Project Title : Housing Loan a Comparative Study. Organisation : Bank of Baroda. The successful development in the banking business has become a complex process in the world of competition today. The development of marketing og a new service, the complexity of a new and different product, their market and therefore their process through which they developed, dictates that a number of different people, each which there own role, work together to create the service. The project represents a information regarding company’s/banks performance and the service for the home loans to the all sections of society. The main objective of the project is to understand/study the different product of a housing loan, the rate of interest of housing loan the days for sanctioning of a housing loan. This will help us to select the appropriate bank of financial institution which will have less interest rate and maximum repayment period. For the execution of the project, the methodology adopted is the collection of information through primary and secondary data collection method, questionnaire, processing and analyzing data. 1
The successful development in the banking business has become a complex process in the world of competition today. The development of marketing og a new service, the complexity of a new and different product, their market and therefore their process through which they developed, dictates that a number of different people, each which there own role, work together to create the service. The project represents a inform
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Project Title: Housing Loan a Comparative Study.
Organisation: Bank of Baroda.
The successful development in the banking business has become a complex process in
the world of competition today. The development of marketing og a new service, the
complexity of a new and different product, their market and therefore their process
through which they developed, dictates that a number of different people, each which
there own role, work together to create the service.
The project represents a information regarding company’s/banks performance and the
service for the home loans to the all sections of society.
The main objective of the project is to understand/study the different product of a
housing loan, the rate of interest of housing loan the days for sanctioning of a housing
loan. This will help us to select the appropriate bank of financial institution which will
have less interest rate and maximum repayment period.
For the execution of the project, the methodology adopted is the collection of
information through primary and secondary data collection method, questionnaire,
processing and analyzing data.
The banks collected for comparison of a housing loan are the main stream banks in
Nanded city i.e. state bank of India, bank of Maharashtra , one schedule and one co-
operative bank. The above group represents the total population of Nanded city. The
Bank of Baroda is very good service provider in the banking sector. The bank has
recently completed 100 years, in its quest to become a world class bank with global
best practice.
The area of project work is Nanded city as it is the fast developing city in Marathwada
region and the city has very good prospect in future.
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OBJECTIVE OF THE PROJECT:
The objective of the project on Home – Loans is to compare the home loan schemes
of different banks and financial institutions in the Nanded City only. This will help us
to select the appropriate bank of financial institution, which will have less interest rate
and maximum repayment of period with easy documentation.
Main objectives include:
Comparison of interest rate of different banks for Home-Loans.
Share of home loans in all loans disbursed by that particular bank.
Profitability & Cost of a loan proposal from the customer point of view and
lenders point of view.
Profitability and cost of the loan proposal decides the financial position of the bank
and its survives. And it also helps to banks to decide which type of loans gives them
more benefits for the long period.
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BANKING AND FINANCE IN INDIA
The Indian money market is classified in to : the organized sector(comprising private,
public and foreign owned commercial banks and cooperative banks, together known
as scheduled banks); and the unorganized sector(comprising individual or family
owned indigenous bankers or money lenders and non banking financial companies
(NBFCs)).
The unorganized sector and micro credit and still preferred over traditional banks in
rural and sub-urban areas, especially for non-productive purposes, like ceremonies
and short duration loans.
Early History
Banking in India originated in the first decade of 18th century. The first banks were
The General Bank of India, which started in 1786, and Bank of Hindustan, both of
which are now defunct. The oldest bank in existence in India is the State Bank of
India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This
was one of the three presidency banks, the other two being the Bank of Bombay and
the Bank of Madras. The presidency banks were established under charters from the
British East India Company. They merged in 1925 to form the Imperial Bank of India,
which, upon India's independence, became the State Bank of India. For many years
the Presidency banks acted as quasi-central banks, as did their successors. The
Reserve Bank of India formally took on the responsibility of regulating the Indian
banking sector from 1935. After India's independence in 1947, the Reserve Bank was
nationalized and given broader powers.
Post-independence
The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the
end of a regime of the Laissez-faire for the Indian banking. The Government of India
initiated measures to play an active role in the economic life of the nation, and the
Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed
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economy. This resulted into greater involvement of the state in different segments of
the economy including banking and finance. The major steps to regulate banking
included:
In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing
bank may be opened without a license from the RBI, and no two banks could have
common directors.
However, despite these provisions, control and regulations, banks in India except the
State Bank of India, continued to be owned and operated by private persons. This
changed with the nationalization of major banks in India on 19th July, 1969.
