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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

Nationalization 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.
Banking in India originated in the last decades of the 18th century. The first banks were
The General Bank of India which started in 1786, and the Bank of Hindustan, both of
which are now defunct. The oldest bank in existence in India is the State Bank of India,
which originated in the Bank of Calcutta in June 1806, which almost immediately became
the Bank of Bengal. This was one of the three presidency banks, the other two being
the Bank of Bombay and the Bank of Madras, all three of which were established under
charters from the British East India Company. For many years the Presidency banks acted
as quasi-central banks, as did their successors. The three banks merged in 1921 to form
the Imperial Bank of India, which, upon India's independence, became the State Bank of
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. Reserve Bank of
India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority.
The following are the steps taken in chronological order by the Government of India to
Regulate Banking Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.
1961: Insurance cover extended to deposits.

1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
1980: Nationalization of seven banks with deposits over 200 crore.
The nationalization of banks in India were initiated in 1969 by Mrs. Indira Gandhi, the then
prime minister. After the nationalization 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%.
In 1991, under the chairmanship of M. Narasimham, a committee was set up by his name
which worked for the liberalization of banking practice. The country was flooded with
foreign banks and their ATM stations. Efforts were being put to give a satisfactory service
to customers. Phone banking and net banking were introduced. The entire system became
more convenient and swift. Time is now given more importance than money.
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), nationalized 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 constituted under 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".


Technology plays a very important role in banks internal control mechanisms as well as
services offered by them. It has in fact given new dimensions to the banks as well as
services that they cater to and the banks are enthusiastically adopting new technological
innovations for devising new products and services.
The latest developments in terms of technology in computer and telecommunication have
encouraged the bankers to change the concept of branch banking to anywhere banking. Use
of ATMs and Internet banking has allowed anytime, anywhere banking facilities.
Automatic voice recorders now answer simple queries; currency accounting machines
make the jobs easier for the employees and ensure faster service to the customers. Credit
card facility has encouraged an era of cashless society. Today MasterCard and Visa card are
the two most popular cards used world over.
The banks have now started issuing smartcards or debit cards to be used for making
payments. These are also known as electronic purses. With increasing popularity of telebanking and e-banking, banking has become a 24*7 activity. And a system like Electronic
Clearing Service has made receiving dividends and interest easier and safer by making
bulk transfers from one account to many accounts (or vice-versa) possible. Mobile banking
too is growing rapidly and banks are using SMS as major tool of promotion, giving great
utility to their customers.
With such changes in technology, banks today have left behind their traditional role of
accepting deposits and lending money and focus on providing premium services to their
customers to retain their brand name and reputation in the market.
Internet Banking
Phone Banking/Tele-Banking
Mobile Banking

2.1) Internet banking : Internet banking: Also referred to as E-banking, internet banking
is changing the banking industry and is having the major effects on banking relationships.
Almost every bank has a website today and provides for delivery of its products & services
electronically. In true Internet banking, any inquiry or transaction is processed online
without any reference to the branch at any time. Providing Internet banking is increasingly
becoming a "need to have" than a "nice to have" service, and it is soon to become a norm
from an exception due to the fact that it is the cheapest way of providing banking services.
Using e-banking a customer can view account balances & statements, transfer funds
between accounts, create FDs Online, request a DD, pay bills, order a cheque book,
request stop payment on a cheque, apply for and access credit cards, apply for loans and
most importantly gets easy access to complete information about various products and
2.2) Phone Banking : It use an automated phone answering system with phone keypad
response or voice recognition capability. This feature is known as Interactive Voice
Response System (IVR). With the obvious exception of cash withdrawals and deposits, it
offers virtually all the features of an automated teller machine: account balance information
and list of latest transactions, electronic bill payments, funds transfers between a
customer's accounts, etc. Some banks engage call centres to provide 24*7 services to their
customers, via toll-free numbers. Others connect their customers to phone bankers, but in
this case, the service is only available for particular hours for which phone bankers are
available. Some make use of both i.e. toll-free numbers for some services, and phone
bankers for the ones that require professional assistance. Telephone banking
representatives are usually trained to do what was traditionally available only at the branch:
loan applications, investment purchases and redemptions, cheque book orders, debit card
replacements, change of address, etc.
2.3) Mobile Banking: ICICI was the first bank in India to introduce complete mobile
banking services in the year 2007. Since then, conducting banking operations using the
mobile phone has been fast catching up in the country. It works through a set of text

messages (SMS). With SMS a customer can perform a wide range of query-based
transactions from his/her mobile phone, like funds transfer (within and outside the bank),
enquiry services (Balance enquiry/ Mini statement), request services (cheque book
request), bill payment (utility bills, credit cards),


Strengthening financial systems has been one of the central issues facing emerging
markets and developing economies. This is because sound financial systems serve as an
Important channel for achieving economic growth through the mobilization of financial
savings, putting them to productive use and transforming various risks.
Many countries adopted a series of financial sector liberalization measures in the late
1980s and early 1990s that included interest rate liberalization, entry deregulations,
reduction of reserve requirements and removal of credit allocation. In many cases, the
timing of financial sector liberalization coincided with that of capital account
liberalization. Domestic banks were given access to cheap loans from abroad and allocated
those resources to domestic production sectors.
The Man banking sector can be divided into five distinct sub-sectors:
1. Clearing
2. Private
3. Off- Retail
4. Savings
5. Trust
Over the past 15 years the sector has grown by between 3% and 9% pa but has been in
decline since 2002 and faces a further sharp reduction.
Banking facilities on the range from basic current and deposit account facilities to
complex wealth management structures. However, there is no genuinely uniqueness in
Man banking products.
In a global context, the Man banking sector offers a mainly retail, mass-affluent
proposition targeting UK expatriates. Its chief revenue stream is derived from international
personal client business referred from UK and International Group offices.
Indian banks have compared favorably on growth, asset quality and profitability with other
regional banks over the last few years. The banking index has grown at a compounded
annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the

