A STUDY ON CREDIT RISK MANAGEMENT

AT CORPORATION BANK
Submitted in partial fulfilment of the requirements for the award of the degree of

Master of Business Administration

OF

BANGALORE UNIVERSITY

BY
SHABREEN SULTANA
(REG-NO: 16JQCMD025)

Under the Guidance of

Dr. Vinaya T

Associate Professor and Deputy Director

City College Jayanagar

BANGALORE UNIVERSITY

2016-2018
ABSTRACT

The purpose of this study is to identify the Credit Risk Management practices of banks.
Banks are increasingly facing credit risk in various financial instruments other than loans,
including acceptances, trade financing, foreign exchange transactions, financial futures,
options, bonds, equities, swaps and in the extension of commitments and guarantees. This
study uses Corporation Bank as a case study with particular reference to the Credit risk
management. Credit risk management in a Bank starts with the establishment of sound
lending principles and an efficient framework for managing risk. Policies, industry specific
standards and guidelines, together with risk concentration limits are designed under the
supervision of risk management committees and departments. The findings may be useful
in strengthening the credit practices in Corporation Bank.

Credit risk is defined as the potential that a bank borrower or counterparty will fail to meet
its obligations in accordance with agreed terms, or in other words it is defined as the risk
that a firm’s customer and the parties to which it has lent money will fail to make promised
payments is known as credit risk.

Credit risk management is a key concept in banking which is given much attention among
banks across board. This study assessed the credit risk management at Corporation Bank.

Key words: Credit Risk Management, Corporation Bank

CHAPTER ONE

INTRODUCTION

INDUSTRY PROFILE

Banking in India has its origin as carry as the Vedic period. It is believed that the transition
from money lending to banking must have occurred even before Manu, the great
Hindu jurist, who has devoted a section of his work to deposits and advances and laid down
rules relating to the interest. During the mogul period, the indigenous bankers played a very
important role in lending money and financing foreign trade and commerce. During the days
of East India Company, it was to turn of the agency houses top carry on the
banking business. The general bank of India was the first joint stock bank to be established
in the year 1786.The others which followed were the Bank of Hindustan and the Bengal
Bank. The Bank of Hindustan is reported to have continued till 1906, while the other two
failed in the meantime. In the first half of the19th Century the East India Company
established three banks; The Bank of Bengal in 1809,

The Bank of Bombay in 1840 and The Bank of Madras in 1843.These three banks also
known as presidency banks and were independent units and functioned well. These
three banks were amalgamated in 1920 and The Imperial Bank of India was established on
the 27th Jan 1921, with the passing of the SBI Act in
1955, the undertaking of The Imperial Bank of India was taken over by the newly
Constituted SBI.

The Reserve Bank which is the Central Bank was created in 1935 by passing of RBI Act
1934, in the wake of swadeshi movement, a number of banks with Indian Management were
established in the country namely Punjab National Bank Ltd, Bank of India Ltd, Canara
Bank Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The Central Bank of India Ltd .On
July 19th 1969, 14 Major Banks of the country were nationalized and in 15th April 1980 six
more commercial private sector banks were also taken over by the government. The Indian
Banking industry, which is governed by the Banking Regulation Act of India 1949, can be
broadly classified into two major categories, on-scheduled banks and scheduled banks.
Scheduled Banks comprise commercial banks and the co-operative banks
The Indian Banking System:

Banking in our country is already witnessing the sea changes as the banking sector seeks
new technology and its applications. The best port is that the benefits are beginning to reach
the masses. Earlier this domain was the preserve of very few organizations.
Foreign banks with heavy investments in technology started giving some

“Out of the world” customer services. But, such services were available only to selected
few- the very large account holders. Then came the liberalization and with it a multitude of
private banks, a large segment of the urban population now requires minimal time and space
for its banking needs.

changed the concept of banking like nothing before. Instead of tellers handling your own
cash, today there are efficient machines that don’t talk but just dispense cash. Under the
Reserve Bank of India Act 1934, banks are classified as scheduled banks and non-scheduled
banks. The scheduled banks are those, which are entered in the Second Schedule of RBI
Act, 1934. Such banks are those, which have paid- up capital and reserves of an aggregate
value of not less than Rs.5 lacs and which satisfy RBI that their affairs are carried out in the
interest of their depositors. All commercial banks Indian and Foreign, regional rural banks
and state co-operative banks are Scheduled banks

NonScheduled banks are those, which have not been included in the Second Schedule of t
he RBI Act, 1934.The organized banking system in India can be broadly classified into three
categories: (i)Commercial Banks (ii) Regional Rural Banks and (iii) Co-operative banks.
The Reserve Bank of India is the supreme monetary and banking authority in the country
and has the responsibility to control the banking system in the country. It keeps the reserves
of all commercial banks and hence is known as the “Reserve Bank”
Market Size

 The Indian banking system consists of 27 public sector banks, 26 private sector banks,
46 foreign banks, 56 regional rural banks, 1,574 urban cooperative banks and 93,913
rural cooperative banks, in addition to cooperative credit institutions. Public-sector
banks control more than 70 per cent of the banking system assets, thereby leaving a
comparatively smaller share for its private peers. Banks are also encouraging their
customers to manage their finances using mobile phones.
 As the Reserve Bank of India (RBI) allows more features such as unlimited fund
transfers between wallets and bank accounts, mobile wallets are expected to become
strong players in the financial ecosystem.
 The unorganised retail sector in India has huge untapped potential for adopting digital
mode of payments, as 63 per cent of the retailers are interested in using digital
payments like mobile and card payments, as per a report by Centre for Digital
Financial Inclusion (CDFI). ICRA estimates that credit growth in India’s banking
sector would be at 7-8 per cent in FY 2017-18.

Investments/developments
Key investments and developments in India’s banking industry include:

 The bank recapitalisation plan by Government of India is expected to push credit

growth in the country to 15 per cent and as a result help the GDP grow by 7 per cent
in FY19. ^
 Public sector banks are lining up to raise funds via qualified institutional placements
(QIP), backed by better investor sentiment after the Government of India's bank
recapitalisation plan and an upgrade in India's sovereign rating by Moody's Investor
Service.
 The RBI amends statutes thereby allowing lenders to invest in real estate investment
trusts (REITs) and infrastructure investment trusts (InvITs) not exceeding 10 per cent
of the unit capital of such instruments.
 Government Initiatives

 The Government of India is planning to introduce a two-percentage point discount in

the Goods and Services Tax (GST) on business-to-consumer (B2C) transactions made
via digital payments.
 A new portal named 'Udyami Mitra' has been launched by the Small Industries
Development Bank of India (SIDBI) with the aim of improving credit availability to
Micro, Small and Medium Enterprises' (MSMEs) in the country.
 Mr Arun Jaitley, Minister of Finance, Government of India, introduced 'The Banking
Regulation (Amendment) Bill,2017', which will replace the Banking Regulation
(Amendment) Ordinance, 2017, to allow the Reserve Bank of India (RBI) to guide
banks for resolving the problems of stressed assets.
 Under the Union Budget 2018-19, the government has allocated Rs 3 trillion (US$
46.34 billion) towards the Mudra Scheme and Rs 3,794 crore (US$ 586.04 million)
towards credit support, capital and interest subsidy to MSMEs.

The government and the regulator have undertaken several measures to strengthen the Indian
banking sector.

