INDEX

Sr No. Chapter Name Page No.1 INTRODUCTION1.1 General Introduction about the Banking sector 1

1.2 Banking Sector in the Past 3

1.3 Indian Banking Scenario 2011 4

1.4 Future of the Indian Banking Market 5

2 PROFILE OF THE ORGANIZATION

2.1 Organizational Chart of the Bank 6

2.2 Banking Structure in India 7

2.3 Changes in Banking Structure 28

2.4 Impact of Changes in Banking Structure of Economy

30

2.5 Comparison of Banking Structure in China And India

34

2.6 Organizational Structure of the Co-operative Bank

36

2.7 State Bank of India 39

2.8 Structure of the State Bank of India 41

3 STUDY OF SELECTED PROBLEM RESEARCH

3.1 Statement of Research Objective 48

3.2 Research Design & Methodology 49

4 SUMMARY AND CONCLUSION 4.1 Summary by Learning the Project 49

4.2 Recommendation & Conclusion 50

BIBLIOGRAPHY 51

INTRODUCTION

India has a well developed Banking system. The banking industry

originated in India in the 18th century and since then it has

undergone significant number of changes. The commercial banking

industry in India over the past few decades has been revolutionized

by a number of factors such as independence, nationalization,

deregulation , rise of the Internet, etc. The commercial banking

structure in India consists of Scheduled Banks and Unscheduled Banks.

In the past the banks did not find any attraction in the Indian

economy because of the low level of economic activities and little

business prospects. Today we find positive changes in the National

business development policy. Earlier, the money lenders had a strong

hold over the rural population which resulted in exploitation of small

and marginal savers. The private sector banks failed in serving the

society. This resulted in the nationalization of 14 commercial banks in

1969. Nationalization of commercial banks paved ways for the

development of Indian economy and channelized financial resources for the

up liftment of weaker sections of the society. The passage of financial

modernization legislation by Congress in 1999 removed barriers, allowing

banks to expand product offerings, while the potential of the Internet as a

sales, marketing and delivery tool, widened the avenues to sell and deliver

these products. The main products of the commercial banking industry-

insurance, securities , mortgages, mutual funds and consumer credit-have all

benefited from these changes. This report will examine the extent to which

increased product sales have influenced overall bank assets and how commercial

banks' increased market share in each of these products areas over the next five

years will raise overall bank income and assets.

Currently (2011), banking industry in India is generally fairly mature in terms of

supply, product range and reach-even though reaches in rural India still remains a

challenge for the private sector and foreign banks. In terms of quality of assets

and capital adequacy, Indian banks are considered to have clean, strong and

transparent balance sheets relative to other banks in comparable economies in its

region. The Reserve Bank of India is an autonomous body, with minimal pressure

from the government. The stated policy of the Bank on the Indian Rupee is to

manage volatility but without any fixed exchange rate-and this has mostly been

true.

With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail

banking, mortgages and investment services are expected to be strong. One may

also expect mergers and acquisitions, takeovers, and asset sales.

BANKING SECTOR IN THE PAST

Banking in India originated in the first decade of 18th century with The General

Bank of India coming into existence in 1786. This was followed by Bank of

Hindustan. Both these banks are now defunct. The oldest bank in existence in

India is the State Bank of India being established as "The Bank of Bengal" in

Calcutta in June 1806. A couple of decades later, foreign banks like Credit

Lyonnais started their Calcutta operations in the 1850s. The first fully Indian

owned bank was the Allahabad Bank, which was established in 1865.By the

1900s, the market expanded with the establishment of banks such as Punjab

National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both

of which were founded under private ownership. The Reserve Bank of India

formally took on the responsibility of regulating the Indian banking sector from

1935. After India's independence in 1947, the Reserve Bank was nationalized and

given broader powers.

At the beginning of the 20th century, Indian economy was passing through a

relative period of stability. Around five decades have elapsed since the India's

First war of Independence, and the social, industrial and other infrastructure have

developed. At that time there were very small banks operated by Indians. The

banking in India was controlled and dominated by the presidency banks, namely,

the Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later

on merged to form the Imperial Bank of India, and Imperial Bank of India.

INDIAN BANKING SCENARIO 2011

The last decade has seen many positive developments in the Indian banking

sector. The policy makers, 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. The

sector now compares favorably with banking sectors in the region on metrics like

growth, profitability and non-performing assets (NPAs). A few banks have

established an outstanding track record of innovation, growth and value creation.

This is reflected in their market valuation. However, improved regulations,

innovation, growth and value creation in the sector remain limited to a small part

of it. The cost of banking intermediation in India is higher and bank penetration is

far lower than in other markets. India’s banking industry must strengthen itself

significantly if it has to support the modern and vibrant economy which India

aspires to be.

Opportunities And Challenges For Players

The bar for what it means to be a successful player in the sector has been raised.

Four challenges must be addressed before success can be achieved.

First, the market is seeing discontinuous growth driven by new products

and services that include opportunities in credit cards, consumer finance and

wealth management on the retail side, and in fee-based income and

investment banking on the wholesale banking side. These require new skills

in sales & marketing, credit and operations. Second, banks will no longer

enjoy windfall treasury gains that the decade-long secular decline in interest

rates provided. This will expose the weaker banks. Third, with increased interest

in India, competition from foreign banks will only intensify. Fourth, given

the demographic shifts resulting from changes in age profile and household

income, consumers will increasingly demand enhanced institutional capabilities

and service levels from banks.

FUTURE OF INDIAN BANKING MARKET

The Indian banking market is growing at an astonishing rate, with

assets expected to reach US$1 trillion by 2010. An expanding

economy, middle class, and technological innovations are all contributing

to this growth.

A new Celent report, Overview of Indian Banking Market, examines

the impressive growth of this industry, largely due to an expanding

economy and growing consumer middle class in need of financial

services . India's economy is growing at a rate of 8%, with banking

assets increasing at a CAGR of 24% from 2001 to 2008, from

US$374.4 billion in 2003 to US$616.15 billion in 2008. While public

sector banks still dominate India’s banking industry, the private sector

is growing, with global players now actively competing with domestic

banks.

Organizational Chart of the Bank

Banking Structure in India

Scheduled bank in India

Scheduled Banks in India constitute those banks which have been

included in the Second Schedule  of Reserve Bank of India (RBI) Act,

1934. RBI in turn includes only those banks in this schedule which

satisfy the criteria laid down vide section 42 (6) (a) of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India

having a total network of 64,918 branches. The scheduled commercial

banks in India comprise of  State bank of India and its associates

(8), nationalised banks (19), foreign banks (45), private sector banks

(32), co-operative banks and regional rural banks.

A] Commercial Banks in India

Commercial Banks in India are broadly categorized into Scheduled

Commercial Banks and Unscheduled Commercial Banks. The Scheduled

Commercial Banks have been listed under the Second Schedule of the Reserve

Bank of India Act, 1934. The selection measure for listing a bank under

the Second Schedule was provided in section 42 (6) (a) of the

Reserve Bank of India Act, 1934.

Commercial bank is the term used for a normal bank to

distinguish it from an investment bank or retail bank. It can also

refer to a bank or a division of a bank that mostly deals with

deposits and loans from corporations or large businesses, as opposed to

normal individual members of the public (retail banking).

Activities of Commercial Banks

The modern Commercial Banks in India cater to the financial needs of

different sectors. The main functions of the commercial banks comprise:

transfer of funds

acceptance of deposits

offering those deposits as loans for the establishment of industries

purchase of houses, equipments, capital investment purposes etc.

