A

PROJECT REPORT ON
“CASH MANAGEMENT & CREDIT APPRAISAL”
IN BANK OF INDIA
(A Government of India Undertaking)

Submitted in partial Fulfillment of the requirement

For the Award of Master of Business Administration

LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT& DEVEOPMENT

STUDIES
LUCKNOW

UTTER PRADESH TECHNICAL UNIVERSITY

FACULTY GUIDE: INDUSTRY GUIDE:

Dr.Manoj Kumar Mr.Radhe Nigam(chief manager)

(Reader),LBSIMDS Mr.R.R.Mishra(Senior Manager)
Mrs.Pushpa Chaudhari(Senior Manager)

Submitted by:
 Rupali jaiswal
(M.B.A Finance)
 CONTENTS

S. No. CHAPTER NAME PAGE No.

1 Introduction 1
1.1 BOI Star House
1.2 Over view about BOI 3
1.3 Vision, Mission & Quality Policy of BOI 7
1.4 Future Activities, Future Plans & Business Initiatives 9
1.5 Emblem 16
1.6 Bank of India Security System 20
1.7 BOI Foreign Branch Network & Operations 21
1.8 Position at a glance 22
1.9 Factor For Success 23

2 Product & Service Profile of BOI 25

2.1 List of Product & Service
2.2 Deposit & Loan Products
2.3 Credit Card Facility
2.4 ATM Facility
2.5 Credit Counseling Service ABHAY 29
2.6 New Product & Services (2010) 30

3 Information Technology & BOI 33

4 Opportunities & Challenges before BOI 39

5 Back Office Services of Bank 41

6 Project Work 43
6.1 Introduction of Cash Management 44
6.2 Cash Management at a Glance 47
6.3 Cash Management Trends in Banks 48
6.4 CMS Indian Scenario 51
6.5 CMS in BOI 55
6.6 CMS in Public & Private Sector Banks 59
6.7 Frame work for effective Cash Management Service 68
6.8 Cash Management Process 70
6.9 Benefits & Features of CMS in Nationalized Banks &
Private Banks 71

6.10 Swot Analysis of CMS Market 79

Swot Analysis of Competition in CMS Market 80

7 Credit Appraisal 85
7.1 Stages of Credit appraisal 90
7.2 Clientele 92
7.3 Credit delivery 94
7.4 Segmented approach to lending 97

8 Modes of Credit delivery 99

9 Credit Thrust 102

10 Tenure of credit 110

11 Credit Acquisition 113

12 Appendices 117
12.1 Business Mix 118
12.2 Total Priority 119
12.3 Gross Deposit & Gross Advances 121-122
12.4 Profit & Loss A/c 123
12.5 Balance Sheet 124
12.6 Cash Flow Statement 125
12.7 Performance Highlights 127
12.8 Awards & Achievement 133
134
13 Conclusion

14 Bibliography 136
 Acknowledgement

It is my proud privilege to show my gratitude to my project

guide who is also the Chief Manager of Bank of India Mr. Radhe
Nigam for all his valuable guidance and encouragement that
helped me to complete this project successfully and in time. I
sincerely thank from the bottom of my heart Mr. R.R. Mishra
senior manager (Administrative Department who has given me
an opportunity to study about the topic in his department. I cannot
ignore the help, which I got from Mrs. Pushpa Chaudhari, Senior
manager (credit Department) at BOI. Also I thank the entire staff
members of The Bank of India civil lines branch, Allahabad for
giving me a bagful of information pertaining to the topic. All of them
guided and explained me the concepts of Cash Management in
spite of their busy schedule they were always broad-minded in
helping me with valuable tips pertaining to the subject.

The support from the college and department is always

crucial in completing the project. As well as the unparallel support
rendered by our beloved faculties.

Ultimately I would thank my friends who supported me and

co-operated with me. I have received a valuable support from them
and for that I thank them again.
 100 YEARS OF FULFILLING
DREAMS

Relationships beyond banking

 Bank of india Star house

HEAD OFFICE-
“STAR HOUSE”,C-5, G- BLOCK,
BANDRA-KURLA COMPLEX
BANDRA (EAST) MUMBAI
 BANK OF INDIA
Bank of India was established on 7th Sep, 1906 by a group of
eminent businessmen from Mumbai. The Bank was private
ownership and control till July 1969 when it was nationalized along
with 13 other Banks.

 Beginning with one office in Mumbai with a paid up capital of

Rs.50 Lacs and 50 employees, the Bank has a made a rapid
growth over the years and blossomed into a mighty
institution with a strong national presence and sizable
international operations. At present Net worth of the Bank
surpasses Rs.11100 crores. In business volume, the Bank
occupies a premier position among the nationalized Banks.

 The Bank has been the first among the nationalized banks to
establish a fully computerized branch and ATM facility at
Mahalaxmi Branch Mumbai way back in 1989.

 The Bank is a Founder Member of SWIFT in India.

 The Bank came out with its maiden public issue in 1997.
Total number of shareholders presently is more than 2.25
Lacs.
 While firmly adhering to a policy and prudence and cautin,
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 sizable presence abroad, with a network of 29

branches spread in 15 countries.

 The Bank has capital stake of 51% in Dai-Ichi Mutual Life

Insurance Company recently established in India, the second

largest Japanese company (6th largest in the World)
company in the field of Life Insurance.

 BOI provides a wide range of banking products and financial

services to corporate and retail customers. The bank
provides specialised services for businesses (dealing in
foreign exchange), NRIs, merchant banking, etc.

 It also has specialised branches that deal in asset recovery,

hi-tech agricultural finance, lease finance and treasury, and
small scale industries.

 BOI is leading player in Retail banking and it was first

nationalised bank to establish fully computerised branch and
ATM facility bank in India
 As of 31 March,BOI had 3207 branch and 820 automated
teller machine(ATMs)

 Real estate firm DLF Ltd held 39% in DLF Pramerica before
exiting, while Axa is still in a joint venture with the Bharti
group, where telecom is the dominant interest.

 Among other players on BoI’s radar, Aegon Asset

Management Co. Pvt. Ltd already has approval from market
regulator, the Securities and Exchange Board of India,
having obtained this for a joint venture with Religare
Enterprises Ltd. However, Religare decided to acquire
troubled Lotus Asset Management in 2008 and opted to go
solo.

 Japanese firm Dai-ichi Mutual Life Insurance Co., which

already has an insurance joint venture with BoI, Aviva Plc
and BBVA SA are the other names on the list. None of these
three firms have regulatory clearance to launch mutual
funds.
 BoI started a MF business in 1990 and launched six
schemes. It redeemed four of them and transferred two to
Taurus Mutual Fund after offering an exit option to investors
by

 BoI 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 BOI 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 international business accounts for around 17.82% of

Bank's total business.
 VISION &MISSION OF BANK OF INDIA

VISION
To become the “Bank of Choice” for corporate, medium business
and upmarket retail customers and development banking for small
business, mass market and rural markets.

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

QUALITY POLICY
Bank of India is 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.
 Future activities

The following services will be integrated in the existing system :

 Prepayment/Payment of Term Deposit.

 Debit Card PIN/TPIN request.
 Registration for Mobile Banking Process.
 Mobile Banking Charges- Utility Payment.
 Issue of Term Deposit & Recurring Deposit.
 Execution of Standing Instructions.
 Issue of Demand Draft/Pay order.
 Linking of more than one account to a Debit Card.
 Request for regeneration of password for Internet Banking.
 Process for registration for e-bill payment (E-pay) & De-mat
Facility.
 Request for Duplicate Password for Internet Banking.
 Closure of account.
 Transfer of accounts.
 De-mat accounts & all other related activities.

Way Forward

 Customer Acquisition on a wider scale and Inclusive

Banking.

 Higher profitability and accent on asset quality

 Leverage technology to a large extent.

 Focus on Mid Corporate segment for higher returns.

  To have a branch network of over 3500 branches and 1500
ATMs by March 2011 and enlarge our presence abroad.
 Bank of India expects loans to grow 25% and deposits to rise
23%-24% in the year to March 2011.

The Bank has a strong position in financing foreign trade. Over

270 branches provide export credit. The expertise in this area has
enabled the Bank to achieve a leading position in providing export
credit in certain areas like diamond export.

The Bank has identified specialized target groups to develop

core advantage for future growth. The Bank, has specialized
branches comprising of Corporate Banking Branches to undertake
very large credit business, Overseas Branches specializing in
Foreign Exchange Business, NRI Branches which specially cater
to the requirements of Non-Resident Indians, Capital Market
Branches which undertake all activities relating to capital market
such as collection of applications, processing of refund orders,
Merchant Banking etc. Commercial & Personal Banking Branches
cater to the requirements of high net worth customers. Apart from
this, the Bank also has specialized Branches for Asset Recovery,
Small Scale Industries, Hi-tech Agriculture Finance, Lease Finance
and Treasury.

To effectively meet the ever-growing challenges and

competition, the Bank has made a good headway in bringing about
technological up gradation. MIS and critical functions of controlling
offices have been computerized. At present, the operations at
about 3207 branches are totally computerized. 26 branches
operate in partially computerized mode besides these 1019
branches and 31 extension counters are migrated to Core Banking
Solution. New facilities such as, Telebanking, ATM & Signature
Retrieval Systems have been introduced in a progressing manner
to add value to services. Telebanking facilities with Fax on
Demand facility, Remote Access Terminals for Corporate
Customers are now available at many branches. The Bank has
installed ATMs in Mumbai and other centre in the country.

The Bank is a member of the RBI's VSAT Network and has

installed 39 VSATs linking strategic branches/offices. The Bank is
making a paradigm shift from branch automation to bank
automation and is in the process of implementing a Multi-Branch
Banking Project, that facilitates City-wise Connectivity of
Computerized Branches. The Bank is in the process of installing
BOINET, a Wide Area Network for providing a inter- and intra-city
connectivity, as a part of enhancing its decision support system.

The Bank's corporate personality and philosophy are fully

reflected in the emblem, which is a five-pronged Star -- a
harmonious blend of traditional and the functional. The elongated
prong pointing upwards, conveys the Bank's drive to achieve
ascending goals. The Star is a beacon and guide to those in need
of direction.
EMBLEM

The Bank of India emblem epitomizes the corporate

personality and basic policy of the Bank. In conception and design,
it is a harmonious blend of the traditional and the functional.

Within the central circle lies the Bank’s seal – a symbolic and
stylized representation of Mother India, signifying

Bank of India’s continuing consciousness of the legacy of the

national past.

The five prongs of the star represent the Bank’s pragmatic

aspect Banking service extending over five continents .The single
Elongated point, yearning upwards, conveys Bank Of India
unceasing endeavour to achieve ever – ascending goals.

The star has yet another aspect – it is a beacon and guide to

those in need of direction. It symbolizes the Bank’s perpetual
readiness to assist anyone – common man and business man
alike – in steering a course through the contemporary maze of
money affairs.

Last of all, the star has astrological significance : it is a

determinant of times to come. Bank of India sees this as a
commitment – to ensure that the corporate emblem shines as a
harbinger of a bright future for all.
JOINT VENTURE

Bank entered into an arrangement with Dai-Ichi Mutual Life

Insurance Company, second Japanese company in the field of
Life Insurance (sixth largest in the world) and Union Bank of India
for setting up a Joint Venture Life Insurance Company with capital
stake of 51%, 26%, and 23% respectively. Formalities for
incorporation of JV Company are in advanced stage.
BRANCH EXPANSION

Bank opened 63 new branches and converted 41 Extension

counters to full-fledged branches. Total number of domestic outlets
is 2845.

INTERNATIONAL OPERATIONS

 With the opening of a branch at Antwerp (Belgium),

number of overseas offices stand at 25 spread in 13
countries. Shenzen Representative Office in China was
upgraded as a Branch in March 2007. A new Representative
Office was opened in Beijing (China).
 Bank has taken over management of Almana
Exchange House in Doha Qatar. Arrangements with Bank
Azizi, Kabul in Afghanistan made for money remittance to
India.
 Bank is holding approval of Reserve Bank of India for
setting up Subsidiaries in Tanzania and Canada, Branches
in DIFC (Dubai) and Dhaka (Bangladesh), and
 Representative Offices in Dubai, Johannesburg (South
Africa) and Doha (Qatar).
 Bank’s International Operations contribute 20% of
Bank’s total Business.

