CAHPTER 1

INTRODUCTION

1.1 EXECUTIVE SUMMARY Bank of India is a state-owned commercial bank with headquarters in Mumbai. Government-owned since nationalization in 1969, It is India's 4th largest PSU bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It has 4157 branches as on 21/04/2012, including 29 branches outside India, and about 1679 ATMs. The bank is a founder member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications ), which facilitates provision of cost-effective financial processing and communication services. The Bank completed its first one hundred years of operations on 7 September 2006.

The promoters incorporated the Bank of India on 7 September 1906 under Act VI of 1882, with an authorized capital of Rs. 1 crore divided into 100,000 shares each of Rs. 100. The promoters placed 55,000 shares privately, and issued 45,000 to the public by way of IPO on 3 October 1906; the bank commenced operations on 1 November 1906.

2 1.2 OBJECTIVES OF THE STUDY

Primary objective

To study the overall functions of the company and to understand the duties and responsibilities performed by employee at different levels in the organization.

Secondary objective

 To understand the history, growth profile, structure & future plans of the organization.  To understand the hierarchical structure followed in the organization  To conduct a SWOT analysis.  To determine the functions & procedure of various departments in the organization  To interact with the manager at different levels & to know their responsibilities & routine activities.  To observe at their work place & to interact with them

1.3 SCOPE OF THE STUDY

3 The Organization study conducted at BANK OF INDIA-KERALA ZONAL OFFICE was aimed at getting a firsthand information of its organizational structure, the different departments, the duties and responsibilities of the different management levels, the various functional and managerial activities taking place and finally an overall review of the company. The information was collected mainly through the interaction and communication with the concerned departmental head and authorities.

1.4 CHAPTERIZATION

4 Chapter 1

The first chapter is the introductory chapter and includes the objectives of the study, Scope of study, and chapter scheme.

Chapter 2

The second chapter is about the theoretical background

Chapter3

The third chapter is about industrial profile. This chapter includes the world, Indian & state scenario of the industry.

Chapter 4

The third chapter is about the company profile and this includes history of the company stating the objectives and developmental stages since inception, date of inception, ownership status, capital structure, competitors, organization. This chapter also includes departmental details also each department’s structure, functions, procedure, duties and responsibilities, policies and programmes.

Chapter5

The fifth chapter refers to SWOT analysis i.e., strength, weakness, threats and opportunities of the organization also findings, recommendation and conclusion is included.

5 CHAPTER 2

LITRETURE REVIEW

2.1 Concepts of organizing

6 Organizing

“ Organizing is the process of identifying and groping the work to be performed, defining responsibility, delegating authority, establishing relationships, for the purpose of enabling people to work most effectively together in accomplishing objectives”

- Lousis. A. Allen

The act of creating activities and assigning suitable workers to complete these activities successfully, efficiently and effectively. It requires a formal structure of authority and the direction and flow of such authority through which work sub division are defined, arranged and coordinated so that each part relates to other part in a united and coherent manner so as to attain the prescribed objectives. it follows, therefore that the function of organizing is concerned with:

1. Identifying the tasks that must be performed and grouping them whenever necessary

2. Assigning tasks to the personnel while defining their authority and responsibility.

Organization is the task of mobilizing resources. It is a structure involving a large no. of people engaging themselves in a multiplicity of tasks, a systematic and rational relationship with authority responsibility between individuals and groups. It involves dividing the entire work into manageable units, departmentation, decentralization, delegation and span of control.

LOUIS A ALLEN: Organization is a mechanism or structure that enables living things to work effectively together. The evolution of all forms of life and of human society demonstrates the need for organization. Various types of organisations are;

1. Hierarchical Organization

The hierarchical organization is very effective in a relatively stable environment, where the efficient and predictable delivering of products is its main reason of existence. Following the rules and procedures is of the utmost importance here. This type of organizations is often characterized by a machine bureaucracy with a role culture.

2. Market Organization

7 In a more competitive environment, hierarchical organizations are no longer that effective, since they are too ‘internal minded’. A more external minded organization is required in such conditions. This type is called the market organization and is strongly focused on the result of the production processes. The economical and political environment is perceived is dangerous and is approached aggressively. The focus in this type of organization lies primarily on the results and productivity. The feeling that holds the company together is that feeling of being better than the competition. Here, a task culture dominates.

3. Family Organization

In a family organization (which is most often a professional bureaucracy) the idea that success is a consequence of individual development, teamwork and shared norms and values is paramount. The freedom of action for the individual employee is cherished. This type of organization is characterized by a lot of attention for the individual and a strong sense of solidarity. The culture in this type of company is a personal culture.

4. Adhocracy

In an adhocracy, the temporary character of the organization is the central tenet. This is a consequence of the central position of innovation and fast adaptation to new situations. Hierarchical power levels are missing and someone’s influence can strongly fluctuate based on the problem that is being solved. In cultural perspective, creativity, entrepreneurship and a dynamical attitude dominate. The overall task is innovation and the production of unique and original services and products. The dominant culture in this type of organization is a combination of a task and personal culture. These four organizational types are strongly correlated with the structure and culture in that are being implemented in the organization. Organizing is the act of rearranging elements following one or more rules. Anything is commonly considered organized when it looks like everything has a correct order or placement. But it's only ultimately organized if any element has no difference on time taken to find it. In that sense, organizing can also be defined as to place different objects in logical arrangement for better searching.

8 2.2 Organization

An organization is the systematic arrangement of people working together in a structural way to accomplish some specific purpose. Three common characteristics of an organization

 People  Structure

9  Purpose

There are 2 concepts of organization

 Static concept  Dynamic concept

Static concept:- under static concept the term ‘ organization ‘ is used as a structure, an entity or a network of specified relationship. In this sense, organization is a group of people bound together in a formal relationship to achieve common objectives. It lays emphasis on position and not on individuals.

Dynamic concept:- under dynamic concept the term ‘ organization ‘ is used as a process of an organizing activity. In this sense, organization is a process of organizing work, people and the systems. It is concerned with the process of determining activities which may be necessary for achieving an objective and arranging them in suitable groups so as to be assigned to individuals. It considers organization as an open adoptive system and not as a closed system. Dynamic concept lays emphasis on individuals and considers organization as a continues process.

2.3 Departmentalization

It is the first step in the organizing process. Departmentalization refers to the process of grouping activities into departments. There are different methods of departmentalization

1. Functional departmentalization

10 In functional departmentalization, departments are segregated i.e. separated from each other based on functions or tasks they perform.

Examples of functional departmentalization include; production department, finance department, marketing department, human resource (HR) department, etc. Here, all activities, which are directly or indirectly connected with production are grouped together to make a production department.

Fig no: 1

2. Process departmentalization

In process departmentalization, departments are separated based on their role in a production process.

Example of process departmentalization can be seen in a textile mill where we may have a spinning department, weaving department, dyeing department, printing department, etc. Here, inside a textile mill, all activities, which are directly or indirectly related with spinning are grouped together to make a spinning departments

11 Fig no: 2

3. Product departmentalization

In process departmentalization, departments are separated based on a type of product produced by the company. Here, every individual department is responsible for producing and selling the type of product assigned to them.

Example of product departmentalization is witnessed in an automobile manufacturing company. In such a company, we generally see departments like a two-wheeler department, three-wheeler department, four-wheeler department, heavy motors department, etc., which manufacture vehicles such as motorcycles (bikes), auto-rickshaws, cars, buses and trucks, respectively. Here, inside an automobile company, all activities, which are directly or indirectly related to car manufacturing, are grouped together and assigned to four-wheeler or car department.

Fig no: 3

4. Geographic departmentalization

In geographic departmentalization, separate departments are made based on the company's (i.e. institution's) operations to be carried out either over a vast area or within some restricted area through branches or offices established at different zones or places in that area.

First, an entire area of operation (e.g. world, country, state, city, etc.) is decided followed by division of that area into different zones. Secondly, a branch or an office is established in each geographical zone to manage local affairs of the company in that zone.

12 For example, a large company may operate globally through its different zonal departments established on a country basis. In a similar context, a small business or firm may operate only within city boundaries through its offices established in east zone, west zone, north zone and south zone of the city

Fig no: 4

5. Customer departmentalization

In customer departmentalization, departments are separated from each other based on the types or groups of customers to be handled or dealt with.

For example, customers can be classified under types such as, international or foreign customers, inland or domestic customers, bulk purchasing or wholesale customers, retail customers, etc.

Each group of customers needs different tactics and strategies to handle them better. Hence, an appropriate customer departmentalization serves this purpose

13 Fig no: 5

6. Combined departmentalization

In combined departmentalization, a company or an organization uses a mixture or combination or union of two or more different bases of departmentalization.

