organisational behavior on SBM BANK

INTRODUCTION

As a part of the MBA programme, I have undertaken Project Work i.e.an

Organizational Study of State Bank of Mysore, which I completed as per the requirements

of the organization as well as project rules.

This internship did enable me to understand the nuances of the service sector and

get an on-hand experience of application of theoretical knowledge. In fact it gave me a

look-through to gimmicks of the game and assured me of the fact that „Business is a

combo of Art, Science and Profession.

I did gain good amount of knowledge since I had an encounter with the assets of

the organization or rather Employees of the firm, its‟ culture, practices, departments,

so...On and so forth.

Walter Lipmann says “The ultimate test of a leader is found by the trail he leaves

behind and not by what he has achieved”. And therefore let me take you through further in

this report to show you what trail State Bank of Mysore has left by being a Leader in letter

and spirit.

The study is limited to the information drawn from the authorities of the

organization and its‟ respective website. The study is not proposed to be an expert study

since the time frame offered for the study was very short. However the scope of the study,

by and large is all inclusive though there could be areas which are not addressed to due to

the reason stated above already.

All in all it was an experiential learning that an MBA candidate is expected to

possess which was possible because of curriculum defined by the Bangalore University

and State Bank of Mysore. Rest assured I am now for this internship has cleared the veil in

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front of us to let us know how actually does a firm look like and functions, unlike what we

had read in the books.

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Chapter - 1

MEANING OF ORGANISATION

Organisation is the foundation upon which the whole structure of

management is built. Organisation is related with developing a frame work where the total

work is divided into manageable components in order to facilitate the achievement of

objectives or goals. Thus, organisation is the structure or mechanism (machinery) that

enables living things to work together. In a static sense, an organisation is a structure or

machinery manned by group of individuals who are working together towards a common

goal.

“Organisation is the process of identifying and grouping work to be

performed, defining and delegating responsibility and authority and establishing

relationship for the purpose of enabling people to wore most effectively together in

accomplishing objectives”.

Definition

Different authors have defined organisation in different ways. The main definitions

of organisation are as follows:

According to Keith Davis, "Organisation may be defined as a group of

individuals, large of small, that is cooperating under the direction of executive leadership

in accomplishment of certain common object."

According to Chester I. Barnard, "Organisation is a system of co-operative

activities of two or more persons."

According to Louis A. Allen, "Organisation is the process of identifying and

grouping the work to be performed, defining and delegating responsibility and authority,

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and establishing relationship for the purpose of enabling people to work most effectively

together in accomplishing objectives."

According to Mooney and Railey, "Organisation is the form of every human

association for the attainment of a common purpose."

IMPORTANCE OF ORGNISATIONAL STUDY

The effectiveness and efficiency of organization helps in providing the

continuity and success to the enterprise. There are many factors that explain the importance

and objectives of organisation and they are:-

1. Facilitates Administration: An efficient and sound organisation make easy for

the management to relate the flow of resource continually to the overall objectives. A

sound organisation helps in providing appropriate platform where management can

performs the functions of planning, direction, coordination, motivation and control.

2. Facilitates Growth and Diversification: A sound organisation helps in the

growth and diversification of activities. The growth is facilitated by clear division of work,

proper delegation of authority etc. In short, it helps in the organisational elaboration. In

case of reasonable expansion of organisation, the functional types get replaced by a more

flexible decentralized organisation.

3. Permits optimum use of Resources: The optimum use of technical and human

resources gets facilitated in sound and efficient organisation. The organisation can have

the facilities of latest technological developments and improvements. It also facilitates

optimum use of human resources through specialization. The people in the organisation

get appropriately trained and get promotion opportunities. A sound organisation provides

all the desired potential and strength to the company to meet the future challenges.

4. Stimulate Creativity: The specialization in the organisation helps individuals in

getting well defined duties, clear lines of authority and responsibility. It encourages the

creativity of the people. The sound organisational structure enables mangers to concentrate

on important issues where their talent can be exploited to the maximum.

5. Encourages Humanistic Approach: A sound organisation helps in adopting

efficient methods of selection, training, remuneration and promotion for employees. It

makes people work in a team and not like machines or robots. Organisation helps in

providing factors like job rotation, job enlargement and enrichment to its employees. A

sound organisation provides higher job satisfaction to its employees through proper

delegation and decentralization, favourable working environment and democratic and

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participative leadership. It enhances the mode of communication and interaction among

different levels of the management.

PRINCIPLES OF ORGANIZATION

The Principle of Objective

Principle of Specialization

The Scalar Principle

The Principle of Authority

The Principle of Unity of Command

OBJECTIVES OF THE STUDY

1. To study the organization

2. To study various departments such as:

a). Operations Management Department

b. Planning and Development Department

c). Commercial and Institutions Department

d). Treasury Department

e). Technology Department

f). Vigilance and Inspection Department

3. To study the day to day activities of the Bank

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INDUSTRY

PROFILE

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Chapter –2

Overview of Industry Profile

A Bank is a financial institution and a financial intermediary that accepts deposits

and channels those deposits into lending activities, either directly or through capital

markets. A bank connects customers that have capital deficits to customers with capital

surpluses.

Due to their critical status within the financial system and the economy] generally,

banks are highly regulated in most countries. Most banks operate under a system known as

fractional reserve banking where they hold only a small reserve of the funds deposited and

lend out the rest for profit. They are generally subject to minimum capital requirements

which are based on an international set of capital standards, known as the Basel Accords.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in

Siena, Italy, which has been operating continuously since 1472

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Banking Sector in India

Banking in India originated in the last decades of the 18th century. The first Banks

were The General Bank of India, which started in 1786, and Bank of Hindustan, which

started in 1790; both are now defunct. The oldest Bank in existence in India is the State

Bank of India, which originated in the Bank of Calcutta in June 1806, which almost

immediately became the Bank of Bengal. This was one of the three presidency Banks, the

other two being the Bank of Bombay and the Bank of Madras, all three of which were

established under charters from the British East India Company. For many years the

Presidency Banks acted as quasi-central Banks, as did their successors. The three Banks

merged in 1921 to form the Imperial Bank of India, which, upon India's independence,

became the State Bank of India.

History

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in

1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank,

established in 1865 and still functioning today, is the oldest Joint Stock Bank in India.

(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable

for the company's debt) It was not the first though. That honour belongs to the Bank of

Upper India, which was established in 1863, and which survived until 1913, when it

failed, with some of its assets and liabilities being transferred to the Alliance Bank of

Shimla.

When the American Civil War stopped the supply of cotton to Lancashire from the

Confederate States, promoters opened Banks to finance trading in Indian cotton. With

large exposure to speculative ventures, most of the Banks opened in India during that

period failed. The depositors lost money and lost interest in keeping deposits with Banks.

Subsequently, Banking in India remained the exclusive domain of Europeans for next

several decades until the beginning of the 20th century.

Foreign Banks too started to arrive, particularly in Calcutta, in the 1860s. The

Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in

Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed.

HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in

India, mainly due to the trade of the British Empire, and so became a Banking centre.

The first entirely Indian joint stock Bank was the Oudh Commercial Bank,

established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank,

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established in Lahore in 1895, which has survived to the present and is now one of the

largest Banks in India. Around the turn of the 20th Century, the Indian economy was

passing through

a relative period

of stability.

Around five

decades had

elapsed since

the Indian

Mutiny, and the

social,

industrial and other infrastructure had improved. Indians had established small Banks,

most of which served particular ethnic and religious communities.

The presidency Banks dominated Banking in India but there were also some

exchange Banks and a number of Indian joint stock Banks. All these Banks operated in

different segments of the economy. The exchange Banks, mostly owned by Europeans,

concentrated on financing foreign trade. Indian joint stock Banks were generally

undercapitalized and lacked the experience and maturity to compete with the presidency

and exchange Banks. This segmentation let Lord Curzon to observe

The period between 1906 and 1911, saw the establishment of Banks inspired by

the Swadeshi movement. The Swadeshi movement inspired local businessmen and

political figures to found Banks of and for the Indian community. A number of Banks

established then have survived to the present such as Bank of India, Corporation Bank,

Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

No. of Banks Failed & their Capitals

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Years Number of Banksthat failed

Authorised capital(Rs. Lakhs)

Paid-up Capital(Rs. Lakhs)

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1

9

Table 2.1: No. of Banks Failed and its capital

The fervour of Swadeshi movement lead to establishing of many private Banks in

Dakshina Kannada and Udupi district which were unified earlier and known by the name

South Canara ( South Kanara ) district. Four nationalised Banks started in this district and

also a leading private sector Bank. Hence undivided Dakshina Kannada district is known

as "Cradle of Indian Banking".

During the First World War (1914-1918) through the end of the Second World

War (1939-1945), and two years thereafter until the independence of India were

challenging for Indian Banking. The years of the First World War were turbulent, and it

took its toll with Banks simply collapsing despite the Indian economy gaining indirect

boost due to war-related economic activities.

At least 94 Banks in India failed between 1913 and 1918 as indicated in the

following table:

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

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:

The Reserve Bank of India, India's central Banking authority, was

nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to

Public Ownership) Act, 1948 (RBI, 2005b).

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 could be opened without a license from the RBI, and no two Banks could

have common directors.

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Nationalisation

Banks Nationalisation in India: Newspaper Clipping, Times of India, July, 20, 1969

Despite the provisions, control and regulations of Reserve Bank of India, Banks in

India except the State Bank of India or SBI, continued to be owned and operated by

private persons. By the 1960s, the Indian Banking industry had become an important tool

to facilitate the development of the Indian economy. At the same time, it had emerged as a

large employer, and a debate had ensued about the nationalization of the Banking industry.

Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of

India in the annual conference of the All India Congress Meeting in a paper entitled "Stray

thoughts on Bank Nationalisation." The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an

ordinance and nationalised 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 9 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 Government of India controlled

around 91% of the Banking business of India. Later on, in the year 1993, the government

merged New Bank of India with Punjab National Bank. It was the only merger between

nationalized Banks and resulted in the reduction of the number of nationalised Banks from

20 to 19. After this, until the 1990s, the nationalised 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 Narasimha Rao government embarked on a policy of

liberalization, licensing a small number of private Banks. These came to be known as New

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Generation tech-savvy Banks, and included Global Trust Bank (the first of such new

generation Banks to be set up), which later amalgamated with Oriental Bank of

Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move,

along with the rapid growth in the economy of India, revitalized 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 set up 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

74% 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.

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&A's, takeovers, and asset sales.

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.

In recent years critics have charged that the non-government owned Banks are too

aggressive in their loan recovery efforts in connection with housing, vehicle and personal

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loans. There are press reports that the Banks' loan recovery efforts have driven defaulting

borrowers to suicide.

Phase 1 (March 2005 to March 2009)1. Foreign banks were allowed to establish presence in India and were given an

option to operate through branch presence or set up a 100% Wholly Owned Subsidiary

(WOS).2. Foreign banks were allowed to open 12 branches a year (the limit was in line with World Trade

Organisation (WTO) commitment). Branch licensing procedure was kept same as applicable for

private banks. More liberal branch opening policy was adopted in under-banked areas.3. The

limit of 12 branches a year was raised to 20 branches for foreign banks in March2006.4.

Acquisition of shares in Indian banks by foreign banks was permitted for banks whichare

identified by RBI for restructuring.

Phase 2 (April 2009 onwards)1. Branch expansion: -After reviewing the experience of the first phase, RBI has proposed to

remove the restriction on branch expansion and limited excess to Indian market and treating them on

par with domestic banks to the extent appropriate.

2. Listing of foreign banks: -After completion of the proposed year of operation in India,

WOS of foreign banks will be allowed to list and dilute the stake in the manner that at

least of 26% of the paid-up capital remains with the resident Indian.

3. Mergers and acquisitions: -After a review is made with regard to the extent

of penetration of foreign investment in Indian banks and functioning of foreign banks,

foreign banks may be permitted, subject to regulatory approvals and such conditions as

may be prescribed, to enter into merger and acquisition transactions with any private

sector bank in India, subject to the overall investment limit of 74 per cent.

Adoption of Banking Technology

The IT revolution had a great impact in the Indian banking system. The use of

computers had led to introduction of online banking in India. The use of the modern

innovation and computerisation of the banking sector of India has increased many fold

after the economic liberalisation of 1991 as the country's banking sector has been exposed

to the world's market. The Indian banks were finding it difficult to compete with the

international banks in terms of the customer service without the use of the information

technology and computers.

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The RBI in 1984 formed Committee on Mechanisation in the Banking Industry

(1984) whose chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India.

The major recommendations of this committee were introducing MICR Technology in all

the banks in the metropolis in India .This provided use of standardized cheque forms and

encoders.

In 1988, the RBI set up Committee on Computerisation in Banks (1988) headed by

Dr. C.R. Rangarajan which emphasized that settlement operation must be computerized in

the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and

Thiruvananthapuram.It further stated that there should be National Clearing of inter-city

cheques at Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational.It also

focused on computerisation of branches and increasing connectivity among branches

through computers.It also suggested modalities for implementing on-line banking.The

committee submitted its reports in 1989 and computerisation began form 1993 with the

settlement between IBA and bank employees' association.

In 1994, Committee on Technology Issues relating to Payments System, Cheque

Clearing and Securities Settlement in the Banking Industry (1994) was set up with

chairman Shri WS Saraf, Executive Director, Reserve Bank of India. It emphasized on

Electronic Funds Transfer (EFT) system, with the BANKNET communications network

as its carrier. It also said that MICR clearing should be set up in all branches of all banks

with more than 100 branches. Committee for proposing Legislation On Electronic Funds Transfer and other

Electronic Payments (1995) emphasized on EFT system. Electronic banking refers to

DOING BANKING by using technologies like computers, internet and networking,

MICR, EFT so as to increase efficiency, quick service, productivity and transparency in

the transaction.