 A two-year plan to strengthen the public-sector banks through reforms and capital
infusion of Rs 2.11 lakh crore (US$ 32.5 billion), has been unveiled by the
Government of India that will enable these banks to play a much larger role in the
financial system and give a boost to the MSME sector. In this regard, the Lok Sabha
has approved recapitalisation bonds worth Rs 80,000 crore (US$ 12.62 billion) for
public sector banks, which will be accompanied by a series of reforms, according to
Mr Arun Jaitley, Minister of Finance, Government of India.
 The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been
passed by Rajya Sabha and is expected to strengthen the banking sector.
Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation
of reforms are expected to provide further impetus to growth. All these factors suggest that
India’s banking sector is also poised for robust growth as the rapidly growing business
would turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet banking services
to the fore. The banking sector is laying greater emphasis on providing improved services
to their clients and also upgrading their technology infrastructure, in order to enhance the
customer’s overall experience as well as give banks a competitive edge.
Many banks, including HDFC, ICICI and AXIS are exploring the option to launch contact-
less credit and debit cards in the market shortly. The cards, which use near field
communication (NFC) mechanism, will allow customers to transact without having to insert
or swipe.
Mr Bill Gates, Co-founder of Microsoft Corp, has stated that India will move quite rapidly
to a digital payments economy in as little as seven years, based on the introduction of digital
payment banks combined with other things like direct benefit transfers, universal payments
interface and Aadhaar.

The world has experienced remarkable number of banking and financial crises during the
last few decades. Though most of those were experienced in the developing countries, the
majority of the crises coincided with the deregulatory measures that led to excessively rapid
credit extension. In the long run, continuous increases in asset prices created bubble. At
some point, the bubble burst and the asset markets experienced a dramatic fall in asset prices
coupled with disruption. Finally, widespread bankruptcies accompanied by Non-Performing
Loans, Credit losses and acute banking crises were observed. Subsequently, the global
financial market is going through a turbulent situation. This has necessitated a close
examination of the numerous issues related to the operation of financial markets to identify
the root of the problem. Various issues such as the capital adequacy levels in the banking
system, the role of rating agencies in financial regulation and the fair value assessment of
banking assets are the most debated ones. In response to the banking crises, significant
reformations have been carried out in the banking regulatory system.

In new economic policy in 1991, the financial (particularly banking) sectors received special
attention in improving their financial strength and functional efficiency and thereby bring
them to international standards.

The exposure to the credit risks large in case of financial institutions, such commercial banks
when firms borrow money they in turn expose lenders to credit risk, the risk that the firm
will default on its promised payments. As a consequence, borrowing exposes the firm
owners to the risk that firm will be unable to pay its debt and thus be forced to bankruptcy.

In recent days, people are becoming more aware about the management of their resources.
As the banks do business by lending their depositors' money, they are more responsible to
manage their credit portfolio smoothly. Bank's reputation is a critical factor for its success
and therefore multinational banks must follow appropriate guidelines, policies and relevant
manuals regarding credit extension and recovery. The usage of banking service for any type
of financial activities is increasing day by day. People are taking loans to start different types
of businesses as well as other purposes. It is now very important to know the internal credit
processes of the banks.

The goal of credit risk management is to maximize a bank’s risk adjusted rate of return by
maintaining credit risk exposure within acceptable parameters. Bank need to manage the
credit risk exposure inherent in the entire portfolio as well as the risk in individual credit or
transactions. Bank should consider the relationship between credit risk and other risk. The
effective management of credit risk is a critical component of a comprehensive approach to
risk management and essential to the long-term success of any banking organization.
Credit risk management is the practice of mitigating losses by understanding the adequacy
of a bank’s capital and loan loss reserves at any given time – a process that has long been a
challenge for financial institutions.

The purpose of this study is to investigate the management of credit risk in Corporation
Bank The study will be basically approached descriptively, as it aims to present descriptive
and sound evidence representative of Corporation Bank. This study will be based on
quantitative research and data. The purpose of this study will be explained further as the
study progresses, along with the list and explanations of the study’s problems and
objectives, and other details about the methods it will use. However, it briefly presents and
discusses the background of the study. Credit risk management in Corporation Bank starts
with the establishment of sound lending principles and an efficient framework for
managing risk. Policies, industry specific standards and guidelines, together with risk
concentration limits are designed under the supervision of risk management committees
and departments. Credit risk, also known as counterparty risk is the risk of loss due to a
debtor's non-payment of a loan or other line of credit (either the principal or interest
(coupon) or both). Also, credit risk is most simply defined as the potential that a loan
borrower or counterparty will fail to meet its obligations in accordance with agreed terms.
In most banks, loans are the largest and most obvious source of credit risk. However, other
sources of credit risk exist throughout the activities of a bank. They include activities in the
banking and trading books, and those both on and off the balance sheet. Banks are
increasingly facing credit risk or counterparty risk in various financial instruments other
than loans. These include bankers’ acceptances, interbank transactions, trade financing,
foreign exchange transactions, financial futures, swaps, bonds, equities, options and the
settlement of transactions. Credit risk analysis (finance risk analysis, loan default risk
analysis) and credit risk management are important to financial institutions which provide
loans to businesses and individuals. Credit can occur for various reasons: bank mortgages
(or home loans), motor vehicle purchase finances, credit card purchases, instalment
purchases, and so on. Credit loans and finances have the risk of default. To know the risk
level of credit users, credit providers normally collect vast amount of information on
borrowers. Statistical techniques can be used to analyse or determine risk levels involved in
credits, finances, and loans, thus default risk levels. While financial institutions have faced
difficulties over the years for a multitude of reasons, the major cause of serious banking
problems continues to be directly related to lax credit standards for borrowers and
counterparties, poor portfolio risk management, lack of attention to changes in economic
factors (interest rates, inflation rates, etc.) In recent times, the flow of credit in global
financial markets has slowed from a glacial pace to a virtual standstill and credit markets
threaten to stay that way despite immense amounts of cash being pumped into various
economies by their governments and central banks around the world. Credit risk is a
problem faced by banks all over the world and the question mostly asked is “what will it
take for banks to regain enough confidence in the financial system to get credit markets
moving again?”

Credit Risk Management in Banks

Bank loan is a debt, which entails the redistribution of the financial assets between the
lender and the borrower. The bank loan is commonly referred to the borrower who got an
amount of money from the lender, and need to pay back, known as the principal. In
addition, the bank normally charges a fee from the borrower, which is the interest on the
debt. The risk associated with loans is credit risk. Credit risk is perhaps the most significant
of all risks in terms of size of potential losses. Credit risk can be divided into three risks;
default risk, exposure risk and recovery risk. As extension of credit has always been at the
core of banking operations, the focus of banks’ risk management has been credit risk
management. It applied both to the bank loan and investment portfolio. Credit risk
management incorporates decision making process before the credit decision is made,
follow up of credit commitments including all monitoring and reporting process. The credit
decision is based on the financial data and judgmental assessment of the market outlook,
borrower, management and shareholders. The follow up is carried out through periodic
reporting reviews of the bank commitments by customer. Accordingly, warning systems
signal the deterioration of the condition of the borrowers before default whenever possible.
Loans that are in default or close to being default become NPLs. The terms of the default
rate in loans are defined by each bank. Usually, loan becomes non-performing after being
default for three months but this can depend on contract terms. NPLR shows the proportion
of the default or near to default loans to the actual performing loans. It indicates the
efficiency of the credit risk management employed in the bank. Therefore, the less the ratio
the more effective the credit risk management. Capital is needed to cover the risks of such
losses. Banks have an incentive to minimize capital they hold since reducing capital frees
up economic resources that can be directed to profitable investment. In contrast, the less
capital a bank holds, the greater is the likelihood that it will not be able to meet its own
debt obligations, that is, the losses in a given year will not be covered by profit plus
available capital, and that the bank will become insolvent. Accordingly, banks must
carefully balance the risks and rewards of holding capital. A number of approaches exist to
determine how much capital a bank should hold. The IRB approach adopted by Basel II
focuses on the frequency of bank insolvencies arising from credit losses that supervisors
are willing to accept. Through IRB approach, the Basel Committee intended to develop a
framework which is credible, prudentially sound and reflect healthy risk management
practices. Banks have made use of internal rating system for very long time as a means of
categorizing their exposure into broad, qualitatively differentiated layers of risk.