market index for the same period. Policy makers have made some notable changes in
policy and regulation to help strengthen the sector. These changes include strengthening
prudential norms, enhancing the payments system and integrating regulations between
commercial and co-operative banks. However, the cost of intermediation remains high and
bank penetration is limited to only a few customer segments and geographies. While bank
lending has been a significant driver of GDP growth and employment, periodic instances of
threatened the stability of the system Structural weaknesses such as fragmented industry
structure, restrictions on capital availability and deployment, lack of institutional support
infrastructure, restrictive labour laws, weak corporate governance and ineffective
regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could
seriously weaken the health of the sector. Further, the inability of bank managements(with
some notable exceptions) to improve capital allocation, increase the productivity of their
service platforms and improve the performance ethic in their organisations could seriously
affect future performance.
The second unique feature of Indias banking sector is that the Reserve Bank of
India has permitted commercial banks to engage in diverse activities such as securities
transactions, foreign exchange transactions and leasing activities.
India escaped a major and fatal injury to its economy even in the context of a full-blown
global economic crisis. This happened mainly owing to:

our high savings rate at around 34% to 35% of GDP

our lesser dependence on the external sector
sustained and strong domestic demand particularly in Indias semi-urban
and rural sector,
strong regulatory oversight and a well-calibrated monetary policy
our sumptuous foreign exchange reserves
a gradual and lower convertibility on capital account
Despite the strong prevalence of domestic sources of growth, the global financial crisis
interrupted the growth momentum in India. There was clear moderation in growth by the
third quarter of 2008-09. This is evident from the fact that the second-half GDP growth

was only 5.8%, down from 7.8% for the first half of the year and 9.0% for the previous
financial year 2007-08.


A large number of international and domestic banks all over the world are engaged in merger and
acquisition activities. One of the principal objectives behind the mergers and acquisitions in the
banking sector is to reap the benefits of economies of scale. With the help of mergers and
acquisitions in the banking sector, the banks can achieve significant growth in their operations
and minimize their expenses to a considerable extent. Another important advantage behind this
kind of merger is that in this process, competition is reduced because merger eliminates
competitors from the banking industry. Through mergers and acquisitions in the banking sector,
the banks look for strategic benefits in the banking sector. They also try to enhance their
customer base. The mergers and acquisitions in the banking sector of India are overseen by the
Reserve Bank of India (RBI).
Following are some of the major mergers and acquisitions in the global and domestic
banking sector:

The merger of Chase Manhattan Corporation with J.P. Morgan & Company. The name of

the new company formed as a result of the merger is J.P. Morgan Chase & Company.
The merger of Firstar Corporation with U.S. Bancorp. The name of the resultant entity is

U.S. Bancorp.
The merger of Golden State Bancorp, Inc. with Citigroup Inc. The name of the newly

formed company is Citigroup Inc

The merger of FleetBoston Financial Corporation with Bank of America Corporation. The
newly formed entity is Bank of America Corporation.

Merger between IDBI (Industrial Development bank of India) and its own subsidiary IDBI

Bank. The deal was worth $ 174.6 million (Rs. 7.6 billion in Indian currency).
Centurion Bank and Bank of Punjab. Worth $82.1 million (Rs. 3.6 billion in Indian
currency), this merger led to the creation of the Centurion Bank of Punjab with 235
branches in different regions of India.


There are several terminologies being used in day-to-day banking process. Following
are the important terms used in BANKING SECTOR:






4.1) BANK RATE- Bank Rate is the oldest instrument of monetary policy. It is the rate at
which RBI lends money to other banks or financial institutions or commercial banks. In
other words it is the rate of interest which is charged by RBI on its advances to commercial
banks. If bank rate is increased by RBI, then all banks will also hike their own lending
rates such as deposit rates and prime lending rates etc. The bank rate policy seeks to affect
both the cost and availability of credit.
Bank Rate is the rate at which central bank of the country (in India it is RBI) allows
finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term
purposes. Any upward revision in Bank Rate by central bank is an indication that banks
should also increase deposit rates as well as Prime Lending Rate. This any revision in the
Bank rate indicates could mean more or less interest on your deposits and also an increase
or decrease in your EMI
4.2) REPO RATE- Repo rate is the rate at which our banks borrow rupees from RBI.
Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction
in the repo rate will help banks to get money at a cheaper rate. When the repo rate
increases, borrowing from RBI becomes more expensive. Under repo transaction the

borrower places with the lender certain acceptable securities against funds received and
agree to reverse this transaction on a predetermined future date at agreed interest cost. It is
known as repurchase rate.
Therefore, we can say that in case, RBI wants to make it more expensive for the banks to
borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks
to borrow money, it reduces the repo rate. If increases the repo rate it will increase general
interest rates throughout the economy. If the repo rate for commercial banks increases they
will pass this onto their own consumers. Higher interest rates have the effect of reducing
spending, investment and economic growth. This will reduce inflationary pressures in the
4.3 ) REVERSE REPO RATE - This is the reverse of repo rate. It is the rate at which
RBI borrows money from banks. When liquidity or cash floating is excess in banks, RBI
sucks it out by reverse repo by lending securities and taking out money from banks. RBI
uses this tool when it feels there is too much money floating in the banking system.
Banks are always happy to lend money to RBI since their money is in safe hands with a
good interest. An increase in Reverse repo rate can cause the banks to transfer more funds
to RBI due to this attractive interest rates.
4.4) CASH RESERVE RATIO - CRR means Cash Reserve Ratio. Banks in India are
required to hold a certain proportion of their deposits in the form of cash. However,
actually Banks dont hold these as cash with themselves, but deposit such cash with
Reserve Bank of India (RBI), which is considered as equivalent to holding cash with them.
This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by
the RBI and is known as the CRR or Cash Reserve Ratio.
Suppose a bank has total deposits of Rs.100 Bn and is required to maintain a CRR of say
5%. This means that the bank should maintain in current accounts with the central bank or
any other approved bank balances, not less than Rs. 5 Bn. This much amount is impounded
and kept in the free form. And the bank cannot lend this money. This acts as a buffer to the

