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CHAPTER 1

1.1 History of Banks

The first banks were probably the religious temples of the ancient world, and were

probably established sometime during the third millennium B.C. Banks probably

predated the invention of money. Deposits initially consisted of grain and later other

goods including cattle, agricultural implements, and eventually precious metals such as

gold, in the form of easy-to-carry compressed plates. Temples and palaces were the safest

places to store gold as they were constantly attended and well built. As sacred places,

temples presented an extra deterrent to would-be thieves. There are extant records of

loans from the 18th century BC in Babylon that were made by temple priests/monks to

merchants. By the time of Hammurabi's Code, banking was well enough developed to

justify the promulgation of laws governing banking operations. [1]

Ancient Greece holds further evidence of banking. Greek temples, as well as private and

civic entities, conducted financial transactions such as loans, deposits, currency

exchange, and validation of coinage. There is evidence too of credit, whereby in return

for a payment from a client, a moneylender in one Greek port would write a credit note

for the client who could "cash" the note in another city, saving the client the danger ofcarting coinage with him on his journey. Pythius, who operated as a merchant banker

throughout Asia Minor at the beginning of the 5th century B.C., is the first individual

banker of whom we have records. Many of the early bankers in Greek city-states were

metics or foreign residents. Around 371 B.C., Pasion, a slave, became the wealthiest

and most famous Greek banker, gaining his freedom and Athenian citizenship in the

process.

The fourth century B.C. saw increased use of credit-based banking in the Mediterranean

world. In Egypt, from early times, grain had been used as a form of money in addition to

precious metals, and state granaries functioned as banks. When Egypt fell under the rule

of a Greek dynasty, the Ptolemies (332-30 B.C.), the numerous scattered government

granaries were transformed into a network of grain banks, centralized in Alexandria

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where the main accounts from all the state granary banks were recorded. This banking

network functioned as a trade credit system in which payments were effected by transfer

from one account to another without money passing.

In the late third century B.C., the barren Aegean island of Delos, known for its

magnificent harbor and famous temple of Apollo, became a prominent banking center. As

in Egypt, cash transactions were replaced by real credit receipts and payments were made

based on simple instructions with accounts kept for each client. With the defeat of its

main rivals, Carthage and Corinth, by the Romans, the importance of Delos increased.

Consequently it was natural that the bank of Delos should become the model most closely

imitated by the banks of Rome.

Christ drives the Usurers out of the Temple, a woodcut by Lucas Cranach the Elder in

Passionary of Christ and Antichrist.

Ancient Rome perfected the administrative aspect of banking and saw greater regulation

of financial institutions and financial practices. Charging interest on loans and paying

interest on deposits became more highly developed and competitive. The development ofRoman banks was limited, however, by the Roman preference for cash transactions.

During the reign of the Roman emperor Gallienus (260-268 AD), there was a temporary

breakdown of the Roman banking system after the banks rejected the flakes of copper

produced by his mints. With the ascent of Christianity, banking became subject to

additional restrictions, as the charging of interest was seen as immoral. After the fall of

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Rome, banking was abandoned in western Europe and did not revive until the time of the

crusades.

Religious restrictions on interest

Most early religious systems in the ancient Near East, and the secular codes arising from

them, did not forbid usury. These societies regarded inanimate matter as alive, like plants,

animals and people, and capable of reproducing itself. Hence if you lent 'food money', or

monetary tokens of any kind, it was legitimate to charge interest. [3]Food money in the

shape of olives, dates, seeds or animals was lent out as early as c. 5000 BC, if not earlier.

Among the Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and

often fixed by the state. But the Jews took a different view of the matter.[4]

The Torah and later sections of the Hebrew Bible criticize interest-taking, but

interpretations of the Biblical prohibition vary. One common understanding is that Jews

are forbidden to charge interest upon loans made to other Jews, but allowed to charge

interest on transactions with non-Jews, or Gentiles. However, the Hebrew Bible itself

gives numerous examples where this provision was evaded.

During Late Antiquity and Middle Ages

Jews were ostracized from most professions by local rulers, the Church and the guilds

and so were pushed into marginal occupations considered socially inferior, such as tax

and rent collecting and moneylending, while the provision of financial services was

increasingly demanded by the expansion ofEuropean trade and commerce.

Medieval trade fairs, such as the one in Hamburg, contributed to the growth of banking in

a curious way: moneychangers issued documents redeemable at other fairs, in exchangefor hard currency. These documents could be cashed at another fair in a different country

or at a future fair in the same location. If redeemable at a future date, they would often be

discounted by an amount comparable to a rate of interest. Eventually, these documents

evolved into bills of exchange, which could be redeemed at any office of the issuing

banker. These bills made it possible to transfer large sums of money without the

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complications of hauling large chests of gold and hiring armed guards to protect the gold

from thieves.