The banks are allowed to act as trustees. On account of the knowledge of the

financial market of India the financial companies are attracted towards them to act

as trustees to take the responsibility of the security for the financial instrument

like a debenture. The Indian Government presently hires the commercial banks

for various purposes like tax collection and refunds, payment of pensions etc.

Functions of Commercial Banks

The functions of commercial banks are divided into two categories:

i) Primary functions, and

ii) Secondary functions including agency functions.

i) Primary functions:

The primary functions of a commercial bank include:

a) Accepting deposits; and

b) Granting loans and advances;

i i ) Secondary function

Be sides the primary functions of a accepting deposits and lending money, banks

perform a number of other function which are called secondary functions.

These are as follows-

Issuing letter of credit, traveler cheques, circular notes etc.

Undertaking safe custody of valuables, important documents and

securities by providing safe deposit locker

Providing customers with facilities of foreign exchange.

Transferring money from one place to another; and from one branch to

another branch of the bank.

Standing guarantee on behalf of its customers, for making payments for

purchase of goods , machinery, vehicles etc

Collecting and supplying business information;

Providing reports on the credit worthiness of customers

Nationalized Banks in India

Nationalised banks in India are the major players in Indian banking

system dominating the industry. Not only that, the nationalized banks in

India also play pivotal role in the economic development of the

country at the same time. The history of nationalization of Indian

banks dates back to the year 1955 when the Imperial Bank of India

was nationalized and re-christened as State Bank of India (under the

SBI Act, 1955). Later on July 19, 1960, the 7 subsidiaries of SBI

viz. State Bank of Hyderabad (SBH), State Bank of Indore, State

Bank of Saurashtra (SBS), State Bank of Mysore (SBM), State Bank

of Bikaner and Jaipur (SBBJ), State Bank of Patiala (SBP) and State

Bank of Travancore (SBT) were also nationalized with deposits more

than 200 crores

Nationalised Banks:

Allahabad Bank

Andhra Bank

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

IDBI Bank Ltd.

Indian Bank

Punjab & Sind Bank

Punjab National Bank

Syndicate Bank

Union Bank of India

United Bank of India

II] Private sector banks in India

Private banking in India was practiced since the beginning of

banking system in India. The first Private bank in India to be

set up in Private Sector Banks in India was Induslnd Bank. It

is one of the fastest growing Private Sector Banks in India.

IDBI ranks the tength largest Development bank in the world

as Private Banks in India and has promoted a world class

institution in India. The First Private Bank in India to receive an

in principle approval from the Reserve Bank of India was

Housing Development Finance Corporation Limited, to set up

a bank in the private sector banks in India as part of the

RBI's liberalization of the Indian Banking Industry. It was

incorporated in August 1994 as HDFC Bank Limited with

registered office in Mumbai and commenced operations as Scheduled

Commercial Bank in January 1995. ING Vysya, yet another

Private Bank of India was incorporated in the year 1930

Bangalore has a pride of place for having the first branch

inception in the year 1934. With successive years of patronage

and constantly setting new standards in banking, ING Vysya

Bank has many credits to its account.

List of Private Banks in India

Bank of Punjab

Bank of Rajasthan

Centurion Bank

City Union Bank

Dhanalakshmi Bank

Development Credit Bank

Federal Bank

HDFC Bank

ICICI Bank

Jammu & Kashmir Bank

Karnataka Bank

South Indian Bank

United Western Bank

UTI Bank

III] Regional rural banks in India

Rural banking in India started since the establishment of banking

sector in India. Rural Banks in those days mainly focused upon the

agro sector. Regional rural banks in India penetrated every corner of

the country and extended a helping hand in the growth process of

the country. SBI has 30 Regional Rural Banks in India known as

RRBs. The rural banks of SBI is spread in 13 states extending from

Kashmir to Karnataka and Himachal Pradesh to North East. The

total number of SBIs Regional Rural Banks in India branches is

2349 (16%). Till date in rural banking in India, there are 14,475

rural banks in the country of which 2126 (91%) are located in

remote rural areas Regional Rural Banks in India are an integral

part of the rural credit structure of the country. Since the very

beginning, when the Regional Rural Banks in India (RRBs) were

established in October 2, 1975, these banks played a pivotal role in the

economic development of the rural India. The main goal of establishing

regional rural banks in India was to provide credit to the rural people

who are not economically strong enough, especially the small and marginal

farmers, artisans, agricultural labours, and even small entrepreneurs . Apart

from SBI, there are many other banks which function for the development

of the rural areas in India. These banks are listed below:

Chhattisgarh Gramin Bank

Madhya Bihar Gramin Bank

Dena Gujarat Gramin Bank

Baroda Gujarat Gramin Bank

Harayana Gramin Bank

Gurgaon Gramin Bank

Assam Gramin Vikash Bank

Jharkhand Gramin Bank

Madhya Bharath Gramin Bank

Chambal-Gwalior Kshetriya Gramin Bank

Himachal Gramin Bank

Punjab Gramin Bank

Aurangabad -Jalna Gramin Bank

Thane Gramin Bank

Baroda Rajasthan Gramin Bank

Rajasthan Gramin Bank

Baroda Western Uttar Pradesh Gramin Bank

B] Co-Operative Bank in India :

The Co–operative banks in India started functioning almost 100 years

ago. The Cooperative bank is an important constituent of the Indian

Financial System, judging by the role assigned to co operative, the

expectations the co operative is supposed to fulfil, their number, and

the number of offices the cooperative bank operate. Though the co

operative movement originated in the West, but the importance of such

banks have assumed in India is rarely paralleled anywhere else in

the world. The cooperative banks in India play an important role even

toda y in rural financing. The businesses of cooperative bank in the urban

areas also have increased phenomenally in recent years due to the

sharp increase in the number of primary co-operative banks. Co-

operative Banks in India are registered under the Co-operative

Societies Act. The cooperative bank is also regulated by the RBI. They

are governed by the Banking Regulations Act 1949 and Banking Laws

(Co-operative Societies) Act , 1965.

Features of Cooperative Banks

Co-operative Banks are organized and managed on the principal of

co-operation, self-help, and mutual help. They function with the rule

of "one member, one vote". Function on "no profit, no loss" basis. Co-

operative banks, as a principle, do not pursue the goal of profit maximisation.

Co-operative bank performs all the main banking functions of deposit

mobilisation, supply of credit and provision of remittance facilities.

Co-operative Banks provide limited banking products and are functionally

specialists in agriculture related products. However, co-operative banks

now provide housing loans also. UCBs provide working capital loans and

term loan as well. The State Co-operative Banks (SCBs), Central Co-

operative Banks (CCBs) and Urban Co-operative Banks (UCBs) can

normally extend housing loans upto Rs 1 lakh to an individual. The

scheduled UCBs, however, can lend upto Rs 3 lakh for housing purposes.

The UCBs can provide advances against shares and debentures also. Co-

operative bank do banking business mainly in the agriculture and rural

sector. However, UCBs, SCBs, and CCBs operate in semi urban, urban, and

metropolitan areas also. The urban and non-agricultural business of these

banks has grown over the years. The co-operative banks demonstrate a

shift from rural to urban, while the commercial banks, from urban to rural.

Co-operative banks are perhaps the first government sponsored, government-

supported, and government-subsidised financial agency in India. They get

financial and other help from the Reserve Bank of India NABARD, central

government and state governments. They constitute the "most favoured"

banking sector with risk of nationalisation. For commercial banks, the

Reserve Bank of India is lender of last resort, but co-operative banks it is

the lender of first resort which provides financial resources in the form of

contribution to the initial capital (through state government), working capital,

refinance. Co-operative Banks belong to the money market as well as to the

capital market. Primary agricultural credit societies provide short term and

medium term loans. Land Development Banks (LDBs) provide long-term loans.

