Corporation Bank

ORGANIZATION PROFILECORPORATION BANK

TypePublic (BSE, NSE:CORPBANK)

FoundedUdipi, 1906

HeadquartersCorporation Bank,CORPORATE OFFICE ,Mangaladevi Temple RoadPandeshwarMangalore 575 001 India

KeypeopleChairman B. Sambamurthy

IndustryBanking

ProductsLoans, Credit Cards, Savings, Investment vehicles, etc.

No. of Employees14000

Net incomeRs 3171 Million(2013-14)

Websitehttp://www.corpbank.com/

BRIEF HISTORYEstablished in the year 1906, Corporation Bank is an organization based on the traditional Indian values of service to the community. Corporation Bank is regarded as one of the well-run banks in the comity of Public Sector Banks in the country. The Bank has a unique history of 100 years of successful Banking and has stood the test of time by growing steadily, offering vast, varied and versatile services with a personal touch. Today, its good customer service, pre-eminent track record in House Keeping, adherence to Prudential Accounting norms, consistent profitability and adoption of modern technology for betterment of customer service have earned the Bank a place of pride in the Banking Community. The Bank has been richly endowed with a relatively young, dynamic and efficient manpower, which is the key factor of the Banks success. Excellence in performance and uniqueness in customer service form the central core of the Banks organizational culture. The growing confidence of its clientele is well reflected in the Banks performance in all critical areas of its Operations all through the year. The Bank is a Public Sector Unit with 57.17% of Share Capital held by the Government of India. The Bank came out with its Initial Public Offer (IPO) in October 1997. The Banks Net Worth stood at Rs. 4,980.18 Crores as on 31.03.2014.

Branch NetworkBanks total service outlets crossed 8,600 mark to reach 8,617 units, comprising of 2,021 branches, 2,264 ATMs and 4,332 Branchless Banking units. Of these, 314 branches, 839 ATMs and 787 Branchless banking units were operationalized during the year. Business growth and branch network expansion Necessitated fresh recruitment to the extent of 966 employees during the year. The total staff strength stood at 12465 on 31st March, 2009 compared to 12011 in the previous year. 21.2 The staff productivity in the Bank increased from Rs.839.19 lakhs as on 31.03.2008 to Rs.1048.86 lakhs as on 31.03.2009, recording a growth of 24.98%. Net Port per employee increased from Rs.4.79 lakhs to Rs.7.64 lakhs during the year.

Operating PerformanceIn spite of the challenging environment, the Bank continued to show a better performance under business parameters. The Bank has reached a business level of over 3.30 lakh Crores, by registering a growth of 16%. Deposits of the Bank crossed a level of 1.93 lakh Crores, while overall credit scaled up to 1.37 lakh Crores. The Bank has registered a healthy growth in agriculture, MSME & retail lending. The Bank could also achieve the regulatory target of 40% of ANBC in Priority sector lending. Besides, the Bank has also come out with various innovative products services to give a better customer experience and accelerate our pace of growth. The Bank has crossed a landmark Branch Network of 2000 and ATM Network of 2000.The company reported revenue of Rs. 3.30 lakh Crores during the fiscal year 2013 (2013). The company's revenue grew at a CAGR of 21.20% during 2009 - 2013, with an annual growth of 16.73% over 2012. In 2013, the company recorded a net profit margin of 8.51% compared to a net profit margin of 10.45% in 2012. The Gross NPA stood at 3.42% and the Net NPA stood at 2.32%. The Bank has effected Cash recovery and upgradation of NPAs to the extent of 1,355.53 Crores as compared to 1,509.30 Crores last year.

SWOT AnalysisStrengths Broad portfolio of products and servicesThe bank offers variety of products and services catering to variety of customers ranging from premium customers to common people. It offers products such as Mobile Banking App and e passbook for customer convenience and as part of green initiative. Capital adequacyThe bank has maintained a high capital adequacy ratio of around 12% over last 10 years against the requirement prescribed by RBI of 4%. Increase in total depositsThere has been steady increase in deposits to Rs. 193393.01 Cr in 2013-14 Strong distribution networkBanks total service outlets crossed 8,600 mark to reach 8,617 units, comprising of 2,021 branches, 2,264 ATMs and 4,332 Branchless Banking unitsWeakness Declining financial performanceThe Banks financial performance has not witnessed the growth as compared to other banks of equal size.