Beginning around 1100s, the need to transfer large sums of money to finance the

Crusades stimulated the re-emergence of banking in western Europe. In 1156, in Genoa,

occurred the earliest known foreign exchange contract. Two brothers borrowed 115

Genoese pounds and agreed to reimburse the bank's agents in Constantinople the sum of

460 bezants one month after their arrival in that city. In the following century the use of

such contracts grew rapidly, particularly since profits from time differences were seen as

not infringing canon laws against usury. In 1162, King Henry the II levied a tax to

support the crusades -- the first of a series of taxes levied by Henry over the years with

the same objective. The Templars and Hospitallers acted as Henry's bankers in the HolyLand. The Templars' wide flung, large land holdings across Europe also emerged in the

1100-1300 time frame as the beginning of Europe-wide banking, as their practice was to

take in local currency, for which a demand note would be given that would be good at

any of their castles across Europe, allowing movement of money without the usual risk of

robbery while traveling.

By 1200 there was a large and growing volume of long-distance and international trade in

a number of agricultural commodities and manufactured goods in western Europe; some

of the goods traded during that period included wool, finished cloth, wine, salt, wax and

tallow, leather and leather goods, and weapons and armour. Individual trading concerns

and combines often specialized in one or more of these, as did individual producers;

because a large amount of capital was required to establish, e.g., a cloth manufacturing

business, only the largest firms could diversify. As a result, businesses and clusters of

businesses tended to market fairly narrow product lines. Big firms like the Medici bank

could and did specialize; the Medicis manufacturing division had a number of

manufacturing facilities producing many different types of cloth. Perhaps the best

example of product policy comes from the Cistercian monastic order, where individual

monasteries and granges tended to specialize in particular agricultural products or types

of industrial production, usually with an eye to meeting particular local or regional

market needs.

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Ironically, the Papal bankers were the most successful of the Western world, though often

goods taken in pawn were substituted for interest in the institution termed the Monte di

Piet. When Pope John XXII (born Jacques d'Euse (1249 - 1334) was crowned in Lyon in

1316, he set up residency in Avignon. Civil war in Florence between the rival Guelph and

Ghibelline factions resulted in victory for a group of Guelph merchant families in the

city. They took over papal banking monopolies from rivals in nearby Siena and became

tax collectors for the Pope throughout Europe. In 1306, Philip IV expelled Jews from

France. In 1307 Philip had the Knights Templar arrested and had gotten hold of their

wealth, which had become to serve as the unofficial treasury of France. In 1311 he

expelled Italian bankers and collected their outstanding credit. In 1327, Avignon had 43

branches of Italian banking houses. In 1347, Edward III of England defaulted on loans.

Later there was the bankruptcy of the Peruzzi (1374) and Bardi (1353). The

accompanying growth of Italian banking in France was the start of the Lombard

moneychangers in Europe, who moved from city to city along the busy pilgrim routes

important for trade. Key cities in this period were Cahors, the birthplace of Pope John

XXII, and Figeac. Perhaps it was because of these origins that the term Lombard is

synonymous with Cahorsin in medieval Europe, and means 'pawnbroker'. Banca Monte

dei Paschi di Siena SPA (MPS) Italy, is the oldest surviving bank in the world.

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Of Usury, from Brant's Stultifera Navis (the Ship of Fools); woodcut attributed to

Albrecht Drer

After 1400, political forces turned against the methods of the Italian free enterprise

bankers. In 1401, King Martin I of Aragon expelled them. In 1403, Henry IV of England

prohibited them from taking profits in any way in his kingdom. In 1409, Flanders

imprisoned and then expelled Genoese bankers. In 1410, all Italian merchants were

expelled from Paris. In 1401, the Bank of Barcelona was founded. In 1407, the Bank of

Saint George was founded in Genoa. This bank dominated business in the Mediterranean.

In 1403 charging interest on loans was ruled legal in Florence despite the traditional

Christian prohibition of usury. Italian banks such as the Lombards, who had agents in the

main economic centres of Europe, had been making charges for loans. The lawyer andtheologian Lorenzo di Antonio Ridolfi won a case which legalised interest payments by

the Florentine government. In 1413, Giovanni di Bicci deMedici appointed banker to the

pope. In 1440, Gutenberg invents the modern printing press although Europe already

knew of the use of paper money in China. The printing press design was subsequently

modified, by Leonardo da Vinci among others, for use in minting coins nearly two

centuries before printed banknotes were produced in the West.

By the 1390s silver was short all over Europe, except in Venice. The silver mines at

Kutn Hora had begun to decline in the 1370s, and finally closed down after being sacked

by King Sigismund in 1422. By 1450 almost all of the mints of northwest Europe had

closed down for lack of silver. The last money-changer in the major French port of

Dieppe went out of business in 1446. In 1455 the Turks overran the Serbian silver mines,

and in 1460 captured the last Bosnian mine. The last Venetian silver grosso was minted

in 1462. Several Venetian banks failed, and so did the Strozzi bank of Florence, the

second largest in the city. Even the smallest of small change became scarce.