SCBs and CCBs also provide both short term and term loans. Co-operative banks

are financial intermediaries only partially. The sources of their funds

(resources) are

central and state government,

the Reserve Bank of India and NABARD,

other co-operative institutions,

ownership funds and,

deposits or debenture issues.

NAFSCOB

The National Federation of State Cooperative Banks Ltd. (NAFSCOB), was

established on 19th May 1964 with a view to facilitate the operations of

State and Central Cooperative Banks in general and Development of

Cooperative Credit in particular.

The objectives of NAFSCOB are:

To provide a common forum to the member banks to examine the

problems of cooperative credit, banking and allied matters and

evolve suitable strategies to deal with them.

Promote and protect the interests of the member banks in all spheres

of their activities and to give expression to the views of the member banks.

Co-ordinate and liaison with Government of India , Reserve Bank of

India respective State Governments, NABARD and other higher

financing institutions for the development of cooperative credit on behalf

of the member banks.

Provide research and consultancy inputs to the member banks in

order to facilitate them to strengthen their own organizations.

Organise conferences / seminars/ workshops / meeting to share the

views of common interest with a view to contribute for better policy

decisions.

The Federation functions with three of its wings, viz.

Planning, Research and Development (PRD)

All India Mutual Arrangement Scheme (AIMAS) and

Computer Services Division (CSD).

I] Rural Cooperative Banking

Rural Cooperative Banking and Credit Institutions play an important role in

meeting the growing credit needs of rural India. The volume of credit

flowing through these institutions has increased. The performance of these

institutions, however (apparent in the share of total institutional credit and the

indicators of their financial health), has been less than satisfactory and is

deteriorating rapidly. Of late, a number of Committees have gone into the

reasons for this situation and suggested remedial measures, but there has been

little progress in implementing their recommendations. The Government of

India, which is committed to reviving and revitalising the rural cooperative

credit structure (CCS) and attributes high priority and urgency to it, felt

it necessary To commission a fresh review. The Union Government

constituted a Task Force (vide Government of India notification dated 05

August 2004 reproduced in Annexure I) to formulate a practical and

implementable plan of action to rejuvenate the rural cooperative credit

structure.

1) Short-term Rural Co-operatives:

The short-term rural co-operatives provide crop and other working

capital loans to farmers and rural artisans primarily for short-term purpose.

These institutions have federal three-tier structure.

At the Apex of the system is a State Co-operative bank in

each state.

At the middle (or district) level, there are Central Co-

operative Banks also known as District Co-operative banks.

At the lowest (or village) level, are the Primary Agricultural

Credit Societies.

State co-operative Bank

State Co-operative Banks are the apex of the three-tier Co-operative

structure dispensing mainly short / medium term credit. It is the principal

society in a State which is registered or deemed to be registered under the

Government Societies Act, 1912, or any other law for the time being in

force in India relating to co-operative societies and the primary object of

which is the financing of the other societies in the State which are

registered or deemed to be registered. The State Co-operative Banks receive

current and fixed deposits from its constituent banks as well as savings, current

and fixed deposits from the general public and from local boards, other local

authorities, etc. Further, they receive loans from the RBI and NABARD.

NABARD is the supervisory authority for State Co-operative Banks. The state

government contributes the certain portion of their working capital. The principal

function of State Co-operative Banks is to assist the Central Co-operative Banks

and to balance excesses and deficiencies in the resources of Central Co-operative

Banks. It also act as the “balancing centre” for Central Co-operative Banks in the

sense that surplus fund of some of these banks are made available to other needy

banks. It also serves the link between RBI and the Central Co-operative Banks

and Primary Agriculture Credit Societies. But the connection between the State

Co-operative Banks and Primary Co-operative Societies is not direct. The Central

Co-operative Banks are acting as intermediaries between the State Co-operative

Banks and Primary societies

Central co-operative Bank

Central Co-operative Banks form the middle tier of Co-operative credit

institutions. These are the independent units in as much as the State Co-operative

Banks have control to control or supervise their affairs. They are of two kinds i.e.

‘pure’ and ‘mixed’. Those banks are the membership of which is confined to co-

operative organizations only are included in ‘pure’ type, while those banks the

membership of which is open to co-operative organizations as well as to the

individuals are included in ‘mixed’ type. The pure type of Central Banks can be

seen in Kerala, Bombay, Orissa, etc., while the mixed type can be seen in Andhra

Pradesh, Assam, Tamil Nadu, etc. The pure type of banks is based on strict co-

operative principles. However, the mixed type has an advantage over the pure

type in so far as they can draw their funds from the non-agricultural sector too.

The Central Co-operative Banks draw their funds from share capital, deposits,

loans from the State C-operative Banks and where State Banks do not exist from

the RBI, NABARD and commercial banks. NABARD is the supervisory authority

for Central Co-operative Banks. Deposits constitute the major component of

sources of funds, followed by borrowings. The main function of Central Co-

operative Banks is to finance the primary credit societies. In addition they carry

on Commercial banking activities like acceptance of deposits, granting of loans

and advances on the security of first class guilt-edged securities, fixed deposit

receipts, gold, bullion, goods and documents of title to goods, collection of bills,

cheques, etc., safe custody of valuables and agency services. They are expected to

attract deposits from the general public. They also act as ‘balancing centres’,

making available access funds of one primary to another which is in need of them.

The central co-operative banks are located at the district headquarters or some

prominent town of the district. These banks have a few private individuals also

who provide both finance and management. The central co-operative banks have

three sources of funds,

Their own share capital and reserves

Deposits from the public and

Loans from the state co-operative banks

Primary Agriculture Credit Societies:

Primary Agricultural Credit Societies is the foundation of the co-operative

credit system on which the superstructure of the short-term co-operative credit

system rests. It deals directly with individual farmers, provide short and

medium term credit, supply agricultural inputs, distribute consume articles

and also arrange for the marketing of products of its members through a c-

operative marketing societies. These societies form the basic unit of co-

operative credit system in India. These voluntary societies based on principle

of one man one vote has posed challenge to exploitative practices of the

village moneylenders. The farmers and other small-time borrowers come in

direct contact with these societies. The success of the co-operative credit

movement depend largely on the strength of these village level societies.

The major objective of Primary agricultural Credit Societies is to serve the

need of weaker sections of these society. For this purpose, the people with

limited means, particularly with schedules castes and scheduled tribes, are

encouraged to become members of these societies. So, they must function

effectively as well-managed and multi-purpose institutions mobilizing the

savings of the rural people and providing the package of services including

credit, supply of agricultural inputs and implements, consumer goods,

marketing services and technical guidance with focus on weaker sections.

Government has promoted multi-purpose societies in tribal areas for the

benefit of people living there

2) Long-term Rural Co-operatives:

The long-term rural co-operative provide typically medium and long-term

loans for making investments in agriculture, rural industries and, in the

recent period, housing. Generally, these co-operatives have two tiers, i.e.

State Co-operative Agriculture and Development Banks (SCARBDs) at the

state level and Primary Co-operative Agriculture and Rural Development Banks

(PCARDBs) at the taluka or tehsil level. However, some States have a

unitary structure with the state level banks operating through their own

branches.

i. State Co-operative Agriculture and Development Banks

(SCARBDs):

State Co-operative Agriculture and Development Banks constitute the upper-

tier of long term co-operative credit structure. Though long term credit co-

operatives have been allowed to access public deposits under certain

conditions, such deposits constitute a relatively small proportion of their total

liabilities. They are mostly dependent on borrowings for on-lending.

