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PROJECT REPORT ON
EVALUATING THE PERFORMANCE OF CANARA BANK AT
BRANCH LEVEL
(MBA)
(2009-11)
UNDER THE SUPERVISION AND GUIDANCE OF
Prof. RKP
SUBMITTED BY
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DECLARATION
I SHIRDHAR .S. HUGAR hereby declare that the project report on the topic
PERFORMANCE EVALUATION OF CANARA BANK AT BRANCH LEVEL
Conducted at CANARA BANK, Bangalore prepared and submitted by me under the proper
guidance of Prof. RKP, JGI MATS Institute of Management & Entrepreneurship,
BANGALORE.
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ACKNOWLEDGEMENT
This is my duty to acknowledge all the persons who had helped me in the fulfillment of the
project because it was not possible for me to complete the project. So, it becomes my foremost
responsibility to acknowledge those who had played a great role for the completion of the
project.
So in the same sequence at very first, I would like to acknowledge my parents because of whom
I got the existence in the world for the inception. Later on I would like to confer the flower of
acknowledgement to my guide and mentor as well as teacher Prof.-RKP and other faculty
members who taught me that how to do project through appropriate tools and techniques. Since
Canara bank trusted me and given me a chance to do my integrated internship. So, I would like
to give thanks to the organization and especially to MR. PUTTARAJU (INVESTMENT
OFFICER) from the depth of my heart. Rest all those people who helped me are not only matter
of acknowledgment but also authorized for sharing my success.
I would like to thank all the respondents who offered their opinions and suggestions through the
process that was conducted by me.
Last but not the least I would like to thank my fellow management trainees from my college. By
interacting with them, I was able to generate more meaningful ideas that have enabled me to
further complete this project successfully.
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ABSTRACT
The project is about evaluation of performance at Canara Bank at branch level. There are various
factors or variables which affect the banking industry performance. This project defines some of
the factors that have an effect on the performance of the branch. In this report a detailed analysis
of the factors affecting the branch is carried on and the variable are identified to study the effect
of various factors on the banks business. Here, various factors like number of Current Account,
number of salary accounts, number of loans taken, customer satisfaction etc.., are considered
which reflect the performance of the bank at branch level. The project mainly deals with the
implementation of performance management at bank’s branches.
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1. INTRODUCTION TO THE STUDY :
A) Research Background:
The banking system is an integral part of any economy. It is one of the many institutions that
impinges on the economy and affect its performance. Economists have expressed a variety of
opinions on the effectiveness of the banking systems in promoting or facilitating economic
development. As an economic institution, the bank is expected to be more directly and more
positively related to the performance of the economy than most non-economic institutions.
Banks are considered to be the mart of the world, the nerve centre of economies and finance of a
nation and the barometer of its economic perspective .They are not merely dealers in money but
are in fact dealers in development. Banks are important agencies for the generation of savings of
the community. They are also the main agents of credit. They divert and employ the funds to
make possible fuller utilization of the resources of a nation. They transfer funds from regions
where it is available in plenty to where it can be efficiently utilized and the distribution of
funds between regions have the way for the balanced development of the different regions . They
are thus agents that create opportunities for the development of the resources to speed up the
tempo of economic development. In the Indian financial system, commercial banks are the major
area to utilize the financial resources. They have a role in the growth of a developing country like
India. The role of banks in accelerating the economic development of a country like India has
been increasingly recognized following the nationalization of fourteen major commercial banks
in July 1969 and six more banks in April 1980. With nationalization, the concept of banking has
undergone significant changes. Banks are no longer viewed as mere lending institutions. They
are to serve the society in a much bigger way with a socio-economic development oriented
outlook. They are specially called upon to use their resources to attain social and economic
development.
To achieve the varied objectives of nationalization, the nationalized banks have introduced
innovative schemes in the mobilization of resources as well as its disbursement. Nationalization
resulted in a comprehensive programming of branch expansion, innovations in mobilization of
Savings and lending to priority sectors and weaker sections of the society and soon.
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**PERFORMANCE MANAGEMENT
Performance management includes activities to ensure that goals are consistently being
met in an effective and efficient manner. Performance management can focus on performance of
the organization, a department, processes to build a product or service, employees, etc.
Information in this topic will give you some sense of the overall activities involved in
performance management
C) Objectives:
The important objectives of the present study are:-
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D) Methodology:
Performance evaluation is an important pre-requisite for sustained growth and development of
any institution. As in the case of any institution, the evaluation of a bank's performance too has
to be undertaken in relation to its goals and objectives. Though many studies have been
undertaken in India for evaluating the performance of banks, no single or universally acceptable
technique/methodology has emerged so far. Assessment of a bank's performance is beset with
many difficulties on account of its diverse objectives that influence its performance: the affairs of
the nationalized bank are conducted not merely on financial or business considerations in which
case it would have been easier to evolve suitable parameters and thereby evaluate its
performance. The researcher, after much deliberations has attempted to convert the broad
objectives of the nationalized banks in terms of certain specific parameters to facilitate the
evaluation of their performance. This is done in the light of the objectives of nationalisation as
well as on the basis of the recommendations of the Narasimham Committee on the Financial
System. After observing the various performance evaluation studies and assessing the
gaps/deficiencies that exist in this field, the researcher has used six broad parameters in this
study to evaluate and assess the performance of Canara Bank so as not to overlook the various
aspects of the problem. The following are the six basic parameters used in the study to evaluate
the performance of the individual nationalised banks.
1. Capital adequacy and quality of assets
2. Profitability
3. Social banking
4. Growth
5. Productivity
6. Customer service
The above basic parameters are the aggregate of a number of sub-parameters. All the basic
parameters and sub-parameters are important in varying degrees towards an evaluation of the all
round performance. However, it is hard to determine the influence of each of them independently
towards performance.
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E) Sources of Data:
The data required for the study is collected from both primary and secondary sources. Data
pertaining to customer service, which is mostly qualitative in nature, is collected by a survey
covering 2 branches of the canara bank using an interview schedule. The schedule consisted of
14 questions brought under eleven sub-headings or areas of concern to customers. Reliable
secondary data is made use of in areas where primary source is not accessible. The Balance sheet
of the branch and the Standard of the asset invested datasheet are some of the most important
source based on which the present study is accomplished.
