterizedinthesystem GenerateTaxcertificatesinuserdefinedformatsforanytaxdeductedatsource. GenerateTDSReturn,asofanyparticulardate,tobefiledwiththetaxauthoritiesforTaxdeduc tedfromcustomers,intheformatasrequiredbythetaxauthorities. People Requirement Automationofthisprocesswouldresultinreductionofeffortsatthebranchesfortheabovemen tionedprocess,asmanualinterventionrequiredwouldbeminimal. Excessstaffcanbere-deployed Management Decision Datacapturetobeuniformacrossallbranches Checkforexistenceofaccountamust AllaccountsofacustomertobegroupedunderauniquecustomerID AllparametersforcalculationandrecoveryofTDStobegloballyparameterised,branchestoha venoaccesstomodifythesame. IdentifyproficientpersonneltodefinerulesforTDScalculationandrecovery AbilitytosupportTDScalculationforacustomerofanybranchatanybranchonthecorebankings olution. AbilitytotrackthemovementoftheTDScertificatesalongwiththedetailsofthetransactions Abilitytomaintaincustomerhistorycardforon lineverification Vendor QuestionsTax Deducted at Source Future State

Other ProcessesProcess Current State Future State De-centralised Systempromptsusertoentercharges,andacceptsanyamountenteredaschargesresultingin: Possibilityofleakageofincome Customerdissatisfactionforwrongchargesapplied

Processeslikestoppayments,Accountholdandrestriction,accounttransfers,canbehandled byanybranchonthecorebankingsystem. Instructionsforstoppayments,accountholds,accounttransferscanbe: Givenbythecustomeroverthecounter Throughinternet/phonebanking ATMetc. Systemtoautomaticallyapplythedateandtimestampintheeventtheinstructionshavebeenrec eivedthroughanyofthedeliverychannels,butintheeventtheinstructionsaregivenoverthe counterthecollectingofficerwouldmanuallyputthedateandtimestamp Allinstructionsreceivedoverthecounterwouldbeenteredimmediatelyinthesystembytherec eivingbranch Instructionsreceivedthroughthevariousdeliverychannelswouldbedownloadedtothecoreba nkingsystematperiodicintervalforupdaton. Systemtovalidatetheinstrumentsbeforestoppayments Allcharges,commissionetc.toberecoveredfromthecustomertobegloballyparameterised Accessrightstobedefinedinthesystemforplacing/revokingholds,stoppaymentsetc. Floorlimitstobedefinedinthesystemforinterbranchtransactions Rulesforinterbranchtransferstobedefinedinthesystem Systemtoautomaticallyprintareportbeforeday endforallinterbranchtransactionsdonebyap articularbranchonotherbranchesandtransactionsdonebyotherbranchesofaparticularbra nch People Requirement Noadditionalstaffrequiredtohandletheabovementionedprocesses Individualdepartmentheads/officerstohandletheprocesses Management Decision Definerulesforinterbranchtransferse.g.betweenthesamecustomeraccount, between3rdpartyaccounts Movementofinstructionsforstoppayment,accounthold/restrictionI.e.toacentrallocatio n,tothebranchwherethecustomeraccountismaintained,atthebranchwheretherequestwasac cepted Definefloorlimitsforinterbranchtransactions Definethetransactiontobeallowedthroughdeliverychannels Abilitytohandletheabovementionedprocessesthroughanybranchonthecorebankingsolution Abilitytodefinefloorlimitstointhesystemforinterbranchtransactions Abilitytodefinerulesforinterbranchtransfersinthesystem Abilitytoautomaticallyprintareportbeforeday endforallinterbranchtransactionsdonebya particularbranchonotherbranchesandtransactionsdonebyotherbranchesofaparticularbr anch

Vendor Questions Stop Payment, Account Holds, Account Transfers Processes Future State

Branches to concentrate on marketing of credit Expertise to evaluate credit proposal to be decentralized or centralized for the Bank as a whole at the Head office Powers to be delegated to the branches to process and disburse loans on the basis of amount of loan, purpose of loan, type of branch etc. The same to be configured i n the core banking system. Loan / advance proposal beyond the powers of the branches to be directly forwarde d to the centralisedlocation for evaluation and processing. All / selected branches to have access to the credit appraisal system. Parameters for credit scoring and rating, benchmarking, documentation requirement and compliance to be parameterisedin the core banking system at a central level. Branches to only have access to enter the relevant information for generation of the credit appraisal report. Branches to obtain approval from higher authority in the event of deviations from the credit appraisal done by the system. Maximum facility that can be offered to the customer based upon his credit apprai sal and rating to be ascertained by the system and validated at the time of limit granti ng. All details of the customer for the particular type of loan, security details, do cumentation details etc. to be entered at the branch in the event the credit appraisal for t he particular customer was done at the branch, else the central department will be responsible for entering details of the customer for the particular type of loan, security detai ls, documentation details etc Loans & Advances (Pre-Sanction) Future State

Disbursal schedules to be automatically generated by the system on entering the required loan details. Branches to be informed by the central departments through the core banking system about the acceptance / rejection of the proposal. Loan approval letter to be generate from the branch and couriered to the customer. Disbursal of the loan / advance to be done by the respective branch where the customer has an account. Loans & Advances (Pre-Sanction) Future State