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1.2 Major events in banking history

Florentine banking The Medicis and Pittis among others.

Knights Templar- earliest Euro wide /Mideast banking 1100-1300.

Banknotes Introduction of paper money.

1602 - Firstjoint-stockcompany, the Dutch East India Company founded.

1720 - The South Sea Bubble and John Law's Mississippi Scheme, which caused

a European financial crisis and forced many bankers out of business.

1781 - The Bank of North America was found by the Continental Congress.

1800 - Rothschild family founds Euro wide banking.

1930-33 In the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping

out a third of the money supply in the United States.[5]

2008 - Washington Mutual collapses. It was the largest bank failure in history.

1.3 Oldest national banks

Bank of Sweden The rise of the national banks, began operations in 1668

Bank of England The evolution of modern central banking policies, established

in 1694

Bank of America The invention of centralized check and payment processing

technology

Swiss banking

United States Banking

The Pennsylvania Land Bank, founded in 1723 and receiving the support of

Benjamin Franklin who wrote "Modest Enquiry into the Nature and Necessity of

a Paper Currency" in1729[1].

Imperial Bank of Persia (Iran) Founded in 1888 and was merged in Tejarat Bank

in 1979 History of banking in the Middle-East

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1.4 History of Banking in India

Without a sound and effective banking system in India it cannot have a healthy economy.

The banking system of India should not only be hassle free but it should be able to meet

new challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements

to its credit. The most striking is its extensive reach. It is no longer confined to only

metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even

to the remote corners of the country. This is one of the main reason of India's growth

process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with

the nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a

draft or for withdrawing his own money. Today, he has a choice. Gone are days when the

most efficient bank transferred money from one branch to other in two days. Now it is

simple as instant messaging or dial a pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and

Phase III.

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Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of

Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency

Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was

established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and

1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,

and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To

streamline the functioning and activities of commercial banks, the Government of India

came up with The Banking Companies Act, 1949 which was later changed to Banking

Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of

India was vested with extensive powers for the supervision of banking in india as the

Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilisation was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.

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Phase II

Government took major steps in this Indian Banking Sector Reform after independence.

In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a

large scale specially in rural and semi-urban areas. It formed State Bank of india to act as

the principal agent of RBI and to handle banking transactions of the Union and State

Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th

July, 1969, major process of nationalisation was carried out. It was the effort of the then

Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country

was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980

with seven more banks. This step brought 80% of the banking segment in India under

Government ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

1949 : Enactment of Banking Regulation Act.

1955 : Nationalisation of State Bank of India.

1959 : Nationalisation of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalisation of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

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Phase III

This phase has introduced many more products and facilities in the banking sector in its

reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was

set up by his name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put

to give a satisfactory service to customers. Phone banking and net banking is introduced.

The entire system became more convenient and swift. Time is given more importance

than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any

crisis triggered by any external macroeconomics shock as other East Asian Countries

suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,

the capital account is not yet fully convertible, and banks and their customers have

limited foreign exchange exposure.

Nationalisation of Banks in India

The nationalisation of banks in India took place in 1969 by Mrs. Indira Gandhi the then

prime minister. It nationalised 14 banks then. These banks were mostly owned by

businessmen and even managed by them.

Central Bank of India

Bank of Maharashtra

Dena Bank

Punjab National Bank

Syndicate Bank

Canara Bank

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Indian Bank

Indian Overseas Bank

Bank of Baroda

Union Bank

Allahabad Bank

United Bank of India

UCO Bank

Bank of India

Befor the steps of nationalisation of Indian banks, only State Bank of India (SBI) was

nationalised. It took place in July 1955 under the SBI Act of 1955. Nationalisation ofSeven State Banks of India (formed subsidiary) took place on 19th July, 1960.

The State Bank of India is India's largest commercial bank and is ranked one of the top

five banks worldwide. It serves 90 million customers through a network of 9,000

branches and it offers -- either directly or through subsidiaries -- a wide range of banking

services.

The second phase of nationalisation of Indian banks took place in the year 1980. Seven

more banks were nationalised with deposits over 200 crores. Till this year, approximately

80% of the banking segment in India were under Government ownership.

After the nationalisation of banks in India, the branches of the public sector banks rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

1955 : Nationalisation of State Bank of India.

1959 : Nationalisation of SBI subsidiaries.

1969 : Nationalisation of 14 major banks.

1980 : Nationalisation of seven banks with deposits over 200 crores.

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Scheduled Commercial Banks In India

The commercial banking structure in India consists of:

Scheduled Commercial Banks in India Unscheduled Banks 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.