THEORETICAL BACKGROUND OF THE STUDY

The project is carried out in corporation bank NR colony branch. The study only includes
the credit risk management procedures under credit department of corporation bank. This
study does not include deposit service of corporation bank. Besides this study does not
include the services of other private and public commercial banks and non-banking
institutions.

The objective of credit risk management is to minimize the risk and maximize bank’s risk
adjusted rate of return by assuming and maintaining credit exposure within the acceptable
parameters. Effective credit risk management is essential to the long-term success of any
banking organization; since it protect the shareholders money and prevents most Banks from
going on bankruptcy. If not properly managed, it may lead to the collapsing of the credit
market and most companies. It is therefore justifiable because it helps Banks to verify
whether demographic and behavioural characteristics such as age, sex, occupation, marital
status and amount collected among others determines the creditworthiness of a borrower.
IMPORTANCE OF THE STUDY

This study is a step in the right direction as it comes at the time when there is a public outcry
against financial mismanagement and the failure of many debtors of various financial
institutions to honour their obligations thus, paying monies they have enjoyed from these
financial institutions as a result of loans granted to them for various reasons. The recent
financial crisis that have engulfed the globe should give us cause to worry about how our
various financial institutions plan and take steps to recover loans granted out. This study
will add to existing knowledge and contribute to the building of literature on this topic. Also,
the hypothesis would help examine the effectiveness of credit risk management departments
and the processes in granting of credit (loans, etc) in Corporation Bank. This study will
especially be useful to customers and other stakeholders in the corporate world who have
interests either directly or indirectly with banks. It will give an insight into how management
is offering quality for their assets and how they are maintaining the health of the business
through their risk intermediation function.

NEED OF THE STUDY

The project helps in understanding the clear meaning of Credit Risk Management in
Corporation Bank It explains about the credit risk scoring and Rating of the Bank.

The Business of lending is gradually becoming a major target for many banks, as a result
there is high competition among the financial institutions in India leading to default of most
loans. In order to raise the quality of giving loans and reduce the risk involve in giving loans,
credit scoring models have been developed by banks and researchers to improve the process
of assessing credit worthiness during the credit evaluation process. This study uses historical
data on payments, demographic characteristics and statistical techniques to construct logistic
regression model (credit scoring models) and to identify the important demographic
characteristics related to credit risk.
CHAPTER TWO

REVIEW OF LITERATURE AND RESEARCH DESIGN

Introduction

This chapter presents the research gap, the literature that was being reviewed, and the
statement of the problem, the objectives of the study, scope of the study, the hypothesis,
operation definitions, and a description of methods that were employed in the study. The
chapter includes the research design, sample selection, research instruments, chapter
scheme, the research procedure, data management and the plan of analysis

LITERATURE REVIEW

The origin and Evolution of Credit risk can be traced back thousands of years ago. Credit is
much older than writing. Krimsky and Plough (1988) trace the origin of risk awareness
back to Ancient Mesopotamia, based on the work by Covello and Mumpower (1985), as
do Golding (1992) and Thompson, et al.(2005). According to Covello and Mumpower
(1985), an optimistically early dating of the practice of risk analysis is that of the time of
ancient Mesopotamia, as well as ancient Greece and Rome, the former relating to sacerdotal
practice and the latter to the history of philosophy (Covello and Mumpower, 1985).

V.S.Kaveri and K.V.Patel (1997) have concluded that improper selection of borrowers,
under-financing/ delays in financing, social political pressure for financing, lack of income
generation due to natural calamities, mismanagement of fund, lack of proper follow up,
wilful defaults etc., are responsible for an account becoming Non Performing Assets 12 ..

Joel Bessis (1998) in his research paper “Risk Management in Banking” points out the fact
that credit risk is perhaps the most significant of all risks in terms of size of potential losses.
Credit risk can be divided into three; default risk, exposure risk and recovery risk. As
extension of credit has always been at the core of banking operation, the focus of banks‟
risk management has been credit risk management. It applies both to the bank loan and
investment portfolio. Credit risk management incorporates decision making process before
the credit decision is made, follow up of credit commitments including all monitoring and
reporting process.

The main consideration of Covello and Mumpower‘s statements about the history of risk are
that they are generic. Althaus (2005) traces a more linear and detailed postulated
development through linguistics of the term risk ‘. Even though the code which codified
legal thinking from 4,000 years ago in Mesopotamia (Hammurabi‘s Code) fails to give basic
rules of borrowing, it did emphasize that failure to pay a debt is a crime. The code boldly
said that one who fails to pay a debt at the right time should be treated identically to theft
and fraud. Hammurabi‘s Code did not 13 address concepts such as interest, collateral and
default as use by the present day financial institutions but also set some limits to penalties
for a defaulter.

Aaron (2004) said a defaulter could face a penalty of been sold by his creditor into slavery,
but his wife and children could only be sold for a three-year term.

In Leland and Toft (1996) work, firms allow to continuously issue debts of a constant but
infinite time to maturity. Earlier works in credit risk modelling were characterized by a
dominant focus on credit scoring and static assessment of default probabilities, (Altman
and Saunders,1998). However, this situation does not hold in recent articles any longer,
since the focus on the studies of credit risk modelling has now changed focus from individual
level to the loan-portfolio level and from static model to the dynamic model.

Selwyn piramuthu (1997) analyse the beneficial aspects of using both neuro fuzzy systems
as well as neural networks for credit-risk evaluation decisions.

David (2000) investigated the credit scoring accuracy of five neural network models:
multilayer perceptron, mixture-of experts, radial basis function, learning vector
quantization, and fuzzy adaptive resonance. The neural network credit scoring models were
tested using 10-fold cross validation with two real world data sets. He results were
benchmarked against more traditional methods under consideration for commercial
applications including linear discriminant analysis, logistic regression, k nearest neighbour,
kernel density estimation, and decision trees. Results demonstrated that the multilayer
perceptron may not be the most accurate neural network model, and that both the mixture-
of-experts and radial basis function neural network models should be considered for credit
scoring applications. Logistic regression was found to be the most accurate of the traditional
methods.