CORPORATE SOCIAL RESPONSIBILITY

Bank as part of its centenary celebrations promoted a Trust,

‘ABHAY’, to offer credit
counseling services, free of cost, with the following objectives:

 Advising on gaining access to structured financial

system including banking.
 Counseling people who are struggling to meet the
repayment obligations and helping debt.

Resolution

 Helping in rehabilitation of borrowers in distress.

 Bank has pioneered a Mega Project for
Integrated Development of 129 villages in 78 Districts and
17 States covering 60,000 households, identified for holistic
development and showcased as Model Villages. The Bank
has so far extended financial assistance over Rs. 150 crores
to the rural households in the identified villages. An
evaluation study conducted in select villages has revealed
that there is 20-25% improvement in the household income
after the implementation of the scheme.
 BOI Security system
Two-Factor Authentication (2FA)

Two-Factor Authentication (2FA) refers to a security system

where two levels of identity checks are required. It comprises the
current identity check using User ID and Password, and an
additional level using something that you carry which generates a
unique security code commonly known as OTP (One-Time
Password) before an authorized user can gain access to an online
service. These two levels of identity checks help boost security
against Internet Banking crimes. (User ID & Password is basically
“Something you know” and Hardware device “Something you
have”)
(A GOVERNMENT OF INDIA CONCERN)

FOREIGN BRANCH NETWORK

 Factors for Success in Foreign countries

Offshore Credit Services

It also provides cross-border loans to joint ventures and
wholly owned subsidiaries of Indian companies. This helps these
Indian companies to secure loans, allowing them to increase their
presence in the EU. The bank facilitates Indian companies in
raising trade finance, letters of credit or project finance for their
business ventures in the EU. This has enabled the bank’s growth,
since many Indian companies are venturing in the EU.

Technology Implementation
The Bank of India has been the leading bank in India to
adopt new technologies to provide better services to its
consumers. The bank has been able to offer high-quality
technology-based products and services to its customers. This has
assisted I in tapping the EU market. The bank has successfully
integrated technology to support applications such as tele-banking,
internet banking, signature retrieval system, fax on demand and
remote access terminal services for its corporate clients. It has
also put in place effective monitoring and control mechanisms to
provide efficient services to its customers

Leveraging Special Services

The Bank of India is strategically targeting Non- Resident

Indians (NRIs). It facilitates NRIs in their personal financial
services needs such as remitting money to India. The bank
provides NRIs the facility of transferring funds to BOI accounts in
India in an efficient and cost-effective manner. Since the EU has a
substantial Indian population, the bank has grown rapidly and has
been successful in the EU. It offers personal and corporate
banking services as well as specialist services, including forex
dealings, loan syndications, etc, to its customers in the EU.
 Future Plans

BOI is planning to increase its presence in the EU by

opening new branches and offering complete financial services to
its customers, including guidance for entering the market, loans,
remittances, etc. BOI has plans to open a branch in Antwerp
(Belgium) to cater to the requirements of diamond merchants,
traders and in this segment BOI is market leader in India.BOI will
have 9 branches in the EU to service its customers. BOI also plans
to enhance its services to Indian companies that are investing in
the UK. It has plans to assist them in generating corporate and
project finance for their investments abroad. It plans to increase its
focus on other diversified services, apart from banking services
such as venture capital, merchant banking, etc. The bank also
hopes to leverage IT technology and develop quality products and
services for increasing its reach and gaining competitive

BUSINESS INITIATIVES

 To strengthen our internal control system, Project

STAR BOOST has been initiated by the bank to leverage
technology for more effective and focussed audit. With the
launch of this programme bank has established a Back
Office for Offsite Audit and related work and is effectively
making use of CAAT (Computer Aided Audit Tools). The
Audit Exception Reports (AER) are generated in advance
and sent to branches for compliance before commencement
 of audit. This process is expected to improve the audit
rating of the branches.

 Bank has opened Global Remittance Centre (GRC) at

Mumbai. The inward remittances, SB NRE / NRO Account
opening of NRI customers have been centralized at GRC.
Bank has initiated the process for establishing a hub for the
purpose of handling the documentation part of Trade
Finance portfolio.

 Bank has initiated media campaigns on the

existing theme “Relationships beyond Banking”.

 For building the brand image and increasing the

visibility and better marketing of various products through
publicity, Bank has also been advertising our products in
newspapers, magazines, television, Hoardings, banners,
bus panels, trains, glow signs at railway stations, events
and sponsorships, leaflets and brochures, etc.

 Introduction of Credit Application Processing

Systems through software termed as CAPS which covers all
major credit segments – Retail, Corporate, MSME and
Agriculture. It will be a fully Automated system to improve
credit delivery.

 Two new products, “Star Suraksha SB

account” and “Star Benefi t CD account” having unparallel
features were launched on the Bank’s Foundation Day on
7th September, 2009 for improving the CASA business.
 To give a boost to SME business, Bank has
SME branches and also SME hubs and Nodal Officers at all
Zonal Centres.

 Bank has devised a Composite Loan Scheme

for MSE sector borrowers in Rural / Semi Urban and Urban
areas for maximum exposure of up to Rs. 5 lacs per
borrower. The scheme has unique features like simplified
application cum proposal format, hassle free minimum
documentations, relaxed margin and interest rates, etc.

 MOUs have been signed with Tata Motors,

M/s. Piaggio Vehicles Pvt. Ltd., M/s. Asia Motor Works, M/s.
JCB India Ltd., M/s. Mahindra Navistar, M/s. Ashok Leyland
Ltd., Sonalika Group of companies etc. for financing
vehicles / earth moving equipments.

 Credit business is receiving focus through

specialised branches - 29 SME branches, 28 Mid Corporate
Branches2 Large Corporate and 13 Corporate Banking
branches, 36 Commercial & Personal banking branches and
‘Retail Hubs’ at 27 centres across the country working on
the concept of single window for Housing & Personal
finance banking.

 To achieve objective of Financial Inclusion,

information technology initiatives implemented and the
 concept of business correspondents and facilitators has
been introduced throughout the country.

Other New Initiatives

 Technology has been leveraged in some important projects

 Financial Inclusion Project – Banking the unbanked Sector

 Solar Power Project – Eco-friendly – Technology Power for

Rural Areas

 V-sat Connectivity Project – Networking / connecting the

Rural /Remote locations.

 Collaborative Communication –Virtual classroom sessions

/ Installation of High definition Audio / Video equipments.

 E -learning to revolutionise training.

 Installation of Biometric ATMs and ATMs with easy

accessibility for the physically handicapped.

 Sales Lead Management.

 Customer Complaint Management Solution.

 Credit Risk Management Project.

 Credit application Processing Systems (CAPS).

 Anti Money Laundry System.

 Human Resources Management Systems.

 Opportunities

 Recovery in global output and trade is expected to be

strengthened in 2010 and as projected by IMF, output is
expected to grow by 3.9% and trade volume is to expand by
5.8%. Similarly, domestically, India’s GDP growth is
expected to exceed 8 percent in FY 2011 against 7.4 percent
in FY2010.

 The industrial sector is growing at over 10 percent and

exports sector has witnessed positive growth trend. These
positive developments provide opportunities for banks to
expand their activities

 The pick up in consumption and investment demand and the

Government’s thrust on investment in infrastructure sector
will provide impetus to the bank credit growth.

 The stress on inclusive growth and financial inclusion will

create enabling environment for expansion of banking
facilities.
 CHALLENGES
With the inflation rising to double digit, which may necessitate
certain restrictive monetary measures, there is expected to be
pressure on interest rate. Among others, the challenge confronting
banking sector during 2010-11, include the following ones:

● Improving NIM by keeping the overall of cost of deposits down

by expanding CASA base and improving yield on advances by
prudent deployment of resources among various portfolios.

● Expansion of credit portfolio, which have shown a deceleration

in growth during 2009-10.

● Pro-active NPA management, by arresting further slippages and

augmenting recovery efforts.

● Ensuring growth in profitability by steady increase in noninterest

income in light of pressure on NIM.

● Increasing capital base to keep pace with the asset growth so

as to maintain a healthy capital adequacy ratio.
 LIST OF PRODUCTS AND SERVICES

1. Deposit Products
Savings Bank Account
BOI Savings Plus
Current Deposit Account
BOI CD Plus
Double Benefit Deposit
Fixed Deposit
Short Deposit
Quarterly Income Certificate
Monthly Income Certificate
Recurring Deposit
Foreign Currency Deposit Scheme
FCNR Deposit
Floating Rate Deposit Scheme
Deposit Scheme for Senior Citizens
Special Deposit Product for High Value Deposit Customer

2. Loan Products

Cash credit
Overdraft
Loan against Bank Deposit
Loan against NSC, KVP, LIC policies etc.
Agricultural Loan
SSI Finance
Star SSI Supreme Scheme, Priyadarshini Scheme etc.
Star Home Loan
 Star Personal Loan
Star Mortgage Loan
Star IPO
Star Autofin
Star Education Loan
Medimobile Loan
Gold Loan
Bullion Banking Bill Finance
Bank Guarantee
Export Finance
Channel credit
Corporate Loan
Discounting Future Cash Flows
Foreign Currency Swing

3. Other Products and Services

Credit Cards
Debit cum ATM card
Star Cash Management
Depository Services
Safe Deposit Vault
Safe Custody Services
Government Relief Bonds
Retailing of Government Securities
Multicity Cheque Facility
Multi Branch Banking
Telebanking and Fax on demand
 Internet / SMS Banking
Corporate Remote Access Terminal
SWIFT
Electronic Clearing Service / Electronic Fund Transfer

CREDIT CARD FACILITY

Bank of India's range of Card Products is an open line of

credit and a useful source of cash, anytime and anywhere.
Bank of India issues a range of following card products.
i) INDIA CARD ( MasterCard)
ii) INDIA CARD ( Visa Gold)
iii) BOI NAVY CLASSIC ( MasterCard)
iv) BOI NAVY GOLD ( MasterCard)
v) TAJ PREMIUM CARD ( MasterCard)

ATM FACILITY
Savings, Current and overdraft account holders, who in
terms of operating instructions are authorised to operate upon their
account singly, are eligible to apply for the ATM card - 'Starlinks
International Debit cum ATM Card'. (Minors and illiterate
accountholders are not eligible.). You may use the card at any of
our ATM centre (list available on our website
www.bankofindia.com) on a 24/7 basis for :
withdrawing cash up to Rs.15,000/- per day (Rs.5000/- at a time)
Transfering balance among accounts
Depositing cash & cheques through ATM
Checking balances in your accounts
Getting a mini statement for your last 5 transactions
Registering a request for a cheque book
The card is also accepted at ATMs under 'Cash Tree', 'Bancs
Network' and all ATMs that display the VISA logo world wide. It
may also be used at selected points of sale .
 Cre

Intro
 NEW PRODUCTS & SERVICES (2010)
● All domestic branches are covered under Core Banking
Solution. New domestic branches opened are directly under the
CBS platform. All domestic branches are RTGS/NEFT enabled.

● Call centre facility is made operational as an alternate delivery

channel to a branch set-up which would act as a “Contact” centre
and is a cost effective touch point for customers.

● Bank has launched the Marathi version of its web-site.

● Bank has launched “Welcome Kit” for all new accounts opened
at the select branches of Mumbai, New Delhi, Chandigarh and
Ghaziabad. The kit contains cheque book, ATM card, Pin, TPIN
and internet PIN, the unique feature of which is that the same are
in activated status from the day one.

● A web based Customer Complaint Management System has

been made live from 1st January, 2010 to reduce the response
time.

● Oracle Marketing Online product has been implemented Data

Warehouse for communicating with customers via email. With this
system in vogue, Bank is able to deliver emails overnight to its
customers.

● SMS alert facility has been introduced and provided to all

customers for all debit transactions from delivery channels, all
debit clearing transactions of Rs.25,000 and above, all customer
induced debit transfer and cash payments of Rs. 10,000 and
above, all debit RTGS transactions and acknowledgement on
accepting the cheque book issue request.

● Bank of India is the first PSU Bank in India to implement TWO-

Factor Authentication (2FA) – Star Token for both Retail and
Corporate internet banking customers as an additional security
measure. Bank’s customers enjoy the convenience of “secured”
Anytime, Anywhere, Anyhow hassle free Banking from the comfort
of their homes and offices with a click of a mouse.

● Resetting or Unblocking of Internet Banking login password

can be done using Debit-cum-ATM card PIN.