"Scheduled banks in India" means the State Bank of India constituted under the State

Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of

India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constitutedunder section 3 of the Banking Companies (Acquisition and Transfer of Undertakings)

Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank

included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but

does not include a co-operative bank".

"Non-scheduled bank in India" means a banking company as defined in clause (c) of

section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled

bank".

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The following are the Scheduled Banks in India (Public Sector):

State Bank of India

State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Saurashtra

State Bank of Travancore

Andhra Bank

Allahabad Bank Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

Indian Overseas Bank

Indian Bank

Oriental Bank of Commerce

Punjab National Bank

Punjab and Sind Bank

Syndicate Bank

Union Bank of India

United Bank of India

UCO Bank

Vijaya Bank

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The following are the Scheduled Banks in India (Private Sector):

ING Vysya Bank Ltd

Axis Bank Ltd

Indusind Bank Ltd

ICICI Bank Ltd

South Indian Bank

HDFC Bank Ltd

Centurion Bank Ltd

Bank of Punjab Ltd

IDBI Bank Ltd

The following are the Scheduled Foreign Banks in India:

American Express Bank Ltd.

ANZ Gridlays Bank Plc.

Bank of America NT & SA

Bank of Tokyo Ltd.

Banquc Nationale de Paris Barclays Bank Plc

Citi Bank N.C.

Deutsche Bank A.G.

Hongkong and Shanghai Banking Corporation

Standard Chartered Bank.

The Chase Manhattan Bank Ltd.

Dresdner Bank AG.

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CHAPTER 2

2.1 History of Central Bank Of India

It was established in 1911 by Sir Sorabji Pochkhanawala and claims to have been the first

commercial Indian bank completely owned and managed by Indians.

In 1923, it acquired the Tata Industrial Bankin the wake of the failure of the Alliance

Bank of Simla.

In 1969, the Indian Government nationalized the bank on 19 July, together with 13

others.

Established in 1911, Central Bank of India was the first Indian commercial bank which

was wholly owned and managed by Indians. The establishment of the Bank was the

ultimate realisation of the dream of Sir Sorabji Pochkhanawala, founder of the Bank. Sir

Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. In fact, such was

the extent of pride felt by Sir Sorabji Pochkhanawala that he proclaimed Central Bank of

India as the 'property of the nation and the country's asset'. He also added that 'Central

Bank of India lives on people's faith and regards itself as the people's own bank'.

During the past 98 years of history the Bank has weathered many storms and faced many

challenges. The Bank could successfully transform every threat into business opportunity

and excelled over its peers in the Banking industry.

A number of innovative and unique banking activities have been launched by Central

Bank of India and a brief mention of some of its pioneering services are as under:

1921 Introduction to the Home Savings Safe Deposit Scheme to build saving/thrift habitsin all sections of the society. 1924 An Exclusive Ladies Department to cater to the Bank's

women clientele. 1926 Safe Deposit Locker facility and Rupee Travellers' Cheques. 1929

Setting up of the Executor and Trustee Department. 1932 Deposit Insurance Benefit

Scheme. 1962 Recurring Deposit Scheme.

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Subsequently, even after the nationalisation of the Bank in the year 1969, Central Bank

continued to introduce a number of innovative banking services as under:

1976 The Merchant Banking Cell was established. 1980 Centralcard, the credit card of

the Bank was introduced. 1986 'Platinum Jubilee Money Back Deposit Scheme' was

launched. 1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with

its headquarters at Bhopal in Madhya Pradesh. 1994 Quick Cheque Collection Service

(QCC) & Express Service was set up to enable speedy collection of outstation cheques.

Further in line with the guidelines from Reserve Bank of India as also the Government of

India, Central Bank has been playing an increasingly active role in promoting the key

thrust areas of agriculture, small scale industries as also medium and large industries. The

Bank also introduced a number of Self Employment Schemes to promote employment

among the educated youth.

Among the Public Sector Banks, Central Bank of India can be truly described as an All

India Bank, due to distribution of its large network in 27 out of 28 States as also in 4 out

of 7 Union Territories in India. Central Bank of India holds a very prominent place

among the Public Sector Banks on account of its network of 3413 branches and 237

extension counters at various centres throughout the length and breadth of the country.

In view of its large network of branches as also number of savings and other innovative

services offered, the total customer base of the Bank at over 25 million account holders is

one of the largest in the banking industry.

Customers' confidence in Central Bank of India's wide ranging services can very well be

judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as

also almost all major corporate houses in the country.

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2.2 Profile of Central bank of India

Central Bank of India, a government-owned bank, is one of the oldest and largest

commercial banks in India. The bank currently has 3,168 branches and 270 extension

counters across 27 Indian states.