RBI uses CRR either to drain excess liquidity or to release funds needed for the economy
from time to time. Increase in CRR means that banks have fewer funds available and
money is sucked out of circulation. Thus we can say that this serves duel purposes i.e. it
not only ensures that a portion of bank deposits is totally risk-free, but also enables RBI to
control liquidity in the system, and thereby, inflation by tying the hands of the banks
in lending money. The RBI is empowered to vary CRR between 3% and 20% respectively.
4.5) STATUTORY LIQUIDITY RATIO - It is the amount a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing
credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank
of India) in order to control the expansion of bank credit.

Every bank is required to

maintain at the close of business every day, a minimum proportion of their net demand and
time liabilities as liquid assets in the form of cash, gold or approved securities. This
percentage is fixed by RBI. The maximum and minimum limits for the SLR are 40% and
25% respectively.
In the above example, suppose the bank is supposed to maintain SLR of 25%, this means
that over and above CRR the bank is expected to keep aside an amount of Rs. 25 Bn. This
will be kept in easy-to encash securities like, treasury bills of the government and any other
approved securities. This again acts as buffer to the bank and prevents the bank from
lending the entire amounts of deposits kept with it by various customers.




Bank Rate



Repo Rate



Reverse Repo Rate















In order to address the severe liquidity crunch, the Reserve Bank of India introduced a slew
of measures since mid-September 2008, viz. reduction in CRR from 9% to 5%, SLR from
25% to 24%, buyback of MSS securities, opening of new refinancing windows, increase in
ceilings on non-resident deposits and easing of restrictions on external commercial
borrowings and on short-term trade credits. Policy rates were also cut repo by 400 bps
from 9% to 5% and reverse repo by 250 bps from 6% to 3.50%. The fiscal and monetary
stimulus measures initiated during FY 2008-09 coupled with lower crude and metal prices
somewhat cushioned the down-turn in growth momentum in FY 2009-10. While the
domestic financial situation is improving, external financial environment will remain tight.
Therefore, investment demand will be at a lower ebb. On balance, with the assumption of a
normal monsoon, the GDP growth for FY 2009-10 is expected to be around 7% to 7.5%,
going forward.
Following are few guidelines directed by the RBI for the UCB sector:

RBI has asked Scheduled Co-operative Banks to draw the ALM structural Liquidity

statement on a daily basis.

RBI has notified that approvals for branch expansion including off-site ATMs in respect of
UCBs will henceforth be considered based on their Annual Business Plans, subject to

certain criteria.
RBI has permitted well-managed and financially sound multi-state UCBs to set up onsite

ATMs without prior approval of the RBI.

RBI has instructed large-sized and systemically important UCBs to apply capital charge for
market risk with effect from 1st April, 2010.
Basal Norms:
In July 1988, the Basel Committee came out with a set of recommendations aimed at
introducing minimum levels of capital for internationally active banks. This first series of
recommendations by Basel Committee are popularly known as Basel I norms. These norms
required the banks to maintain capital of at least 8 per cent of their risk-weighted loan
exposures. Different risk weights were specified by the committee for different categories
of exposure. For instance, government bonds carried risk-weight of 0 per cent, while the
corporate loans had a risk-weight of 100 per cent. The Basel Committee also laid down

standard definitions for different types of capital. Capital was categorized as Tier I and Tier
II capital. Tier I capital is mainly the permanent capital like equity. Tier II capital is the
supplementary capital like subordinate debt. The norms were successful in improving the
capitalization ratios of the banks worldwide. In India, the banks were required by the
Reserve Bank of India to maintain a higher capital-to-risk-weighted-assets ratio (CRAR) of
9 per cent.
Basel II is an international business standard that requires financial institutions to maintain
enough cash reserves to cover risks incurred by operations. The Basel accords are a series
of recommendations on banking laws and regulations issued by the Basel Committee on
Banking Supervision (BSBS). Basel II also requires companies to publish both the details
of risky investments and risk management practices. The full title of the accord is Basel II:
The International Convergence of Capital Measurement and Capital Standards - A Revised
The three essential requirements of Basel II are:
1) Mandating that capital allocations by institutional managers are more risk sensitive.
2) Separating credit risks from operational risks and quantifying both.
3) Reducing the scope or possibility of regulatory arbitrage by attempting to align the real
or economic risk precisely with regulatory assessment.
Basel II has resulted in the evolution of a number of strategies to allow banks to make risky
investments, such as the subprime mortgage market. Higher risks assets are moved to
unregulated parts of holding companies. Alternatively, the risk can be transferred directly
to investors by securitization, the process of taking a non-liquid asset or groups of assets
and transforming them into a security that can be traded on open markets.