● Transaction under taken through Credit Card can be viewed

through Internet Banking channel.

● Provision to make online bid-cum-application for Application

Mobile Banking Services extended to all retail internet banking
customers.

Mobile banking which includes features like Balance enquiry, last

five transactions, Cheque status, Funds Transfer and Mobile
Payments.

● Bank has joined National Financial Switch (NFS) which enables

customers to access more than 50,000 ATMs across the through
owned as well as shared ATMs network.
● Technology has been leveraged in some important projects like
Financial inclusion project for Banking the unbanked sector, Solar
Power Project which is Eco-friendly for Technology Power for
Rural Areas, V-sat Connectivity Project – Networking / connecting
the Rural / Remote locations.

● Bank launched “Star Abhilasha Biometric Smart Cards” in

Nagpur, Maharashtra in February, 2010.Installation of Biometric
ATMs and ATMs with easy accessibility for the physically
handicapped is being established Supported by Blocked Amount
(ASBA) IPO issues by Retai internet banking customer.

INFORMATION TECHNOLOGY AND

BANK OF INDIA
 TECHNOLOGY PRODUCT & SERVICES

Bank of India has been pioneer in launching key initiatives in areas

of Products, Distribution, Technology, International Operations and
Risk Management. Our Bank aims at strengthening customer
relations, diversifying delivery channels, increasing international
capabilities and services, and strengthening revenue streams from
diversified sources. Our Bank has redefined banking services with
hi-tech services. The theme of "Relationships beyond Banking"
has helped in creating & cementing a niche in the minds of our
clientele.

 Branch Automation
Bank completes implementation of 100% Core Banking Solution in
all its 3023 branches.

 Listing of CBS branches Automated Teller

Machines (ATMs)
Bank is having its own 487 ATMs (both on-site & off-site). The
Bank is member of Cash tree and BANCS network. The Bank is
the Settlement and Nodal Bank for Cash tree ATM network having
13 member Banks and BANCS network having 14 member banks.
The Bank has also entered into bilateral agreement with State
bank of India and its associates. Our Bank has joined National
Financial Switch (NFS) which enables our Customers to access
more than 35,000 ATMs across the country.

 ATM Locator Solar Power Systems

 Solar Power Systems implemented in 147 Rural / Semi
urban branches where there is acute shortage of Power or
high load-shedding periods. We plan to extend in another
100 branches / administrative offices during the year 2009.

 Financial Inclusion
IT enabled FINANCIAL INCLUSION SOLUTION has been
successfully implemented in different states of India, viz.
Gadab (rural) branch of Raigad Thane Zone, Puttur in
Hyderabad Zone, districts of Lucknow in U.P and Budhni in
Sehore District, Bhopal in M.P. Expansion of the solution in
these centers is in full-swing.

 Teller Cash Dispensers

Installation of Teller Cash Dispensers is in progress at
identified branches. It will reduce wait-time, enhance the
productivity of Tellers and also help in accurate dispensing of
Cash.

 Star Connect Internet Banking Services

Bank’ customers enjoy the convenience of “secured”
Anytime, Anywhere, Anyhow hassle free Banking from the
comfort of their Homes & Offices with a mouse click.
Features like Statement of Account – View, Enquiring status
of cheques, Request for a cheque Book, Transfer of funds
including third party transfer within the networked branches
etc.
 Interbank Fund Transfer
Online Interbank Fund Transfer made easy and convenient.
Now, you can transfer funds ONLINE across banks, through
our StarConnect Internet Banking Services, using RTGS/
NEFT facility, WITHOUT ANY CHARGES.

• Star Connect Retail

• Star Connect Corporate

 Technology Product & Services BOI Star e-Pay

Customers can register for Auto-pay or on-line payment of
various utility services like Telephone Bills, Electricity Bills,
Mobile Bills, Insurance premia, Credit card Bills and
subscription payments to certain magazines, Mutual fund
applications and certain other agencies. The benefits being:-

• No more late payments.

• No more queues.
• No more hassles of writing and depositing of cheques.

 e-Payment of Direct & Indirect, Central Excise &

Service Tax
Tax Payment made Easy. Pay your Direct & Indirect Central
Excise, Service Tax, Custom duties online from the comforts
of your office or home, avoiding queues and last minute
rushes.

 Star e-Share Trade

 Bank’s customers are provided with a fast, easy, transparent
and hassle-free way to trade in shares. Customers can
invest in shares traded on Stock Exchanges without visiting
or calling the share brokers, track settlement cycles, delivery
instructions for purchases and sales.

 RTGS / NEFT
Remittance of funds for inter-bank transactions / customers
transactions utilising the RBI’s RTGS infrastructure through
our networked RTGS / NEFT enabled branches. 2100+
branches are RTGS enabled & 2000+ branches are NEFT
enabled.

 Star e-Remit Service

An effective way to transfer money from any bank account in
the United States to anyone in India. The facility can be used
for all personal US dollar remittance from anywhere in USA
to India.

 DGFT Online e-Payment

A safe, secure and convenient mode of license fee payment
to Directorate General of Foreign Trade, Ministry of
Commerce, Government of India, through the Internet
without visiting the Bank.

 Online Booking of Indian Airlines Ticket / Spice

Jet
 Travel Ticket booking made easy. Select your flight, provide
necessary details and pay through Bank of India Internet
Banking.

 Online Booking of Indian Railway Ticket

Railway Ticket booking made easy. Select your train, provide

necessary details and pay through Bank of India Internet
Banking.

 Online Application for Education loan

On Line facility available for submission of Education Loan
application.

 Online Utility Payments

Online facility for payment of Utility bills and other payments
viz. MTNL, Reliance Infocomm, BSNL (select circles), Tata
Indicom, Vodafone, Idea, Airtel, MSEB, Reliance Energy,
Mahanagar Gas, Tata Sky, BSES Rajdhani, BSES Yamuna,
NDPL Delhi, VSNL, LIC etc.

 SWIFT
Our bank also facilitates services to its customers through
SWIFT, thereby providing a cost-effective financial
processing & communication services of assured quality,
integrity, reliability for International funds transfer and other
financial transactions.

 STAR CASH MANAGEMENT

 A product specifically for corporate customers. It offers fast-
track cheque collections, speedier release of funds and
profitable funds management at a reasonable cost.

 ECS (Debit & Credit)

BOI offers its customers a faster and easier method of
effecting payments by direct debit to the customer’s account
in case of utility payments, credit card bills etc. ECS is also a
preferred method of credit in respect of dividend warrants,
interest warrants, refund orders, salary pensions.

BACK OFFICE SERVICES OF BANK

 Delegation of powers
Bank will ensure that authorities at various levels will
be empowered with adequate powers to take prompt
decisions with regard to sanctioning of loans and advances,
issuance of guarantees, settlement of claims of deceased
depositors, issuance of duplicate demand drafts, deposit
receipts, other claims and administrative matters concerning
customer service.

 Reorganization
In order to facilitate quick decision-making and to suit
the changing requirements, the organizational structure has
been revamped. More specialized branches like Personal
Banking Branches, Corporate Branches, Small Scale
Industries Branches, Hi-tech Agricultural Finance Branches,
Housing Finance Branches, Capital Market Branches,
Overseas and NRI Branches have been opened at important
centers.

 Transparency and secrecy

Bank will ensure that there would be transparency in all
business operations at all stages. Customers will be
educated about the various products and facilities available.
A uniform strategy will always be adopted to eliminate any
possibility of discrimination on caste, creed and religion or
economic status of the clients. Secrecy norms will be
simultaneously observed to protect the interests of our
customers.
 Surveys by outside agencies
All steps will be taken by bank to improve Customer
Service and enhance customer satisfaction. Towards this
end, bank services will be got evaluated through outside
reputed marketing agencies with a view to assessing the
quality of services extended at the branches and to ensure
that bank customer service match the expectations of bank’s
various clientele.
 Introduction of Cash Management

Manage your cash flow and liquidity effectively

and efficiently
Cash Management Trends
in Banks of India

Traditionally having a paper-based clearing system involving not

only high processing cost but security risk, cash management in
India has certainly undergone a paradigm change. From a product-
centric approach, the focus for almost all banks today has shifted
emphatically to the customer. And success is all about bringing the
maximum possible delivery channels to the prospect's doorstep.

In the rapidly transforming world of business, banking faces its

biggest challenge yet - constant change. With every bank seeming
to offer service possible, efficiency coupled with innovative value
added solutions have emerged as the key business differentiators
that affect a bank's bottom line. Confronted with shrinking
deposits/margins, rising customer expectations and intensifying
competition, banks must at all times strive to be a step ahead of
industry standards. At the same time, they cannot lose sight of
credit risk, a natural by-product of the increasingly complex
relationships in today's dynamic markets.

For some time now, technology has been the key driving force
behind every successful bank. In such an environment, the ability
to recognise and capture market share depends entirely on the
bank's competence to evolve technically and offer the customer a
seamless process flow. The objective of a cash management
system is to improve revenue, maximise profits, minimise costs
and establish efficient management systems to assist and
accelerate growth.
Today a corporate treasurer's dilemma is multifaceted. With more
movement towards the regional/central liquidity management in
the complex structure of rules and regulations, further complication
is caused by taxation issues.

corporate treasurer needs as VOC - Visibility of funds, Optimised

returns on funds, and Control over receivables and payables.
Treasury can face a number of issues related to the slow
movement of funds, locked working capital, loss of float income,
high cost of funds, time consuming reconciliation and manual
processes. In India the cash management business primarily
involves collections and payments services.

Cash Management Solutions Offered

Account reconciliation services

Balancing a chequebook for a very large business can be quite a
difficult process. Banks have developed a system to overcome this
issue. They allow companies to upload a list of all the cheques
whereby at the end of the month, the bank statement will show not
only the cleared cheques but also uncleared ones.

Positive pay
An effective anti-fraud measure for cheque disbursements. Using
the cheque issuance data, updated regularly with cheque issuance
and payment, the bank balances all cheques offered for payment.
In the case of any discrepancies, the cheque is reported as an
exception and is returned.

Balance reporting services

Balance reporting provides help in procuring a company's current
banking information from its accounts. With this service the banks
can offer almost all types of transaction-specific details on
activities related to payment like deposits, cheques, wire transfers
etc. It also helps in an effective and efficient management of
regular cash flow.

Lockbox
Facilitates the cash improvement where, instead of being delivered
to business address, customer payments are delivered to a special
post office (PO) box. It is only the customers' payments that are
delivered in the PO box and the company's own bank collects the
amount and delivers them to the banks of the customers. The bank
of the customers opens and processes the payments for direct
deposit to the bank account. Lockbox contents regularly removed
and processed.
CASH MANAGEMENT AT A GLANCE
 CASH MANAGEMENT

For any organization, cash is the lifeblood that keeps the business
going. That is why, increasingly, Cash Management has been
gaining importance with organizations that view the services as a
crucial part of their corporate strategies.
Cash Management is Efficient Management of cash
(Outflows/Inflows) to improve liquidity and returns while
implementing adequate control and managing risks.

Cash Management can generally be defined as the efficient

utilization of cash through coordinated management of payments,
collections and cash balances. The objectives are to reduce costs,
enhance control and optimize returns as well as reduce the
inventory holdings.

Traditionally, cash management involved personalized services

offered by the bank's staff to the company's treasurer via mails,
telephone, calls, faxes etc or visits to the bank initiated
transactions. But with the advent of computer technology, cash
management services have been automated to a large extent.
Many banks now allow their corporate customers to perform online
inquiries and transaction services (payment, collection and liquidity
management) through PC or Internet via a web interface. With
such a system in place, a company can perform most of the cash
management functions themselves without relying on a bank staff
to act as the executor of their requests
 Cash Management helps the organization in :

Properly timing the disbursements

Some payments must be made on a specified or legal date, such

as Social Security payments. For such payments, there is no cash
management decision. For other payments, such as vendor
payments, discretion in timing is possible. Government vendors
face the same cash management needs as the Government. They
want to accelerate collections. One way vendors can do this is to
offer discount terms for timely payment for goods sold.

Eliminating idle cash balances

Every Rupee held as cash rather than used to augment revenues

or decrease expenditures represents a lost opportunity. Funds that
are not needed to cover expected transactions can be used to buy
back outstanding debt (and cease a flow of funds out of the
Treasury for interest payments) or can be invested to generate a
flow of funds into the Treasury’s account. Minimizing idle cash
balances requires accurate information about expected receipts
and likely disbursements.

