SML 720

Business Environment &

Corporate Strategy
Contents
Indian Banking Sector : an Overview
About the company
Organizational structure
Financials
SWOT & PEST analysis
Indian Banking Sector:
Overview
222 commercial banks in India
Operating with 68,681 branches (March 06)
Nearly 70% of branches are in rural/semi-
urban areas
Bulk of commercial bank finance is for short-
term working capital needs of industry, trade,
agriculture & personal segment.
Banks are supporting growth in the economy
by financing productive sectors
Vibrant Indian Banking
Sector

es
tim
6

• Due to growing competition, market share of various groups o

banks has changed, though public sector banks still dominate the
market.
Banking Potential in India
Skilled managerial and technical manpower
Huge middle class provide India with a
distinct cutting edge in global competition.
A well established judiciary
Sophisticated legal and accounting system
User friendly intellectual infrastructure
Free and vibrant press
Industry Segments
Nationalised/Public Sector Banks :
 Dominate the banking system in India.
 Nationalization of banks in India took place in 1969
by Mrs. Indira Gandhi.
.
Private Banks :
 Made banking more efficient and customer friendly.
 Jolted public sector banks out of complacency and
forced them to become more competitive.

Foreign Banks :
 Have brought latest technology and latest banking
practices in India.
 Have helped made Indian Banking system more
competitive and efficient.
 Branches Staff Deposits Advances Net Profit
% Share in the Total
Public Sector Banks 88.41 87.23 75.24 73.25 73.62
Private Sector Banks 11.33 10.76 19.42 20.24 16.95
Foreign Banks 0.26 2.01 5.44 6.51 9.43
ASCB Total Banks 100.00 100.00 100.00 100.00 100.00
Major Key Players
New Initiatives by PSBs
Specialized branches
New products targeted at specific groups
Change in structure, systems and
procedures involving quick turnaround
time to meet world standards
Marketing orientation
Change in ambience
Recruitment of specialists
 Tie-ups, sharing networks, and strategic
alliances
Present Heads
History
• 1895: PNB Established in Lahore by Lala
Lajpat Rai
• 1939: PNB acquired Bhagwandas Bank
• 1947: Partition of India and Pakistan at
Independence. PNB lost its premises in
Lahore, but continued to operate in Pakistan
• 1961: PNB acquired Universal Bank of India
• 1965: After the Indo-Pak war the government
of Pakistan seized all the offices
• 1969: The Government of India (GOI)
nationalized PNB and 13 other top banks
1978: PNB opened a branch in London
1988: PNB acquired Hindustan Commercial
Bank in a rescue
1993: PNB acquired New Bank of India, which
the GOI had nationalized in 1980
2002: PNB introduces its IPO
2003: PNB took over Nedungadi Bank, the
oldest private sector bank in Kerala
About the Company
• Distinction of being the first Indian bank to
have been started solely with Indian capital
• Largest branch network in India - 4525 Offices
including 432 Extension Counters and more
than 58300 employees spread throughout the
country
• Serves over 3.5 crores customers
• Strong correspondent banking relationships
with more than 217 international banks of the
world
• More than 50 renowned international banks
maintain their Rupee Accounts with PNB
Vision
” To evolve and position the bank as a world
class progressive, cost effective and customer
friendly institution providing comprehensive
financial and related services; integrating
frontiers of technology and serving
various segments of society especially
the weaker sections; committed to
excellence in serving the public and also
excelling in corporate values”
Mission
“To provide excellent professional services and
improve its position as a leader in financial
and related services; build and maintain a
team of motivated and committed
workforce with high work ethos; use latest
technology aimed at the customer satisfaction
and act as an effective catalyst for socio
economic development”
Values & Ethics
Bonding and integrity.
 Ethical conduct (specially in conflicts of interest).
 Periodic disclosures.
 Compliance with rules and regulations.
 Confidentiality and fair dealing.
Products and Services
 Corporate banking
 Personal banking
 Industrial finance
 Agricultural finance
 Financing of trade
 International banking
 Home loan
 Auto loan
 ATM/DEBIT Card
 Deposit Interest rates
 Credit Interest rates
 Other Services :
Locker Facilities, Senior Citizen Schemes, Merchant Banking,
Electronic Fund Transfer & Clearing Services,etc.
Subsidiaries
 PNB Gilts Ltd. : A subsidiary of  Punjab National Bank
which was amongst the first ones to get the license for
undertaking activities in the Government Security market,
as a primary dealer in 1996.