Opportunities Growing Indias annual disposable incomeThe average annual disposable income in India increased by more than 29 percent in real terms between 2007 and 2012 and reached to to 80663730 INR Million in 2012. Growing Indian Consumer finance marketThe demand for residential and commercial property supported the growth of real estate and in turn increased the demand for mortgages/housing loans in India. As per RBI, the gross non-performing assets (NPA) or the bad loans of the domestic banking system stood at 4% of gross loans at the end of December 2013. The ratio of bad loans to total loans saw marginal decline in 2014 due to combined security measures from RBI and the banks. Both RBI and the banks continued their focus on strengthening loan disbursement process starting from verification and screening of application to recovery mechanisms. Strategic initiativesA large no. of new initiatives are being taken through both fiscal and monetary policies related to banking sector. Threats Changing regulationsThere have been constant changes in regulation related to banking sector. Regulatory policies like Basel Norms put constant pressure on banking sector operations. Fluctuations in Interest ratesRBI has to change interest rates constantly due to high inflation and low IIP.

Major Operating problems faced in Corporation Bank Time to clear cheque Time to create drafts Time to update Passbook Loan Processing / Savings Account opening time Time to deposit cash

BUSINESS PROCESS REDESIGN BPRThe complete overhaul of a key business process with the objective of achieving a quantum jump in performance measures such as return on investment, cost reduction and quality of service. Business processes that can be redesigned encompass the complete range of critical processes, from manufacturing and production, to sales and customer service.

Need of BPR in Bank BPR lowers the cost significantly as compared to a new system development. BPR improves the overall quality of services of the particular organization. BPR is useful in beating the market competition and in attaining the maximum market share. BPR is useful in obtaining dramatic industry growth rate In the banking industry, the Business Process Re-engineering (BPR) means transforming the select processes and procedures with a view to empower the bank with contemporary technologies, business solutions and innovations that enhances the competitive advantage. BPR can be defined as the fundamental reconsideration and radical redesign of organizational processes, in order to achieve drastic improvement of current performance in cost, service and speed. To ensure survival in the changing global environment it is essential that banks respond to major trends reshaping the markets. Objective: The objective of a BPR initiate is to create and enhance the value of the bank for the customers. It takes into account 4 important aspects customer (to given him enhanced value), competition (to meet it successfully), change (to manage it) and cost (to reduce). The basic objectives of BPR are to reduce the transaction process time without sacrificing security aspects, quality and real time service to clients and extensive propagation of single window concept. BPR basically aimed at maintaining long term profitability and strengthening the competitive edge of banks in conforming to transforming market realities. Process: There are three key parameters for BPR i.e. customer service, product innovation and operational excellence. BPR envisages a number of activities such as procurement, order fulfilment, product development, customer service and sales. The process involves identification of the business processes to be redesigned, understanding and measuring the existing processes, identifying the information technology levers and designing and building a prototype of new process. Benefits: There is growing need for use of BPR to further the strategic goals of banks. BPR can benefit the customers through significantly reduced transaction time, flexibility in servicing and improved value. The banks can be benefited by increased volume of business and higher productivity, reduced operational cost leading to higher profits, improved employee loyalty and sense of belongingness and establishment of bank within a branch concept. Employees benefit through empowerment leading to higher job satisfaction, effective job rotation as an additional incentive and effective interface with customers as work load is evenly distributed.Corporation Bank of India completed a Six Sigma project to make its business processes and operations more efficient. Wipro Infotech facilitated the project, which started in June 2004. Along with improving its internal processes, the project installed a culture of continual improvement at the bank. Wipro Infotech helped to garner the requisite Six Sigma skills to make Banks systems and processes much more efficient in identified areas. They are taking a data-oriented, analytical approach to facilitate the application of six sigma within the bank.

Implementation of Core BankingCore Banking is normally defined as the business conducted by a banking institution with its retail and small business customers. Many banks treat the retail customers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the Corporate Banking division of the institution. Core banking basically is depositing and lending of money.

