Organization study

Introduction
Banking in India has a long and elaborate history of more than 200 years. The beginning of this industry can be traced back to 1786, when the countrys first bank, Bank of Bengal, was established. But the industry changed rapidly and drastically, after the success. However, many traditional banks have also expanded to offer online banking, and some formerly Internet-only banks are opting to open branches. Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals. Credit unions are another kind of depository institution. Most credit unions are formed by people with a common bond, such as those who work for the same company or belong to the same labor union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest rate than that demanded by other financial institutions. Federal Reserve banks are Government agencies that perform many financial services for the Government. Their chief responsibilities are to regulate the banking industry and to help implement our Nations monetary policy so our economy can run more efficiently by controlling the Nations money supply the total quantity of money in the country ,including cash and bank deposits. For example, during slower periods of economic activity, the Federal Reserve may purchase government securities from commercial banks, giving them more money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of services for other banks. For example, they may make 1

Organization study
emergency loans to banks that are short of cash, and clear checks that are drawn and paid out by different banks. Interest on loans is the principal source of revenue for most banks, making their various lending departments critical to their success. The commercial lending department loans money to companies to start or expand a business or to purchase inventory and capital equipment. The consumer lending department handles student loans, credit cards, and loans for home improvements, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to purchase real estate. The money to lend comes primarily from deposits in checking and savings accounts, certificates of deposit, money market accounts, and other deposit accounts that consumers and businesses set up with the bank. These deposits often earn interest for the owner, and accounts that offer checking provides an easy method for making payment safely without using cash. Deposits in many banks are insured by the Federal Deposit Insurance Corporation, which ensures that depositors will get their money back, up to a stated limit, if a bank should fail. Technology is having a major impact on the banking industry. For example, many routine bank services that once required a teller, such as making a withdrawal or deposit, are now available through ATMs that allow people to access their accounts 24 hours a day. Also, direct deposit allows companies and governments to electronically transfer payments into various accounts. Further, debit cards, which may also use as ATM cards, instantaneously deduct money from an account when the card is swiped across a machine at a stores cash register. Electronic banking by phone or computer allows customers to pay bills and transfer money from one account to another. Through these channels, bank customers can also access information such as 2

Organization study
account balances and statement history. Some banks have begun offering online account aggregation, which makes available in one place detailed and up-to date information on a customers accounts held at various institutions. Advancements in technology have also led to improvements in the ways in which banks process information. Use of check imaging, which allows banks to store photographed checks on the computer, is one such example that has been implemented by some banks. Other types of technology have greatly impacted the lending side of banking. For example, the availability and growing use of credit scoring software allows loans to be approved in minutes, rather than days, making lending departments more efficient. Other fundamental changes are occurring in the industry as banks diversify their services to become more competitive. Many banks now offer their customers financial planning and asset management services, as well as brokerage and insurance services, often through a subsidiary or third party. Others are beginning to provide investment banking services that help companies and governments raise money through the issuance of stocks and bonds, also usually through a subsidiary. As banks respond to deregulation and as competition in this sector grows, the nature of the banking industry will continue to undergo significant change.

Structure
The Indian banking system can be classified into nationalized banks, private banks and specialized banking institutions. The industry is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. The Reserve Bank of India is the foremost monitoring body in the Indian Financial sector. It is a centralized body that monitors discrepancies and shortcomings in the system. 3

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Industry estimates indicate that out of 274 commercial banks operating in the country, 223 banks are in the public sector and 51 are in the private sector. These private sector banks include 24 foreign banks that have begun their operations here. The specialized banking institutions that include cooperatives, rural banks, etc. form a part of the nationalized banks category.

Origin of the word

The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, traces of banking activity can found even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint.

Indian Banking Trends& Developments

The last three decades have demonstrated a significant increase in the size, spread and scope of activities of banks in India. The business profile of banks has changed significantly to include non-traditional activities such as merchant banking, new financial services, mutual funds, etc. The evolution from class banking to mass banking and rising customer focus is immensely changing the landscape of Indian banking.

Payments and banking transactions through mobile phones in India are likely to reach US$350 billion by 2015, according to global management consulting firm, The Boston Consulting Group (BCG). This, in turn, will 4

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provide banks, telecom operators, device makers and service providers an opportunity to earn fee income of US$4.5 billion

With an objective of increasing the financial inclusion, the SBI has opened 21 new branches, besides, 101 new Automatic Teller Machines (ATMs) and 400 green channel counters.

Around 350,000 villages spanning the entire India would have access to financial services offered by banks in the next two financial years, according to a plan given by banks to the RBI. RBI has directed banks to ensure that 223,473 villages have access to basic financial services by March 2012

Three local banks have partnered with a global financial technology firm - Polaris Software with its headquarters in India - to establish a joint venture IT Company in Bangladesh. The company would start with providing software solutions to these three banks before selling customized services to other banks, non-bank financial institutions and insurance companies

Indian Banking Key Investments

Standard Chartered Private Equity (SCPE) said that it has invested US$ 56 million in Ravi Jaipuria-promoted Varun Beverages International (VBIL), buying a "significant minority" stake in the bottling firm. The funds would be used to fast-track VBIL's growth in its beverages business in India and in foreign countries

South Indian Bank has signed a service agreement with TimesofMoney, an e-payments service provider to offer remittance solutions to Non Resident Indians (NRIs) in selected countries. The service would enable NRIs to get a strong transaction platform along with better pricing and safety, besides speedy money transfer.

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Government Initiatives

The policy makers for the banking sector, which comprise the Reserve Bank of India (RBI), Ministry of Finance and related government and financial sector regulatory entities, have made several notable efforts to improve regulation in the sector. These changes include:

Strengthening prudential norms Developing the payments system and, Integrating regulations between commercial and co-operative banks To support capitalisation, the government has infused Rs 23,200 crore (US$ 5.2 billion) into state-owned banks during the last three fiscals The RBI has said that for each branch that is proposed to be opened in Tier 3 to Tier 6 centres of under-banked districts of under-banked States, a bank will get the authorization to open a branch in a Tier 1 or Tier 2 centre. This incentive to banks comes on the back of the continuing need to open more branches in these States in order to ensure more uniform spatial distribution

With financial inclusion being a key program for RBI and the government, the central bank has decided to give private banks a push to go rural. The RBI has, in its circular, said that banks should open at least 25 per cent of the branches under the annual branch expansion plan in un-banked rural centres. 6

Organization study Indian Banking - Road Ahead

The Indian banking story is running in parallel with Indias growth story. With economic growth of India expected to average at double-digit for the current decade, the banking sector is also poised for growth as the factors contributing to the growth of GDP would act as catalysts for the banking sector as well in retail, corporate as well as rural banking. By 2017, the average consumption in rural India will be the same as of urban India in 2005, according to a McKinsey study. As a result, Indias labour force will grow at a higher rate than population growth and therefore, the ratio of working age population to total population will be on the rise, and it will be more urban, rich and educated. This will result in a higher flow of savings to the banking system. Consumer credit is expected to drive future growth of the sector. Further, Indias mortgage loan and wealth management business will grow 10 times by 2020, according to the estimates put by Boston Consulting Group (BCG). An under penetrated market, both in terms of number of accounts and number of borrowers, the banking segment in India holds huge potential for the future.

Role of Banks:
Banks play a positive role in economic development of a country as repositories of communitys savings and as purveyors of credit. Indian Banking has aided the economic development during the last fifty years in an effective way. The banking sector has shown a remarkable responsiveness to the needs of planned economy. It has brought about a considerable progress in its efforts at deposit mobilization and has taken a number of measures in the recent past for accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened branches in urban, semi-urban and rural areas and 7

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have introduced a development. The activities of commercial banking have growth in multi-directional ways as well as multi-dimensional manner. Banks have been playing a catalytic role in area development, backward area development, extended assistance to rural development all along helping agriculture, industry, international trade in a significant manner. In a way, commercial banks have emerged as key financial agencies for rapid economic development. By pooling the savings together, banks can make available funds to specialized institutions which finance different sectors of the economy, needing capital for various purposes, risks and durations. By contributing to government securities, bonds and debentures of term-lending institutions in the fields of agriculture, industries and now housing, banks are also providing these institutions with an access to the common pool of savings mobilized by them, to that extent relieving them of the responsibility of directly approaching the saver. This intermediation role of banks is particularly important in the early stages of economic development and financial specification. A country like India, with different regions at different stages of development, presents an interesting spectrum of the evolving role of banks, in the matter of intermediation and beyond. Mobilization of resources forms an integral part of the development process in India. In this process of mobilization, banks are at a great advantage, chiefly because of their network of branches in the country. And banks have to place considerable reliance on the mobilization of deposits from the public to finance development programmes. Further, deposit mobilization by banks in India acquired greater significance in their new role in economic development. number of attractive schemes to foster economic

Organization study
Commercial banks provide short-term and medium-term financial assistance. The short-term credit facilities are granted for working capital requirements. The medium-term loans are for the acquisition of land, construction of factory premises and purchase of machinery and equipment. These loans are generally granted for periods ranging from five to seven years. They also establish letters of credit on behalf of their clients favoring suppliers of raw materials/machinery (both Indian and foreign) which extend the bankers assurance for payment and thus help their delivery. Certain transaction, particularly those in contracts of sale of Government Departments, may require guarantees being issued in lieu of security earnest money deposits for release of advance money, supply of raw materials for processing, full payment of bills on the assurance of the performance etc. Commercial banks issue such guarantees also.

Scope
The Banking sector is considered the most lucrative option in todays job market. In the industry, a position in Treasury or Forex is considered right on top and this is followed by careers in Private Banking, Investment Banking and Retail Banking. One could work in a variety of areas in banking industry including Recurring Deposit account, banking officer, probationary officer, loan officer, assessor, personal loan officer, home loan officer, home loan agent, loan manager, mortgage loan underwriter, loan processing officer, accountant, product marketing and sales executive, and customer service executive among others. In the Financial Services, some of the important jobs include that of a stockbroker who is essentially a person who buys and sells securities on behalf of individuals and institutions for some commission. While some brokers like to

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practice with individual clients others work for institutions. Brokers who work for institutional investors are often called securities traders. Many prefer to work as dealers, advisors and securities analysts. Security analysts are those who advise companies on floatations of shares as they are expected to have sound knowledge of capital markets. Investment analysts are the backbone of the financial services sector. They study the financial reports of companies, assess various statistical information, profitability, projections, compare financial results, survey the industry as a whole and on the basis of the available information, and finally conclude to a decision. Equity Analysts do jobs similar to investment analysts and research the equity markets and make predictions

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Organization study Industry profile

With economic liberalization measures many private and foreign banking companies were allowed to operate in the country. Favorable economic climate and a variety of other factors such as demand for wide range of financial products from various sections of the society led to mutually beneficial growth to the banking sector and economic growth process. This was coincided by technology development in the banking operations. Today most of the Indian cities have networked banking facility as well as Internet banking facility. A customer is empowered to operate his account from any part of the country. UTI Bank, ICICI, HDFC Bank and Bank of Punjab are the main winners of the race.

Scope of Banking & Insurance Sectors in India

Diversifying into investment banking, insurance, credit cards, depository services, mortgage financing, securitization has increased revenues. As large number of players in various fields enters the market, competition would be intensified by mutual funds, on Banking Finance Corporations (NBFCs), post offices, etc. from both domestic and foreign players. All this would lead to increased sophistication and technology in the sector. Corporate governance would come into the picture and other financial institutions would have to reach global standards. Also the limit for FDI in private banks is increased to 74% and the limit for FII is 49%. There are many challenges ahead for the banking sector such as technology, consumer satisfaction, corporate governance, risk management, etc. and they are redefining their priorities, which are now focused on cost reduction, product differentiation and customer centric services. Some of the major players in this sector are HDFC, ICICI,

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HSBC, State Bank of India, Punjab National Bank, IngVysya, ABNAmro Bank, Centurion Bank, City Bank, etc. The insurance sector has opened up for private insurance companies with the enactment of IRDA Act, 1999. A large number of companies are competing under both life and general Insurance. The FDI cap/equity in this sector is 26% and the proposals have to be cleared by Insurance Regulatory and Development Authority (IRDA) established to protect the interest of holder of Insurance policy and act as a regulator and facilitator in the industry. Some of the major players in this sector are LIC, Max New York Life Insurance, Bajaj Allianz, ICICI Prudential, HDFC Standard Life, MetLife Insurance, Birla Sun Life Insurance, etc. Various types of policies and instruments are coming up in the market to attract more customers. Most of the population of India is not insured, hence there is a lot of scope in this sector and a number of companies are planning to enter the sector. Every futuristic individual would want himself to get insured. Capital markets have a long history of over 100 years in India. Bombay Stock Exchange came into existence more than a hundred years ago to remove direct Government .