For example, in practice, owing to rising market competition and emerging complexity of tasks most organizations often uses a combination of above-discussed types (i.e. methods or bases) of departmentalization.

Departmentalization by using a combination of two or more different bases is shown in the following diagram.

.

Fig no: 6

7. Time departmentalization

14 In time departmentalization, departments are separated based on the division of their working time or job shifts.

For an example, departments can be made based on night shift, morning or regular shift, evening shift, etc.

This method of departmentalization is generally seen among those organizations who render 24-hours emergency and/or essential public services for 365 days a year. Examples of such organizations include; hospitals, hotels, airports, police, security, and so on.

Departmentalization done on a basis of division of work time is depicted in the following image.

Fig no: 7

8. Number departmentalization

In number departmentalization, separate departments are made after analyzing and judging the maximum limit up to which number of persons can be managed or educated or supervised or taken care of. This method of departmentalization is generally used in schools and colleges for making division of classes.

For example, students having numbers from 1 to 50 are made to sit in A division of their class and so on. Military forces also use this method.

15 Departmentalization by numbers is depicted in the image given below.111

Fig no: 8

2.4 Process of organizing

Identification and classification of activities

Grouping of activities

Delegation of authority

Co-ordination of activity

Fig no: 9

2.5 Organizational structure

16 It is the established pattern of relationship among components or parts of the organization. It prescribes the relationship among various positions and activities in business. Since various positions are held by persons so structure create relationship among them .The organization structure provides a frame work which holds the various functions together in accordance with the pattern determine by managers. A planned structure outlines the required functions, correlates the functions in a systematic manner and assigns authority and responsibility.

Every businesses sets some goals to be achieved. In order to achieve goals some activities are to be performed. These activities are to be specified classified and grouped. The grouped activities are assigned to individuals or groups. The responsibility and authority is assigned to carry out various activities. A system of proper co-ordination is established to reach the organizational goals. The establishment of systematic relationship among various activities and persons is the framework of the organization structure. There may be problems and difficulties if the structure is faulty. The structure should be suitable to the working of the organization and be helpful in achieving business goals.

2.5.1 Types of organizational structure

Line organizational structure

Line and staff organizational structure

Functional organizational structure

Committee organizational structure

Line Organization.

This is the oldest as well as the most common type of organization. It i still used by many concerns especially the small ones. It is also known as the “Military System” as this type of organization is usually found in the army. The characteristic feature of this type is that line of authority flows vertically form the top most executive to the lowest subordinate throughout the entire organizational structure. The authority is greatest at the top and reduces through each successive level down the organizational scale. A variation of the pure line organization is the departmental line organization, under which the business enterprise is divided into several departments and the authority flows downward from the General Manger through the

17 departmental managers to the lower subordinates. The departmental heads are independent of each other and enjoy equal status.

Functional Organization.

In this type of organization the personnel an their work are organized on the basis of the same type of work of activities. All works of the same type are grouped together and brought under one department managed by an executive who is an expert. Thus there are separate functional departments, for the major functions of the business viz., engineering or production, purchase, sales, finance personnel etc. Each department performs its specialized function for the entire organization. For example, the purchase department deals with purchases on behalf of the entire organization, and so on. Now-a-days almost all business concerns usually follow some sort of functional plan to carry out the primary functions of business. However, it is the rare to find a pure functional organization and there is always an element of line organization.

Line and Staff Organization.

In order to avoid the defects of the line and functional types of organization, too much concentration of control in the former and too much division of the same in the latter, the line and staff organization was evolved. It seeks to strike a balance between the first tow types. Under this type, the organizational structure is basically that of the line organization, but “Staff, officers of functional experts are engaged to advise the line officers in the performance of their duties. 'Staff' means something to lean on, and this is precisely the function of the staff officers. Line officers are the executives, and the staff officers are their advisers. Being an admixture of the Line and Functional organizations, it has the advantages of both and is admirably suited for large concerns. A large-size business concern, with its multifarious functions of complicated nature needs an organization where there will be an unbroken line of authority and responsibility so that responsibility can be fixed, discipline can be maintained and decision-making and execution can be prompt. At the same time, it requires that a high degree of specialization and co-ordination of functions are achieved without which efficiency is bound to suffer. Line and Staff organization caters to both these

18 needs. The Line officers make the decisions and issue instructions to subordinates, the staff officers have no authority to issue instructions. But in their decision-making function, the Line officers receive advice and guidance from the Staff Officers.

Committee Organization.

A committee means a body of persons entrusted with discharging some assigned functions collectively as a group. Committees may be permanent (standing) or temporary (adhoc) bodies. Committee is found to exist in different areas and levels of an organizational structure, in both business and non-business institutions. Because of its advantages, the committee’s form of organization is very often preferred by different concerns. However, a committee organization is rarely found in its pure form, it is usually found in addition to a line and staff organization. The committee itself may be organized with line authority, it is usually vested with powers of decision making and its execution. The committee then assumes command authority in the organization and function as a group executive or 'plural executive'. Where it is organized on staff authority it has merely an advisory function. The example of a group executive is the board of a business company where the various committees of directors (both standing and adoc) as well as other committees at lower levels of organization are staff or advisory committees. The example committees at lower levels of organization are staff or advisory committees. The example of a group executive of 'plural executive' where it is organized on staff authority, it has merely an advisory functions

2.6 Authority

In context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority. Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an

19 equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost authority.

2.7 Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-

1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.

2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.

20 3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.

Therefore every manager i.e., the delegator has to follow a system to finish up the delegation process. Equally important is the delegate’s role which means his responsibility and accountability is attached with the authority over to here

2.8 Centralization

Is said to be a process where the concentration of decision making is in a few hands. All the important decision and actions at the lower level, all subjects and actions at the lower level are subject to the approval of top management. According to Allen, “Centralization” is the systematic and consistent reservation of authority at central points in the organization

2.9 Decentralization

Is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.

21 22 CHAPTER 3

INDUSTRY PROFILE

3.1 INTRODUCTION A bank is a commercial or state institution that provides financial services, including issuing money in form of coins, banknotes or debit cards, receiving deposits of money, lending money and processing transactions. A commercial bank accepts deposits from customers and in turn makes loans based on those deposits. Some banks (called Banks of issue) issue banknotes as legal tender. Many banks offer ancillary financial services to make additional profit. For example: selling insurance products, investment products or stock broking. Most banks also rent safe deposit boxes in their vault. Currently in most jurisdictions, commercial banks are regulated and require permission to operate. Operational authority is granted by bank regulatory authorities and provides rights to conduct the most fundamental banking services such as accepting deposits and making loans.

A commercial bank is usually defined as an institution that both accepts deposits and makes loans; there are also financial institutions that provide selected banking services without meeting the legal definition of a bank. Banks have a long history, and have influenced economies and politics for centuries. In history, the primary purpose of a bank was to provide liquidity to trading companies. Banks advanced funds to allow businesses to purchase

23 inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers.

Commercial lending today is a very intense activity, with banks carefully analysing the financial condition of its business clients to determine the level of risk in each loan transaction. Banking services have expanded to include services directed at individuals and risks in these much smaller transactions are pooled. A bank generates a profit from the differential between what level of interest it pays for deposits and other sources of funds, and what level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate.

Historically, profitability from lending activities has been cyclic and dependent on the needs and strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on array of deposit activities and ancillary services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). However, lending activities still provide the bulk of a commercial bank's income.

3.2 INTERNETIONAL SCENARIO

The History of Banking begins with the first prototype banks of merchants of the ancient world that made grain loans to farmers and traders carrying goods between cities; recorded as having occurred at about 2000 BC within the areas of Assyria and Babylonia. Later on, in ancient Greece and during the Roman Empire, lenders based in temples made loans and added two important innovations: the accepting of deposits and the changing of money. Archaeology from this period in ancient China and India shows the existence also of money lending activity.

Banking, in the modern sense of the word, can be traced to medieval and early Renaissance Italy, to the rich cities in the north such as Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. Perhaps the most famous Italian bank was the Medici bank, established by Giovanni Medici in 1397.

24 The development of banking spread through Europe also and a number of important innovations took place in Amsterdam during the Dutch Republic in the 16th century and in London in the 17th century. During the 20th century, developments in telecommunications and computing resulting in major changes to the way banks operated and allowed them to dramatically increase in size and geographic spread. The Late-2000s financial crisis saw significant number of bank failures, including some of the world's largest banks, and much debate about bank regulation.

3.3 NATIONAL SCENARIO

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 in 1955

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

25 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 Simla.

Foreign banks too started to app, 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 centres.