Ensuring timely deposit of collections

Having funds in-hand is better than having accounts receivable.

The cash is easier to convert immediately into value or goods. A
receivable, an item to be converted in the future, often is subject to
a transaction delay or a depreciation of value. Once funds are due
to the Government, they should be converted to cash-in-hand
immediately and deposited in the Treasury's account as soon as
possible.
Monitoring exposure and reducing risks

The Banks have the responsibility to use timely, reliable, and

comprehensive financial information and systems. To that end,
banks encourage to improve their cash management practices by
using electronic funds transfer (EFT) whenever cost effective,
practicable, and consistent with statutory authority. So there is a
need to monitor the exposure and reduce the risk.
 Cash Management Services - Indian Scenario

The need for cash management aroused two decades ago in the
mid eighties when the Indian corporates were facing various
problems like the uncertainty as to when funds would be made
available to them, the problem of long transit period between
banking cheques and receiving funds, long period of
administrative work in banking cheques and tracking progress
and reconciliation problems regarding uncertainty of inflows and
lack of details on each credit to the account.
It is important to review the Indian scenario in this regard. As we
are all aware, that the banks’ desire for funds has lost because of
the slowdown. Despite the offer of very soft terms corporates are
refusing to borrow, while bank deposits have been ballooning.
Compelled to service the burgeoning liabilities, but unable to lend
hastily and allow their non-performing assets (NPAs) to grow,
bankers are forced to compete for the handful of safe bets among
their borrowers. Banks chose to use the opportunity to refocus
their activities, seeking clearly defined identities in terms of
services and customer segments. Most of them concentrated on
cleaning up their books by peeling down their NPAs. All of them
are attempting for freezing of costs, improving operational
efficiencies, and boosting productivity. The strategy of the banks,
which are performing well, is to use fee-based services to
maintain their earnings growth. With interest rates falling, non-
interest income is, unsurprisingly, the fastest-growing component
of the banks’ total income. Fee-based activities will complement
though not substitute the core business of lending. With rising
interest rates too, Corporate and others are not willing to borrow,
fee-based services play again an active role in boosting a Bank’s
total income.
It is gratifying to note that a number of banks in India are offering
wide-ranging cash management services to their corporate
clients. All the three categories of banks viz., nationalized banks,
private banks, and foreign banks operating in India are active in
the cash management segment. SBI, PNB, Corporation, ICICI
Bank, HDFC Bank, Centurion Bank of Punjab and ING Vysya
Bank, are some of the active Indian banks in this segment. Citi
Bank, Standard Chartered Bank, ABN Amro Bank, BNP Paribus,
and HSBC are the foreign banks operating in India, which are
prominent among the cash management services providers.
Indian banks are offering services like electronic funds transfer
services, provision of cash related MIS reports, cash pooling
services, collection services, debit transfer services, guaranteed
credit arrangements, sweep products, tax payment services,
receivables and payables management. Foreign banks operating
in India are offering regional and global treasury management
services, liquidity management services, card services, electronic
banking services, e- commerce solutions, account management
services, collection management services, cash delivery
management services and investment solutions. Banks realized
that if they do not offer the services required by corporate
customers it would result in a net loss of clientele, returns and
goodwill. Banks in India need to continuously monitor
international trends in innovations taking place in providing cash
management services and swiftly offer similar services to their
corporate clients.
The Reserve Bank of India is taking a number of initiatives, which
has facilitated the active involvement of commercial banks in the
sophisticated cash management segment. One of the pre-
requisites is to ensure faster and reliable mobility of funds in a
country and to have an efficient payment system. Considering the
importance of a robust payment system to the economy, the RBI
has been taking numerous measures since mid Eighties to
strengthen the payments mechanism in the country. Introduction
of computerized settlement of clearing transactions, use of
Magnetic Ink Character Recognition technology, provision of
inter-city clearing facilities and high value clearing facilities,
Electronic Clearing Service Scheme , Electronic Funds Transfer
scheme, Delivery vs. Payment for Government securities
transactions, setting up of Indian Financial Network are some of
the significant initiatives which highlight the seriousness with
which the Reserve Bank has taken up the reforms in Payment
systems. Introduction of a Centralized Funds Management
System, Securities Services System , Real Time Gross
Settlement System and Structured Financial Messaging System
are on the top priority items of the agenda to transform the
existing systems into a state-of-the-art payment infrastructure in
India by the Reserve Bank. The current vision envisaged for the
payment systems reforms is one, which contemplates linking up
of at least all important bank branches with the domestic payment
systems network thereby facilitating cross border connectivity.
With the help of the systems already put in place in India and
which are coming into being, both banks and corporates can
exercise effective control over the cash management.
 Cash Management Services
In BOI

The menu of cash management services offered by banks is

indeed diverse and tempting. The services broadly fall under
collection services, disbursement services, information and control
services, services related to electronic data interchange
commercial web banking services, sweep services, fraud detection
solutions, global trade solutions and investment solutions.
Collection Services accelerate receipt of payments from sales and
quickly turn them into usable cash in accounts. Disbursement
Services make efficient payments by reducing or eliminating idle
balances in company’s accounts. Information and Control Services
receive the data and provide the management capability needed to
monitor company cash picture, control costs, reconcile and audit
bank accounts, and reduce exposure to fraud. Financial Electronic
Data Interchange is a computerized exchange of payments
between a company’s business and its customers and vendors.
Commercial Web Banking Services give a wide range of services
from any Internet connection, which can help streamline banking
process quickly and efficiently. Sweep Services maintain liquidity
and increase earnings without having to actively monitor accounts
and move money in and out of them. Information reporting
solutions assist companies, which need to receive account data
that is timely, precise, and easy to access and interested in
initiating online transactions. Investment solutions help to minimize
excess balances and maximize return on available funds
Collection of cheques
 Local Cheques & Upcountry cheques at places where
Bank’s branches exist.

 Upcountry cheques at places where Bank’s branches do not

exist.

 Instant credit as per arrangement on any day before

realization.

 Customized MIS, including outstanding entries at any time.

 Pooling is possible ,including multiple pooling.

 Single point reference for any detail/data.

 Courier Pick-Up from Customer’s Collections.

Post Dated Cheques Collection:

 Post–dated cheques (PDC’s) vaulted, dispatched to drawee
center three days in advance collected.

 On due dates and credited to account on due date or next

day.

 Tracking of customer’s invoices with PDC’s possible.

 Auto Reconciliation.
 Unpaid/Returned PDC’s also properly tracked and
accounted.
 All other advantages of collections.

Payments
 Centralized or Remote printing of payments (Cheques/Pay
Orders/DDs/IWs/DWs/Ros-with
 facsimile signatures)
 Printing of Cheques on continuous stationery.
 Interface with RTGS/NEFT/ECS.(Linkage to e-modes)
 Correspondent Banking
 Issue of DDs by branches*of Correspondent Bank.
 Funding before issue/upon payment.
 Auto Reconciliation.
 17
 Genera
 l:
 Customized MIS of data in whichever way desired.
 Interface between Finacle and CMS Software
CANARA BANK
CORPORATE CASH MANAGEMENT SERVICES
(CCMS)

The speedier Corporates are, its easier for them to address the
challenges of globalization. Corporate Cash Management Services
(CCMS), an innovative service offered by Canara Bank for speedy
collection of cheques and other instruments, places Corporates on
a faster- track. In more ways than one-such as definite funds flow,
better cash management and deployment of funds, better
monitoring of funds flow, optimum allocation of funds and effective
planning of investment functions

WHAT IS CCMS :

 An innovative service specifically tailored to meet the

requirements of
Corporates/Business houses/Partnership firms.

 Speedy collection of outstation cheques and other

instruments.

Pooling of funds at designated centers.

 More importantly, providing funds to the Corporates as per

their need.
 •Customized MIS reports.

WHAT CANARA OFFER :

Under CCMS they offer the state of the art technology products.

 SUPERFAST SERVICE - Local

cheque collection services

 FASTRACK SERVICE - Upcountry

cheque collection services

 BULK COLLECTION SERVICE - Bulk

cheques collection services

Under 'SUPERFAST SERVICE', agents or offices of Corporates

can deposit the cheques to be cleared in the local clearing and
funds will be pooled at any pooling branch designated by the
Corporates.
Under 'FASTRACK SERVICE', agents or offices of Corporate can
deposit the cheques drawn onoutstatio n centers and proceeds will
be pooled at any pooling branch designated by Corporate. Under
'BULK COLLECTION SERVICE', agents or offices of Corporate
can deposit their bulk (large number) instruments of small value to
be cleared in the local clearing and funds will be pooled at any
pooling branch designated by the Corporate
 PRIVATE BANKS

ICICI BANK
Collection Products
Local Cheque Collections

 One of the largest network spanning over 488 locations.

 Courier pick-up can be provided.
 Process flow can be structured to suit the company’s
requirements.
Upcountry Cheque Collections

 Coverage of over 3919 locations with tie-ups with

correspondent banks
 Capability to process cheques drawn on any location in
India.
 Assured credit given with funds pooled at any ICICI Bank
location. Instrument level tracking of
 instruments to ensure faster realization.

Cash Collections

 Cash Collection from dealers and business associates on

behalf of companies.
 Cash pick-up facility in 28 locations.
 Customized MIS for cash collection.

Payment Products
Anywhere Banking
  Cheques issued payable at par at various ICICI Bank
locations .
 Single account to be operated at any ICICI Bank branch for
this facility.
 Ideal for small value, large volume payments.

Fund Transfers

 Online transfer of funds between accounts maintained with

any branch of ICICI Bank.

Issue of Bulk Demand Drafts/ Pay orders

 Capability to issue Bulk Demand Drafts/Pay Orders on

various ICICI Bank and correspondent bank locations
 Capability to accept online requests from the customers
 Capability to print beneficiary advice and despatch
 Remote printing facility
 Simple process with a low turnaround time and delivery .

Cheque Writing

 Cheques can be issued on behalf of companies.

 Capability of processing large volumes of cheques in a
short turnaround time.
 Capability of printing facsimile signatures.
 Capability to print beneficiary advice and despatch.
 Ideal for bulk payments such as pension payments, gratuity
payments.

At Par Payments
  Services can be availed for the ‘at par’ payment of dividend
warrants /interest warrants/ refund
 order/redemption payments/brokerage payments
 Simplified and streamlined procedures ensuring smooth
process flow Online validation of
 instruments before payment ? Regular reconciliation
statements provided by the bank
Covering over 100 major locations through own network (90%of
the payments) Arrangement with correspondent banks thereby
covering over 200 locations through instruments based payments •

 ECS credit facility at all available locations.

HDFC BANK
Payment Services
HDFC Bank can structure a number of Payment products to suit
the corporates needs.

Payable at par chequebook

This product enable the corporate to issue local cheques at all
HDFC Bank branch locations through one chequebook thereby
eliminating the hassles of obtaining demand drafts or opening
current account at each location.

At par facility for statutory payments

HDFC Bank branch locations - cover over 80% of shareholders /
beneficiaries for most of
their clients. Hence reconciliation, query resolution and pricing are
superior.
In order to provide adequate coverage, HDFC Bank also provides
100 locations of their correspondent bank. However, there is
sustained reduction in dependence on correspondent bank due to
continuously increasing branch network.
The maximum limit on warrant can be mutually agreed upon -
substantially reducing draft costs and efforts. It also has Ability to
meet the customer’s requirement of large number of drafts in a
short time at very competitive rates.
An At Par chequebook is provided on branch locations, after
revalidation thereby eliminating
the need for Demand Drafts on branch locations.

Pay Quick

 This product caters to the customers requirement of large

volume of Demand Drafts/Pay orders
at over 1617 HDFC Bank and correspondent bank
locations.
 It provides the Option to forward data in soft copy form
(floppy) in a secure environment.
 It gives Easy data transferability from the Corporate office to
HDFC Bank.
 Multiple payment instructions through one file.
 Upload option for bulk issuance resulting in quick and error
free delivery.
 Payment instrument to include payment details.
 Facility to mail to beneficiary directly. Also the committed
courier turn around time enables you to make payments as
close as possible to the payment date - resulting in additional
cost savings.
 Various value added MIS
 One Stop dedicated Service Desk at our Centralized Cash
Management Operations Unit
 for prompt attention to your queries
 Extensive coverage - over 500 locations.
 Status of DD - paid / unpaid - can be provided on HDFC
Bank location on a case-to-case
 basis.
Collection services
HDFC Bank’s Collection services are aimed at ensuring quick
realization of local and outstation cheques and providing the funds
in a central collection account. This enables the corporate to
manage their funds flow position most effectively from a central
location. This service can be availed with/without a current account
with HDFC Bank.