Apart from the above mentioned innovations the banks have been selling the

third party products like Mutual Funds, insurances to its clients. Total numbers of ATMs

installed in India by various banks as on end March 2005 is 17,642).The New Private

Sector Banks in India is having the largest numbers of ATMs which is fol off site ATM is

highest for the SBI and its subsidiaries and then it is followed by New Private Banks,

Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks

of India.

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The below graphical representation shows Number of branches in India

Figure 2:1 No. Branches in India

.

History of other banks in India (includes Nationalised Banks, Private Banks and Foreign Banks)

No. Year Period Characterized by

1 1840 to 1947 Pre Independence Small size, less regulated and bank failures

2 1947 to 1969 Post Independence to Nationalisation

Slower growth, private sector dominance and start of regulation

3 1969 to1991 Nationalisation to Liberalisation

Nationalised of banks by government, high regulation, secular growth in business and expansion & rising inefficiencies

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4 1991 to 2010 Liberalisation to current date

De-regulation, entry of private and foreign banks and technological advancement

Table 2:2 History of Banks in India

Arguments of government for nationalisation were as follows:

Before the nationalisation, the privately-owned banks were operating on thecriteria of profit

maximisation and lesser emphasis was placed on the development of ruralareas. Credit and

deposits base was confined to large corporates and wealthy depositors.The nationalised

banking set-up would vigorously pursue expansion progrmmes tocover rural areas, smaller

towns and lower income groups.To pay special attention to inter-sectoral balances and

balanced regionaldevelopment.To take away the stranglehold of the few industrial houses

on credit and reducetheir control over the community's resources. Ensure stability in the

functioning of thecredit institutions and inspire more confidence among the

depositors.Encourage healthy competition between large and small industrial houses.

Insummary, the following are the steps taken by the Government of India to regulate

thebanking institutions in the country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of SBI.

1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalization of seven banks with deposits over Rs.200 crores.

These are the list of banking currently operating in India:

State Bank of MysoreState Bank of Bikaner and JaipurState Bank of Hyderabad State Bank of PatialaState Bank of TravancoreState Bank of IndoreNationalised BanksAllahabad Bank

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Indian Bank Andhra Bank Indian Overseas Bank Bank of Baroda Oriental Bank of CommerceBank of India Punjab National Bank Bank of Maharashtra Punjab & Sind Bank Canara Bank Syndicate Bank Central Bank of India Union Bank of IndiaCorporation Bank United Bank of IndiaDena Bank 19. UCO Bank IDBI Bank Ltd. Vijaya Bank Private Sector BanksAxis Bank Jammu & Kashmir BanBank Of Rajasthan Karnataka Bank Catholic Syrian Bank Karur Vysya Bank City Union Bank Kotak Mahindra Bank Development Credit Bank Lakshmi Vilas Bank Dhanalakshmi Bank Nainital Bank Federal Bank Ratnakar Bank HDFC Bank Bank SBI Commercial & InternationaICICI Bank South Indian Bank South Indian Bank IndusInd Bank Tamilnad MercantileBank Tamilnad Mercantile Bank ING Vysya Bank Yes Bank

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Yes Bank

Foreign BanksABN AMRO Bank DBS Bank 2.Abu Dhabi Commercial Bank Deutsche Bank Antwerp Diamond Bank HSBCArab Bangladesh Bank JP Morgan Chase Bank Bank Of America Krung Thai Bank Bank Of Bahrain & Kuwait Mashreq BankBank Of Ceylon Mizuho Corporate Bank Bank Of Nova Scotia Oman International Bank Bank Of Tokyo-Mitsubishi- UFIShinhan Bank Barclays Bank Societe GeneraleBNP Paribas Sonali Bank Calyon Bank Standard Chartered Bank Chinatrust Commercial Bank State Bank of Mauri

Objectives of the Study

1) To know the organisational structure of the SBM

2) To have the practical exposure to Organisational function as compared to

theoretical concepts

3) To know the product and service offered by SBM at Kaval Byrasandra

branch, Bangalore

4) To know its growth strategy and potential

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5) To study the strength, weakness, opportunities and threats of the organisation

to carry out swot analysis.

Profile of State Bank of

Mysore

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Chapter -3

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State Bank of Mysore

State Bank of Mysore was established on 2nd October 1913 as “Bank of Mysore

Ltd”. under the royal patronage of the Maharaja of Mysore, erstwhile Govt. of Mysore, on

the recommendations of the Banking Committee headed by the great Engineer-

Statesman,Bhara Late Dr. Sir M.Vishweswaraiah . Subsequently, in March 1960, the Bank

became an Associate of State Bank of India. State Bank of India holds 92.33% of shares.

The Bank's shares are listed in Bangalore, Chennai, and Mumbai stock exchanges.

As an associate Bank, State Bank of Mysore has a team of employees with a

management. This Bank has 737 branches (as on 31.03.2012) and 10249 employees. The

Bank has regional officesin, Bengaluru, Mysore, Mangalore, Mandya, Hassan, Shimoga,

Devanagari, Bellary, Tumkur, Kolar, Chennai, Coimbatore, Hyderabad, Mumbai and New

Delhi.

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About State Bank of Myore

Date of Establishment 1913

Revenue ( USD in Millions )

Market Cap 21775.942287 ( Rs. in Millions )

Corporate Address KG Road,PBNo 9727,Bengaluru-560009, Karnataka (www.statebankofmysore.co.in)

Business Operation Bank – Public

Background State Bank of Mysore was established in 1913 as Bank of Mysore under the patronage of the erstwhile government of Mysore, at the instance of the banking committee headed by the great Engineer-Statesman, Late Dr Sir M Visvesvaraya. Subsequently, in March 1960, the bank became an Associate of State Bank of India. State Bank of India holds 92.33% of shares. The bank's shares are listed in Bangalore, Chen

FinancialsTotal Income - Rs. 55948.247 Million ( year ending Mar 2012) Net Profit - Rs. Million ( year ending Mar 2012)

Company Secretary G Soundarajan

Bankers Auditors HS Ahuja & Co, Dhawan & Co, LK Kejrswal & Co, SK Basu & Co, PKKG Balasubramaniam & Associates, Bhasin Raghavan & Co, BL Ajmera & Co, MKPS & Associates, SK Basu & Co, Maharaj N R Suresh & Co

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Management Committee of the Bank

Managing DirectorMr. Sharad Sharma

+91 80 22251855+91 80 22353480 Fax 080 22254753

Chief General ManagerMs.Hamsini Menon

+91 80 22251570Fax 080 22350563

Chief General Manager Mr.KalyanMukherjee

General Manager (Operations) & Corporate Development Officer

Mr Bibhupada Nanda+91 80 22353487Fax 080 22353478

General Manager &Group Executive (Agriculture & MSME)

Mr K Lakshmisha+91 80 22257149

Fax 080 22353494

General Manager & Group Executive(Corporate Banking)

Mr.SaswataChaudhuri+91 80 22353471Fax 080 22355978

General Manager (Treasury and Finance & Accounts) & Group Executive(Government Business)

Sri Viswanathan V+91 80 22257149Fax 080 22353494

General Manager (Technology &Risk Management) & Group Executive (Personal Banking)

MrV Pattabhiraman+91 80 22352591Fax 080 22356472

General Manager – Risk Management and Credit Policy and Procedures

Mr ParthasarathyN

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General Manager & Chief Vigilance Officer

Mr Vijay Dube

 +91 80 22255617Fax 080 22350562

State Bank of Mysore Organizational Structure

Figure 3:1 Sbm Organization Structure

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VISION:

“Working for better tomorrow”

MISSION

A premier commercial Bank in Karnataka, with all India presence, committed to

provide consistently superior and personalised customer service backed by employee pride

and will to excel, earn progressively high returns for its shareholders and be a responsible

corporate citizen contributing to the well being of the society.

POLICIES & PROCEDURES

State Bank of Mysore: - FUNCTIONS AND DUTIES

Power and duties of its officers and employees- All the officers have certain

financial powers and administrative powers depending upon their positions. The delegation

of financial powers of various grades of officials is decided by the Central Board which is

revised from time to time, depending upon the organization’s requirement and also

Government / RBI guidelines. The concerned sanctioning authority takes a decision to

sanction a loan or otherwise on merits of each proposal.

The procedure followed in the decision making process, including channels of

supervision and accountability-There is a well defined system in the Bank regarding the

decision making process. Financial decisions are taken at various levels by different

officials depending upon their positions and also through committee approach. Centralized

credit processing cells are being formed at certain centres for sanction of personal segment

loans and other loans. Branches will source the applications and forward them to the

respective credit processing cells, for their consideration. Further, there is a well defined

organisational structure and a clear system of accountability and control system, which also

take into account the RBI / CVC guidelines.

The norms set for discharge of its function

 The Bank functions with the following core values / norms

Excellence in customer service

Profit orientation

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Fairness in all dealing and relations

Risk taking and innovation

Integrity

Transparency and discipline in policies and systems

Regarding the core functions of the Bank i.e. accepting deposits and sanction of

loans, the interest rates for deposits / advances and different deposit as well as loan

products, are displayed in the Bank’s website and also made available at all the Branches.

Regarding sanction of loans, each officer of the Bank will consider loan proposals

and take a decision in terms of the scheme of delegation of powers, on the merits of the

proposals. All the officers of the Bank are expected to discharge their duties and

responsibilities with integrity and due diligence. Public can also refer to the captions

''Interest rates', 'code of ethics' & 'citizens charter' of the Bank's website for any

further information.

The rules and regulations, instructions, manuals and records held by the

Bank/ used by its employees for discharging its functions.

There are quite a number of documents like manuals, book of instructions, codified

circulars, scheme of delegation of powers, proceedings of the board etc and also the

periodical circulars used by the employees for discharging various functions.

A statement of the categories of documents that are held by the Bank or under

its control.

These are mainly register of Shareholders/Record of the proceedings of the AGMs,

Board Meetings and various Committee meetings, documents executed by

customers/borrowers/guarantors, contracts with third parties etc.

The particulars of any arrangement that exists for consultation with, or

representation by, the members of the public in relation to the formulation of its

policy or implementation thereof in SBM.

As per the present arrangement, the Shareholders can raise issues concerning

policies and in the Annual General Meetings which can relate to the policy of the Bank.

Further, the Banks quarterly results and annual results / reports are published in the

Bank’s website periodically for information of public as well as shareholders which would

give an idea about the policies of the Bank and implementation thereof.

Canara Bank School of Management26

Further, the Central Board the apex management body of the Bank is constituted

with members who are leaders from different interest groups and professions such as

Industrialists, Bankers from Apex Institutions, Chartered Accountants, Economists and

Workmen representatives. Public can also refer to the captions financial results /

consolidated financial statement / annual report / shareholders information of the

Bank's website, for further information.

Bank has appointed various committees for different purposes. Following are some of the

important Committees managing the key affairs of the Bank

a)Risk Management Committee

b)Credit Risk Management committee

c)Asset Liability Management committee

d)Operational Risk Management committee

e)Audit Committee

f)Central Management Committee

g) Central as well as Local Boards

Public are not entitled to participate on the above committee meetings and minutes

are not accessible to public. Public can also refer to the caption Annual report for various

committees more particularly the "corporate governance" link under the Annual report for

more information about the committees.

Achievements

1913 - The Bank was established as 'Bank of Mysore Ltd.', on the 19th May, &

commenced its business on the 2nd October 1913, under the patronage of His Highness

the Maharaja of Mysore, with an authorised capital of Rs.20.00 Lakhs.

1953 - During the year, the Bank was appointed as an Agent of Reserve Bank of

India to conduct Government business & treasury operations.

1959 - With effect from the 10th September, the Bank was constituted as State

Bank of Mysore as a Subsidiary of State Bank of India, under State Bank of India

[Subsidiary Banks] Act, 1959 enacted through an Act of Parliament, [Act No. 38 of

1959s].

- The Bank has formulated schemes for [1] financing coffee planters/coffee traders

against coffee curer’s certificate, [2] financing coffee traders, [3] coffee exporters & [4]

coffee curers who also engage in trading.

Canara Bank School of Management27

- State Bank of Mysore has various deposit schemes to cater to the requirements of

its customers.

- The Bank has also actively participated in all Government sponsored schemes

and contributed its share of financial assistance or the economically weaker sections

through DIR, IRDP, Prime Minister Rojgar Yojna & SUME schemes.

- The Bank has sponsored two Regional Rural Banks, Cauvery Grameena Bank &

Kalpatharu Grameena Bank which have between them 202 branches for growth of

agriculture & rural industries.

- The Bank, as part of State Bank Group has been engaged in financing 551 since

1960 & introduced the concept of need based rather than security oriented finance & the

Entrepreneur scheme under which technically qualified persons were financed the entire

requirement up to Rs.2 Lakhs.

- The Bank has 3 specialised SSI branches to assist the SSI units & proposes to

establish 3 more such 551 branches shortly.

- The Bank has correspondent & agency arrangements all over the world & offers

spot services in 18 major approved currencies.

- The Bank computerised dealing room is equipped with state-of-the-art

information net-work for excellent services to the Bank customers.

- The Bank also proposed to open 21 NRI service centres to specially cater to the

requirements of NRI customers.

- State Bank of Mysore handles a significant part of day-to-day Banking business

of both the Central & State Governments in the State of Karnataka & is a Banker to

various Public Sector Undertakings in various sectors of Economy.

- The Bank has been actively participating in welfare Banking needs of public

through its community services.

- The Bank has set up social circles, a voluntary group of employees to conduct the

community service activities, at various centres.

- The Bank is the proud recipient of Rolling Trophy from the Red Cross Society of

Karnataka for 17 years in succession, till date, for having mobilised the maximum number

of blood donors each year, among Banking Institutions.

- The Bank has installed a Main Frame Computer in its Head Office which

provides a useful information system to the Management & mini computers at the Zonal

Offices.