A comprehensive picture of Canara Bank could not be fully revealed by the present study, for,
the study could cover a present year data only. And included with this the study made covers
only 2 of the branches of Canara Bank and with this the sample size of the respondent was very
small to come to a good conclusion or make a good decision.
The performance effectiveness of the nationalized banking industry that controls more than 90
percent of the banking business in India is an issue of serious concern. Though a number of
studies are available on banking industry, there is storage of a comprehensive academic study on
the performance effectiveness and managerial efficiency of the nationalised banks. A review of
the available literature on banking reveals that no exclusive study on the performance
effectiveness of banks has so far been attempted in India. In this context the present study may
fill the gap to a certain extent. Further, it would throw some light on the performance of Canara
Bank on the basis of the performance of its branches. Since the canara bank as a whole will
perform better only it’s all branches will perform better. So, the performance of branches plays a
vital role as a whole.
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INDUSTRY PROFILE
Banking in India originated in the first decade of 18 century with The General Bank of India
coming into existence in 1786. This was followed by Bank of Hindustan and Bengal Bank. Both
these banks are now defunct. The oldest bank in existence in India is the State Bank of India
being established as "The Bank of Bengal" in Calcutta in June 1806.The Reserve Bank of India
formally took on the responsibility of regulating the Indian banking sector from1935. After
India's independence 1947, the Reserve Bank was nationalized and given broader powers.
Currently (2009-10), 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.
The Modern Banking Functions are Fund based and Non-Fund based functions. These functions
of a bank are those in which banks extend various services to their customers or add their
commitments to certain transactions undertaken by their clients and charge their fees/
commissions for the services rendered by them / their commitments added to the transactions
undertaken by the clients. This type of activities is popularly known as ‘Non-fund facilities’
provided by Banks. The products and services banks generally deal in are:
1. PRODUCT
BANKS PRODUCTS:
(A) DEPOSITS:
Savings,
Current,
Fixed deposits
(B) ADVANCES:
(1) Fund Oriented:-
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Term Loan
Clean Loan
Bills Discounting
Advances
Pre-shipment Finance
Post-shipment finance
Secured and Unsecured lines of credit
(D) CONSULTANCY:
Investment Counseling
Project Counseling
Merchant Banking, and
Tax Consultancy
(E) MISCELLANEOUS:
Credit card
Remittances
Collections
Sale of Drafts
Standing instructions, and
Trusteeship
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In banking the products are services. Services cannot be seen or protected like goods. The
potential buyer of the services can form an opinion about the services offered.
In India the banks are being segregated in different groups. Each group has their own benefits
and limitations in operating in India. Each has their own dedicated target market. Few of them
only work in rural sector while others in both rural as well as urban. Many even are only catering
in cities. Some are of Indian origin and some are foreign players.
The RBI has shown certain interest to involve more of foreign banks than the existing one
recently. This step has paved a way for few more foreign banks to start business in
India. The lists of banks are mentioned below.
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LIST OF FOREIGN BANKS
1 Ab Bank Ltd.
2 Abn Amro Bank N.V
3 Abu Dhabi commercial Bank ltd.
4 Bank of America N.A
5 Bank of Bahrain& Kuwait BSC
6 Barclays bank plc
7 BNP Paribas
8 Calyon Bank
9 Citi Bank N.A
10 Deutsche bank Ag
11 JP Morgan chase bank, national association
12 Krung Thai Bank public company.
13 Mashreqbank PSC
14 Mizuho Corporate Bank Ltd.
15 Oman International Bank S A O G
16 Societe Generale
17 Standard Chartered Bank
18 State Bank of Mauritius Ltd.
19 The Bank of Nova Scotia
20 The Bank of Tokyo-Mitsubishi,UFJ Ltd.
21 The Development Bank of Singapore Ltd.
22 The Hongkong & Shanghai Banking Corp. Ltd.
23 UBS AG
24 United Overseas Bank Limited.
ASSOCIATE BANKS OF SBI
1 State Bank of Bikaner & Jaipur
2 State Bank of Hyderabad
3 State Bank of Indore
4 State Bank of Mysore
5 State Bank of Patiala
6 State Bank of Travancore
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Threat of competitors
Large no of banks
High market growth
rate
Barriers to entry Threat of substitute
Low switching costs
Undifferentiated
Product differentiation very services Non banking financial sector
difficult High fixed cost increasing rapidly
Licensing requirement High exit barriers Deposits in posts
Stock Market
Porter’s model is based on the insight that a corporate strategy should meet the opportunities and
threats in the organizations external environment. Especially, competitive strategy should base
on and understanding of industry structures and the way they change. Porter has identified five
competitive forces that shape every industry and every market. These forces determine the
intensity of competition and hence the profitability and attractiveness of an industry. The
objective of corporate strategy should be to modify these competitive forces in a way that
improves the position of the organization. Porter’s model supports analysis of the driving forces
in an industry. Based on the information derived from the Five Forces Analysis, management can
decide how to influence or to exploit particular characteristics of their industry.
EXPLAINATION OF PORTER’S MODEL:-
1. RIVALRY AMONG COMPETING FIRMS
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the interest. Hence the intensity of rivalry is very high. The no of factors has contributed to
increase rivalry those are.
1. A large no of banks
There is so many banks and non financial institution fighting for same pie, which has
intensified competition?
2. High market growth rate
India is seen as one of the biggest market place and growth rate in Indian banking
industry is also very high. This has ignited the competition.
3. Homogeneous product and services
The services banks offer is more of homogeneous which makes the company to offer
the same service at a lower rate and eat their competitor market’s share.
4. Low switching cost
Costumers switching cost is very low, they can easily switch from one bank to another
bank and very little loyalty exist.
5. High fixed cost
6. Undifferentiated services
Almost every bank provides similar services. Every bank tries to copy each other services
and technology which increase level of competition.