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, 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, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

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

26 have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

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:

Number of banks Authorised capital Paid-up Capital Years that failed (Rs. Lakh) (Rs. Lakh) 1913 12 274 35 1914 42 710 109 1915 11 56 5 1916 13 231 4 1917 9 76 25 1918 7 209 1

Table no:1

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 theLaissez-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:

27 . The Reserve Bank of India, India's central banking authority, was established in April 1934, but was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[1]

. 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 SBI, and no two banks could have common directors.

3.4 NATIONALISATION

28 Fig No:10 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 ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. These banks contained 85 percent of bank deposits in the country. 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. 3.5 LIBERALISATION

29 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 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 (2010), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&as, takeovers, and asset sales. 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.

30 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 loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.

3.6 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 folds 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.

Fig No:11 Number of branches of scheduled banks of India as of March 2005 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 Bhubaneswar, 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

31 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 Sara, 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.

Fig no:12 Number of ATMs of different Scheduled Commercial Banks of India as on end March 2005 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 fall 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.

32 ON NUMBER OF OFF SITE TOTAL BANK GROUP SITE BRANCHES ATM ATM ATM

NATIONALISED BANKS 33627 3205 1567 4772 STATE BANK OF INDIA 13661 1548 3672 5220 OLD PRIVATE SECTOR 4511 800 441 1241 BANKS NEW PRIVATE SECTOR 1685 1883 3729 5612 BANKS FOREIGN BANKS 242 218 579 797

Table no:2

33

3.7 INDIAN BANKING SYSTEM

India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders, agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the last decades of the 18th century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was known as the Bank of Calcutta. SBI is presently the largest commercial bank in the country.

The role of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947 and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed by six next largest in 1980. But with adoption of economic liberalization in 1991, private banking was again allowed.

The commercial banking structure in India consists of: Scheduled Commercial Banks and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the Act.

Indian banks can be broadly classified into public sector banks (those banks in which the Government of India holds a stake), private banks (government does not have a stake in these banks; they may be publicly listed and traded on stock exchanges) and foreign banks.

Various types of deposites in bank are as follows: i)Bank Fixed Deposits Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from

34 15days to 5 years.

ii) Current Account Current Account is primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated accounts meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of business hence they are non-interest bearing accounts iii) Demat Account Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a Demat account in order to buy or sell shares. iv) Recurring Bank Deposits Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor. v) Reserve Bank of India The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. Though initially RBI was privately owned, it was nationalized in 1949. Its central office is in Mumbai where the Governor of RBI sits. vi) Savings Bank Account Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. The main advantage of Savings Bank Account is its high liquidity and safety.

vii) Senior Citizen Saving Scheme 2004

35 The Senior Citizen Saving Scheme 2004 had been introduced by the Government of India for the benefit of senior citizens who have crossed the age of 60 years. However, under some circumstances the people above 55 years of age are also eligible to enjoy the benefits of this scheme. viii) Foreign Banks in India Foreign banks have brought latest technology and latest banking practices in India. They have helped made Indian Banking system more competitive and efficient. Government has come up with a road map for expansion of foreign banks in India. ix) Nationalised Banks Nationalised banks dominate the banking system in India. The history of nationalised banks in India dates back to mid-20th century, when Imperial Bank of India was nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. x) Private Banks in India initially all the banks in India were private banks, which were founded in the pre- independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of

India.

36 3.8 NATIONALISED BANKS IN INDIA

Nationalised banks dominate the banking system in India. The history of nationalised banks in India dates back to mid-20th century, when Imperial Bank of India was nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Then on 19th July 1960, its seven subsidiaries were also nationalised with deposits over 200 crores. These subsidiaries of SBI were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBIR), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS), and State Bank of Travancore (SBT).

However, the major nationalisation of banks happened in 1969 by the then-Prime Minister Indira Gandhi. The major objective behind nationalisation was to spread banking infrastructure in rural areas and make cheap finance available to Indian farmers. The nationalised 14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India (UBI), and Vijaya Bank.

In the year 1980, the second phase of nationalisation of Indian banks took place, in which 7 more banks were nationalised with deposits over 200 crores. With this, the Government of India held a control over 91% of the banking industry in India. After the nationalisation of banks there was a huge jump in the deposits and advances with the banks. At present, the State Bank of India is the largest commercial bank of India and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9,000 branches.

37 3.9 LIST OF PUBLIC SECTOR BANKS IN INDIA IS AS FOLLOWS:

 Allahabad Bank

 Andhra Bank

 Bank of Baroda

 Bank of India

 Bank of Maharashtra

 Canara Bank

 Central Bank of India

 Corporation Bank

 Dena Bank

 Indian Bank

 Indian Overseas Bank

 Oriental Bank of Commerce

 Punjab and Sind Bank

 Punjab National Bank

 State Bank of Bikaner & Jaipur

 State Bank of Hyderabad

38  State Bank of India (SBI)

 State Bank of Indore

 State Bank of Mysore

 State Bank of Patiala

 State Bank of Saurashtra

 State Bank of Travancore

 Syndicate Bank

 UCO Bank

 Union Bank of India

 United Bank of India

 Vijaya Bank

 IDBI Bank

3.10 STATE SCENARIO

39 Kerala has a sound banking infrastructure. An effective financial system in the form of banks and financial institutions offer economical lending and borrowing. Kerala has many commercial, nationalized cooperative banks along with a wide network of informal entities including money-lending agencies. With progressing time Kerala banking system has attained a high benchmark. Here is a list of some of the banks in Kerala.

Banking was one of the more preferred lines of business in Kerala - as well as in the princely states of Travancore and Cochin and the Malabar Province of British India) that originally comprised it - in the twentieth century. A list of some of the Banks that operated in that territory during that period are given below. Due to various reasons most of them were either closed or amalgamated with other banks, leaving only a handful now.

. Aleppey Bank Ltd - ....-1964 (Amalgamated with Federal Bank Ltd)

. Bank of Cochin Ltd - ....-1985 (Amalgamated with State Bank of India)

. Bank of Kerala Ltd - ....-1961 (Amalgamated with Canara Bank)

. Bank of New India Ltd - ....-1961 (Amalgamated with State Bank of Travancore)

. Catholic Bank Ltd - ....-1961 (Amalgamated with Syndicate Bank)

. Catholic Syrian Bank Ltd [1] - 1920-

. Chalakudy Public Bank Ltd - ....-1964 (Amalgamated with Federal Bank Ltd)

. Cochin Nayar Bank Ltd - ....-1964 (Amalgamated with State Bank of Travancore)

. Cochin Union Bank Ltd - ....-1964 (Amalgamated with Federal Bank Ltd)

. Dhanalakshmi Bank Ltd - 1927-

. Federal Bank Ltd (originally known as Travancore Federal Bank) [3] - 1931-

. Kottayam Orient Bank Ltd - ....-1961 (Amalgamated with State Bank of Travancore)

. Latin Christian Bank Ltd - ....-1964 (Amalgamated with State Bank of Travancore)

40 . Lord Krishna Bank Ltd - ....-2006 (Amalgamated with Centurion Bank of Punjab)

. Marthandom Commercial Bank Ltd - - ....-1968 (Amalgamated with Federal Bank Ltd)

. Nedungadi Bank Ltd - 1899-2003 (Amalgamated with Punjab National Bank)

. Palai Central Bank Ltd - 1927-60 (Liquidated by High Court of Kerala on the request of Reserve Bank of India)

. Parur Central Bank Ltd - ....-1990 (Amalgamated with Bank of India)

. Quilon Bank Ltd - ....-1937 (Amalgamated to form Travancore National & Quilon Bank Ltd)

. South Indian Bank Ltd [4] - 1929-

. State Bank of Travancore (originally known as Travancore Bank Ltd) [5] - 1945-

. St George Union Bank Ltd - ....-1965 (Amalgamated with Federal Bank Ltd)

. Thiya Bank Ltd - ....-1964 (Amalgamated with Lord Krishna Bank Ltd)

. Travancore Forward Bank Ltd - ....-1961 (Amalgamated with State Bank of Travancore)

. Travancore National & Quilon Bank Ltd - 1937-38 (Liquidated by Travancore Government)

. Travancore National Bank Ltd - ....-1937 (Amalgamated to form Travancore National & Quilon Bank Ltd)

. Venadu Bank Ltd - ....-1961 (Amalgamated with South Indian Bank Ltd)