Canara Bank School of Management28

- The Bank is a member of society for worldwide Inter Bank Financial

Telecommunication [SWIFTs] which was established to offer cost effective & fast

transmission of financial messages globally, 2 branches of Bank are presently covered

under the scheme and an additional 15 branches are proposed to be covered under SWIFT

shortly.

1992 - The State Government has also taken up vigorously 'ASHRAYA', a new

housing scheme for weaker sections & 'VISHWA', a new rural & cottage industry scheme.

A new programme called 'AKSHAYA' has also been launched to help the children in

primary education. The Konkan Railway Project & the New Mangalore Port Project are

also progressing satisfactorily.

- The Bank has also been assisting Small Scale industries by offering technology &

financial consultancy services to the units in its books, so as to enable them to overcome

the problems of technological obsolescence, marketing, management etc.

- The Bank has been given a special annual award by Karnataka Unit of Indian Red

Cross Society for fourteenth time for having held the most number of voluntary blood

donation camps.

1994 - Several important measures have been introduced in the busy season credit

policy of November 1993 & slack season credit policy of May 1994, announced by

Reserve Bank of India.

- The Bank extended rehabilitation finance to 54 such units during the year under

review.

- The Bank STREE SAKTHI PACKAGE designed exclusively for women

continued to be implemented with full vigour.

- The Bank also proposes to introduce Automated Teller Machines [ATMs] and

Electronic Funds Transfer facility during the next year as a measure of offering state of art

Banking services to its customers.

2000 - Mr. M. Sitarama Murty has been appointed as Managing Director, of Bank.

- Crisil has reaffirmed the A+ & P1+ ratings assigned to the bond issue & the CD

programme of Bank.

2001 - State Bank of Mysore has opened a foreign exchange cell at its

hierarchically Industrial estate branch in Tumkur district to enable small-scale

industrialists to manage their foreign exchange transactions.

- The Bank has closed its issue of unsecured non-convertible debentures after

raising the target of Rs 60 crore.

Canara Bank School of Management29

2002 - Enters the market with a coupon of 6.4% per annum for its Tier-II capital

bonds issue of Rs.60cr on a private placement basis.

- Slashes interest rate on domestic term deposits & on NRE deposits by 25-50 basis

points.

2003 - Considers new method of appraisal for lending to the agricultural sector

more on the lines of industrial credit given to trade & commerce.

- Declared a dividend of 40% on equity capital for year ended.

- Ties up with HMT Ltd & launches SBM-HMT Agri Farm Scheme, to promote

agricultural mechanisation in south India.

- Maruti Udyog forges alliances with SBM to offer car finance.

- Slashes floating home loan rates & the new loan is as follows: maturities up to 5

five years, the rates would be 8 per cent, for maturities up to 10 years, the rates would be

8.75 per cent on a floating rate basis & for above 10 years, 9.25 per cent. The fixed rate

housing loans remained unchanged. Farm lending rate up to Rs 50,000 was lowered to 9

per cent

- Inaugurated two branches in Hyderabad.

2004 - SBM joins hands with LTJD for tractor financing

- State Bank of Mysore has informed that Shri M. Sitarama Murty, Managing

Director of Bank retired from the services on December 31, 2003 on attaining super-

annuation

- Mr. Vijayanand assumes charges as Managing Director of Bank from 01/03/2004

-State Bank of Mysore has joined the Real Time Gross Settlement Systems

[RTGSs] network that facilitates inter-Bank funds settlement on 22 July

2005 - SBM unveils new single window system

2006 - Mr P.P. Pattanayak has assumed charge as Managing Director of State Bank

of Mysore. Mr Pattanayak was earlier Deputy Managing Director [DMDs] & Chief Credit

Officer of State Bank of India, Mumbai.

2009 - The Comp. has splits its face value from Rs100/- to Rs10/-.

The State Bank of Mysore has a dedicated workforce of 9926 employees

consisting of 3179 supervisory staff, 6747 non-supervisory staff (as on 31 March 2011).

The skill and competence of the employees have been kept updated to meet the

requirements of customers keeping in view the changes in the Banking environment.

Canara Bank School of Management30

State Bank of India is the nation's largest and oldest Bank. Tracing its roots back

some 200 years to the British East India Company (and initially established as the Bank of

Calcutta in 1806), the Bank operates more than 15,000 branches within India, where it also

owns majority stakes in six associate Banks. State Bank of India (SBI) has more than 80

offices in nearly 35 other countries, including multiple locations in the US, Canada, and

Nigeria. The Bank has other units devoted to capital markets, fund management, factoring

and commercial services, credit cards, and brokerage services. The Reserve Bank of India

owns about 60% of State Bank of India. The roots of the State Bank of India rest in the

first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal,

was established on 2 June 1806. The Bank of Bengal and two other Presidency Banks,

namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras

(incorporated on 1 July 1843). All three Presidency Banks were incorporated as joint stock

companies, and were the result of the royal charters. These three Banks received the

exclusive right to issue paper currency in 1861 with the Paper Currency Act, a right they

retained until the formation of the reserve Bank of India. The Presidency Banks

amalgamated on 27 January 1921, and the reorganized Banking entity took as its name

Imperial Bank of India. The Imperial Bank of India continued to remain a joint stock

company.

Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank

of India, which is India’s central Bank, acquired a controlling interest in the Imperial Bank

of India. On 30 April 1955 the Imperial Bank of India became the State Bank of India. The

Govt. of India recently acquired the Reserve Bank of India’s stake in SBI so as to remove

any conflict of interest because the RBI is the country’s Banking regulatory authority. In

1959 the Government passed the State Bank of India (Subsidiary Banks) Act, enabling the

State Bank of India to take over eight former State-associated Banks as its subsidiaries. On

Sept 13, 2008, State Bank of Saurashtra, one of its Associate Banks, merged with State

Bank of India.

SBI has acquired local Banks in rescues. For instance, in 1985, it acquired Bank of

Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, State Bank

of Travancore, already had an extensive network in Kerala.SBI provides a range of

Banking products through its vast network in India and overseas, including products aimed

at NRIs. The State Bank Group, with over 16000 branches, has the largest branch network

in India. With an asset base of $250 billion and $195 billion in deposits, it is a regional

Banking behemoth. It has a market share among Indian commercial Banks of about 20%

Canara Bank School of Management31

in deposits and advances, and SBI accounts for almost one-fifth of the nation’s loans. SBI

has tried to reduce its over-staffing through computerizing operations and Golden

handshake schemes that led to a flight of its best and brightest managers. These managers

took the retirement allowances and then went on the becoming senior managers at new

private sector Banks.

The State Bank of India is 29th most reputable company in the world

according to Forbes.

Associate Banks:-The Subsidiaries of SBI till date

*State Bank of Indore

*State Bank of Bikaner & Jaipur

*State Bank of Mysore

*State Bank of Hyderabad

*State Bank of Patiala

* State Bank of Travancore

Company pictures

State Bank of Mysore

Canara Bank School of Management32

Canara Bank School of Management33

PRODUCTS/SERVICES OFFERED

State Bank of Mysore offers its products and services in domains like

Personal Banking.

NRI Services.

Agriculture.

International.

Corporate.

Canara Bank School of Management34

SME.

Domestic Treasury.

Canara Bank School of Management35

1. Safe Deposit Lockers2.

RATES OF INTEREST WITH EFFECT FROM 4th May   2012.

PERIOD RATE OF INTEREST (%)

Canara Bank School of Management36

Up to Rs.15 lacs Above Rs.15. lacs

7 Days to 14 days ------ 8.50

15 days to 45 days 6.25 8.50

46 days to 90  days 6.50 8.50

91 days to 179 days 8.00 8.50

180 days to 299 days 8.50 8.50

300 days 8.50 8.50

301 days to less than 1 year 8.50 8.50

1 year to less than 500 days 9.25 9.25

500 days 9.25 9.25

501 days to less than 2 years 9.25 9.25

2 years to less than 909 days 9.25 9.25

909 days 9.25 9.25

910 days to less than 3 years 9.25 9.25

3 years to less than 5 years 9.25 9.25

5 years and above 9.25 9.25

Table 3:1 Interest Rate

Interest Rates on Personal Segment Advances 

Canara Bank School of Management37

Housing Loans (w.e.f. 01.11.2011)

NAME OF THE SCHEME

Rate Of Interest

(Base Rate 10.50%p.a)

  11Upto Rs 25 Lacs

HOUSING LOAN Upto 20 Years BR+0.75 .25%

  Above 20 to inclusive of 25 years

BR+1.00 11.50%

Above Rs 25 lacs upto Rs 30 Lacs

Upto 20 Years BR+0.75 11.25%

Above 20 to inclusive of 25 years

BR+1.00 11.50%

Above Rs 30 lacs upto Rs 75 Lacs

Upto 20 Years BR+1.00 11.50%

Above 20 to inclusive of 25 years

BR+1.25 11.75%

Above Rs 75 Lacs

Upto 20 Years BR+1.50 12.00%

Above 20 to inclusive of 25 years

BR+1.75 12..25%

HOUSING LOANS- (Fixed Interest Rate) 

NO FIXED INTEREST RATES

CAR LOANS - FESTIVE OFFER TILL 31.12.2011

Upto and inclusive of 5 years

BR+1.75 12.25%

Above 5 years BR+2.00 12.50%

Canara Bank School of Management38

ADVANTAGE CAR LOANS - FESTIVE OFFER TILL 31.12.2011

Upto and inclusive of 5 years

BR+1.75 12.25%

Above 5 years BR+2.00 12.50%

CAR FLEXUpto and inclusive of 7 years

BR+3.00 13.50%

USED CAR LOAN

Upto and inclusive of 3 years

BR+6.50 17.00%

Above 3 years upto inclusive 5 years

BR+7.2517.75%

TWO WHEELER Upto 5 years BR+6.50 17.00%

EDUCATION LOANS(Fixed rate)*

No fixed rates w.e.f. 01.06.2011

EDUCATION LOANS (Floating)* (*0.50% CONCESSION FOR GIRL STUDENTS)For sanctions made from 01.12.2011

Upto 4.00 Lacs BR+3.50 14.00%

4.00 to 7.50 Lacs BR+4.00 14.50%

Above 7.50 Lacs BR+2.0012.50%

MYBANK SCHOLAR TERM LOAN BR+2.50 13.00%

UDYOGI GNANAMITRA TERM LOAN BR+4.00 14.50%

ALL PURPOSE MORTGAGE LOAN

Overdraft BR+5.75 16.25%

Term Loan BR+5.25 15.75%

MYBANK HOME CASH

Overdraft BR+5.75 16.25%

Term Loan BR+5.25 15.75%

PERSONAL LOAN With Check off BR+7.25 17.75%

XPRESS CREDIT With Check off BR+4.75 15.25%

With partial check off

BR+5.25 15.75%

Canara Bank School of Management39

No Check off BR+6.75 17.25%

MYBANK ARAKSHAK   BR+6.00 16.50%

MYBANK ADHAYAPAK   BR+6.00 16.50%

MYBANK UTSAV   BR+6.50 17.00%

BDA SITES-Payment of Initial Deposit

  BR+5.2515.75%

MYBANK SAMACHAR

With check-off facility

BR+5.2515.75%

Without check-off facility

BR+5.7516.25%

SANJEEVINI

With check-off facility

BR+5.5016.00%

Without check-off facility

BR+5.7516.25%

GOLD LOAN

Upto Rs.1.00 lac BR+4.00 14.50%

Above Rs.1.00 lac BR+4.50 15.00%

Loan against NSC/RBI Relief Bonds/KVPS/

Demand Loan BR+4.2514.75%

IVPS/Surrender value of SBI Life Policy/SBI Magnum/ Surrender value of LIC policy

Overdraft BR+4.25

14.75%

HELPAGE   BR+4.50 15.00%

LOANS AGAINST SHARES   BR+7.50 18.00%

ADVANCES AGAINST SECURITIES OF UNITS OF UTI

  BR+7.5018.00%

CONSUMER DURABLES Upto 3 years BR+7.25 17.75%

VARSHAVAHINI Upto 5 years BR+1.50 12.00%

Canara Bank School of Management40

HBL-CRE HOUSING LOANS Upto Rs 30 Lacs

  Upto 20 Years BR+1.75 12.25%

Above 20 to inclusive of 25 years

BR+2.00

12.50%

Above Rs 30 lacs upto Rs 75 Lacs

Upto 20 Years BR+2.00 12.50%

Above 20 to inclusive of 25 years

BR+2.25

12.75%

Above Rs 75 Lacs

Upto 20 Years BR+2.50 13.00%

Above 20 to inclusive of 25 years

BR+2.75

13.25%

HOUSING LOAN - Upto Rs 30 Lacs

AGRICULTURISTS Upto 20 Years BR+1.25 11.75%

Above 20 to inclusive of 25 years

BR+1.50

12.00%

  Above Rs 30 lacs upto Rs 75 Lacs

  Upto 20 Years BR+1.50 12.00%

Above 20 to inclusive of 25 years

BR+1.75

12.25%

Above Rs 75 Lacs

Upto 20 Years BR+2.00 12.50%

Above 20 to BR+2.25 12.75%

Canara Bank School of Management41

inclusive of 25 years

HBL- INT SUBSIDY SCHEME-ISHUP

5-15 Years BR+1.75 12.25%

15-20 Years BR+2.00 12.50%

CLEAN OVERDRAFTS   BR+7.25 17.75%

REVERSE MORTGAGE LOAN (overdraft) Fixed Rate Public

 11.25%

Table 3:2 Interest rates on personal loans

NRE Term / Reinvestment Deposit account

PeriodRevised Rate of Interest w.e.f. 06.07.2012

1 Year & above but less than 2 years 9.25

2 Years & above but les than 3 years 9.25

3 Years & above but less than 5 years 9.25

5 Years & above but up to 10 years 9.25

Table 3:3 NRE Reinvestment Deposit account

i)  The revised rates are applicable to fresh deposits and on renewal of maturing deposits.ii)  In case of premature withdrawal:

1. No interest is payable if the deposit is withdrawn before one year2. In other cases of premature withdrawal, the interest paid shall be 1.00% below the rate

applicable for the period the deposit has remained with the Bank or 1.00% below the contracted rate, whichever is less.