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Organization study Major Players in the Industry

Allahabad Bank Andhra Bank Axis Bank Ltd. Bank of Baroda Bank of India Canara Bank Central Bank of India HDFC Bank Ltd. ICICI Bank Ltd. Indian Bank IndusInd Bank Ltd. Industrial Development Bank of India Ltd. ING Vysya Bank Ltd Jammu & Kashmir Bank Ltd. Karnataka Bank Ltd. Karur Vysya Bank Ltd. Kotak Mahindra Group Lakshmi Vilas Bank Ltd. Lord Krishna Bank Ltd North Kanara G.S.B. Co-operative Bank Oriental Bank of Commerce PricewaterhouseCoopers Pvt. Ltd Punjab & Sind Bank Punjab National Bank South Indian Bank Ltd. State Bank of Bikaner and Jaipur

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State Bank of Hyderabad State Bank of India State Bank of Indore Ltd. State Bank of Mysore State Bank of Patiala State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank

Company profile
VIJAYA BANK

Our mission is to emerge as a prime national bank backed by modern technology meeting customers aspirations with professional banking services, and sustained growth contributing to national development.

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Organization study

Vijaya Bank: A medium sized bank with presence across India was founded on October 23, 1931 by A. B. Shetty and other enterprising farmers in Mangalore, Karnataka in India.. The objective of the founders was essentially to promote banking habits, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. 15

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The bank became a scheduled bank in 1958. Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it from 1963-68. The credit for this merger as well as growth goes to Shetty, who was then the Chief Executive of the bank. The bank was nationalised on April 15, 1980.

Growth & Nationalisation

Vijaya Bank grew steadily by merging nine smaller banks into it between 196368.Mulki Sunder Ram Shetty, who was then the Chief Executive of the bank is largely credited with these mergers. The bank was nationalised on April 15, 1980. This is the first bank to bring credit card facility in the banking industry.

Branches
In line with the prevailing trends, the bank has been giving greater thrust towards technological upgrading of its operations. The bank has network of 1158 branches, 46 extension counters and 435 ATMs. (as of March 31, 2010) All 1158 branches, 46 extension counters, and 12 service branches are functioning on the CBS platform, as well as at 758 centers, covering 100% of Bank's business.

Thrust on Information Technology

The Bank has chosen Finacle from Infosys as centralized banking solution. In line with the prevailing trends, the bank has been giving greater thrust towards technological upgrading of its operations.The bank has network of 1200 branches, 49 Extension Counters and 551 ATMs. (as of June 30, 2011) The bank has a network of 1200 branches, 49 extension counters and 551 ATMs. (As of June 30, 2011) 16

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The bank has diversified to meet constantly evolving and diverse needs. It is entering several new areas such as credit card, merchant banking, hire purchase and leasing, and electronic remittance services. Vijaya Bank is one among the few banks in the country to take up principal membership of VISA International and MasterCard International. The driving force behind Vijaya Bank's every initiative has been its 12107strong dedicated workforce. Banking Regulation Act of India, 1949 defines Banking as accepting, for the purpose of lending or of investment of deposits of money from the public, repayable on demand or otherwise or withdrawable by cheque, draft order or otherwise. The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India.

Area of corporation
After obtaining the certificate of incorporation and certificate of commencement and getting the draft of the memorandum of association and articles of association approved, Vijaya bank Ltd., started functioning as per the provision of Indian companies act in a small bungalow with a tiled roof (Mangalore tiles) on Kadri road in Mangalore. Background Type: Public Founded; 1931 at Mangalore, India. Headquarters: Bangalore, India Key people: Albert Tauro, Chairman & Managing Director Industry: Financial Commercial banks

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Employees: 12,107

Products and services

Deposit Schemes 1. Savings Bank 2. V Platinum Savings Bank Account 3. Vijaya Saral Savings 4. Current Account 5. VStar Savings Scheme 6. Term Deposit Loans & Advances 1. Retail Lending Schemes 2.Loans against Securities 3.Non Fund Based Facilities 4.Advances to Agriculture, SSIs and Others 5.Government Sponsored Schemes 6.Special Schemes for Women NRI Services 1. Deposits 2. Loans Remittances 3. FOREX Branches 4. FCNR (B) Branches 5. Helpline for NRIs Remittance Collection and Facilities 18

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1. FOREX Remittances 2. Inland Remittances 3. Electronic Remittance Services 4. Inward / Outward Collection Instruments

Credit Cards 1. Domestic Cards 2. Global cards 3. Debit cards

Management
Today, living up to the ideals of the visionaries of the bank, the management includes dedicated professionals, who bring with them a considerable amount of expertise and experience in the banking industry.

Organization structure
Bank has a three tier Organization structure. Head Office, Regional Office and Branches.

The Head office hosts various functional departments that are instrumental in policy formulations and monitoring of performances of the regions and branches. The bank's 20 Regional Offices exercise immediate supervision and control over the branches under their jurisdiction. 19

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Directors Currently, the Bank's board of directors consists of : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Shri. H.S Upendra Kamath, Chairman & Managing Director Smt. Shubhalakshmi Panse, Executive Director Shri. L K Meena, Govt. Nominee Director Smt. Suma Varma, RBI Nominee Director. Shri. Suresh Kamath, Workmen Director. Shri. Ranjan Shetty, Officer-employee Director Shri. B. Ibrahim, Non Official Director Shri. Ashok Kumar, I.A.S (Retd.), Shareholder Director. Shri. Ashok Kumar Shetty, Shareholder Director. Shri. S. Ananthan, Shareholder Director Shri. Prakash Chandra Nalwaya , Non Official Director

General Managers

General Managers at the Head office

(Position as on 01.08.2011)

1) Shri. K. Jayakar Shetty. 2) Shri. J. Pandiyan. 3) Shri.Narayan Shetty H. 4) Shri. Raviraj Hegde K 5) Smt. K. Chandra. 6) Shri. Vasantha Shetty B 7) Shri. C.R. Chandramouli ( Chief Vigilance Officer ) 8) Shri. N. Devadas. 9) Shri. Jayanth T S 10) Shri. Harindranath Shetty 11) Shri. Subhodaya Shetty

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General Manager at Regional Office 1. Sri. K. Shashidhar Rao 2. Sri. Veera Brahmaji Rao K : Regional Office, Mumbai. : Regional Office, Bangalore (North)

Inception

Company Facts
Registered Address 41/2, M G Road Bangalore Karnataka 560001

Vijaya Bank

Tel: 080-25584066 080-25584067 Fax: 080-25598040 Email: sdigc@vijayabank.co.in Website: http://www.vijayabank.com Group: Public Sector

Registrars
Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mill Compound, LBS Marg, Bhandup (West) Tel: 25960320

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Name H S Upendra Kamath L K Meena Ranjan Shetty Prakash Chandra Nalwaya Nishank Kumar Jain Bharati Rao P Vaidyanathan Name Shubhalakshmi Panse Suma Varma Suresh Kamath Bharati Rao P Vaidyanathan Nishank Kumar Jain

Designation Chairman and Managing director Nominee Director Director Non Official Part-time Director Shareholder Director Shareholder Director Shareholder Director Designation Executive Director Nominee Director Director Shareholder Director Shareholder Director Shareholder Director

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Company History - Vijaya Bank

YEAR EVENTS 1980 - The Bank came into existence on 15th April, as a consequence of The Government of India taking over the undertaking of Vijaya Bank Ltd. The Bank is engaged in transacts all types of banking Business including foreign exchange and is a Government of India Undertaking. 1984 - Capital worth Rs 10 lakhs subscribed by Government. 1985 - The Bank sponsored its first Regional Rural Bank under the name And style Visweswaraya Grameena Bank in March. This Regional Rural Bank would cater to the needs of the target group belonging to Mandya district of Karnataka State. - Capital worth Rs 772 lakhs subscribed by Government. 1986 - Capital worth Rs 1000 lakhs subscribed by Government. 1989 - Rs 800 lakhs subscribed by Government. 1991 - Rs 2500 lakhs subscribed by Government. 1992 - Rs 2500 lakhs subscribed by Government. - The bank has introduced automatic renewal facility up to four Times in respect of short term deposits accepted for periods From forty six days to one year for the convenience of the customers. - The novel scheme of `Vijaya Vichar Vihar' was introduced by The Bank in 1989 and is now flourishing in 25 centres as On March. 1993 - Rs 5000 lakhs subscribed by Government. - The Bank has installed 68 ALPMs in 25 branches. - The 'Vijaya Bank Diamond Jubilee Scholarship Scheme' was Introduced as a part of Diamond Jubilee Celebrations of the Bank, with the objective of awarding scholarships to such of those children of serving permanent sub-staff employees. 1994 - Rs 6500 lakhs subscribed by Government. - The Bank had entered into the Memorandum of Understanding With the Reserve Bank of India, undertaking to fulfill definite Performance commitments. - The Bank introduced the new schemes viz. Vijaya Gift Bond Scheme And Vijaya Service Card for enlarging its services to its 23

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Business clientele. 1996 - The Bank opened its first subsidiary, VIBANK HOUSING FINANCE LTD To add impetus to housing finance. - Vijaya Bank introduced three new loan schemes, namely, 'Vijaya Nivruthi', 'Vijaya Krishi Vikas' and 'Vijaya Mangala' to cater To the credit needs of pensioners, farmers and working women Respectively. - The Bank has also entered into tie-up arrangements with ICICI Banking Corporation Limited and Oman International Bank Ltd. - The Bank introduced innovative banking service called 'Any Branch Banking.' 1997 - Vijaya Bank has introduced a novel way to improve customer Service. - The Bank has recently introduced a new `trade finance' scheme. 1998 - Vijaya bank has introduced a jewel scheme under which loans Are granted by the bank to fund the purchase of jewellery by Keeping the purchased item as collateral till the loan has been Repaid.

1999 - Vijaya Bank has entered into a Rs 200-crore take-out financing Agreement with the Housing and Urban Development Corporation (Hudco)S for funding infrastructure projects. 2000 - Vijaya Bank has introduced a new scheme named V-Star savings bank Account scheme. - Vijaya Bank Chairman and Managing Director S Gopalakrishnan has Been elected as the president of Indian Banks' Association, Bangalore. 2003 -Vijaya Bank signs a pact with LIC to offer Life insurance cover to All its existing as well as its new deposit-holders. 2004 -Vijaya Bank ties up with NIC to offer free insurance policy -US-based Principal Group enters distributorship tie-ups with VijayaBank 24

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-Delhi based Punjab National Bank (PNB) and Bangalore-based Vijaya Bank enter into a four-way partnership with Principal Financial of the US and Berger Paints to set up an insurance broking company -Bangalore-based Vijaya Bank has launched a new credit facility for Farmers who are caught up in the clutches of private money-lenders And help them to improve their financial status -Vijaya Bank ties up with New Holland Tractors -Vijaya Bank ties up with National Insurance 2005 -Vijaya Bank ties up with TAFE -Vijaya Bank sets up new branches 2008 - Vijaya Bank inked a memorandum of understanding with credit rating Agency, Crisil, for rating its corporate customers. - Vijaya Bank has inked a pact with Credit Analysis & Research Ltd (CARE), one of the RBI accredited rating agency, to provide bank loan Ratings to its corporate clients at a concessional fee. -Vijaya Bank has informed that Shri. Ranjan Shetty has been nominated as Officer Employee Director of the Bank with immediate effect, vide Letter dated September 09, 2008 received from Government of India, Ministry of Finance, Department of Financial Services. 2009 - Vijaya bank has plans to issue 1,000 biometric smart cards to Account-holders residing in villages by the end of this fiscal. - Vijaya Bank forged an alliance with VE Commercial Vehicles, a leading auto brand, to become a preferred financier for the latter'S commercial vehicles.

Company Background - Vijaya Bank

Industry Name House Name Collaborative Country Name Joint Sector Name Finance - Banks - Public Sector Public Sector N.A. N.A.
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Year Of Incorporation

1931

Year Of Commercial Production N.A.