Local cheque collection

This product provides quick realization of local cheques deposited
at the same location. This product is available at all locations of
HDFC Bank ("SPEED") and over 292 locations of their
correspondent Bank ("RAPID").

Outstation Cheque Collections

This product enables the customer to deposit outstation cheques
drawn on any HDFC Bank location at any HDFC Bank location
("SPRINT"). Similarly, cheques drawn on over 928 locations of
their correspondent bank ("EXPRESS") can be deposited at any
HDFC Bank locations.

Transfer Cheque Collection

This product provides quick realization of local/outstation cheques
drawn on any branch of HDFC Bank Ltd. This product is available
at all locations of HDFC Bank ("HDFCTRF") locations.

Clean collection
Cheques drawn on any locations, which are not covered, by HDFC
Bank or their correspondent bank are also collected at any of their
locations and proceeds credited to Customers account as soon as
credit is received by HDFC Bank.

HDFC Bank's comprehensive MIS includes :

 Daily report of deposits made at various locations.

 Location wise report

 Credit Forecast report

 Monthly cumulative report - date wise / location wise.

 Monthly charging statement.

 Monthly cheques return statement.

 Customized reports as per mutual agreement

 Framework for effective Cash Management
Service
Companies seek to achieve synergies by implementing a
simplified account structure and through rationalizing the number
of banks used. In advising companies on the optimal account
structure, it is important to bear in mind the nature of company’s
funds flows. The aim is to maximize control, efficiency and returns.
Banks need to work with its clients to ensure that arrangements
are in place to assist them in maximizing returns from an otherwise
idle fund. Experience of local banking regulations and market
practices can ensure client’s preferred structure. Greater
challenges lie in tying together multiple accounts into a cohesive
structure to manage liquidity efficiently, often across numerous
time zones and currencies. To meet the needs of international
corporate and institutional clients, banks should have a wide range
of customized products and services. Often companies should
maintain multiple banking relationships for their cash management.
Movement of funds between accounts across banks is generally
inefficient, costly and time-consuming. Cash status is not readily
available, often causing unnecessary usage of overdrafts or return
of issued checks. Untimely payments can also result in penalty
and other charges. With multiple accounts, account reconciliation
is usually difficult to be kept current, making control virtually
impossible. So for effective cash management there is a need for
multiple banking relationships which is often due to the lack of
comprehensive service offered by a bank, the difficulty in
accessing particular services of a bank, or the varying degree of
efficiency across services of a bank. Many companies, including
medium-sized enterprises, are now implementing Enterprise
Resource Planning (ERP) systems to help manage the accounting
process and gain better control of their cash management.
However, what several have found is that while internal processes
are more automated, the number of staff required to support their
cash management operations has not reduced. Without a
comprehensive cash management solution from a bank, business
finds it difficult to
reach the optimal operational and working capital efficiency level.
Corporate treasurers cannot afford to spend time worrying about
routine payments and collections. So banks have to help clients to
successfully handle the large volumes of corporate client
payments.
So in today's competitive market place, effectively managing cash
flow can make the difference between success and failure. And
so the Banks offer a full range of receivables and payment
services to meet the complex cash management needs.
Payments received from their buyers and made to their suppliers
are efficiently processed to optimize their cash flow position and
to ensure the effective management of their business' operating
funds. The flow of receivables and payables can also be seen
through the web solution.
 Cash management process

Collections Payments
Benefits and features of cash management
service
 Benefits & Features of cash management
services
Cash Management services are availed benefits to all from the
manufacturer, retailer, logistics to the supplier as well as global
customer. The following are the benefits provided by various
banks.

Nationalized Banks
Bank has been always aiming to create values for its customers.
Looking beyond traditional banking, the Bank introduced an array
of other products and services to different customer segments.
Cash Management Services is one such solution offered by the
Bank to the Corporate customers. Every organization has
receivables to collect from its dealers/ depots/ customers. Every
revenue collected by the organization gets paid in one form or the
other. Collection And Payment Services (CAPS) provides
customized solutions to corporates' needs in liquidity
management.

The PRODUCT RANGE under the umbrella of CAPS, provide

one point solution to corporates cash
management requirements in the area of receivables and
payables management of the corporates.

The essence of CAPS is Speed, Accuracy, and Efficiency.

Features of CAPS, - evolved in response to corporates' needs -
aim at providing significant TANGIBLE BENEFITS to corporates.
Collection And Payment Services are offered and managed by
specialized exclusive Special Business Units in the form of CAPS
BRANCHES, Payment Processing Centre and FCS HUB using
the state of the art technology.

CAPS - Benefits to Corporates

CAPS ensures not just unlocking of funds in transit, it enhances

liquidity in the Corporate’s system and enables effective funds
management. All these at a very attractive cost structure reducing
the burden on the corporate.
Detailed MIS along with payouts and customized MIS of
corporate needs in soft form either through Mail, floppy, CD ROM
and through Internet eliminates all the hassles of reconciliation
and enables onward integration into corporate system.
Value addition such as courier pick up from clients’ desks enables
operational convenience Collection of service charges at monthly
rests as opposed to check to check charges deduction provides
the operational comfort and reconciliation ease.
Unique payment products under CAPS makes payable
processing very simple with tremendous comforts in the areas of
dispatch of payout instruments, tracking, paid/unpaid status,
confirmation on payouts etc.
 Benefits and features of cash management
services in private banks

ICICI BANK

BENEFITS TO CORPORATE
ICICI Bank is a leading player in the field of Cash Management
Services (CMS) market.
Their Cash Management Service is technology driven with a
versatile software, hardware and network support. Customized
daily transaction reports and web-enabled reports are offered
regularly to their clients.
CMS solutions are designed to be company-specific allowing a
corporate to efficiently
manage its treasury. Cash management products covers both.
Collections and payments.
ICICI Bank's Cash Management Services also helps the customer
to make optimum use of their working capital, leveraging the float
between faster collections and just-in-time payments.
Their vast network across the length and breadth of the country
uses superior technology based solutions to deliver speedy&
efficient payments. Their solution is to customize to customer
needs.
So the customer can leave the burden of bulk demand drafts and
pay orders, dividend and interest warrants, fund transfers, cheque
writing and more to ICICI Bank. They will also get customized daily
transaction reports and online reports for complete MIS.
At Par Payments – I safe Pay
In this the customers can Make payments through dividend
warrants, interest warrants, refund orders, redemption warrants,
etc. These warrants are payable at par at the centre/locations
selected by them. The customer can avail of this service through
over 300 ICICI Bank locations and 200 correspondent bank
locations. They also get monthly reconciliation statement showing
the account status and unpaid list of warrants on a monthly basis.
I- Safe Pay offers them a complete solution for executing their
payments.
Through different modes including Warrants, Demand Drafts / PO,
ECS, Direct Credit, Swift
Remittances and Foreign DD.
HDFC BANK

Benefits to Corporates
If the organisation is multi-locational, managing outstation funds
collections and payments can often be time consuming and
expensive. Delays of days or even weeks in realizing outstation
cheques, constant tracking and follow-up to transfer funds from
outstation collection accounts, uncertainty and delays regarding
information on the fate of cheques etc., are common.
At HDFC Bank they offer a comprehensive range of Collections
and Payments solutions under their Cash Management Services
(CMS) umbrella to meet Corporate needs and put them in control
of their cash position.
 HDFC Bank's Cash Management Services will
enable the customer:

 Lower Interest Costs

Their collection services enable the customer to receive funds
in their main (concentration) account with the bank with a minimum
transit time thereby reducing interest costs.

 Improve Liquidity
Saving on transit time enables the customer to realize cheques
and use funds earlier and therefore gives them enhanced liquidity.

 Better Accounting and Reconciliation’s

Detailed information on cheques deposited are made available
on a daily / weekly basis/periodically thus simplifying accounting,
reconciliation and query resolution. HDFC Bank also provide
customized MIS as per the customers requirements

 Achieve Overall Operational Convenience

HDFC Bank's Collection Services enable the customers to

derive convenience in banking operations thereby facilitating
management of cash positions through a central treasury. Also,
the same may be used for improved control over different business
segments. The advantages of their Collection products can also be
availed without opening a Current Account with HDFC Bank.
  Interconnectivity

Experience real-time online banking on E-Net with your CMS

account. E Net is an Internet based software, which allows you to
view current a/c balances, download statements, view CMS
collections, effect payments / receive payments online, plus a host
of other activities.

 Centralized Service Desk

HDFC Bank provides a dedicated service desk to ensure that
the queries are resolved quickly and efficiently.
 CONCLUSION
The network, technology and the corporate relationship services
provided by all the three sectors are highly sophisticated and good
but the scalability, marketing provided by the Public sector is low in
terms of the Private and MNC sector. As well as the services
provided by the public sector is not fairly good and up to the
standard.
As Cash management is constantly changing to meet the needs of
the corporate treasurer. The challenge for both corporation and
provider is to keep up with developments, technology, changing
regulations and fitting these in with normal business. A changing
regulatory environment, new technology and mergers that expand
the scope of traditional banking are redefining the traditional
treasury management paradigm for both banks and corporations.
Electronic commerce is evolving far beyond simply ordering goods
online or buyer-to- supplier commerce.
In a vast country like India Providing Cash Management Services
do posses a challenge to the Cash Manager as well as the banks.
Considering the present Indian scenario, where Cheques are the
basic form of payment and cheque clearing takes a long time, cash
management services need to devise innovative methods and
means to expedite the clearing to benefit the corporate customer.
As the Indian economy becoming an open market economy,
residents may maintain accounts in other countries and non-
residents may hold In a vast country like India Providing Cash
Management Services do posses a challenge to the Cash
Manager as well as the banks. Considering the present Indian
scenario, where Cheques are the basic form of payment and
cheque clearing takes a long time, cash management services
need to devise innovative methods and means to expedite the
clearing to benefit the corporate customer. As the Indian economy
becoming an open market economy, residents may maintain
accounts in other countries and non-residents may hold accounts
in India. As a result, Indian treasurers may often find themselves
managing cash across geographies and time zones. In India the
transaction types run from the classic paper cheque to the latest
Internet initiated electronic payment. Corporations initiate and
receive paper-based transactions, as well as high value and low
value electronic transactions on a daily basis. Expectations from
new services may not eliminate or fully replace the older traditional
services. Change will be gradual but, probably, it will be firm. Fee
structures for cash management services in India vary from bank
to bank and also from customer to customer. Many banks price the
services based upon the overall relationship, especially for multiple
product solutions. As Indian banks become more consultative and
total solution- oriented rather than product-driven, pricing will
become even more customized. Corporate treasurers will consider
the amount they can save on banking fees and the level of
efficiency in their departments as a sequel to the new cash
management services. After they have negotiated the best
possible price, treasurers then focus on the return on excess
balances. They are no longer content to leave large balances in
return for no fees charged. Treasurers will look for true partnership
with banks to build systems that will take them into future.
Swot analysis of cms market
 Importance of Cash Management for a
Corporate Entity
There is a need to put in place a specialized cash management
system by Corporates. Good Cash Management is a conscious
process of knowing when, where, and how a company’s cash
needs will occur; knowing what the best sources for meeting
additional cash needs; and being prepared to meet these needs
when they occur by keeping good relationships with bankers and
other creditors. Cash management results in significant savings in
time decrease in interest costs, less paper work and greater
accounting accuracy. Proper cash management creates more
control over time and funds; provides timely access to information;
enables easy employee related payments; supports electronic
payments; produces faster electronic reconciliation; allows for
detection of bookkeeping errors; reduces the number of cheques
issued and earns interest income or reduces interest expense.
Corporations with subsidiaries worldwide can pool everything
internationally so that the company can offset the debts with the
surplus monies from various subsidiaries. The end result will
transform treasury function as a profit-centre by optimizing cash
and put it to good use. Creative and pro-active cash management
solutions can contribute dramatically to a company’s profitability
and to its competitive edge. The ultimate purpose of proper
management of liquidity, needless to emphasize, is to improve the
overall productivity of funds.
How Corporate Select a Bank for Sourcing Cash Management
Services?
Probably, it is important to consider what the companies expect
from their bankers in this regard. It is normally the client-bank
relationship, which is a main consideration in choosing a bank for
cash management. Pricing, obviously, is a very dominant factor.
Making a choice between the local banks and the more highly
priced foreign banks usually depends on how cost savings are
presented by the banks. Multinational corporate with complex
treasury operations admire their respective banks’ expertise and
ability to offer creative solutions. There are some common
requirements related to basic cash management systems.
Flexibility, reliability, security and stability have been cited as vital
parameters for any electronic banking system. The systems should
be tailored to provide pertinent reports and the ability to upgrade
easily in future. The technology should allow real-time cash
management with strategic banking partners. It should integrate
easily with legal framework in place. It should lower operating
costs and resolve disputes quickly by providing secure and legally
enforceable audit trails. It should be capable of reducing risk of
fraud in electronic funds transfers and other treasury activities. It
should also be able to use a low-cost public network infrastructure
like Internet, which eliminates the need for dedicated leased lines.
For instance, availability of requisite bandwidth for Internet
connection is still a problem faced by various financial institutions.
With a highly technology savvy there are several exciting new
opportunities for both user and provider in the cash management
arena. Cash management worldwide is constantly evolving to meet
the needs of the corporate treasurer, take advantage of new
technology and support customers as they move into new markets.
The challenge for both company and service provider is to keep up
with developments in technology and changing regulations and
espouse them to their normal business. The key to success will be
active partnerships between corporations and their providers as no
one will be able to keep up with all developments on their own.
Because of the mounting importance of fee-based financial
services, all banks need to fine- tune their strategies, if they want
to harness the potential in this area. They need to appreciate the
dynamics of the new fee-based market, which is driven by the
growth of the Internet and inter-connect applications.
But it won’t be easy for all banks to capture their share and profit of
the swiftly expanding fee-based market. Taking advantage of the
opportunities and avoiding the threats of unprofitable products,
insufficient customer service, and diverse IT applications entails an
understanding of the market place, the needs and expectations of
the customer and of course the competition. It is an important point
to note that offering fee-based services is no longer a choice today
to the beleaguered banker. It is a desirable compulsion to thrive.
Managing cash in the emerging milieu will require a new mind-set
of banker and his client.
With a comprehensive cash management solution, companies are
able to compete with low operating and administrative costs, with
more focus on better control of their cash flow and efficient use of
working capital .The right solution can even enhance the
relationships with customers and suppliers by helping them to be
more efficient and reducing non-productive activities .It is therefore
important to select a cash management bank that offers a
complete and proven solution to deliver the results the customers
expect to achieve.
 WHAT IS CREDIT APPRAISAL ?
Credit appraisal is a holistic exercise which starts from the time a
prospective borrower walks into the branch and culminates in
credit delivery and monitoring with the objective of ensuring and
maintaining the quality of lending and managing credit risk within
acceptable limits. Details of it will be given under the title Credit
Policy.