Nationalization
By the 1960s, the Indian banking industry has become an important tool to facilitate
the development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensued about the possibility to nationalize the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of
the GOI in the annual conference of the All India Congress Meeting in a paper
entitled "Stray thoughts on Bank Nationalization." The paper was received with
positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued
an ordinance and nationalized the 14 largest commercial banks with effect from the
midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described
the step as a "masterstroke of political sagacity." Within two weeks of the issue of the
ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer
of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The
stated reason for the nationalization was to give the government more control of credit
delivery. With the second dose of nationalization, the GOI controlled around 91% of
the banking business of India.
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After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer
to the average growth rate of the Indian economy.
Liberalisation
In the early 1990s the then Narsimha Rao government embarked on a policy of
liberalisation and gave licenses to a small number of private banks, which came to be
known as New Generation tech-savvy banks, which included banks such as Global
Trust Bank (the first of such new generation banks to be set up) which later
amalgamated with Oriental Bank of Commerce, UTI Bank (now re-named as Axis
Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the
economy of India, kick – started the banking sector in India, which has seen rapid
growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks.
The next stage for the Indian banking has been setup with the proposed relaxation in
the norms for Foreign Direct Investment, where all Foreign Investors in banks may be
given voting rights which could exceed the present cap of 10%at present it has gone
up to 49% with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%; Lend at 6%;Go home at 4) of
functioning. The new wave ushered in a modern outlook and tech-savvy methods of
working for traditional banks. All this led to the retail boom in India. People not just
demanded more from their banks but also received more.
Current situation
Currently (2007), banking in India is generally fairly mature in terms of supply,
product range and reach-even though reach in rural India still remains a challenge for
the private sector and foreign banks. In terms of quality of assets and capital
adequacy, Indian banks are considered to have clean, strong and transparent balance
sheets relative to other banks in comparable economies in its region. The Reserve
Bank of India is an autonomous body, with minimal pressure from the government.
The stated policy of the Bank on the Indian Rupee is to manage volatility but without
any fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M&As, takeovers, and asset sales.
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In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its
stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an
investor has been allowed to hold more than 5% in a private sector bank since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks
would need to be vetted by them.
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks
(that is with the Government of India holding a stake), 29 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges)
and 31 foreign banks. They have a combined network of over 53,000 branches and
17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public
sector banks hold over 75 percent of total assets of the banking industry, with the
private and foreign banks holding 18.2% and 6.5% respectively.
Since liberalization, the government has approved significant banking reforms.
While some of these relate to nationalized banks (like encouraging mergers, reducing
government interference and increasing profitability and competitiveness) other
reforms have opened up the banking and insurance sectors to private and foreign
players.
Central bank Reserve Bank of India
Nationalized banks
Allahabad Bank · Andhra Bank · Bank of Baroda · Bank
of India · Bank of Maharashtra · Canara Bank · Central
Bank of India · Corporation Bank · Dena Bank · Indian
Bank · Indian Overseas Bank · Oriental Bank of
Commerce · Punjab & Sind Bank · Punjab National
Bank · Syndicate Bank · Union Bank of India · United
Bank of India · UCO Bank · Vijaya Bank · IDBI Bank
State Bank Group
State Bank of India · State Bank of Bikaner & Jaipur ·
State Bank of Hyderabad · State Bank of Indore · State
Bank of Mysore · State Bank of Patiala · State Bank of
Saurashtra · State Bank of Travancore
Private banks Axis Bank · Bank of Rajasthan · Bharat Overseas Bank ·
Catholic Syrian Bank · Centurion Bank of Punjab · City
Union Bank · Development Credit Bank · Dhanalakshmi
Banking in India falls mainly under two categories, viz. Commercial banks and Co-
operative banks, while commercial banks cater to the needs of industry and trade
largely; the cooperative banks play a major role in financing agriculture and allied
activities in rural areas, and trade and services in urban areas.
The commercial banks may be classified into four group in terms of ownership: 1)
Public Sector Banks 2) Regional Rural 3) Indian Private Sector Banks and 4) Banks
incorporated outside India.