3.10.1 National & Local Banks in Kerala

41 Name of Banks Websites

Allahabad Bank www.allahabadbank.com Bank of India www.bankofindia.com Canara Bank www.canbankindia.com Catholic Syrian Bank www.csb.co.in Centurion Bank of Punjab www.centurionbop.co.in IndusInd Bank www.indusind.com Dhanalakshmi Bank Limited www.dhanbank.com Federal Bank Limited www.federalbank.co.in ICICI Bank www.icicibank.com IDBI Bank www.idbibank.com Indian Bank www.indianbank.in ING Vysya Bank www.ingvysyabank.com South Indian Bank www.southindianbank.com State Bank of India www.sbi.co.in State Bank of Travancore www.statebankoftravancore.com Syndicate Bank www.syndicatebank.in

3.10.2 Foreign Banks in Kerala

Name of Banks Websites

ABN AMRO Bank www.abnamro.com Abu Dhabi Commercial Bank www.adcbindia.com American Express Bank www.americanexpress.com ANZ www.anz-it.com Citibank India www.online.citibank.co.in DBS Bank www.dbs.com

42 HSBC www.in.hsbc.com Standard Chartered Bank www.standardchartered.com

3.10.3 Government Financial Institutions

• Kerala Financial Corporation (KFC) • Kerala State Financial Enterprises (KSFE) • Kerala Transport Development Finance Corporation (KTDFC) • Reserve Bank of India(RBI)

CHAPTER 4

43 COMPANY PROFILE

4.1 BANK OF INDIA

Company profile

NAME : BANK OF INDIA

INCORPORATION YEAR : 1906

CHAIRMAN : SHRI. ALOK KUMAR MISRA

MANAGING DIRECTOR

REGISTERD OFFICE : BANK OF INDIA, HEAD OFFICE,

STAR HOUSE, C-5, ‘G’ BLOCK,

BANDRA-KURLA COMPLEX,

44 BANDRA EAST,

MUMBAI -400051

URL : HTTP://WWW.BANKOFINDIA.COM

NO: OF BRANCHES : 3752 (IN INDIA)

29 (ABROAD)

LISTING : BSE

INDUSTRY : FINANCIAL SERVICES

PRODUCTS :COMMERCIAL BANKING, RETAIL BANKING PRIVATE BANKING, ASSET MANAGEMENT & MORTGAGES REVENUE : 24,393.50 CRORE (US$4.87 BILLION) TOTAL ASSET : 364,556.48 CRORE (US$72.73 BILLION) OPERATING INCOME : 5,384.23 CRORE (US$1.07 BILLION) NET INCOME : 2,488.71 CRORE (US$496.5 MILLION)

4.2 INTRODUCTION

Fig no: 13

Bank of India (BOI) (BSE:) is a state-owned commercial bank with headquarters in Mumbai. Government-owned since nationalization in 1969, It is India's 4th largest PSU

45 bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It has 4157 branches as on 21/04/2012, including 29 branches outside India, and about 1679 ATMs. The bank is a founder member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications ), which facilitates provision of cost-effective financial processing and communication services. The Bank completed its first one hundred years of operations on 7 September 2006.

The earlier holders of the Bank of India name had failed and were no longer in existence by the time a diverse group of Hindus, Muslims, Parsees, and Jews helped establish the present Bank of India in 1906. It was the first in India promoted by Indian interests to serve all the communities of India. At the time, banks in India were either owned by Europeans and served mainly the interests of the European merchant houses or by different communities and served the banking needs of their own community.

The promoters incorporated the Bank of India on 7 September 1906 under Act VI of 1882, with an authorized capital of Rs. 1 crore divided into 100,000 shares each of Rs. 100. The promoters placed 55,000 shares privately, and issued 45,000 to the public by way of IPO on 3 October 1906; the bank commenced operations on 1 November 1906.

The lead promoter of the Bank of India was Sir Sassoon J. David (1849-1926). He was a member of the Sassoons, who in turn were part of a Bombay community of Baghdadi Jews, which was notable for its history of social service. Sir David was a prudent banker and remained the Chief Executive of the bank from its founding in 1906 until his death in 1926.

The first board of directors of the bank consisted of Sir Sassoon David, Sir Cowasjee Jehangir, J. Cowasjee Jehangir, Sir Frederick Leigh Croft, Ratanjee Dadabhoy Tata, Gordhandas Khattau, Lalubhai Samaldas, Khetsety Khiasey, Ramnarain Hurnundrai, Jenarrayen Hindoomull Dani, and Noordin Ebrahim Noordin.

4.3 PREVIOUS BANKS THAT USED THE NAME BANK OF INDIA

At least three banks having the name Bank of India had preceded the setting up of the present Bank of India.

46 1. A person named Ramakrishna Dutt set up the first Bank of India in Calcutta (now Kolkata) in 1828, but nothing more is known about this bank.

2. The second Bank of India was incorporated in London in the year 1836 as an Anglo- Indian bank.

3. The third bank named Bank of India was registered in Bombay (now Mumbai) in the

year 1864.

4.4 INDUSTRIES WHERE BANK OF INDIA COMPETITERS

 Banks & Credit Unions

 Financial Services

 Lending

4.5 COMPETITORS OF BANK OF INDIA

 Bank of Baroda  Canara Bank  Punjab National Bank  Ge Money India  Indian Overseas Bank

4.6 ZONAL OFFICE PROFILE

NAME : KERALA ZONAL OFFICE

INCORPORATED YEAR : 2002

ZONAL MANAGER : MR. MANOJ KAPOOR

DEPUTY ZONAL MANAGER : R. VISHVANATH

47 OFFICE : KERALA ZONAL OFFICE

BANK OF INDIA

KALOOR TOWERS

KALOOR KADAVANTHRARA ROAD

COCHIN-78

URL : HTTP://WWW.BANKOFINDIA.COM

NO OF BRANCHES : 92

DEPARTMENT : PERSONNAL DEPARTMENT, MARKETING,

FAC, ARD, CSD, CMC, PLANNING IT, LAW

4.7 INCEPTION DETAILS OF BANK OF INDIA

Inception Date : 7th September, 1906

Place : Mumbai

Initial capital : 50 lakh

48 Initial employee no : 50 employees

Ownership : Private

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees

Now the bank has around 29 branches abroad. Bank of India was the first Indian Bank to open a branch outside the country, at London, in 1946 and Europe, Paris in 1974. Bank has branches in foreign countries like London, New York, Paris, Tokyo, Hong-Kong and Singapore, UK, Paris, Dubai, South Africa etc…

The Bank has 3752 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 50 Zonal offices. There are 29 branches/ offices (including five representative offices) and 3 Subsidiaries and 1 joint venture abroad. The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008.

The bank has its Zonal office at kaloor, Ernakulam. Across Kerala the bank has around 92 Branches and is administrated by this Zonal office. Bank also has one NRI Branch and a Specialised Service Branch in Kerala. Bank has two ultra small branches in Kerala at Thennor and Vadakemthala.

4.8 HISTORY

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalised along with 13 other banks.

49 Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalised banks.

The Bank has 3752 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 50 Zonal offices. There are 29 branches/ offices (including five representative offices) and 3 Subsidiaries and 1 joint venture abroad. The Bank came out with its maiden public issue in 1997 and follow on Qualified Institutions Placement in February 2008. Total number of shareholders as on 30/09/2009 is 2, 15,790.

While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalised banks to establish a fully computerised branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/rating its credit portfolio.

The Bank's association with the capital market goes back to 1921 when it entered into an agreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is an association that has blossomed into a joint venture with BSE, called the Shareholding Ltd. to extend depository services to the stock broking community. Bank of India was the first Indian Bank to open a branch outside the country, at London, in 1946, and also the first to open a branch in Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29 branches (including five representative offices) at key banking and financial centres viz. London, New York, Paris, Tokyo, Hong-Kong and Singapore. The international business accounts for around 17.82% of Bank's total business.

4.8.1 HISTORY AT A GLANCE

. 1906: founded with Head Office in Bombay.

50 . 1921: entered into an agreement with the Bombay Stock Exchange to manage its clearing house.

. 1946: opened a branch in London, the first Indian bank to do so. This was also the first post-WWII overseas branch of any Indian bank.

. 1950: opened branches in Tokyo and Osaka.

. 1951: opened a branch in Singapore.

. 1953: opened a branch in Kenya and another in Uganda.

. 1953 or 54: opened a branch in Aden.

. 1955: opened a branch in Tanganyika.

. 1960: opened a branch in Hong Kong.

. 1962: opened a branch in Nigeria.

. 1967: The Government of Tanzania nationalized operations in Tanzania and folded them into the government-owned National Commercial Bank, together with those of Bank of Baroda and several other foreign banks.

. 1969: The Government of India nationalized the 14 top banks, including Bank of India. In the same year, the People's Democratic Republic of Yemen nationalized branch in Aden, and the Nigerian and Ugandan governments forced to incorporate its branches in those countries.