Mr S Sridhar [Ex CMD National Housing Bank] has been appointed as the Chairman and

Managing Director of state-run Central Bank of India as on 2 March 2009. The post had

been lying vacant and the appointment was cleared by the government yesterday, the

Bank said in a statement. To improve the Bank's capital adequacy ratio and enable it to

support the credit requirements of the productive sectors of the economy, the Centre has

recently decided to infuse Rs 1,400 crore in the Bank. Under the proposed capital

infusion plan, Central Bank of India will get Rs 700 crore by this month-end, while the

balance amount will be made available to the Bank in next fiscal.

Central bank of India is one of 18 Public Sector banks in India to get

recapitalization.finance from the government over the next 24 months. The infusion of

fund will improve the financial health of the banks as their capital adequacy ratio (CAR)

will be raised more than desired level of 12 percent. The increase in CAR of the banks

will also enable them to lend more money. The CAR of Central Bank of India was less

than 12 percent as on June 30 2006.

The wholly-owned public sector bank, based in Mumbai, will convert an amount of Rs.

800 crore out of its Rs. 1,124.14-crore total equity capital into perpetual non-cumulative

preference shares.The preference shares would carry an annual floating coupon rate of

eight per cent, which would be benchmarked to 100 basis points above the repo rate. It

will shore up the balance-sheet of the bank and enable it to raise capital from the markets.

According to an official statement, the equity capital restructuring would lead to an

improvement in the bank's credit rating as also facilitate the adoption of Basel II norms.

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For financial year 2008-2009, Central Bank of India's Q3 standalone net profit went up at

Rs 353.26 crore from Rs 201.01 crore (YoY). The bank's standalone net interest income,

NII was up at Rs 671.94 crore versus Rs 544.85 crore .

At a time when the global banking industry is feeling the pinch of the global credit

crunch, Central Bank of India is planning to expand its foreign presence. The public-

sector lender has approached the Reserve Bank of India (RBI) for permission to open

representative offices in five locations - Singapore, Dubai, Doha, London and Hong

Kong. This is the first time the bank is venturing an independent overseas foray after the

Sethia scam in the 1970s forced the bank to close down its London office. RBI had then

asked the other two banks, who had operations in London, to close down.

As on March 31, 2006, the bank's reserves and surplus stood at Rs. 1,810.19 crore. Its

total business at the end of the last fiscal amounted to Rs. 1,05,677 crore.The bank had a

staff strength of 37,241 as on Nov 2006.

Central Bank of India partnered with TCS[ Tata Consultancy Services ] for its Core

Banking Solution. The solution set to be implemented will include B@NCS from

Sydney-based Financial Network Solutions (FNS), Exim Bills Trade Finance software

from China Systems and eTreasury from TCS. With 703 banks in the core bankingsystem (CBS), it was planned that by the end of March 2008 a total of 1,000 branches

would be brought under the CBS.

As of 31 March 2006, the bank achieved a landmark: crossing a business mix of Rs.

1,05,000.00 crores. The next target has been fixed at doubling this figure in the next three

years. Krishnan Subharamaniam, Executive Director of the bank, in his message to staff

members, has called upon them to achieve the target and suggested some steps. One of

these steps is to change the manner in which employees extend service to customers

across different delivery channels. He has advocated the adoption of the '3R' principles

when dealing with customers - recognition, respect and response. This is asserted to be

the path to make customers experience 'Customer Delight'. Subbaraman is of the view

that to be able to achieve the coveted goal of at least Rs.2,00,000.00 crores in three years'

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time, it is urgent to add large numbers of new customers to the bank's existing portfolio.

Central Bank also came with its IPO, which was oversubscribed 64 times. The bank has

plans to change the bank's signboard across the country, trying to impart a new look to

the bank after the IPO.

A number of innovative and unique banking activities have been launched by Central

Bank of India and a brief mention of some of its pioneering services are as under:

1921 Introduction to the Home Savings Safe Deposit Scheme to build saving/thrift habits

in all sections of the society.

1924 An Exclusive Ladies Department to cater to the Bank's women clientele.

1926 Safe Deposit Locker facility and Rupee Travellers' Cheques.

1929 Setting up of the Executor and Trustee Department.

1932 Deposit Insurance Benefit Scheme.

1962 Recurring Deposit Scheme.

Subsequently, even after the nationalisation of the Bank in the year 1969, Central Bank

continued to introduce a number of innovative banking services as under:

1976 The Merchant Banking Cell was established.1980 Centralcard, the credit card of the Bank was introduced.

1986 'Platinum Jubilee Money Back Deposit Scheme' was launched.

1989 The housing subsidiary Cent Bank Home Finance Ltd. was started with its

headquarters at Bhopal in Madhya Pradesh.

1994 Quick Cheque Collection Service (QCC) & Express Service was set up to enable

speedy collection of outstation cheques.