DIMENSIONS OF CREDIT APPRAISAL

Management Appraisal
A lot of attention has to be paid to this area, for this is one of the
long term factors affecting the business of the concern. Does the
management have enough experience in the line? What is its track
record? What are the antecedents? Introduced to us by whom?
These are some of the questions that need to be answered before
we can take up any kind of exposure to the concern.

TECHNICAL APPRAISAL
What is the status of technology used? Has a prototype been
developed of the product? What could be the possible economic
life period of the present technology? Is the venture technology
feasible?

COMMERCIAL APPRAISAL
The business has to be commercially viable for us to proceed
further. Is there enough demand in the market? Is the product
accepted in the market? How many substitute products are there?
What about entry and exit barriers? Is there scope for further
growth?
FINANCIAL APPRAISAL
Does the promoter has the capacity to raise finance---- both own
equity and debt? What are the sources of margin? Will the
business generate sufficient funds to service the debt and other
Stakeholders? Is the capital structure optimal?

ECONOMIC APPRAISAL
What is the breakeven level? Will the business post positive net
present value through its economic life? What is the level of cost
/benefit? What is the Internal Rate of Return (IRR)? Will the cost of
funding and operations be well below the IRR?

Answers to all these questions would fall into place in the jig-saw
of credit appraisal when we investigate a credit proposal from the
point of the six C’s viz. Character, Capacity, Condition, Collateral
and Cash flow.

As a prudent Banker the following areas need to be particularly

looked into :

CHARACTER
-Antecedents-introduced by whom- Is it a takeover account? In
which case, what does the status report say?- Background
educational professional socio –economic political- Initiative and
Drive.

CAPACITY
- Experience in the activity – track record – planning,
budgeting and review handling –production capacity
capacity utilization- professional capacity to handle men,
 material, money and minutes – capacities to handle
contingencies and crises.

CAPITAL

- Extent of stake in business

- Ability to raise finance – both owned equity and debt
- Ability to inspire and sustain investor confidence
- Ability to absorb losses – expected and unexpected
- Structuring and budgeting capital.

CONDITION

- Condition of economy – growing, stagnant or depressed

- Condition of industry – sunrise, Greenfield or sunset
- Numbers of competitors
- Substitutes in the market
- Demand vs. Supply
- Government policies and regulations
- Status of technology
- Availability of manpower, material other resources
- Utility services
- Scalability of activity
- Pollution control and effluent treatment

COLLATERAL
-Risk perception and evaluation

-Financial parameters

• Debt/equity ratio
 • Asset Cover
• Interest Cover
• DSCR

-Availability, suitability and chargeability of security –MAST

principle

CASH FLOW
-Pattern of cash generation

- Liquidity risk

- Break-even analysis

• DCF Technique
• NPV
• IRR
• PV Index
• Payback period

-Commercial and economic viability

-Working capital management

When all the six C’s are considered thoroughly, credit appraisal
becomes comprehensive.

As a conclusion process of credit appraisal would begin with

the selection of the proponent. It would involve appraising
the background of the proponent/management, commercial,
technical and financial appraisal. Appraisal of credit facilities
would comprise two distinct segments :

a) Appraising the acceptability of the customer.

 b) Assessment of the customer's credit needs.

STAGES OF CREDIT APPRAISAL

1. Interview with the proponent and obtention of application on

Bank’s prescribed format
2. Adherence of KYC norms stipulated by Reserve Bank of
India
3. Obtention and verification of documents/financial
statements according to type of credit facility/ies required as
per Bank’s norms
4. Inspection : Pre sanction Inspection is done by Bank’s
Officials viz. inspection of borrower’s residence, making
inquiries from his area and collect market reports, inspection
of proposed principal and collateral securities. In case of
mortgage of property proposed, a search report is obtained
from Bank’s approved advocate for last 30 years regarding
non-encumbrance of the property, dues on the property,
genuineness of title, peaceful possession and market ability
of property. To ensure the market and distress sale sale
value of the property, Valuation report of the property is also
needed from Bank’s approved Architect.
5. Preparation of credit proposal : The credit proposal contains
the complete information about the proponent’s background,
appraisal of financial & managerial status, technical and
economic viability of the activity and future prospects.
 Financial analysis is exercised to justify the required financial
assistance/ to arrive maximum permissible finance as per
Bank’s norms. This Financial analysis is done according to
Bank’s/RBI norms for difference kind of facility/ies. In
specified cases SWOT analysis (strength, weakness,
opportunity and threats) is also done for the proponent’s and
Bank’s financial safeguard. It is responsibility of the
processing officer to mention all the facts relating to
proponent, his/their financials , security proposed and all the
terms and conditions.
6. Sanction of credit proposal : The sanctioning authority goes
through the credit proposal and it is his responsibility to
ascertain the facts of the proposal. If needed he himself
make physical inspection and change/modify the terms and
conditions and finally give sanction within stipulated time
frame of the scheme.
7. A sanction letter is given to the proponent. The sanction
letter contains the type and size of facility and margin
stipulated with all terms and conditions including rate of
interest and charges, Insurance of the proposed security
and periodicity of inspections etc. which is duly
acknowledged by the proponent/s.
8. If the proponent agrees the terms and conditions stipulated
by the bank, he/authorized persons have to execute the
security documents before the Bank’s authorized officer and
finally the account is opened to disburse the facility.
9. After disbursement post sanction inspections are carried out
by the Bank’s official from time to time (as stipulated per
terms of sanction) to ascertain the utilization of funds, for
safeguard of the advance and Bank’s interest in the security.

CLIENTELE

Bank being one of the largest public sector Banks is required

to service a varied clientele having diverse requirements.
This include lending to the poorest of the poor under DRI
lending, other priority sector lending, individuals, partnership
firms, associates of persons, corporates, trusts, large
business houses and groups, undertakings owned by
Central/State Governments, etc.

Having regard to the changing pattern of the lending and the

need to improve return to the stakeholder we need to have a
judicious mix of clientele. In respect of priority sector lending
where there are laid down parameters bank would be guided
by the same. In respect of the others it would be the
endeavour to build up a sound asset base by lending to high
Net worth individuals/firms/corporates with credit rating of
‘AA’ (LC3 to LC4) and above. To ensure that the overall
quality of the Bank's credit exposure is good, it is desirable
that a major portion of the portfolio is in respect of customers
(having exposure of Rs. 1 crore and above) enjoying good
health i.e. risk rating not below “A” (LC5 to LC6). This may be
reviewed annually. It shall be the endeavour of the Bank to
reduce the proportion of non-performing assets to be as low a
level as international standards demand.

Bank considers lending to retail sector as very important in

order to increase the customer base and diversify the
portfolio. Emphasis on retail advances such as personal
loans, education loans, housing loans, mortgage loans etc. is
expected to result not only in better interest spread but is
also expected to improve the overall quality of credit.
Increasing of customer base will benefit the Bank in cross
selling of other products. Separate operational guidelines on
retail sector products have been brought out by the Bank.

Small & Medium Enterprises (SME) Sector constitutes the

growth engine of the economy. The SME lead to
entrepreneurial development and diversification of the
industrial sector, and also provide depth to industrial base of
the economy. With the Services sector dominating the SME
and MNCs outsourcing their various requirements to Indian
service providers, there is tremendous scope for SME
finance. Accordingly, Bank decided to give increased thrust
for lending to SMEs. There is a separate policy for financing
SMEs.
 MARKETING

It is proposed that Bank should gradually move over to the

system of marketing credit by an exclusive team trained for
this purpose. This shall be initially put in place in
metropolitan cities and larger towns, and depending on our
experience, extended to other places. It is proposed to cover
the top 50/100 locations (cities, towns, etc.) which account
for about 80% of the Bank's business. Further, separate
teams may be chosen for marketing corporate products and
retail products. The function of marketing team will continue
till obtention and provision of adequate data, providing
indicative inputs on interest rates, charges, securities,
submission of proposals, etc. The processing and monitoring
functions will be assumed by the branch, which will be
acquiring the business. Bank has established marketing
teams at select centres for marketing of various products
including retail credit and credit to SMEs.

It is also proposed that the Bank should adopt a relationship

approach in marketing, offering the whole basket of products
to a client, in particular medium and large corporates. To
this end, the Bank has already posted Relationship
Managers to handle specific clients in its Corporate Banking
Branches.

Credit Delivery through Bank's branches

The Bank may adopt a segmented approach to deliver credit
through specialized/specially identified branches, in order to
develop a focused approach that will develop credit appraisal
skills for speedy credit decisions and disposal of credit, as
given below :
• C & P Branches : These branches will dispense
loan against fixed deposits and other paper securities,
personal loans including Consumer Loans, Housing
Loans, Priority Sector Credit including transport
operators, retail trades, small businesses,
professionals & self employed persons, educational
loans, etc.
• Housing & Personal Finance Branches :
Housing Finance and Consumer Loans.
• SME Branches : All the existing specialised SSI
Branches are redesignated as SME Branches. These
SME branches are required to cater to the credit
requirements of SME segment in these centres while
continuing extending other advances. These branches
would also have adequate operational flexibility to
extend finance/render other services to other
sectors/borrowers.
• Agri-Hi-Tech Branches : Hi-Tech Agriculture
projects, large volume agriculture businesses.
 • Main Branches in cities/towns : Trade finance,
small and medium enterprises – working capital, term
loan requirements.
• Corporate Banking Branches : Large volume
asset portfolios above the cut off limits specified in this
regard from time to time. This limit may be fixed
differently for different sectors depending on potential
for such business. If necessary, Large Corporate
Branches may be established in various cities to cater
to the specific credit requirements of Corporates. Mid
Corporate branches may also be established for
providing focus on this segment. The cut off limit for
mid corporate size may also be fixed from time to time.
These branches will cater to the needs of borrowers
with total limits (Fund based + Non-Fund Based) of
more than Rs.25 crores. The existing corporate
branches in these cities will cater to the needs of Mid
Corporate borrowers viz. total limits (Fund based +
Non-Fund based) of more than Rs.5 crores and upto
Rs.25 crores.
The category for the above segmentation is proposed to be
decided by the respective Zonal Manager.
SEGMENTED APPROACH TO LENDING
 The present approach in respect of
delegation of powers to different authorities in respect of
various credit facilities offered to customers with modification
thereon effected from time to time will continue. Additionally,
it is also proposed that large volume asset portfolios should
necessarily be assessed/parked either at the identified
larger branches (identified by the ZM for this purpose) or the
corporate banking branches only as per the cut-off limits
specified for Corporate Banking Branches from time to time.
Wherever needed the Zonal Offices will extend support
through the Large Borrowers’ Division to the main branches
as well as specialised branches such as SME Branches,
Personal & Hosing Finance Branches, Overseas Branch,
Agri-Hi-Tech branches etc.

 While all branches may consider requests within

their delegated powers for any of the credit products of the
Bank, we propose that specialised branches may be
developed for focussed lending to various segments. This
would include Commercial & Personal (C & P), Housing
Finance, Housing & Personal Finance, SME Branches, Agri-
Hi-Tech, Overseas branches and Corporate Banking
Branches (both Large and Mid corporate Branches) to
consider requests in their specialised areas. Further, certain
categories of finance requiring specialised skills are
restricted, as per policy guidelines for financing, to certain
Branches/ Centres like Film, Infrastructure Projects and
Diamond business. This may be considered for appraisal at
only these Branches/Centres.

 This segmented approach is expected to provide both

market and customer focus for ensuring better business
development, better development of expertise and better
customer satisfaction. Towards this end, it is proposed to
develop further on this segmented approach.

 The entire credit is identified into five strategic business

units headed by separate General Managers for giving
focussed attention viz.

i) Large Corporate Credit (Rs.25 crores and above)

ii) Mid-Corporate Credit (Rs.5 crores to Rs.25 crores)

iii) SME Credit (upto Rs.5 Crores)

iv) Retail Credit

v) Agriculture Credit

However, presently Credit Policy would be applicable to

borrowers in Large Corporate Credit, Mid-Corporate Credit
and Retail Credit.
 CREDIT DELIVERY

Types Of Facilities
The types of facilities would comprise of Term Loans,
Demand Loans, Overdrafts, Cash Credits, WCDL, Advances
against Bills(both DP/DA) with/without L.C., Channel Credit,
Invoice Discounting/financing, Discounting of future cash
flows/rent receivables and Line of Credit, L/Cs, Guarantees,
Acceptance facilities, CPs, Cash Management Services etc.

Modes for delivery of Credit facilities

The credit requirements may be dispensed by any one of
following modes -
A) Sole Banking Arrangements;
B) Multiple Banking;
C) Consortium Lending or
D) Syndication

Sole Banking
In "AAA" (LC1 to LC2) and "AA" (LC3 to LC4) rated
accounts where we are sole bankers, we should endeavour
to retain such accounts. Borrowers shall normally obtain our
prior approval in case they would like to switch over to
Multiple Banking Arrangement or consortium lending.
 Whenever a customer's credit requirements exceed 50%
of the exposure ceiling or Rs.100 crores whichever is higher,
the borrower would be encouraged to scout for another
Bank/institution to share the credit facility/ies under Multiple
Banking, Consortium or syndication arrangement.

As a matter of corporate policy, we may emphasis

financing accounts of "AAA" (LC1 to LC2) and "AA" (LC3 to
LC4) borrowers under sole banking arrangements (subject to
our exposure ceilings). "A" (LC5 to LC6) rated borrowers
shall continue to be financed in the normal course of business
as per Bank's policies.

Multiple Banking
Where we are the sole bankers and the borrower
desires to avail of credit limits from other bank/s without a
formal consortium arrangement, the reasons for the borrower
wanting to shift to another bank should be ascertained and
recorded.
We may decide to permit the borrower to bank
elsewhere provided the borrower agrees to furnish from time
to time details of the various facilities availed from other
bank/s and also provided that the total working capital limits
availed by the borrowers are within a 10% tolerance of the
working capital limits assessed by us. Acceptance of distinct
and separate security or otherwise may be considered by the
sanctioning authority on the merits of each case. In such
cases, Bank's exposure for working capital needs should
normally not exceed 75% of the total working capital
requirements of the borrower. Where it exceeds this limit,
justification for the same shall be mentioned in the appraisal
note.

Consortium Lending
Banks have been given the freedom to frame the ground rules
for lending under consortium arrangement. The ground rules
are given in Annexure I. Addition/ modification in this regard
may be considered and approved by the Credit Risk
Management Committee. In case of accounts where we are
members, we may accept the rules framed by the leader,
provided they do not jeopardise Bank's interest and generally
conform to Bank' policies.

Syndication
A syndicated credit is an arrangement between two or more
lending institutions to provide a credit facility using common
loan documentation. We shall encourage financing under
such arrangements. Bank will also act as syndication leader
whenever such opportunity is spotte
 CREDIT THRUST

Priority Sector Lending

The Bank has traditionally been proactively involved in

aggressively lending to the priority sector to fulfil the social
obligations enjoined upon the nationalised sector. The
experience in respect of quality of assets, recovery record,
earnings and expenditure available under this sector is quite
satisfactory. Thus, the Bank will always endeavour to meet the
targets prescribed by GOI/RBI in this regard from time to time.
Presently the same being as follows :

⇔ The priority sector target of 40% of net Bank credit.

⇔ Exposure to agriculture not less than 18% of net
Bank credit and direct finance to agriculture should
not be less than 13.5% of Net Bank credit.
⇔ Exposure to weaker section not less than 10% of
net Bank credit.
⇔ Export credit target of 12% of net Bank credit.
⇔ DRI not less than 1% of the previous year's total
advances.
⇔ Housing loan targets set by RBI from time to time,
presently 3% of the incremental deposits of the
previous year.
⇔ Lending under Government sponsored schemes
and schemes formulated by KVIC, SIDBI, etc.
 The Bank has in place well laid out policies giving the
entire gamut of Priority Sector Lending including thrust
areas, strategies to be adopted etc. which are reviewed and
revised periodically depending upon the market scenario.

However, to ensure that the lead established by the

Bank in this area is maintained and to continuously garner
viable business under this head, with minimum additional
burden on staff cost, the following areas are identified as
thrust areas :

• Maintain/achieve targets laid down for financing

agriculture under special Agricultural Credit plan by
increasing our finance for production as well as
investment credit viz. Irrigation, land development, farm
mechanisation, allied activities, post harvest
management and processing and other direct
advances under agriculture crop loan, loan for farm
mechanisation, dairying, cold storage units and indirect
advance under agriculture.

• Under Priority Sector finance we may give thrust

for Housing, rural infrastructure, construction of
godowns/cold storage units, tie up with corporates,
advance against ware house receipts.

• We may generally consider extending short term

finance while considering medium term loans to
farmers and vis-à-vis to maintain continued customer
relationship.
• We may encourage issue of Kisan Credit Cards
to enable quicker dispensation of credit, whilst
strengthening our short loan portfolio to agriculture and
allied activities and also ensuring timely availability of
adequate credit for investment purpose.

• Branches having potential for development of

specific thrust areas/activities may be identified to
achieve specific targets/ objectives.

• Innovative/area based schemes, contract farming

schemes may be developed to give thrust to improve
agricultural lending.

• We may involve Micro Finance Institutions and

NGOs so as to cover large number fo SHGs from
weaker sections more particularly women from SC/ST
communities, tenant farmers, share croppers, oral
lessees etc.,

• Focus on low risk short duration exposures.

• Focus on established and well run co-operative

societies, NGOs, corporates who may offer us secured,
big ticket financing on projects falling under priority
sector lending. (This may also fall under indirect
lending).
 • To proactively canvass tie-up business through
various government bodies like Agricultural Marketing
Board, Coffee Board, Housing Board, etc. in respect of
any project tie-ups undertaken by them like dairy,
poultry, housing, etc.

• To tie-up with NBFCs in respect of RTO finances.

• To focus on SHGs for financing specified areas

like weaker section, etc.

Under Retail Sector thrust will be given for home Loa,

Star Mortgage Loan, Star Autofin, Star IPO and Education
Loan, Star Personal Loan and Star Holiday Loan and such
other loan products as may be introduced in future.

Lending in addition to Priority Sector

Bank’s credit priorities would be also determined by the

market realities, which are

i. Currently price driven wherein the corporates have

shed their traditional alignment with the bankers merely
due to past connections. The present trend, being
price driven, even in short duration loans ranging
between 90-365 days.

ii. Changed conditions in money supply resulting in the

availability of cheaper credit.
iii. Multiple Bank financing in place of consortium lending.
The approach of the Bank officials also needs to be
moulded towards quick credit appraisal on an
independent basis leading towards quick credit
decisions and disbursements.

iv. Demand and aggressive competition in the retail

segment and SME segment. In order to ensure better
spread as well as for spreading the risk, and encashing
opportunities for cross selling we need to accord thrust
for retail lending and lending to SME.

Keeping in mind the above aspects, the following thrust

areas are identified :

i. Focus on major corporate clients to capture the

price driven short duration loans i.e. between 90 days –
365 days. This will be aimed at ‘AA’ (LC3 to LC4) and
above rated clients.

ii. Emphasis will also be on personal & housing

finance besides trade finance including L/C business.
This segment, historically, has least delinquencies and
offers better spread on interest as well as better spread
of risk.

iii. Thrust will also be on post sale finance both for

supplier and buyer including invoice discounting &
 services offering opportunities for fee based income
like syndication, etc.

iv. Increase thrust to SME due to risk dispersal and

also in tune with national importance for economic
development.

v. In respect of corporate finances, the present

approach of corporates towards capital market needs
throws up ample opportunities for financing mergers,
acquisition, takeover, IPO financing, ESOP funding,
etc. It is proposed to selectively enter these areas.
Additionally any new type of credit business with good
potential not specifically mentioned in the policy maybe
considered at H.O. level.

Considering the fact that the distinction between the

role of treasury and the credit department while dispensing
present day credit products is becoming non-distinguishable
due to varieties of new short term products, continuous and
dynamic interaction between the credit and treasury
functionaries is envisaged to ensure that the opportunities for
credit dispensation are seized as and when available.

The exposures should also be effectively linked up with

products like factoring and forfaiting, etc. wherever
applicable to ensure risk free recovery.
 While considering term loans wherever feasible, Bank may
consider a take-out financing structure wherever longer tenor is
envisaged such as infrastructure projects.

Low Priority/Negative List

New industries not belonging to the following list can be
considered for Bank finance. The following industries may
not be financed at all :

 Industries consuming/producing ozone depleting

substances like Chlorofluoro Carbon (CFC–11, CFC–12),
CFC–113 Carbon Tetrachloride, Methyl Chloroform,
Halons – 1211, 1301, 2402. The sectors in which they
are generally used are Foam Products, Refrigerators and
Air-conditioners, Aerosol products, cleaning applications,
fire extinguishers.

 Sugar industries in the co-operative sector should not

be financed except in the following cases :

i) Pledge of sugar with NOC from working capital

Banks wherever applicable.

ii) On lending for basal dose finance to member

farmers and for financing harvesting and transport
contractors.

iii) For setting up co-generation plant and ethanol

 manufacturing plant after careful and satisfactory
detailed TEV study with the prior approval of M.Com.

iv) Any other case, with the approval of M.Com.

Existing Accounts : The review of existing accounts with or

without additional limits may also be considered by various
delegatees as per their authority.

Operative instructions conveyed from time to time through

various communications like Branch Circular, Circular
Letters, Administrative Circulars etc. will be guiding force for
determining the restrictions/ priorities in lending to specific
industries/ sectors.