The company with its head office in New York has been to make out a huge profit of $ 2.1
billion, in the first quarter of the year 2009.It has branches in 50 countries , including
India.This has good experience in off-shore banking and financing in stock markets.
This 150 years old organization has its head office in Zurich, Switzerland. This is now the
world Bank In the first Quarter of the year 2009, it got the profit of 200 crores Swiss
This institution with its head office in New York, has made a profit of $3.23 per share in
the first quarter of this year. This was established in 1869 And now it has branches in
many important countries in the world, including India.
This American Company provides services in managing properties and finances.
Established in 1985, this company had suffered a huge loss of $82.7 crores in the last
quarter of 2008. But it recovered so intelligently that in the first quarter of 2009. the loss
came down to only $ 9.3 . It is sure that in later quarters of 2009, the insttuition has
definitely made profits.
This bank with its head office in Syantender in Spain, is one of the oldest banks in the
world. Established in 1857



The Businessworld magazine in India published an Indias Best Banks of 2009. The factors
used to select these banks are growth, size, sustainability and some risk parameters1. State Bank of India
2. HDFC Bank
3. Axis Bank
4. Bank of India
5. Punjab National Bank
6. Bank of Baroda
7. ICICI Bank
8. Union Bank of India
9. Citibank
10. Canara Bank
The Top 10 Banks in India based on Assets1. Punjab National Bank
2. Bank of India
3. Bank of Baroda
4. HDFC Bank
5. Citibank
6. Power Finance Corporation Limited
7. Canara Bank
8. Standard Chartered Bank
9. State bank of India
10. ICICI banks



The symbol takes off from our earlier logo and visualizes a hexagon. It is an attempt to
appeal to younger and new customers without alienating the existing ones. The logo
represents two caring hands in the shape of a hexagon. The upper hand is of golden yellow
colour. Yellow is the colour of warmth, sunshine, cheer and happiness. Gold of wealth,
prosperity and ever increasing value. They are the colours of the Sun and symbolize life,
youth and harmony. The lower hand is burgundy red, the colour of excitement, strength
and passion. It symbolizes aggressiveness and in the Indian context, Soubhagya.



"The Saraswat Co-operative Banking Society" was founded on 14th September 1918. Mr.
J.K. Parulkar became its first Chairman, Mr. N.B. Thakur, the first Vice-Chairman, Mr.
P.N. Warde, the first Secretary and Mr. Shivram Gopal Rajadhyaksha, the first Treasurer.
These were the people with deep and abiding ideals, faith, vision, optimism and
entrepreneurial skills.
The Society was initially set up to help families in distress. Its primary objective was to
provide temporary accommodation to its members in eventualities such as weddings of
dependent members of the family, repayment of debt and expenses of medical treatment
etc. The Society was converted into a full-fledged Urban Co-operative Bank in the year
1933. The Bank, which was originally founded in 1918, i.e. close on the heels of the
Russian Revolution, also witnessed as a Society and as Bank-the First World War, the
Second World War, India's freedom Movement and the glorious chapter of postindependence India. During this cataclysmic cavalcade of history, the Bank as a financial
institution and its members could not of course remain unaffected by the economic
consequences of the major events. The Founder Members and the later-day management's
of the Bank continued to demonstrate their unwavering faith in the destiny of the common
man and the co-operative movement. By 1942, the Bank was fulfilling all the banking
needs of its customers. The Bank had established five branches within the city of Mumbai
and one each at Pune and Belgaum. The Bank has grown in stature, progressed in its social
and economic objectives and produced an image of what an ideal bank should be.
Resultantly, in the year 1977-78, the Bank's gross income crossed the Rs.3.00 Crore mark
for the first time.
Last two decades the Bank has witnessed a steady growth in the business. The bank has a
network of 200 fully computerised branches covering six states viz. Maharashtra, Gujrat,
Madhya Pradesh, Karnataka, Goa and Delhi. The Bank is also providing 24- hour service
through ATM at 84 locations.
In 1988 the bank was conferred with "Scheduled" status by Reserve Bank of India. The
Bank is the first co-operative bank to provide Merchant Banking services. It got a
permanent license to deal in foreign exchange in 1978. Presently the Bank is having
correspondent relationship in 45 countries. The Beginning of the 21st Century has been a

giant leap forward for the Bank. Bank chose a path of organic/inorganic growth and pace
of growth accelerated .Bank's total business which was around Rs 4000 Crore in 2000
which almost tripled to Rs 15295 Crore in 2007. The Business of the Bank as on 31st
March 2009 had crossed Rs 21000 Crores.



Fig.: Growth of the bank at a glance

Total business of the Bank (i.e. deposits plus advances) crossed the Rs. 21,000 crore mark
for the first time to stand at Rs. 21,029.26 crore as on 31st March 2009 (from Rs.
18,879.13 crore as on 31st March 2008) i.e. a growth of Rs. 2,150.13 crore in absolute
terms and of 11.39% in percentage terms, on a y-o-y basis. The deposits of your Bank
increased from Rs. 11,430.82 crore as on 31st March 2008 to Rs. 12,918.85 crore, while

advances rose from Rs. 7,448.31 crore to Rs. 8,110.41 crore in FY 2008-09.
The profit of the Bank (before tax and exceptional items) has increased from Rs. 231.84
crore to Rs. 315.61 crore i.e. a rise of 36.13%. The net profit after tax, which stood at Rs.
202.26 crore in FY 2007-08, rose to Rs. 241.29 crore after tax and before exceptional items

for FY 2008-09 constituting a growth of Rs. 39.03 crore in absolute terms and 19.30 in

percentage terms.
The profit from our foreign exchange business grew from Rs. 63.14 crore in FY 2007-08 to

Rs. 65.09 crore in FY 2008-09.

This bank succeeded in maintaining zero net NPA status for the fifth consecutive year.
The number of branches of your bank, grew to 175. While the merger of erstwhile SICBL
added ten branches, the merger of the erstwhile KMCBL resulted in an addition of fifteen
branches. Your Bank opened seven new branches, one each at 1) New Delhi, 2)Tilak
Nagar, Mumbai 3) Lokhandwala Complex, Mumbai, 4) Udupi, 5) Alibaug, 6)Kudal and 7)

The first state-of-the-art SME focussed Branch of your Bank was opened at Vikhroli
(West), Mumbai, on 27th April 2009. The second SME focussed branch was opened at
Panjim, Goa on 9th May 2009. Both the branches are specifically meant to cater to Small

and Medium Enterprises.