Further in line with the guidelines from Reserve Bank of India as also the Government of

India, Central Bank has been playing an increasingly active role in promoting the key

thrust areas of agriculture, small scale industries as also medium and large industries. The

Bank also introduced a number of Self Employment Schemes to promote employment

among the educated youth.

20


21/40

Among the Public Sector Banks, Central Bank of India can be truly described as an All

India Bank, due to distribution of its large network in 27 out of 28 States as also in 4 out

of 7 Union Territories in India. Central Bank of India holds a very prominent place

among the Public Sector Banks on account of its network of 3541 branches and 218

extension counters at various centres throughout the length and breadth of the country.

In view of its large network of branches as also number of savings and other innovative

services offered, the total customer base of the Bank at over 25 million account holders is

one of the largest in the banking industry.

Customers' confidence in Central Bank of India's wide ranging services can very well be

judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as

also almost all major corporate houses in the country.

2.3 Management Body Of The Bank

Shri S. Sridhar

Chairman & Managing Director

Shri Ramnath Pradeep

Executive Director

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Shri Arun Kaul

Executive Director

Dr.Shashank Saksena

Director

Shri M.K. Bhattacharya

Director

Shri M.S. Johar

Director, (Chartered Accountant)

Ms. Indu Singh Pawar

Director

Shri C.M. Puri

Director

Shri N. K. Pareek

Director

Shri Brijlal Kshatriya

Director

Prof. N. Balakrishnan

Director

2.4 Products and services of the bank

Deposits

Money Multiplier Deposit Certificate

(MMDC)

Monthly Interest Deposit Receipt

(MIDR)

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Quarterly Interest Deposit Receipt

(QIDR)CENT Uttam Scheme

Central's Senior Citizen Deposit Scheme Central's Flexi Yield Deposit Scheme

CENT Bachat Khata CENT Tax Saving Deposit

Other Services

Central Card Electronic Central Card

Debit Card Traveller's Cheques

Gift Cheques Cash Management Services

CENT Billpay Bancassurance

Depository Services Mutual Funds

Visa Platinum Card Bank Visa Gold Card

International Banking

Repatriable Schemes Non-Repatriable Schemes

Facilties for Exporters & Importers BIC Branch Swift Code

Addresses Gulf War Claims

Opening of NRI AccountsFacilities To NRIs Returning To

India

Foreign Exchange Remittance Facilities to

Resident Indians

MoneyGram / ExpressMoney

Loans

Cent Suvidha Cent Home Loan Plus Scheme

Cent Buy Cent Computer Loan

Cent Jewel Cent Kalyani

Cent Liquid Scheme Cent Mortgage

Cent Multipurpose Cent Rentals

Cent Safar Cent Trade

Cent VehicleCent Vidyarthi (Click Here to ApplyOnline)

Cent Vivah Centvyapari Scheme

Central Kisan Credit Card Housing Finance Scheme

Loans to Pensioners Drawing Personal Loan Scheme (Corporate)