PERIODRATE OF INTEREST ( % p.a. )

USD GBP EUR CAD AUD

1 Year & above but less than 2 Years 3.05 3.49   2.90 4.05 6.55

Canara Bank School of Management42

2 Years & above but less than 3 Years

2.42 2.80 2.60 3.36 5.22

3 years & above but less than 4 Years 3.48 3.82 3.70 4.45 6.28

4 Years & above but less than 5 Years

3.63 3.92 3.86 4.54 6.47

5 Years Only 3.79 4.06 4.05 4.64 6.55

Table 3:4 Rate of Interest to NRE

Interest Rates on RFC deposits with effect from 01.08.2012

TYPE/ PERIOD OF DEPOSIT RATE OF INTEREST (% p.a.)

USD GBP EURO

Current Account No Interest

Savings Bank Account 0.75 2.50 1.25

Term Deposits  

3 months and above less than 6 months 1.69 1.99 1.51

6 months and above less than 1 year 1.98 2.26 1.82

1year & above but less than 2 years 3.05 3.49 2.90

2 years & above but less than 3 years 2.42 2.80 2.60

3 years & above but less than 4 years 3.48 3.82 3.70

4 years & above but less than 5 years 3.63 3.92 3.86

5 years only 3.79 4.06 4.05

Table 3:5 RFC Deposit

Canara Bank School of Management43

DEPARTMENTS

Canara Bank School of Management44

Chapter -4

Functional Departments

1. Operations Management Department

-Manpower Profile

-Training

-Industry Relations

2. Planning and Development Department

-Marketing

-Public Relations

-Organisational Development

3. Finance Department

-Business Growth

-Key performance

-Business review

4. Commercial and Institutions Department

-Assets Management & Recovery

-Credits

-Risk Management

5. Treasury Department

-Mid Corporate

-Corporate governance

-International Banking

-Finance and Accounts

6. Technology Department

-IT Service

- Management Information System

-Software Maintenance and Development

-Network management Cell

-Integrated Risk Management

-Business Process Re-Engineering

7. Vigilance and Inspection Department

-Credit Audit

-Vigilanc

Canara Bank School of Management45

4.1 Operations Management Department

Operations Department is headed by General Manager. Basically it takes care of

the Human Resources needed for them.

They are divided into three major groups

1. Manpower Profile

2. Training

3. Industrial Relations

3.1 (a) Manpower Profile:

Staff Strength: 1 Staff Strength: The total strength of the Bank as at the end of

March 2012 stood as 10249 as against 9926 as at the end of March 2011. The staff

strength comprised of 3187 officers, 4914 clerical staff and 2148 subordinate staff.

Of these, 814 are Ex-defence personnel, 161 belong to physically handicapped category

and 599 belong to Minority community.

Women’s Representation: : As at the end of March 2012, there were 2821 Women

employees (comprising of 382 Officers and 2439 Other Employees) ..

Scheduled Caste/ Scheduled Tribes-representation: Representation: As at the end

of March 2012, there were 1983 Scheduled Castes employees comprising of 588

Officers, 764 Clerical Staff and 631 Subordinate staff. There were 628 Scheduled

Tribe employees comprising of 250 Officers, 239 Clerical staff and 139 Subordinate

staff as at the end of March 2012. All the guidelines of the Government of India for

safeguarding the interests of SC/ST employees have been complied with.

Human Resources Management Solution: Bank has implemented Human

Resource Management Solution (HRMS) to handle all HR activities. Mechanization of

HR activities has resulted in substantial reduction of man power for HR activities and also

helped in uniform HR policy across the Bank. HRMS cell was formed to integrate salary,

perquisites, and reimbursements and leave details of the employees. The Cell commenced

payment of centralized salary. Additional module of annual reimbursement of medical

expenses and furniture maintenance charges were introduced. The Cell is in the process of

covering the remaining modules such as other items of staff expenses and leave module

also, shortly.

Canara Bank School of Management46

4.1.(b) Training:

Training Activities and Coverage: To make progress in this competitive environment, it

is imperative for the Bank to hone the skills of its employees by imparting training to

improve their knowledge as well as soft skills. Further, it is necessary to establish a

high-performance work culture, both in the operational and administrative areas. Towards

this end, Bank`s learning centers at Bangalore and Mysore are conducting training

programmes on various topics viz., credit appraisal (both basic and advanced),

communication skills, Marketing, Behavioural Science, Personal Segment & MSME

product awareness Etc. Several programmes, aimed at keeping the employees updated on

the Latest technology developments like internet banking, mobile banking and Other

alternate delivery channels were also conducted. All the programmes are designed,

keeping the customer-needs in mind. Bank has a focused approach to training and

intends to subject each employee to one or two trainings within a span of 2 years.

Learning Centers at Bangalore and Mysore have conducted 181 training / workshops.

During the year, a total of 5250 members of staff got trained at our Learning Centers. Based

on the job-role being played by the officers, bank is regularly deputing them for training

to Apex training institutes of SBI and others like NIBM, IIBF, RBI`s College of Agri.

Banking etc. to update their knowledge with latest developments in the area of Banking.

During the year 608 officials were deputed to the Apex Training Institutes of SBI and

other premier training institutions. Bank also conducted an exclusive work-shop for the

Regional Heads of the Bank with the assistance of faculty from State Bank Staff

College, Hyderabad. Training schedules were drawn up for imparting training to the

Probationary Officers and newly recruited clerical staff and both were carried out

smoothly.

Pre- Recruitment Training: Pre-examination trainings for candidates belonging to

SC/ST/Minority communities and appearing for Probationary Officers/Clerical

recruitment examination for selection to Associate Banks of SBI were conducted during

the year at the Learning Centers, Bangalore & Mysore. Faculty guided the participants in

their preparation for the written examination and also provided them with the reading

material.

Pre-promotional Training : programmes for SC/ST/Minority Community employees were

also conducted at the Learning Center, Bangalore during the year. These trained

candidates appeared for written examination for promotions from subordinate cadre to

Canara Bank School of Management47

clerical cadre, from clerical cadre to officer’s cadre and within officers` cadre, from JMGS

I to MMGS II.

Training to CKGB Staff: Our Mysore Learning Centre had conducted training

programmes for officers & staff of Cauvery Kalapatru Grameen Bank (sponsored by

SBM). In the current year, 9 training programmes for CKGB employees were conducted

covering 236 employees. The Center also imparted pre-recruitment training to candidates

belonging to SC/ST/Minority/ Ex-Servicemen who applied for officer’s posts and Office

Assistant posts in CKGB.

Special Training to retiring officers/staff: To enable our retiring officers & staff to lead

a happy, healthy and peaceful retired life, our Learning Centre, Mysore conducted 7

special training programmes for retiring employees, with inputs on financial planning,

health tips, yoga and relaxation techniques, during the year 2011-12 covering 246

employees.

3.1.(c) Industrial Relation : Terminal Benefits to Retired Staff: The Bank gives due

importance to the settlement of terminal benefits well in time to the Staff on their

termination from service of the Bank either on superannuation or on other grounds.

During the current year 2011-2012 as many as 438 staff members retired from the

services of the Bank. Pension and Commutation benefits wherever applicable have also

been settled on top priority.

Staff Welfare Activities:The major welfare measures extended to the members of the

staff include Holiday Homes, Group Insurance Cover, Scholarship Scheme, Farewell

Scheme for the retiring employees, Financial Assistance to the employees with

physically handicapped/mentally challenged children, Medical Expenses

Reimbursement Scheme etc,. During the year, Mysore and Goa Holiday Homes were

shifted to new hotels.

Defined Contributory Benefit Scheme: Employees joining the services of the Bank after

01st April, 2010 are eligible under the Defined Contributory Pension Scheme - which

will be governed by the provisions of New Pension Scheme introduced for employees of

Central Government with effect from 01.01.2004 and as modified from time to time. As at

the end of March, 2012 as many as 1156 are covered under "Defined Contributory Benefit

Scheme".

The Banks relationship with its employees remained harmonious and cordial

throughout the year.

Canara Bank School of Management48

4.2 Product and Development Planning

The product and development planning department mainly helps in increasing the

products and number of new branches.

4.2.(a) Marketing Initiatives

For sustainable growth marketing of Bank`s products and services on an ongoing

basis, assumes central role in its operational activities. The institutional setup to meet the

new challenges in marketing, using the power of technology, has accordingly been

strengthened at various operating levels. Besides, a Marketing Department functioning

at Head Office, marketing functionaries are also placed at Zonal/Regional offices. To

further strengthening the marketing activities, Customer Relationship Managers are also

placed in large branches.

Marketing efforts at various levels of the Bank have enabled the Bank to open large

number of the salary accounts of Government Employees

Focused marketing efforts directed towards improving Retail/ Personal Segment

advances by conducting Home Loan/Car Loan and Educational Loan Melas at important

centres of the Bank were conducted during the year. With a view to provide our customers a

wide basket of products, the Bank has been introducing new products/services regularly.

The strategies such as convening traders/merchants’ meet shop to shop campaign,

branch marketing team meeting representatives of trade bodies/Association at each centre

etc.,, may be adopted by all branches for achieving current account deposit growth. The

Branches, may intensify, inter-alia, the strategies such as marketing of corporate salary

package, Door-to-Door campaign, forming branch level marketing team to visit customers

and Dormant/inoperative account holders, etc., to achieve the targets.

Contact Centre - As a customer friendly service, State Bank of Mysore has established a

dedicated "SBM Contact Centre". The Centre is provided with a toll free number 1800-

425-2244 which is accessible from throughout the country. A separate primary rate

interface (pri) number 080-22300020 is also provided. The information from the Contact

Centre is available in English, Hindi and Kannada and it provides services for 24 hours

on 365 days (24*7*365) basis.

Canara Bank School of Management49

4.2.(b) Public Relations: Effective publicity of the Bank`s schemes and services was

carried out through the medium of captivating hoardings at important vantage points,

advertisements in print and electronic media, glow sign displays at railway and bus stations

in important cities/ towns and advertisements on modern bus shelters and police kiosks.

Special media campaigns covering the various loan schemes, special offer in

housing, vehicle, gold loans, MSE loans under CGTMSE scheme, other retail loans and

new deposit schemes like My Bank Suraksha Savings Bank, Savings Bank Plus and Term

Deposit account were carried out in the print and electronic media and through hoardings.

The Bank has sponsored various State level seminars, District ustavas, Fruit

and Flower show at various districts/taluks, musical, cultural and sporting events.

Besides the Bank also sponsored Mysore Dasara festivitites-2011 in a big way, India

Finance Conference -2011 organized by Indian Institute of Management and a Bus

Shelter and drinking water facility at World Heritage site, Hampi, The Bank extended

financial aid to Sankalpa a unique theatre festival enacted by prison inmates and supported

the 12th Convocation organized by Karnataka State Open University etc. These activities

have resulted in good publicity besides further enhancing the bank`s image. The Bank's

performance highlights, launching of new products and services, opening of branches,

ATMs, BPR initiatives and technological achievements were extensively covered in print

and electronic media.

4.2. (C) Organisational Development

Branch Expansion: Branch Expansion: The Bank has opened 33 new branches

during the year 2011-12. With this, the Bank`s network of branches stands at 737

spread over 15 states. As at the end of March,2012, the branch network comprised of

197 Metro, 156 Urban, 159 semi- urban and 225 rural branches.

Branches in Minority Concentrated Districts-Centres (MCDs)/ Under-banked

Districts: During the year, the Bank has opened 2 branches and 4 branches in Minority

Concentrated Districts/Centers and Under-Banked Districts respectively. As on 31st

March 2012, out of 737 branches, the Bank has 70 branches in MCDs constituting

9.50% of the branch network and 83 branches in Under-banked Districts constituting

10.85% of the branch network.

Business Intelligence department: The Business Intelligence Department in the

Bank constantly assesses upgrades and fine tunes the growing information requirements of

Canara Bank School of Management50

various user departments and business units. The information takes care of both decision

support as well as statutory requirements. The Data Warehousing Project, designed to be a

single source for all data requirements, is also progressing satisfactorily.

Implementation of Official Language Policy:

In pursuance of constitutional provisions, Bank is making all efforts for the

propagation of the Official Language, Hindi, and its progressive use in day-to-day

official work. Bank is progressively improving the usage of Hindi and the Regional

Language to serve customers to their satisfaction bringing transparency in administration.

To ensure the usage of Hindi in official correspondence, routine forms used

on computers were identified and converted in bilingual/trilingual form and

were made available to the staff members, providing Script Magic Hindi Software in our

CBS and Unicode Mangal fonts for word processing. Our Bank`s website is made

available in Hindi and Kannada also and being updated simultaneously. Operating

option of Hindi & Regional Language is provided in all the ATMs of our Bank.

Apart from publishing Hindi Articles in the House Magazine "Sambrama", a

separate Quarterly Hindi Magazine "Mybank Bhashadarshini" is being published for

enriching the Hindi knowledge of our staff. Hindi version of Fire and Pension Manuals

were issued during the year under review besides publishing Bank address book in

bilingual form.

24 Functional/Computer Workshops/On the Desk Training were organized at

different places and imparted functional knowledge of Hindi to the 289 Staff Members and

organized All India Official Language Conference at Pondicherry inviting local

dignitaries to create favorable atmosphere for implementing Official Language Policy

of Government of India. Our efforts in this regard are appreciated by various Town

Official Language Committees. Kannada being the Official Language of Karnataka ,

occupies the place of prominence in the Bank, as more than 80% of our branches are in

Karnataka.

Account opening forms, pay in slips, withdrawal forms, DD and pay order

challans, all Agricultural and SHG loan applications and other important forms are in

Kannada/trilingual form. All our ATMs display operational instructions in Kannada

also. Correspondence with the State Government and its departments is done in Kannada.