Capital to Risk Asset Ratio (CRAR), which is known as capital adequacy ratio, improved
from 10.85% for FY 2007-08 to 10.92% for FY 2008-09 even after absorbing losses of the

two merged banks.

Net profit per employee increased from Rs. 7.14 lakhs for FY 2007-08 to Rs. 7.26 lakhs for
FY 2008-09. The productivity per employee also improved from Rs. 6.66 crore to Rs. 7.24

crore during the year 2008-2009

This bank acquired two weak co-operative banks viz. the South Indian Co-operative Bank

Ltd. and the Kolhapur Maratha Co-operative Bank Ltd.

Peer level NET level comparison:
The following table gives the net profit earned by some select schedule commercial banks
in the private sector and also in the public sector. It clearly shows that the Banks profit
stands out in as much as the total business (Deposits plus Advances) of all the other banks.
Name of the Bank

Total Business

Net Profit

Indusind Bank
ING Vysa Bank
South Indian Bank
Saraswat Bank
Vijaya Bank
Karnataka Bank
Kotak Mahindra Bank

(Rs in Crore)

(Rs in crore)

Name of the Bank

Total Business

Net Profit

State Bank Of Indore

Yes Bank
State Bank Of Mysore
Bank of Maharashtra

(Rs in Crore)

(Rs in crore)



Financial Accounting is a process of systematic recording of business transactions in the
various books accounts maintained by organization with the ultimate intention of preparing
financial statements there from. Financial accounting ultimately aims at preparing financial
statements which are basically in two forms:

Profit and loss statement is a period statement and related to curtained period, usually one
year. This tells about the results of operations, either profit or loss, arising out of the

conduct of business operations during that period

Balance sheet which is a potion statement and relates to a particular point of time. This
tells about the various properties held by the business (termed as Assets) and obligations
accepted by the business (termed as Liabilities) as on particular date.
Balance Sheet:
The purpose of preparing the balance sheet is to disclose financial status of an organization
in the form of assets and liabilities at a given point of time.
Liabilities: Credits balances in all the personal and real accounts appear on liabilities side.
The following items may appear on the liabilities side:

Capital: Capital Indicates the amount of funds contributes by the owner of business to
requirement of fund of business. Similarly, any amount of profit earned in past which is not

distributed to the owner also belongs to owner and become a part of the business.
Long term liabilities: This indicates the liabilities which are to be paid off over long
period of span of time say 5 to 10 years. In practical circumstances, it may consists of long-

term loan borrowed from a bank and financial institutes.

Currents liabilities: This indicates the liabilities which are suppose to be paid off which a
very short span of time say one year. In practical circumstances, it consist Sundry
creditors, Advances received from customer, Outstanding expenses, Income received in
advanced, Liability taxes etc.
Capital & Liabilities

Sub liabilities
Authorized Capital

Rs. In Crores

Individual & Societies

Reserve Funds & Other

Building Funds





General Reserve
Bank Deposits

Special Reserve
Central Co-op Banks


Saving Banks

Current Deposits
Foreign currency


Overdraft From Bank

Interest on Loans &
Other liabilities

Branch Adjustment


Bills Receivable
Interest Payable
Bills Payable
Profit Earned Past i.e.
In 2007.


Debit balances in all the personal and real accounts appear on assets side. Following items
may appear on assets side:

Fixed assets: Fixed assets indicate the value of infrastructure properties acquired by the
business where the benefit received over long period of time. Fixed assets are land,

building, machinery, furniture vehicles, and computer.

Investments: This indicates the amounts of funds invested by the organization outside the

Current assets: Current assets are the assets which are likely to be converted in the form of
cash of likely to be consumed during the normal operating cycle of a business within a
very short span time say one year. Current assets are stocks, sundry debtors, cash & bank
balances, prepaid expenses.
Balance Sheet As At 31st March, 2008


Properties & Assets


Sub Assets

Rs. In Crores

Plant & Machinery

Furniture & Fixture




Balances with Banks

Shares investment


Mutual Funds
Govt. Securities
Members Welfare Funds
Short Term Advances



Medium Term Advances

Long Term Advances
Interest Receivable

Other Assets


Computer Software
Non Banking Assets
Bills Receivable


Profit and Loss accounts:

A profit and Loss account is prepared to disclose the results of operation of the business
transaction during certain duration of time. Accounts may have following four

Manufacturing accounts: This part of profit and loss accounts discloses the results of
manufacturing operations carried out by the organization. The final results in terms of
manufacturing accounts is a cost of production incurred by the organization.


Trading accounts: This part of profit and loss accounts discloses the results of trading
operations carried by organization. The final results in terms of Gross Profit earned by the

Profit and Loss accounts: This part of profit and loss accounts discloses the final results of
business transactions of the organization. The final results in terms of Net profit earned by

Profit and Loss appropriation accounts: This part of profit and loss accounts which mainly
applicable to company form of organization, discloses the manner in which the net profit
earned by the organization is appropriated. The amounts of profit not appropriated or
retained transferred to reserves and surplus in balances sheet.