The main objective of the Co-operative State Agriculture and Rural

Development bank is to finance primary agriculture and rural development

banks. The bank undertakes the following functions to achieve the above

objectives:-

(a) Floatation of Debentures;

(b) Receiving Deposit;

(c) Grant of loans to primary cooperative agriculture and rural

development banks for purposes approved by the National Bank for

Agricultural and Rural Development and Registrar of Cooperative

Societies;

(d) To function as the agent of any cooperative bank subject to such

conditions as the Registrar may specify;

To develop, assist and coordinate the work of affiliated primary cooperative

agriculture and rural development banks

The bank issues long term and medium term loans towards

agricultural and allied activities like construction of godowns, cattle shed,

farm house, purchase of lands etc., and for minor irrigation purposes like

construction of new wells, deepening of existing wells etc., In addition ,

long term loans are also sanctioned for animal husbandry, fisheries,

plantation, farm mechanization, non-farm sector and other non-minor

irrigation schemes.

i. Primary Co-operative Agricultural and Rural

Development Banks (PCARDB)

Primary Co-operative Agriculture and Rural Development Banks are

the lowest layer of long term credit co-operatives. It is primarily

dependent on the borrowings for their lending business. They provide

credit for developmental purposes like minor irrigation, cultivation of

plantation crops and for diversified purposes like poultry, dairying and

sericulture on schematic basis. They get requisite financial assistance

from the Cooperative State Agriculture and Rural Development Bank.

In order to widen their scope of lending to compete with other

financial agencies, the primary cooperative agriculture and rural

development banks have been permitted to finance artisans, craftmen

and small scale entrepreneurs. They have also been permitted to

issue loans to small road transport operators in rural areas for

purchase of goods carriers and passenger vehicles. As a result,

during 2007-08, the Primary Cooperative Agriculture and Rural

Development Banks have again started lending for the Non-Farm

Sector including Jewel Loans.

B] Urban Co-operative Banks

The term Urban Co-operative Banks (UCBs), though not formally defined,

refers to primary cooperative banks located in urban and semi-urban areas.

These banks, till 1996, were allowed to lend money only for non-

agricultural purposes. This distinction does not hold today. These banks were

traditionally centred around communities localities work place groups. They

essentially lent to small borrowers and businesses. Today, their scope of

operations has widened considerably. The origins of the urban cooperative

banking movement in India can be traced to the close of nineteenth century

when, inspired by the success of the experiments related to the cooperative

movement in Britain and the cooperative credit movement in Germany such

societies were set up in India. Cooperative societies are based on the

principles of cooperation, - mutual help, democratic decision making and

open membership. Cooperatives represented a new and alternative approach to

organisation as against proprietary firms, partnership firms and joint stock

companies which represent the dominant form of commercial organisation.

Improving health

The tally of financially weak urban banks declined (grade III and IV banks)

to 330 in 2009-10 from 392 in 2008-09. Due to the consolidation process

in the sector, the percentage of banks in grades III and IV witnessed a

declining trend during recent years. There was an improvement in the

asset quality of the entire UCB ector in both a bsolute and percentage

terms as at end-March over the previous year. Gross bad loans declined by

Rs 135 crore to Rs 12,727 crore. However, both gross as well as net non-

performing loans of the UCB sector continued to be on the higher side, RBI

said, in its Trends and Progress report for the banking sector in 2009-

10 .Along with a decline in non-performing loans, there was also an

increase in the coverage ratio of UCBs as of end-March over the previous

year, indicating improvement in financial soundness. The provision coverage

ratio improved to 62.9 per cent at the end of 2009-10 from 59.9 a year

before.

C] All India financial institution

AIFIs With the progressive blurring of functions between banks and

financial institutions, the AIFIs are fast losing ground and adopting the

business model of a bank to remain viable in the long run (Table 3.11).

The merger of ICICI with ICICI bank on March 30, 2002 was the

beginning of conversion of AIFIs into universal banks. Taking into account

the changing operating environment following the initiation of economic

reforms in the early1990s, the Government decided to transform IDBI into a

commercial bank without eschewing its traditional development finance

obligations. The migration to the new business model of commercial

banking, with its access to low cost, current/saving bank deposits is expected to

enable it to overcome most of the limitations of the current model of

development finance and also to diversify its client/ asset base.

I. NABARD

The National Bank for Agriculture and Rural Development (Nabard) is

seriously mulling a proposal to provide Credit Plus services through the

Farmers’ Clubs. Nabard regional office chief general manager Venkatesh

Tagat said North Karnataka offers ample scope for construction of rural

godowns and the banks should hold talks with farmers and explore the

possibility of godown construction especially in the chilly growing belt.

Addressing the farmers during an interaction session organised at

Neeralakatti village in Dharwad taluk recently, he said refinance facility from

Nabard would be available for the purpose with subsidy of up to 25 per

cent of the project cost. Likewise, Nabard was also extending subsidy for

units producing organic manure. Villages covered 100 per cent under solar

energy units, would get a special package from Nabard, he revealed.

II. EXIM

Export-Import Bank of India is the premier export finance institution of the

county, set up in 1982 set up in 1982 under the Export-Import Bank of India Act

1981. Government of India launched the institution with a mandate, not just to

enhance exports from India, but to integrate the country’s foreign trade and

investment with a mandate, not just to enhance exports from India, but to

integrate the country’s foreign trade and investment with the overall

economic growth. Since its inception, Exim Bank of India has been both a

catalyst and a key player in the promotion of cross border trade and

investment. Commencing operations as a purveyor of export credit, like other

Export Credit Agencies in the world, Exim Bank of India has, over the

period, evolved into an institution that plays a major role in partnering

Indian industries, particularly the Small and Medium Enterprises, in their

globalisation efforts, through a wide range of products and services offered at

all stages of the business cycle, starting from import of technology and

export product development to export production, export marketing, pre-

shipment and post- shipment and investment

III. Small Industries Development Bank of India

It is an independent financial institution aimed to aid the growth and

developmen t of micro, small and medium-scale enterprises in India. Set up

on April 2, 1 990 through an act of parliament, it was incorporated initially

as a wholly owned subsidiary of Industrial Development Bank of India.

Current shareholding is widely spread among various state-owned banks,

insurance companies and financial institutions. Beginning as a refinancing

agency to banks and state level financial institutions for their credit to

small industries, it has expanded it s activities, including direct credit to the

SME through 100 branches in all major industrial clusters in India. Besides, it

has been playing the development role in several ways such as support to

micro-finance institutions for capacity building and on lending. Recently it

has opened seven branches christened as Micro Finance branches, aimed

especially at dispensing loans up to Rs. 5.00 lakh.

It is an apex body and nodal agency for formulating, coordination and

monitoring the policies and programmed for promotion and development of

small scale industries.

IV. Industries Development Bank of India

The Industrial Development Bank of India (IDBI) was established on 1 July

1964 under an Act of Parliament as a wholly owned subsidiary of the

Reserve Bank of India. In 16 February 1976, the ownership of IDBI was

transferred to the Government of India and it was made the principal financial

institution for coordinating the activities of institutions engaged in

financing, promoting and developing industry in the country. Although

Government shareholding in the Bank came down below 100% following IDBI’s

public issue in July 1995, the former continues to be the major shareholder

(current shareholding : 65.14%). IDBI provides financial assistance, both in

rupee and foreign currencies, for green-field projects as also for expansion,

modernisation and diversification purposes. In the wake of financial sector

reforms unveiled by the government since 1992, IDBI also provides

indirect financial assistance by way of refinancing of loans extended by

State-level financial institutions and banks and by way of rediscounting of

bills of exchange arising out of sale of indigenous machinery on deferred

payment terms. IDBI’s transformation into a commercial bank would provide

a gateway to low-cost deposits like Current and Savings Bank Deposits. This

would have a positive impact on the Bank’s overall cost of funds and

facilitate lending at more competitive rates to its clients. The new entity

would offer various retail products, leveraging upon its existing relationship

with retail investors under its existing Suvidha Flexi-bond schemes.