Compared to a decentralized setup, the Core Banking Solution has the following advantages:Centralized database for performing various online banking utilitiesFacilitates Any Branch BankingShifting of time consuming activities like End of Day (EOD) processing, Interest calculation, interest posting, debiting inward clearing cheques etc., to centralized location to enable the field level functionaries to concentrate on customer service and marketing activities Facilitates centralized auditing of branches Provides for effective monitoring by the controlling offices Facilitates ease of maintenance of the package Enables simultaneous launching of new products across all branches connected to the CBS Paves the way for setting up a Data Warehouse Facilitates better MIS as a decision support tool.The Core Banking environment offers a totally different perspective from the business angle when compared to a decentralized environment. With the Core Banking in place, the focus of erstwhile "Branch Banking" will shift to "Bank Banking". Further, the banking operations assume "Round the clock" capability which is not limited by closure of the branches, holidays etc.

Cheque Clearance Existing Process (Existing Process) Clearing Process:The clearing process begins with the deposit of a cheque/other clearing instruments referred above in a bank. The bank arranges the cheques submitted to it for clearing bank wise and presents it in the clearing house to other banks. When there are more than one bank branch for a bank in the clearing area, they would have a coordinating branch/ service branch to take care of presenting the cheques to the clearing house. Upon receipt of the cheques/other instruments, they are passed for payment if the funds are available and the banker is satisfied about the genuineness of the instrument. The cheques that are unpaid are returned to the presenting bank through another clearing called the Return Clearing. The realization of the funds occurs after the completion of return clearing and by the absence of an unpaid cheque.

Cheque Clearance - Speed Clearing Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee branch. The concept of Speed Clearing combines the advantages of MICR clearing with that of CBS. Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local center. How is Speed Clearing an improvement over collection basis?Outstation cheque collection through collection basis takes around one to three week time depending on the drawee center. Under Speed Clearing, it would be realized within 48 hours. Further customers need not incur any service charge for collection of outstation cheques (value up to Rs. 1 lakh) in Speed Clearing which they may have to incur if such cheque is collected under collection basis. Even local cheques will be cleared in 1 2 daysOutward Clearing: 1. Ease in Implementation2. Reduction in processing costs and Operational Overheads3. Elimination of logistics attached with handling outstation instruments4. Improved Fund Management

Cheque Truncation SystemCTS 2010 is the standard prescribed by the RBI recently for cheques issued by all banks in the country. CTS stands for Cheque Truncation System and essentially means that instead of sending the cheque in physical form by the collecting bank to the paying bank, an electronic image of the cheque is transmitted to the drawee branch for payment through the clearing house, thereby eliminating the cumbersome physical presentation of the cheque to the paying bank, thus saving in time and costs involved in traditional clearing system.Benefits of CTS to Bank Customers1. The main feature of the CTS 2010 cheque is that the physical movement of the cheque is stopped and the images of cheques are transmitted electronically thereby speeding up the process of cheque clearance and settlement between banks. This obviously means quicker clearance, shorter clearing cycle and speedier credit of the amount to account.2. With the movement of cheques from one bank to another having been stopped, there is no fear of loss of cheques in transit and chances of cheques being lost due to mishandling, etc are totally avoided.3. At present clearing is restricted to banks operating within a city or within a restricted geographical area. Under the CTS, it is proposed to integrate multiple clearing locations managed by different banks in different centres so that cheques drawn on upcountry banks too can be cleared electronically without any geographical restrictions. 4. The cheques in transit are most susceptible to frauds and customers of banks are the worst sufferers in the present system of physical movement of cheques from one place to another. Under the CTS system moving of physical cheques at different points is obviated as only electronic images are transmitted between banks, and this will considerably reduce the scope for perpetuation of frauds inherent in paper instruments.5. With the introduction of homogeneity in security features under CTS standards 2010 such as embedded verifiable features like bar codes, encrypted codes, logos, watermarks, holograms, etc in every cheque leaf, it is now possible to detect frauds easily through interception of altered and forged instruments while passing through the electronic imaging system. This is expected to considerably reduce operational risks and risks associated with paper clearing for the benefit of all bank customers.6. The CTS is expected to improve operational efficiency of the entire banking system, resulting in better customer service, improved liquidity position for banks customers and safe and secure banking for the entire banking public.Process of making demand drafts (Existing Process)

It can be noted from the above process that the above process involves many redundant components and also suffers from bottlenecks. The above process implementation results in more time and resources in making demand drafts.