STATEMENT OF THE PROBLEM

Credit risk has been in the news recently for the bad reasons. It is the risk arising due to the
inability or the unwillingness of a counter party to honour its financial obligation. This leads
to default and losses for those extending credit. The credit loss in reality is a worst-case
scenario that can be reduced or offset by collateral netting or recoveries. It can appear in the
form of direct credit risk, trading credit risk, contingent credit risk, correlated credit risk,
settlement credit risk or sovereign credit risk.

The exposure to credit risk continues to be the leading source of problems in the banking
industry and as a result needs to be managed. Credit risk is identified as a core pillar for the
viability of banks and credit institutions.

SCOPE OF THE STUDY

The project is carried out in corporation bank NR colony branch. The study only includes
the credit risk management procedures under credit department of corporation bank. This
study does not include deposit service of corporation bank. Besides this study does not
include the services of other private and public commercial banks and non-banking
institutions.

OBJECTIVES OF THE STUDY

• To know the different methods available for credit Rating and understanding the credit
rating procedure used in Corporation Bank.

• To gain insights into the credit risk management activities of the Corporation Bank.

• To know the RBI Guidelines regarding credit rating and risk analysis.

LIMITATIONS OF THE STUDY

There were several challenges relating to the success of the study. The following are few
among others;

 Unwillingness on the part of the bank concerned to give private information relating
to their customers.
 Time Constraint. The short time period wasn’t enough for conducting a detailed study
about the subject of study.
 Limited access to extensive data set of variables.
 Confidential information was not disclosed by respective personnel of the
department.

 The data collected is limited only to Corporation Bank

SOURCES OF DATA COLLECTION

Primary data

Primary data was collected from the employees of Corporation Bank NR colony branch and
also other branches of the Bank in South Bangalore

Structured questionnaires, personal face to face interviews, telephone interviews and email
communications were carried out to obtain primary data. The collected data was both
qualitative and quantitative.

Secondary data

Secondary data was collected from the annual reports of the company, journals, magazines,
and websites and from other relevant publications. The data was analysed descriptively.

DATA COLLECTION METHODS

The following data collecting techniques were used;

With primary methods, the researcher engaged in collection of raw data from the field. The
primary source of data was used to crosscheck the information got from documentary
analysis and support it. The following instruments were used.

QUESTIONNAIRE

The questionnaire was the main instrument of data collection of this study, which was
structured, and self-administered. The researcher designed questionnaires for the
respondents. These structured questionnaires were administered to the bank employees
whose views, opinions, and attitudes on how the Credit risk management is very vital for
this research. The choice of questionnaire as the main research instrument is mainly
prompted by the fact that the target population is literate, responsible and capable of filling
questionnaires (Moserandkaltonl979). Structured questionnaires are simple to administer
and relatively cheaper to analyse (Kothari, 2004).

KEY INFORMANT INTERVIEW

An interview guide, prepared to assist the researcher collect data through face to face
interviews with the bank employees in Corporation Bank. The purpose of the interview is
to solicit views concerning the Credit risk management practices being used by Corporation
Bank. According to Kahn and Connell (l957), interviews are a conversation with purpose
and therefore data is collected easily. Interviews also have greater flexibility and opportunity
to restructure questions (Kothari, 2004). Interview guide was used because it assists the
interviewer to remain focused during probing time for deeper information.

SAMPLING

The research sampling method used in the study is the convenient method.

Sampling technique

The study employed purposive sampling technique on the respondents as it allows the
researcher to include key informants who are knowledgeable on the business models. This
method of sampling was used because it economizes time and reliable information can be
obtained at a much-reduced cost and time (Kothari, 2004).

Respondents were the employees of the Corporation Bank at NR colony branch primarily
and also other branches of the Bank in South Bangalore

A total of a hundred respondents were interviewed during the survey. A structured

questionnaire was also being formed to help during the collection of information. The study
included 50 females and 50 male respondents. This was to help in collecting primary data.

STUDY SAMPLE DISTRIBUTIONS

GENDER FREQUENCY

Male 50

Female 50

AGE

20-30 30

30-40 45
50-60 25

CHAPTER SCHEME

I. Introduction
II. Review of literature and Research design
III. Profile of the organization and respondents
IV. Data Analysis and Interpretation
V. Summary of findings, conclusions and suggestions

CHAPTER THREE

PROFILE OF THE ORGANISATION

Corporation Bank is a public-sector banking company headquartered in Mangalore, India.

The bank has a pan-Indian presence. Presently, the bank has a network of 2,440 fully
automated CBS branches, 3,040 ATMs, and 4,724 branchless banking units across the
country.

Nationalised in 1980, Corporation Bank was the forerunner when it came to evolving and
adapting to the financial sector reforms. In 1997, it became the Second Public Sector Bank
in the country to enter capital market, the IPO of which was over- subscribed by 13 times.
the Bank has many " firsts " to its credit - Cash Management Services, Gold Banking,
eCommerce, " Online " approvals for Educational loans, 100% CBS Compliance and more
recently, its pioneering efforts to take the technology to the rural masses in remotest villages
through low-cost branchless banking - Business Correspondent model. All of which
symbolise Bank's unserved commitment to its customers to provide convenience banking.

At Corporation Bank, what motivates us is the passion to excel in banking by maintaining

highest standards of service to our customers, backed by innovative products and services
which makes us one of the leading Public-Sector Banks in the country, catering to a wide
range of customers - from individuals to corporate clients.

Corporation Bank, the oldest banking institution in the erstwhile undivided Dakshina
Kannada(Mangalore) District of Karnataka and one of the oldest banks in India, was
founded in 12th March 1906 in the Temple Town of Udupi, by a small group of
philanthropists led by Khan Bahadur Haji Abdulla Haji Kasim Saheb Bahadur. The need to
start this bank was felt because there was no such facility at Udupi, an important trading
centre next to Mangalore in D.K. District. The indigenous banking was largely in the hands
of a few rich private individuals and something had to be done to provide relief to the
common man from the clutches of the money lenders who held full sway. The first branch
of a modern bank established in the district was the Bank of Madras, one of the
three Presidency Banks, which set up its office in Mangalore in 1868 largely to cater to the
business needs of a few British firms dealing in export of plantation products. Its agent used
to visit Udupi once a fortnight or so, to do banking. Money remittances had to be made only
through postal medium

To overcome these drawbacks and also to provide banking facilities for Udupi in particular
and the district in general, a Cosmopolitan group of philanthropists led by Haji Abdulla
Saheb made a bold venture to start this institution. What inspired the founding fathers was
the fervour of Swadeshism. For promoting the Bank, the Founder President made an appeal
saying, " The primary object in forming the ‘Corporation' is not only to cultivate habits of
thrift amongst all classes of people, without distinction of caste or creed, but also habits of
co-operation amongst all classes. This is ‘swadeshism', pure and simple and every lover of
the country is expected to come forward and co-operate in achieving the end in view." They
rightly defined Swadeshism as institution-building to aid economic activity through co-
operation of all, shorn of distinction of caste and creed.

"The Canara Banking Corporation (Udupi) Ltd.", as the institution was called then, started
functioning as a ‘Nidhi' with a humble beginning. The initial capital was Rs.5000/- and at
the end of the first day, its resources stood at 38 Rupees - 13 Annas and 2 Pies.