7. High exit barriers
High exit barriers humiliate banks to earn profit and retain customers by providing world
class services.
8. Low government regulations
There are low regulations exist to start a new business due lpg policy adopted by India.
Banking industry is governed by Reserve Bank of India. Reserve Bank of India is the authority
to take monetary action which leads to direct impact on circulation of money in the Economy.
The rules and regulation lay down by RBI.
Suppliers of banks are depositors .these are those people who have excess money and
prefer regular income and safety. In banking industry suppliers have low bargaining power.
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1. Nature of suppliers
Suppliers of banks are those people who prefer low risk and those who need regular
income and safety as well. Banks best place for them to deposits theirs surplus money.
2. Few alternatives
1. Large no of alternatives
Customers have large no of alternatives, there are so many banks, which fight for same pie.
There are many non financial institutions like ICICI, HDFC, AND IFCI, etc. which has also
jump into these business .there are foreign banks , privet banks, co-operative banks and
development banks together with specialized financial companies that provides finance to
customers .these all increase preference for customers.
2. Low switching cost
Cost of switching from one bank to another is low. Banks are also providing zero balance
account and other types of facilities. They are free to select any banks service. Switching cost are
becoming lower with internet banking gaining momentum and a result customers loyalties are
harder to retain.
3. Undifferentiated service
Bank provide merely similar service there are no much diffracted in service provides by different
banks so, bargaining power of customers increase. They cannot be charged for differentiation.
4. Full information about the market
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Customers have full information about the market due to globalization and digitalization
Consumers have become advance and sophisticated .they are aware with each market condition
so banks have to be more competitive and customer friendly to serve them.
For good creditworthy borrowers bargaining power is high due to the availability of large
number of banks
Reserve Bank of India has laid out a stagnant rules and regulation for new entrant in Banking
Industry. We expect merger and acquisition in the banking industry in near future. Hence, the
industry is less porn of new competitor.
Barriers to an entry in banking industry no longer exist. So lots of privet and foreign
banks are entering in the market. Competitors can come from an industry to ‘disinter mediate
‘bank product differentiation is very difficult for banks and exit is difficult. So every bank strives
to survive in highly competitive market so we see intense competitive can mergers and
acquisitions. Government policies are supportive to start new bank. There is less statutory
requirement needed to start a new venture but every bank to tries to achieve economies of scale
through use of technology and selecting and training manpower. There are public sector banks,
private sector and foreign banks along with non banking finance companies competing in similar
business segments.
Every day there is one or the other new product in financial sector.
Banks are not limited to tradition banking which just offers deposit and lending. In addition,
today banks offers loans for all products, derivatives, Forex, Insurance, Mutual Fund, Demit
account to name a few. The wide range of choices and needs give a sufficient room for new
product development and product enhancement.
Substitute products or services are those, which are different but satisfy the same set of
customers. In private banking industry following are the substitutes:
NBFC: Non-banking financial Institutions play an important role in giving financial
assistance. Mobilization of financial resources outside the traditional banking system has
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witnessed a tremendous growth in recent years in the India. NBFC is a close substitute of
banking in respect of raising funds. Borrower can easily raise funds from NBFC because it
requires less formal procedure for getting funds compare to private banks.
Post Office Products: Post office is also providing some service like fixed deposit facility,
saving account, recurring account etc. The interest rate of saving account is higher than
private banks. It is fully secured by the government so people who do not want to take risk
for them post office saving is good substitute.
Government Bond: Govt. Bond also attracts savings from the general public. It is less risky
and more secured as compare to savings in private banks.
Mutual Funds: Mutual funds are also now proving as good substitutes for banks. They
assure for providing high return with less time in comparison of banks. The administrative
expenses are also very low as compared to banks. Investment in Mutual funds is more
flexible than investment in banks.
Stock Market: People who are ready to bear risk and wants a high return on their
investment, stock market is a good substitute for them. Day by day investors are moving
towards stock market as interest rate in banks are decreasing. So now stock market has
proved as a big competitor for baking sector.
Debentures: Debentures is also proved as a good substitute of bank’s fixed deposit as return
on debenture is fixed and high. There are different types of debentures, which attract various
classes of investors.
Other Investment Alternatives: Now common people’s attraction is shifting from banks to
other various alternatives such as gold, precious metals, land, small savings etc. As we can
see the growing trend in these alternatives in comparison of decreasing interest rates in
banks.
Performance of Industry
newly granted autonomy would certainly make the PSBs more competitive and
Expressed the need to relax the prescribed limit of single ownership and cross holding cap in
the Ownership and Governance guidelines for Private sector Banks.
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75 percent of the foreign bank respondents expressed that time frame prescribed to expand
through Merger & Acquisitions should have been less and equal number voiced that the
guidelines are not in line with international norms.
Consolidation in the banking industry followed by Technological up radation was considered
as key factors currently required to enhance the international
Competitiveness of the Indian banks.
Free trade agreements (FTA) considered a positive step in the area of banking by almost all
respondents. The available market size and the level of access provided to Survey on Status
of Indian banking Industry – Progress & Agenda ahead 2
Indian banks in foreign countries should be the key factors in consideration, while entering
into such agreements, as highlighted by 76 percent of banks Rise in the interest rates
imminent say 64 percent survey respondents. Majority expects increase by 0.5 percent.
88 percent of Public and private sector banks considered HRD related issues as one of 15 the
biggest challenge in the process of consolidation.
83 percent respondent banks claim to have more than 85% level of technological
advancements in their banks with remaining banks stating it to be around 65-85%.
All our respondents emphasized that customer retention is significantly important for the
profitability of the banks.
More than 70 percent of banks felt the need of advanced security software’s and stricter
security policies to safeguard and ensure the security of customer information.
Some of the legal changes suggested are detailed in the survey.
53 percent of respondent banks considered 6 months transition period to shift from MIFOR
rupee benchmarks for interest rate derivatives to be inadequate
Majority of banks felt that their Risk management framework for implementation of BASEL
II was well in place.
53 percent of our survey respondents intend to increase their retail portfolio by more than
25% in the year 2005-06.