Name Intime Spectrum Registry Ltd. Address C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai - 400078, Maharashtra Tel. No. : 25963838, 25946970
Key Dates Year Ending Month AGM Date (Month) Book Closure Date (Month) Mar Jul Jun

Listing Information Face Value Of Equity Shares Market Lot Of Equity Shares BSE Code NSE Code BSE Group

10 1 532401 VIJAYABANK A

Whether The Company Forms A Part Of The Following Indices Sensex Nifty BSE100 BSE200 S&P No No No Yes Yes 26

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CNX 500 CNX Midcap CNX FMCG Listed On

Yes No

The Stock Exchange, Mumbai, National Stock Exchange.

Board Meetings Summary

The last board meeting of Vijaya Bank was held on July 28, 2011 for Quarterly Results

Meeting Date 28-07-2011 28-04-2011 22-02-2011 24-01-2011 22-10-2010 22-07-2010 30-04-2010 23-01-2010 29-10-2009 25-07-2009 28-04-2009 23-01-2009 23-10-2008 26-07-2008 26-04-2008 22-01-2008 24-10-2007 30-07-2007 30-04-2007 27-01-2007 18-10-2006 22-07-2006 05-05-2006 21-01-2006 24-10-2005

Remark Quarterly Results Audited Results & Dividend Allotment of Equity Shares Quarterly Results Quarterly Results Quarterly Results Audited Results, Dividend & Others Quarterly Results Quarterly Results Quarterly Results Audited Results, Dividend & Others Quarterly Results Quarterly Results Quarterly Results Audited Results & Dividend Quarterly Results Quarterly Results Quarterly Results Audited Results & Final Dividend Quarterly Results Interim Dividend Quarterly Results Accounts & Dividend Quarterly Results Quarterly Results 27

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20-04-2005 24-02-2005 27-01-2005 24-10-2004 26-07-2004 22-04-2004 22-01-2004 27-11-2003 23-10-2003 12-09-2003 23-07-2003 30-04-2003 28-01-2003 23-10-2002 02-08-2002 13-07-2002 Dividend & Accounts Interim Dividend Quarterly Results Half Yearly Results Quarterly Results Dividend & Accounts Quarterly Results Interim Dividend & Others Half Yearly Results Others Quarterly Results Dividend & Accounts Quarterly Results Quarterly Results Dividend Quarterly Results

AGM/EGM Summary
The last AGM of Vijaya Bank was held on July 29, 2011. The book closure was from June 21, 2011 to June 25, 2011. Announcement Purpose Date Date 31-05-2011 AGM 29-072011 22-02-2011 EGM 22-032011 Book Closure From To 21-0625-062011 2011 Remarks Rs.2.50 per share(25%)Dividend To issue and allot 3,91,48,936 Equity Shares of the Bank of Rs. 10/- each for cash at a premium of Rs. 84 per Equity Share, i.e. issue price of Rs. 94 aggregating to Rs. 368 Crs by way of preferential issue to the Promoters of the 28

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Bank. Rs.2.50 per share(25%)Dividend 10% Dividend 20% Dividend 10% Dividend 10% Final Dividend To elect 4 Directors among the shareholders of the Bank other than the Central Government. (EGM cancelled) 15% Final Dividend Dividend 12% Dividend Bookclosure

31-05-2010 29-05-2009 26-05-2008 04-05-2007 24-04-2006 27-06-2005

AGM AGM AGM AGM AGM EGM

09-072010 10-072009 25-072008 27-062007 28-062006 22-082005

06-072010 06-072009 16-062008 20-062007 15-052006 -

09-072010 10-072009 21-062008 27-062007 20-052006 -

11-05-2005 06-05-2004 22-04-2003 25-05-2002 31-05-2001

AGM AGM AGM AGM AGM

22-062005 16-062004 19-062003 03-082002 14-072001

17-062005 15-062004 22-052003 05-072002 06-072001

22-062005 16-062004 12-062003 03-082002 14-072001

Dividend Summary
For the year ending March 2011, Vijaya Bank has declared an equity dividend of 25.00% amounting to Rs 2.5 per share. At the current share price of Rs 61.00 this results in a dividend yield of 4.1%. The company has a good dividend track report and has consistently declared dividends for the last 5 years. Announcement Effective Dividend Dividend Remarks 29

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Date 28-04-11 30-04-10 28-04-09 28-04-08 30-04-07 18-10-06 24-04-06 Date 17-06-11 02-07-10 02-07-09 12-06-08 18-06-07 06-11-06 11-05-06 Type Final Final Final Final Final Interim Final (%) 25.00 25.00 10.00 20.00 10.00 10.00 10.00 AGM AGM Rs.2.50 per share(25%)Dividend -

As per the Profit & Loss account

INTEREST RATES

Domestic Term Deposits / Additional interest benefit for Senior Citizens NRE Accounts FCNR(B) RFC - SB DEPOSIT Capital Gains Accounts Scheme 1988

30

Organization study

Savings Bank 4.00 % p.a

Domestic Term Deposits

Interest rates on domestic term deposits have been revised with effect from 7
th

JUNE, 2011 as under (%

p.a.)
Sl

Maturity Periods 7 days to 14 days 15 days to 29 days 30 days to 45 days 46 days to 90 days 91 days to 179 days 180 days to less than one year one year to less than Two years Two years to less than Three Years Three years to less than Five Years Five Years and above

No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Less than ` FIVE crores 4.00 4.00 4.00 5.75 7.00 8.00 9.25 9.35 9.00 8.75

` FI VE Crores and Above 4.00 4.00 4.00 6.00 7.00 8.50 9.00 9.00 8.50 8.25

NRE Accounts
Repatriable Savings Bank and Term Deposit Rupee accounts carrying interest rates. NRE Savings Bank - 4.00 % p.a. Interest Rates on Non Resident External Rupee Deposit (Term Deposits) Effective from 01 AUGUST 2011 Maturity Period
1 year to less than 2 years

Interest Rate [% p.a.]

2.51 31

Organization study
2 years to less than 3 years 3 years and above upto and including 5 years

2.39 2.69

Note

: The above changes in interest rates will also apply to NRE deposits renewed after their present maturity period

FCNR
Rate of Interest at percent per annum Term Deposit Percent Per Annum (% p.a.) - w.e.f. 01 AUGUST 2011 GBP USD EURO One month and up to below 3 months Deposits are accepted for a minimum period Three months and above but below Six months of one year Six months and above but below one year One year and above but below two years 2.59 1.76 3.17 Two years and above but below three years 2.32 1.64 2.94 Three years and above but below four years 2.57 1.94 3.11 Four years and above but below five years 2.86 2.32 3.31 Five years only 3.14 2.72 3.51 Interest on FCNR (B) deposits for periods above one year are compounded on half yearly basis at 360 days a year. The interest rates quoted are maximum permissible and hence deposits of retired staff members cannot be extended additional interest over the rates quoted.

RFC Deposits
Rate of Interest at percent per annum

Term Deposit

Percent Per Annum (% p.a.) - w.e.f. 01 AUGUST 2011

32

Organization study
GBP
One month and up to below 3 months Three months and above but below Six months Six months and above but below one year One year and above but below two years Two years and above but below three years Three years Only Four years and above but below five years Five years only

USD 1.19 1.26 1.43 1.76 1.64 1.94

EURO 2.38 2.56 2.80 3.17 2.94 3.11

1.63 1.83 2.12 2.59 2.32 2.57

RFC Term Deposits are accepted only for maximum period of three years and at simple rate of interest

RFC - SB DEPOSITS
RFC Savings Bank Deposits: Interest with effect from 01 AUGUST 2011 is as under

CURRENCY GBP USD EUR

Capital Gains Accounts Scheme 1988 Category of Account Savings Bank Account Term Deposit Account %P.A 3.5 % p.a

INTEREST RATE 1.63 % 1.19 % 2.38 %

As Mentioned in Domestic Term Deposit (given above)

33

Organization study

Interest rates
RATE OF INTEREST ON RETAIL LENDING SCHEMES
BASE RATE AT 10.65% P.A. W.E.F 01 st AUGUST 2011

Loans & Advances linked to Base Rate Sl. 1 % p.a. V Cash For women beneficiaries including working women BR+5.00=15.65 For marriage & purchase of consumer durables BR+5.50=16.15 For others BR+5.50=16.15 For Pensioners BR+4.50=15.15 For V-Shikshak borrowers BR+5.00=15.65 V - Solar - for Lighting BR+4.50=15.15 - for Heating 12.50% (Fixed) V IPO V IPO-If paid within 30 days BR+4.50=15.15 V --IPO If paid after 30 days BR+5.50=16.15 For finance to employees to subscribe shares of their own companies BR+5.50=16.15 under ESOP/ IPO V Professional (Rural/Semi-urban) BR+4.50=15.15 Others BR+5.50=16.15 V Trade BR+5.75=16.40 V-Wheels (for individuals, corporate clients, partnership firms & V-Shikshak BR+ 0.85=11.50 borrowers (HOC10165) V Equip For V Shikshak borrowers BR+4.00=14.65 For others BR+4.50=15.15 V Mortgage Loan BR+6.50=17.15 Educational Loan (Irrespective of amount) for girl students (0.50% interest concession for all fresh loans BR+2.25=12.90 w.e.f 01.11.08 to 31.12.10) For others BR+2.75=13.40 Jewel Loans For Agricultural activities As applicable to Agricultural Loans For others BR+3.75=14.40

5 6

8 9

10

34

Organization study
11 V-Rakshak BR+3.50=14.15

BASE RATE 10.65% p.a. W.E.F 01 ST AUGUST 2011

Sl. 12 V-Reverse Mortgage

% pea 11.00 [Fixed]

13 14 15 16

(with reset clause once in every 5 years) V Rent Small Road Transport Operators (SRTO) V Swashakthi V SOD

BR+4.25=14.90 As applicable under MSE (Service) BR+4.00=14.65

ALL VIJAYA HOME LOANS LINKED TO BASE RATE (in respect of existing loans and those sanctioned from 01 st August 2011)

Upto 5 years Above 5-10 years Above 10-15 years Beyond 1520yrs

For loans up to Rs 30.00 Lakh Floating Fixed BR+ See 0.10=10.75 below
BR+ No fixed No fixed No fixed

For Loans above Rs 30.00 Lakh Floating Fixed BR+ See 0.85=11.50 below
BR+ No fixed No fixed No fixed

0.35=11.00
BR+

1.10=11.75
BR+

0.60=11.25
BR+

1.35=12.00
BR+

0.85=11.50

1.60=12.25 For loans up to Rs 30.00 Lakh

11.00 % 11.50%

18

Home loans under Fixed rate of interest with tenor of up to 5 years

For Loans over Rs 30.00 Lakh

11.50 % 12.00%

Existing Home loans sanctioned before 06/5/2011 Home Loans sanctioned on or after 06/5/2011

35

Organization study
Home Loans sanctioned on or after 01/7/2011 Home Loans sanctioned on or after 01/8/2011 11.75%

11.75%

12.25%

PART-B
PRIORITY SECTOR ADVANCES BASE RATE 10.65% P.A. W.E.F 01 st AUGUST 2011

% p.a. (1) AGRICULTURE (a) Crop Loans Upto Rs.3.00 lakhs (Under Interest subvention scheme)* 7.00 (Fixed ) * Interest Rate for Crop loan up to Rs.3.00 lakhs disbursed from 014/2010 shall be charged at 7% p.a.. (Fixed), in view of interest subvention scheme announced in the Union Budget 2011-12. Even if the Crop loan sanction is more than Rs.3.00 lakhs, interest at 7% p.a.. (Fixed) shall be charged for amounts up to Rs.3.00 lakhs and applicable interest Rate shall be charged for the loan amount exceeding Rs.3.00 lakhs. If the loan remains unpaid after the cut off date/period stipulated as per the Interest Subvention Scheme (Please refer HOCL 10273 dated 24/9/2010), applicable interest as shown below should be charged. Above Rs.3.00 lakhs BR+3.00=13.65 Upto Rs.50000/BR+1.00=11.65 Above Rs.50000 up to Rs.2 lakh BR+2.00=12.65 Above Rs.2 lakh Upto Rs.3 lakh BR+3.00=13.65 (b) Other Short Term Loans and Term Loans Upto Rs.50000/BR+1.00=11.65 Above Rs.50000 Upto Rs.2 lakh BR+2.00=12.65 Above Rs.2 lakh BR+3.00=13.65 (c) Loans granted through Societies BR+3.50=14.15 (Loans routed through PACS/LAMPS/FSS irrespective of repayment and size of the loan ) Note: Broader guidelines on charging and compounding of interest Rates on agricultural advances have been furnished in Annexure-3 to this Circular. 36