 PNB Housing Finance Ltd. : This is a wholly owned

subsidiary of Punjab National Bank, is engaged in providing
housing loans for purchase, construction and upgradation
of a dwelling unit. The company offers Loans for:
- Construction or for purchase of house/flat
- Renovation/ repairs
- Construction of residential projects
- Loans to NRIs are also provided for purchase/
construction of house/ flat along with a resident/ non-
resident co-borrower

 PNB Capital Services Limited :

Stands merged with PNB
Organizational Structure
PNB Branches
(National & International)
 Branches in all the 7 metropolitan and cosmopolitan cities in
India
 New Delhi, Mumbai, Calcutta, Chennai, Bangalore,
Hyderabad and Ahmedabad.
 It has branches in both urban as well as rural areas.

 PNB is always focusing on expanding abroad and till date

has identified some emerging economies. Some of them are
in these places.
 Almaty
 Kazakhktan
 Shanghai
 China
 London
 Kabul
 Afghanistan
Hierarchy
Legal framework
 The Banking Regulation Act, 1949 and the Reserve Bank of India
Act, 1934 authorize the RBI to regulate the banking sector
 IT ACT 2000 ,bankers book act new way of banking can be safe,
secure and adaptive.
 India had adopted Basel I guidelines in 1999.
 India to adopt Basel II
 Under Basel I, risk-weights were pre-decided by regulator In Basel II,
risk-weights linked to the external ratings by accredited rating
agencies
 Banks allowed to develop there own internal ratings of different assets
and risk-weight them based on those ratings.
 supervisory review process by national regulators
 disclosure by banks of key information regarding their risk exposures
and capital positions and aims at improving market discipline.
 The deadline for implementing Basel II, originally set for March 31,
2007, has now been extended to March 31, 2009.
Financials
Growth Rate
Operating Profit
Net Profit
Non Interest Income
Key Financials Ratio
Growth Rate Figures in Rs crores

PARTICULARS 30/06/07 30/06/06 Growth (%)

Own Funds 10,858 9,634 12.7

Deposits 1,42,609 1,17,173 21.7

Net Advances 95,640 77,546 23.3

Investment 48,942 43,088 13.6

Total Business 2,38,249 1,94,719 22.4

Total Assets 1,65,319 1,37,767 20.0

Operating Profit Figures in Rs crores

PARTICULARS 30/06/07 30/06/06 GROWTH (%)

Interest Income 3363 2630 27.9
Interest Expense 1985 1348 47.3
Net Interest Income 1378 1282 7.5
Non-Interest Income 432 293 47.4
NET TOTAL INCOME 1810 1575 25.8
Operating Expenses 877 697 25.8
a) Staff Expense 641 479 33.8
b) Other Operating 236 218 8.4
Expense
Operating Profit 933 878 6.2
( Excl. Loss On
Transfer Of
Net Profit Figures in Rs crores

PARTICULARS 30/06/07 30/06/06 GROWTH (%)

Operating Profit 933 878 6.2
( Excl. Loss On
Transfer Of
Securities)
LESS: Loss of Transfer 69 Nil
of Securities
LESS: Provisions For
a) NPAs 138 26
b) Dep. On 86 364
Investments(Net of
Dep. Held Against
Securities transferred) 14 -26
c) Others
PROFIT BEFORE TAX 626 514 21.7
LESS: Provision For 201 146
Taxes
PROFIT 425 368 15.4
Non Interest Income Figures in Rs crores