. 1970: National Bank of Southern Yemen incorporated's branch in Yemen, together with those of all the other banks in the country; this is now National Bank of Yemen. was the only Indian bank in the country.

. 1972: sold its Uganda operation to Bank of Baroda.

. 1973: opened a rep in Jakarta.

. 1974: opened a branch in Paris. This was the first branch of an Indian bank in Europe.

. 1976: The Nigerian government acquired 60% of the shares in Bank of India (Nigeria).

51 . 1978: opened a branch in New York.

. 1970s: opened an agency in San Francisco.

. 1980: Bank of India (Nigeria) Ltd, changed its name to Allied Bank of Nigeria.

. 1986: acquired Paravur Central Bank (Karur Central Bank or Parur Central Bank) in Kerala in a rescue.

. 1987: took over the three UK branches of Central Bank of India (CBI). CBI had been caught up in the Sethia fraud and default and the Reserve Bank of India required it to transfer its branches.

. 2003: opened a representative office in Shenzhen.

. 2005: opened a representative office in Vietnam.

. 2006: plans to upgrade the Shenzen and Vietnam representative offices to branches, and to open representative offices in Beijing, Doha, and Johannesburg. In addition, plans to establish a branch in Antwerp and a subsidiary in Dar-es-Salaam, marking its return to Tanzania after 37 years.

. 2007: acquired 76 percent of Indonesia-based PT Bank Swadesi.

. 2011: opened a fully owened Subsidairay in Auckland, New Zealand on 6th October,2011 (Bank of India (New Zealand) Ltd.)

4.8.2 Chairman and Managing Director since nationalisation

. 1969-1970: Tribhovandas Damodardas Kansara

. 1970-1975: J N Saxena

. 1975-1977: C P Shah

. 1977-1980: H C Sarkar

. 1981-1984: N Vaghul

. 1984-1986: T. Tiwari

. 1987-1991: R. Srinivasan

52 . 1992-1995: G. S. Dahotre

. 1995-1997: G. Kathuria

. 1997-1998: M G Bhide

. 1998-2000: S Rajagopal

. 2000-2003: K V Krishanamurthy

. 2003-2005: M Venugopal

. 2005-2007: M. Balachandran

. 2007-2009:T.S.Narayanasami

. 2009-2011 : Alok Kumar Mishra

4.9 VISION AND MISSION

4.9.1 Mission

"To provide superior, proactive banking services to niche markets globally, while providing cost-effective, responsive services to others in our role as a development bank, and in so doing, meet the requirements of our stakeholders".

4.9.2 Vision

"To become the bank of choice for corporates, medium businesses and up market retail customers and to provide cost effective developmental banking for small business, mass

53 market and rural markets"

4.9.3 Quality policy

“We, at bank of India, are committed to become the bank of choice by providing superior, pro-active, innovative, state-of-the art banking services with an attitude of care and concern for the customers and patrons”

4.10 CORPORATE DESK

CHAIRMAN

Fig no:14

Shri. Alok Kumar Misra, Chairman & Managing Director, (From 05.08.2009)

54 Shri Alok Kumar Misra has taken over as the Chairman and Managing Director of Bank of India with effect from 5th August, 2009. Shri Misra was the Chairman & Managing Director of Oriental Bank of Commerce prior to the present assignment. Shri Misra held the post of the Executive Director of Canara Bank from 24th March 2006 to 3rd June 2007 and the Chairman & Managing Director of Oriental Bank of Commerce from 4th June 2007

4.10.1 LIST OF BOARD OF DIRECTORS

1. Shri. Alok Kumar Misra 2.Shri N. Seshadri 3.Shri. M S Raghavan 4.Shri Kuttappan K. Nair 5.Shri Umesh Kumar 6.Shri Pramod K. Panda 7.Shri Harvinder Singh 8.Shri P.M. Sirajuddin 9.Shri. Neeraj Bhatia 10. Shri Umesh Kumar Khaitan 11. Shri. Pramod Bhasin Radhe Mohan

4.11 ZONAL OFFICE HIERARCHY

ZONAL MANAGER

DEPUTY ZONAL MANAGER

55

CALICUSENIOR ERNAKULAMMARKETITRIVANDRU T MANAGER NG TEAMM (HRMS) LEADER CHIEF SENIOR MANAGER SENIOR MANAGER MANAGER MANAGER (CMC) MANAGER (PLANNIN (LAW, ARD) (CREDIT) (RMD) G)) SENIOR CHIEF SENIOR SENIOR MANAGER MANAGER (HR, MANAGER MANAGER (CSD) MRKTG) (FAC) (IT)

SM (ARD)

SENIOR MANAGE MANAGER R (IR) MANAGER (HRD) (LAW)

Fig no:15

4.12 PRODUCT AND SERVICES

4.12.1 DIRECT SERVICES:

 Depository account facilities; Current deposits Term deposits Recurring deposits

56 Deposit schemes for NRIs  Savings bank account  Credits and loans  Payment of bills  Tax payments  Gold loans  Insurance facilities  Cheque facilities  Safe depository facilities  Share marketing  ATM facilities  Credit card facilities  Debit cards  Travel cards

4.12.2 ONLINE SERVICES:

 Mobile banking & payments  Internet banking  Pay bills  Book air & railway ticket  Online ASBA IPO  Direct tax  Central excise, service tax  Online trading in shares  Star e-remit  Internet banking demo

4.12.3 OTHER PRODUCTS AND SERVICES

 Demat account and online share trading

57  ASBA online for applying in IPOs/FOPs without visiting banks.  Star savings plus  Star suraksha SB plus scheme  Star home loan scheme  Star education loan scheme  Star vehicle loan  Star mahila gold loan scheme  Star personal loan scheme  Gold coins with certicard  Life insurance products of star union dai-ichi.  Non life insurance products of NICL including medic-claim family floater policy  BOI gift cards.

4.13 DEPARTMENTS

Most of the organizations are to be started with the aim of maximizing profit. For maximizing profit, the company should have a proper management system. Single person cannot do every work in an organization. So for the smooth running of the work in an organization are to be divided into different department according to their nature.

Departmentalization can be defined as the process of grouping of activities into units and sub units for the purpose of administration, Administrative units and sub units. Sub units may be as divisions, unit, branches, sections, jobs etc. The process of departmentalization is done in all sections of the organization.

The top-level executive or Manager of the organization groups, the entire activities into major divisions such as production, sales, finance etc. A senior executive of the organization administers these divisions and they are to report to chief executive. The senior executives assign duties to their juniors. So departmentalization is done on the basis of level of management.

As soon as it becomes necessary, on account of volume of business, to divide the work in a bank into divisions, each employing a group of clerks, such division is organized into a department having a department head who is usually a teller, a head bookkeeper, or perhaps a

58 junior officer. In the very large banks the executive staffs is itself organized into groups, and there may be a vice - president and one or two assistant cashiers in charge of each important department.

The work of a department in a large bank is nothing more nor less than the work of a single man in a small bank, apportioned among several men. For example, the receiving teller in a five-man bank will take the deposit, count the cash, examine the checks, assort them as to place payable, enter them upon the proper records and make a settlement or proof at the end of the day. In a large bank each of these operations is performed by a different man or group of clerks under the direction of the receiving teller, who is head of the department. It may be that he himself will do very little if any of the detail work

In bank of India there are 8 departments as follows:

 Follow up Audit Cell (FAC).  Law and Asset Recovery department (ARD).  Corporate Service Department (CSD).  Credit Monitoring Cell (CMC).  Human resource department.  Marketing Department.  Planning Department.  Information Technology department.  Risk management department.  Credit department.

59 4.14 HUMAN RESOURCE DEPARTMENT

4.14.1 PROFILE

Bank of India’s Kerala Zonal office has a well functioning Human Resource Department. Human Resources Management or Personnel Management is a relative recent title for all aspects of managing people in an organization. It represents a broad based understanding of the development problems of people where management follows scientific ways and means to solve the issues if any and to enhance the abilities of their personnel.

Human Resource Development base evolved out of different terms such as Personnel Management, Personnel Administration; labour Relations, Industrial Relations etc.

They have a strong backup of a good healthy group of employees. The organisation has an established frame work and has been adopting changes and practices in Human Resources Development, with utmost respect to human values integrity and through a variety of services by using appropriate training, motivation techniques and employee welfare activities.

4.11.2 FUNCTIONS

The key functions in HR are staff postings, transfers, deployment, deputation payment of salary, maintenance of leave. Recruitment & Manpower planning, Welfare functions;

60 including statutory and non-statutory welfare measures, Grievance handling as per the provisions of industrial disputes act and Maintaining discipline, Industrial relations, Job specification, Staffing and training, annual performance appraisal, claims, settlement, job rotation, etc.,

4.14.3 TIMINGS AND SHIFTS The working time of the bank is from Monday to Saturday, Morning 10.00 Am to evening 5.00pm. Employees Usually Stay At Office Till Work Gets Over. No Shift system exists here.