Organization study
2) For SGSY loans : (Term Loans- 5 years to 9 years) Irrespective of activity financed and irrespective of Individual or Group. Upto Rs. 50,000/8.75(Fixed) Above Rs. 50,000/9.00(Fixed) 3) For Vijaya General Credit Card (VGCC): Vijaya General Purpose Credit Card 9.25 (Fixed) (HOC No. 71/2008 dated 13.05.2008) % p.a. 4) for Self Help Groups (SHGs): Bank to SHGs/ JLGs BR+2.00=12.65 Bank to NGOs/VAs for on-lending to SHGs/ JLGs BR+3.50=14.15 5) DRI Advances 4.00 (Fixed)

PRIORITY SECTOR ADVANCES (Contd)

BASE RATE 10.65% P.A. W.E.F 01 ST AUGUST 2011 6) Micro Medium and Small Enterprises(MSME) ( A) Micro Manufacturing Enterprises Sanctioned Limit Loans Upto Rs.50000/Above Rs.50000 Upto Rs.2 lakh Above Rs.2 lakh Upto Rs.25 lakh Above Rs.25 lakh Upto Rs.50 lakh Above Rs.50 lakh Upto Rs.1 crore Above Rs.1 crore to Rs.10 crore (B) Micro Service Enterprises : (Includes SRTO/ V-Swashakthi/Professional/ Self-employed/ service enterprises) Limit Loans Upto Rs.50000/Above Rs.50000 Upto Rs.2 lakh Above Rs.2 lakh Upto Rs.25 lakh Above Rs.25 lakh Upto Rs.50 lakh Above Rs.50 lakh

BR+ 0.85=11.50 BR+ 1.35=12.00 BR+ 2.60=13.25 BR+ 3.10=13.75 BR+ 3.60=14.25 BR+ 4.10=14.75 Small Business and other

BR+ 1.35=12.00 BR+ 1.85=12.50 BR+ 3.35=14.00 BR+ 3.60=14.25 BR+ 4.10=14.75 37

Organization study
(C) Small Manufacturing Enterprises : Sanctioned Amount Loans Upto Rs.50000/BR+ 1.60=12.25 Above Rs.50000 Upto Rs.2 lakh BR+ 2.10=12.75 Above Rs.2 lakh Upto Rs.25 lakh BR+ 3.60=14.25 Above Rs.25 lakh Upto Rs.50 lakh BR+ 3.85=14.50 Above Rs.50 lakh Upto Rs.1 crore BR+ 4.35=15.00 Above Rs.1 crore to Rs.10 crore BR+ 4.85=15.50 (D) Small Service Enterprises : Loans Upto Rs.50000/BR+ 2.10=12.75 Above Rs.50000 Upto Rs.2 lakh BR+ 2.60=13.25 Above Rs.2 lakh Upto Rs.25 lakh BR+ 3.85=14.50 Above Rs.25 lakh Upto Rs.50 lakh BR+ 4.35=15.00 Above Rs.50 lakh Upto Rs.10 crore BR+ 4.85=15.50 7) For other categories of Priority sector Other than (1) to (6) above and other than Housing & Education (both for working capital inclusive of bills facility and term loans For limits Upto & inclusive of Rs.2.00 lakhs BR+4.00=14.65 Above Rs.2.00 lakhs & inclusive of Rs.25 lakhs BR+5.00=15.65 Above Rs.25 lakhs BR+5.50=16.15

38

Organization study PART-C

BASE RATE 10.65% P.A. W.E.F 01 st AUGUST 2011

NON PRIORITY SECTOR ADVANCES WORKING CAPITAL LIMITS (INCLUDING BILLS PURCHASED/ DISCOUNTED AND TERM LOANS Medium & Large Industries including Medium Enterprises [MEs] % p.a. Medium Manufacturing and Service Enterprises : Limit Loans Upto Rs.2 lakh BR+4.00=14.65 Above Rs..2 lakh Upto Rs.1 crore BR+5.00=15.65 Above Rs.1 crore and Upto Rs.10 crore BR+6.00=16.65 Above Rs.10 crore BR+7.00=17.65 All other Non-priority loans and advances including BR+7.00=17.65 Pronote Loans Upto and inclusive of Rs.2 lakh. (wherever Risk Rating is not applicable) Premises loans to Landlords of Branch premises, Pronote As per Risk Rating loan/ Clean Loan, Non Priority Transport Operators, [wherever applicable] above Rs.2.00 lakhs For Commercial Real Estate Loans [other than V-Rent and As per Risk rating or Home Loans] BR+6.50=17.15 whichever is higher For term loans exceeding 5 years other than to 0.25% to be added as Term Agriculture/ MSE/ Retail Advances/ Staff loans. Premium besides Risk Premium to the interest computed based on risk ratings.

39

Organization study PART-D

Discounting of Inland Bills covered by Letter of credit (BDLC): (exclusively for Borrowers enjoying sanctioned Bill Discount Limit) %P.A Tenor With tenor Upto 90 days BR=10.65 Above 90 days to 180 BR+0.50=11.15 days Note : The Rates stipulated shall be for inland bills limit and not for foreign bills which are guided by separate guidelines. The tenor of the Inland bills discounted shall be generally for maximum period of 90 days. Based on the assessment, Regional Managers can approve maximum tenor up to 180 days period. The competent authority to approve bills of tenor exceeding 180 days shall be General Manager, Credit (C&I), HO and above as per extant delegated powers. Bills drawn on/accepted by Co-operative Banks shall not be discounted. Similarly, branches shall not discount bills drawn against Letter of Credit issued by Co-operative Banks. Bills Discount limit (L.C/ Non-L.C) is permitted only to borrowers within the assessed Working Capital limit. In case bills drawn under L/C of Scheduled Commercial Banks (other than Co-operative Banks), of non-borrower constituents of the Bank is permitted upon assessment (say in the case of restricted L/C on our Bank), it shall be ensured that the proceeds are remitted directly to the beneficiarys bank account or the main/Lead Bank on the written request from the party. Bills discounted shall be only in respect of Bills drawn for genuine trade transaction with documents of title to goods evidencing dispatch of goods relating to the business activity of the borrower and accommodation bills/service agencies bills shall not be discounted/ purchased.

a) b)

c) d)

e)

40

Organization study PART-E

EXPORT CREDIT BASE RATE 10.65% P.A. W.E.F 01 ST AUGUST 2011

Sl no 1

Tenor

Revised ROI linked to BR -10.65 % p.a.

PRESHIPMENT CREDIT IN RUPEES (a) Upto the due date (or the extended due date ) of the LC BR+1.50=12.15 /firm order with a maximum of 270 days from the date of advance (see note no. 1 below) (b) Against incentives receivable from Government covered BR+1.50=12.15 by ECGC guarantee Upto 90 days POST SHIPMENT CREDIT IN RUPEES (a) On demand bills for transit period (as specified by FEDAI) BR+1.50=12.15 (b) Usance bills (for total period comprising usance period of export bills, transit period as specified by FEDAI, and grace period, whichever applicable) i) Upto 180 days BR+1.50=12.15 ii) Upto 365 days for exporters under Gold Card Scheme BR+1.50=12.15 (C) Against incentives receivable from Govt. (covered by ECGC BR+1.50=12.15 Guarantee) Upto 90 days (d) Against undrawn balances (Upto 90 days) BR+1.50=12.15 (e) Against retention money (for supplies portion only) BR+1.50=12.15 payable within one year from the date of shipment (Upto 90 days) PRESHIPMENT CREDIT IN FOREIGN CURRENCY (a) Upto the due date (or the extended due date) of the LC Not exceeding 200 /firm order with a maximum of 180 days from the date of basis points over LIBOR advance.(see note no.2 below) /EURO LIBOR/ EURIBOR (b) Beyond 180 days and Upto 360 days Rate for initial period of 180 days prevailing at the time of extension plus 200 basis points i.e. 3(a) above plus 200 basis points. POST SHIPMENT CREDIT IN FOREIGN CURRENCY 41

Organization study
(a) On demand bills for transit period, as specified by FEDAI. (See note. No.2 below) Not exceeding 200 basis points over LIBOR / EURO LIBOR /EURIBOR Not exceeding 200 basis points over LIBOR / EURO LIBOR/EURIBOR Rate as in 4 (b) above plus 200 basis points

Against Usance bills (Credit for total period comprising usance period of Export Bills, transit period as specified by FEDAI, and grace period, wherever applicable)- Upto 6 months from the date of shipment (see note no. 2 below) (c) Export bills (Demand of Usance) realized after due date, but Upto date of crystallization 5 EXPORT CREDIT NOT OTHERWISE SPECIFIED (ECNOS) (a) Pre-shipment credit (see note no.3 below) BR + 6.00=16.65 (b) Post-shipment credit (see note no.3 below) BR + 6.00=16.65 6 ALL TYPES OF EXPORT CREDIT LIQUIDATED FROM LOCAL SOURCES (a) Pre-shipment credit BR+6+2=18.65 (b) Post-shipment credit BR+6+2=18.65 7 DEFERRED EXPORT CREDIT BR+5.50=16.15 NOTE: 1 For guidelines on extending due dates of pre and post-shipment export credit, please refer to General Circular no. 10019 dated 15.05.2010 and 10049 dated 21.07.2010 respectively 2 For releasing PCFC/BPFC/BDFC, branches should obtain prior approval from the competent authority as per the guidelines in General Circular no. 24/209 dated 20.06.2009 3 ECNOS rate should be applied in the case of: a) Overdue PCL, beyond the original / extended due date Upto the date of closure or Upto 360 days from the date of advance, whichever is earlier. b) Overdue PCL which are outstanding beyond 360 days, on the outstanding amount, from the date of original advance Upto the date of closure. c) Overdue FDBP/FUDBP/LAEBC, beyond the notional due date Upto the date of realisation. d) Crystallised PCFC/BPFC/BDFC, from the date of crystallisation Upto the date of closure from the export proceeds in the case of PCFC and Upto the date of realisation in the case of bills.

(b)

42

Organization study PART-F

BASE RATE 10. 65% P.A. W.E.F 01 st AUGUST 2011

TENOR % P.A. ADVANCE AGAINST TERM DEPOSITS INTEREST ON LOANS AGAINST DOMESTIC TERM DEPOSITS FOR STAFF AND EX-STAFF MEMBERS LTD/Overdraft (Secured) against own 1% above the Deposit Rate domestic deposits with a minimum margin of 10% FOR OTHER DEPOSITORS AND NON RESIDENT (ORDINARY) (NRO) DEPOSIT HOLDERS LTD/Overdraft (Secured) against own 2% above domestic deposits with a minimum margin of the Deposit Rate 15%. Loan against own JND balances with a BR+4.00=14.65 minimum margin of 20% All advances against third party deposits with Rate applicable relevant to the borrower a minimum margin of 15%. category with a minimum of BR+4 from time to time. INTEREST ON LOANS AGAINST NON RESIDENT TERM DEPOSITS NON RESIDENT EXTERNAL DEPOSITS (NRE) (1) Advances to depositors against their own 1.50% above the interest Rate payable on deposits with 10% margin. deposits. (2) Advances to residents against third party Upto Rs.2 lakhs deposits with 10% margin 2% above the interest Rate payable on the deposit OR 2% above BR, whichever is higher. Above Rs.2 lakhs : Personal purpose : 2% above the interest Rate payable on the deposit OR 3% over BR, whichever is higher. Above Rs.2 lakhs-Other than Personal purpose : 2% above the interest Rate payable on the deposit OR 4% over BR, whichever is higher.