The commercial banks can be further classified into Scheduled banks and Non
Scheduled Banks. Scheduled Banks are those listed in the second schedule to the
Reserve Bank of India Act 1934
These banks satisfy the criteria laid down under section 42 (6) of the RBI Act that
they should have capital and reserve of Rs. 5 lakhs and their activities should not be
detrimental to the interests of depositors. The scheduled banks are required to
maintain cash reserves equal to 5 % of DTL which can go up to 15 % under section
42 (1). Those, which are not included in the 2nd schedule, are called the non-scheduled
banks. The number of take- oven/liquidation as also in some cases up gradation into
scheduled banks category.
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Commercial Banks
Public Sector Private Sector
State Bank of India
Nationalized Banks Non-Scheduled Banks
Regional Rural Banks
Other Banks in IndiaAssociate Banks
Foreign Banks in India
14 major banks nationalized on 19th July 2, 1969
6 Banks nationalized on 15th April 1980
Introduction to finance :
Finance is the handmaiden of economic growth Institutions like banks, which
command huge financial resources, can play a crucial role in shaping the economy of
a country by judiciously deploying their funds over such important activities as would
lead to an overall economic growth. A bank’s offer compared to a dam and the money
lying scattered with individuals and institutions in society to the water running its own
course without any direction. Money is collected by banks by way of deposits, and
from this fund money is turned back to the community in the form of loans. Thus,
banks act as a vital link between the savers and the needy.
India is striving to transform herself into an industrially developed country based on a
rural and agricultural economy which should not only be able to feed the millions of
her populations but also to produce raw material for her mills. This can be done by
bringing about the necessary change from an agrarian economy to a diversified one.
Banks have crucial role to play not only in the achievement of this objective but more
significantly in determining how speedily and efficiently it is achieved. Since the
nationalization of the fourteen major banks, the banking industry has developed
adequately enough to meet the changing needs, both corporate and personal. Banks
now offer a wide range of financial services in an extensively varied environment.
The complex task of managing these changes and their consequences requires that
banker should be more professional than ever before.
The Business of Banking
Banking has been understood differently at different times and indifferent countries.
In India, the earliest legislation that dealt with the business of banking was the Indian
Companies Act 1913. The Banking Regulations Act came in 1936. Under this Act all
companies having their principal business, accepting deposits from the public were
classified as banks. Hence between 1936 and 1942 even trading and industrial
concerns accepting deposits were classified as banks, if accepting such deposits was
their principal business. The Government of India passed a compressive Banking
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Regulation Act in 1949. Accordingly a banking company was defined as a company
which carries on the business of banking that is to say accepting for the purpose of
lending or investing deposits of money from the public, repayable on demand of
otherwise, and withdrawal cheque, draft, order of otherwise. The study group
reviewing legislation affecting banking is of the opinion that “banking should be
abroad based.” The definition given by the Banking Regulation Act 1949 is certainly
not exhaustive, and it needs certain alterations for the sake of simplification. The
purpose of accepting deposits is strictly not relevant for the definition of banking,
through it is basic for banking regulation. There is no need to distinguish between
“loans” deposits” in the context of banking regulation. The definition of banking
should cover all forms of deposits from the public, and banking regulation should take
into its ambit all the different types of banking.
Functioning of a Bank:
Functioning of a Bank is among the more complicated of corporate operations. Since
Banking involves dealing directly with money, governments in most countries
regulate this sector rather stringently. In India, the regulation traditionally has been
very strict and in the opinion of certain quarters, responsible for the present condition
of banks, where NPAs are of a very high order. The process of financial reforms,
which started in 1991, has cleared the cobwebs somewhat but a lot remains to be
done. The multiplicity of policy and regulations that a Bank has to work with makes
its operations even more complicated, sometimes bordering on illogical. This section,
which is also intended for banking professional, attempts to give an overview of the
functions in as simple manner as possible.
Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose
of lending or investment of deposits of money from the public, repayable on demand
or otherwise and withdrawal by cheques, draft, order or otherwise."
Deriving from this definition and viewed solely from the point of view of the
customers, Banks essentially perform the following functions:
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1. Accepting Deposits from public/others (Deposits)
2. Lending Money to public (Loans)
3. Transferring money from one place to another.
4. Acting as trustees.
5. Keeping valuables in safe custody.
6. Government business.
But do these functions constitute banking? The answer must be a no. There are so
many intricacies involved in the activities that a bank performs today, that the above
list must sound very simple to a seasoned banker. Please click on the activity to see
what a Bank has to do to give the above services to its customers. These activities can
also be described as back office banking. Banks are organized in a linear structure to
perform these activities at the base of which lies a Branch. The corporate office of a
bank is normally called Head Office
FORMS OF ADVANCES:
Advances by commercial banks are made in different forms such as loans, cash credit,
overdrafts, bills purchased, bills discounted etc. These are generally short- term
advances. Commercial banks do not sanction advances on a long-term basis beyond a
small proportion of their demand and time liabilities. They cannot afford to lock up
their funds for long period. Hence a considerable percentage of their advances is
repayable on demand.