4.14.4 DEPARTMENT STRUCTURE:

CHEIF MANAGER (HR)

STAFF OFFICER MANAGER (HR) STAFF OFFICER SENIOR MANAGER (HR) (HRMS) (IR/HR)

CLERICAL STAFF OFFICER STAFF

CLERICAL STAFF

Fig no:16

61 4.14.5 DESIGNATIONS AND ROLES

 CHIEF MANAGER : is in control of overall supervision, work allocation.  SENIOR MANAGER(HR): is looking after the day to day function and department recommendation of office notes to higher authorities, effecting transfers, sanctioning of various claims as per the delegated authority and recommending of the same, delegation of work to officers and clerks  SENIOR MANAGER (IR/HR): is the Vigilance Officer for the Zone, who is responsible for timely conclusion of disciplinary action cases, court cases, compliance of statutory displays at branches, convening of statutory meetings.  MANAGER (HR) : processing claims, arrange for deputation of staff, nomination of training and maintenance of staff records, processing recruitment related work, booking of holiday homes, sanction etc.,  OFFICER(HRMS): deals with salary processing/ verifying entries done by the clerk.  CLERK(HR) : typing office notes, transfer orders, letters etc., maintenance of inward and outward register, various typing related matter etc.,  CLERK(HRMS): salary data entry, processing Holiday Home requests

4.14.6 HR POLICY

 Promotion policy: well defined promotion policy for promotion for subordinate staff and clerks. From clerical staff to officers, in officers cadre from JM-I to MM-II and outwards up to TEG-VII.  Recruitment: subordinate staff is recruited from list provided by employment exchange. In Clerical and officers cadre recruitment process is first done by IBPS. They conduct written test selected candidates are interviewed in bank and recruited. There is transfer

62 policy for clerical cadre and officer’s cadre. Clerical staff is transferred generally within the district only. Officers can be transferred posted anywhere in India and also in foreign

countries, as per banks recruitment.

4.14.7 TRAINING AND DEVELOPMENT PROGRAMME

Training is imparted to all staff in staff training colleges and MDI periodically. Individual trainings are given to various specialists in HR, marketing, planning; IT etc… various other trainings like induction and orientation trainings are given.

4.14.8 APPRAISAL MECHANISM

For officers and clerk on probation monthly appraisal is done. For promote officers quarterly progress report is submitted and for officers there is annual appraisal and based on the marks obtained promotion eligibility is determined.

4.14.9 WAGES AND SALARY

Salary is paid through centralised process from Zonal office salary structure is as per settlement with Indian banks association and officers association and staff union every five years. DA is paid on the basis of cost of living which is calculated every quarter.

4.14.10 MANAGEMENT OF TRADE UNIONS

Trade unions of workers and associations of officers are formed with the intention of protecting the employee’s interest against the exploitation by management. Trade unions take care of employees to have better working condition and other basic facilities which strive towards the development of individual employees and the organization.

There is all India bank of India officers association for officers and bank of India staff union for clerical and subordinate staff which is affiliated to federation of association and union at all India level.

63 4.14.11 INDUSTRIAL RELATIONS

Profile

Industrial relations were founded by John R. Commons when he created the first academic industrial relations program at the University of Wisconsin in 1920. Early financial support for the field came from John D. Rockefeller, Jr. who supported progressive labour management relations in the aftermath of the strike at a Rockefeller-owned coal mine in Colorado. In Britain, another progressive industrialist, Montague Burton, endowed chairs in industrial relations at Leeds, Cardiff and Cambridge in 1930, and the discipline was formalized in the 1950s with the formation of the Oxford School by Allan Flanders and Hugh Clegg.

Industrial relations are a multidisciplinary field that studies employment relationship. Industrial relations are increasingly being called employment relations because of the importance of non-industrial employment relationships. Many outsiders also equate industrial relations to labour relations. Industrial relations studies examine various employment situations, not just ones with a unionized workforce.

In bank of India IR department in head office deals with framing polices and guidelines for the functioning of bank. They set certain rules for code of conduct for the employees and also structure policies in accordance with the law and govt rules. The bank has each IR sub departments in each Zonal office, they deals with monitoring the code of conduct of employees and deals with any misconduct or frauds

64 Activities

IR in Zonal office deals with the disciplinary actions and proceedings. The process starts with reporting of any fraud, audit report, customer complaints etc and the like to IR department. When such reporting takes place the next stage is to fact find or investigation and this is done by an authorised officer from bank. Then investigating officer submits his report. And the report is verified or analysed by the IR department and an explanation is called from the erring employees. if the report suggests any acts of misconduct by the employee. After receipt of the explanation for the employee case is put up to the Internal Advisory Committee for further classification as vigilance or non vigilance and subsequently actions is under taken.

65 4.15 ASSET RECOVERY AND LAW DEPARTMENT

4.15.1 PROFILE

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, allow banks and financial institutions to auction properties (residential and commercial) and recover the dues, when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction.

Banks declare the account as NPA as per RBI guidelines, if a borrower defaults on repayment of his/her secured loan for three months at stretch, banks give him/her a 60-day period to regularize the repayment, by issuing a demand notice under SARFAESI Act. On failure to do so, banks may take possession of the security and auction it to recover the debt.

The Banks use the provisions of “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)” which appear to be draconian in some cases while the Act is justified from another angle. The Bank has to follow the RBI guidelines and the RBI circulars having binding nature from to time. It is known that the Banks should follow the guidelines of ‘Asset Classification’ prescribed by the Reserve Bank of India in classifying any loan account as ‘Non-performing Asset’. The guidelines never intended to unnecessarily and unreasonably harass the borrowers. The guidelines refers to the significance of looking at ‘risk factor’, the ‘value of security’, track record of the borrower

66 and even getting the loan Account updated though Bank usually follows their internal guidelines.

In some cases, the borrowers do not want to litigate the issues with the Bank and may try their level best to get the default rectified and may try to get the account settled finally under ‘One-time Settlement Scheme’. The Bank or the officers concerned in most of the cases maintain written or oral communication with the borrowers when there is default. The borrowers, in-turn, explains their difficulties in view of their long standing relationship with the Bank and may seek some relaxation and may seek indulgence of the Bank to rectify the default in repayment. This communication or negotiation happens before classifying any loan Account as “Non-performing Asset” and even after the classification of account as NPA and before initiating the proceedings under the provisions of SARFAESI Act, 2002. In some cases, the borrowers negotiate with the Bank for rectifying the default or for a ‘final settlement’ even after the issuance of demand notice by the Bank under section 13 (2) of the Act. When a borrower intends to avoid litigation, he may act upon the oral understanding with the Bank. Sometimes, the understanding for ‘rectification of default’ or ‘settlement of loan’ can be in writing also. While the ‘rectification of default’ is oral in most of the cases, the ‘final settlement of the account’ is in writing normally.

4.15.2 ACTIVITIES

This department deals with banks all legal aspects and acts as an intermediary between court and bank. Also carry out all activities with regards to assets recovery and its procedures. Law department provides legal advices to the bank and stand as a nominee of bank with the procedures of court.

Works in close coordination with various operational departments and tender legal advice in policy and operational matters more particularly in areas relating to staff matters, vigilance matters, disciplinary proceedings, long term and short term credit, infrastructure lending, resource mobilization, premises matters, RRBs and Cooperatives. Appear before Labour Commissioner in conciliation proceedings, consumer forum, and arbitration hearings. Activities also constitute Preparation of brief to senior advocates or retired judges of High Court, Supreme Court for obtaining their opinion in important matters.

67 Documentation regarding refinance agreements, security documents, co-financing and infrastructure financing. Participate in negotiations on behalf of the Bank where legal issues are involved. selection of circulars of lending procedure and procedure for invoking of guarantee, enforcement of securities. Vetting of draft legislations and examine the legal validity of the same which are concerned with agriculture and rural developments sent by GOI. Vetting of draft legislations and examine the legal validity of same which are concerned with agriculture and rural development sent by State Governments. Vetting of draft legislations and examine the legal validity of same which are concerned with agriculture and rural development sent by State Governments. Drafting and vetting of documents sent by various operational departments

4.15.3 DEPARTMENTAL STRUCTURE

Deputy Zonal Manager

CHIEF MANAGER

(LAW, ARD)

MANAGER (ARD) MANGER (LAW)

Fig no:17

68 4.16 CORPORATE SERVICE DEPARTMENT

4.16.1 Profile

Bank of India has a well functioning corporate service department, which take cares of all needs and wants of the bank. Each Zonal office has a corporate service department which looks after the branches in the respective area. Kerala Zonal office department is headed by a Senior Manager and he reports to the deputy zonal manger and Senior Manager is assisted by a Manager and Staff Officer.