Bank has Kannada version for its website.

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All press releases of the Bank, including quarterly and annual financial results

are being simultaneously published in Kannada. Reports of community services and

cultural programmes at Branches are published in Kannada in the Bank`s house

magazines "Sambhrama" and "Mybank BhashaDarshini".

Kannada Rajyotsava is celebrated every year at Head Office, Zonal Offices and

Regional Offices during the month of November. Renowned Kannada writers and aged

artists are felicitated on the occasion.

Our Kannada Department conducts Kannada language classes for the Probationary

Officers who do not know Kannada.

4.3. Finance Department

Company Performance

4.3(a) Market Share and Business Growth

The business levels of the Bank and the position of market share in the recent years

are furnished hereunder.

Year ended 31st March 2008 2009 2010 2011 2012

Aggregate Deposits 26,781 32,388 38437 42779 49663

Percentage of growth 25.17 20.94 18.68 11.30 16.09

Market share % 0.84 0.84 0.86 0.79 0.78*

Total Advances 21,315 25,880 29874 34442 40653

Percentage of growth 27.09 21.42 15.43 15.29 18.03

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Market share % 0.90 0.93 0.92 0.87 0.85*Table 4:1 Market shares ASCB as on 30.03.2012

Graph Representing the Total Deposits from 2008 -2012

Figure 4.1 Total Deposits

Graph Representing the Total Advances from 2008 -2012

Figure4:2 Total Advances

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The Bank has seen continuity in growth during the current year also with

aggregate deposits reaching Rs. 49663 crores, a growth of Rs. 6884 crores at 16.09% and

total advances reaching a level of Rs..40653 crores recording a growth of Rs. 6211 crores

at 18.03%. As on 30.03.2012 the Bank`s market share in deposits decreased to 0.78%

from 0.79%, and the Bank`s market share in Advances also reduced to 0.85% from 0.87%

during the year 2011-12. The marginal decline in the market share is on account of subdued

growth in advances at 15.76% as on 30.3.2012 as against ASCB growth of 19.35%. The

market share under advances marginally declined, notwithstanding to the fact an

increase in growth rate in advances from 15.29% as on 31st March 2011 to 18.03% as on

31st March 2012. The Bank is proposing a corporate business plan for the year 2012-13 to

improve its retail business base & hence improve its market share.

4.3(b)Key performance

2009-10 2010-11 2011-12

Key Indicators

1. Net Profit (Rs. in Crores) 445.77 500.62 369.15

2. Return on Assets (%) 1.06 1.03 0.67

3. Return on Equity (%) 21.50 16.17 10.82

4. Expenses-Income Ratio (%) 43.60 43.87 49.55

5. Earnings per Share (in Rs.) 111.07* 121.66 78.88

6. Gross NPA to Gross Advances (%) 2.00 2.51 3.70

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7. Net NPA to Net Advance (%) 1.02 1.38 1.93

(Table 4:2 Key performances)

EPS restated on account of Rights Issue during financial year 2010-11.

Income

Total Income of the Bank increased by 23.39% from Rs.4534 crores as at 31st

March, 2011 to Rs.5595 crores in 31st March,2012. Interest Income increased from

Rs.4079 crores to Rs. 5078 crores (24.50%). Average Yield on Advances increased from

10.33% in 2010-11 to 11.44% during 2011-12, while Average Yield on Investments

increased from 6.95% as on 31st March 2011 to 7.22% as on 31st March,2012. Non

Interest Income increased by Rs. 61 crores (13.45%) from Rs.455 crores to Rs. 516

crores; the growth in profit from sale of securities from Rs. 13.62 crores to Rs. 38.60

crores. The ratio of Non-Interest Income to Total Income was lower at 9.23% (10.04%

last year).

Expenses

The Total Expenditure (before provisions and contingencies) increased by

34.96% from Rs.3361 crores in 2010-11 to Rs. 4535 crores in 2011-12. While Interest

Expenses increased by Rs. 1051 crores (43%) the Operating Expenses increased by Rs.

124 crores (13%) during the current year. The Average Cost of Deposits increased from

5.56% in March, 2011 to 7.09% in March, 2012 predominantly owing to reduction in

CASA share from 33.97% (31.03.11) to 32.03% (31.03.12).

Canara Bank School of Management55

Profit

While the Operating Profit decreased from Rs.1173.75 crores in 2010-11 to Rs.

1059.61 crores in 2011-12 (down by 9.72%), the Net Profit decreased from Rs. 500.62

crores to Rs. 369.15 crores (26.26%). The decline in net profits was predominantly on

account of the necessity to provide more on our non-performing assets. Return on Assets

(ROA) decreased from 1.03% to 0.67% and Return on Equity (ROE) decreased from

16.17% to 10.82% during the year.

Graph Showing Net profit

Figure 4:3 Net Profit

Capital Adequacy Ratio

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The Capital Adequacy Ratio under Basel II guidelines stands at 12.55% as on 31st

March 2012, against 13.76% as on 31st March 2011. The Capital Adequacy Ratio of the

Bank, however, is above the statutory requirement of 9%.

Dividend

The Board of Directors has declared a dividend of 100% (Rs.10 per equity share of

Rs.10/-) for the year 2011-12. This will involve a pay-out of Rs.54.39 crores including the

tax component. The pay out ratio for 2011-12 works out to 12.68% as against 9.35% for

2010-11.

4.3(c) BUSINESS REVIEW

Deposits

The Total Deposits of the Bank grew by Rs. 6961 crores to reach the level of Rs.

50186 crores and the Average Total Deposits grew by Rs.5475.05crores (13.71%) during

the year 2011-12. While the Aggregate Deposits(total deposits excluding interbank

deposits) stood at Rs. 49663 crores as at the end of 31st March 2012 recording a growth

of Rs. 6884 crores (16.09%) during the year, the share of CASA deposits to Aggregate

Deposits decreased from 33.97% as on 31st March 2011 to 32.03% as at 31st March

2012.

Personal Segment Deposits

The Personal segment deposits grew by Rs. 4100 crores, registering a growth of

21.07% to reach a level of Rs. 23562 crores as on 31st March 2012.Campaigns were

conducted to increase the Personal segment deposit base of the Bank. As a result the

share of Personal segment deposits in the aggregate deposits has increased to 47.44%

during the year from 45.49%. The number of deposit accounts under Personal segment has

increased by 7,08,574 during the year.To increase Savings Bank growth under Personal

segment three new deposit products viz. Mybank Suraksha Savings, Mybank Suraksha

Savings Plus andMybank Suraksha Time deposit account were introduced.These

productsprovide depositors free Accidental death cover upto Rs. 5.00 lacs

Credit Expansion

Canara Bank School of Management57

While the total advances of the Bank increased from Rs. 34442 crores to Rs.

40653 crores registering a growth of Rs. 6211 crores (18.03%) during the year, net

advances(i.e. net of NPA related/floating Provisions, and outstanding under Staff

Festival Advance of the Bank increased from Rs.34030 crores as on 31st March 2011

to Rs. 39835 crores as at 31st March,2012. Credit Deposit Ratio of the Bank increased

from 80.51% as on 31 March 2011 to 81.86% as at 31 March 2012. The Average Total

Advances grew by Rs. 4543 crores (14.66%) during the year.

The Head Office Credit Committee - I (HOCC-I) with the Managing Director

as Chairman and Head Office Credit Committee - II (HOCC-II) with the Chief General

Manager as Chairman, which have been set up in order to make the credit process

speedier and to take decisions through a committee approach, held 63 and 38 meetings

respectively to facilitate growth in Non-food Advances. In addition, Zonal Office Credit

Committees are functioning at all the five Modules of the Bank, while in respect of

DGM heade branches, a committee called HOCC-III is functioning.

Personal Segment Advances

Personal segment advance grew by Rs. 443 crores to reach a level of Rs.5815

crores. Housing loans grew by 235 crores and reached a level of Rs.3216 crores. The

Bank has introduced a new scheme My bank Suraksha Loan,which provides loans to

cover the life insurance premium for Home loan borrowers. To increase the Gold loan

business under Personal segment a Special Campaign was conducted. As a result, gold

loans grew by Rs.31 crores to reach a level of Rs. 58 crores. The Bank has waived Pre-

payment penalty/Pre-closure charges for floating rate Housing loans and Car loans. The

Bank has introduced a facility of applying online for Home loans and Car loans besides

Education loans.

Priority Sector Lending and Social Banking

The total credit provided to the Priority Sector for the year ended March 2012

stood at Rs.11631.10 crores, which constitutes 34.16% of the Adjusted Net Bank Credit

(ANBC). Segment wise status of these advances are as under:

* Agriculture: The direct agricultural advances increased by 16.87% from Rs. 3767.94

Crores to Rs. 4403.68 Crores. However, the overall agricultural advances declined by

2.43% from Rs. 5377.75 Crores to Rs. 5247.21 Crores mainly due to decrease in indirect

agriculture from Rs. 1609.81 crores to Rs. 843.53 crores.

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* Micro and Small Enterprises(MSE): The Bank`s advances to Micro and Small

Enterprises as on 31.03.201 is Rs. 3353.68 crores.

* Personal & Services Banking (P&SB): While housing loans under priority sector

grew by 2.85% and reached a level of Rs. 2465.34 crores during the year, education loans

grew by over 1.66% and reached a level of 564.8 crores during 2011-12.

Agriculture Finance

During the year ended 31 March 2012, the Bank has sanctioned 57295 Kissan

Credit Cards amounting to Rs. 1000.31 crores. A special campaign was also conducted

during the year for coverage of all eligible farmers with KCC limits and all non-farmers

in rural areas with SB-cum-OD Limit in the bank`s Service Area.

Micro and Small Enterprises (Manufacturing)

The Bank`s advances to Micro and Small Enterprises (Manufacturing)as on

31.03.2012 is Rs. 2209.07 Crores. While continuing all the existing products and schemes

introduced to take care of the varying financial needs of the sector, the Bank has

introduced MyBank Surya Kiran Scheme to extend finance for purchase of Solar Photo

Voltaic home Lighting system at a concessionary rate of interest. The bank has

introduced a Scheme for issuance of Weavers Credit Card for the handloom weavers for

their working capital and investment requirements. Bank has several schemes to cater to

the needs of Micro and Small Enterprises (Manufacturing) sector.

Micro and Small Enterprises (Services)

The Bank`s advances to Micro and Small Enterprises (Services) as on

31.03.2012 is Rs. 1346.99 Crores.The Bank has introduced Mybank Home Stay to help

development of tourism in the State of Karnataka. Initially the Scheme is restricted to

branches in Kodagu and Chikmagaluru District.

Credit Guarantee Scheme

The Bank continued to extend collateral free financial assistance to MSE sector

by participating in Credit Guarantee Scheme of CGTMSE. The maximum limit of

Canara Bank School of Management59

coverage under the scheme is Rs. 100 lakhs. As at 31st March 2012, 6169 accounts

amounting to Rs. 349.23 crores were covered under the scheme.

Assistance to Weaker Sections of the Society

The Bank continued to extend financial assistance to Weaker Sections of the Society

comprising of small & marginal farmers with land holdings of 5 acres or less, landless

labourers, tenant farmers etc., village & cottage industries whose individual limits does not

exceed Rs. 50,000/-, SJSRY,SGSY, SLRS, DRI, Self-Help Groups and advances to SC/ST

beneficiaries. The outstanding amount under lending to Weaker Sections at Rs. 4756 crores

as at the end of March 2012 constitutes 13.97% of ANBC, as against the stipulated

benchmark of 10%.

Assistance to Women Entrepreneurs

A booklet on "Charter for Women" containing the details of concessions

available to women has been supplied to all the branches for display and distribution. The

Bank`s total credit to women as at the end of March 2012 stood at Rs. 2006 crores

covering 140461 beneficiaries, which work out to 5.89% of Adjusted Net Bank Credit as

against the stipulated benchmark of 5%.

Measures to improve the economic conditions of Minority

Communities

The Bank`s assistance to the minorities under various schemes as at the end of

March 2012 stood at Rs. 1359.87 crores covering 31298 beneficiaries, which forms

11.69% of Priority Sector Advances.

Government Sponsored Scheme

The position of assistance rendered under various Government sponsored

schemes by our Bank as at the end of March 2012 is as detailed below:-

Prime Minister`s Employment Generation Programme (PMEGP)

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The Government of India has launched the new scheme "Prime Minister`s

Employment Generation Programme (PMEGP)" to empower first generation

entrepreneurs to set up micro enterprises across the country by merging the earlier Prime

Minister`s Rozgar Yojana (PMRY) and Khadi & Village Industries Commission`s

Rural Employment Generation Programme (REGP) from the financial year 200809. The

Bank has extended financial assistance of Rs. 6.62 crores to 154 beneficiaries under

PMEGP during the year. The Bank`s total credit under PMEGP Scheme as at the end of

March 2012 stood at Rs. 41.50 Crores covering 812 beneficiaries.

Swarna Jayanthi Shahari Rojgar Yojana (SJSRY) Scheme

The Bank has extended financial assistance of Rs. 6.42 crores under SJSRY

during the year to 542 beneficiaries. Total amount outstanding under SJSRY scheme as

at the end of March 2012 is at Rs. 20.70 crores covering 4232 beneficiaries.

Differential Rate of Interest (DRI) Scheme

The Bank`s advances under DRI scheme stood at Rs. 15.94 crores as at the end

of March 2012 covering 16790 beneficiaries and the share of advances to SC/ST

beneficiaries within this is 52.24% 8.32 crores).

Swarna Jayanthi Gram Swarozgar Yojana (SGSY) Scheme

The Bank has extended financial assistance of Rs. 359.00 lacs under SGSY during

the year to 92 group beneficiaries, and 120 individual beneficiaries were also extended

financial assistance to the tune of Rs. 76.00 lacs.