Advances may be granted against tangible security or in special deserving cases on an
unsecured/clean basis.
1. Loans
1. Overdrafts
2. Cash credits
3. Temporary Overdrafts
4. Clean advances
5. Term loans
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6. Bridge loan
7. Participation loan
8. Loans to small borrowers
10. Hire purchase and leasing finance
11. Bills purchased
12. Bills discounted
LOANS:
Bank loans are called indirect agents of production. For achieving a sustained rate of
economic growth over a long period, greater efforts have to be made to increase
agricultural and industrial production, and in this increased production, bank credit
plays a significant role. But banks in India are not free to employ their funds n an
arbitrary manner, while lending, they will have to keep in mind factors like a desirable
balance among liquidity, safely and profitability, legal and statutory requirements,
socio-economic conditions of the country, priorities set by economic planners, and so
on. Banks try to achieve this objective through maintaining a particular relationship
between their assets and deposits. As such, between advances and deposits in the form
of advances among as many different types of securities and over as wide an areas as
possible, and they avoid granting too large a proportion of their advances to one party
or to a single industry. While the se factors limit banks capability to lend, they are,
nevertheless expected to grant credit according to the changing economic scene
conditioned by the programs and priorities of different Five Year Plans.
In a loan account the entire amount is paid to the debtor at one time, either in cash or
by transfer to his current account. No subsequent debit ordinarily allowed except by
way of interest, incidental charges, insurance premiums, expenses incurred is
provided for by installment without allowing the demand character of the loan to be
affected in any way. There is usually a stipulation that in the event of installment
remaining unpaid, the entire amount of the loan will become due. Interest is charged
on the debit balance, usually with quarterly rests unless there is an arrangement to the
contrary. No cheque book is issued. The security may be personal or in the form of
shares, debentures. Government paper, immovable property, fixed deposit receipts,
life insurance policies, goods etc.
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History of Bank of Baroda –
Bank of Baroda was founded by Maharaja Sayajirao Gaekwad of Baroda on July 20,
1908 with a paid up capital of Rs 10 lakhs. Since then bank has traversed an eventful
and successful journey of almost 100 years. Today, Bank of Baroda has a network of
2737 branches including 39 overseas branches spread over 20 countries. In mid-
eighties, the Bank of Baroda diversified into areas of merchant banking, housing
finance, credit cards and mutual funds. In 1995 the Bank raised Rs 300 crores through
a Bond issue. In 1996 the Bank tapped the capital market with an IPO of Rs 850
crores.
Bank of Baroda took the lead in shifting from manual operating systems to a
computerized work environment. Today, the Bank has 1918 computerized branches,
covering 70% of its network and 91.64% of its business.
Bank of Baroda gives high priority to quality service. In its quest for quality, the Bank
has secured the ISO 9001:2000 certifications for 15 branches. By end of the 2005-06,
the Bank is targeting 54 more branches for this quality certification.
Centenary Year
On the 20th July 2007, the Bank entered its Centenary year. In its quest to become a
world-class bank with global best practices, the Bank is, now, well poised to take-off
with the most modern business and HR systems and processes. The Bank has already
initiated myriad HR interventions with special thrust on internal talent discovery,
upgrading the managerial skills through training, and improving the motivational
level of the employees of the bank
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Mission Statement –
To be a top ranking National Bank of International Standards committed to
augmenting stake holders' value through concern, care and competence.
Education is the most important investment one makes in life. Higher studies and
specialization in certain fields call for additional financial support from time to time.
Whether you are planning school education (nursery to standard XII) of your child,
pursuing a graduate or post-graduate degree, the Bank of Baroda Education Loans,
can help finance your ambitions and goals.
ACHIEVEMENTS
1) Business Performance
The Bank continued scaling new heights of business size recording global business
growth of 24.07 per cent during 2007-08. Its domestic deposits increased by 22.82 per
cent and domestic advances rose by 25.63 per cent.