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http://www.centralbankofindia.co.in/english/dep_qidr.asphttp://www.centralbankofindia.co.in/english/dep_qidr.asphttp://www.centralbankofindia.co.in/english/dep_uttamscheme.asphttp://www.centralbankofindia.co.in/english/dep_scds.asphttp://www.centralbankofindia.co.in/english/dep_fyds.asphttp://www.centralbankofindia.co.in/english/dep_bachatkhata.asphttp://www.centralbankofindia.co.in/english/dep_taxsaving.asphttp://www.centralbankofindia.co.in/english/services_other.asphttp://www.centralbankofindia.co.in/english/services_other.asphttp://www.centralbankofindia.co.in/english/os_centralcard.asphttp://www.centralbankofindia.co.in/english/os_debitcard.asphttp://www.centralbankofindia.co.in/english/os_travellerschq.asphttp://www.centralbankofindia.co.in/english/os_giftchq.asphttp://www.centralbankofindia.co.in/english/os_cms.asphttp://www.billdesk.com/cbihttp://www.centralbankofindia.co.in/english/os_bancassurance.asphttp://www.centralbankofindia.co.in/english/os_depository.asphttp://www.centralbankofindia.co.in/english/os_mf.asphttp://www.centralbankofindia.co.in/english/os_platinum.asphttp://www.centralbankofindia.co.in/english/os_goldcard.asphttp://www.centralbankofindia.co.in/english/int_banking.asphttp://www.centralbankofindia.co.in/english/int_repatriable.asphttp://www.centralbankofindia.co.in/english/int_nonrepatrible.asphttp://www.centralbankofindia.co.in/english/int_exportimport.asphttp://www.centralbankofindia.co.in/english/int_bic.asphttp://www.centralbankofindia.co.in/english/int_addresses.asphttp://www.centralbankofindia.co.in/english/int_gwc.asphttp://www.centralbankofindia.co.in/english/int_nriaccount.asphttp://www.centralbankofindia.co.in/english/int_nrifacility.asphttp://www.centralbankofindia.co.in/english/int_nrifacility.asphttp://www.centralbankofindia.co.in/english/int_remittance.asphttp://www.centralbankofindia.co.in/english/int_remittance.asphttp://www.centralbankofindia.co.in/english/int_moneygram.asphttp://www.centralbankofindia.co.in/english/loans.asphttp://www.centralbankofindia.co.in/english/loan_suvidha.asphttp://www.centralbankofindia.co.in/english/loan_centhomeloan_plus.asphttp://www.centralbankofindia.co.in/english/loan_buy.asphttp://www.centralbankofindia.co.in/english/loan_computer.asphttp://www.centralbankofindia.co.in/english/loan_jewel.asphttp://www.centralbankofindia.co.in/english/loan_kalyani.asphttp://www.centralbankofindia.co.in/english/loan_liquidscheme.asphttp://www.centralbankofindia.co.in/english/loan_mortgage.asphttp://www.centralbankofindia.co.in/english/loan_multipurpose.asphttp://www.centralbankofindia.co.in/english/loan_rentals.asphttp://www.centralbankofindia.co.in/english/loan_safar.asphttp://www.centralbankofindia.co.in/english/loan_trade.asphttp://www.centralbankofindia.co.in/english/loan_vehicle.asphttp://www.centralbankofindia.co.in/english/loan_vidyarthi.asphttp://www.centralbankofindia.co.in/education_loan/default.asphttp://www.centralbankofindia.co.in/education_loan/default.asphttp://www.centralbankofindia.co.in/english/loan_vivah.asphttp://www.centralbankofindia.co.in/english/loan_vyapari.asphttp://www.centralbankofindia.co.in/english/loan_kcc.asphttp://www.centralbankofindia.co.in/english/loan_centhomeloan.asphttp://www.centralbankofindia.co.in/english/loan_pensioners.asphttp://www.centralbankofindia.co.in/english/loan_personal_corporate.asphttp://www.centralbankofindia.co.in/english/dep_qidr.asphttp://www.centralbankofindia.co.in/english/dep_qidr.asphttp://www.centralbankofindia.co.in/english/dep_uttamscheme.asphttp://www.centralbankofindia.co.in/english/dep_scds.asphttp://www.centralbankofindia.co.in/english/dep_fyds.asphttp://www.centralbankofindia.co.in/english/dep_bachatkhata.asphttp://www.centralbankofindia.co.in/english/dep_taxsaving.asphttp://www.centralbankofindia.co.in/english/services_other.asphttp://www.centralbankofindia.co.in/english/services_other.asphttp://www.centralbankofindia.co.in/english/os_centralcard.asphttp://www.centralbankofindia.co.in/english/os_debitcard.asphttp://www.centralbankofindia.co.in/english/os_travellerschq.asphttp://www.centralbankofindia.co.in/english/os_giftchq.asphttp://www.centralbankofindia.co.in/english/os_cms.asphttp://www.billdesk.com/cbihttp://www.centralbankofindia.co.in/english/os_bancassurance.asphttp://www.centralbankofindia.co.in/english/os_depository.asphttp://www.centralbankofindia.co.in/english/os_mf.asphttp://www.centralbankofindia.co.in/english/os_platinum.asphttp://www.centralbankofindia.co.in/english/os_goldcard.asphttp://www.centralbankofindia.co.in/english/int_banking.asphttp://www.centralbankofindia.co.in/english/int_repatriable.asphttp://www.centralbankofindia.co.in/english/int_nonrepatrible.asphttp://www.centralbankofindia.co.in/english/int_exportimport.asphttp://www.centralbankofindia.co.in/english/int_bic.asphttp://www.centralbankofindia.co.in/english/int_addresses.asphttp://www.centralbankofindia.co.in/english/int_gwc.asphttp://www.centralbankofindia.co.in/english/int_nriaccount.asphttp://www.centralbankofindia.co.in/english/int_nrifacility.asphttp://www.centralbankofindia.co.in/english/int_nrifacility.asphttp://www.centralbankofindia.co.in/english/int_remittance.asphttp://www.centralbankofindia.co.in/english/int_remittance.asphttp://www.centralbankofindia.co.in/english/int_moneygram.asphttp://www.centralbankofindia.co.in/english/loans.asphttp://www.centralbankofindia.co.in/english/loan_suvidha.asphttp://www.centralbankofindia.co.in/english/loan_centhomeloan_plus.asphttp://www.centralbankofindia.co.in/english/loan_buy.asphttp://www.centralbankofindia.co.in/english/loan_computer.asphttp://www.centralbankofindia.co.in/english/loan_jewel.asphttp://www.centralbankofindia.co.in/english/loan_kalyani.asphttp://www.centralbankofindia.co.in/english/loan_liquidscheme.asphttp://www.centralbankofindia.co.in/english/loan_mortgage.asphttp://www.centralbankofindia.co.in/english/loan_multipurpose.asphttp://www.centralbankofindia.co.in/english/loan_rentals.asphttp://www.centralbankofindia.co.in/english/loan_safar.asphttp://www.centralbankofindia.co.in/english/loan_trade.asphttp://www.centralbankofindia.co.in/english/loan_vehicle.asphttp://www.centralbankofindia.co.in/english/loan_vidyarthi.asphttp://www.centralbankofindia.co.in/education_loan/default.asphttp://www.centralbankofindia.co.in/education_loan/default.asphttp://www.centralbankofindia.co.in/english/loan_vivah.asphttp://www.centralbankofindia.co.in/english/loan_vyapari.asphttp://www.centralbankofindia.co.in/english/loan_kcc.asphttp://www.centralbankofindia.co.in/english/loan_centhomeloan.asphttp://www.centralbankofindia.co.in/english/loan_pensioners.asphttp://www.centralbankofindia.co.in/english/loan_personal_corporate.asp