Rising Indebtedness followed by lack of Technological advancements were identified as
biggest challenges that could affect the future growth of Retail banking.
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80 percent of survey respondents did not agree with the notion that housing loan is creating a
bubble.
Substantial progress made by banks in cleaning up the NPAs from their balance sheets, was
largely attributed to SARFAESI Act and increased provisioning on Doubtful debts by
majority of survey respondents.
Absence of Secondary Market for the trading of security receipt issued by ARCs was
identified as one of major problem in Indian Model of NPA management.
Separate NPA norms for the farm and the SME sector were recommended by large number
of respondents.
Survey on Status of Indian banking Industry – Progress & Agenda ahead 3
96 percent of all banks claim that the current growth of non-food credit is sustainable for
about 3-5 years.
Detailed information on banks sectoral exposure of credit reveals that over two-thirds of the
credit flow has been on account of retail, housing and other priority sector loans. Banks
credit flow exposure to large Enterprises continues to remain buoyant with recent indications
that credit to agriculture and Micro credit has also picked up.
71 percent of our survey respondents did not consider SMEs as an avenue of forced lending.
COMPANY PROFILE:
"A good bank is not only the financial heart of the community, but also one with an
obligation of helping in every possible manner to improve the economic conditions of the
common people" - A. Subba Rao Pai.(founder)
VISION
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MISSION
“To provide quality banking services with enhanced customer orientation, higher value creation
for stakeholders and to continue as a responsive corporate social citizen by effectively blending
commercial pursuits with social banking.”
PUNCHLINE:
“'Together We Can”
Company in brief:
Canara Bank (Canbank) founded as 'Canara Bank Hindu Permanent Fund' in July of the year
1906 at a small port in Mangalore, Karnataka, by late Sri. Ammembal Subba Rao Pai, a
philanthropist, this small seed blossomed into a limited company as 'Canara Bank Ltd.' in 1910
and became Canara Bank in 1969 after nationalization.
The Bank has undergone various phases in its growth path over hundred years of its existence.
The growth of Canara Bank was phenomenal, especially after nationalization in the year 1969,
attaining the status of a national level player in terms of geographical reach and clientele
segments. Eighties was characterized by business diversification for the Bank.
The Bank has expanded its domestic presence, with 3046 till (2009-10) branches spread across
all geographical segments. Apart from 111 specialized service branches, the Bank has 195
Extension Counters. In view of the centrality of customer convenience, the Bank provides a wide
array of alternative delivery channels that include over 2006 ATMs- covering 694 centers. Also
the Bank providing Internet and Mobile Banking (IMB) services 'Anywhere Banking' services.
Under advanced payment and settlement system, the Bank offers Real Time Gross Settlement
(RTGS) and National Electronic Funds Transfer (NEFT). Across the borders, the Bank's
presence comprised two overseas branches in London and Hong Kong, one representative office
in Shanghai, China, slated for conversion into a full-fledged branch and one Offshore Banking
Unit at NOIDA, U.P.
The Bank's 1000th branch was inaugurated in the year 1976. During the year 1983, overseas
branch of the bank was inaugurated at London and in the same year the bank's credit card was
instigated under the name of Cancard. Merger of the bank with the Laksmi Commercial Bank
Limited was happened in the year 1984. A year later, in 1985, the bank commissioned the Indo
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Hong Kong International Finance Limited. Canara Bank had launched the Canbank Mutual Fund
& Canfin Homes in the year 1987 and the Canbank Venture Capital Fund was started during the
year 1989.
The Bank had opened the factoring subsidiary during the year 1989-90 under the name of
Canbank Factors Limited. During the year 1992-93 became the first Bank to articulate and adopt
the directive principles of 'Good Banking'. One of its branches in Bangalore conferred with ISO
9002 certification in the period of 1995-96.
Canara Bank had opened a 'Mahila Banking Branch', first of its kind at Bangalore during the year
2001-02 for catering exclusively to the financial requirements of women clientele. During the
year 2002-03, the bank had entered into the capital market with the maiden IPO. As a value
added service, the bank had launched Internet & Mobile Banking Services in the year 2003-04.
A year after, in 2004-05, the bank's all branches were 100% computerised. In 2005-06, the bank
had entered into the 100th year in Banking Service, also in the same year launched Core Banking
Solution in selected branches and Canara Bank became as number One Position in Aggregate
Business among Nationalized Banks also in the same year the Bank had adjudged the 'Best
Public Sector Bank' in India under the 'Best Banks Survey' conducted by 'Financial Express-
Ernst and Young' for 2005-06.During the year 2006-07, the bank had retained its number One
Position in Aggregate Business among Nationalized Banks. Canbank singed the MoUs for
commissioning of Two JVs in Insurance and Asset Management with international majors.
Canbank was awarded the 'First National Award' instituted by the Ministry of Micro, Small &
Medium Enterprises, Government of India, for excellence in 'Micro & Small Enterprises (MSE)
lending' for 2006-07.
The Bank had launched the multilingual Biometric-voice enabled ATMs during September of the
year 2007, the number of such ATMs increased to 8 locations across India. Canara Bank is the
first bank in the country to launch mobile Biometric-voice enabled ATM in Bangalore rural.
The Bank has also launched a pilot programme of issuing Smart Cards to villagers in remote
areas. In keeping with a fast changing environment, Canara Bank launched a new brand identity
on 29th December of the year 2007, The new logo for Canara Bank is based on the idea of a
bond and is a representation of the close ties between the Bank and its varied stakeholders-
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customers, investors, employees, institutions and society at large, with a tag line 'Together We
Can'.
The Bank had conferred the Business Super brands Status for the year 2008. The Bank has
installed 629 offsite ATMs and 178 ATMs in railway stations. It has also set up 109 e-kiosks for
booking railway tickets. The Bank also introduced global Debit Card under VISA and MASTER
franchise. The Bank had a Debit-cum-ATM card base of (approx) 4.96 million as at March of the
year 2010.
Canara Bank aims to emerge as a Best Practices Bank' by pursuing global benchmarks in
profitability, operational efficiency, asset quality, risk management and expanding the global
reach. And also strongly believes that the next century is going to be equally rewarding and
eventful not only in service of the nation but also in helping the Bank emerge as a 'Global Bank
with Best Practices'. This justifiable belief is founded on strong fundamentals, customer
centricity, enlightened leadership and a family like work culture.
Deposits
Savings Bank Deposits An account for everyone
Savings Bank Gold A/c An account for High Networth Individuals
Can Saral A No- frill Savings Bank a/c for common man
Can Champ An exclusive account for Children
Canara Super Savings Salary A/c Exclusively for Salaried class
Canara Flexi A/c An account which fetches FD interest
Current Account An account for Business needs
Can Premium Current Account For High Networth Individual Traders, Businessmen
Kamadhenu Deposit Deposit A/c for Higher returns
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Fixed Deposit Deposit A/c for Interest returning at regular intervals.
Ashraya Deposit Deposit A/c for Sr. Citizens
Recurring Deposit Systematic Savings Plan for Individuals
Systematic Savings Plan for Institutions, Corporate,
Special Recurring Deposit
Govt. Undertakings
Can Bank Auto Renewal Deposit
A/c which rotates the deposit to fetch higher returns
(CARD)
Can Tax Saver A/c For Tax saving & Higher returns
Can Relax A/c Pension plan for High Networth Individuals
NRE Deposits Deposit A/c for Non- Resident Indians
Miscellaneous:
Insurance Products Telebanking
Mutual Fund Products E- Tax Payment
Debit Card Forex Rates
Credit Card Rate of Interest on Deposits
Electronic Funds Transfer (NEFT/RTGS) Rate of Interest on Advances
Internet & Mobile Banking Any Where Banking
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The Net Profit of the Bank has reached an impressive Rs.3021.43 cr, by recording a robust
45.8% growth over FY09 net profit of Rs.2072 cr. Operating Profit of the Bank rose to
Rs.5060.81 cr compared to Rs.3964 cr for FY09, with a growth of 27.7%.
A total provision of Rs.2039 cr has been made during FY10, which includes a provision of
Rs.1408 towards NPA. The Provision Coverage Ratio for the Bank was comfortable at 77.71%,
which is well above the RBI stipulated level of 70% (to be achieved by September 2010). Return
on Average Assets for FY10 improved to 1.30% compared to 1.06% a year ago. While Earnings
Per Share (EPS) improved to Rs.73.69 from Rs.50.55 a year ago, Book Value rose to Rs.305.83
compared to Rs.244.87 as at March 2009.
The Bank’s total income grew by 11.2% to reach Rs.21610 cr, including Rs.13946 cr contributed
by interest income from loans/advances. Non-interest income of the Bank grew by 23.7% to
Rs.2858 cr. Fee-based income increased to Rs.1403 cr, supported by income from bancassurance
at Rs.68 cr.
While the growth in total expenses of the Bank was contained at 7.0%, operating expenses of the
Bank grew by a moderate 13.5% during FY10 on account of provision for wage revision.
The Net interest income improved to Rs.5681 cr, with a growth of 20.4% compared to Rs.4718
cr as at March 2009. The Bank could maintain the spread by increasingly focusing on core
business growth and containing cost. Net Interest Margin (NIM) improved from 2.78% as at
March 2009 to 2.80% as at March 2010.
Against the challenging economic environment, total business reached Rs.403986 cr as at March
2010, recording a robust y-o-y growth of 24.3% over Rs.325112 cr last year. While aggregate
deposits of the Bank grew by 25.6% y-o-y to touch Rs.234651 cr, net advances increased to
Rs.169335 cr, registering a y-o-y growth of 22.5%. Credit to deposit ratio stood at 72.16%.
The Bank's core deposits grew by 32.3%. The share of CASA deposits in domestic deposits were
29.85%. Savings deposits recorded a growth of over 19%.
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During FY10, the Bank had launched a nationwide ‘Savings Utsav’ campaign to mobilize higher
savings deposits. The Bank could add a significant 16 lakh plus new savings bank accounts
during the campaign period.
The Bank’s domestic business constituted 96.7% of the aggregate business with Rs.228445 cr
(97.4%) under deposits and Rs.162287 cr (95.9%) under advances.
The Productivity, measured as Business per Employee, rose to Rs.9.83 cr as at March 2010,
compared to Rs.7.80 cr a year before. Business per Branch rose to Rs.132.63 cr as against
Rs.118.96 cr at March 2009. The Bank has added 2.54 million clientele during the year, taking
the total clientele base to 37.34 million as at March 2010.
Capital to Risk Weighted Assets Ratio (Basel II norms) worked out to a comfortable 13.43% vis-
à-vis the regulatory requirement of 9%. The Bank’s gross NPA ratio stood at 1.52% (Rs.2590
Cr) and net NPA ratio at 1.06% (Rs.1800 cr) as at March 2010. The recovery campaign launched
during the year also yielded good results.
Credit Segments
Advances to priority sector reached Rs.59310 cr, recording a significant y-o-y growth of 21.6%
and accounted for 43.92% of the adjusted net bank credit. Credit to agriculture touched Rs.25052
cr, signifying a strong 24.4% growth, covering 29.39 lakh farmers. The Bank's credit to Micro,
Small and Medium Enterprises (MSMEs) grew by a robust 30.4% to reach Rs.31074 cr
compared to a level of Rs.23823 cr a year ago.
The Bank opened nine exclusive microfinance branches in urban centers to cater to the
requirements of the urban poor.
Sustaining its premier position among nationalized banks, the Bank’s education loan portfolio
increased to Rs.2896 cr as at March 2010, registering a y-o-y growth of 25.9% and covering
more than 1.71 lakh students.
With a disbursal of Rs.8653 cr during the year, credit under retail lending operations touched
Rs.23902 cr as at March 2010 with a y-o-y growth of 20.73%. The Bank’s retail portfolio as a
proportion of net credit stood at 14.59%. Advances under housing (direct) increased by 28.1%
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growth to reach Rs.10116 cr. Housing portfolio, with a significant portion in priority ambit,
constituted 42.3% of the retail portfolio.
Continuing with its commitment to greater financial inclusion in the country, the Bank has
achieved total financial inclusion in all the 26 lead districts spread across five States. With a
mobilization of 4.50 lakh no-frill accounts during the year, the total tally under such accounts
rose to 21.80 lakh since inception. Amount under such accounts increased to Rs.382.5 cr. The
Bank has so far formed 3.2 lakh Self Help Groups (SHGs), with credit linking of 2.75 lakh
SHGs, with an outstanding amount of Rs.926 cr. Extending credit under financial inclusion, the
Bank has issued 1,88,762 General Credit Cards, amounting to Rs.269.64 cr.
All subsidiaries and sponsored entities of the Bank posted better performance in FY10.
The Bank aims to reach an aggregate business figure of Rs.5 lakh cr, comprising total
deposits of Rs.285000 cr and advances of Rs.215000 cr.
The Bank will continue to focus on core business, with the objective of profit.
Expanding global footprints, the Bank is likely to open a Representative Office at Sharjah
shortly in addition to RBI approval already obtained in 9 international centers.
The Bank has plans to open over 200 new branches during FY2011.
Best Bank in South Zone Award for the year 2008-09 in respect of lending under KVIC
and PMEGP Schemes. The award was handed over by Dr.Manmohan Singh, Hon’ble
Prime Minister of India.
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The Bank received the Credit Guarantee Approval Certificate issued by CGTMSE from
Shri Pranab Mukherjee, Hon’ble Finance Minister of India.
SWOT ANALYSIS
CANARA BANK is one of the top public sector banks in India. Owing its origin to the State, it
is continuing its leadership position in Karnataka, one of the fastest growing states in India. The
bank’s leadership position in Karnataka enables it to benefit from the economic growth in
Karnataka State. However, weak monsoon, and intensifying competition could pose problems for
the bank.
Strengths Weaknesses
Leadership in Karnataka state Declining asset quality to
impact margin
Diversified loan book & Comfortable
capital and reserve level Low international exposure
Opportunities Threats
high growth areas likely to broaden Intensifying competition likely
fee income sources to check
Strengths:
Leadership in Karnataka state Canara Bank is ranked at 213th among the top 500 global banks in
2009-10 list. Owing its origin to the State, it is continuing its leadership position in Karnataka,
one of the fastest growing states in India. The Bank has over 600 branches and 400 atm’s spread
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across the State. At the end of FY2009-10 the total business of the Bank in the State stood at
INR518.50 billion comprising INR272.51 billion under deposits and INR246 billion under
advances. The bank continues to expand into other regions while defending its leadership
position in Karnataka. The bank’s leadership position in Karnataka enables it to benefit from the
economic growth in Karnataka State. Canara Bank has a diversified loan book with industrial
loans forming 37% of net advances, retail loans 14.3%, agriculture 14.5% and Micro, Small and
Medium Enterprises (MSME) 17% at the end of FY2008-09.The number of borrowing accounts,
as at March 2009, rose to 4.30 million. Diversified loan book has enabled the bank to diversify
and sustain growth in its interest income sources. Comfortable capital and reserve levels.
Net worth of the Bank, as at March 2009, stood at INR100.4 billion ($1.9 billion) compared to
INR83 billion ($1.6 billion) as at March 2008. With the paid-up capital at INR4.10 billion ($100
million), reserves and surplus increased to INR118 billion ($2.3 billion). To augment the capital
resources, the Bank raised INR2.40 billion ($46.4 million) through the Innovative Perpetual Tier
I Bonds and INR3.25 billion ($62.8 million) through lower Tier II Bonds during the year. As at
March 2009, Capital to Risk Weighted Assets Ratio (CRAR) of the Bank under Basle II stood at
14.10%, well above the 9% regulatory benchmark. Significantly, the Bank has attained a Tier I
capital ratio of 8.01%. The medium term objective of the Bank is to maintain the CRAR ratio
above 12%. With the still undiluted 73.17% Government of India shareholding, the Bank has
large headroom available under Tier I and Tier II options to raise capital and support business
growth momentum.
Weaknesses:
Declining asset quality to impact margins Gross NPAs increased by 70% to reach INR6577.9
million in FY2008-09 compared to INR3, 731 million in FY2007-08. After provisions, net NPA
ratio has risen from 0.84% to 1.09%. The rise in NPA was primarily due to the bank's exposure
to Dabhol project (around INR4, 000 million) which was classified as NPA. Provision coverage
is around 30% which continues to be among the lowest and may affect the bank if the current
economic scenario persists. The Bank has restructured 1.5 per cent of its advance which would
be treated as standard asset. This restructuring is among the lowest compared to some of its
public sector peers.
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Low international exposure though the bank’s international operations are substantial in terms of
distribution network and tie-ups with foreign financial institutions yet the bank’s international
business book is low when compared with its major peers. For the financial year 2009,
international markets, accounted for just 1.6% of the total revenues. International business
accounts for nearly 20% of Bank of India, a major competitor to Canara Bank. Low international
exposure makes the bank vulnerable when it comes to competing with global banks’ Indian
subsidiaries for international business of Indian corporate.
Opportunities:
Foray into high growth areas likely to broaden fee income sources. The bank has been making
efforts to broaden its fee income sources by venturing into high growth areas such as insurance,
mutual funds, online trading services and other traditional services such as LCs, guarantees, DDs
and others. The Bank has tie-up arrangements in both life and non-life insurance segments under
its ‘banc assurance’ arm. In FY2008-09, The Bank earned a commission income of INR1.8
billion from its newly formed Canara HSBC Oriental Bank of Commerce Life Insurance
Company Limited. The Bank took several initiatives to expand its credit and debit-cum-ATM
card base. The Bank almost doubled its profit under card business during 2008-09 at INR2.1
billion compared to INR1.1 billion in 2007-08. The bank’s efforts to become a financial super
market are likely to broaden its fee income sources. The government of India has sought a $3.2
billion loan from the World Bank to infuse capital into public sector banks. The likely capital
infusion enables the PSBs (public sector banks) to meet credit requirements of the economy
while maintaining a healthy and comfortable level of regulatory capital to risk-weighted assets
ratio. Canara Bank is one of the PSBs that are likely to be benefited from the government
support. The reduction in the Reserve Bank's policy rates and easy liquidity conditions in the
market have helped all public sector banks, most private sector banks and some foreign banks
reduce their deposit and lending rates. Term deposit rates between October 2008-April 18, 2009
have been reduced by a range of 125-250 basis points by public sector banks, 75-200 basis points
by private sector banks and 100-200 basis points by five major foreign banks. The reduction in
the range of BPLRs (below prime lending rate) was 125-225 basis points by public sector banks,
followed by 100-125 basis points by private sector banks and 100 basis points by five major
foreign banks. Since mid-September 2008 till date, the Reserve Bank has cut the repo rate by 400
36
basis points to 5% and the reverse repo rate by 250 basis points to 3.5%. The CRR was also
reduced by 400 basis points of NDTL of banks and stood at 5%. Apart from the bank rate cuts
announced in the stimulus packages, cash withdrawals from bank will not attract tax from April
1, 2009 following abolition of the banking cash transaction tax (BCTT) in the Union Budget
2008-09. Also, inter-ATM usage transaction became free of charges effective April 1, 2009.
These government initiatives are likely to spur the demand in financial transactions. Increase in
financial transactions is likely to increase business volume of banks such as CANARA BANK.
Threats:
Weak monsoon likely to impact rural credit off-take .According to the India Metrological
department, the monsoon situation in India is not very encouraging especially in the rice and
sugarcane growing regions in the northwest that has received
40.0% below normal rainfall. For instance, in the first week of August 2009, monsoon rains were
deficient in four of the 36 meteorological subdivisions in the country and scanty in 23. In
cumulative terms, India has received 376.6 mm rainfall during Jun 1-Aug 5, as against normal
503.4 mm, leading to a deficit of 25.0%. Below-average-monsoon does not augur well for rural
demand especially for Canara Bank sectors like tractors, motorcycles, mobile phones and
FMCG. Consequently, rural credit is likely to suffer going forward. Declining exports likely to
subdue trade financing demand in India
India’s merchandise exports declined for the ninth consecutive month by 27.7% (y-o-y) in
June’09 to $12.81 billion. The imports too declined by 29.3% narrowing the trade deficit to
$6.16 billion inJun’09 from $ 9.12 billion a year ago. In cumulative terms, the trade deficit was
$15.50 billion in Apr-Jun’09 versus $28.64 billion in Apr-Jun’08. India’s July manufacturing
PMI remained unchanged at the June level of 55.3, according to a survey by Market Economics.
A PMI above 50.0 points to expansion in manufacturing activity and less than 50.0 signals a
contraction. Intensifying competition likely to check growth opportunities .Recently Reserve
Bank of India (RBI), India's central bank has allowed foreign banks to invest up to 74% in Indian
banking sector and also set up branches in rural India. As a result, Indian banking sector is
expected to see aggressive business expansion plans by both domestic and foreign banks. The
Hongkong and Shanghai Banking Corporation (HSBC) put in fresh capital to the tune of $200
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million into its India operations to support business expansion in high growth economy. HSBC
India is considering focusing on its corporate loan book in order to grow its business. The bank is
looking to lend more in the unsecured loans segment, amid improvement in the economic
scenario and Credit Information Bureau (India). HSBC India has also received licenses from the
Reserve Bank of India for three bank branches. Increasing competition is likely to check Canara
Bank’s growth opportunities.
PEST ANALYSIS
POLITICAL/LEGAL ENVIRONMENT
Various policies are framed by the RBI for better control over the banks.
ECONOMIC ENVIRONMENT
• Commencement of the present era in banking with establishment of Bengal bank in 1809
under the government charter and with government participation in share capital.
• Every year RBI declares its 6 monthly policy and accordingly the various measures and
rates are implemented which has an impact on the banking sector.
• Union budget affects the banking sector to boost the economy by giving certain
concessions or facilities. For e.g. encouragement of the savings in the Budget, relaxation
of the FDI limits.
SOCIAL ENVIRONMENT
• Nationalization of the banks in 1969 –Only big business houses and the effluent sections
of the society getting benefits of banking.
• To adopt the social development in the banking sector and speedy economic progress,
consistent with social justice.
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• Help economically weaker section of the society and provide need-based finance to all
the sectors of the economy with flexible and liberal attitude for instance:- various types of
loans to farmers, working women, professionals, traders, education loans, housing loans,
consumer loans etc.
• Banks having big clients or big companies have to provide services like personalized
banking to their clients.
Banks have changed the culture of human life and have made life much easier for the people.
TECHNOLOGICAL ENVIRONMENT
• Use of SMS and Internet as major tool of promotions and utility to customers.
All these technological changes have forced the bankers to adopt Customer-Based Approach
instead of Product- Based Approach.
TOP COMPETITORS:
QUESTIONNAIRE
Dear Sir/Madam,
I am a student of Mats Institute of Management And Entrepreneurship (JGI MIME), Bangalore.
As part of the requirements for my Post Graduation Diploma in Management I am required to do
36
a research based project. Kindly spend a few minutes of your valuable time and fill in this
questionnaire.
1. Name_____________________________________
8. Occupation_____________________________
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9. Number of years associated with the branch_________
ANALYSIS: -
The survey was done by taking the response of 30 respondents and they are divided in to 2 parts
that is 15 from Lavelle branch and 15 from kalyan nagar branch. The questionnaire was designed
to understand the service quality and the support of branch staff to the branch customers. So,
with that other details were also collected for instance the details regarding the branch asset
standards, the social responsibilities performed by the branch, balance sheet of the branch for
36
good 4 3
average 5 2
poor 2 5
3) Guidelines for deposit schemes
v.good 6 8
good 4 4
average 3 2
poor 2 1
4) General behavior of the members of staff
v.good 5 5
good 3 7
average 4 3
poor 3 0
5) Availability of services at Computerized Counters
v.good 3 5
good 7 6
average 2 3
poor 3 1
6)Time taken in sanctioning of loans against Bank's deposit
v short 4 7
short 5 3
average 5 2
long 1 3
7) Payment of Cash, Cheques, Demand Drafts
within 15 mins 9 7
15-30 min 3 4
more than 30
mins 3 4
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Summary of the survey made:-
HYPOTHESIS:
In this report basically I will test a hypothesis. That is as follows:
1. The performance of Lavelle branch of canara bank is better than the other branches
(kalyan nagar branch) of canara banks in Pakistan.
The Canara Bank continued to grow which is reflected by the increasing branch network of
canara bank. Now, concentrating on the two branches attended that are Lavelle branch and
kalyan nagar branch. Taking in to consideration the asset standards on which the branches have
invested on then we will find that Lavelle branch is performing better than kalyan nagar branch
of canara bank. Now, Lavelle branch is having 364 numbers of accounts as a grand total under
gross liability (term loans and other). Here 331 number of accounts stands under Standard
Assets and Sub-Standard Assets is totaled to 6 accounts. Now, the Doubtful Assets are at 3
accounts and with it Loss Assets is holding 24 accounts. So, all this totals up to 364 accounts
under gross liability.
After analyzing the standard of assets at Lavelle branch now we perform analysis of the state of
assets at kalyan nagar branch. The total accounts under the gross liability at kalyan nagar branch
are 342 accounts. These 342 accounts are totaled by Standard Assets of 220 accounts and Sub-
Standard Assets holding 88 numbers of accounts. Now, the doubtful assets and Loss Assets at
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kalyan nagar branch is numbered to 30 numbers of accounts and the Doubtful Assets going up
to 4 in numbers of accounts. So, these all accounts total up to 342 accounts under gross liability.
Now, these two branches are compared on the term loans amount and advances bases. The total
of Term Loans at Lavelle branch is Rs. 14 crores and the total Advances of Rs. 10 crores.
Whereas the kalyan nagar branch is having its total term loans of Rs. 10 crores and the grand
advances of Rs. 8 crores till 31-march-2010.
Now, from the above data analysis consider the gross liability and the standard assets and the
amount of term loans and advances at these branches, we get to know that the performance of
Lavelle branch of canara bank is performing better than kalyan nagar branch of same bank. The
Lavelle branch is performing better because of its better staff and the service they offer to the
customers. Now, the same conclusion is proved in the Test made below called Z-test.
Z-test
Statement:--the Lavelle road branch is performing a same as kalyan nagar branch
Ho- > po=p1
H1-> po>p1
Los= 5%,
Z (calculated value) =2.02
Z (table value) =1.645
So, Z (calc) is under critical region at 5% los. That means that performance of
Lavelle road branch of canara bank is performing better than kalyan nagar branch
of canara bank.
H1 is accepted that is the Lavelle branch is not performing same as kalyan nagar
branch of canara bank at 5% los.
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It was very surprising to find that the bank does not go in for video advertisements and moreover
for pamphlets and billboards were used and though the pamphlets are designed in a very catchy
manner in such a competitive era it is necessary to have video advertisements.
The promotional activity is versatile where the bank is much focusing on service design and
corporate social responsibility. The bank also focuses on the customer relationship where each
and every customer is been personally attended and there problems are solved as well as their
advise are considered. Throughout the analysis it was very clear that the bank was much focusing
on retaining the customers and making more customers by its warm and caring customer
attending service. Since the customer now only want better service from branches.
Even it was found that many of the people were migrating from other banks to Canara bank
especially for the competitive benefits given in some of the schemes. When asked with the
managers they said that serving the people is main objective. The bank has also taken step to
educate and train the school children and the rural people regarding banking through its
extension. The managers put forth their views that proper and complete training should be given
to the senior work force regarding computerized banking. It was even clear that the employee
satisfaction and Job satisfaction was present it was because the bank make to attend the training
session for at least one person in a branch at regular interval and the bank was making its
employee at branch level as a means of advertisement of their bank by their total service motive.
The Bank is practicing its tag line very well which is “together we can”.
RECOMMENDATIONS: -
The major findings were that the bank is lagging behind in video advertisements and it has a
tough competition from the SBI and ICICI bank. The bank is much more customer service
oriented and the workforce present is much impressive. The product profile of the bank is also
36
impressive where it is covering all the sections and places in the society. It is also in top most
banks in India in south region which has a good customer response and support. Its increasing
number of branches across India was showing the progress of the bank.
As a management student and also as a customer the main suggestion would be that the bank
should go for an effective video advertisement as people would come to know more about the
bank. The bank should also concentrate in some of institutional tie ups to gear the business at
branch level so that it can cover up a significant part of the country and the reach will to deep
and fast. The workforce present is very much effective but lacking in the use of computers was
The promotional activity has to be more stressed upon cause of the tough competition from other
banks. The major problem in this particular bank is that some of the very impressive services and
schemes like the demat and online trading account service is being unnoticed in the market even
the banks prime customer lack knowledge about such services present in the bank and it also
includes the bank employees. So, the bank should much concentrate in making the public realize
CONCLUSION:-
As a leading bank in the banking industry Canara bank should not neglect the promotional
activities at all in its activity towards making business as promotional activity is necessary in any
business so that the society and customer would know about the benefits of the service and that
are influenced to buy. The Canara bank branches performance stands at good position in the
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south side but it is facing a stiff competition from many banks for stance State Bank of India,
ICICI bank etc..,
Market and environmental analysis is much more of importance before launching any of the
service so Canara bank should also forecast the exact market segment for each of its product
cause many of the schemes are only suitable to a particular location and class of people. Because
if the products of the canara bank perform better in the market then it will increase the
performance of the branches and as a whole it will uplift the performance of canara bank.
A bank can only perform better when its branches perform better in terms of service providing,
social responsibilities, loan processing, etc.., which are the major items in evaluating the
performance of the bank at branch level.
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