PARTICULARS 30/06/07 30/06/06 GROWTH (%)

Commission, Exchange 275 243 13.2
& Brokerage
Trading Profit 131 49 167.3
Profit on Exchange 58 32 81.3
Transaction
Recovery In Written Off 23 11 109.1
A/C
Others 22 28 -21.4
TOTAL 509 364 39.8
Key Financial Ratios
PARTICULARS 30/06/07 30/06/06

Net Interest Margin 3.80 4.07

Cost to Income Ratio 66.82 58.62

Cost to Inc. Ratio (excl. Loss 48.45 44.23

incurred on securities
transfer)
ROA 1.02 1.06

MARKET VALUATIONS

EPS (Rs.)-(Annualised) 53.92 46.64

EPS Growth % 15.6 2.6

Return on Equity 16.09 15.75

Focus Areas
• Technology
PARTICULAR 30/06/07 30/03/07 Growth (%)

CBS branches 2557 2304 10.98

ATM Network 1092 879 24.23
Internet Banking 235990 166000 42.23
Customer Base

– 100% Computerization of all branches

– SFMS has been Implemented in 1398 branches for
intra bank funds transfer
– Enables bank’s customers to have access to 23000
ATMs across the country
• Global Ventures
FOREX BUISNESS 30/06/07 30/06/06 Growth (%)

Export Turnover 7030 5999 17.2

Import Turnover 8770 6727 30.4
Forex Turnover 15800 12726 24.2

– The bank converted its representative office at

London (UK) into a wholly owned subsidiary on
May 10, 2007
– In addition Bank has Representative Offices at
Almaty (Kazakhstan), Shanghai (China) & Dubai
(UAE)
– Shortly, opening, Branch at Hong Kong,
Subsidiary at Canada, Offshore banking unit at
Agriculture & SME Figures in Rs crores
FOREX BUISNESS 30/06/07 30/06/06 Growth
(%)
Credit to Agriculture 18732 15295 17.2

Credit to SME 15236 11696 30.4

Credit to SSI 11674 8434 24.2

 2/3 of the branches are in Rural/ Semi-urban area with

predominance in the Indo-Gangetic plain where major
economic activity is agriculture which gives us a natural
advantage in disbursing agriculture credit
 Towards empowering farmers bank has set up 8 ‘Farmers’
Training Centres’ which provide free training to farmers,
rural women & unemployed youth.
Retail Credit
 Retail credit constitutes
22.7% of Net credit as on
30th June 2007
 Education loan is the
area of thrust for the
bank
Awards & Recognitions
Ranked 21st amongst top 500 companies by the
leading financial daily, Economic Times.
Ranked as 323rd biggest bank in the world by
Bankers Almanac (January 2006), London.
Earned 9th place among India's Most Trusted top
50 service brands in Economic Times- A.C Nielson
Survey.
Ranked 368 amongst the top 1000 banks in the
world according to "The Banker" London.
Golden Peacock Award for Excellence in Corporate
Governance - 2005 by Institute of Directors.
FICCI's Rural Development Award for Excellence
in Rural Development - 2005.
Objective Strengths Weaknesses

Analysis of PNB •Wide network •Casual behavior

•Large no. of customers •High gross NPA
•Fast adaptability to •Corruption & Red
technology Tapism
•Brand recognition •Slow decision making-
•Excellent Training due to large hierarchy
Opportunities Facilities
•Home to home banking •Decentralized decision
•Fast growing Indian services making
economy •Diversification towards •Awards & Incentives
•High growth in banking other fields
sector •Globalization
•Liberal markets
•Micro financing

hreats •Providing better •Fast Decision making

services •Competitive edge
•Building long term •Changing culture
arge no. of market customer relationships
players
Suggestions
Developing strong cultural values
Social Integrity
Bonding with customers
Responsiveness
Fast & Decentralized decision making
Diversification
Awards and Incentives based pay structure
Globalization
Thank You