The setting up of the Canara Banking Corporation Ltd. seems to have given a fillip to co-
operative Banking and also to regular banking elsewhere in the district. Between 1909 and
1917, six co-operative banks came into being and during the decade immediately after the
First World War (1914-18) South Kanara gave birth to as many as eight banks. It is to the
credit of this Bank that despite two world wars, economic depression and stiff competition,
the Bank not only quite survived, but also made satisfactory progress.

Having been started at Udupi, the Bank first branched out by opening a branch at Kundapur
in 1923. The second branch of the Bank was opened in Mangalore at Car Street in 1926.
The Bank stepped into Kodagu District in 1934 by opening its seventh branch in Madikeri.
In 1937, the Bank was included in the second schedule of Reserve Bank of India Act, 1934.
In 1939, the Bank's name changed from "Canara Banking Corporation (Udupi) Ltd." to
"Canara Banking Corporation Ltd." The Bank graduated into a Regional Bank in 1945 when
the total number of its branches stood at 28. In the year 1961, it took over ‘Bank of
Citizens, Belgaum.' In the same year, the Bank's Administration Office shifted from Udupi
to Mangalore.

The second change in the name of the Bank occurred in 1972, from ‘Canara Banking
Corporation Ltd'. to ‘Corporation Bank Limited.' The Bank was nationalised in 1980 along
with 5 other private sector banks. After nationalisation, the pace of growth of the Bank
accelerated and it made all-round progress. Started as a common man's bank, it changed
with the times to meet the aspirations of the people but never swerved from its motto- "Sarve
Janah Sukhino Bhavantu" meaning Prosperity for All. It endeavoured and succeeded in
striking a right balance between traditional values and innovative approach, personalised
service and professional outlook and commercial considerations and public concern. One of
the unique achievements of the Bank is that it has been paying dividend continuously for
the last 98 years since its inception. Today, with the most modern technology-driven
products and services and nationwide branches & ATMs, Corporation Bank stands tall
among the Public-Sector Banks in the country and is hailed as one among the well-managed
Public-Sector Banks with excellent track record in all the key parameters of banking. The
Bank has the second largest ATM network in the public sector.

100 YEARS OF BANKING

Corporation Bank completed 100 years of existence on 12 March 2006.

The Centenary celebrations were launched by Shri V Leeladhar, Deputy Governor, Reserve
Bank of India with the Bank's Foundation Day lecture on 12 March 2005.

As a part of the Bank's centenary celebrations, a number of programmes and projects were
planned and executed. As a first step, the Bank has launched the Corp Kissan Card debit
card tied up with VISA international, to enable the farmers make timely purchases for
agricultural operations.at Yeshwantpur-Malur in Kolar District on 13 March 2005. A
modern public library was dedicated to the citizens of Mangalore in DK District, the birth
place of the Bank by Shri P. Chidambaram, Hon’ble Union Finance Minister on 2 March
2006. The library building also houses a Numismatic Museum and a multi-purpose hall
for intellectual activities. The Bank has also set up libraries in 25 villages and given away
scholarship to 100 meritorious students of such villages for the pursuit of their higher
education. Such libraries will be set up in 75 more villages in a phased manner. Corporation
Bank - A Corporate Journey, the history of the Bank and Haji Abdullah Saheb a biography
of the Bank's Founder President have been published on the occasion of the valedictory
function of the Bank's Centenary Celebrations.

VISION AND MISSION STATEMENTS

VISION STATEMENT

 To be a financially viable, independent community bank that is committed to

improving the quality of life of the communities we serve.
 To earn the loyalty of employees, customers and the community by operating with
integrity and fairness at all times.
 To demonstrate behaviour that totally focuses on the customer and recognize they
are the reason we are here.
  To have employees who are empowered to build long-term relationships with our
customers.
 To provide our shareholders long-term growth and an attractive return on their
investment in the bank.
 To satisfy the customer’s needs by offering a myriad of products that are driven by
a sales and service philosophy.
 To "Emerge as a Model for Inclusive Growth and Innovative Banking Services"

MISSION STATEMENT

 To expand our reach to meet the financial needs of people

 To provide full range of banking services with innovative products
 To continue to adopt modern technology for superior banking experience
 To create a rewarding environment for all stakeholders
 To continue as a model organisation for transparent and ethical practices
 To add value for our customers,
 To create a positive economic impact in our communities, and
 To create positive personal and professional opportunities for our employees.

PRODUCT PROFILE

The following are the broad categories of banking services at Corporation Bank:

1. Personalized Services:
i)Savings:
■Students Saving Bank Account
■ Gold Bars and Coins
■ Savings account
■Current: Corp 4-in-l account
ii)Term deposits:
■ Fixed Deposits
■ Tax Saving Term Deposits
■ Continuous Ready Cash Deposits • Recurring Deposits • Premium Deposits
■ Janata Deposit
■Corp gold
iii)Loans
■ Home or Housing Loans
■ Personal Loan
■ Car Loan
■ Educational Loan
■ Loans against Property or Securities

2. NRI Services:

■ Speed Cash
■ Speed Remittance
■ Deposits and Loans
■ Taxation

3. Cards:

■Credit Card

■ATM Cum Debit Card

■Cash Back Cards

4. Corporate Banking:

■ Cash Management
■ Forex - Foreign Exchange
■ Working Capital Finance
■ Finance for Project, Business and Retail

5. Other Services

■ Mobile, SMS Banking

 ■ Corpnet - Internet Banking Services
■ Online Railway Tickets Reservation
■ Mediclaim
■ Mobile Recharge
■ Sale of Gold Bars and Coins
■ Issuing Government of India Bonds
■ Senior Citizens' Schemes and Pension Accounts
■ Sale of Stamp Papers in Karnataka

In keeping with the Government’s Financial Inclusion Programme and with a view to take
the banking services to remotest villages through the aid of technology, Corporation Bank
has launched a rare initiative of Branchless Banking Project and Smart Card System by
which, basic banking facilities are extended to rural people in non-banked areas in
December 2007. The Bank is authorized to collect Direct Tax, Excise Duty & Custom Duty
with online remittance facility. Corporation Bank is in the forefront of providing innovative
and Tech Savvy products & services to its customers. In its bouquet of products & services
are Internet banking, SMS Banking, International Debit Card, International Credit Card and
SMS-based Pay-by-Mobile Service, which is first of its kind in the country. The Pay-by-
Mobile facility is available to all debit cardholders of the Bank. Through this service a
customer can now shop at Internet, do tele-shopping and purchase at over 3,000 merchant
establishments across categories and interfaces which include airlines, restaurants, retailers
etc., through the mobile.

Corporation Bank is in the forefront of providing innovative and Tech Savvy products &
services to its customers. In its bouquet of products & services are Internet banking, SMS
Banking, International Debit Card, International Credit Card and SMS-based Pay-by-
Mobile Service, which is first of its kind in the country. The Pay-by-Mobile facility is
available to all debit cardholders of the Bank. Through this service a customer can now shop
at Internet, do tele-shopping and purchase at over 3,000 merchant establishments across
categories and interfaces which include airlines, restaurants, retailers etc., through the
mobile.

In order to render comprehensive, multifaceted quality service to its

customers, Corporation Bank launched two maiden services “Financial Health Check

up” & “Invest Shoppe” at Mangalore and Mumbai in late 2007 and plans to launch
the service at important centres across the country, shortly. Financial Health Check

up facilitates the customers to get their finance portfolio examined from the point of

healthy mix and get advice on risk-reward portfolio sharing. With a view to providing

these facilities under the specialized roof, the Bank has opened a new outlet “Invest

Shoppe” attached to Fort - Mumbai Branch of the Bank. Put together, these services

ensure that the customers need not look further than the Bank for any of them

financial requirements. This financial boutique will be a one-point focused cell for

investment to better manage the wealth of customers, leveraging the expertise of a

host of partner organizations.