43

Organization study
FOREIGN CURRENCY NON RESIDENT [FCNR (B)] DEPOSITS : (1) Advances to depositors against their BR+2.00=12.65 own deposits, with minimum margin of 15% (2) Advances to residents against third party Upto Rs.2 lakhs deposits with minimum margin of 15% 2% above the interest Rate payable on the deposit OR 2% above BR, whichever is higher. Above Rs.2.00 lakhs Personal purpose 2% above the interest Rate payable on the deposit OR 3% above BR, whichever is higher. Other than personal purpose 2% above the interest Rate payable on the deposit OR 4% above BR whichever is higher. Branches/ ROs are advised not to grant fresh loans or renew existing loans in excess of Rs. 1.00 crore against NRE and FCNR (B) deposits, either to depositors or to third parties. It is further directed that branches should not undertake artificial slicing of the loan amount to circumvent the ceiling. [Refer HOC No. 25/09 dated 28th June 2009.] Note : With regard to margin on Loans and advances against various kinds of term deposits of our Bank, Regional Heads have powers to approve reduction subject to maintenance of minimum margin of 10%. Concession if any, in interest Rate shall be approved only by the Chairman and Managing Director or by Executive Director in the absence of CMD. The branches should ensure the following: (a) Prompt recovery of interest debited to the loan account on monthly basis and; (b) The required margin is maintained in the account at any point of time.

44

Organization study PART-G

BASE RATE 10. 65% P.A. W.E.F 01 ST AUGUST 2011

% p.a. For certain specified categories (irrespective of the quantum of the loan and repayment period) Loans on the security of IVPs/ KVPs/ NSCs/ Units/ BR+4.00=14.65 Capital Investment Bonds/ SV of life insurance policies. Adhoc sanctions (other than export credit 1% above the Rate applicable facilities) (a) Interest on all advances of temporary nature such BR+8.00=18.65 as Current Account TODs and excess drawings in the sanctioned limits/ DP, drawals against instruments sent in clearing, etc. (irrespective of the Rate of interest for regular limit). (b) Overdrawing due to credit card transactions in 27.40 Savings/ Current/Overdraft/Cash Credit and other operative accounts (C) In case of cardholders opting for revolving credit: (i) On the revolving credit balance retained at 21.40 CCD HO (ii) After transfer of liability to the Branch 27.40 (iii) Overdue/ returned unpaid bills, invoked BGs, BR+8.00=18.65 defaults under DPG/Bills co-acceptance, devolvement under Inland & Foreign Letters of Credit. PENAL INTEREST a) For Priority Sector advances Upto Rs.25,000/Nil b) For Priority Sector Advances above Rs. 25,000/- 2.00 and all other Advances [including Export credit not otherwise specified (ECNOS)], overdue/
45

Organization study
overdrawn loan accounts and excess over sanctioned limits outstanding beyond the stipulated time and for non-submission/ delayed submission of stock statements/ QIS statements/ renewal proposal/ diversion of funds/ non adhering lending discipline etc. as per H.O Circular No.67/2000 dated 21/3/2000. c) Maximum applicable Rate of interest including BR+10.00=20.65 penal interest (other than Credit card overdrawings)

Organization study
1. Indian economy The global economy continues to recover amidst ongoing policy support and improving financial market conditions. The recovery process is led by Emerging Market Economies (EMEs), especially those in Asia, as growth remains weak in advanced economies. The global economy continues to face several challenges, such as, high levels of unemployment, which are close to 10% in the U.S. and the Euro area. Despite signs of renewed activity in manufacturing and improvement in retail sales, the prospects of economic recovery in Europe are clouded by fiscal strains in some countries. Core Inflation levels in major advanced economies are still moderating as the output gap persists and unemployment remains high. Inflation expectations also remain well anchored. In contrast, core inflation in EMEs, especially in Asia, has been rising. This has prompted Central Banks in some EMEs to begin phasing out their accommodative monetary policies. The Indian Economy performed well during 2009-10. The overall growth of GDP as per Advance Estimates of the Central Statistical Organization (CSO) was 7.2% in 2009-10representing an increase from 6.7% during 2008-09. The final real GDP growth for 2009-10,as perceived by RBI, may settle between 7.27.5%. The share of Agriculture, Industry and Services Sector in GDP is estimated at 14.6%, 28.2% and 57.2% respectively in 2009-10.

46

Organization study
During 2009-10 (April '09 -Jan.'10), Exports stood at US $131.8 billion, posting a decline of 17.9% as against the growth of 22.8% during the corresponding period last year. Imports during the similar period also recorded a decline of 19.8% as against growth of32% a year ago. India's Foreign Exchange Reserves stood at U.S. $ 279 billion at the end of March 2010. As regards recent Greek Debt Crisis, it could trigger short-term vulnerability, in terms of capital inflows in the Indian markets, though its long-term impact might not be severe. On the inflation front, Y-o-Y inflation in terms of Wholesale Price Index (WPI) was 9.9% as at March 2010, exceeding the RBI's baseline projection of8.5% for March 2010. Inflation as measured by Consumer Price Index (CPI) stood much higher at 16.2% (Y-o-Y) in January 2010. 2. Banking Scenario Growth in monetary and credit aggregates during 2009-10 remained broadly in line with the RBI's projections. Aggregate Deposits of Scheduled Commercial Banks (SCBs) recorded a Y-o-Y growth of 17% during the year, while Advances recorded a Y-o-Y growth of 16.7%compared to 18.2% last year. Scheduled Commercial Banks (SCBs) raised their deposit rates by 25-50 basis points between February and April 2010, signaling a reversal of the trend in deposit rates. On the lending side, the Benchmark Prime Lending rates (BPLRs) of SCBs have remained unchanged since July 2009, following reductions in the range of 25-100 basis points between March and June 2009. For most part of 2009-10, the main focus of the RBI was on gradual withdrawal of accommodative monetary policy stance, which it had adopted earlier, in response to the global economic crisis of 2008. This was necessitated by the need to rein in the burgeoning fiscal deficit. In continuation of the calibrated exit strategy, which it had pursed in the earlier year, the RBI, in its Monetary Policy Statement for 2010-11 has further raised the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 5 per cent to5.25 per cent and the reverse repo rate under the LAF by 25 basis points from 3.5 per cento 3.75 per cent with effect from April 20, 2010. Further, the CRR has been increased by25 basis points from 5.75 per cent to 6 per cent. These measures are expected to anchor inflationary expectations and contain inflation going forward. As liquidity in the banking system is likely to remain comfortable, credit expansion for sustaining the recovery may not be affected. 3. Outlook In its World Economic Outlook Update for January 2010, the IMF projected that global growth will recover from -0.8% in 2009 to 3.9% in 2010 and further to 4.3% in 2011. Three major factors that are likely to contribute to the global 47

Organization study
outlook are the massive monetary and fiscal support, improvement in confidence and a strong recovery in EMEs. On the domestic front, the Indian Economy is firmly on the recovery path. Exports have been expanding since October 2009, a trend that is expected to continue. The industrial recovery is increasingly becoming broad based. A sustained increase in bank credit and in the financial resources raised by the commercial sector from non-bank sources also suggest that the recovery is gaining momentum. On balance, under the assumption of a normal monsoon and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand, the baseline projection of real GDP growth for 2010-11 is placed at 8 per cent with an upward bias. On the Inflation front, keeping in view the domestic demand-supply balance and the global trend in commodity prices, projection for WPI Inflation is placed at 5.5%for March 2011 . The need for sustainable developmental efforts by financial institutions in India has assumed urgency and banks, in particular, can help contribute to this effort. RBI in its notification dated 20th November 2007 has advised banks to take note of the issues raised and consider addressing the same by putting in place an appropriate plan of action towards helping the cause of sustainable development. VIJAYA BANK'S PERFORMANCE IN 2009-10 4. Working Results Operating profit posted by the Bank for the year 200910 was Rs. 1056.96 Crore as compared to Rs.898.91 Crore in 2008-09, while the Net profit for the year 2009-10 amounted to Rs. 507.29 Crore as compared to Rs. 262.48 Crore in 2008-09, recording a growth rate of93.27%. On the deposit front, average cost of deposits decreased from 7.56% in 2008-09 to6.21% in 200910 mainly due to decrease in market interest rates and Bank's reduced recourse to highcost bulk deposits. However, the yield on advances recorded a decrease from 11.09% in 2008-09 to 10.26% in 2009-10, which was in keeping with the industry trend. The trends in Bank's financial results and important ratios are highlighted in the tables below:

48

Organization study

TABLE-1 Income-Expenditure Parameters

SI. No. 1. 2. 3. 4. i. ii. 5. 6. i. ii. 7. 8. 9. 10.

Item Interest Incomes Interest Expenditure Net Interest Income (1-2) Non-interest income Profit on sale of investments Other non-interest income Net Total Income (3+4) Operating expense Staff Expenses Other operating expenses Operating profit (5-6) Operating profit (excl. Treasury profit) Provisions and Contingencies Net profit

200809 5238 4113 1125 699 304 395 1824 925 598 327 899 595 636 262

200910 5201 3752 1449 680 283 397 2129 1072 706 366 1057 774 550 507

Annual increase (%) -0.71 -8.79 28.83 -2.77 -6.84 0.51 16.72 15.88 18.10 11.83 17.58 30.08 -13.63 93.27

TABLE-2 Profitability/Efficiency Ratios Parameters (%) SI. No. 1. 2. 3. 4. 5. 6 7. 8. Yield on funds Cost of funds Interest spread (1-2) Yield on advances Cost of deposits Net Interest Margin Yield on investments - excluding Trading Profit - including Trading Profit Other operating expenses to Average working funds 200809 8.88 6.97 1.91 11.09 7.56 2.04 7 72 9 38 0.55 200910 7.89 5.69 2.20 10.26 6.21 254 6.67 7.05 0.56

49

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9. 10. 11. 12. 13. 14. 15. Cost-Income Ratio Establishment cost to average working funds Return on Assets Return on Equity Capital Adequacy Ratio - Basel I - Basel II Gross Non-Performing Assets Net Non-Performing Assets 50.71 1.01 0.59 11.10 13.08 13.15 1.95 0.82 50.34 1.07 0.76 21.41 11.79 12.50 2.37 1 40

5. Dividend Taking into consideration the overall profitability position, the Board of Directors have recommended a dividend of Rs.2.50 per Equity Share of the face value of Rs. 10/-for the year 2009-10, amounting to Rs. 108.38 Crore. 6. Capital Adequacy Bank's capital adequacy ratio (Basel II) stood at 12.50% as on 31.03.2010 viesa-vies the Reserve Bank of India norm of 9%. The Tier I Capital Adequacy Ratio was 7.69% and Tier II ratio 4.81%. 7. Branch Network Fifty seven additional branches were opened during the year taking the total network of branches from 1101 in March 2009 to 1158 in March 2010 with an all-India footprint. Three Extension Counters were opened during 2009-10, taking the tally of Extension Counters to46. 8. Deposit Mobilization Total deposits of the Bank increased from Rs. 54535.43 Crore as on 31.3.2009 toRs.61931.74 Crore as on 31.3.2010, recording an annual growth rate of 13.56 %. CASA deposits recorded a 16.35% growth, accounting for 24.6% in the aggregate deposits. CASA deposit growth was driven by 20% growth in SB deposits, which crossed the Rs. 10000 Croremark during the year.