The responsibility for maintaining standards of corporate governance lies with its

Board of Directors. Two Committees of the Board viz. the Executive Committee

and the Audit Committee are adequately empowered to monitor implementation

of good corporate governance practices and making necessary disclosures

within the framework of legal provisions and banking conventions.

CHANGES IN BANKING STRUCTURE

The opening up of the Indian banking sector to private players acted as 'the

tipping point' for this transformation. The deregulatory efforts prompted many

financial institutions (like HDFC and ICICI) and non-financial institutions enter

the banking arena. With the entry of private players into retail banking and with

multi-nationals focusing on the individual consumer in a big way, the banking

system underwent a phenomenal change. Multi-channel banking gained

prominence. For the first time consumers got the choice of conducting

transactions either the traditional way (through the bank branch), through ATMs,

the telephone or through the Net. Technology played a key role in providing this

multi-service platform. The entry of private players combined with new RBI

guidelines forced nationalized banks to redefine their core banking strategy. And

technology was central to this change.

Today banks have to look much beyond just providing a multi-channel service

platform for its customers. There are other pressing issues that banks need to

address in order to chalk-out aroadmap for the future. Here are the top three

concerns in the mind of every bank's CEO.

Customer retention:

Customer retention is one of the main priorities for banks today. With the entry of

new players and multiple channels, customers have become more discerning and

less 'loyal' to banks. Given the various options, it is now possible to open a new

account within minutes. Or for that matter shift accounts within a couple of hours.

This makes it imperative that banks provide best levels of service to ensure

customer satisfaction.

Cost pressures:

Cost pressures come into play when banks are not able to afford the cost of a

certain service or initiative although they want to or need to have it in place. This

is primarily because the cost structure at the backend is not efficient enough to

offer that kind of service to the marketplace.

Increased competition:

The entry of new players into the banking space is leading to increased

competition. A recent example would be of Kotak Mahindra Finance Limited

(KMFL)—a financial services company focused on investment consulting, auto

finance, insurance, etc— morphing into Kotak Bank. Many other such players are

waiting on the sidelines. Technology makes it easier for any company with the

right channel infrastructure and money reserves to get into banking. This has been

one of the major reasons behind this kind of competition from players who do not

have a banking background. Kotak Bank overcame the initial costs of setting up

its own ATM network by getting into a sharing agreement with UTI bank. New

entrants with strategies such as these make the banking game tough

IMPACT OF CHANGE IN BANKING STRUCTURE ON

ECONOMY

Financial and Banking reforms

The last decade witnessed the maturity of India's financial markets. Since 1991,

every governments India took major steps in reforming the financial sector of the

country. The important achievements the following fields are discussed under

separate heads:

Financial Markets

In the last decade, Private Sector Institutions played an important role. They grew

rapidly in commercial banking and asset management business. With the

openings in the insurance sector for these institutions, they started making debt in

the market. Competition among financial intermediaries gradually helped the

interest rates to decline. Deregulation added to it. The real interest rate was

maintained. The borrowers did not pay high price while depositors had incentives

to save. It was something between the nominal rate of interest and the expected

rate of inflation.

Regulators

The Finance Ministry continuously formulated major policies in the field of

financial sector of the country. The Government accepted the important role of

regulators. The Reserve Bank of India (RBI) has become more independent.

Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and

Development Authority (IRDA) became important institutions. Opinions are also

there that there should be a super-regulator for the financial services sector instead

of multiplicity of regulators.

Development Finance Institutions

Financial institution's access to SLR funds reduced. Now they have to approach

the capital market for debt and equity funds. Convertibility clause no longer

obligatory for assistance to corporate sanctioned by term-lending institutions.

Capital adequacy norms extended to financial institutions. DFIs such as IDBI and

ICICI have entered other segments of financial services such as commercial

banking, asset management and insurance through separate ventures. The move to

universal banking has started.

Non-banking finance companies

In the case of new NBFCs seeking registration with the RBI, the requirement of

minimum net owned funds, has been raised to Rs.2 crores. Until recently, the

money market in India was narrow and circumscribed by tight regulations over

interest rates and participants. The secondary market was underdeveloped and

lacked liquidity. Several measures have been initiated and include new money

market instruments, strengthening of existing instruments and setting up of the

Discount and Finance House of India (DFHI).The RBI conducts its sales of dated

securities and treasury bills through its open market operations (OMO) window.

Primary dealers bid for these securities and also trade in them. The DFHI is the

principal agency for developing a secondary market for money market

instruments and Government of India treasury bills. The RBI has introduced a

liquidity adjustment facility (LAF) in which liquidity is injected through reverse

repo auctions and liquidity is sucked out through repo auctions. On account of the

substantial issue of government debt, the gilt- edged market occupies an important

position in the financial set- up. The Securities Trading Corporation of India

(STCI), which started operations in June 1994, has a mandate to develop the

secondary market in government securities. Long-term debt market. After

bringing some order to the equity market, the SEBI has now decided to

concentrate on the development of the debt market. Stamp duty is being

withdrawn at the time of dematerialization of debt instruments in order to

encourage paperless trading.

The Capital Market

The number of shareholders in India is estimated at 25 million. However,

only an estimated two lakh persons actively trade in stocks. There has been

a dramatic improvement in the country's stock market trading infrastructure

during the last few years. Expectations are that India will bean attractive

emerging market with tremendous potential. Unfortunately, during recent

times the stock markets have been constrained by some unsavory

developments, which have led to retail investors deserting the stock

markets.

Deregulation of Banking System

Prudential norms were introduced for income recognition , asset

classification, provisioning for delinquent loans and for capital adequacy. In

order to reach the stipulated capital adequacy norms, substantial capital were

provided by the Government to PSBs. Government pre-emption of banks'

resources through statutory liquidity ratio (SLR) and cash reserve ratio

(CRR) brought down in steps. Interest rates on the deposits and lending

sides almost entirely were deregulated . New private sector banks allowed

promoting and encouraging competition. PSBs were encouraged to approach

the public for raising resources. Recovery of debts due to banks and the

Financial Institutions Act, 1993 was passed, and special recovery tribunals

set up to facilitate quicker recovery of loan arrears. Bank lending norms

liberalized and a loan system to ensure better control over credit introduced.

Banks asked to set up asset liability management (ALM) systems. RBI

guidelines issued for risk management systems in banks encompassing

credit, market and operational risks. A credit information bureau being

established to identify bad risks. Derivative products such as forward rate

agreements (FRAs) and interest rate swaps (IRSs) introduced.

Capital Market Developments

The Capital Issues (Control) Act, 1947, repealed, office of the Controller

of Capital Issues was abolished and the initial share pricing were

decontrolled. SEBI, the capital market regulator was established in 1992.

Foreign institutional investors (FIIs) were allowed to invest in Indian

capital markets after registration with the SEBI. Indian companies were

permitted to access international capital markets through euro issues. The

National Stock Exchange (NSE), with nationwide stock trading and

electronic display, clearing and settlement facilities was established. Several

local stock exchanges changed over from floor based trading to screen based

trading.

Private Mutual Funds Permitted

The Depositories Act had given a legal framework for the establishment of

depositories to record ownership deals in book entry form.

Dematerialization of stocks encouraged paperless trading. Companies

were required to disclose all material facts and specific risk factors associated

with their projects while making public issues. To reduce the cost of issue,

underwriting by the issuer were made optional, subject to conditions. The

practice of making preferential allotment of shares at prices unrelated to

the prevailing market prices stopped and fresh guidelines were issued

by SEBI. SEBI reconstituted governing boards of the stock exchanges,

introduced capital adequacy norms for brokers, and made rules for

making client or broker relationship more transparent which included

separation of client and broker accounts.

Comparison of Banking Structure in China and India

A comparison of China and India is both exciting and challenging,

and should ideally lead to a serious consideration of various policy

implications. In this context, our conference today marks the beginning of

a long journey. In my remarks, I will try to compare the banking sectors in

China and India, largely focusing on structure and robustness as well as the

effectiveness of the banking supervisory systems.

As far as the banking sector is concerned, it may well be true that

the two countries share many attributes, particularly in terms of industry

structure. First of all, the two countries heavily depend on bank finance to support

economic growth, and capital markets are less developed. In China, the

total assets in the banking sector represent more than 90 percent of the assets

in the financial sector. And in India, the commercial banking sector

represents about 74 percent of total financial system assets. Nonbank financial

institutions make up the balance in India, of which 8.6 percent are term-

lending institutions and 15.4 percent are investment institutions. Some of

these institutions could be considered as banking institutions according to the

broader definition in China. Moreover, the proportion of commercial banking

sector financial assets in both countries is likely to rise further. Another

strikingly common attribute of the banking system in the two economies is

dominant state ownership. This stands in stark contrast to other developing

economies and has strong implications for the conduct and performance

of the banking sector in general. In China, until very recently, all major

commercial banks except one or two were controlled by the central and

local governments, as are virtually all small commercial banks. China’s banking

sector is relatively concentrated. The four large banks, known as state-owned

commercial banks until the recent diversification of ownership, plus the

Bank of Communications (BOCom), also largely owned by the central

government, account for nearly two-thirds of commercial bank assets.

The Indian banking system can be characterized by a large number of

banks with mixed ownership. However , 27 public sector banks—namely,

banks owned and controlled by the state—continue to dominate the Indian

commercial banking landscape. Together, these banks account for three

quarters of the market share. Even though these public sector banks have

access to capital markets, government policy is to ensure that its equity

interest does not, as a result of public issues by banks, go below 51

percent. As is the case with many developed and developing countries, the

efficiency of the state-owned banks has been a concern for both the Chinese and

Indian governments. And the Indian government also openly admitted that

public sector banks have been consistently outperformed by private sector

banks. The effort to restructure the state-owned banks is still a work in

progress in the two countries. Both governments have continued to launch

many new initiatives to further promote progress in this area.

ORGANISATIONAL STRUCTURE OF THE CO-OPERATIVE

BANK

Managing Director/ Special officer

General Manager Executive Officer

Asst. General Manager (Agricultural Credit)

Board of Directors

Chairman

Asst. General Manager (Non-Agricultural Credit)

Asst. General Manager (Administration credit)

Asst. General Manager

(Banking)

Asst. General Manager (Development)

Manager

Accountant

Section Assistants

Manager

Accountant

Section Assistants

Assistants

Sub-Staff

Filed ManagerFiled Manager

Filed- Staff Filed- Staff

Sub-Staff Sub-Staff

It is observed from chart that the top boss of the Bank is chairman of the bank. The decisions on the policy of the bank are taken by the Board of Directors and are implemented by the chairman through the Managing Director of the Bank

MANAGEMENT OF THE BANK

Management plays a vital role in the operation of business enterprise. A business companies of several elements namely men, materials, money, machines, methods, markets and management. Of these seven M’s, management stand at the apex of the enterprise pyramid and it it determines and controls all other factors of business operation.

As per the provision of the co-operative Societies Act of Tamil Nadu, there are three bodies which control the working of the Central Bank. The representative from the primary co-operative societies and the state Government constitute the General body. Since the general body is large in size, it is impossible for them to meet often. So, they elect a few members who form the Board of Directors. As the Board of Directors is also large in order to carry on the day today activities they select from among themselves a few members who constitute the executive committee. There will be a paid General Manager who is responsible for all the activities of the Bank. He is the officer to sue and to be sued on the behalf of the bank.

The management of the bank was vested in the hands of a special officer in the rank of Joint Registrar of Co-operative department till September 11, 1998 for more than 20 years. Then elections were conducted to the co-operative societies and the management was dissolved on August 10,2001 and the administration was vested with the special officer. Now the bank is under is under the control of a special officer.

According to section 33, sub- section 3 of the Tamil Nadu Co-operative Societies Act, 1983, the minimum number of members in the Board should be 21 and the Maximum should be 31. But of this, the representatives from the PACBS constitute the majority.

Sub-Staff Sub-Staff

27 Members are in the Board of Directors of the Thoothukudi District Central Co-operative Bank, which is constituted as below.

COMPOSITION OF BOARD OF DIRECTORS

Members Number of DirectorsPrimary Agricultural Co-operative Banks 14Other Co-operative Societies 9Government Nominees 4

Total 27

Source : Thoothukudi District Central Co-operative Bank Records.

Out of the 27 directors, directors of PACBS constitute the majority, and one member each from other 9 categories of societies is elected. Tamil Nadu Government nominates 4 directors. The nominees are 1. Management Directors,2 Regional Joint Registrar of Co-operative Societies, 3. Joint Directors from Agricultural Department and 4. Expert in Agricultural Finance.

The above members elect one Chairman and one Vice-Chairman from among them. The day- to-day affairs of the bank are looked after by the Managing Director deputed from the co-operative department in the cadre of joint Registrar of co-operatives. Under him one General Manager the employee of the bank elevated by promotion looks after the entire activities of the bank. One Executive officer deputed from the co-operative department in the cadre of Deputy Registrar looks after the agricultural and non-agricultural credit. He works under the control of the Managing Directors.

The powers and duties of the board of directors are

1. To control the paid staff and look into their appointment, suspension, punishment and removal.

2. To convene general meetings.3. To raise funds, sanction loans and recover debts.4. To sanction contingent expenditure,5. To supervise and manage the affairs of the bank and6. To fix credit limit of the Societies in the recommendation of

the Registrar.

The Executive Committee consists, vice-chairman, Treasurer and a paid Secretary. Usually the Registrar of co-operative deputy one of the his subordinate officers to serve as the Secretary of the Bank.

The General Body is the supreme authority and it meets at least once a year. Ex-ordinary general meetings may be convened by the Registrar of Co-operatives or by the Board of Management of the bank. Every member has only one vote. All questions are decided in the presence of all members. Usually the General Body meets for the following purposes.

1. To elect the directors.2. To examine the statement of accounts audit reports and declare the

dividend. Agricultural3. To amend the bye-laws, and4. To admit any new members or to consider the expulsion of any one

from membership.

5. MEMBERSHIP

The bank has been primarily organized to provide credit and to extend guidance and technical assistance to primary agricultural co-operative banks without affecting their autonomy and independent character. The bank also acts as financing agencies to all types of societies such as weavers societies, industrial co-operatives, consumer stores and employees societies. So they all become member of the bank. Once peculiar feature of the bank is that individuals were also admitted as members in the initial years, because induction of individual members with reputation could repose confidence in the minds of the investing public and creditors. At the instance of All Indian Rural Credit Survey Committee (1954), the process of elimination of individual members was introduced in the most of the makes in bid to make them fully co-operative bank also admission of individual membership has been stopped.

From 1991-92 onwards, the bank has only “A” class members consisting of representatives of co-operative institutions and Tamil Nadu Government “A” class Members who form a part of the General body of the bank. They are eligible to vote and to get dividend. Individuals are admitted as Associate Members and they could avail of only jewel loan, consumer loan and the like. A nominal amount as entrance fee is collected from them.

State Bank of India  is the largest banking and financial services company in India by revenue, assets and  market capitalisation. It is a  state-owned  corporation with its headquarters in  Mumbai, Maharashtra. As of March 2012, it had assets of  US$360 billion with over 13,577 outlets including 157 overseas branches and agents globally. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the  Bank of Calcutta, making it the oldest commercial bank in the  Indian Subcontinent. Bank of Madras merged into the other two presidency banks — Bank of Calcutta and Bank of Bombay —to form the Imperial Bank of India, which in turn became the State Bank of India. The  Government of India  nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India  taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI has been ranked 285th in the  Fortune Global 500  rankings of the world's biggest corporations for the year 2012

SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at  non-resident Indians  (NRIs). The State Bank Group, with over 18,324 branches, has the largest banking branch network in India. SBI has 14 local head offices situated at Chandigarh, Delhi, Lucknow, Patna, Kolkata, Guwahati (North East Circle), Bhuwaneshwar , Hyderabad, Chennai , Trivandram, Banglore, Mumbai, Bhopal & Ahmedabad and 57 Zonal Offices that are located at important cities throughout the country. It also has 157 branches overseas.

SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes. Also, SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by  Brand Finance and  The Economic Times  in 2010. The State Bank of India is the largest of the  Big Four  banks of India, along with  ICICI Bank,  Punjab National Bank  and  HDFC Bank is main competitors

Some Important Statistics :     (Amount in Lacs) Parameter March

2012June 2012

No. of  Regional Offices 4 4No. of  District Covered 8 8No. of  Branches (as on 31 March 2012)

228 228

No. of  Branches in Core Banking

228 228

No. of employees 1019 1011Total Deposits (as 31.03.11) 20,03,96 21,03,40Total Advances (as on 31.03.2011)

11,67,93 11,90,62

No. of Kisan Credit Card Issued 22,14,11  No. of  Self  Help Group 16,757  Profit before Tax 9,49  Per Branch Business 13,91Per employee Business 3,11Per Branch Profit 2.33Per employee Profit 0.93

ORAGANIZATIONAL STRUCTURE OF THE STATE BANK

OF INDIA

CORPORATE

CENTER

BUSINESS GROUP

Chairman

DMD & CFO

DMD & CCO

DMD & CDO

DMD (I &MA)

DMD (I)

MD &

GM (CB)MD & CE (NB)

DMD & GE (IB)

DMD & GE (A&S)

Deputy General Manager (Module)

AGM – Operation Manager MIS (Direct Branches)

Chief Manager Advances, Rehab.Cum.NPA Mgt. Cell

Chief Manager Gen. Banking / Budgeting & Per. Mon.etc.

Chief Manager Personnel\& HRD Manager Adv. Cell

Manager NPA MGT. / REC.CELL

Manager- Office Language Chief Manager Lead Bank Cell (in a few Modules)

CM Banking Operations

MMGS III – Zonal Office computer Centre

MMGS III – Inter office Reconciliation (Government Accounts Department)

Chief Manager-Office Administration

Medical Officer Premises Officer

AGMs (Region)

Manager- Disc. Pro Cell

Security Officers (Module)

Asst. Manager (Law)

All Branches headed by AGMs

The Bank provides management and organizational structure is sufficient decentralized to provide senior managers decision making responsible within their business units allowing them to continuously improve their management skills. In services of the Indian institute of management Ahmadabad were engaged and on their advice, the modular structure i.e. zonal and regional offices were created under each local zonal head office to handle growth and achieve efficient branch banking. The administrative structure was decentralized by making the controlling offices near to opening offices. In 1994, the bank engaged Mckinsey & co. a firm of leading international consultants to help the bank identify strategies, structure, system etc to face new challenges and retain its eminent position in the Indian Banking Industry. The present structure of bank is the outcome of the comprehensive change programmers all aspects structure, system, process etc. implemented by the bank based on the diagnostic and recommendation of the consultants. In order to exploit the synergies among the various SBUs having close linkages or dealing with the same or integrated groups of customers they have been group together under a few group, each being headed by a senior executive of the rank by Managing Director. Each business group has full profit and loss responsibility for the group and the enjoys a high level of autonomy including control over human and capital resources in order to achieve the group ‘s business goals. The organizational structure of the bank is reviewed at periodic intervals and wherever feasible departments are merged with a view to improve efficiencies. The bank has carried out the exercise at corporate center and is rolling it out at local regional and Zonal office levels.

Corporate center

corporate centre is at the apex level of the organizational structure. It is responsible for long term planning and policy formation. This management of the bank consists of the following members.

Chairman :

chairman is the chief executive officer of the bank central board of Directors. The staff functionaries are in charge of policy planning functions. The group executive have operational responsibility for the SUBs attached

AGM (Retail Asset CPC)

AGM (SE Credit Cell)

Head, Mortgage Sales

Credit Processing Cell (Temporary)

to their groups. All these executive are independently responsible for matters related to their group or staff areas and directly repot to the chairman

Lead Head Office :

Chief General Manager is the top management executive heading the circle. Staff functionaries, network chiefs management committee covers the

following areas : Review of business programmers of the circle. Review of functioning of all department at the local head office. Ensuring compliance with the corporate objective etc

Zonal Office :

DGM is the executive heading the module All personal Banking branches, with AGM incumbency and AGMs in change of regions in the module directly report to the DGM. The zonal Office credit committee is constituted to handle credit proposals relating to sanction of loans as well as matters related to advances such as write off, losses, bad debts, initiation, withdrawal of legal action etc suitable intervals

Regional Office :

Assistant general manager is the head of network branches with incumbency of chief manager and below in a region. The necessary planning support is provided by the sales planners.

Branch Expansion :

The bank has been pursuing a policy of offering services to specific customer segments through specialized outfits with a view to countering the competition from the private and foreign banks. It has 81 personal banking branches at selected centers. The bank has so far opened 9 rehabilitation and recovery branches. In has opened a specialized housing finance branch in Chennai, Diamond branch in Mumbai and Leather branch in Chennai. It has total of 21,500 branches. The Bank has a network of 137 overseas offices spread over 32 countries covering all the time zones. The Bank also maintain comprehensive correspondent relationship with 593 top ranking branches in 127 countries. It has 25,000 ATMs and 99345 offices in India. Telebanking offered by the bank free of charges is operative in 301 branches in 18 cities. Over 31000 customers have registered for the service. Internet banking is provided by 501 branches in 97 cities. The special EFT (electronic fund transfer) schemes was launched by the Bank

from 01-04-2003 in close coordination with RBI to facilitate efficient and expeditious interbank transfer of funds. 29 branches of the bank are participating in the scheme. The bank has two wholly owned subsidiaries abroad-SBI Canada, SBI California and two joint ventures namely Nepal SBI Bank Ltd of Bhutan. The other subsidiaries are SBI international Ltd, Mauritius, indovigeria Merchant Bank Ltd. Besides there are 18 corresponding Banks working as agents of SBI. In our valley there are 46 computerized branches of the bank with 10 extension counters. The State Bank Group which has 13,635 branches has computerized all the branches. State Bank Group has 3,900 networked ATMs comprising over 2,800 ATMs of SBI and 1,100 branches. SBI has five associate banks :

state bank of Bikaner & Jaipur state bank of Hyderabad state bank of Mysore state bank of Patiala state bank of Travancore

HRD Philosophy of the Bank

HRD in State Bank of India is a continuous movement and direction to enable every individual as a member of an effective team and the SBI community, to realize and activate his potential so as to contribute to the achievement of the Banks goals and derive satisfaction thereof. The HRM policy aims at creating a facilitating environment for overall development of people and thereby enabling them to translate their potentials into role related competencies. The Bank recognizes the value of the contribution of the individuals in achieving the corporate objectives. All HR related interventions are based on the philosophy of individual and organizational development. The interventions aim at achieving professional excellence in individual and fostering team work. Some of the HR policies of the Bank as well as areas of concern and where the policies are reviewed and revamped are : Recruitment Policy, Career Systems-consisting of manpower planning, appraisal and promotion and career planning and development inclusive of placement, work planning involving role analysis and performance appraisal system. Performance counseling, job rotation, self renewal system - comprising role efficiency and organizational development and cultural systems, which deal with HRD climate, value system, quality orientation, communication and empowerment. Formal HRD structure emerged in 1979. In order to design a system it was essential to state the values in respect of its people’s area and to describe the aims and

objective of having an HRD system. The values stated were that the Bank should create an enabling culture whereby individuals get an opportunity to grow to their full potential the aims and the objectives fixed by the bank are:

To create a climate of openness and trust To build collaborative culture whereby everyone is an important

member of an effective team to promote human capabilities and competencies in the organization

To bring about integration of the individual and organizational goals To improve the quality of work life.

Based on the above aims SBI adopted the following HRD policies :

Manpower Planning

banks manpower planning is meant to improve the innovative and creative abilities of its people through promoting a conductive climate, enhancing the human touch and improving interpersonal relations. Manpower requirements are assessed at the micro level though overall decisions are made within frame work of government guidelines and corporate perspectives. Branch activity analysis and productivity norms are the basis upon which the assessments are made. Manpower planning in the bank is subordinate to guild lines issued by the Govt. of India and RBI.

Training and Development

Training system enables the employees to take up their assignment and perform tasks with a higher level of confidence and perfection. Training system not only addresses the needs in the areas of knowledge and skills but also looks at the need for change in the attitude of employees. The Training programmes are aligned to the Bank’s business, goals and objective and endeavor of the bank. While exclusive programmes have the customer as the central theme. Eminent specialist in different fields of management, banking, finance, HRM etc are invited for delivering guest lectures to make the programmes more efficient. Training is a key variable in human resources development strategy of he Bank. The bank has constituted “advisory council ” comprising management experts, academicians and the Bank’s senior executives. The advisory council aim at improving the training effectiveness.

Job Rotation :

Developing functional versatility among employees is a must and it is possible only through job rotation. In SBI, the process of job rotation was started from 1989. Along with job rotation, job analysis occupies a central position in the design of HRD activities in SBI. The purpose of role analysis is to reduce role ambiguity of the role- occupant for maximizing his individual contribution to the bank. The bank well designed transfer, promotion and placement policy. The career system in SBI includes career surveys, career information, career monitoring and several career support system like human resources planning, potential appraisal and career.

Employee Welfare

The SBI has introduced a no. of welfare schemes to improve the Quality of the work life of the employees. These schemes include canteen facilities, education scholarship to the children of employees, consumer cooperative stores, housing loans, SBI employees mutual welfare scheme, festival advances, conveyance loans etc.

Human Resources Information System :

Different aspects of information about individual employees- biographical cultural traits performance records, promotion obtaines, potential for higher positions, critical incidents, placement enjoyed etc are well managed in SBI. The State Bank institute of information and communication management conducts a series of computer based human resources information system course for various categories of employees. HRD policies of the Bank seems to be the ideal order to win competitive battles in globalised environment.

OBJECTIVES OF THE STUDY

The objectives of project are as follows:

To find out the earlier banking structure that prevailed in India.

To assess the various factors that lead to the change in the

Indian banking structure

To assess the impact of all these factors on the banking structure.

To draw a contrast between the old and the new Indian banking

structure.

To determine the various services offered by banks earlier and

currently

To determine the future of Indian Banking Markets

To study the comparison of china banking structure and India structure

To draw conclusions of the impact of the changes in banking sector

RESEARCH METHODOLOGY

Secondary data is the data which is collected for some other purpose.

The data used for preparing the project report was secondary data. It was

collected from various websites, newspapers and books.

Research follows a specific plan of procedure.

Research requires a clear articulation of a goal.

Research is guided by the specific research problem & question.

SCOPE OF STUDY

The project entitled “BANKING STRUCTURE”. The study will focus

on how banking structure is implemented in India, its impact , changes,

concerns with a various parts .

CONCLUSIONS AND SUGGESTIONS

1. The Indian banking can be broadly categorized into nationalized

(government owned), private banks and specialized banking institutions.

The Reserve Bank of India is the apex institution in the Indian banking

system & acts a regulator and a centralized body for monitoring any

discrepancies and shortcoming in the system.

2. Before Nationalisation, banks in the beginning aced severs financial

crisis. During and after World War I, 87 banks were liquidated.

Development of banks in India was characterized by bank failures. After

Independence, the Indian banking underwent a thorough and moral change.

The government of India announced Banking Regulations Act in 1949 to

consolidate and regulate the banking growth in India

3. After Nationalisation, however, growth of banking during the first 3

plan periods resembles that of capitalist growth. There was need for

stimulating the savings and investment to meet the growing demand for

bank credit for economic development. Therefore government focused on

social banking than capitalistic banking. Hence, in February 1961,

announcement of 14 banks was made for the purpose of nationalisation.

Since then, the performance of banking has been remarkable in the many

aspects such as branch expansion, expansion of business, priority sector

advances, development and spread of banking.

4. Currently, banking system has entered into the third phase of development

which is characterized by innovation & diversification in order to meet new

challenges. New services have been started such as merchant banking,

investment banking, housing finance , investment banking, internet

banking, telebanking , branch banking, electronic money transfers, SMS

banking, mobile banking, proxy banking, plastic money such as credit

cards , ATM cards, debit cards, smart cards, etc.

5. Banks have indulged in activities such as service area approach, mutual

funds, housing finance, factoring services, commercial papers, certificate of

deposit, stock invest and other money and capital market instruments.

6. The unleashing of products and services through the net has galvanized

players at all levels of the banking and financial institutions market grid to

look anew at their existing portfolio offering. Banks have been benefited

a lot with the internet and information technology. As a result banks

have become more efficient and cost-effective. Indian nationalized banks

continue to be the major lenders in the economy due to their sheer size and

penetrative networks which assures them high deposit mobilization.

However there is a need to create more awareness regarding social

development. There is need for taking decisive actions .

7. Industry estimates indicate that out of 274 commercial banks operating

in India, 223 banks are in the public sector & 51 are in the private

sector. The private sector bank grid also includes 24 foreign banks.

8. Indian banking market is growing at an astonishing rate, with assets

expected to reach US$1 trillion by 2010. The Indian banking industry is

in the middle of an IT revolution, focusing on the expansion of retail and

rural banking. Players are becoming increasingly customer-centric in

their approach, which has resulted in innovative methods of offering new

banking products & services. Banks are now realizing the importance of

being a big player & are beginning to focus their attention on mergers

& acquisitions to take advantage of economies of scale.

BIBLIOGRAPHY

There was immense need and flow of the information while preparing the

project report which was gathered through various sources mentioned

below:

Websites:

www.rbi.org.in

www.wikipedia.com

Books:

Money , Banking & Finance in India

Indian Banking Managing Transformation

New Paper:

I. The Economic Times