Speeding demand draft process (To-Be)

Speed demand draft process has advantages over traditional process it removes some of the redundant process and bottlenecks as after checking the form the demand draft is printed and signatory is done at same place and thus total time taken in the entire process reduces significantly.

E Demand DraftE-demand draft is an online Demand Draft generating application. E-demand draft is an application which will help us to generate a demand draft online by the user itself. Thus this application will reduce the work of the banks and will help the customer to get a new facility at their place as result both can reduce their time of work. This approach will reduce the overall time of both banks and customers, this also reduces the manual work and banks will generate more revenue and will help the customer to get a new facility at their place as result both can reduce their time of work. Conventionally, the people have to go to the bank for collecting demand draft or the bank has to send it through post at the mentioned address. This technology provides a facility where people can generate demand draft sitting at home and they can take out the print out of the demand draft in the same manner as we take the print out of the online generated ticket.

Pass Book Updating (Existing Process)

Pass Book Updating (To-Be)Kiosk and QR code implementation Traditionally one had to wait to get your passbook updated.Nowone can withdraw money and simultaneously get your passbook updated at the automated teller machine (ATM) instantly.Traditional method of updating passbook involves high cost as well as inconvenience to customers. Every passbook update costs the bank Rs 70 to Rs 80.Banks in association with NCR, a technology company, have planned to get the self-service technology in India. NCR bagged a contract to install 3,000 ATMs for SBI. Canara Bank has also signed up with NCR for installation of about 2000 ATMs. This deal includes installation of biometric ATMs as well.

New Loan account / Savings Account / ATM card application processing (As-Is)

The above process involves different counters and different queues for different processes resulting in wastage of time and resources of both banks and as well as that of customers.

New Loan account / Savings Account / ATM card application processing (To-Be)

The new process has a case manager alloted for all process. Customers approach to case manager who routes customer application to appropriate channel. The Backend team checks all the necessary status (e.g. Credit control officer checks credit status of customer for loan) and after necessary due diligence, processing, backend team sends the resulting status to Case manager. Then the Case manager closes the case. It can be inferred that the above process is centralised as compared to previous process and this results in faster execution and more utilization of resources.

Cash Deposit process transition through BPR

In the new process a self-service kiosk is set up in the branch in which customer enters his account no. manually or swaps his debit card and then deposits money in the account. The kiosk has both currency note counting as well as detecting mechanism and after placing cash in the designated slot it automatically calculates the amount to be deposited. The kiosk also serves as a single point of contact where one can deposit cash and update his passbook simultaneously.The new process of cash deposit has following advantages No need to line up twice No need for unnecessary waiting Passbook update at the same time

ResultsFollowing results were observed after implementing Business process reengineering

The study was conducted to understand the effectiveness of Business process reengineering in Corporation Bank. To serve the state objective of the study, the transaction time for each of the stated processes was recorded for both before as well as after the implementation of BPR. This shows that the introduction of Business process reengineering has made a significant impact on cash flow of Corporation Bank. The growth percentage would further be increased if the employees of the bank are given effective and complete training on core banking and also by educating & increasing the awareness level of core banking to the customers of the bank. Everything has been taken into account to judge the effectiveness. To conclude with the concept of Business process reengineering has made a significant effect on operational efficiency of Corporation Bank.The Indian banking system though lauded by the global experts, especially in the time of the recession has got a long way to develop, especially in the matter of customer relation. Total Quality Management (TQM) in the Indian banking scenario can do a lot in improving the present conditions, in rendering it more useful to the people and in improving the profitability. Training the employees, fine-tuning the product mix, improving the top management commitment to quality, fine-tuning of the processes of ensuring quality top-bottom and bottom-top, reduction of retirement age, introducing employee development programmes with the nature of an academic course, monitoring of the performances and proper rewarding based on achievements, empowering the employees professionally and personally, ensuring the customer satisfaction in everything etc are the ways suggested as a aspects of Total Quality Management in Banking.