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During the year, Bank launched new product V-GenU Unnati RD Account for the Generation Next clients. The product received overwhelming response within a short span of about two months as 26139 accounts were opened with balance of Rs.1.64 Crore. A Deposit Campaign, covering Savings Account of different segments like the households, salaried class and other niche segments was also launched by virtue of which nearly 5 lakh accounts were opened mobilizing in all Rs. 640 40 Crore Apart from the Deposit campaigns, various activities were undertaken to nurture the new generation V-GenUTH SB Accountholders and HNI segment of SB accounts. All these led the SB deposit portfolio to post growth that was one of the highest. 9. Credit Expansion Gross advances of the Bank increased from Rs. 35874 63 Crore in March 2009 toRs.41934.53 Crore in March 2010, recording an annual growth rate of 16.89 %. The average gross credit recorded an annual growth rate of 8.35% from Rs. 34540.16 Crore in 2008-09 toRs.37424.90 Crore in 2009-10, reflecting low credit absorption trend for most part of the year under review. Infrastructure Finance Advances to Infrastructure sector increased from Rs. 7722 Crore in March 2009 toRs.10445 Crore in March 2010, registering a growth rate of 35.26%. Power sectors, Roads, Ports, Airports, Industrial Parks, SEZ, Pipelines for Gas/ Petroleum products transportation, Telecommunication sector etc., were the major areas under infrastructure financed by the Bank. Retail Credit The Bank continued to accord priority to its Retail Lending Schemes viz., Housing Loan, Education Loan, Jewel Loans etc. However, Retail Credit segment witnessed sluggish growth during the financial year 2009-10 in tune with the growth/trend prevailing in the industry on account of recessionary trends for most part of the year. The Bank disbursed Rs. 2857.98 Crore under Retail credit during the year & the amount outstanding as at March 2010 stood at Rs. 9348.90 Crore. Retail Credit Portfolio accounted for at 22.26% of the Bank's Gross Credit. The Bank disbursed Rs. 614.40 Crore under Housing loan, Rs. 144.44 Crore under Education loan and Rs. 359.46 Crore under Vehicle loans and Rs. 718.91 Crore under Jewel loan schemes during the year. The amount outstanding under Housing loan, Education loan, Motor Vehicles loans & Jewel Loan schemes, as on 31st March 2010, was Rs. 4525.60 Crore, Rs. 534.47Crore, Rs. 791.98 Crore and Rs. 571 Crore respectively. The 51

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Y-o-Y growth in Jewel loan segment was 65.90% and that under Education loan segment was 24%. The Bank also introduced, during the year, a new Retail product called V-Gold Cash Credit in order to cater to the needs of small businessmen, Retail traders and professionals, particularly in semi-urban and urban areas. During the year, the Bank entered into tie-up arrangements with auto majors like AshokLeyland, Mahindra & Mahindra, V.E. Commercial Vehicles Ltd., (Eicher Motors) &TATA Motors Ltd, to step up the portfolio under vehicle loans. Priority Sector Lending Total Priority Sector advances of the Bank increased to Rs. 14553 Crore as at the end of March 2010 as against Rs. 13450 Crore as at March 2009, registering a growth rate of 8.20% (Y-o-Y). Priority Sector Credit of the Bank constituted 40.57% of the Adjusted Net Bank Credit, as against the 40% stipulation. Agricultural Finance Direct Agricultural advances of the Bank as at March 2010 stood at Rs. 3608 Crore, as against Rs.3053 Crore as at March 2009, registering a growth rate of 18.18% over March2009. Total Agricultural advances (with 4.50% cap on Indirect Finance for agriculture)stood at Rs. 5222 Crore, which formed 14.56% of the Adjusted Net Bank Credit, as against the norm of 18%. Under Special Agricultural Credit Plan, the Bank disbursed Rs. 4103 Crore during the year 2009-10, as against the target of Rs. 4713 Crore, which works out to an achievement ratio of 87.06%. Kisan Credit Card scheme During the year under review, the Bank issued 42348 Kisan Cards and disbursed Rs. 336.27Crore under the Scheme. The Bank also launched ATM enabled Kisan Credit Cards at some select branches for the benefit of farmers. Coverage of new farmers During the year, the Bank financed 39728 new farmers and disbursed Rs. 430.47 Crore under various agricultural activities. The average number of new farmers financed comes to78 as against the Govt, of India' stipulation of a minimum of 100 new farmers per rural and semi urban branch. 52

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Financing Micro Small and Medium Enterprises (MSME): Advances to Micro Small and Medium Enterprises increased to Rs. 5436 crore as at March2010 from Rs. 4552 Crore as at March 2009, signifying a Y-o-Y growth of 19.42%. As per the directives of Government of India, advances under the Micro, Small and Medium Enterprises(MSME) are to be doubled over a period of five years ended 2009-10. The Bank achieved this in March 2008 itself. Advances to Weaker Sections: As at March 2010, outstanding advances to weaker sections stood at Rs. 3462 Crore, which constitutes 9.65% of the ANBC as against the stipulated norm of 10%. Credit to Women beneficiaries Advances to Women beneficiaries stood at Rs. 2342 Crore as at March 2010 as againstRs.2052 Crore as at March 2009, registering a growth rate of 14.13%. Against the stipulated benchmark level of 5% of net bank credit to women, the Bank's achievement stood at 6.52%. Advances to SC / ST beneficiaries Bank's total advances to SC / ST clients stood at Rs. 705 Crore as at March 2010,against Rs. 441 Crore as at March 2009, showing a 59.86% growth during the year. Credit to Minority Communities: Advances to Minority Communities stood at Rs. 1566 Crore as at March 2010, constituting10.75% of total priority sector advances. Lending under Govt. Sponsored Schemes: Bank continued to accord emphasis on implementation of Government sponsored schemes. As at March 2010, total out standings under such schemes amounted to Rs. 243.74 Crore, involving 26141 beneficiaries. Self Help Groups (SHGs) During the year 2009-10, the Bank financed 44243 SHGs and disbursed Rs. 244 Crore. Cumulatively, the Bank so far financed 118257 SHGs and disbursed Rs. 646 Crore. In recognition of its stellar performance in this vital area, the Bank was conferred Best Performance Award for SHG-Bank Linkage in the State of Karnataka, for 2008-09. 53

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Janashree Bima Yojana It is one of the Schemes of LIC of India, wherein women members of SHGs are getting life cover and also insurance against permanent disability. Besides, their children studying in 9th to 12th Standard are also provided with scholarship. Bank implemented the scheme for the benefit of women members of various SHGs. It has so far covered 1735members and disbursed scholarship of Rs.1.36 lakhs to eligible students. Visveshvaraya Grameena Bank: Visveshvaraya Grameena Bank (VGB), a Regional Rural Bank (RRB) sponsored by the Bank continued to make good progress during 2009-10. VGB with a total network of 30 branches in Mandya District of Karnataka State, had total deposits and advances of Rs. 191.35 Crore andRs.133.41 Crore respectively as at March 2010. The performance and working results of the VGB have been quite encouraging. VGB posted a net profit of Rs. 335.48 lakhs on March 31, 2010. Agricultural Debt Waiver and Debt Relief Scheme - 2008 The Bank actively participated in the Agriculture Debt Waiver and Debt Relief scheme of Government of India. Under the scheme, the Bank extended loan waiver benefit to 47807small and marginal farmers amounting to Rs. 147.12 Crore and identified relief benefit to21664 other farmers amounting to Rs. 60.41 Crore. Financial Inclusion As at March 2010, Bank had 2.72 lakhs No-frill accounts, with balance of Rs. 29.99Crore. After successful implementation of the first phase of Financial Inclusion in dallits three districts in Karnataka, Bank has taken forward the initiative to provide banking services at the door steps of its clients through Business Correspondent Model with Smartcard/ Hand Held Machine. Under Branchless banking, Bank has covered 14 villages in Karnataka State through 5 business correspondents/sub-Agents and issued 2300 smart cards as on March 2010. Loan Restructuring Keeping in view the prevailing trends in Industry and other sectors, the Bank restructured eligible advances of needy borrowers, thus giving respite to these sectors affected by economic recession. During the year, the Bank restructured 7108 loan accounts involving an amount of Rs.1563 Crore, taking the cumulative number of accounts restructured and amount to 16760 and Rs.2573 Crore respectively. 10. Asset Quality 54

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The Bank continued its focus on maintaining quality assets along with thrust on preventing fresh slippages. It initiated and continued to emphasize various measures in this direction, including the following: Accounts showing signs of stress / likely default in dues are identified and treated as Special Watch accounts and are closely monitored. Wherever feasible, such assets are restructured, with additional need-based credit limits considered in deserving cases, to prevent fresh slippages. In case of willful defaulters, stringent recovery measures, including legal options like Securitization, Lok Adalats / DRTs, etc., are promptly resorted to. To facilitate speedy recovery, 'Vijaya Adalats ' are regularly conducted to settle dues of defaulters amicably. During the year, Bank could recover Rs. 35.66 Crore under 5594 accounts by way of such settlements. The gross Non-Performing Assets of the Bank as on March 2010 worked out to 2.37 percent, while net NPA ratio was 1.40 per cent. During the year 2009-10, Bank could affect total cash recovery of Rs. 424.82 Crore (including interest) and upgraded NPAs amounting to Rs. 163.10 Crore. Further, the Bank also made provision of Rs. 194.59 Crore for the unexpected defaults, apart from having a floating provision of Rs. 213 Crore as on March31, 2010. The Provision Coverage Ratio (including PWO) as at March 2010 worked out to64.24% 11. Investment and Fund Management Total investment portfolio of the Bank increased from Rs. 17388 Crore as on March 31,2009 to Rs.21107 Crore as on March 31, 2010. The average yield on investments (excluding profit on sale of investments) during the year worked out to 6.67% as against 7.72% in2008-09. The liquidity position in the Bank was generally comfortable throughout the year under review. The Bank also complied with CRR/SLR requirements as stipulated by Reserve Bank of India consistently during the year. The Bank has successfully implemented the ITMS (Integrated Treasury Management Software) during the financial year and the same is interfaced with CBS platform. Implementation of RTGS & NEFT The Bank joined the Real Time Gross Settlement (RTGS) system on June 14, 2004 and has-been undertaking customer transactions with effect from January 12, 2005. As on March 31,2010, all Branches/ Extension counters/ Service Branches and Regional Offices of the Bank were RTGS enabled. The Bank joined the National Electronic Funds Transfer (NEFT) scheme with effect 55

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from December 7, 2006. NEFT facility has been extended to cover all our RTGS enabled branches /Offices. 12. Risk Management Risk management function in the Bank is overseen by several committees, including Board level Committee, namely, Risk Management Committee of the Board (RMCB). The risk management policies are implemented through Credit Risk Management Committee (CRMC),Operational Risk Management Committee (ORMC) and Asset Liability Management Committee(ALCO) at the corporate level, headed by the Chairman and Managing Director. Apart from the primary risk policies, Bank has put in place several important risk related policies, such as, Internal Capital Adequacy Assessment Process (ICAAP), Business Continuity and Disaster Recovery Plan, Disclosure, Stress Testing, Collateral Management, Adoption of External Rating, Managing Risks on Outsourcing of Financial Services, IT security, Country Risk Management policies, etc. These risk management policies are being reviewed and revised periodically. The Bank has carried out self assessment of its Risk Profile, based on the RBI prescribed Risk Profile Templates, on quarterly basis, vetted by a Quality Assurance Team, before submission to RBI and the Board. Credit Risk Lending Policy of the Bank is being revised from time to time, to include, among others, such aspects as risk appetite, risk based pricing, risk diversification/mitigation strategy, prudential limits, exposure ceiling, preferred sector growth strategies, credit approval process, documentation and security standards, security valuation, etc. In order to enhance the effectiveness of Loan Review Mechanism, the Bank introduced Onsite Credit Audit for exposures of Rs. 5 crore and above and also modified its Loan Review Mechanism for exposures below Rs. 5 crore. The Bank has also complied with the RB requirement of at least 30 to 40% of the credit exposures that are to be covered under the Loan Review Mechanism / Credit Audit. Stress Test on Credit Risk is also carried out on annual basis, in terms of the Stress Test policy of the Bank. The Bank has put in place a comprehensive risk rating / scoring system that serves as a single point indicator of diverse risk factors on the counterparty and for taking credit decision in a prudent manner. A separate risk scoring model for Housing and other Retail sectors has also been evolved so as to ensure higher coverage under risk rating exercise, presently around 90%. Migration analysis is also carried out on quarterly basis in respect of exposures 56

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of Rs. 1 Crore and above. From Sept 09, the Bank has introduced Credit risk rating software, which is Basel II compliant for conducting risk rating of all retail and non-retail loans. This software enables the Bank to ensure that all types of exposures are covered under risk rating before sanctioning of any loan so as to maintain the credit quality and also to move towards compliance with the advanced approaches under Basel II. ALM and Market Risk Asset Liability Management Committee (ALCO) in the Bank has devised appropriate tolerance limits for mismatches in different time buckets, for managing liquidity and interest rate risks. These limits are being monitored at fortnightly intervals and are also being placed before the Board. Market risk assessment is done by tools like VaR (Value at Risk), AGL (Aggregate Gap Limit) and Duration Gap Analysis. Single country limits and group limits for all countries have also been put in place to manage and monitor the country risk. Mid-office reports on treasury operations are also placed before ALCO on a monthly basis, covering information about exceptions, reviews and compliance. Interest rate risk on entire credit portfolio is identified and measured through tools like Earnings at Risk (EaR). Besides, Portfolio Sensitivity analysis is conducted and reviewed by the top management. Further, Contingency Funding Plans, Prudential Ratios /Limits have been set and actual position is monitored as part of Liquidity Risk Management. Stress Test on Interest Rate Risk, Liquidity Risk, Forex, etc on different scenarios are also carried out on quarterly basis and appraised to ALCO. To monitor short-term liquidity, ALM statements and Mid Office reports on daily basis are also generated. Operational Risk With a view to mitigating various Operational Risks, several studies were conducted during the year. These include studies on functioning of the data centre, Retail Assets Centralized Processing Cells, RTGS/NEFT etc. The Bank has started implementing the qualifying criteria for the Standardized Approach by putting critical business processes under RCSA (Risk & Control Self Assessment) exercise. Two RCSA workshops at Head Office level and 8 RCSA workshops at Regional Office level were conducted during the year wherein assessment of risks and the corresponding control measures were evaluated in respect of 7 operational areas. The Bank has constituted a Business Continuity Management Committee (BCMC) at the apex level and various Emergency Response Teams at HO/RO/ Branches to oversee implementation and management of the business continuity and related activities. During the year, the Bank also reviewed its Business Continuity & Disaster Recovery Plan. 57