4.4Commercial and Institutional Department

This department takes care of the credits and the corporate transaction and also

Assets Management and recovery. A growth of Rs 3987 Crores, which translates into a

growth of 21.10% over the yearend level has been projected under advances under C&I

segment.The Major strategies that can be adopted, inter alia for achieving this growth are:

Identifying growth sectors of industries and specifically targeting companies in such sectors

E.g. Pharmaceuticals, cement Automobile, Telecommunications, Readymade Garments.

Canara Bank School of Management61

Focusing on infrastructure sectors like power, road, telecom, transport urban infrastructure

etc. Exploiting opportunities under National Highway Development programme. Exploring

the possibility of securing higher share in the existing consortium arrangement of highly

rated corporate entities. Focusing on mid corporate to ensure consistent credit growth, duly

taking into consideration factors such as dispersion of credit risk and interest rates.

Developing market related products so as to enhance the scope of both interest and non-

interest income through build up of our relationships with large corporate. Emphasis on

Trade finance- Particularly in urban and Metro centers

4.4(a)Asset Management and Recovery:

The Asset Liability Management System has been functioning as per the guidelines

prescribed by RBI. The Asset Liability Management Committee (ALCO) of the Bank is

entrusted with the task of managing Liquidity andInterest rate risk. The Committee meets

regularly to monitor the risks and Net Interest Margin (NIM) on an ongoing basis. The

tolerance limits forliquidity mismatches and interest rate risks are fixed in accordance

with RBI guidelines and Bank`s ALM Policy and these are reviewed by ALCO atregular

intervals. Various interest rate revisions including the revision of BPLR/Base Rate are

thoroughly discussed and decided by ALCO dulyconsidering all the relevant factors.

Possible mismatches in the Structural Liquidity projections of the Bank are also discussed

with regard to long term asset exposures and appropriate decisions are taken.

Restructuring of Debt: Restructuring of Debts: The Bank continues to provide

Restructuring Packages within the framework of RBI guidelines to deserving borrowers

under the Rehabilitation Programme or under packages approved 1by CDR/ BIFR, subject

to the viability of the units being established. The Bank has extended the package to

19569 (15879*) borrowal accounts with dues amounting to Rs. 2671.23 (Rs. 2417*)

crores. Towards diminution in their fair value on account of economic loss caused in

the process of restructuring, provision to an extent of Rs. 90.95 (Rs. 80*) crores has

been made by the Bank.

Business Continuity Planning: . In the backdrop of growing complexity of

financial products and the increased leveraging of technology, operational risks have

assumed critical importance in recent times. The treatment of operational risk as a distinct

risk category along with credit and market risks in the Basel II framework is a

manifestation of the significance of operational risk in impacting the risk profile of a

Bank. Keeping this in mind our Bank has:-

1

Canara Bank School of Management62

* Adopted well defined IT Policy and IS Security Policy which is being

periodically reviewed and updated.

* Become a part of well established (common for State Bank Group) state-of-the

art IT infrastructure which is certified as BS 259992:2007 by BSI.

Our Bank has taken proactive measures to respond to business discontinuities

and ensure uninterrupted availability of all key business resources that support critical

banking functions. In this connection the Bank has adopted a well defined Business

Continuity Plan and Disaster Recovery Plan Policy. Our Bank is part of a well

established high-end Business continuity and Disaster Recovery infrastructure which

ensures seamless continuity in case of need. The Disaster Recovery drill is being

conducted on a half-yearly basis during which the transactions of our branches are

routed through the DR site. In addition to this, the Bank has a nearby site to ensure zero

data loss in the event of a disaster. The Bank has implemented Business Continuity Plan in

all the branches and also in the administrative offices together with periodic reviews and

updates.

4.4(b) Risk Management

Risk is an integral part of banking business. Effective management of all types of

risks through the best risk-return trade-off is essential for the Bank, which only can ensure

higher profitability in our operations. The Bank is exposed to various types of risks and

the most prominent among them are credit risk, market risk &operational risk.

The Bank has achieved substantial progress in the implementation of risk

management systems, envisaged in RBI guidelines. An Integrated Risk Management

approach is followed, with a well-designed organizational structure consisting of

committees, viz. Risk Management Committee of the Board (RMCB) at the Board

level, Asset Liability Management Committee (ALCO), Credit Risk Management

Committee (CRMC), Market Risk Management Committee (MRMC) and Operational

Risk Management Committee (ORMC). These committees meet at periodic intervals to

oversee the functions of Risk Management and Asset Liability Management.

With regard to Credit Risk, a Credit Risk Mitigation and Collateral Management

Policy is in place. Bank has a comprehensive Loan Policy document in place which

addresses Credit Risk Management and is reviewed and revised periodically.

Canara Bank School of Management63

Credit Risk Assessment System (CRAS) which is in the Bank has separate

models designed for trading and non-trading/service sectors. While limit aggregating to

Rs. 5.00 crores and above will warrant borrower as well as facility ratings, limits from

Rs. 25.00 lacs and upto Rs. 5.00 crores will carry only borrower rating.

With a view to controlling the risk relating to exposure on domestic and foreign

counterparty banks, detailed guidelines are laid down and bank-wise exposure limits have

been fixed and allocated among the various user/ departments/branches. The exposures

taken at the branches/departments are being monitored at periodic intervals.

For managing risks arising out of adverse movement in market interest rates,

currency exchange rates, equity prices and commodity prices, the Market Risk

Management Policy has been framed. A Back Testing Policy envisaging testing of

market risk measurement models is also included in this policy.

Operational Risk Management Policy duly approved by the Board is put in place.

Monitoring through the process of audit has been tightened. As part of Risk Based

Supervision, the Bank has introduced Risk Focused Internal Audit (RFIA) as the

exclusive form of audit effective from 1st Aug 2003. The Audit Report Format (ARF) has

been suitably modified and adopted. A Fraud Risk Management Policy covering

identification and control, accountability, reporting and follow up measures has also

been formulated for effective control over incidence of fraud.

The Bank has put in place a policy on Disclosures as required by RBI under

Pillar-3 of Basel-ll and necessary disclosures are being made periodically as

stipulated.

Reserve Bank of India has issued final guidelines for migration to Advanced

Approaches for computation of Capital charge for Credit Risk, as per Basel II guidelines,

on 22.12.2011.

Having complied with the requirements of the basic approaches in credit risk,

market risk and operational risk for computation of capital adequacy, the bank is

preparing for migration to advanced approaches viz. Internal Rating Based Approach in

credit risk, Internal Models Approach in market risk and Advanced Measurement

Approach in operational risk for computation of capital. With the proposed migration,

Bank`s risk management systems would be further strengthened.

To facilitate smooth migration to Advanced Approaches, individual committees

are in place for Credit Risk, Market Risk and Operational Risk to interact with the

Consultants and to oversee the execution of the required tasks in time.

Canara Bank School of Management64

4.5 Treasury Department

4.5(a) Mid Corporate Central processing Centre (MCCPC)

As part of the Bank`s BPR initiative, a Mid Corporate Central Processing

Centre (MCCPC) was set up during February 2010 in our Bank for Bangalore centre,

with a view to pool specialized credit skills, to standardize the credit processes, to

improve the quality of assets and to provide speedy credit delivery and reduction in turn

around time (TAT).

Initially 25 branches of Bangalore Zone I which were having Medium

Enterprises (ME) and mid-corporate accounts were linked to MCCPC. During FY 2011-12

a further 10 branches of Bangalore Zone II have been added.Currently there are 67

mid-corporate accounts with aggregate sanctioned limit of Rs. 1243.38 crores and

outstanding of Rs. 1,125.16 crores as on 31.3.2012.

MCCPC is engaged in the credit appraisal, sanction, supervision and follow-up

of corporate and mid-corporate advance accounts of Bangalore. MCCPC is extending

support to branches in the adjoining district of Tumkur in the above matters.

4.5.(b) CORPORATE GOVERNANCE

. As a committed and responsible Corporate Citizen, the Bank effectively

associated with various community development activities pertaining to education,

health, social, art, culture and sports. The Bank has sponsored 130 programmes during

the year with a financial outgo of Rs.130.02 lakhs including contributions for purchase

of utility assets by various social and charitable institutions.

The other activities/programmes include conduct of various health camps like

eye camp, asthma camp, animal health check up camp, general check up camp,

conducting Tree Planting Programme, honoring meritorious students in SSLC,

sponsoring Taluk and District level sports tournament, donating text books, utensils,

blankets to orphanages, supported the Care Earth Trust engaged in conserving

biodiversity, Sponsored prevention of cancer awareness programme and SHG awareness

programmes like health, girl child education programme etc.

The Bank had, among others, made a donation to `Ekal Vidyalaya Movement

for Elementary Education of Tribals` in Chamrajnagar and Mysore District by adopting

Canara Bank School of Management65

schools in 10 villages and an Ambulance to SDS Tuberculosis Research Centre and

Rajiv Gandhi Institute of Chest Diseases. The Bank made a donation to Tumkur

University to construct a building for their Fine Arts College. It donated a Corpus Fund

for instituting a Chair at Visvesvaraya Technological University (VTU), and to Mysore

University for installing statues of Sir M.Visvesvaraya and Nalwadi Krishnaraja

Wadeyar.

The New Businesses Department was created to formulate strategies for new

businesses, incubate new business initiatives, pilot the same and on stabilization, handover

to the concerned Business Group. Various new businesses like Pension Fund

Management, General Insurance, Private Equity, Financial Planning & Advisory Services

(FP&AS), and Custodial Services, Payment Solutions, Depository Participant Services and

On-line trading have been initiated by the department.

Statement of Bank's philosophy on Corporate Governance

State Bank of Mysore, as an organization driven by values, is committed to pursue

objectives that are in the interests of the Bank, shareholders all other stakeholders and the

society at large, in consonance with best practices. The primary objectives of Corporate

Governance are:

• To protect the interests of the shareholders and all stakeholders and to ensure

maximization of long term shareholder value in a legal and ethical manner.

• To act in the best interests of all stakeholders like customers, employees,

government and the society.

• To ensure transparency, fairness, courtesy and dignity in all transactions within

and outside the Bank which form the hallmark of good governance.

• To maximize operational efficiency in a well defined and transparent manner and

achieve excellence and benchmarks at all levels.

• As custodians of public thrift, ensure safety of funds and investments.

• Focus on core competence areas, planned expansions and sustained growth.

The Bank believes that Corporate Governance facilitates effective management

and better internal controls.

Compliance function is an integral part of corporate governance along with internal

control and risk management process. In view of increasing complexities and

sophistication in Banking business there is a critical need for management of compliance

risk arising out of compliance failures.

Canara Bank School of Management66

During the year, the Compliance Department conducted Compliance Audit based

on closed Branch Internal Audit Reports for 81 branches and Compliance Credit Audit of

220accounts. Commissions/omissions noticed were flagged to the branches and the

controllers for rectification and sensitization.

KYC/ AML (Know Your Customer/Anti Money Laundering) Cell is part of

Compliance Department. The cell ensures timely submission of Cash Transaction Reports

and Counterfeit Currency Reports in addition to submission of Suspicious Transaction

Reports based on analysis of alerts. The cell is responsible for the following areas.

• Framing and implementing Board approved policies on KYC and AML

measures.

• Analysis of transaction alerts for identifying transactions of suspicious nature for

reporting to the Financial Intelligence Unit-India (FIU).

• Monitoring the process of risk categorization of accounts by branches.

• Monitoring of updating of Customer Information Module by branches.

• . Monitoring the implementation of provisions of 'Unlawful Activities

(Prevention Act 1967 (UAPA) on combating financing of terrorism.

• Issue of circulars regarding the list of individuals/ entities banned by United

Nations received from RBI.

• Observance of KYC Compliance and Fraud Prevention day on 1st August Every

year.

• Detailed information on KYC guidelines and Anti Money

Laundering (AML) has been uploaded in the Bank's Website as measure of

customer education.

• To sensitize and create awareness, the cell has brought out 3 issues of KYC-

AML news letter.

The department ensures submission of monthly and quarterly DSB and other

related regulatory returns to RBI through Off-site Surveillance Cell in addition to

furnishing back up data for quarterly discussion with the Regulator.

The Bank is committed to:

• Ensure that the Bank's Board of Directors meet regularly, provide effective

leadership, exercise control over the management and monitor executive performance with

their blend of expertise and professionalism.

Canara Bank School of Management67

• Establish a framework of strategic control and continuously review its efficacy to

promote integrity, openness and accountability. Better disclosures and transparency will

bolster investor/ share/stakeholder confidence.

• Establish clearly documented and transparent management processes for policy

planning and development, coherent business strategies, implementation and review,

decision-making, monitoring, control and reporting.

• Ensure adherence to good business ethics and principles white carrying out

banking transactions and be responsive to the needs and interests of wide range of

constituencies.

• Practice sound financial and accounting procedures to ensure statutory and

regulatory compliances and constantly review organisational structure and control systems

to respond to new challenges.

The Bank is a listed public sector entity. The Bank has implemented the Clause49

of the Listing Agreement which seeks affirming compliance of code of conduct. The code

of conduct is also posted on the Bank's website. The Directors on the Board of the Bank

and Senior Management have affirmed compliance with the Bank's Code of Conduct for

the financial year 2010-11. Declaration to this effect signed by the Managing Director is

furnished hereunder.

4.5.(c) .International Banking

The level of Export Credit as on 31st March 2012 was Rs. 1,325.17 Crores (Rs.

1260.62 Crores as on 31st March 2011) constituting 3.85% of ANBC. In order to

encourage exports, more eligible exporting units were offered Gold Card Scheme on

competitive terms including interest rate concession of 0.25%. Exporters` meets were

arranged at strategic centers periodically.

NRI Deposits as on 31.03.2012 stood at Rs. 770.98 Crores showing an increase of

Rs. 114.30 crores as against Rs. 656.68 Crores, comprising of FCNR(B)/RFC deposits of

Rs. 189.02 Crores and NRE/NRO deposits of Rs.581.96 Crores.