4.16.2 Activities

The main activities to be carried out by this department is, looking after premises and facilities of bank, new branch openings, dealing with complaints from customers, deals with fraudulent of customers, acquisition of land in various centers for construction of office and residential premises. Other functions are Monitoring of the Construction Work at various locations, Maintenance work of office premises/staff quarters.

In case of any customer complaints registered;

 If any complaint registered, ask the branch to give the facts about the case and branch gives clarification.  Branch will give report to Zonal office and will try to resolve the issue

69  CSD dept. will also help the Branch in pursuing the complaintant to close the issue by apologising.

4.16.3 DEPARTMENT STRUCTURE

Deputy Zonal Manager

Senior Manager

Manager

Officer

Clerk

Fig no:18

70 4.17 CREDIT DEPARTMENT

4.17.1 PROFILE

This department deals with the credit sanctioning in Kerala which is beyond the delegation of individual branch. The team comprises of two Senior Manager and four Managers. Under the Senior Manager credit there are three Managers in respect to the area they deals with as retail, small and medium enterprises (SME) and other loans. And the second Senior Manager deals with large borrowing cell (LBC). Retail deals with housing loans, education loans etc... LBC deals with large business loans whereas SME deals with small and medium enterprise loans. There are Staff Officers and clerks reporting to the Managers.

4.17.2 ACTIVITIES

This department deals with the sanctioning credits which are beyond the delegation of individual branch. Usually high amounts credits are sanctioned from the Zonal office. The amount differs in respect to the scale of the Managers in the branch. And proposals beyond the power of ZLCC Zonal Level Credit Committee are submitted to NBGLCC. The SME team is focused on providing financial services to small and medium enterprises, and offers customers a range of products and services specifically tailored to meet their fund based and non fund based requirements. Credit proposals from branches are first cleared by a credit risk

71 evaluation committee (CREC) and submitted to ZM. Upon receiving the clearance from ZM the proposals are placed to ZLCC. Sanctions/approvals are made by the ZLCC.

4.17.3 DEPARTMENT STRUCTURE

ZONAL OFFFICER

Deputy Zonal Manager

SENIOR MANAGER (CR) SENIOR MANGER (LBC)

MANAGER Manager Manager (RETAIL) (SME) (other loans)

72 STAFF OFFICER STAFF OFFICER STAFF OFFICER

CLERK CLERK CLERK

Fig no:19

4.18 CREDIT MONITORING CELL

4.18.1 PROFILE

Credit monitoring is a credit recovery assurance department of bank offered who are under concerned of fraud or any lapse in return of credit to bank. In credit monitoring, an agency is keeping constant watch on the advances portfolio of the bank to keep these assets (advances) in good health, as performing assets so that they will keep on earning interest increases to the bank. If they become Non-Performing Assets due to non repayment of interest and instalments, they will stop earning interest and also the bank has to keep provision for these NPAs from the profit earned by other performing assets. In a sense, credit monitoring could be considered the stepped-up version of checking one's credit report one or two times a year: instead of checking every six months, a credit monitoring agency checks all the time

4.18.2 ACTIVITIES

This department monitors the advances continuously to find out early warning symptoms of the accounts becoming bad and takes timely corrective measures to prevent the accounts from becoming NPAs. The adverse features are brought to notice of the concerned branches and the department also contacts the borrowers directly for necessary corrective measures.

73 The department ensures that various internal control mechanisms like inceptions, review etc... are effectively utilised by the branches to supervise the advances. The credits sanctioned are monitored and controlling by this department. If loans are not paid back then this department takes control and takes action. In a condition if EMI is not paid in time for a certain period then it is given to asset recovery department for the recovery of the assets

4.18.3 DEPARTMENT STRUCTURE

ZONAL MANAGER

DEPUTY ZONAL MANAGER

MANGER

SATF OFFICER

CLERK

74 Fig no:20

4.19 MARKETING DEPARTMENT

4.19.1 PROFILE

Marketing is the activity directed at satisfying the needs and wants through an exchange process. It deals with products and services, pricing, placing and promoting the final product of particular process. The marketing department is headed by Chief Manager marketing and reports directly to the Zonal Manager.

In Kerala the bank has three marketing teams, in Calicut, Trivandrum and Ernakulam. They look after the marketing activities of bank in Kerala. Teams travel along different places and canvas customers for bank

4.19.2 ACTIVITY

The main activity of marketing team is to advertise the bank and canvas customers for having accounts in bank. They familiarize the products and services of the bank to the customers and potential customers. The function of the marketing department of a bank is to advertise about the bank and reach more potential customers who would open accounts with the bank. They usually start up a campaign or a promotional scheme explaining/offering a host of benefits

75 that come along with the process of account opening with the bank. Such a campaign usually results in the increase in the customer base and increased revenue/profit for the banks..

4.19.3 DEPARTMENT STRUCTURE

Zonal manager

Deputy Zonal Manager

Chief Manager

Marketing teams

ERNAKULAM TRIVANDRUM CALICUT

76 Marketing executives

Marketing officers

Clerk

Fig no:21

4.20 RISK MANAGEMENT DEPARTMENT

4.20.1 Profile

Bank of India has a well designed and robust Risk Management framework in place, The Risk Management function partners with the Business functions to ensure that capital is used efficiently while driving value, with an appropriate trade off between risk and returns Bank has a well designed The credit risk mechanism consists of policies and practices that ensure credit risk is measured, and monitored at account level and portfolio level. The Credit Risk Management policy address the Credit Risk related to lending. Credit Approving committee, Prudential Exposure Limits, Risk Rating System, Risk Based Pricing, Portfolio Management are the various instruments for Management of Credit Risk.

The Bank has standardized and well defined approval processes for all credit proposals to minimize the credit risk associated with them. The Bank has set up Credit Approval committees in zonal level which include five members, Zonal Manager, Deputy Zonal Manager, Senior Manager Credit and Senior Manager Risk Management department and the senior most Chief Manager in the zone. The Bank has also developed credit rating models and scoring model for Retail lending schemes. Entire credit portfolio of the Bank is subject to internal credit rating. It has credit rating migration and default probability data for the last

77 several years. The Bank constantly strives to improve credit quality and maintain a risk profile that is diverse in terms of borrowers, products and industry types.

Bank of India has risk management departments in each of its zone office. In Kerala Zonal office the department is headed by a Senior Manager Risk Management, and Senior Manager reports directly to Deputy Zonal Manager. There is a zonal level credit committee for approving the credit and Senior Manager of risk management department is a member of it. The Senior Manager analysis the risk in the sanctioning of credit and plays n important role in sanctioning of credit

4.20.2 Activities

The credit department in Zonal office mainly deals with the minimising the credit risk of the bank. The major activity is credit rating for approval of loans and other credits, and it is done through credit risk evaluating. And in accordance with the credit rating the interest rate for each approved credit is decided.

Each credit comes as a proposal in Zonal office and this will be evaluated and rated by this department and then it will be passed to the zonal level credit sanctioning committee. The committee consist of 5 members including Zonal Manager, Deputy Zonal Manager, Senior Manager credit department, Senior Manager Risk Management, Senior Manager Risk management and senior most Chief Manager in the zone.

4.20.3 Departmental Structure

ZONAL MANAGER

DEPUTY ZONAL MANAGER

78 SENIOR MANAGER (RISK MANAGEMENT)

Fig no:22

4.21 FOLLOWUP AUDIT CELL

4.21.1 Profile

The head of Kerala Zonal office audit department functions from southern zonal audit office Chennai, Six Zonal offices are under this head office. They pursue audit in all branches in southern zone. Audit is done for all operations of bank, and mainly aims at risk factor. In accordance with the audit report the branches are classified as low high and medium risk branches. Again each of these ids sub classified in to increasing, decreasing and stable. There is a zonal audit committee with respect to each branch, with members as Chennai Zonal office DGM, Zonal Manager of respective branches, Deputy Zonal Manager, and departmental heads of credit, credit monitoring cell, risk management cell, information technology department and asset recovery department.

Audit is done with in a period of 45 days, it is compulsory that there should be minimum 6 audits within a year. For branches which are stated as high risk again an audit is done after every 12 month, and for medium 15 month, for low it is 18 months. After every audit the Follow-up Audit Cell functions as the follow up activities of each after audit.