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Pension

Personal Loan Scheme

(Noncorporate)

Personal Loan To Commission Agents

LIC

Personal Loan To Teachers Cent Nano

Cent Swabhiman

E-Payments

DGFT Online E-Payment Central Excise & Service Tax

2.5 Interest rates of the bank for deposits and loans

DEPOSITS

NATURE RATE OF INTEREST MINIMUM BALANCE

ACCOUNT NORMALSENIOR

CITIZENRURAL

SEMI-

URBANURBAN

1. Savings Account - Domestic

a. With Cheque book

facility3.5 - - - -

b. Without cheque book

facility3.5 - - - -

c. No frills Account 3.5 - - - -

2. Term Deposits

(% p.a.)

A. Domestic Rates

For Deposits Upto Rs.

15 Lacs

Rates

For Deposits Above

Rs. 15 Lacs to Less

Than Rs. 1 Crore

Rates

For Deposits Rs. 1

Crore & Above

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http://www.centralbankofindia.co.in/english/loan_pensioners.asphttp://www.centralbankofindia.co.in/english/loan_personal_noncorporate.asphttp://www.centralbankofindia.co.in/english/loan_personal_noncorporate.asphttp://www.centralbankofindia.co.in/english/loan_lic.asphttp://www.centralbankofindia.co.in/english/loan_lic.asphttp://www.centralbankofindia.co.in/english/loan_teachers.asphttp://www.centralbankofindia.co.in/download/Nano_Car_Finance.pdfhttp://www.centralbankofindia.co.in/english/loan_swabhiman.asphttp://www.centralbankofindia.co.in/english/e-payment.asphttp://www.centralbankofindia.co.in/english/dgft.asphttp://www.centralbankofindia.co.in/english/centralexcise-servicetax.asphttp://www.centralbankofindia.co.in/english/loan_pensioners.asphttp://www.centralbankofindia.co.in/english/loan_personal_noncorporate.asphttp://www.centralbankofindia.co.in/english/loan_personal_noncorporate.asphttp://www.centralbankofindia.co.in/english/loan_lic.asphttp://www.centralbankofindia.co.in/english/loan_lic.asphttp://www.centralbankofindia.co.in/english/loan_teachers.asphttp://www.centralbankofindia.co.in/download/Nano_Car_Finance.pdfhttp://www.centralbankofindia.co.in/english/loan_swabhiman.asphttp://www.centralbankofindia.co.in/english/e-payment.asphttp://www.centralbankofindia.co.in/english/dgft.asphttp://www.centralbankofindia.co.in/english/centralexcise-servicetax.asp


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(w.e.f. 01.08.2009) (w.e.f. 22.06.2009) (w.e.f. 22.04.2009)

Term Deposits (All Maturities)

7 days to 14 days 3.00 2.50 2.00

15 days to 45 days 3.75 3.50 2.50

46 days to 90 days 4.25 4.00 3.00

91 days to 179 days 5.50 5.00 3.50

180 days to 269 days 6.25 5.75 4.50

270 days to 364 days 6.50 6.50 5.50

1 year to less than 2

years6.50 6.50 6.00

2 years to less than 3

years6.75 7.00 6.00

3 years to less than 5years

7.00 7.00 6.00

5 years and above 7.50 7.50 6.00

An additional interest rate of 0.50% p.a. over and above the normal rate of interest for any of the

Time Deposit Schemes will be given as incentive for deposits of Senior Citizens who are above 60

years of age.

B. Non Resident Accounts Rate of Interest (%)

a. NRO (All Maturities) NRO rates are same as domestic deposit rates.

b. NRE (All Maturities) 3.71% - 4.13% p.a.

C. FCNR (B)-

w.e.f. 01-July-

2009

1 year &

above but

fianal bank

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