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Basel-ll Compliance In order to comply with the Basel II norms, the Bank has been carrying out parallel run exercise on the capital adequacy calculation in the RBI prescribed format, on a quarterly basis and apprising the Board, apart from submitting the same to RBI. Besides, the Bank has entered into MOU with four rating agencies viz. CRISIL, ICRA,CARE and Fitch, for risk rating of its corporate clients. In compliance with the RBI guidelines on Standardised Approach for Credit Risk, Standardised Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk, Bank has complied with Basel II norms and the overall Capital Adequacy Ratio as at 31st March 2010 worked out to 12.5 %, as against the minimum stipulated norm of 9%. Integrated Risk Management System (IRMS) Project. In order to facilitate smooth and effective transition to the Basel-ll framework, the Bank has taken up implementation of an Integrated Risk Management System (IRMS). The IRMS Project consists of six solutions, viz., Credit Risk Management (CRM), Market Risk Management (MRM), Operational Risk Management (ORM), Credit Risk Rating Solution(CRR) (Retail & Non-Retail), Asset Liability Management (ALM) and Funds Transfer Pricing (FTP) Solution. During the year, the Bank implemented Phase I of this project i.e. achieving the Standardized Approaches and is steadily moving forward towards implementing the Advanced Approaches. 13. International Banking As at March 2010, foreign business turnover of the Bank stood at Rs. 12530 Crore, comprising Rs.5479 Crore under export, Rs. 2360 Crore under imports and Rs. 4691 Crore under remittance business. The Bank is participating in the Rupee Drawing Arrangement with six Exchange Houses and three non-resident banks from Middle East. Besides, it has drawing arrangement and the Cheque collection facility with correspondent Banks abroad to serve clients. "Vijaya Bank Speed Remittance" facility facilitates online credit of remittances from Gulf Countries through Exchange houses directly to the customer's account with the Bank's branches. Presently, this facility is extended to UAE Exchange Centre LLC.Abu Dhabi, UAE. Similar arrangements are planned to be forged with other Exchange Houses also. 58

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With a view to improving the NRI deposits, the bank has deputed its officials to UAE for canvassing NRI accounts of expatriate Indians. 14. Merchant Banking & Allied Activities Vijaya Bank is a SEBI registered category I Merchant Banker, Bankers to Issue, Debenture Trustee and Depository Participant. The Bank is also registered as 'Self Certified Syndicate Bank' (SCSB) for accepting IPO/Rights issue applications under Applications Supported by Blocked Amount (ASBA) scheme. The Bank undertakes Payment Bankers Assignments for payment of Interest/Dividend/Refund orders of Corporate. Bank also offers Depository Services to its clients. Towards providing value added service to the investor community, the Bank proposes to launch an Online Trading portal, now in advanced stage of implementation. Government Business Amongst various Government businesses, Bank is collecting Direct Tax at its 288designated branches and also Indirect Tax at 37 branches. E-Payment facility for the payment of taxes is available to customers through all branches. Besides, PPF accounts cane opened in 153 designated branches and State and Central pension payments are disbursed through all the branches of the Bank. 15. Card Business Under Credit card operations of the Bank, the cumulative card base as of March 2010 was1.48 lakh, with a turnover of Rs. 445 Crore. There is 1098 Merchant Establishment enrolled with the Bank. Under Debit cards, the bank continued to make good progress during 2009-10. As at March2010, Debit card base of the bank stood at 11.35 lakh compared to 7.05 lakh as at the end of last financial year. Bank offers a special Savings Bank deposit scheme, V-GenU SB account, for minors. Account holders of the scheme who are above 12 years of age are issued with specially designed ATM cards, for cash withdrawal at the Bank's ATMs. 16. Marketing Setup Marketing Division at the bank's H.O. is actively engaged in designing new products, reviewing and fine-tuning existing products, conducting marketing campaigns, creating awareness on technology-backed Alternate Delivery Channels (ADC) offered by the Bank. 59

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To nurture the customer friendly schemes of the Bank, like V-GenU SB Account-GenU Unnati RD Account, V-Platinum SB Account etc, Bank is sending Greeting cards to the customers on important occasions like birthdays, Examinations, Festivals etc. To enhance the hidden talents among children, VGenU Drawing Competitions for different age groups were also conducted and over 5000 responses were received. Interactive events like V-GenU 'Hungama' were held at apartment complexes in major cities to give boost to the growth of the new generation products of the bank. The Bank also conducted the 24th State Level Inter-High School Vijaya Bank V-GenU Quiz Contest during the year. All these initiatives yielded very encouraging results for the Bank's core deposit portfolio and stronger relationship building with such clients. 17. Publicity and Public Relations The Bank is continuing the existing outdoor publicity projects aimed at achieving heightened visibility through displays at prominent locations like Railway Stations, Bus Stands and hoardings at prominent public places, highways and airports. During the last financial year, the Bank also carried out a major print media Ad campaign in the North and Central India in Hindi and regional language to elevate the visibility of Bank and its products /services. 18. Customer Service and Redressal of Complaints There is a full fledged Grievance Redressal Mechanism in the Bank and all efforts are being made to resolve complaints within the stipulated time The Bank has constituted standing Committee on Customer Service, which includes a customer as its member. A Customer Service Committee of the Board, which also includes a customer as one of its members, has also been constituted by the Bank. These Committees are meeting periodically and evaluating and monitoring the customer service and addressing the deficiencies. The Bank also conducted a Customer Service study in Bangalore city and arrived at informative inference. The study is proposed to be extended to other metro cities, for proactively involving customers as integral part of 19. Information Technology (IT) Info Tech Progress The Bank implemented, to varying extents, an Integrated Treasury Management System(ITMS), Human Resources Management System (HRMS), and Integrated Risk Management System(IRMS) during the year 2009-10. These systems have been operationalised and integrated with the Core Banking System on a centralized platform. These projects are expected to be rolled out enterprise wide during the current financial year. 60

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Having brought all branches under Core Banking Solution, RTGS and NEFT services are available to the Bank's customers from all its branches. Since Straight Through Processing(STP) has been enabled in RTGS and NEFT, the customers do enjoy the benefit of immediate inter-bank fund transfer facility. During the year under review, SMS Alert facility was launched by the Bank. As at March31, 2010, about 3.65 lakh customers of the Bank have opted for this service offered free with value propositions. The Bank has upgraded the infrastructure including the hardware at its Data Centre at Bangalore and the Disaster Recovery Centre at Mumbai to take care of the increased requirement of computing capacity after migration of all branches to CBS. Internet Banking: V-Net Banking, the internet banking module of the Bank was upgraded to a higher version during 2009-10. V-Net Banking now facilitates features like online funds transfer to other Banks through NEFT/RTGS, Online Registration of beneficiary, availability of the latest challan formats for remittance of service tax, Central Excise etc in addition to the earlier facilities like balance enquiry, account statement, intra bank funds transfer, transaction related SMS alerts, payment of indirect taxes, direct taxes and utility bill payments etc. With all the branches working on Core Banking platform, all customers of the Bank can avail this facility with the convenience of accessing and transacting in their account from any location at any time through Internet. So far, 44887 clients are enrolled under the V-Net banking module. ATMs During the year 2009-10, 71 more ATMs were operationalised, taking the number of Bank's ATMs to 435 as at the end of March 2010. Bank's customers have now access to more than56000 ATMs connected under National Financial Switch (NFS) across the country. Cheque Truncation System (C.T.S) As directed by the Reserve Bank of India, the Bank has successfully implemented cheque truncation system in NCR of Delhi. Bank is awaiting RBI's directions for rollout of the C.T.S. in other centres. 20. Human Resources Management Manpower & Staff Productivity: Total staff strength of the Bank stood at 11565 in March 2010 as compared to 11,975 in March 2009. Of the total staff, 5194 are Officers, 3866 Clerical Staff 61

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and 2505 are in the subordinate cadre. The number of women employees as at the end of March 2010 stood at 2211consisting of 905 Officers and 1306 Award Staff, constituting 19.12% of total employees in the Bank. As at the end of March 2010, there were 199 employees belonging to physically challenged category and 568 employees belonging to Ex-Servicemen category. Productivity, measured by Business per Employee as of March 2010 stood at Rs.9.30 Crore as against Rs.7.85 Crore for the financial year ended March 2009. Recruitment and Promotions: Bank is in the process of recruiting of 500 Clerks, besides recruiting 123 officers in JMG-S-I and 3 officers in MMG-II. Through Lateral recruitment, the Bank also roped in 112officials in MMG-S-II and 6 officials in MMG-S-III cadres during 2009-10. Training: Training system in the Bank has been strengthened by providing additional and competent manpower and enhanced budgetary allocation. The training curriculum has also been fine-tuned, in tune with the changing market dynamics. Four executives attended Seminars/ Conferences held abroad during the year, while 348Branch Heads and 6 Faculty Members were trained on 'Effective Branch Management' programme conducted by NIBM, Pane. The Bank had imparted Comprehensive Training for 85 officials in Credit, 60 officials in Forex and 90 officials in Marketing during the year 2009-10. In all, the Bank, during the last financial year, imparted training to 7031 employees constituting about 61% of the total employees. While 6289 employees had undergone training in the Bank's own establishments, 742 were trained at reputed external training institutions including overseas institutions. SC/ST Employees: Out of the total manpower of 11565 as at the end of March 2010, 1636 employees belong to SC category and 588 to ST category. A separate Cell for SC/ST has been created to look into the matters pertaining to these employees and also to supervise implementation of Government of India guidelines in service matters in respect of SCs/STs. SC/ST Cells are functioning in all the Regional Offices as well. The Chief Liaison Officer at H.O. is involved in all the policy decisions concerning SC/ST employees. Quarterly meetings are held between representatives of SC/ST employees and the management. The Bank is also arranging pre-recruitment / pre-promotion training for SCs/STs regularly. Further, the Bank has designated one General Manager as Chief Liaison Officer to attend to the grievances of OBC and Minority Community Employees Bank 62

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is complying with the Reservation Policy of the Govt, of India, including reservation for Persons with Disability. Staff Relation : Continuation of the pro-active and humanistic approach by the Bank during the year yielded positive results for the Bank as it scaled new heights of excellence. Industrial relations in the Bank were cordial and harmonious, during the year. The consultative committee meetings and negotiating committee meetings were held with the representatives of the recognized unions at regular intervals to sort out the grievances of the employees and to settle the disputes, if any, amicably. These meetings were attended by the top executives of the Bank as well. Human Resources Management System: To enable faster decision making and error-free centralized employees' data management, the Bank is implementing HRMS (PeopleSoft) Software. Several Modules of the software have already been operationalised. 21. Housekeeping Reconciliation with regard to all inter bank transactions has been drawn up to31.03.2010. As against the Reserve Bank of India Benchmark of six months for reconciliation of outstanding inter branch entries, Bank's present status is 3 months. All outstanding entries under different sensitive accounts are also being followed up promptly. Except entries relating to pending court cases, all other long outstanding entries have been eliminated. 22. Internal Inspection The Bank has put in place a well-defined Audit policy. The Audit Committee of Board oversees the performance of audit functions on a regular basis, providing guidance and directions for improvement in the audit system and internal controls in the Bank. The Bank conducts regularly Risk Based Internal Audit and Surprise Inspections. In addition, inspection of 41 Forex Branches, 12 Services Branches, 27 Currency Chests, 10Regional Offices and 7 Head Office Departments were conducted during the year. Branches are also subjected to IS Audit in accordance with the IS Audit Policy Bank has covered 76.54% of its business under concurrent audit by external firms of Chartered Accountants whereas 17 branches were subjected to Concurrent Audit by our Internal Inspectors. Bank is making use of 63