As at the end of the current financial year, the export credit denominated in

foreign currency stood at USD 136.02 million as at the end of current financial year 2011-

12, against USD 101.08 million as at the end of previous year 2010-11.

The Bank has also been offering Foreign Currency Loans (FCNR(B) Loans) to

its customers at LIBOR linked rates which stood at USD 37.41 million as at the end of the

Canara Bank School of Management68

current financial year 2011-12 as against USD 42.29 million as at the end of previous year

2010-11.

The Foreign Exchange Turnover of the Bank 2011-12 touched Rs.177988 crores

(Merchant Turnover - Rs. 31583 crores and Trading Turnover Rs.146405 crores)

against the previous year level of Rs. 172001 crores (Merchant Turnover - Rs. 34343

crores and Trading Turnover - Rs. 137658 crores)

As per Bank`s BPR objectives, the Bank had set up five Trade Finance

Central Processing Centres (TFCPC) at Bangalore, Chennai, Hyderabad, Mumbai

and New Delhi. During the current financial year (2011-12), more branches have been

linked to TFCPCs for extending quality service to Exporters.

Cross Selling

During the year the Bank sold 29135 policies of SBI Life Insurance Company Ltd

and collected a premium of Rs. 46.83 Crores. The Bank has collected a premium of Rs.

19.76 Crores, while marketing General Insurance Products. In respect of Investment

Products, the Bank is selling Mutual Funds products of SBI MF and UTI MF. Applications

for SBI Credit Cards are also sourced by the Bank. The Bank has earned an income of Rs.

8.77 Crores from Cross Selling Business during the Year 2011.12.

4.5(d)Financial Inclusion

In terms of Reserve Bank of India directives, the Bank`s Board has approved the

Disaggregated Financial Inclusion plan to implement Financial Inclusion plan covering

254 villages in Karnataka and 6 villages in Tamil Nadu with population above 2000 (as per

census 2001) and the same has been submitted to RPCD, Reserve Bank of India.

Further the Bank has shouldered the responsibility of implementing the smart

card based EBT Scheme in Chamarajanagar District covering all the villages in the

District and the SSP scheme will be fully operational shortly.

Apart from this the Bank is participating in EBT program in Bellary and

Chitradurga Districts through the allotted service area villages.

The Bank has covered all the 254 villages with populations above 2000 in

Karnataka and 6 villages in Tamil Nadu by appointing Business Correspondents for

providing minimum banking facilities to the rural populace at their doorstep.

Canara Bank School of Management69

Further the Bank has established 3 Financial Literacy and Credit Counseling

Centers in 3 Lead District of the Bank to impart knowledge of banking and to inculcate

saving habits and the repayment responsibility of loans availed among the rural populace.

4.6 Technological Department

4.6(a) IT Services

Core Banking Solution: The bank is fully on Core Banking Platform since 1st

January 2006. The software provides for Anywhere Banking, Internet Banking, Mobile

Banking, and Operations though ATM, Real Time Gross Settlement, National Electronic

Funds Transfer etc.

Automated Teller Machines (ATMs): Automated Teller Machines: Our

customers can now transact through 802 of our ATMs and the daily average hits at these

ATMs during the year were 218. Our Bank has earned a record net income per ATM

and we stand first among the State Bank Group Banks in this respect. The Point-of-Sale

transactions have registered a consistent growth and with a view to further increase the

POS usage and e-commerce transactions, a new Card strategy has been formulated and

introduced in our Bank. Accordingly, new 16 digit Debit Cards with Card Verification

Value (CVV) have been rolled out.

Internet Banking: Against the background of growing volume of transactions and

the need to meet customer needs expeditiously, technology up-gradation has become

indispensable. Online banking, being one of the alternate delivery channels, caters to both

Retail and Corporate Banking customers. As on 31st March 2011,112283 customers have

registered for Retail Internet Banking and 9273 Corporate Customers are covered under

Corporate Internet Banking. New Merchant sites such as M/s. Avenues India Pvt. Ltd.,

M/s. ATOM Technologies Ltd., and M/s E-Billing Solutions Pvt. Ltd. have been

integrated for e-commerce and e-shopping for purchase of goods and services. The

following customer friendly developments have taken place under Retail Internet Banking.

• E-TDR/STDR enabled for creation of Term Deposit accounts.

• E- RD enabled for creation of Recurring Deposit accounts.

• Requests can be made online for Multi City Cheques.

• The facility of processing third Party Transfer transaction to an already defined

third party up to a maximum of Rs. 10000/- in a day without insisting for profile password

or one time password enabled.

Canara Bank School of Management70

Mobile Banking Service

All personal segment customers with satisfactorily run savings/current account

(non-dormant) are eligible to avail mobile banking service. All the branches are provided

with a blue tooth device to enable the branches to provide MBS software into the

customers' mobile. The bank is also set to join Internet-bank Mobile Payment Service

(IMPS) offered through National Payment Corporation of India (NPCI) which will enable

our customers experience a better and faster access to their account via mobile phones and

with a wider choice of transactions.

Real Time Gross Settlement (RTGS) & National Electronic Funds Transfer

(NEFT): This facility enables seamless transfer of funds between accounts of customers

of different Banks/ branches. RTGS and NEFT are promoted by RBI. RTGS caters to bulk

payments of Banks and customers, while NEFT caters to retail payments. All our branches

are RTGS-NEFT enabled. An internal group is overseeing the usage/ performance of these

electronic payment systems.

State Bank Group Payment Transactions (SBGRPT): Electronic Fund Transfer

between branches of State Bank Group is implemented in the Bank. It enables State Bank

Group Branches to send and receive interbank customer remittances in the group.

Network: All the branches, administrative offices including Head office and

ATM's of the Bank are networked through "State Bank Connect'. The projects like NEFT,

RTGS and Internet Banking are also implemented through 'State Bank Connect', which is

the backbone of connectivity supporting various technology initiatives that are

implemented.

Bank's Website:

• The Bank's web site http:// www.statebankofmvsore.co.in hosts contents on

products and schemes of P&SB, C&l, SME, Agriculture and NRI services, Interest Rates,

Calculators, Downloadable Forms, Service Charges and Fees, Statutory Codes, Policies,

Acts, Online Loan Enquiry Form, information on Bank's Financials etc., and the

information is functional in English, Hindi and Kannada.

• Various downloadable application forms are available in the Home page for the

benefit of the customers.

• The home page contains links for information on various technology products of

the Bank like Internet banking, Mobile Banking and ATMs.

• Special links have been provided to Reserve Bank of India, Indian Banks

Association, State Bank of India, SBI Life, SBI Cards, SBI Mutual Funds, SBI Capital and

Canara Bank School of Management71

Security, RBI Financial Inclusion sites. Online Application Forms for Education Loan,

customer complaints and feedback are available.

• A separate text version website for the benefit of the physically challenged is also

launched.

• A separate page is provided for educating the customers on safe banking

guidelines.

• The Website is since re-launched on 15.04.2011.

4.6.(b) Software Development:

Various software requirements of the Bank are being developed in-house by the in-

house software development team. The software technologies used in the bank were

heterogeneous. Now, the Bank has also introduced uniform technology for in-house

developed software packages. This has helped the Bank in reducing the cost of ownership

of in-house software packages. Bank has developed new software packages for handling

government business. Through these new initiatives the Bank is able to Settle government

business on time, monitor the government business more efficiently and reconcile the

transactions more promptly and accurately.

In order to reduce the usage of paper and to align with the global GREEN

movement, we have introduced Online Reporting for inter office communication through

our Intranet website Subnets. Online reporting from branches to Head Office Departments

and Central Processing Centres has saved on time and improved efficiency. We have

introduced paper less online reporting for ATM customer complaints and communication

between branches and HRMS Cell. Online reporting modules are planned to be introduced

in other areas like CPPC (Centralized Pension Processing Centre) etc., during the current

year.

New programmes and reports have been added in the MIS module built in the

Banks' intranet to cater to the various MIS requirements. Monthly performance review,

Balance sheet etc, are being centrally compiled and sent to branches through intranet

thereby reducing the workload at the branches.

4.6.(c) Management Information System (MIS)

The MIS Department consolidates and maintains the Credit Information

System(CIS) database apart from collating information from branches and Head Office

Departments for submission of various statements to Reserve Bank of India like

submission of Basic Statistical returns, Sectoral Deployment of Funds etc,. The

Canara Bank School of Management72

Department also provides information to the Top Management and other user Departments

in Head Office.

The scope of CIS has also been extended to submission of data relating to Credit

Information Bureau (India) Limited (CIBIL) to whom the Department is submitting

individual borrower-wise credit information every month after due processing. In turn, the

Credit Information Reports (CIRs), drawn from the CIBIL database, serve as important

fraud prevention tool to the credit appraisal/sanction functionaries. The Department has

developed a webpage in the SBMNEST, providing useful information to the controlling

offices and the branches. The Department has also developed the software/ formats of

Balance Sheet, Profit and Loss Account, MOC etc, and has hosted the same in the

SBMNEST for use by the branches.

SYSTEMS AND PROCEDURES

Systems and Procedure Department is a special resource available at Head Office

for effective management of work organization concerning Bank`s Systems and

Procedures. The department regularly reviews the systems and procedures in line with the

technological developments in the areas of Core Banking and the alternate delivery

channels.

The department has, in the year under report, introduced Inter Office Instrument

in all branches/SBI and other Associate Banks in lieu of Demand Draft and Banker`s

Cheque payable in any branches of the Bank/SBI and Associate Banks. The department

has introduced Universal Pass Book for both deposits and advances accounts. The

department has promoted Government of India Green Initiative Policy by effecting

payments to vendors/contractors through NEFT/RTGS.

The department also reviewed the service charges structure with regard to locker,

multicity cheques transactions, non-maintenance of any time quarterly balance in SB

accounts of P segment customers etc. The department has also updated directory of offices

and designed monthly visit report of single officer branch/fence sitting branches.

4.6.(d)BUSINESS PROCESS RE-ENGINEERING (BPR)

. The Bank has rolled out various BPR initiatives since 2004, in consonance

with the design principles provided by the Corporate Centre. The BPR initiatives

leverage technology to significantly enhance customers` satisfaction and convenience.

Canara Bank School of Management73

BPR initiatives rolled out over the years have stabilized and started yielding desired

results. So far 19 BPR initiatives have been rolled out.

Based on the feedback received from the branches and the initiatives, some

changes in the processes have been brought out to improve efficiency.

Our Centralized Clearing Processing Centres (CCPCs) at Bangalore., Mysore

and Chennai undertake entire clearing work of all the linked branches. All the

branches at Mysore have been linked to CCPC Mysore during the year. Service branch,

Chennai and Bangalore were integrated with CCPC, Chennai and Bangalore respectively

during the year.

Cheque Transaction System has been implemented during the year at Chennai

and is working successfully. The process of implementing the Cheque Transaction System

at Bangalore is in progress and it will be extended to other centers in a phased manner as

the Reserve Bank of India will direct from time to time.

33 new branches have been opened at Bangalore, Mysore Zone, Hubli Zone,

Chennai Zone, and Delhi Region as per BPR design principles. 59 branches have been

redesigned during renovation/shifting to new premises as per BPR design principles at

Bangalore, Mysore, Chennai, Hyderabad, Mumbai, Delhi and Kolkata.

4.6. Vigilance and Inspection Department

Audit and Inspection

As against a target of 545 branches/BPR entities envisaged in theannual audit

plan, 586 branches/BPR entities were subjected to InternalAudit and IS Audit during the

year under reference. That apart, 17 newlyopened branches were subjected to Spot Audit,

7 Head Office Departments and 2 Staff Training Centres were also subjected to Internal

Audit.

73 branches (Scale IV & above) were subjected to Expenditure Audit during the

year. 423 branches selected, with advance levels of more than Rs. 10.00 Crores and

income leakage of Rs. 1.00 lakhs & above were subjected to Special Revenue Audit

to ensure that there is no income leakage (as against 388 branches during previous year)

140 branches/offices covering 55.66% of deposits and 72.59% of advances and

7 Head Office Departments were subjected to concurrent audit for bringing

improvement in functioning, compliance with the laid down systems and procedures.

The findings enumerated in these audit reports are appraised to the Audit Committee of

the Board and follow-up actions are ensured.

Canara Bank School of Management74

Structured meetings were held at quarterly intervals at Zonal Centres and

half-yearly intervals at Regions headed by Deputy General Managers during 2011-12,

to follow up pending compliances and bring about qualitative improvement in

compliances at all levels. Workshops were conducted at various centres (Bangalore,

Hyderabad, Chennai, Mumbai, Mysore & Delhi covering all the Modules) during 2011-12

for concurrent auditors to update their knowledge and skills. Also, two training

programmes were conducted for RFIA (Risk Focussed Internal Audit) auditors during

2011-12

4.6.(a) Credit Audit

The audit of loan appraisal and amount management for high value credit

accounts with the aim of improving the asset quality of the Bank is undertaken by the

Credit Audit Department. Accounts with total exposure of Rs. 2 crore and above are

covered under Credit Audit. During the financial year 1135 loan accounts in 173

branches were covered under Credit Audit. Out of 1135 accounts 1019 accounts (90%)

were rated as Low and Very Low Risk accounts.

4.6.(b)Vigilance

Vigilance administration as an important aspect of management function is

carried out as per the directives of the Central Vigilance Commission so as to achieve

good Corporate Governance for the overall growth of the bank.

To create better preventive vigilance awareness and to prevent incidence of

frauds, various preventive vigilance activities like surprise visit to branches, formation

of preventive vigilance committees at all major branches and BPR entities, sessions in

the staff training centers, surprise verification of cash etc., are being undertaken by the

Vigilance Department.

The Fraud Monitoring and Investigation Cell (FMIC) under the Vigilance

Department monitors certain critical areas of branch functioning on regular basis as part

of surveillance responsibilities. Besides, to speed up and monitor disciplinary

proceedings, the Chief Managers, General Banking/ Administration at the Zonal/Regional

Office level are designated as Zonal Vigilance Officers as an extension of the Vigilance

structure at Head Office.