Internal audit of the branches in the zone is being carried from Southern Zonal Audit Office, Chennai, headed by Deputy General Manager. Six Zones under the National Banking Group (south) are under this Audit Office. Audit covers all operations of the Bank, with a special

79 importance on risk factor. On the basis of risk, branches are classified to High, Medium, Low risk branches. Based on comparison to previous rating further classification is made to Increasing, Stable or Decreasing. There is Zonal Audit Committee at each Zone, with members as Deputy General Manager, Zonal Manager, Deputy Zonal Manager, Follow-Up Audit Cell In-Charge, the Departmental Heads of Credit Department, Credit Monitoring Department, Risk Management Department, Information Technology Department, and Asset Recovery Department, etc.,

For Branches rated High, audit will be repeated after 12 months, for Medium rated branches after 15 months and Low rating after 18 months. After the audit, Audit Report will be sent to respective branches from Audit Office. Follow up Audit Cell at Zonal Office do follow up with Branches who will rectify the irregularities and send compliance to Zonal Office.

4.21.2 Activities

The department has a Senior Manager who reports to directly to the zonal audit committee. The follow up audit cell look after all related activities of zone after the audit. Each audit report is forwarded to respective Zonal office and the follow-up audit cell in respective zone does the follow up. They ask each branch to send the reasoning letter, if there is any need of rectifying any activity of the branch. Then the branch rectifies the report and sends reply, the FAC department checks this and reports to the head office. Again to check on branches a discretionary audit is done.

4.21.3 Department structure

Zonal manager

Deputy Zonal Manager

Senior manager (FAC) 80 Fig no:23

4.22 PLANNING DEPARTMENT

4.22.1 Profile

Corporate Planning Department defines the corporate goals of the organization and plays the role of a “Liaison Department “with the branches. The Department coordinates with various other Departments and branches within the organisation in formulating Annual Business Policy guidelines of the Bank. Periodic meet are organised with branches to discuss issues and guide the branches in the development of business.

Bank of India has a well developed planning department which plans and coordinate all activities related to business development. Kerala Zonal officedepartment deals with all monetary and non-monetary planning of the Kerala zone bank, with respect to the guidance from the head office.

4.22.2 Activities

The major activities of this department comprise of; allocation of budgets to the branches (advances, deposits, profit etc..) and monitoring the performance of branches under the respective heads. They also under take the review of the performance on quarterly basis.

81 4.22.3 Department structure

ZONAL MANAGER

DEPUTY ZONAL MANAGER

SENIOR MANAGER (PLANNING) Fig no:24

4.23 INFORMATION TECHNOLOGY DEPARTMENT

4.23.1 Profile

Information technology department serves as the prime facilitation for all it related matters of the Bank. It also involves completely with Network Architecture and Support for the Bank’s Software Development through external and internal development agencies. This department also helps in Small module software development through in-house resources for internal usage, Guidance and Review of IT Matter of the Bank. Decisions affecting policy or practice are generally taken at the highest level in the hierarchy, through strategies for implementation are largely the responsibilities of zonal it department. Powers related to it terminated at zonal office level.

They enable Decision Support / Management Information System for the Bank and for achieving its Business Intelligence goals quickly and effectively. With the implementation of this solution, Bank’s Data Warehouse is storing periodically transactional data from Core Banking System. The Bank has simultaneously taken initiatives for improving the quality of the data and increasingly the Bank’s MIS has become more sophisticated and accurate. IT Responsible for managing, developing and supporting the bank’s IT infrastructure and systems used by the business to provide customers with superior banking services.Each

82 Zonal office of bank India has an IT department, with a senior manger and Staff Officers reporting to the respective Zonal Manager.

4.23.2 Activities

They facilitate implementation of bank’s IT policies and also keeping close watch on procedures related to IT. The department deals with implementing bank’s IT security policies, business continuity plans, and acting as the first contact points for disaster management. They also certify the feasibility and making recommendations for smother operations at branches and deciding as local IT infrastructure.

4.23.3 Department structure

Zonal manager

Deputy Zonal Manager

SENIOR MANAGER (IT)

STAFF OFFICER STAFF OFFICER

Fig no:25

83 Chapter-5

SWOT ANALYSIS OF THE ORGANISATION

84 5.1 SWOT ANALYSIS

 STRENGTHS o Nationalized bank o 107 years experience in banking service o Well established geographically o Experienced and committed personnel o Strong Capital support o Geographically Established market o Strong finance o Esteemed customer clientele

 WEAKNESS o Faces stiff competition from other banks in the same lane. o Need better infrastructure. o Tedious work for limited staff. o need more ATM’s

 OPPORTUNITIES

85 o Growing market. o Increasing number of industries. o Financial inclusion o Increasing entrepreneurs

 THREATS o Entry of new generation banks in the town o Increasing private finances o Presence of other well established and local banks

5.2 GROWTH PROFILE

Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalised banks.

Now the Bank has 3752 branches in India spread over all states/union territories including specialized branches. These branches are controlled through 50 Zonal offices. There are 29 branches/ offices (including five representative offices) and three Subsidiaries and one joint venture abroad. Total number of shareholders as on 30/09/2009 is 2, 15,790.

Some growth highlights of bank as on 31.12.2011:

 Credit deposit ratio : 67.59 crores  Investments net : 71055 crores  Capital & reserves (net): 16242 crores  Total income : 17263 crores  Total expenditure : 13084 crores  Operating profit : 4179 crores  Total deposits : 298949 crores  Total advances : 213993 crores

86 5.3 PRODUCTIVITY GROWTH:

As Per Quarterly Results Published in December 2011:

 Business per employee increased to RS 12.83cr as of 31dec’11 from rs10.81crore in the previous year. Business per branch improved to RS 131.04 cr for the same period last year.  Gross profit per employee increased to rs16.45 lacs in the corresponding period of previous year.

5.4 KEY RATIOS:

As per quarterly results published in December 2011 growth profile is as follows:

 Operating profit up by 24.7% (Y-O-Y) to RS 1,731.88 cr.  Net profit up by 9.6% (Y-O-Y) to RS 716.15 cr. sequentially, net profit rises by 45.8%.  Robust 31.5% growth in non-interest income  Gross NPA ratio drops to 2.74% from 3.02% sequentially  NIM rises to 2.55 percent in quarter 3 from 2.43 percent in Q2 of current year.  ROA moves up sequentially to 0.80 percent in quater3 from 0.56%  Return on equity rises sequentially to 16.97% in Q3 from 12.07% in quarter two.  Cost to income ratio improved to 40.68% for Q3 fy-2011-12 from 47.30% for the corresponding quarter of previous year as also 43.49% from the Q2 of current year.  Capital adequacy ratio (CRAR) stood at 11.18% as on 31st dec’11 as per basel-11  The bank’s net worth as on 31st dec’11 stood at RS17, 235 cr as compared to RS14451 cr in the corresponding previous year.

87 5.6 FINDINGS The study of the above SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are fundamental and weaknesses and threats are transitory.

 Bank of India has a wide scope of operations.  This institution has a good corporate image  107 years experience in banking service  Excellent and efficient organisation structure  Experienced and committed personnel.  Esteemed customer clientele  There is greater support between management and workers.  Different departments have a good coordination.

5.7 SUGGESTIONS

1. Bank of India needs a better infrastructure facility, mainly for the zonal office in Kerala. 2. As the number of ATM in Kerala is not sufficient, they should built more number of ATM. 3. Even though the social interaction programmes are sufficient, Bank could include more leisure programmes to get employees stress-free from routine works.

5.8 CONCLUSION

88 The organization study at BANK OF INDIA was done with an objective to understanding how an organization functions, what are its major departments and functioning of these departments. The study at BANK OF INDIA provided the opportunity to learn the organizational goals and objectives, various department that conduct critical functions and the interrelation between them. Also the working of the various departments and their effective coordination makes possible the growth and development of the firm as a whole. Generally the study gave me awareness about the practical working of an organization and functions regarding each department

BANK OF INDIA is observed to be an organization that not only has an objective of working profitably but also a socially responsible organization that cares of different sections of the society viz ; providing funds and financial assistance to various class of society.

The bank has established different departments based on functions like human resource, marketing, credit, law, Asset Recovery department, Corporate Service Department, Planning Department, Information Technology department, Risk management department.

.

5.9 BIBLIOGRAPHY

89 Website References: www.BOI.com www.RBI.com www.SARFAESI ACT.com www.indianmirror.com/indian-industries/banks.html

Reference Books:  Company journal and Annual Report  Production & Operational management, Aswathappa.K, Tata Mc.Grow Hill publishing company Ltd, New Delhi, 4th edition  Marketing Management, Philip kotler  Shashi K Gupta and Rosy Joshi, HumanResource Management  Principles of Management- K Anbuvelan  Principles of Management- P ParthaSarathy

90