**********
 TENURE OF CREDIT

Being a commercial bank, operating primarily in the short to

medium term money and capital markets, the Bank should
not assume an unduly large exposure on term credit
facilities. While the matching of term deposits to term loans
and investments will be monitored by the Asset Liability
Committee of the Bank, it is desirable to prescribe a suitable
ceiling on term exposure in relation to the total credit
exposure of the bank. There is increased emphasis on
infrastructure financing especially with the concept of
universal banking gaining ground. The role played by
Developmental Term Lending Institutions in such financing is
diminishing day by day. Bank recognises that the Bank's
share of term loan exposures will be on the rise in view of the
changes in the present lending scenario. However, we
propose that the term exposure of the Bank should generally
not exceed 40% of the total credit exposure of the Bank.
Thus, the aggregate of term exposure in the form of term
loans, deferred payment guarantees, term letters of credit,
non convertible debentures and other investments in
corporate debt instruments (including redeemable preference
shares) should not exceed 40% of the total credit exposure
of the Bank. For the sake of clarity, it may be mentioned that
the above exposure includes those L.Cs/ Deferred payment
guarantees with a tenor exceeding 3 years but not more
than 5 years. Branches should not issue DPG/Open L.C.
with tenor exceeding 5 years without the prior permission of
M.Com.

Although, RBI has clarified for disclosure purpose term loans

as loans with specified maturity in excess of 1 year, for
determining as to what is a term exposure, for the purpose of
monitoring exposure by way of term loans, the cut off point
would be 3 years. Thus, the exposures with remaining
maturity of 3 years and above at any time would be treated as
term exposures. Where Take Out finance is available, the
determination of 3 years would be based on the un-expired
period before funds under take out finance would be available.
For this purpose, a suitable Management Information System
has to be in place.

Having regard to the following reasons, the Bank would

assume term exposures for reasonable maturity periods -

a) The longer the term of the credit, the greater the

uncertainty and the attendant risks.

b) The Bank is essentially in the short term market and is

not expected to assume very long term exposures.

Accordingly, the Bank would assume exposures with an initial

maturity of 10 years or less for industry, trade or business as
also in the personal segment. In the agricultural segment as
also for infrastructure projects, the maximum initial maturity
could extend upto 15 years. In cases where these periods
need to be exceeded, the specific sanction of the sanctioning
authority for such elongated periods must be obtained. Such
cases should also be reported to the Management Committee
on an annual basis where the exposure exceeds Rs. 5 crores.
A further exception could be made in regard to personal loans
for financing houses etc. where a clear cut scheme has been
evolved for granting loans for longer maturity periods.
 CREDIT ACQUISITION

Credit Origination
It is proposed that we may accept either primary or secondary
origination of credit, namely by direct acquisition or through take
over. Our policy in this regard is proposed as under :

Primary Acquisition

These are direct credit acquisitions subject to the various

guidelines already in vogue and as amended by this policy. An
asset may be acquired by us as sole banker or through
consortium or multiple banking arrangements or syndication. In
order to enable quicker asset growth with low administration
cost, we may consider entering a consortium/ multiple/
syndication arrangements in respect of assets already
appraised by All India Financing Institutions and other leading
banks on merits based on our fair assessment and acceptability
of the appraisal note as per norms.

Secondary Acquisition

i. Takeover of accounts : We may consider takeover of

sound and remunerative accounts with proper
verification of past records keeping in mind that most
corporates and other entities are no longer bound by
traditional alignment with a bank, due to past
connections. Guidelines in this regard will be laid down
 by the Board or Management Committee of the Board
from time to time.

ii. Inter Bank Participation : We may consider taking

exposures by way of inter bank participation either with
risk or without risk, depending upon the circumstances
of each case and liquidity position of the Bank.

Takeover of Accounts

Whilst in the past we have been considering and taking

over working capital limits of proponents from other banks,
we have been very selective/restrictive in taking over term
loans from other banks/financial institutions. However, we
need to consider taking over term loans also as –

i) We may entertain requests from proponents enjoying

both working capital limits and term loan from another
bank. The term loan may be secured by certain
movable/immovable assets. By taking over the term
facilities, we would be in a position to get first charge
on the movable/immovable properties and thereby
better security for the credit limits considered by us.

ii) Our borrower may be enjoying working capital finance

from us. The term finance may have been availed of
from Term Lending institutions. As a cost-cutting
measure or for certain other reasons, the borrower may
prefer to switch over to us. In such case also, taking
 over the term loan from the financial institution would
give us better security by getting charge on the
securities charged to the financial institutions.

iii) Some banks, foreign & private are known to originate

and sell assets like loan/WCDL etc. They are on the
market regularly. We may also go in for asset purchase
on merits.

Apart from these there could be instances where we would

like to take over term loan from another bank/financial institution
either to improve our market share or for ancillary benefits that
would accrue to the bank. Therefore, take over of term loans from
Banks/Financial Institutions is accepted as a strategy for credit
expansion. While we may generally consider taking over of term
loans from other banks, we may on merits consider take over from
financial institutions. Take over of working capital facilities may be
approved by an authority that may be delegated such authority by
the Board or Management Committee of the Board. Since the
operational guidelines are subject to market requirements,
branches may be guided by the instructions sent from Head Office
in the matter from time to time

Administrative Clearance
Normally, requests for credit facilities may be initiated at
Branch/Zonal Office/Head Office level as per the instructions
in force. In case of bigger proposals, the same may be
initiated in consultation with the delegatee within whose
powers the limits fall for sanction or General Manager -
Credit at Head Office. No formal administrative clearance is
envisaged for the same. However, the General Manager -
Credit and above may consider prescribing administrative
clearance having regard to certain factors like :

i. A particular industry is facing a down trend/industries

from negative list;

ii. Finer rates of interest, concessions are required to be

offered;

iii. Liquidity constraints;

iv. Acceptable deviations from laid down standards; etc.

Particulars
PROFIT &
 Particulars
PERFORMANCE HIGHLIGHTS
● Operating profi t Rs.4,705 crore and Net Profi t Rs.1,741crore.

● Capital Adequacy Ratio at 12.94% as against 10%prescribed by

RBI.
● Net Worth at Rs.12,456 crore, grew by 11.78% over March
2009.
● Book Value per share Rs.236.84 (Rs.211.89 previous year)
● Gross NPA ratio at 2.85% as on31.03.2010
● Net NPA ratio at 1.31% as on 31.03.2010
● Total business (Deposit + Advances) reached at Rs. 401,079
crore recording a growth of Rs.
66,639 crore (19.93%). Domestic business grew by 20.72% to
reach the level of Rs.331,779 crore.
● Total deposits increased by Rs. 40,053 crore reached the level
of Rs.229,762 crore, a growth of 21.11%. Domestic deposits
increased by 23.26% to reach the level of Rs.196,585 crore. Share
of low cost deposits in the domestic deposits is 31.75% as on
31.03.2010.
● Gross credit touched Rs.171,317 crore, recording a growth of
18.37% with domestic credit recording a growth of 17.20% to
reach level of Rs.135,194 crore.
● Priority Sector lending constituted 46.39% of Net Adjusted Bank
Credit and the share of Agricultural Credit to Net Adjusted Bank
Credit was
16.24%.
● Credit to SME sector grew from Rs.25,441 crore to Rs.29,568
crore recording a growth of
16.22%.
● Schematic Retail Credit grew by 15.73% from Rs.8,714 crore to
R s.10,088 crore.
Export Credit registered a growth of Rs. 602 crore, i.e.,
9.98% growth over previous year

OTHER HIGHLIGHTS
The Bank crossed milestone of Rs.4,00,000 Cr. of Business
Mix.

CASA Deposits grew by Rs.13,206 Cr. (a growth rate of 27%)

touching a level of Rs.61,843 Cr.; improved from 30.70% to
31.75%.

As many as 31.5 lakh S/B accounts and 1.17 lakh current

accounts opened during the year. Customer base improves by
over 10%.

Domestic network touched 3207 branches and 820 ATMs. 186

branches and 320 ATMs were inaugurated during the year.

28 specialised Mid Corporate Banking Branches were opened.

Syndication desk reactivated and projects involving outlay of

close to Rs. 10,000 Cr. processed.

To aid credit delivery, online Credit Application Processing

System (CAPS) introduced.

Bank achieved 100% CBS status.

To facilitate control and monitoring Computer Aided Audit Tool

(CAAT) launched.

FINANCIAL PERFORMANCE
The Bank recorded an Operating Profit t of Rs. 4,704.77 crore,
(previous year Rs. 5,456.80 crore).
Net Profit t stood at Rs.1,741.07 crore (previous year Rs. 3,007.35
crore). Net interest income grew by 4.67% due to rise in volume of
business mix by 19.93% (from Rs.334,440 crore to Rs.401,079
crore). Non-interest income declined by 14.26% and covered
71.34% of Operating Expenses as against 98.64% in the previous
year.
Financial indicators

Particul Q4 Q4 Growth FY2009 FY2010 Growth

ars FY2009 FY2010 Rate (y- (Full (Full Rate (y-
(Global) o-y) year) year) o-y)
Operatin 1408 1275 -9 5456 4705 -14
g
Profit
Provisio 597 848 42 2449 2963 21
ns
Net 810 428 -47 3007 1741 -42
Profit
Total 5278 5248 0.6 19399 20494 6
Income
Total 3870 3973 3 13942 15789 14
Expens
es
Net 1433 1552 8 5498 5756 5
Interest
Income
Cost to 36.54 43.96 36.18 43.80
Income
Ratio
NIM 2.98 2.57 2.97 2.51
ROA 1.50 0.65 1.49 0.70
Capital 13.01 12.94 13.01 12.94
Adequacy
Ratio
(Basel-II)
Asset Quality
The Bank’s Gross NPA Ratio stood at 2.85% and Net NPA ratio at
1.31%. The Provision Coverage ratio is at 65.51%. Amount wise,
Gross NPA stood at Rs. 4882 crore and Net NPA at 2207 crore.
The Bank effected Cash Recovery and Upgradation to the tune of
Rs.825 crore.

Capital
The Bank is well capitalised with Capital to Risk Weighted Ratio
under Basel II of 12.94% against 13.01% in March,2009. Tier I
capital constituted 8.58%. The Bank’s Net Worth increased to
Rs.12,456 crore as against Rs.11,144 crore as on March 31,2009.

Social Objectives and Financial Inclusion

 Advances to the Priority Sector touched Rs.52,125 crore,

constituting 46.38% of the Adjusted Net Bank Credit. Credit
to Agriculture Segment went up by 10.75 % to Rs.18035
crore and advances to Micro, Small and Medium (MSME)
went up by 16.21% to Rs.29567 Cr. 5

 146 villages have been made as money lender free villages

under Debt Swap Scheme.

 Under Financial Inclusion Initiative, the Bank has so far

opened 32.63 lakh

 Bank has so far enrolled 412000 accounts for issuance of

smart cards and issued 291000 cards to the customers upto
March 2010.
  Bank is also using IT enabled solution on end-to-end basis
using handheld device terminals and biometric smart cards
by adopting Business Correspondent/ Business Facilitator
model as prescribed by RBI.

Technology Initiative
 All the branches of the Bank are under CBS and are
RTGS enabled. ATM network has been expanded to 820 as
against 500 in March,09.

 Mobile Banking Services has been extended to all

retail internet banking customers. To make internet banking
safe and secure, the Bank implemented 2 Factor
Authentication (2FA) – Star Token for both Retail and
Corporate internet banking customers as an additional
security measure.

 In recognition of various technology initiatives taken,

Bank has been conferred Winner award in the Best
Business Enablement Initiative Category by IBA.

 Bank has launched the web-site in Marathi and is

planning to roll out in other regional languages also.

 In order to make credit processing activity faster and

more objective, Credit Application Processing Systems
(CAPS) was introduced which covers all major credit
segments – Retail, Corporate, MSME and Agriculture.

Awards
The second Most Trusted Brands” (MTB), 2009 under PSU
category 2009

NDTV Profit Business Leadership Awards 2009 for Best PSU

Bank

Outlook money NDTV Profit Awards 2009 –Best Education

Loan Provider Runner up

Best Bank under Banking Category by Dun & Bradstreet – Rolta

Corporate Awards 2009

FE-EY Most Efficient Public Sector Bank Awards 2010 by Dalal

Street

Second best performance award in lending to Micro & Small

Enterprises sector by the
Government of India
Bibliography