The officers from Vigilance Department conducted surprise inspections of

53 offices/branches during the year under report. The main areas of scrutiny are

Canara Bank School of Management75

adherence to systems and procedures, rotation of staff and deficiencies in fraud-prone

areas. The deviations and other irregularities are brought to the notice of the

Module/Regional Heads for taking corrective actions. Vigilance Department is bringing

out a Quarterly House Magazine, which contains vital information on vigilance related

matters useful to the operating staff.

In accordance with the guidelines of the Central Vigilance Commission, the

`Vigilance Awareness Week` was observed at all the offices of the Bank from 31st

October 2011 to 5th November 2011. The focus of observing the Vigilance Awareness

Week was oriented towards evolving and effectively implementing preventive techniques

in vigilance administration, which includes transparency, accountability and fair play,

objectivity and timely response in dealing with matters relating to public administration.

Besides, the role of leveraging of technology in respect of all systems and processes for

deliverance of services, which has to be synchronized through use of technology was

strongly emphasized.

The Vigilance Department is maintaining liaison with outside agencies like

the Central Vigilance Commission and Central Bureau of Investigation and also

effectively coordinating with various departments within the bank so that vigilance cases

are disposed of speedily.

As per the directions of Government of India, a Vigilance set up has been

established in Cauvery Kalpatharu Grameena Bank sponsored by the bank and the Chief

Vigilance Officer of the bank is overseeing the vigilance administration in that Bank.

Audit Committee of the Board

In terms of directives from RBI, the Audit Committee of the Board has been

constituted. The committee comprises of two non official Directors, nominee Director

from the RBI and nominee Director from the SBI. The quorum for the ACB meeting is 3

Directors. The Chairman of the ACB is a Chartered Accountant. The Audit Committee of

the Board provides directions and also oversees the operation of the total audit functions in

the bank with special focus and follows up on:

• Exposure to sensitive sectors i.e., capital market and real estate.

• Inter Branch/Inter Bank reconciliation.

• Performance of Audit/Inspection Department.

• Inspection Reports of poorly rated branches.

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• Position of housekeeping (i.e. balancing of books, clearing differences,

Reconciliation of Nostro Accounts).

• Review of Loss Assets with balances of Rs. 10 Lakhs and above outstanding for

more than two years and where legal action has not been initiated.

• Review of Inspection Reports of specialised and extra large branches.

• Review of frauds.

• Follow up of Statutory Audit Reports of the Bank.

• Follow up of Inspection Reports of RBI.

• Compliance Certificate from Compliance Officer.

• Corporate Governance - Clause 49 of the Listing Agreement.

• Policies with regard to Risk Focused Internal Audit and Credit Audit.

• Review of annual accounts and financial results of the Bank.

• Review of IS Audit Policy.

• ATM Reconciliation status at Link Office and Branches.

The Committee interacts with external auditors before finalisation of the

annual/half yearly /quarterly financial accounts and reports. The Committee meets at least

once in a quarter and not less than six times in a year. During the year 2010-11, the Audit

Committee of the Board met seven times overseeing Inspection and Audit functions of the

Bank. The directions of the ACB are being communicated to various operating

functionaries and compliance obtained. 93% of our branches have secured 'Well

Controlled ‘or 'Adequately Controlled' rating (above satisfactorily run rating) and there is

no ‘Unsatisfactory' rated branch

Canara Bank School of Management77

SWOT

ANALYSIS

Chapter-5

Canara Bank School of Management78

SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the

environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used

technique through which managers create a quick overview of a company’s strategic

situation. The technique is based on the assumption that an effective strategy derives from a

sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external

situation (opportunities and threats). A good fit maximizes a firm’s strengths and

opportunities and minimizes its weaknesses and threats. Accurately applied, this simple

assumption has powerful implications for the design of a successful strategy.”

Strength

1. Good Brand Name because it is related to central government and people can

trust the Bank. They give good facilities to customers.

2. Nationwide networking of branches. 737 branches (as on 31.03.2012) In

every state and in every district there are SBM branches. The total work done by using

internet. Online facility is also available in SBM.

3. Multiple product & service. It is related to all SBM where you get the facility

of taking money in any ATM. It provides online banking also

4. More number of customers all over the World because everyone trusts SBM.

5. Internet Banking & recent trends of Banking. It provides online Banking

where you can transfer money from one account to another account. You can use for

shopping purpose etc. SBM has got adequate ATM’s throughout India.

6. Good Information security policy.

7. Huge public deposit money and backup from government.

8. Head Quarters is located in Bangalore.

9. Excellent Customer Service (E- banking, Mobile banking, ATM facility),

Customers can lodge a complaint Online by just filling a online form which may not take

more time.The Customer can apply

10. Security of the Customers.

11. Interest rate & service charges laid by the SBM is low compared to many

private banks.

12. Strong domestic market position sustaining reach and customer

confidence .

13. Strong capital position helping pursue growth initiatives

Canara Bank School of Management79

Weakness

1. No separate branch for SBM life and SBM mutual Fund. It depends on SBI.

2. Low awareness of the products offered among the people.

3. Comparing to some private Banks, SBM has less modernization of infra

structure.

4. Since more employees are working, the interference of trade union is yet

another constraint.

5. Bank is not open for 7 days in a week.

6. Marketing & Advertisement strategies adopted by bank is low compare to

private sectors .

7. Reduction in the asset quality increasing non performing asset’s ratio.

8. Susceptible to political interventions

Opportunities

1. Large potential Market due to pickup in economic activity.

2. Introduction of innovative product which will lead to higher growth.

3. Massive marketing and Massive customization

4. Chances for increasing more investment avenues and designing various

schemes for the customers. Thereby, all the people all over India will be a customer one

way or other.

5. SBI could be the highest beneficiary from the increasing adoption of E-

transactions

6. Investments in information technology will decrease transaction costs of SBI

7. New business initiative will expand the market share and increase the

revenues

8. Growth in general insurance industry will help increasing the market share

Threats

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1. Huge competition due to private Banks and lot of competitors. They provide

lot of facilities comparing to government Banks.

2. Entry of new private sectors due to globalization and privatization.

3. Economic recession prevailing all over the World.

4. Political instability and interference in Administrative affairs.

5. Global economic slow down could reduce demand for banking

services in India

Canara Bank School of Management81

Findings

Canara Bank School of Management82

Chapter -6

Operations and Management Department:

1) Its interdepartmental coordination is very less.

2) There is no clear training policy for identifying training needs and training.

Planning and Development Department

1) Insufficient staff in areas like marketing

2) Marketing department has very less focus on sales and business development

Finance Department

1) Compared to the previous year the bank as made as growth in its lending

advances & receiving deposits.

2) There is a decrease in the net profit of the company

Commercial and Institutions Department

1) There is lots of documentation and slow transactions.

2) Identifying growth sectors of industries and specifically targeting companies

in such sectors

Treasury Department

1. )Helps in maintaining the Assets and Liabilities

2. )It also helps in bad debts recovery

Technology Department

1) Systems breakdown frequently effecting day to day operations and also

leading to customer’s dissatisfaction.

2) Data warehousing is still in process of implementation.

3) There is a improvement in the technology use

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Vigilance and Inspection Department

1) It helps in effectively implementing preventive techniques like transparency,

accountability and fair play, objectivity and timely response in dealing with

matters relating to public administration.

2) It helps to prevent incidence of frauds in the company as there will be huge

transactions

Recommendation

1. To increase the profitability of Bank they may aim at reducing the cost of its

deposits.

2. The investment portfolio of the Bank may be enhanced for increasing yield on

the assets.

3. Majority of the older employee lacks sufficient soft skill hence they should be

trained in order to increase efficiency of work.

4. There is need of better customer relationship management & awareness program

to make the customer aware about all product and service.

5. There should be minimum documentation and speedy transactions.

6. Need for establishment of better industrial relation in order to deal with

formation of trade unions and achieving higher efficiency of employees.

7. Modernization of infrastructure through benchmarking the global best practices

in order to achieve customer attention and loyalty.

8. Need for consistency and growth in technology in order to keep up position and

deal with competition.

9. Quick implementation of enterprise data warehouse.

10. Need to compete with Private and Foreign banks.

Conclusion

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Being a huge government sector central Bank SBM. in association with parent SBI

along with other subsidiary Banks it has got enormous resources at its disposals to give

wide range of services to the customers & able to meet its peer competitors sucessfuly &

achieve its objective & Vision of “Working For Better Tomorrow” & Satisfy their

customer.

As for my report on, “ORGANIZATIONAL STUDY AT SBM” is concerned it is

really an enhancing experience for me in so many ways. In fact I can rightfully claim to

have achieved my predetermined objective.

Canara Bank School of Management85

Statement showing shareholding pattern of State Bank of Mysore as on

31stMarch 2012

Dmat No of Shareholders

Percentage No of shares

Promoter

Foreign Promoter

0 0 0.00 0

Indian Promoter 43,212,078 1 92.33 43,212,078

Total Promoter 43,212,078 1 92.33 43,212,078

Non Promoter

Institutions

Mutual Funds / UTI

0 0 0.00 0

FI/Bank 2,630 8 0.01 3,840

Insurance 777,758 3 1.66 777,808

Canara Bank School of Management86

Govt 0 0 0.00 0

FII 0 1 0.00 200

Other 0 0 0.00 0

Non-Institution

Bodies Corporate

108,539 321 0.25 118,179

NRIs/OCBs 31,493 157 0.07 32,133

Individuals 1,699,612 27,799 5.63 2,636,845

Others 15 1 0.00 15

Total Non-Institution

1,858,351 28,392 6.00 2,805,864

Total Non Promoter

2,638,739 28,404 7.67 3,587,712

Depository Receipts

0 0 0.00 0

Total 45,850,817 28,405 100.00

46,799,790

Profit & loss a/c

Mar 2012

Mar 2011

Mar 2010

Mar 2009

Mar 2008

I. INCOME :

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Interest Earned 5,078.43

4,079.08

3,558.92

3,247.28

2,494.40

Other Income 516.39 455.18 425.72 515.25 432.36

TOTAL 5,594.82

4,534.26

3,984.64

3,762.53

2,926.76

II. EXPENDITURE :

Interest expended 3,494.14

2,443.07

2,322.36

2,409.02

1,732.10

OperatingExpenses 1,041.06

917.44 724.88 665.09 616.91

Provisions& Contingencies 690.47 673.12 491.63 351.51 258.90

TOTAL 5,225.67

4,033.63

3,538.87

3,425.62

2,607.91

III. PROFIT/LOSS

Net Profit for the year 369.15 500.63 445.77 336.91 318.85

PriorYear Adjustments -1.50 -1.50 0.00 0.00 0.00

Profibrought forward 0.00 0.00 0.00 0.00 0.00

TOTAL 367.65 499.13 445.77 336.91 318.85

IV.APPROPRIATIONS

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Transferto Statutory Reserves 92.29 126.33 111.44 84.23 243.01

Transfer to Other Reserves 220.97 318.41 292.35 210.56 33.72

Proposed Dividend /Transfer to Government

54.39 54.39 41.98 42.12 42.12

Balance c/f to Balance Sheet 0.00 0.00 0.00 0.00 0.00

TOTAL 367.65 499.13 445.77 336.91 318.85

Equity Dividend 46.80 46.80 36.00 36.00 36.00

Corporate Dividend Tax 7.59 7.59 5.98 6.12 6.12

Equity Dividend(%) 100.00 100.00 100.00 100.00 100.00

Earning Per Share (Rs.) 77.26 105.35 122.16 91.89 868.69

Book Value 729.21 662.28 575.94 464.20 3,827.25

Statement Of Balance Sheet

Note: 1 crore = 10 million

Mar 2012 Mar 2011 Mar 2010 Mar 2009 Mar 2008

CAPITAL AND LIABILITIES

Capital 46.80 46.80 36.00 36.00 36.00

Canara Bank School of Management89

Reserves and Surplus

3,941.73 3,636.52 2,629.29 2,235.04 1,341.81

Deposits 50,186.30 43,225.47 38,880.00 32,915.77 27,462.40

Borrowings 4,425.59 3,307.95 2,274.01 3,827.08 1,731.53

Other Liabilities & Provisions

1,829.08 1,910.33 1,634.82 1,497.01 2,497.96

TOTAL 60,429.50 52,127.07 45,454.12 40,510.90 33,069.70

ASSETS

Cash& Balances with RBI

3,025.85 2,705.68 2,765.62 1,735.05 2,661.55

Balances with Banks & money at all & Short Notice

336.86 234.60 213.85 407.66 244.54

Investments 14,732.70 12,927.14 11,494.41 11,377.96 8,402.76

Advances 39,835.31 34,029.81 29,535.86 25,616.05 21,027.14

Fixed Assets 749.42 725.00 732.99 731.36 122.99

OtherAssets 1,749.36 1,504.84 711.39 642.82 610.72

TOTAL 60,429.50 52,127.07 45,454.12 40,510.90 33,069.70

Contingent 17,969.82 16,966.51 20,057.47 19,114.40 14,875.43

Canara Bank School of Management90

Liabilities

BIBLIOGRAPHY

Books:

1. L.M. Bhole. Financial Institution and Markets. 4th Ed. Tata McGraw-Hill

Publishing Company Limited, Delhi, 2004, pp3.1-3.4.

2. V S P Rao, Human Resource Management, 2nd Edition, Excel Books.

Articles

1. M. Srinivas Narayana.(2009) “A study of social responsibility of

commercial Banks”, Finance India, March, No XXIINO1.

2. Annual reports of State Bank of Mysore, from 2011-12

3. Company Manual

4. Company Documents

Website:

1. researchandmarkets.com

2. www.statebankofmysore.com

3. www.moneycontrol.com

Canara Bank School of Management91

Canara Bank School of Management92