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Information Technology in its audit system including Automation in Risk Based Internal Audit System (RBIA). 23. Vigilance The Vigilance Department at the Bank's Head Office is headed by Chief Vigilance Officer in the rank of Chief General Manager. The Fraud Prevention & Monitoring Ceil is also functioning under the Vigilance Department. The Vigilance Department overseas all vigilance functions of the Bank as per the guidelines of Central Vigilance Commission. Cases of frauds involving Rs. 1 lakh & above are placed before the Board of Directors, reports forwarded to RBI as and when frauds are detected and reported. The Audit Committee of the Board is also apprised of frauds of Rs. 1 lakh & above on quarterly basis. Incompliance with RBI guidelines, a Special Committee of the Board is constituted to review large value frauds involving Rs. 1 Crore & above. After studying modus operandi of frauds detected, Bank issues suitable instructions to the field functionaries as preventive Vigilance measure. Bank has also put in place "Whistle-Blowers Policy; accordingly, it is the bounden duty of staff members to report to the Chief Vigilance Officer/ Executive Director/ Chairman & Managing Director the incidence of fraud/malpractices, etc. which come to their knowledge in the course of their day-to-day functioning. Further, the Vigilance Department carries out surprise inspection of branches, concentrating on preventive vigilance by Field Vigilance Officers stationed at Regional Offices. All efforts are made to plug the loopholes in the existing system to prevent recurrence of similar frauds and to strengthen the preventive vigilance machinery. 24. Compliance Board approved Compliance Policy is a requirement under the extant RBI guidelines and accordingly, the Bank adopted a Compliance Policy. The Compliance Department, H.O. ensures compliance with various communications received at Head Office from Govt, of India, Reserve Bank of India, IBA and others by sending all such communications to the concerned operational Departments for necessary action. The Compliance Department is headed by the Chief Compliance Office-who is in the rank of a Deputy General Manager. 25. Right to Information Act. 2005 Government of India has enacted the Right to Information Act, 2005 which has come into force on October 12, 2005. The Act provides for right to every citizens 64

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to secure access to information under the control of public authorities, consistent with public interest. It aims to promote openness, transparency and accountability in administration and in relation to matters connected therewith or incidental thereto. The second line Executive at the Regional Offices are designated as the Public Information Officer and the Regional Heads are designated as the Appellate Authority under the Act. At the Head Office, a Deputy General Manager is designated as the Public Information Officer and a General Manager as the Appellate Authority. As per the provisions of the Act, various information sought under the Act is being provided within the prescribed time frame. During the year 2009-10, the Bank received 377applications and 52 appeals under the Act and the same have been responded to by the Bank. 26. Security Arrangements The Bank has a well-established Security set-up, facilitating all the essential and mandatory security arrangements at branches and currency chests as per RBI/IBA guidelines.1056 Branches of the Bank are provided with strong room conforming to RBI specification. However, branches without strong room as per RBI specification are proposed to be shifted to new premises in a phased manner. CCTV Surveillance System has been installed at select branches keeping in view the threat perception, volume of cash and valuables handled and need for continuous surveillance. The Bank has 29 currency chests. Police guards have been provided to 28 currency chests. A private security agency sponsored by Directorate General of Resettlement has-been arranged for round the clock guarding of Bank's Bhubaneswar Currency Chest. Training, including firing practice organized for Armed Guards deployed at currency chests / branches, is imparted on an annual basis. Security Committees formed at Regional Offices and at the Head Office meet periodically to review various security aspects. The Bank has 414 Armed Guards posted to vulnerable branches / cash escort duties at currency chests and for guarding Head Office. There were no incidents of Dacoity /Robbery, except, eight incidents of Burglary at branches reported. However, there was no loss of cash or property. 27. Awards In recognition of performance in implementing Hindi Language, the Bank was awarded III prize under the prestigious INDIRA GANDHI RAJBHASHA PURASKAR for the year 2007-08. The Bank has also been awarded II prize in 65

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Region 'C" for Progressive Use of Hindi under Reserve Bank Rajbhasha Shield Scheme for the year 2008-09. The Bank was awarded I prize by Regional Implementation Office (North- East), Ministry of Home, Govt, of India in North Eastern Region for Progressive Use of Hindi for the year2008-09. SLBC Gujarat also conferred on the Bank III prize for effective implementation of the Official Language. The Bank's Regional Office, Bangalore (North) was awarded I Prize by TOLIC, Bangalore for effective Implementation of Official Language for the year 200809. Also Regional Offices, Kolkata and Hubli, were awarded II Prize by TOLIC, Kolkata and Hubli respectively for effective Implementation of Official Language. Regional Office, Ahmadabad has been awarded Consolation prize by TOLIC, Ahmadabad during the year. The staff members working in Bangalore city participated in the Inter-Bank competitions conducted under the aegis of TOLIC. 12 competitions were conducted, in which our Bank bagged 9 prizes, out which 2 were First prizes. During the year, the Bank received an award from the NABARD in recognition of the highest share of SHG business to its overall business, under SHG Bank linkage programme or the year 2008-09, among commercial Banks in the State of Karnataka. 28. Corporate Social Responsibility As a responsible and responsive corporate citizen, Vijaya Bank consistently engages itself in community and social investment. Among the various initiatives, For the cause of promoting Education, Bank donated a class Room to St. MariaGoretti Higher Primary School at Kukkundur, Karkala, contributed Rs. 5 lakhs to BharatiyaVidya Bhavan, Shimoga, for construction of Building, donated computers to S.B. High School at Holalkere, contributed to 'Akshaya Patra' school children's mid-day meal programme, in Karnataka State. Financial Inclusion is yet another aspect where the Bank has actively involved itself. 29. Board meetings and Meetings of other Sub Committees of the Board During the year, 12 Meetings of the Board of Directors, 19 Meetings of the ManagementCommittee of the Board, 9 Meetings of the Audit Committee of the Board, 4 Meetings of the Directors' Promotion Committee, 6 Meetings of the Risk Management Committee of the Board,4 Meetings of the Committee to Review Large Value Frauds of Rs. 1 Crore and above, 2Meetings of the Remuneration Committee, one Meeting of the Nomination Committee, 4Meetings of the Customer Service Committee, 4 Meetings of the 66

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Shareholders'/ Investors Grievances Committee and 12 Meetings of the Share Transfer Committee were held. 30. Board of Directors During the year 2009-10, the following changes have taken place in the Constitution of the Bank's Board :1. Shri. S C Kalia, Executive Director demitted the Office of Vijaya Bank on20.11.2009. 2. Mrs. Shubhalakshmi Panse has been appointed as Executive Director of the Bank w.e.f.20.11.09 vice Shri. S.C. Kalia. 3. Shri. Brij Mohan Sharma, Non Official Director appointed under CA category ceased to be the Director w.e.f. 2.1.2010. The Bank's Board as on 31st March. 2010 comprised the following Directors :i. Shri Albert Tauro, Chairman & Managing Director ii. Mrs. Shubhalakshmi Panse, Executive Director iii. Shri G.B. Singh, Government Nominee Director iv. Shri K. Venkatappa, RBI Nominee Director v. Shri P. Shantharam Shetty, Workmen Director vi. Shri Ranjan Shetty, Officer-employee Director vii. Shri Nishank Kumar Jain, Non Official Director viii. Shri Sridhar Cherukuri, Non Official Director ix. Shri B. Ibrahim, Non Official Director x. Shri Ashok Kumar, I.A.S (Retd.), Shareholder Director xi. Shri Ashok Kumar Shetty, Shareholder Director xii. Shri S. Ananthan, Shareholder Director The Board of Directors place on record their appreciation of the valuable services rendered by Shri. SC. Kalia and Shri. Brij Mohan Sharma during their respective tenure in the Bank. Acknowledgement The Board of Directors place on record their sincere appreciation for the excellent support and co-operation extended to the Bank by all customers, shareholders, staff members, financial institutions and other Banks, the Reserve Bank of India, the State Governments, the Securities and Exchange Board of India and the Government of India in improving its overall performance during the year 2009-10.
for and on behalf of the Board of Directors

Head Office, Bangalore Dated, the 30 April, 2010

Albert Tauro Chairman & Managing Director

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Organization structure

chief manager
assistant branch manager

clerks

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Departments in a Bank
As soon as it becomes necessary, on account of volume of business, to divide the work in a bank into divisions, each employing a group of clerks, such division is organized into a department having a department head who is usually a teller, a head bookkeeper, or perhaps a junior officer. In the very large banks the executive staff is itself organized into groups, and there may be a vice - president and one or two assistant cashiers in charge of each important department. The work of a department in a large bank is nothing more nor less than the work of a single man in a small bank, apportioned among several men. For example, the receiving teller in a five-man bank will take the deposit, count the cash, examine the checks, assort them as to place payable, enter them upon the proper records and make a settlement or proof at the end of the day. In a large bank each of these operations is performed by a different man or group of clerks under the direction of the receiving teller, who is head of the department. It may be that he himself will do very little if any of the detail work. He becomes the manager. Frequently we find a department within a department, as for example, the money department within the paying teller's department.

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The ordinary departments, classified as to group, may be described as follows

Chief Manager

Assistant branch manager

Executives

Tellers

Book keepers

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Executives

Loan or discount department

Credit department

Analysis or statistical department

Auditors department

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EXECUTIVES DEPARTMENT
Loan or Discount Department (Executive): Receives notes submitted for discount or makes loans. Figures discount and interest. Has charge of collateral securing loans. Credit Department (Executive): Secures and collects information relating to borrowers. Checks statements submitted by them. In charge of credit files which contain information as to the reliability, business habits and financial strength of borrowers. Analysis or Statistical Department (Executive): Usually found in city banks. Analyzes the accounts of depositors to determine which are profitable and which are losing accounts. Makes monthly reports to officers. In charge of statistics relating to the bank's accounts. Auditor's Department (Executive): Responsible for the settlement of the various departments. Reconciles the accounts with other banks. Certifies interest calculations.

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Teller department

Paying teller

Receiving teller

Note teller

Collection departmnt

Transit departmnt

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TELLER DEPARTMENT
Paying Teller's Department (Teller): Pays or certifies checks. In charge of the signature book or cards bearing the authorized signatures of all depositors. Ships currency. In charge of the vault cash and reserves. Receiving Teller's Department (Teller): Receives deposits. Distributes checks to bookkeepers and other departments. Prepares exchanges for clearing house. Turns cash over to the paying teller at end of day. Note Teller's Department (Teller): Collects notes and drafts due at the bank or elsewhere in the city. Usually in charge of the runners or messenger department, which is a subdivision. Collection Department (Teller): Collects notes, drafts, and other "time" items when payable out of town. Credits accounts of depositors when collections are advised paid. Transit Department (Teller): This is a subdivision of the receiving teller's department and may be known by other terms, such as correspondence, foreign check, miscellaneous check or country check department. Assorts checks payable out of town, endorses them and lists them on letters addressed to other banks. Gives totals of outgoing or remittance letters to general ledger bookkeeper at end of day.

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Book keepers

Individual ledger Department

General ledger department

Country bank account department

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BOOK KEEPING DEPARTMENT

Individual Ledger Department (Bookkeepers): Keeps the records of the balances of individual depositors. May be subdivided as to kind of accounts (savings, dealers), in addition to ordinary alphabetical division. May balance pass-books or there may be a separate department for this purpose using the statement system. Figures interest on accounts. General Ledger Department (Bookkeepers): Keeps the general or control accounts of the bank. Makes up the bank's statement of condition. Country Bank Account Department (Bookkeepers): Confined to city banks. Keeps the accounts of other banks, usually consisting of reserve accounts In addition to these departments, there are others to be found either in very large banks or even in small banks operating special features. Among the first might be noted the coupon department, exchange department, purchasing department, filing department, interest department, new business department, etc., all of which terms are self-explanatory. Among special departments may be mentioned the bond department, safety deposit department, special deposit department (securities and valuables stored with the bank, but not placed in private boxes). In trust companies there is the trust department which may have a complete independent organization of its own, with officers, bookkeepers and other clerks. This department has charge of the trust accounts.

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Bibliography

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