Year ended 31.03.2008

Year ended 31.03.2009



Total Income
Total Expenditure
Gross profit
Operating profit before



Income Taxes
Net Profit



10.1) Maximizing CASA deposits:

A sharp focus on reduction in costs has become priority No. 1 for the Bank. On the liability
side, the cost advantage will be available to the Bank, only if the Bank makes rapid strides
in mobilization of Current Accounts and Savings Accounts (CASA). Major banks in the
country have around 35% to 45% CASA deposits, while this bank has been hitting only the
22% to 30% range in CASA deposits. As CASA deposits carry an average low level of
interest, the average cost of funds (i.e. CASA Deposits + Term Deposits) comes down. We
have repeatedly impressed on our staff the need to mobilize CASA deposits aggressively.
10.2) Reduction in NPA:

To bring down the Gross NPA level as also to ensure that substantial new NPAs are not
added, branches were asked to speed up efforts for recovery in respect of overdue accounts
with them. The drive for reduction in NPAs has been hugely successful under the
leadership of Shri P. G. Kamath, Chief General Manager.


10.3) Marketing:
Business Process Reengineering (BPR) initiative primary objective of this initiative is to
convert the branches into sales and service outfits. India is a huge banking market but the
penetration of Indian Banking is thus one of the lowest in the world. Also a large number
of our branches are functional in Maharashtra State, which has a huge banking business
market of around Rs. 17,00,000/- crore (with aggregate bank deposits of Rs. 8,57,771 crore
and gross credit of Rs. 8,34,701 crore in September 2008). Of these Rs. 17,00,000 crore,
we at Saraswat Bank have a business stake of only Rs. 20,000 crore, which is a miniscule
of merely 1.2% share in the total banking business in the State of Maharashtra. This
provides a huge opportunity to banks including your Bank. In fact, it is on the basis of
these statistics that the bank has planned to do a business of Rs.1,00,000 crore by 2021
under Dr. Adarkar Mission IV of the Bank. All the employees in the branches are being
trained, equipped and instructed to take extra efforts for marketing all the products and
services of the Bank.



SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieve that objective. The technique
is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s
and 1970s using data from Fortune 500 companies.
It specifies the attributes of the person or company that are helpful to achieve the

Saraswat Bank is No. 1 amongst the 1,700 UCBs in the Urban Cooperative Banking Sector

in India with over 90 years of cumulative banking experience.

High standard regulatory environment.
Flexible work permit system and good quality staff offering personal client service.
Bank has implemented Core Banking Solution (CBS) in the Bank. This solution primarily

aims at having a unified customer approach.

Bank is a member of the Credit Information Bureau India Ltd. (CIBIL). CIBIL is Indias
first credit information bureau and is a repository of factual information on the credit
history and repayment records of millions of commercial and individual borrowers.

Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in
PSU banks below 51% thus choking the headroom available to these banks for raining

equity capital.
Lack of competitive differential with other offshore centres
Rigid legislation that inhibits business development

External conditions that are helpful to achieving the objective(s).

Maharashtra State has a huge banking business market of around Rs. 17,00,000/- crore. Of
these Rs. 17,00,000 crore, Saraswat Bank has a business stake of only Rs. 20,000 crore,


which is a miniscule of merely 1.2% share in the total banking business in the State of

Maharashtra. This provides a huge opportunity to the bank.

Saraswat Bank does 0.3% to 0.4% of the nations banking business. In India today, 60% of
the population do not have access to a banking product; 80% of the population do not have
access to an insurance product and 98% of the population do not have access to a stock
market product. Thus, there is tremendous untapped growth potential in the Indian

Rise in inflation figures which would lead to increase in interest rates.

Increase in the number of foreign players would pose a threat to the PSB as well as the
private players.

Anti-offshore regulations in foreign target markets restricting the development of products

and new markets.

Downsizing and reduction in banking operations in favour of rival jurisdictions.
Outsourcing to cheaper jurisdictions
Subsequent impact on rest of finance sector ecosystem



It is our earnest Endeavour to offer suite of new and competitive financial products and
services. We have for this purpose tied up with various insurance companies. The details of
tie-up and products offered are given below:
We are the Corporate Agents for the distribution of Life Insurance products, of M/S HDFC
Standard Life Insurance Co Ltd. Under this tieup arrangement, we offer following life
insurance products:
Protection Plans
Protection Plans help to shield your family from uncertainties in life due to financial losses
in terms of loss of income that may dawn upon them incase of your untimely demise or
critical illness. Protection Plans go a long way in ensuring your familys financial
independence in the event of your unfortunate demise or critical illness. They are all the
more important if you are the chief wage earner in your family. No matter how much you
have saved or invested over the years, sudden eventualities, such as death or critical
illness, always tend to affect your family financially apart from the huge emotional loss.
Childrens Plan
Childrens Plans help to save, so that you can fulfill your childs dreams and aspirations.
These plans go a long way in securing your childs future by financing the key milestones
in their lives even if you are no longer around to oversee them. Childrens Plans help you
save steadily over the long term so that you can secure your childs future needs, be it
higher education, marriage or anything else. A small sum invested by you regularly can
help you build a decent corpus over a period of time and go a long way in providing your
child a secured financial future alongwith.
Retirement Plans
Retirement Plans provide you with financial security so that when your professional
income starts to ebb, you can still live with pride without compromising on your living
standards. By providing you a tool to accumulate and invest your savings, these plans give

you a lump sum on retirement, which is then used to get regular income through an
annuity plan. Given the high cost of living and rising inflation, employer pensions alone
are not sufficient. Pension planning has therefore become critical in today's world.
Savings and Investment Plans
You have always given your family the very best. And there is no reason why they
shouldnt get the very best in the future too. As a judicious family man, your priority is to
secure the well-being of those who depend on you. Not just for today, but also in the long
term. More importantly, you have to ensure that your familys future expenses are taken
care, even if something unfortunate were to happen to you. Our Savings & Investment
Plans provide you the assurance of lump sum funds for you and your familys future
expenses. While providing an excellent savings tool for your short term and long term
financial goals, these plans also assure your family a certain sum by way of an insurance .
Health Plans
Health plans give you the financial security to meet health related contingencies. Due to
changing lifestyles, health issues have acquired completely new dimensions becoming
more complex in nature. It becomes imperative then to have a health plan in place, which
will ensure that no matter how critical your illness is, it does not impact your financial
Here is one more exciting facility the Bank has offered to relieve its customers, our
esteemed client, from spending your valuable time standing in a queue for routine utility
bill payments.
All you have to do is to walk into any of our branch and register yourself under : Easy Pay"
scheme for all your recurring utility bill payments such as Telephone, Electricity Bills,
Cellular Phone Bills, Insurance Premium & many more. Once you are registered all your
future bills will be paid automatically through the bank account with us.