Core banking system to support post sanction activities like : Disbursals Collections Credit monitoring NPA management Recovery Generation of reminder letters Generation of statutory & regulatory MIS PDC maintenance and lodgment etc. Legal Rules for account classifications, provisions etc. to be parameterized centrally. Branches to have no access to modify the defined rules. Account classification and provisioning to be automated as per defined business r ules Branches to have the options to re-classify accounts already classified by the sy stem with appropriate authority Monitoring of accounts to be centrally / de -centrally controlled based upon the amount of loan, purpose of loan, type of branch etc. Central department to have access to view and monitor all accounts based upon acc ess privileges defined in the system PDC maintenance and lodgment to be centralized region wise or at individual branch es All statutory, regulatory, management and executive information and reports to be generated by the core banking system Loans & Advances (Post-Sanction) Future State

Loans & AdvancesProcess Current StateFuture State De centralisedprocessingofloansandadvances Brancheshavingthenecessaryexpertiseonlydeal/disburseparticulartypesofloans/ advances Customerre directedtothenearestbranchwithdealsintheparticulartypeofcredit Shortageoftechnical/functionalexpertisetoservicelargecustomerbase MISgenerationforstatutory,regulator,managementandexecutiveinformationsystemsmainl ymanualinthebranches,resultingindelayedinformationflow Datacaptureinconsistent&inadequateacrossbranches AccuracyofMISisaconcern Branchestoconcentrateonmarketingofcredit Expertisetoevaluatecreditproposal,monitoraccounts,recovery,legal,tobedecentralise dregion wiseorcentralisedfortheBankasawholeattheHeadoffice Powerstobedelegatedtothebranchestoprocessanddisburseloansonthebasisofamountofloan ,purposeofloan, typeofbranchetc.Thesametobeconfiguredinthecorebankingsystem. Loan/advanceproposalbeyondthepowersofthebranchestobedirectlyforwardedtothecentral isedlocationforevaluationandprocessing. All/selectedbranchestohaveaccesstothecreditappraisalsystem. Datacapturefieldsfordataentrytobefixedcentrallytoensuredatauniformity Forloansdisbursedbythebranches,dataentryfortheloantobedonebytherespectivebranches ,elsedataentryfortheloanwillbedonebythecentralisedlocation Loanapprovallettertobegeneratefromthebranchandcourieredtothecustomer. Disbursaloftheloan/advancetobedonebytherespectivebranchwherethecustomerhasanaccou nt. Activitieslikecreditmonitoring,creditappraisal(beyondthepowersofthebranch),NPAman agement,recovery, PDCmaintenance,legaltobecentralisedregion wise/bankwide Rulesforaccountclassifications,provisionsetc.tobeparameterizedcentrally.Branchest ohavenoaccesstomodifythedefinedrules. Anydeviationfromcreditrulesdefinedinthesystemforappraisal,sanction,interestrates, classificationetc.wouldrequirehigherapproval Branchestobeinformedbythecentraldepartmentsthroughthesystemabouttheacceptance/rej ectionoftheproposal,reviewcomments,actionstobetaken,etc. Consolidatedviewandcentralizedmonitoringoftotalcustomerexposure,industryexposure, groupexposureetc. Allstatutory,regulatory,managementandexecutivereportsandinformationtobegeneratedf romthecentrallocation People Requirement Burdenofloanprocessing,dataentry,monitoring,MISpreparationetc.reducedatthebranchl evel,resultinginreductionofstaffhandlingloansandadvances. Excessstaffcanbere deployedformarketingefforts Identificationofcorefunctionalpersonnelintheareasofcreditappraisal,monitoring,NPA management,recovery,legalacrosstheBank Management Decision Expertisetoevaluatecreditproposal,monitoraccounts,recovery,legal,tobedecentralise dregion wiseorcentralisedfortheBankasawholeattheHeadoffice Powerstobedelegatedtothebranchestoprocessanddisburseloansbaseduponcertaincriteria , allotherloanprocessingtobehandledcentrally Criteriafordisbursalatthebranchestobefixed

Rulesformovement/classificationofaccountstobeparameterisedglobally Activitieslikecreditmonitoring,creditappraisal(beyondthepowersofthebranch),NPAman agement,recovery,PDCmaintenance,legaltobecentralisedregion wise/bankwide AllMIStobegeneratedfromthecentrallocation Extentallloansandadvancesschemestoallbrancheswithcontrolsonthesametobecentralised Abilitytosupportcentralisedandde centralisedbackofficeprocessing,monitoring,NPAmana gement,recovery, PDCmaintenance,legaletc. Abilitytosupportallcurrentloanandadvancesproducts Highlyparameterisedsystem Easeofconfiguringnewloanandadvancesproducts GenerationofMIStobecentralised/de centrlised Reminderletters,warningletters,reviewwarningsetc.tobebothcentralisedandde-central ised Vendor Questions Loans & Advances

Future State

Core banking system to support documentation management for all products and serv ices offered by the Bank. Documentation required for each type of product / service to be parameterized in the system along with their grace periods, review and expiry periods etc. centrally Screens for capturing the details of the document to be designed in the core bank ing system as per the Banks requirement Documents to be parameterized as mandatory, non mandatory in the core banking system for various products / schemes Rules to be defined in the core banking for : Documents not collected Escalate the matter to the higher authority Stop all / some transactions in the account etc. Documents not received in time etc. Automatically trigger event (make the Drawing Power 0, etc.) Escalate the matter to the higher authority Change the status of the account Charge penal interest / flat fees

Documentation may be by higher approval

passed or rules may be violated by the branches subject to

Documentation Management Future State

Rules for calculation of limits, drawing power, margin etc. based upon documentat ion details provided to be parameterised in the core banking centrally. System to generate warning messages / letters x number of days (as parameterised) in advance for document expiring on a particular date. Document details to be entered by the branch in the event the credit appraisal wa s done at the branches, else the documents should be collected by the branch as per the li st of documents for the particular product / scheme and the same should be sent to the central location for entry. The central department to have access to view and monitor all documentation detai ls based upon defined access privileges System to generate alerts for documents to be reviewed x number of days (as parameterised) in advance. System to recalculate limits / drawing power based on reviewed documentation System to interface with the insurance package for automatic upload of insurance details in the core banking solution for renewals, fresh policies etc. System to have the facility to link multiple documents to one product / scheme of single document to multiple products / schemes Workflows to be defined for automated escalations, approvals, authorisations etc. based upon defined rules. Documentation Management State Future

Documentation ManagementProcess Current StateFuture State Nodocumentationmanagementsystem Detailsofdocumentsnotcapturedinthesystem Delayinreceiptofdocumentationfromthecustomer/documentsnotreceived/ collectedbythebranch Storageandmovementofdocumentationisaconcernatthebranches Expertisetocriticalevaluatedocumentsnotavailableatallbranches Manualduedatediariesmaintainedbythebranches Corebankingsystemtosupportdocumentationmanagementforallproductsandservicesoffered bytheBank. Documentationrequiredforeachtypeofproduct/servicetobeparameterizedinthesystemalon gwiththeirgraceperiods,reviewandexpiryperiodsetc.centrally Screensforcapturingthedetailsofthedocumenttobedesignedinthecorebankingsystemasper theBanksrequirement Documentstobeparameterisedasmandatory,non mandatoryinthecorebankingsystemforvarious products/schemes Rulestobedefinedinthesystemandactionstobetriggeredfordocumentsnotcollected/docume ntsnotreceivedintime Documentationmaybeby passedorrulesmaybeviolatedbythebranchessubjecttohigherapproval Rulesforcalculationoflimits,drawingpower,marginetc.basedupondocumentationdetailsp rovidedtobeparameterisedinthecorebankingcentrally. Systemtogeneratewarningmessages/lettersxnumberofdays(asparameterised)inadvancefor documentexpiringonaparticular. Documentdetailstobeenteredbythebranchintheeventthecreditappraisalwasdoneatthebran ches, elsethedocumentsshouldbecollectedbythebranchasperthelistofdocumentsfortheparticu larproduct/schemeandthesameshouldbesenttothecentrallocationforentry. Thecentraldepartmenttohaveaccesstoviewandmonitoralldocumentationdetailsbasedupond efinedaccessprivileges Systemtogeneratealertsfordocumentstobereviewedxnumberofdays(asparameterised)inadv ance. Systemtorecalculatelimits/drawingpowerbasedonrevieweddocumentation Systemtointerfacewiththeinsurancepackageforautomaticuploadofinsurancedetailsinthe corebankingsolutionforrenewals,freshpoliciesetc. Systemtohavethefacilitytolinkmultipledocumentstooneproduct/schemeofsingledocument tomultipleproducts/schemes Workflowstobedefinedforautomatedescalations,approvals,authrisationsetc.basedupond efinedrules. People Requirement Noadditionalstaffrequiredforthisprocess,shouldbehandledbyofficersofrespectivebusi nessfunctions Management Decision ParameterisationofDocumentationrequiredforeachtypeofproduct/servicealongwiththeir graceperiods,reviewandexpiryperiodsetc.centrally Rulestobedefinedinthesystemandactionstobetriggeredfordocumentsnotcollected/docume ntsnotreceivedintime Documentdetailstobeenteredbythebranchintheeventthecreditappraisalwasdoneatthebran ches,elsethedocumentsshouldbecollectedbythebranchasperthelistofdocumentsforthepa rticularproduct/schemeandthesameshouldbesenttothecentrallocationforentry. Abilitytosupportallcurrentloanandadvancesproducts

Highlyparameterisedsystem Abilitytodefinetheworkflowstobedefinedforautomatedescalations, approvals,authorisationsbasedupondefinedrules Vendor Questions Documentation Management State Future

Only designated Bank branches deal in foreign currency transactions Existence of a separate package for recording Forextransaction with no interface to the branch banking system Branch only purchases / sell foreign currency / travelers chequesfor customers who maintain an account with that branch. In the event the particular branch is not designated to deal in forexthe customer is sent to the link branch for purchase / sale of foreign currency / travelers cheques. The customer has to submit a written declaration in the form of a letter stating the transaction details The details are recorded in a manual register. Currency / cross currency conversion and commission calculation is done manually. Vouchers are prepared manually for payment of cash, account transfer etc. Transactions are re-entered in the branch banking system for the transfer amounts. Purchase & Sale of Foreign Currency & TC Current State

Process of Issue / Purchase of Travelers Cheques/ Foreign Currency be completely automated and be handled by any branch of the bank All income related fields (e.g. commission, charges etc.) for all currencies be g lobally parameterized. System to capture all details for the purpose of issue / purchase of Travels Cheq ues/ Foreign Currency. Commission to be automatically be calculated for both Issue / Purchase of Travele rs Cheques& Foreign Currency Exchange rates, cross currency rates for all currencies to be pickup automaticall y from the global parameter tables and to be applied to the accounts based upon the amount of the transactions or manually entered System to prompt for special rates from the treasury in the event the transaction amount is beyond than what is specified in the parameter or on the basis of the nature of the transaction. Stock maintenance of Travelers cheques& Foreign Currency issued to branches to be entered at a central location and monitored both from the branch as well as the central location System to apportion the proceeds of the Purchase / sales of Foreign Currency / Tr avelers Chequesby cash, account transfers or combination . Stop payment details of travelers Chequesto be uploaded in the core banking sent by Travelers Chequesagents Purchase & Sale of Foreign Currency & TC Future State

Travelers chequenumber to be verified for stop payment with the details uploaded before printing the Customer Transaction receipt System to print the Customer transaction receipt for sale / purchase of Travelers Cheques/ Foreign Currency as desired by the Bank. On line updationof respective account heads The system to interface with Treasury system for on line reporting of position as well as availing exchange / cross currency rates. Ability to specify limits for currency / travelers chequesholding at the branches based upon user definable parameters e.g. size of branch, forexbusiness, etc. Purchase & Sale of Foreign Currency & TC Future State

Purchase and Sale of Foreign Currency and Travellers ChequesProcess Current StateFuture State OnlydesignatedBankbranchesdealinforeigncurrencytransactions ExistenceofaseparatepackageforrecordingForextransactionwithnointerfacetothebranch bankingsystem Branchonlypurchases/sellforeigncurrency/travellerschequesforcustomerswhomaintaina naccountwiththatbranch. Intheeventtheparticularbranchisnotdesignatedtodealinforexthecustomerissenttotheli nkbranchforpurchase/saleofforeigncurrency/travellerscheques. Currency/crosscurrencyconversionandcommissioncalculationisdonemanually. Vouchersarepreparedmanuallyforpaymentofcash,accounttransferetc. Transactionsarere-enteredinthebranchbankingsystemforthetransferamounts. ProcessofIssue/PurchaseofTravellersCheques/ForeignCurrencybecompletelyautomatedan dbehandledbyanybranchofthebank Allincomerelatedfields(e.g.commission,chargesetc.)forallcurrenciesbegloballyparam eterised. Systemtocapturealldetailsforthepurposeofissue/purchaseofTravelsCheques/ForeignCur rency. CommissiontobeautomaticallybecalculatedforbothIssue/PurchaseofTravellersCheques&F oreignCurrency Exchangerates,crosscurrencyratesforallcurrenciestobepickupautomaticallyfromtheglo balparametertablesandtobeappliedtotheaccountsbasedupontheamountofthetransactions ormanuallyentered Systemtopromptforspecialratesfromthetreasuryintheeventthetransactionamountisbeyon dthanwhatisspecifiedintheparameteroronthebasisofthenatureofthetransaction. StockmaintenanceofTravellerscheques&ForeignCurrencyissuedtobranchestobeenteredata centrallocationandmonitoredbothfromthebranchaswellasthecentrallocation SystemtoprinttheCustomertransactionreceiptforsale/purchaseofTravellersCheques/For eignCurrencyasdesiredbytheBank. On lineupdatingofrespectiveaccountheads ThesystemshouldbecapabletointerfacewithTreasurysystemforonlinereportingofposition aswellasavailingexchange/crosscurrencyrates. People Requirement Automationofthisprocesswouldresultinstaffreductionatthebranches. Re deploymentoftrainedstaffformbrancheshavingexcesstootherbranchestoexpandtheservic eofferings Management Decision Increasethebranchesfromaselectedfewtomaybeall/80%ofthebranchesonthecorebankingsol utionforallforexrelatedtransactions. Identificationofbranchesforofferingforextransactions Settingupofsmallcountersofferingforextransactionsatdomestic/internationalairports andports Extendthefacilityofpurchase/saleofforeigncurrencyandtravellerschequestonon Centralb ankcustomers Remitallforeigncurrencypurchasedtoacentralizedlocationorselltheforeigncurrencytot helocalauthoriseddealersandgetexchangeratesfromthembeforepurchase. Centralisedfundsmanagement SupportcompleteautomationofIssue/PurchaseofTravellersCheques/ForeignCurrency Supportforcentralisedfundsmanagement

Vendor QuestionsPurchase & Sale of Foreign Currency & TC Future State

Define the set of accounting entries that should get generated at every stage of a transaction: on entry authorization Modification Deletion of a transaction Define the different general ledgers that need to be updated, based on the transactions, the General ledgers could be the transacting branch, head office, treasury, customer branch etc. Define when the General Ledgers (of the branch, the head office, treasury and the related branches) should be updated by the system, for example: On-line real time basis After a specified time interval (30 minutes, 1 hour etc.) At the day end Upon completion of specified number of transaction Ability to handle off-line transactions Ability to define the account heads as reconcilable and support automatic reconciliation of such transactions Ability to support automatic reconciliation for all transactions done between cor e banking branches Accounting Future State

Ability to support reconciliation of transactions for non core banking branches, routed through the Inter Branch Accounting department Ability to generate advices for transactions done on non core banking branches Ability to bifurcate accounting entries and post each entry in the respective customer accounts and general ledger account heads (e..g. interest, charges, commission, etc.) Modifications to accounting entries after authorization of the transactions to be discouraged System generated entries to automatically effected in the respective accounts based upon parameters set. System to support transactions from various delivery channels such as ATM.S, Internet Banking, Phone Banking, SMS / Mobile Banking System to be able to identify transactions effected in the core banking through various delivery channels and capability to print a report for the same based upon user definable parameters e.g. delivery channel -wise etc. Central department to have no access to directly post any entries in branch books, in the event of any discrepancies in reconciliation / wrong entries the same should be rectified by the originating branch / department only. All transactions done by core banking branches on non-core banking branches and vice versa to be handled through the Inter Branch accounting and reconciliation department Accounting Future State

Accounting Process Current StateFuture State InterbranchaccountingsettlementsdoneattheInter-branchaccountingandReconciliationD epartment Alladvicesforaccountsettlementspreparedmanually Profit&Lossaccountheadsareopenforposting Noautoreconciliationatthebranchesfordefinedaccountheads,reconciliationatthebranch esaswellastheInter-branchaccountingandReconciliationDepartmentinvolveshugeeffort sintermsofresourcesandtime Existenceofmultiplesystemswithnointerfacewitheachotherresultinginduplicationofeff ortsasentrieshavetobepassedinbothsystems

DefinethesetofaccountingentriesthatshouldgetgeneratedateverystageofatransactionI. e.onentry,authorization,modification,deletionofatransaction Definethedifferentgeneralledgersthatneedtobeupdated,basedonthetransactions,theGen eralledgerscouldbethetransactingbranch,headoffice,treasury,customerbranchetc. DefinewhentheGeneralLedgers(ofthebranch,theheadoffice,treasuryandtherelatedbranch es)shouldbeupdatedbythesystem,forexample: On-linerealtimebasis Afteraspecifiedtimeinterval(30minutes,1houretc.) Atthedayend Uponcompletionofspecifiednumberoftransaction Abilitytohandleoff-linetransactions Abilitytodefinetheaccountheadsasreconcilableandsupportautomaticreconciliationofsu chtransactions Abilitytosupportautomaticreconciliationforalltransactionsdonebetweencorebankingbr anches Abilitytosupportreconciliationoftransactionsfornon corebankingbranches,routedthroug htheInterBranchAccountingdepartment Abilitytogenerateadvicesfortransactionsdoneonnon corebankingbranches SystemtosupportandidentifytransactionsfromvariousdeliverychannelssuchasATM S,Intern etBanking,PhoneBanking,SMS/MobileBanking People Requirement Proficientpersonnelfromaccountingandauditing,expertsineachfunctionalareastobeiden tifiedforcreatingandsettinguptheaccountingsystemoftheBank. ReconciliationburdenatthebranchesaswellastheInterBranchaccountingandreconciliatio ndepartmenttobereduced,excessstaffinthesedepartmentscanbere-deployed Management Decision StreamlinetheaccountingproceduresandpracticesacrosstheBank Definingtheaccountingentriesforalltransactionatvariousstagesofthetransaction. Definingthedifferentgeneralledgerheadstobeupdated Definingtheperiodicityofupdationofdifferentgeneralledgers Modificationstoaccountingentriesafterauthorisation Alltransactionsdonebycorebankingbranchesonnon-corebankingbranchesandvice versatobeh andledthroughtheInterBranchaccountingandreconciliationdepartment

Supportdefinitionofaccountingentriesforeachtransactionthatcanbegeneratedatvarious

stagesofthetransaction Abilitytodefinethegeneralledgerheadstobeupdatedwiththetransaction Abilitytodefinetheperiodicityofupdationofthevariousgeneralledgerheads Abilitytosupporttransactionthroughvariousdeliverychannelsandidentificationofthesa me Vendor QuestionsAccounting Future State

Consolidated GL is maintained at the head office, other departments like treasury etc. maintain their own general ledger in their respective systems, dat a is consolidated manually Current branch banking systems not capable of printing / maintaining the general ledgers as required by the statutory / regulator authorities and bank Data is collated by the regional offices from the branches and sent to the head office for consolidation Data collection and consolidation is manual Profit & Loss and general ledger heads are open for direct postings Accuracy of figures is a concern Consolidation of data involves huge amount of resources in terms of human resources and is a time consuming exercise Multiple systems are used across for bank for various operations at the branches, these systems have their own ways of accounting and only update their respective general ledgers. There is no integration of these systems, resulting in re-entering the transactions in the regular branch banking systems Current systems are not multi -currency General Ledger Current State

Common chart of accounts across the bank Multi currency, multi entity general ledger with the facility to generate separate general ledgers for each currency Chart of accounts and account characteristics to be defined by the Accounts Department of the bank in confirmation with the Audit Department Treasury general ledger to be maintained in the core banking solution to be updated at the time of day end. Branches to also maintain their own general ledgers On-line / periodic updationof the Bank general ledger Branch general ledgers to be updated on an on line real time basis on a transaction to transaction basis. Core banking system to be interface with the banks legacy systems for upload of general ledger information for consolidation purposes at defined time intervals Core banking to be able to upload general ledger data received in electronic format or key in manual data at the central location for consolidation purposed at defined time intervals Facility to have consolidations at various levels : Branches Regional offices Head office

General Ledger

Future State

System to automatically move account balances to different general ledger heads based upon defined rules e.g. dormant accounts over x period, matured deposits over x period etc. Generate statutory, regulatory, management and executive information and reports as desired by the Bank Support revaluation of foreign currency assets and liabilities Support statistical analysis of data System to balance all individual accounts, products / schemes by comparing the individual account balances with the consolidated GL head / sub-head balances for the particular account / product / scheme System to generate a balancing report for each general ledger account, sub account, product / scheme for reconciliation. The system should generate warning messages in event the individual account / product totals do not match the GL totals Balancing of branch general ledger heads will be the responsibility of the branch , I.e. branches to take the onus of the data and certify the amounts in their respective general ledgers General ledger, profit & loss statement, other adhocreports, management and executive information reports can be generated by the central department itself branch wise, region wise, currency wise or consolidated General Ledger Future State

General LedgerProcess Current StateFuture State ConsolidatedGLismaintainedattheheadoffice,otherdepartmentsliketreasuryetc.maintai ntheirowngeneralledgerintheirrespectivesystems,dataisconsolidatedmanually Currentbranchbankingsystemsnotcapableofprinting/maintainingthegeneralledgersasreq uiredbythestatutory/regulatorauthoritiesandbank Dataiscollatedbytheregionalofficesfromthebranchesandsenttotheheadofficeforconsoli dation Datacollectionandconsolidationismanual Profit&Lossandgeneralledgerheadsareopenfordirectpostings Accuracyoffiguresisaconcern Consolidationofdatainvolveshugeamountofresourcesintermsofhumanandisatimeconsuming excercise Commonchartofaccountsacrossthebank Multi currency,multi entitygeneralledgerwiththefacilitytogenerateseparategeneralledge rsforeachcurrency ChartofaccountsandaccountcharacteristicstobedefinedbytheAccountsDepartmentoftheba nkinconfirmationwiththeAuditDepartment Treasurygeneralledgertobemaintainedinthecorebankingsolutiontobeupdatedatthetimeof day end. Branchestoalsomaintaintheirowngeneralledgers On-line/periodicupdationoftheBankgeneralledger Branchgeneralledgerstobeupdatedonanon linerealtimebasisonatransactiontotransactionb asis. Corebankingsystemtobeinterfacewiththebankslegacysystemsforuploadofgeneralledgerin formationforconsolidationpurposesatdefinedtimeintervals Corebankingtobeabletouploadgeneralledgerdatareceivedinelectronicformatorkeyinmanu aldataatthecentrallocationforconsolidationpurposedatdefinedtimeintervals FacilitytohaveconsolidationsatvariouslevelsBranches,regionaloffices,headoffice Abilitytoautomaticallymoveaccountbalancestodifferentgeneralledgerheadsbaseduponde finedrulese.g. dormantaccountsoverxperiod,matureddepositsoverxperiodetc. Generatestatutory,regulatory,managementandexecutiveinformationandreportsasdesired bytheBank Supportrevaluationofforeigncurrencyassetsandliabilities Supportstatisticalanalysisofdata Supportautobalancingofgeneralledgerheads People Requirement Proficientpersonnelfromaccountingandauditing,expertsareastobeidentifiedforcreatin gandsettinguptheaccountingsystemoftheBank. ReconciliationburdenatthebranchesaswellastheInterBranchaccountingandreconciliatio ndept.tobereduced,excessstaffinthesedepartmentscanbere-deployed. Management Decision DefiningthecommonchartofaccountsacrosstheBank Treasurygeneralledgertobemaintainedinthecorebankingsystem Periodicityofupdationstothebanksgeneralledger Periodicityofconsolidationofinformationfromnon corebankingbranches NoaccessfordirectpostingstotheP&Landgeneralledgerheads Standardisationofmanagementandexecutiveinformationreportsandstatisticalanalysis Balancingofbranchgeneralledgerheadswillbetheresponsibilityofthebranch,I.e.branche stotaketheonusofthedataandcertifytheamountsintheirrespectivegeneralledgers

Multi currency,multi entitygeneralledgerwiththefacilitytogenerateseparategeneralledge rsforeachcurrency Supportmaintenanceofothergeneralledgersinthecorebankingsystem,andupdatethesameasp erfrequencydefined interfacewiththebankslegacysystemsforuploadofgeneralledgerinformationforconsolida tionpurposedatdefinedtimeintervals Supportstatisticalanalysisformanagementandexecutiveinformationreports Vendor QuestionsGeneral Ledger Future State

Data capture inconsistent across branches and systems Lack of discipline at the branches Data sent from the branches to the regional offices, regional offices consolidate the data for all branches under them and sent the same to the head office, head office consol idates the data received from the various regional offices, involving in a lot of time lag and delay. Most of the MIS at the branches generated manually and involves huge amount of ma nual efforts at the branches, regional offices and head office for consolidation of t he same. Accuracy of MIS is a concern Most up to date information is not available due to manual processes involved, re sulting in delayed decision making. A number of different banking systems are used by the bank which have different d ata fields and field formats, therefore, extracting information according to a common forma t is not possible for consolidation. Consolidation of information without any manual intervention and data re-entry is not possible, resulting in duplication of efforts and redundant processing. Some systems in use does not provide for sufficient data validations No seamless integration between current systems used by the bank to facilitate da ta flow from one system to another for MIS and consolidation purposes Reports available in the systems but branches not aware of the same All / many processes currently involve manual intervention during some stage / ot her resulting in loss of data integrity and security concerns Management Information System Current State

Core banking system to support generation of all : Statutory and regulatory reports Management reports Executive Information reports and Adhocreports Core banking system c medium or through an interface tion purposes at periodic Core banking system purposes Core banking system Regional offices Head office to have the facility to upload data received in any electroni from branches not on the core banking system, for consolida intervals as desired by the Bank to have the facility to enter data manually for consolidation to have the facility to consolidate data at :

All consolidation of data to be done at the head office Reports to be generated at the branch level, regional office level and head offic e level to be defined in the core banking system. Core banking system to support scheduling for report printing ( at day end, day beg in etc.) at the various branches, regional offices and head office Management Information System Future State

Any reports required for statutory / regulatory reporting, management information , executive information to be generated centrally from the head office Fields for data capture to be defined at the central level and branches / busines s units / departments to capture all relevant information as required. Forms for data capture to be circulated to the non core banking / manual branches for capturing of requisite data for consolidation purposes Print layout (horizontal / vertical etc.) and other printing setting (paper size, margin etc.) can be defined in the system Flexible report writer facility to generate any report which the Bank wants with the following minimum features: Specify the format and layout of reports Summarize and total the information to be reported Select records to be included in the report Select details from each record to be included Perform arithmetic calculation on the information selected Download data to/from third party software. Ability to download data to any user definable formats e.g. flat files, word docu ments, excel sheets etc. Ability to print reports as on a particular date, any user defined date or range of dates for the selected criteria (e.g. stop payments, transaction details etc.) Management Information System Future State

System to interface to interface with other banking application used by the bank e.g. treasury, risk management etc. or 3rd party systems e.g. RTGS, SFMS etc. or legacy systems of the bank for periodic / on -line consolidation of MIS data Access to reports to be restricted based upon user privileges defined in the system Data from the core banking to be picked up and access by the Customer Relationship Management package and data warehousing package (in future) for analysis / processing purposes. Management Information System Future State

Way Forward (For branches not on core Banking and consolidations from other Banking application or 3rdparty systems) Selection of a team consisting of members from IT (all systems), MIS department branches and audit. Standardise reporting formats & chart of accounts for bank / statutory & regulatory reporting, management and executive reporting. Mapping fields from each disparate system with that of the standardised format agreed. For example available, not available, can be captured, requires new development, time frame, cost or cannot be done. Development of programmes / data entry screens for generation of defined MIS Testing with the involvement of IT, MIS,branchand audit representatives Internal audit testing Train personnel to execute programmes or enter details as per screen formats Trial run Fix bugs & error testing for bugs and errors Rollout to few branches (e.g. 5 or 10) Stabilization Go live

Management Information System Future State

Management Information SystemProcess Current StateFuture State Datacaptureinconsistentacrossbranchesandsystems Timelaganddelayincollatingandconsolidatingdata. MostoftheMISatthebranchesgeneratedmanuallyandinvolveshugeamountofmanualeffortsatt hebranches,regionalofficesandheadofficeforconsolidationofthesame. AccuracyofMISisaconcern Inaccurateforecastanddelaysindecisionmaking Dataintegrityandsecurityisaconcern CorebankingsystemtosupportgenerationofallStatutoryandregulatoryreports,management reports,executiveInformationreportsandadhocreports Corebankingsystemtohavethefacilitytouploaddatareceivedinanyelectronicmediumorthro ughaninterfacefrombranchesnotonthecorebankingsystem,forconsolidationpurposesatpe riodicintervalsasdesiredbytheBank Corebankingsystemtohavethefacilitytoenterdatamanuallyforconsolidationpurposes Systemtointerfacetointerfacewithotherbankingapplicationusedbythebanke.g.treasury, riskmanagementetc.or3rdpartysystemse.g.RTGS,SFMSetc.orlegacysystemsofthebankforp eriodic/on-lineconsolidationofMISdata Allconsolidationofdatatobedoneattheheadoffice Reportstobegeneratedatthebranchlevel,regionalofficelevelandheadofficeleveltobedef inedinthecorebankingsystem. Corebankingsystemtosupportschedulingforreportprinting(atday end,day beginetc.)attheva riousbranches,regionalofficesandheadoffice Anyreportsrequiredforstatutory/regulatoryreporting,managementinformation,executiv einformationtobegeneratedcentrallyfromtheheadoffice Fieldsfordatacapturetobedefinedatthecentrallevelandbranches/businessunits/departm entstocaptureallrelevantinformationasrequired. Accesstoreportstoberestrictedbaseduponuserprivilegesdefinedinthesystem People Requirement EffortsatthebranchesforMISpreparation,regionalandheadofficeforconsolidationstored ucetoagreatextent,excessstaffattheselocationinvolvedinMISpreparation/consolidati oncanbere-deployed Management Decision StandardisereportformatsacrosstheBank Formationofteamsfordataidentificationandstandardisation Identificationofreportstobeprintedatthebranches,regionaloffices,headofficeetc. Consolidationatregionaloffices/headofficedirectly Accessprivilegestoprint/viewreports Eachdepartment/businessfunctionheadtoberesponsibleforMISoftheirrespectivedepartme nts SupportgenerationofallStatutoryandregulatoryreports,managementreports,executiveIn formationreportsandadhocreportsasdesiredbytheBank SupportconsolidationofMISdatafromvariouslegacysystem,otherbankingapplicationand3r dpartysystemsthroughelectronicmediumupload,manualdataentry/directinterfaces Supportconsolidation,schedulingofreportsatthebranches,regionalofficesandheadoffic e Vendor Questions Management Information System Future

State

Select the functions to be centralized or de-centralized Identify products and services for cross selling through regional marketing cells Setting up of the product planning and development department / cell Focused attention on marketing of Bank.s products and services by formulating regional teams Overseas branches to offer other regular Banking products and services Explore options of running services of other Banks through Central Bank by leveraging on technology Shift in focus from Non fund Base Income to Service Based Income Plan for alternate strategies to encounter fall in: Non Fund Based Interest Spreads Float Low Cost Liabilities Strategies for profitability retention: Business Impact Analysis Product mix / Pricing Strategy Market Intelligence Customer Retention Man Power Optimization

Key Management Decisions

Staff identification for services to be centralized Develop Skill set matrix Develop current job roles and responsibility matrix Identify change in job description, roles and responsibilities Identify skill sets required for the job description Map job description, roles and responsibilities to the skill sets Identify gaps in skill sets Conduct training to fill the gaps Source personnel having the requisite skill sets from other organizations / banks

Identify locations for centralization of key activities Identify locations for set up of regional marketing cells Revision of the delegated powers manual / instructions Updationof the manual of instructions Marketing of Bank.s products and services Use existing Bank staff competent in Marketing Source personnel from industry

Way Forward

Impart Training for Marketing In house expertise Source expertise from industry Outsource Training

Setting up of strategic business units, headed by responsible and competent authorities in the areas of: Retail Lending Retail Deposits Corporate Lending Corporate Deposits Institutional deposits and advances Government deposits and advances Forexdeposits and advances Customer Relationship Product Planning & Development

Way Forward Sales and Marketing of Bank.s products & Services Centralized credit appraisal, monitoring, recovery and legal Centralized Processing of delivery channels ATM, Credit and Debit Card Processing Correspondent Banking relationship

Change in organization and reporting structures to the strategic business units Greater focus on division of labourand specialization in the defined areas of business Redeployment of excess staff at branches and other business units Optimal utilization of physical resources e.g. land, building, premises etc. Transition Phases First 3 branches Stream line business processes and get accustomed to the new environment and system Train Bank personnel on the new system and develop internal confidence to handle the system Focus on stabilizing the new system Identify staff requirement Introduce new products and services After 6 branches have been migrated to the core Banking systems Identify staff for centralization of activities Identify locations for centralization of activities Train personnel for marketing Way Forward

Transition Phases After 6 branches have been migrated to the core Banking systems Define structure, job descriptions , roles and responsibilities for centralizatio n of activities Prepare for re deployment of excess staff After 10 branches are up on the core banking solution or 3/4thof a particular region has migrated to the core banking solution Re-shuffle identified staff to the central location Re deploy excess staff Centralization of key functions Manpower Optimization

After 15 branches have been migrated to the core Banking systems Identify unused space, premises, land etc. Identify staff requirements Formation of Strategic Business Units Define reporting structure, job descriptions , roles and responsibilities for Strategic Business Units Document and approve the manual of instructions and functioning procedures

Way Forward

Transition Phases After 20 branches have been migrated to the core Banking systems Operationalisethe functioning of the Strategic Business Units Monitor the functioning of the Strategic Business Units Redeployment / reshuffle excess staff Optimiseutilization of physical resources Concentration on focused marketing Monitoring marketing and sales activities

Way Forward