During 2007-08, the Bank’s overseas business grew by 24.56 per cent primarily due
to a substantial increase of 35.70 per cent in overseas advances. The overseas business
contributed 20.0 per cent to total business and 23.8 per cent to net profit. The level of
net profit at Rs 1,435.52 crore for the year 2007-08 reflected a robust year-onyear
growth of 39.9%.
On the front of asset quality management, while the Gross NPA in domestic
operations stood at 2.18 per cent at end-March 2008, the same for Overseas
Operations was just 0.55 per cent. The global Net NPA was pegged at 0.47 percent by
the year-end 2007-08 in line with the promise given by the Bank to its stakeholders.
Total Business (Deposit+ Advances) increased to Rs 2,58,735.45 crore
reflecting a growth of 24.07%.
Gross Profit and Net Profit were Rs 3,028.55 crore and Rs 1,435.52 crore
respectively. Net Profit registered a growth of 39.85% over previous year
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Net NPAs to Net Advances declined from 0.60% last year to 0.47%.
Objective of Bank of Baroda
1) Special focus on improving “relations” with the existing corporate customers
as well as efforts to add new quality customers to the Bank’s Book.
2) Thrust on business process reengineering to reduce the “transaction costs”.
3) A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book
in FY09 and in subsequent years
GLOBAL PRESENCE OF BANK OF BARODA Australia Bahrain Belgium Botswana China Ghana Hong Kong Guyana Mauritius Malaysia South Africa Singapore Tanzania Thailand Uganda Trinidad & Tobago United Arab Emirates United Kingdom United State of America Zambia
Branch Network of BOB in India
Area No. of BranchesMetro 604Urban 504Semi-urban 619Rural 1100Total 2827
Branch Network Overseas
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Foreign(Overseas) 71Total Global 2897
International Operations
Wide global network
Bank of Baroda started its overseas journey by opening its first branch way back in
1953 in Mombassa, Kenya. Since then the Bank has come a long way in expanding its
international network to serve NRIs/PIOs and locals. Today it has transformed into
India's International Bank.
It has significant international presence with a network of 72 offices in 25 countries
including 48 branches/offices of the Bank, 21 branches of its eight Subsidiaries and 3
Representative Offices in Malaysia, Thailand & Australia. The Bank also has one
Joint Venture in Zambia with 9 branches
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The Bank has presence in world's major financial centers i.e. New York, London,
Brussels, Dubai, Hong Kong, and Singapore.
The "round the clock around the globe", Bank of Baroda is further in the process of
identifying/opening more overseas centers for increasing its global presence to serve
its 33 million global customers in still better way.
Recently, it upgraded its operations in Guangzhou, China from Representative Office
to a branch on 2nd August 2008. It also has plans to upgrade its Representative
Offices in Australia and Malaysia.
It has further plans to establish overseas offices in Houston (USA), Canada, New
Zealand, Qatar, Saudi Arabia, Mozambique, Russia etc. Besides this, it has plans to
extend its reach in existing countries of operations in UK, UAE, Uganda, Kenya and
T&T etc.
Board Of Directors
1. Shri M.D.Mallya Chairmen & managing director
2. Shri V. Santhanaraman Executive Director
3. Shri Satish C. Gupta Executive Director 4. Shri Amitabh Verma Director
5. Shri A.Somasundaram Nominee of RBI
6. Shri Milind N. Hadkarni Director
7. Shri Ranjeet Kumar Chatterjee Director
8 Shri Amarjeet Chopra Director
9 Shri Maulin A. Vaishnav Director
10 Shri Atul Agrawal Director
11 Shri Dharmendra Bhandari Director
12 Shri Manesh Prabhulal Mehta Director
Customers:
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Individual
Stock Broking Entities
HUF (Hindu Undivided Family)
Proprietorship Concerns
Public Limited Companies
Private Limited Companies
Corporate Partnership Firms
Competitors: HDFC, ICICI, Standard Chartered, HSBC
Strength
It has diversified customer profile, including Blue chip companies, small and medium
sized companies, retail customers, self-help groups, and high net worth individuals.
It has strong brand equity and a wide customer base of over 5 million.
Bank of Baroda’s financial strength has been recognized by international credit rating
agencies.
A strong capital base ensures that it is well placed for growth of business.
The bank, which has consistently earned profit since its inception, has committed and
competent human capital to power its aggressive growth plan.
Future of the bank :
Bank of Baroda looks confidently into future to face & thrive in intense competitive
environment that is emerging in global era. the Bank has now gained experience and
has in place the strategies required for gaining a leadership position.