COMPETITORS

 STATE BANK OF INDIA

 ANDHRA BANK
 ALLAHABAD BANK
 CANARA BANK

MARKET SHARE

MILESTONES ACHIEVED:

The Bank has won a number of awards and has been prominently ranked in

many studies, which have again provided momentous times for celebration. The

awards and rankings won by the bank over the Century are:
 The Bank bagged the “Best SME Lending -2017” award during Fifth ASSOCHAM
SMEs Excellence Award 2017 instituted by The Associated Chambers of Commerce
& Industry of India (ASSOCHAM).
 The Bank bagged the Rajbhasha Kirti Puraskar instituted by Department of Official
Language, Ministry of Home Affairs, Government of India. The Bank was awarded
Second prize under Nationalised Banks category in ‘C’ region for excellent
implementation of Official Language policy of the Govt. of India in its offices and
branches spread across the country.
 The Bank bagged the Rajbhasha Kirti Puraskar instituted by Department of Official
Language, Ministry of Home Affairs, Government of India. The Bank was awarded
Second prize under Nationalised Banks category in ‘C’ region for excellent
implementation of Official Language policy of the Govt. of India in its offices and
branches spread across the country.
 The Bank was awarded the SKOCH Financial Inclusion Award 2017, and SKOCH
Order-Of-Merit Award, 2017 for Financial Inclusion, instituted by SKOCH Group at
the 48th SKOCH Summit held in Mumbai on 20th June, 2017.
 The Bank has bagged 2 awards for the year 2016 instituted by Chamber of Indian
Micro Small & Medium Enterprises [CIMSME] under the following categories:
 A] Eco-Technology Savvy Bank Award – Winner [Mid-Sized
Category]
 B] Best MSME Bank Award – Runner-Up (Mid-Sized
Category)
 The Bank bagged three Runner up awards under Social Banking Excellence Awards
instituted by the Associated Chambers of Commerce & Industry of India
(ASSOCHAM). The bank bagged the awards for Agriculture Banking, Priority Sector
Lending and Best Social Bank under Large Bank category for 2016.
 The Bank bagged the “Best MSME Bank Award 2016” instituted by The Associated
Chambers of Commerce & Industry of India (ASSOCHAM).
 The Bank has bagged "Excellence Award on Empowering MSMEs 2016".
 The Bank has bagged "SKOCH Achiever Award - 2016" for National SME
enablement.
 The Bank bagged ten awards from NABARD for ‘Best Performance under Self Help
Group (SHG)/Joint Liability Group (JLG) Bank Linkage Programme’ in Karnataka
state for the F.Y. 2013-14 & 2014-15.
 The Bank has bagged “MSME Banking Excellence Awards – 2015” instituted by
Chamber of Indian Micro Small & Medium Enterprises [CIMSME]. The Bank has
won under the categories Best MSME Bank Award for Mid-Sized Bank -
Winner, CSR & Business Responsibility Award for Mid-Sized Bank- Runner Up
and Best Bank Award under MUDRA Yojna for Mid-Sized Bank- Runner Up.
 The Bank has bagged Best Social Bank Award-Winner, Best Rural Bank Award-
Winner and Best Bank for participation in Govt. Schemes Award-Winner under mid-
sized category.
 The Bank has bagged National Payments Excellence Awards 2015 instituted
by National Payments Corporation of India (NPCI). The Bank received the winner
award jointly with Indian Bank for Cheque Truncation System under the mid-sized
category. The Bank also received two runners up awards for National Financial switch
(NFS) for excellent performance in acquirer transactions and Immediate Payment
Service (IMPS).
 'SKOCH Achiever Award-2015' for National SME enablement.
 The Bank has bagged “MSME Banking Excellence Awards – 2014” instituted by
Chamber of Indian Micro Small & Medium Enterprises. The Bank has won two awards
under the categories ‘Best MSME Bank Award for Other Bank (Winner)’ and ‘Best
Bank Award (Runner Up)’.
 The Bank has bagged Skoch Achiever Award for outstanding performance in SME
Enablement during 2014 instituted by SKOCH Consultancy Services Pvt. Ltd
 “Indira Gandhi Rajbhasha Puraskar 2014“for outstanding work in implementation of
official Language . Our Bank was conferred with two awards, First Prize under Town
Official Language implementation committee category & Second Prize under Public
Sector Banks’ category for ‘C’ region.
 The Bank has won IBA Banking Technology Award 2012-13 for “Best Use of
Mobility Technology in Banking”. Indian Banks’ Association (IBA) gives away this
award to the Banks to encourage the use of technological innovations for the benefit
of customers. The Bank has bagged the 2nd Runner Up in Public Sector Banks (PSB)
category.
 The Bank is ranked Number One under “National Awards for Excellence in MSE
Lending” and Second under “National Awards for Excellence in Lending to Micro
Enterprises” for the year 2012-13 under Public Sector Banks from Ministry of Micro,
Small and Medium Enterprises.
 ‘SKOCH Financial Inclusion Award 2013’ for SHG Initiatives.
 “Caring Company Award” at World CSR Congress 2013 held at Mumbai on 18th
February 2013.
 “Number Two Public Sector Bank” at “FE – India’s Best Banks Awards”. The Best
Banks Survey was conducted by Financial Express in association with Ernst & Young
– the Knowledge partner for the survey.
 Best Mid-Size Public Sector Bank (Commendation) Award at “India Best Banks and
Financial Institutions Awards 2012” by CNBC-TV18 & MCX SX
 “Safest Banker” Award by 'The Sunday Standard FINWIZ 2012 – Best Bankers’
Award
 Financial Express - Ernst Young India's Best Banks Survey 2010-11 ranks Corporation
Bank as Second Best Public-Sector Bank
 SKOCH Financial Inclusion Award 2012 for SHG Initiatives instituted by SKOCH
Consultancy Services Private Ltd.
 Ranked “Number One Nationalised Bank 2010-11” at “FE – India’s Best Banks
Awards”. The Best Banks Survey was conducted by Financial Express in association
with Ernst & Young – the Knowledge partner for the survey.
 ‘Best Mid-Size Public Sector Bank’ Award in the CNBC-TV18 Best Bank and
Financial Institution Awards presented by MCX for FY11
 First Prize under "National Award for Excellence in Lending to Micro Enterprises" for
2010-11 from Ministry of Micro, Small & Medium Enterprises, Govt. of India
 “Best Manpower Efficiency Award” by FICCI-IBA at FIBAC Banking Awards 2011
 Ranked No.1 in India’s Most Customer Friendly Bank, a first ever Survey jointly
conducted by Outlook Money and TNS
 “Best PSU Bank of the Year” by Bloomberg UTV ‘Financial Leadership Awards 2011’
 “Best Financial Inclusion Initiative”, “Best Use of Technology in Training &
eLearning Initiatives” Winner Awards & Runner Up Award - under the category “Best
Online Bank” amongst PSBs in the Banking Technology Awards-2010.
 SKOCH Financial Inclusion Award 2011 - for Financial Inclusion initiatives
 Dalal Street Investment Journal [DSIJ] Public Sector Undertakings Awards 2010 - on
the basis of study conducted by KPMG
 SKOCH Challenger Award, 2009 - Financial Inclusion Champion of the Year
 Banking Technology Awards 2009 for its efforts in implementing innovative
technologies in its business initiatives under the auspices of the Indian Banks
Association [IBA], Finacle and the Trade Fairs & Conference International [TFCI].
 Best Bank Mid-size 2009 Award - Business world
 Banking Technology Awards, 2008 - Runner Up Award - For Best on Line and Multi-
Channel Banking Team
 SCOPE Meritorious Award, 2008 - For Best Managed Bank
 IDRBT Best Bank Award of Banking Technology Award, 2008 - For Use of
Technology for Financial Inclusion
 SKOCH Challenger Award, 2008 - For Customer Relationship Management
 Best P.S. Bank - Business Today, 2007
 India's Best Bank Award - FE, 2007
 One among India’s Best Public-Sector Banks - Business Today, 26th February, 2006
 One among the Best 200/100 companies in Asia/Pacific and Europe having turnover
under a billion US $ -Forbes Global, Hongkong dated 1st November, 2004
 India’s Best Public-Sector Bank - Outlook Money, 15th March, 2004
 India’s Strongest and Asia’s Second Strongest - The Asian Banker, Singapore dated
15th December, 2003
 India’s Best Public-Sector Bank - Business Today - KPMG Survey dated 7th
December, 2003
 One of the Best 200 companies’ world over outside the US having a turnover under a
billion US$ - Forbes Global, Hongkong, issue dated 27th October, 2003
 Runner-up Awards in the “Best Online and Multi-channel Banking Team” and
“Outstanding achiever of the year-corporate” categories in recognition of outstanding
achievement in Banking Technology for 2004, instituted under the aegis of Indian
Banks Association and Trade Fairs & Conferences International.
 Best Bank Award for Delivery Channels from Institute for Development and Research
in Banking Technology (IDRBT), Hyderabad (2003)
  Best Bank Award for Innovative Usage and Application on INFINET (Indian Financial
Network) from Institute for Development and Research in Banking Technology
(IDRBT), Hyderabad (2002)
 Best Bank Award for Excellence in Banking Technology from Institute for
Development and Research in Banking Technology (IDRBT), Hyderabad (2001)
 Shiromani Award 1992 for Banking from Union Minister for Commerce
 Gem & Jewellery Export Promotion Council Award successively for 5 years from 1981
to 1985
 National Award for Assistance to Exporters from the President of India (1976-77)
 For “Best Use of Mobility Technology” for encouraging the use of technological
innovations for the benefit of customers.
 The Bank bagged the 2nd Runner Up Award in Public Sector Banks (PSB) category
 Best Use of Mobility Technology in Banking” Award by Indian Banks’ Association
Banking Technology Award 2012-13
 SKOCH Achiever Award 2014’ for Outstanding Performance in SME Enablement
 Shiromani Award 1992 for Banking from Union Minister for Commerce
 Best Public-Sector Bank adjudged by the Business Standards’ study, 1999.
 Asian Banking Award 1999 given by the Asian Bankers’ Association, Manila.
 The Industrial Finance Branch of the Bank in New Delhi received the ISO 9002
certificates issued by Det Norske Veritas, Netherlands in 2000
 The prestigious Best Bank Award for Excellence in Banking Technology from the
Institute for Development and Research in Banking Technology (IDRBT),
Hyderabad, sponsored by the Reserve Bank of India, November 2001 adjudged by the
Asian Banker Magazine, Singapore, as India’s strongest
 Bank and Asia’s second strongest Bank in its December 2003 issue
 Ranked as one of the top 200 companies outside the US having up to One

billion-dollar turnover per annum by the Forbes Magazine, Hong Kong in its October 27,
2003 issue.

 Ranked to be the 59th best Company in India by Dun and Bradstreet in their study.
 Ranked as No. I Public Sector Bank in the Country and the II best amongst all
banks in the country by The KPMG - Business Today Survey, published in the
December 7th 2003 issue of the Business Today.
 The Best Bank Award for Delivery Channel for the year 2003 from IDRBT.
 One of the Best 200 company’s world over outside the US having a turnover under
a billion US dollars - Forbes Global, Hongkong, issue dated 27th October, 2003
 The Best Public-Sector Bank award instituted by the personal finance magazine
Outlook Money, 15th March, 2004.
 Ranked by the Forbes Global, Hongkong, as one among the Best 200/100
companies in Asia/pacific and Europe having turnover under a billion dollars for
the second consecutive year, on 1st November 2004.
 The Runner-up Award in the “Best Online and Multi-Channel Banking Team
Category” and Runner-up Award in the “Outstanding Achiever of the year –
“Corporate Category” in recognition of its outstanding achievements in Banking
Technology for 2004, instituted under the aegis of Indian Banks’ Association and
Trade Fairs and Conferences International.
 One among India’s Best Public-Sector Banks - Business Today, 26th February,
2006
 ‘IT Team-Runner up Award’ for 2006, instituted by Indian Banks' Association
(IBA) and Trade Fares Conferences International.
CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility [CSR] generally refers to activities undertaken by

Institutions towards its commitment for ethical values, community and concern for
environment. Keeping this objective in view, Corporation Bank has set up an Association
and has named it as “Corp Kiran”, a name suggested by its own staff members. The
Association will be managed by women in the Bank for undertaking CSR activities at all
Zonal/Circle Headquarters & Head Office.

The association distributed woollen threads and other materials required for knitting to
“Mobility Training Centre of the Blind (R)”, Attavar, Mangalore. The visually challenged
persons are trained at the centre to make mats and dolls using the material. They also earn
their livelihood by the sale of the item.

The association also donated Rupees twenty-five thousand and bed sheets to “Swamy
Shraddananda Sevashram”, Arya Samaj Road, Balmatta. The Sevashram has been serving
girl students by providing them education and shelter. The amount provided will be used
for construction of a shed for storing firewood and to maintain hygienic conditions.
Further, bed sheets were donated to all the residents of the Ashram.

Corporation Bank, a leading public-sector bank had formed Corp Kiran for carrying out
such CSR activities. Various amenities are provided to the underprivileged and
downtrodden members of the society under the auspices of ‘Corp Kiran’.

“Corp Kiran” has units in corporate office as well as at the Circles and Zones of the Bank.
The CSR activities include provision of food and clothing for the poor school children,
orphanages, old age homes, destitute homes, physically challenged people and medical
help to people in distress from the weaker section of society. Organizing health check-up,
blood donation camps, community developmental activities benefiting poor and the
disabled, green initiatives like tree plantation drives, maintaining greenery, engaging in
empowerment activities like vocational trainings, adult education programmes etc. are
some of the activities that it will carry out.

‘Corp Kiran’ is a guild of the wives of senior executives of Corporation Bank, and also the
female employees of the bank, for executing their CSR plans. This innovative move by the
women is commendable, as they saw the larger picture, and drew their attention on the
importance of conducting CSR activities, and its benefits for the society.
As a part of CSR, this women association distributed back-packs and school bags to the
students of Kamla Shishu Vihar School at Patliputra in Patna. Every Drop contributes to
an ocean. This effort, and many others which will come soon, will definitely enrich the
ocean of CSR in the coming future.

SWOT ASSESSMENT

STRENGTHS

 Equal presence in rural and urban areas

 Strong Financial performance
 Employee base of over 12,000 people
 Customised banking solutions

WEAKNESS

 Lack of Pan India presence

 Less publicity and branding in comparison with leading banks

OPPORTUNITIES

 Innovative products and services

 Government funding

THREATS

 Economic crisis and volatile markets

 Changing RBI policy
 Presence on other banks
CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION

Credit risk is a risk due to uncertainty in counterparty’s ability to meet its obligation. There
are many types of counterparty’s obligations ranging from individuals to sovereign
governments. Risk is inherent in all aspects of commercial operation. However, for banks
and financial institution, credit risk is an essential factor that needs to be managed. Credit
risk is the possibility that a borrower counter party will fail to meet its obligations in
accordance with agreed terms. Credit risk, therefore, arises from the banks dealing with or
lending to corporate, individuals and other banks or financial institutions.

CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS

QUESTIONNAIRE
Dear respondent,

You have been selected as a respondent in the above titled study, which is being done as
part of educational dissertation in partial fulfilment of the requirements for the award of
Master’s Degree in Business Administration of Bangalore University. Your cooperation in
administering the instrument will go a long way in ensuring success of this study. Responses
will only be used for academic purposes and will be treated with utmost confidentiality after
the entire instrument is anonymous. Please endeavour to fill the instrument within two
weeks. I am so grateful to you for sparing your time and accepting to fill this questionnaire.
The questions will be closed ended.

Thank you very much.

Shabreen Sultana.

SECTION A: BACKGROUND INFORMATION

Name :

Age :

Address :

Phone No :

Email ID :

1)Please indicate your rank in the bank

Supervisor

Manager

Director

Others (specify) ____________________

2) For how long has this bank been in operation in Bangalore, India?

Less than 1 year

1 to 5 years

6-10 years

10 years & above

3) For how long have you worked in the Bank?

Less than 1 year

Between 1 to 5 years

Between 5 to 10 years

10 years & above

4)Using the categories below, please indicate the number of branches you have in
Bangalore, India.

Less than 5

Between 5-10

Between 11-20

20 & above

SECTION B: CREDIT RISK MANAGEMENT

1) Does your Bank have a well-documented Credit Risk Management policy that elaborates
the products offered and all activities that have to be performed to manage the Credit?

Yes

No

2) At what level does your bank identify/classify Credit Risk?

Branch level

Department level

3) How regularly do you review your credit policy?

Quarterly

Semi-annually

Annually

Others (specify) ______________

4) WhoainayourabankaisaresponsibleaforaformulatingatheaCreditaRiskamanagement
practices?

Board of Directors
 The Head Office

The Risk Committee

Branch Level

Others (specify) _________________

5) Who approves the overall credit risk management policy in your bank?

Non-Executive Directors

Independent Directors

Chair of the board

Chief Executive Officer

6) With respect to your Bank, please indicate the extent to which each of the following
factors are considered important in loan appraisal and subsequent approval. Use scale 1 to
5 where 1 is to a lesser extent and 5 to a greater extent.

Factors considered important in

loan appraisal and subsequent
1 2 3 4 5
approval (the five Cs)

Borrower’s capacity

Borrower’s character

Borrower’s condition

Borrower’s credit history

Borrower’s collateral

Others (specify)

7) To what extent does Corporation Bank involve the following parties in formulating credit
risk management policies? Use scale 1 to 5 where 1 is to a lesser extent and 5 to a greater
extent.

Parties 1 2 3 4 5
 Executive management

Board of Directors

Credit Committee

Credit Managers

Employees

8) An effective credit risk management system that ensures repayment of loans by borrowers
is critical in dealing with asymmetric information problems and in reducing the level of loan
losses. Listed below are some of the factors that influence effectiveness of a credit risk
management system. With respect to your Bank, please indicate the extent to which you
agree/disagree that indeed the factors are considered important in influencing the
effectiveness of a credit risk management system (Tick as appropriate)

Factors that influence Strongly Disagree Somehow Agree Strongly

the effectiveness of a
Disagree agree agree
credit risk management
system

Establishment of an
appropriate credit
environment through
policy and strategies
(guidelines) that clearly
outline the scope and
allocation of bank credit
facilities

Maintenance of an
appropriate credit
administration that
involves monitoring
process as well as
adequate control over
credit

Top management support

is required to ensure that
there are proper and clear
guidelines in managing
credit

All credit risk

management guidelines
should be properly
communicated throughout
the organization and
everybody involved in
credit risk management
should understand them

Collection of reliable
information from
prospective borrowers is
critical in accomplishing
effective screening)

High quality staff are

critical to ensure that the
depth of knowledge and
judgment needed is always
available

Monitoring of borrowers
is very important as
current and potential
exposures change with
both the passage of time
and the movements in the
 underlying variables, and
also very important in
dealing with moral hazard
problem

Supportive technologies
and equipment such as
computers are useful in
credit analysis, monitoring
and control, as they make
it easy to keep track on
trend of credits within the
portfolio

9) Which of the following do you believe are the most important potential benefits of a
Credit Risk Management strategy?

Improved pricing of products

Real time exposure updates

Accuracy of exposure modelling

Calculation of regulatory exposure

Credit grading(scoring) models

Reduction in losses

Improved selection of clients according to risk profiles

Others (specify) _____________________________

10) Which of the below models are employed by the banks to identify the credit worthiness
of customer?

Credit portfolio view

Equity based approach

 Scenario analysis

Ratings based approach

Stress testing

Sensitivity analysis

Others (specify) _______________

11) Please indicate the extent to which your organization undertakes each of the listed
activities with regards to monitoring of borrowers (Tick as appropriate)

Activities involved in Very High Medium Low Very

monitoring of borrowers high
low

Frequent contact with borrowers

Creating an environment that the

bank can be seen as a solver of
problems and trusted advisor

Development of the culture of

being supportive to borrowers
wherever they are recognized to
be in difficulties and are striving
to deal with the situation

Monitoring the flow of

borrower’s business through the
bank’s account

Regular review of borrowers

reports as well as an onsite visit

Updating borrowers credit files

and periodically reviewing the
borrowers rating assigned at the
time the credit was granted
12)

How important do you believe

each of the following would be
Very High Medium Low Very
in the implementation of a
high low
successful Credit Risk
Management culture within the
bank

Having enterprise risk data

infrastructure in place

Policy is supported at board of

director or executive level

Adequate employee training

Hiring qualified staff

Documented records

Ability of Bank to adapt changes

in banking industry

Implementation of technology

13) Major challenges faced in successful implementation of Credit Risk Management

policies

Difficulty in quantifying risk

Timelines and quality of information

Difficulty integrating risk management with other banking processes

Lack of necessary knowledge and skills within the bank

Calculation of parameters

Difficulty for banks to separate banking and trading books

Lack of technical knowledge and trained personnel

 High cost of information technology

14) How best do you think your bank responds to unforeseen risk or credit crunches? Use
scale 1 to 5 where 1 is to a lesser extent and 5 to a greater extent.

Unforeseen risk or credit 1 2 3 4 5

crunches

Reduce employment

Stringent lending policy

Increase capital reserve ratio