Basically, the concept of Marketing is given by McCarthy who has classified Marketing
Mix tools of four broad kinds called 4 P's and they are as follows

Physical Evidance
These marketing mix tools are used by the marketers to influenc their trade channels and
final consumers.
The Saraswat co-operative banks 4P's criteria is followed below
13.1) Product

Sarswat co-operative bank is No. 1 amongst the 1,700 UCBs in the Urban Co-operative

Banking Sector in India.

The fact remains that we do 0.3% to 0.4% to nation's banking business.
A Sarswat Co-operative Bank has special Product Development Department which is been


seen by Shri M.S.Vaidya, Dy.General Manager.

The product Development department has initiated into all these areas
Products and their attributes.
Unique Selling Propositions of our Products.
Marketing positions of our products.
Promotional imperatives.
Value addition ingredients of our products and their enrichment.
This helps the bank to process of redefining and refashioning our existing products and

creating new products.

This helps to maintain realtionships i.e helps to maintain CMR
13.2) Place

The bank has adopted the policies of inorganic growth since 2006 for increasing its branch

From 2009 the bank has been pursuing a mix of inorganic and organic growth for branch

expansion purposes.
The bank has adopted the cluster based approach.
Instead of having an isolated branch, they have 4-5 branches in a far off area.

This approach has enabled the bank to cluster presence in western Maharashtra, Goa and

The bank has planned under Dr.Adarkar Mission 2, to open 70 more branches by 31st

The is following the mantra of one branch in every 15 days in programme called
13.3) Promotion

Promotion of any brand is very necessary; this helps the marketer as well as customer to

understand each other well.

The Sarswat Co-operative bank has appointed Shri Dilip Prabhavalkar, veteran artist as

their Brand Ambassador

This has heed the bank to achieve and promote heights of success in their business
To attract the young generation the bank has appointed a junior brand ambassador to Ms.

Shalmali Sukthankar, budding artist.

From last five years the bank has encapsulated and expressed our uniqueness to the
customers that the bank is having the "Ability of the Big and Agility of the Small"
13.4) Pricing

In any service industry, cost leadership is critical to the long term success of the

The bank has to compete with other banks on the basis of total reduction of all economic

and unwarranted expenditures and also to control costs in all areas.

The bank initiatives are as follows
o Optimum utilization of the available resources of he bank.
o Streamlining/Re-engineering various procedures in the bank, thus improving customer

The bank has sustained work of the income and cost council, which helps the bank to offer
services to the customers with lower intermediations costs.
13.5) People
During the FY 2008-09, a total of 2,225 employees, consisting of 1,058 from management
and 1,167 from non-management people working in Saraswat Bank.
Today Saraswat Bank have 250 branches, (i.e. 70 more branches by 31st March, 2011),
13.6) Process

Standardization: Bank has got standardized procedures for typical transactions. This is
because of the rules they are subject to. Besides this, each of the branch has its standard
forms, documentations etc. Standardization saves a lot of time behind individual

Customization: There are specialty counters at each branch to deal with customers of a
particular scheme. Besides this the customers can select their deposit period among the

available alternatives.
Number of steps: numbers of steps are usually specified and a specific pattern is followed

to minimize time taken.

Simplicity: Banks various functions are segregated. Separate counters exist with clear
indication. Thus a customer wanting to deposit money goes to deposits counter and does
not mingle elsewhere. This makes procedures not only simple but consume less time.
Besides instruction boards in national boards in national and regional language help the
customers further.


13.7) Physical Evidence :

Internet & Web:
Web :www.saraswatbank.com
Email : corporateoffice@saraswatbank.com



Internal Capability Building Measures (ICBMs):
The bank pursued the recruitment and promotional policy during the year 2008-2009 as per
Internal Capability Building Measures (ICBM).
Promotional Exercise:
The Bank had undertaken promotional exercise in the year 2002 when organizational
restructuring was done as per the recommendations of M/s Seven S Associates. The Bank
has been undertaking expansion of branch network and has been implementing BPR
exercise too, which is resulting in transforming the organization. In order to cater to the
growing expanse of the Bank and the need for managerial positions in the wake of the
same, a promotional exercise to various cadres was conducted. A total of 385 employees
were promoted to various cadres. All promoted personnel have been suitably deployed at
various branches (including the branches of the merged banks) and/or departments.
During the FY 2008-09, a total of 2,225 employees, consisting of 1,058 from management
and 1,167 from non-management cadre attended 98 training programmes conducted at the
Staff Learning Centre at Vashi, Navi Mumbai, as well as at various branch locations. A
special emphasis was given on training of new recruits and employees of erstwhile banks
merged with this Bank at their respective locations as well as at the Staff Learning Centre
at Vashi, where the focus was on validation process, know the Bank, the internal software
package OMNI and the retail products of the bank.
Customer Service:
The bank has adopted the following codes based on the Standard codes documented by
Indian Banks Association:

Customer Fair Practice Code

Cheque Collection Code

Bankers Lender Liability Code

Compensation Policy


Saraswat Bank has become a member of the Banking Codes and Standards Board of India.
This board ensures that the Codes so defined by the Bank are implemented in letter and
spirit. For measuring customer satisfaction, a bank- wide Customer Service Audit has been
planned to be commissioned by the Board in the ensuing year.
Industrial Relation:
The Banks human resources have been organised under the two representative bodies viz.
the Officers Association and the Employees Union. The industrial relations with both
these organizations have been very cordial with joint discussions being held with the
Association/the Union for redressing employee issues in an amicable way.
Voluntary Retirement Scheme (VRS):
This year, the Bank launched the VRS for its employees. Around 236 employees from your
Bank (excluding those of merged banks) opted for VRS under the said scheme. Besides, 83
employees of the erstwhile Nasik Peoples Cooperative Bank Ltd., 43 employees of
erstwhile Annasaheb Karale Janata Sahakari Bank Ltd. and at around 100 employees of the
erstwhile Murgharajendra Sahakari Bank Ltd. (i.e. in all 462 employees) opted for VRS
and have been relieved under the Schemes. The Bank acknowledges with gratitude the
sincerity and hard work put in by all these employees during their tenure with the Bank and
wishes the retired employees an eventful and healthy post retirement life.



Corporate Social Responsibility (CSR) is not a new fashion but it is an old creed for this
organization. The founders and their successors understood and underscored the principle
that a cooperative institution must always stay connected with the needs and aspirations of
the society at large and hence CSR constitutes the umbilical cord that connects this bank to
the society.
The laudable gesture of late Wamanrao Varde and his associates on the Board then in
spontaneously responding to the grave scarcity of foodgrains during the Second World War
and in starting on behalf of your Bank a ration shop at Girgaum in Mumbai to make
available foodgrains to all, is a resplendent example of the early awareness of CSR in this
Bank. This was so because all members of the community always understood that a cooperative institution must always have a social purpose. Bank thereafter also started
scholarships and apprenticeships for deserving students and through that process built the
careers of several young men. The Bank has been providing financial assistance to many
social, educational and medical institutions by way of grants every year from its funds.
From time to time the Board of Directors responded to national and natural calamities like
flood, famine, earthquake etc.
Following are the few initiatives both at macro and micro level, which spell out the banks
vision of Corporate Social Responsibility (CSR):
As a macro level expression of CSR, the bank in association with Maharashtra Times
created an intellectual platform entitled "Shikhar Maharashtra" with the objective of
researching into, debating and finding ways and means to deal with the many stubborn
economic and social issues that Maharashtra faces today. The inauguration of this forum of
'Shikhar Maharashtra" will pave the way for bringing to the table the daunting problems
that our State faces today. It is proposed that at an interval of every three months, a major
issue facing Maharashtra such as farmers' suicides, malnutrition, scarcity of drinking water,
famine and hunger, etc. and thereafter recommendations are made to the Government on
the remedies that may ameliorate the situation and pursued thereafter.



Bank participated in the study conducted jointly by the Great Places to Work Institute India
and the Economic Times, to distinguish a good work place from a great one. Based on the
study of over 373 participants spanning a multitude of sectors, the top 50 best workplaces
were elected. We are happy to announce that your Bank has been adjudged and included in
Indias Best Companies to work for - Year 2009" and in the banking industry vertical,
your Bank is placed fourth after American Express, Kotak Mahindra Bank and HDFC Ltd.
The citation reads as under: The Saraswat Co-operative Bank Ltd. Ranked 4th in Banking
& Credit Services for inspiring trust among your people, for instilling pride in them, for
creating an Environment within the workplace that promotes camaraderie and for many
other reasons that makes your organization one of the Indias.


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.
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.
With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail

banking, mortgages and investment services are expected to be on rise.

Reserve Bank of India (RBI) has approved a proposal from the government to
amend the Banking Regulation Act to permit banks to trade in commodities and
commodity derivatives.


In wake of this, old private sector banks also have the need to fundamentally
strengthen skill levels.
even more imperative is their need to examine their participation in the Indian
banking sector and their ability to remain independent in the light of the

discontinuities in the sector.

Accelerate the creation of world class supporting infrastructure (e.g., payments,
asset reconstruction companies (ARCs), credit bureaus, back-office utilities) to

help the banking sector focus on core activities.

Slower growth in retail credit and narrow spreads spells better fortune for banks
that have higher concentration of corporate assets and low cost deposits along with
good asset quality.
Saraswat Bank perfectly fits into this matrix.
Sustenance of a healthy current and savings account mix and little deterioration
in asset quality also reiterates the operating efficiency of the bank.
Being the largest Urban Co-operative bank, Saraswat Bank is also one of the
lead contenders to initiate the process of building up scalability by acquiring
smaller banks in the PSU and private sectors.
Besides offering the opportunity to cater to borrowing needs of some of the
largest corporate in the country, the consolidation process will also bring about
economies of scale for the bank.
The banking today is re-defined and re-engineered with the use of Information
Technology and it is sure that the future of banking will offer more
sophisticated services to the customers with the continuous product and process
Thus, there is a paradigm shift from the sellers market to buyers market in the
industry and finally it affected at the bankers level to change their approach
from conventional banking to convenience banking and mass banking to
class banking. The shift has also increased the degree of accessibility of a
common man to bank for his variety of needs and requirements.


Also, the banks healthy ROA (Return of Average Asset) and CRAR (Capital to
Risk Asset Ratio) is a matter of comfort. Having said that, the banks market
share of merely 1.2% in the total banking business in the State of
Maharashtra is our lingering concern. We have a positive view on the bank
with respect to its future growth prospects.


1. History of Banking in India:
2. Banking terminology:
3. Mergers and Acquisitions:
4. Current position and financial analysis of the bank: Saraswat Banks Annual Report for
the year 2008 and 2009
5. History of the banks and Corporate Social Responsibilities: