chapter 3 profile of the study area and the select...

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CHAPTER 3

PROFILE OF THE STUDY AREA AND THE SELECT

BANKS

3.1 INTRODUCTION

The principal objective of this chapter is to get first hand reliable information

about each of the select banks. And, to great extent the banking activities depend on

the socio-economic factors of the study area and the surrounding areas of it. Hence, an

attempt is also made to provide socio-economic background of the Bellary city and

the District in brief.

In this background, this chapter titled "PROFILE OF THE STUDY AREA

AND THE SELECT BANKS" is split in to Ten sections including this introductory

section. The Second section presents chapter specific Methodology. The Third section

discusses the Socio-Economic profile of the study area. The Fourth section presents

The evolution of Banking in India. The Fifth section gives the Functions of

Commercial banks. The Sixth section presents the Structure of Banking in India. The

Seventh section presents the Banking products. The Eighth section deals with

Information Technology (IT) in Banking. The Ninth section presents the Profile of

Banks covered by the Research. The concluding remarks are made in Tenth section.

3.2 CHAPTER SPECIFIC METHODOLOGY

Keeping in view the intent and content of the chapter, the researcher has

gathered required information and data from more than one source. Both the sources:

Primary and secondary are used in this exercise. The important secondary sources

includes, District Industry Centre (DIC), Bellary, District Statistical Officer, Census

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report (2011), Annual reports of Reserve Bank of India, Managers of the Branches of

the select banks, Publications made in the News papers, Websites of the select Banks.

The researcher has also made use of the notes he made during his personal interaction

with the mangers of the branches of the select banks.

3.3 SOCIO-ECONOMIC PROFILE OF THE DISTRICT

It has become almost a convention in social science research to devote some

space in the thesis for the profile of the researched area. This section is devoted for

such an exercise. Whatever may be the area of research, it cannot be totally

independent of the overall environment. In fact, the overall socio-economic

environment influences every activity. And, a business activity’s strengths,

weaknesses, opportunities and threats as well as the ability to augment strengths,

minimize weaknesses, counter threats and take advantage of opportunities, to a great

extent, are available in the environment in which the activity is taking place. For

instance, the rich iron ore deposits in the Bellary district and in the surrounding of

Bellary district, has given rise to the resource tied steel plants and other related

activities, for which, banking services are essential.

3.3.1 GOVERNANCE AND ADMINISTRATIVE SETUP

Bellary district is one of the 30 districts in Karnataka, and regionally, it

belongs to the North Karnataka region, and sub-regionally, it forms a part of the

relatively backward Hyderabad - Karnataka, which now comes under article 371.

Administratively, it comes under the jurisdiction of Gulbarga division comprising five

districts.

For administrative convenience, the district is split into seven taluks. The

district has one parliamentary constituency. The district has three-tyre Panchayath

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system - Zilla Panchayath (ZP) at the district level, Taluk Panchayath at Taluk level

(seven) and Gramapanchayath level (189) concerned with rural development. It has

ten urban bodies, of them, one is a municipal corporation (Bellary, the study area),

one is a city municipal council, and remaining seven are town Panchayats. The district

planning commission is in place in the district, is entrusted with the responsibility of

preparing a comprehensive district development plan. The district has two revenue

subdivisions: one at Bellary and one at Hospet.

3.3.2 INDUSTRIAL DEVELOPMENT

The Bellary’s distinction and potential for industrial and economic

development lies in its natural resources, and, particularly in its mineral resources.

They are the basis for mining industry and mineral based massive industrialization.

Karnataka’s largest steel plant “Jindal Vijayanagara Steel Ltd (JSW)” is in Bellary

district (25 kilometres from Bellary city). It's capacity is 10 million tonnes of steel and

has provided direct employment to more than 3500 persons and indirect employment

to more than 20000 persons. There are 47 sponge iron plants, two cement industries.

The Bellary District is also known for readymade garments. There are 2920 Textile

related manufacturing units providing employment to more than 15,000 persons. The

details of Small, Medium and Mega Industries in Bellary district and the details

pertaining to various categories of industries in Bellary district are presented in Table.

3.1 and Table 3.2 Respectively.

3.3.3 POPULATION AND DEMOGRAPHY

The decadal growth of the Bellary district from 2001 to 2011 is 20.99 percent.

The population density of the district (290 km2) is lower than that of state’s (319

km2), whereas, its Sex ratio (983) is higher than the Karnataka state (973).

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Table 3.1: Table showing details of Small, Medium and Mega Industries in

Bellary District

Sl. No Category Number of Units

Investment (in Rs. Lakh) Employment

1 Small Scale Industries 16662 51756 81781

2 Medium and Large Scale Industries 109 201561 62735

3 Mega Industries 13 31273 26497 Source: District Industries Centre, Bellary. http://bellary.nic.in/Industries.html

Table 3.2: Table showing Category-Wise Details of Industries in Bellary District

Sl. No. Categories Units Investment

(in Rs. Lakhs) Employment

1 Food Beverages 1973 12078.23 11405

2 Textiles 2920 8198.76 15758

3 Wood 1730 1672.74 7329

4 Printing & Stationery 276 899.93 1156

5 Leather & Leather Product 653 393.11 3127

6 Rubber & Plastic 117 893.43 3025

7 Glass & Glass Chemicals 312 769.75 1635

8 Chemicals 299 4120.29 2610

9 Metal Products 282 1628.88 1519

10 General Engineering works 1350 4511.7 8301

11 Electricals & Electronics 407 1338.68 1974

12 Transportations 161 256.41 1124

13 Repairs & Servicing 2881 2614.4 7818

14 Ferrous & Non Ferrous 73 415.74 759

15 Other services 439 5608.32 2565

16 Miscellaneous 1738 1946.2 6658

17 Job Works 1009 4409.77 5018

Total 16620 51756.34 81781

Source: District Industries Centre, Bellary. http://bellary.nic.in/Industries.html

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The details of Population, Literates, Average Literacy (%) and the Sex Ratio

for the Bellary District and Bellary City are shown in Table 3.3 and Table 3.4

Respectively.

Table 3.3: Table showing the details of Population, Literates, Average Literacy

(%) and the Sex Ratio for the Bellary District.

Total Male Female

Population 2452595 1236954 1215641

Children (0-6) 1421621 813440 608181

Literates 344152 175543 168609

Average Literacy (%) 67.43 76.64 58.09

Sex Ratio 983

Table 3.4: Table showing details of Population, Literates, Average Literacy (%)

and the Sex Ratio for the Bellary City.

Total Male Female

Population 409644 206026 203618

Children (0-6) 281768 153275 128493

Literates 49587 25337 24250

Average Literacy (%) 78.26 84.83 71.64

Sex Ratio 988

3.4 EVOLUTION OF BANKING IN INDIA

The origin of banking in India can be traced back to almost the Vedic period.

Manu had devoted a section of his work explaining the deposits and advances and he

even laid down certain rules on rates of interests. It was during the Mughal period that

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indigenous bankers started playing a vital role in lending money and financing foreign

trade and commerce.

After English traders came to India in the 18th century, the English agency

houses in Calcutta and Bombay began to conduct banking business besides their

commercial business. The Europeans with aptitude of commercial pursuit, who

resigned from civil and military services, organized these agency houses. The English

agency houses that began to serve as bankers to the East India Company had no

capital of their own, and depended on the deposits for the funds. They financed

movement of crops, issued paper money and established joint stock banks.

The first banks in India were The General Bank of India, which started in

1786, and Bank of Hindustan, which started in 1790, both of which are now defunct.

In the first half of the 19th century three presidency banks were founded. The first of

them was the bank of Calcutta, which started in 1806, which immediately became

Bank of Bengal. The other two were Bank of Bombay (1840) and the Bank of

Madras (1843). All three of them were established under charters from British East

India Company. These three presidency banks acted as quasi-central banks. These

three banks dominated the modern banking scenario in India, until when they were

amalgamated along with their 70 branches to form the Imperial Bank of India on 27th

January 1921. The Imperial Bank during the three and half decades of its existence

recorded an impressive in terms of offices, deposits, reserves, investments and

advances, the increases in some cases amounting to more than six-fold. All these

enabled the Imperial bank to acquire a pre-eminent position in the Indian Banking

industry and also secure a vital place in the country’s economic life.

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The Imperial Bank of India was subsequently named as State Bank of India in

1955. The India’s central bank, the Reserve Bank of India (RBI), began its operations

in 1935. After independence, the Reserve Bank of India was given broad regulatory

authority over commercial banks in India. In 1959, the State Bank of India acquired

state-owned banks of eight former princely states. On July 1960, eights banks of

princely states were nationalized and became the seven subsidiaries of State Bank of

India (SBI) with deposits of over Rs. 200 Crore. These subsidiaries of State Bank of

India were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad

(SBH), State Bank of Indore (SBIN), State Bank of Mysore (SBM), State Bank of

Patiala (SBP), State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT).

However, major nationalization of banks happened in 1969, 14 major

commercial banks with deposits over Rs. 50 Crore were nationalized with the

objective of spreading the banking infrastructure to rural areas with cheap finance

available to Indian farmers. By the end of 1969, 31 per cent of scheduled bank

branches throughout India were government controlled, as part of State Bank of India.

In the year 1980, the second phase of nationalization took place in which 6 more

banks with deposits over Rs 200 Crore were nationalized. With this the Government

of India held control over 91 per cent of the banking industry in India. After

nationalization of banks, there was huge jump in the deposits and advances with the

banks.

The Reserve Bank of India act 1934 established the reserve bank as the banker

to the central Government and set in motion a series of actions culminating in the start

of operations with effect from 1st of April 1935. Starting as a private shareholders’

bank, the Reserve Bank was nationalized in 1949. It then assumed the responsibility

to meet the aspirations of newly independent country and its people. The preamble of

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RBI act, 1934, under which it was constituted, specifies its objective as “to regulate

the issue of bank notes, and keeping of reserves with a view to securing monetary

stability in India and generally to operate the currency and credit system of the

country to its advantage”. The Reserve Bank initiates, plans and implements the

regulatory policies for banking and non-banking financial institutions with the aim of

providing people access to the banking system, protecting depositor’s interest and

maintaining the overall health of the financial system. Amendments to the Banking

Regulation Act, 1949, brought cooperative banks and regional rural banks under the

Reserve Bank’s jurisdiction. It then led to the development of finance institutions,

non-banking financial companies and primary dealers coming under its regulation, as

these entities became important players in the financial system and markets.

The Narasimham Committee conceptualized the creation of Regional Rural

Banks in 1975 as a new set of regional banks, which would combine the local feel and

familiarity of rural problems. Regional Rural Banks were established under the

provisions of an ordinance promulgated on September 27th 1975 and the Regional

Rural Banks, 1976. In 1994, the Reserve Bank of India issued a policy of

liberalization to licence limited number of private banks, which came to be known as

new generation private sector banks. In 1976, the RBI issued guidelines for starting

Local Area Banks (LAB). Only six LOBs were licensed to operate and only four of

them are operating now.

3.5 FUNCTIONS OF COMMERCIAL BANKS

There are three main functions of commercial banks: payment system,

financial intermediation and financial services.

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Payment System: A payment refers to the means by which financial transactions are

settled. Banks are at the core of the payment systems in economy. A fundamental

method by which banks help in settling the financial transaction method is by issuing

and paying cheques issued on behalf of customers. In modern banking the payment

systems involves electronic banking, wire transfers and settlement of credit card

transactions. In all such transactions, banks play a vital role.

Financial Intermediation: The second main function of a bank is to take different

types of deposits from customers and then lend these funds to barrowers, in other

words, financial intermediation. The bank deposits represent banks liabilities, while

the loans disbursed, and investments made by the banks are their assets. The bank

deposits serve the useful purpose of the needs of the depositors, who want to ensure

liquidity, safety, as well as returns in the form of interest. The bank loans and

investments made by banks, channelizes funds into profitable as well as socially

productive uses.

Financial Services: In addition to the above functions, banks today are increasingly

involved with offering customers a wide variety of financial services. The financial

services include investment banking, insurance-related services, government-related

businesses, foreign exchange businesses, wealth management services, etc. The

income from providing such services improves a bank’s profitability.

3.6 STRUCTURE OF BANKING SYSTEM IN INDIA

Reserve Bank of India: The Reserve Bank of India is the central banking and

monetary authority of India. Besides this, it acts as issuer of currency, banker and debt

manager to government, banker to banks, and regulator of banking system. The

Reserve Bank is responsible for administration of the Foreign Exchange management

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Act, 1999 and regulates market by issuing licences to banks and other select

institutions to act as authorised dealers in foreign exchange.

Scheduled Banks: Scheduled Banks comprise Scheduled commercial banks and

Scheduled cooperative banks. The Scheduled commercial Banks which exists

throughout India, accounts for more than three fourth assets of all financial

institutions and their branches have more than four-fold in the last forty years.

Public Sector Banks: The Public Sector Banks are those in which the majority stake

is held by the government of India which together make up the largest category in the

Indian banking system. There are currently 26 public sector banks in India. They

include State Bank of India and its five associate banks, 19 nationalized banks and

IDBI Ltd.

Regional Rural Banks: Regional Rural Banks were established during 1976-1987

with a view to develop the rural economy. Each Regional Rural Bank is owned jointly

by the Central Government, concerned State Government and a sponsored public

sector commercial bank. Regional Rural Banks provide credit to small farmers,

artisans, small entrepreneurs and agricultural labourers. Over a period, the

Government has amalgamated the Regional Rural Banks of the same sponsor bank

within the state to improve viability and profitability.

Private Sector Banks: In this type of banks, the majority of share capital is held by

individuals and corporates. Not all the private sector banks were nationalized in 1969

and 1980. The private sector banks which were not nationalized are collectively

known as old generation private sector banks. They include Dhanalaksmi bank,

Federal bank, Karnataka bank, Karur Vysya bank, South Indian bank, city union bank

etc. In 1994, the Reserve Bank of India issued a policy of liberalization to licence

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limited number of private banks, which came to be known as New generation private

sector banks. They include: AXIS Bank, Development Credit Bank, HDFC Bank,

ICICI Bank, Induslnd Bank, Kotak Mahindra Bank, etc.

Foreign Banks: Foreign banks have their registered and head offices in a foreign

country but operate their branches in India. As on 2011, there were 37 foreign banks

operating in India. Though foreign banks were established in India quite early during

the British rule, the number of foreign banks are increased after globalization of

Indian economy. After the commencement of business of foreign banks in India, the

banking sector in India also became competitive. Foreign banks have brought latest

technology and latest banking practices in India. They have helped make Indian

banking system more competitive and efficient. Few of the foreign banks operating in

India are; American Express bank, Citibank, Deutsche bank, HSBC bank, Standard

Chartered Bank etc.

3.7 BANKING PRODUCTS

Wholesale Banking: Wholesale banking refers to doing banking business with

industrial and business entities – mostly corporate and trading houses, including

multinationals, domestic business houses and prime public companies. Banks in India

have been doing this type of business traditionally and this segment of business is also

called Corporate Banking/Commercial Banking. As this segment is open even for

multinational banks, banks are vying with each other in providing a wide array of

commercial, transactional and electronic banking products. Banks achieve this

through, use of Information Technology (IT) innovative product development and a

well-integrated approach to relationship management.

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International Banking: Banking services catering to cross-border transactions is

called International Banking. In a liberalised free trade economy, the Government and

people of one country may invest capital and labour in another country and in turn

may earn income in the form of profits, dividends, interest, royalty etc. the foreign

exchange market is the place where each people can pay for the requirements and

receive their entitlements in their own home currency. Banks are amongst the active

members of Foreign exchange market and they provide certain types of services to

their customers called International Banking Services.

Retail Banking: Commercial Banks deal with different types of customers like

individuals, sole proprietor/partnership firms, clubs, associations, trusts, schools,

private limited companies and public limited companies etc. Until the late 1990s,

banks have been mobilising deposits from all these customers but were lending

money to the trade and industries. Since the Government and RBI focus was on

production-oriented economic activities, bank financing to consumption expenses was

discouraged. As a result banks were reluctant to finance individuals for their

consumption needs. Individual customers as a separate market segment were not

thought by bankers.

With a ushering in of economic reforms in India during the early 1990s,

banking sector was opened to the private sector and the banking sector has been

deregulated gradually which resulted in operational flexibility and functional

autonomy for the banks. Liberalization of the Indian economy has led to increased

incomes and purchasing power, aspirations for a better life style and expectations of

higher quality products and service. Banks took this opportunity to cater to the

multiple requirements of the individuals by segmenting the individuals as a separate

business market. Retail Banking is defined as banking with individual customers both

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on liabilities and assets sides of balance sheet. Today’s retail banking sector is

characterised by three basic features:

1. Multiple products (Deposits, Credit cards, Insurance, Investments and

Securities);

2. Multiple channels of distribution (Call centre, Branch, Internet and Mobile

phone);

3. Multiple customer groups (Consumer, Small business and Corporate).

The typical products offered in the Indian retail Banking segment are given in Fig.

3.1.

Fig. 3.1: Retail Banking Products

3.8 INFORMATION TECHNOLOGY (IT) IN BANKING

Delivery of banking services through IT based solutions, such as mobile

phones and smart cards is a huge opportunity for banks. Application of IT in banks

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has changed the face of traditional banking. Today the concept of face to face and

branch banking are passed, with the emergence of core banking, remote banking

electronic banking, mobile banking, global banking, any-where banking, electronic

fund transfer i.e. National electronic fund transfer (NEFT) and Real time gross

settlement (RTGS) and so on and so forth. Smart cards, Biometric ATMs, Mobile

banking, Script terminals etc. have improved the effectiveness of banking.

Smart cards embedded with microprocessors or memory chips have become

tamper proof and replace the existing cards, offering customers a secure digital

identity. This will also provide convenience to customer; provide access to bank’s

website and individual accounts, accurate tracking of usage and manage long term

customer relationships through efficient, timely and valuable services to them.

Biometric ATMs will replace the conventional ATMs across the country, apart

from all banks investing in additional ATMs. Banks can authenticate the identity of

customer in three ways; most common being the something the user knows (password

of personal identification numbers), something the user has (a security token) or

something the user is (a physical characteristic like fingerprints, palm geometry etc.).

With the increase in threat on compromise of password, account takeover and misuse

of cards, biometric form of authentication for ATM would be the way ahead. Cheques

will gradually be phased out and replaced by NEFT and RTGS and other electronic

forms of money transfers and payment mechanisms offering superior turnaround

times.

In view of the new challenges being faced by the banks on information

security, electronic banking, technology risk management and cyber frauds, the

working group exhaustively covered various areas such as IT governance, information

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security, electronic banking channels, internet, mobile, ATMs, IT outsourcing,

information system audit, cyber frauds etc. The Indian Banks Association along with

the Institution for Development and Research have been tasked with the responsibility

for putting in place the industry-wide measures to translate the recommendations of

the working committee.

3.9 PROFILE OF THE BANKS COVERED BY THE

RESEARCH

3.9.1 STATE BANK OF INDIA

The Bank of Bengal, Bank of Madras and Bank of Bombay were amalgamated

along with their 70 branches to form the Imperial Bank of India on 27th January 1921.

When India attained freedom, the Imperial Bank had a network of 172 branches and

more than 200 sub-offices all over the country. The first five year plan of independent

India aimed at serving the Indian economy in general and the rural sector of the

country in particular. Until the plan, the commercial banks of the country including

the Imperial Bank of India confined their services to the urban sector. In order to

serve the economy as a whole, the All Indian Rural Credit Survey committee

recommended the formation of state partnered and state sponsored bank. The All

Indian Rural Credit Survey committee, proposed the take-over of Imperial Bank of

India and integrating with it, the former state owned or state associate banks.

Subsequently, an Act was passed in the parliament of India in May 1955. As a result

the State Bank of India was established in 1955.

Up to the end of the year 1987, the bank sponsored 30 regional rural banks

(RRBs) covering 66 backward and under-banked districts in the country. During

February 1991, the bank set up a new subsidiary called the SBI factors and

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commercial Services Pvt. Ltd. for rendering factoring services to the industrial and

commercial units in western India. In 1992, the bank sponsored 30 RRBs with a

network of 3189 offices covering 102 backward and under-banked districts of the

country.

Today, the State Bank of India is the country’s oldest financial institution with

a strong balance sheet size, number of branches, market capital and profit figures. It

has undergone a transformation to keep up with the changing times. It has forayed in

to several new segments including strategic tie-ups for pension funds, general

insurance, custodial services, private equity, mobile banking, advisory services, a

slew of new structured products etc. The only Indian bank to get featured in the

fortune 500 list, the Bank has 15564 offices with staff strength of 2,28,296 as on 31st

March 2013 (Table 3.5) and is well positioned to be the bank of the masses and has

the largest banking network to offer to the Indian customer. The number of offices

have been increased from 12070 to 15564, the number of employees also have been

increased from 2,05,896 to 2,28,296 from 2008-09 to 2012-13. The business per

employee has been increased from 55.60 to 94.39 Million Rupees, the profit per

employee has been increased from 0.47 to 0.65 Million Rupees from 2008-09 to

2012-13.

The SBI also focusing at the top end of the market, on wholesale marketing

capabilities to provide India’s growing mid/large corporates with a complete array of

products and services. It is consolidating its global treasury operations and entering

into structured products and derivative instruments. Today, the bank is the largest

provider of infrastructure debt and the largest arranger of external commercial

barrowings in the country.

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It has six branches in Bellary, which are located at Patel nagar, Sangeetha

complex, Station road, Cantonment, SBI building, ADB branch, Bellary.

VISION

My SBI.

My Customer first.

My SBI: First in customer satisfaction

MISSION

We will be prompt, polite and proactive with our customers.

We will speak the language of young India.

We will create products and services that help our customers achieve their

goals.

We will go beyond the call of duty to make our customers feel valued.

We will be of service even in the remotest part of our country.

We will offer excellence in services to those abroad as much as we do to those

in India.

We will imbibe state of the art technology to drive excellence.

VALUES

We will always be honest, transparent and ethical.

We will respect our customers and fellow associates.

We will be knowledge driven.

We will learn and we will share our learning.

We will never take the easy way out.

We will do everything we can to contribute to the community we work in.

We will nurture pride in India.

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Table 3.5: Table showing No. of Offices, No. of Employees, Business & Profit per

employee of State Bank of India

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 12070 13252 14350 14902 15564

No. of Employees 205896 200299 222933 215481 228296

Business per employee (in Million Rupees)

55.60 63.60 70.47 79.84 94.39

Profit per employee(in Million Rupees)

0.47 0.45 0.39 0.53 0.65

3.9.2 STATE BANK OF MYSORE

In 1913, at the instance of Sir M. Visvesvaraya, the Engineer Statesman, a

state-aided bank, under the patronage of His Highness the Maharaja of Mysore, Sri

Krishnaraja Wodeyar IV, was established. This was “Mysore Bank Ltd”. During

1953, “Mysore Bank” was appointed as an agent of Reserve Bank of India to

undertake government business and treasury operations, and in March 1960, it

became a subsidiary of the State Bank of India under the State Bank of India

(Subsidiary Banks) Act, 1959.

The bank has grown progressively, right from its inception and has declared

uninterrupted profits from the beginning. “Mysore Bank”, as it is popularly known, is

constantly committed to serve its customers. The Bank has 829 offices with staff

strength of 10,784 as on 31st March 2013 (Table. 3.6) The number of offices have

been increased from 720 to 829, the number of employees also have been increased

from 9671 to 10784 from 2008-09 to 2012-13. The business per employee has been

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increased from 60.20 to 95.50 Million Rupees. The profit per employee has been

increased from 0.35 to 0.40 Million Rupees from 2008-09 to 2012-13.

It has nine branches in Bellary, which are located at Station road, Cowl bazar,

Gandhi nagar, Raghavendra colony, Cantonment, APMC yard, VIMS campus,

Basaveswara nagar, SBM building, Bellary.

MISSION

"A premier commercial Bank in Karnataka, with all India presence, committed to

provide consistently superior and personalised customer service backed by employee

pride and will to excel, earn progressively high returns for its shareholders and be a

responsible corporate citizen contributing to the well being of the society".


employee of State Bank of Mysore

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 720 736 755 788 829

No. of Employees 9671 10111 9926 10249 10784


60.20 67.20 79.50 88.10 95.50


0.35 0.44 0.50 0.40 0.40

3.9.3 STATE BANK OF HYDERABAD

State Bank of Hyderabad was constituted as Hyderabad State Bank on August

8, 1941 under Hyderabad State Bank Act, 1941. The bank started with the unique

distinction of being the central bank of the erstwhile state of Hyderabad, covering

present day Telangana region of Andhra Pradesh, Hyderabad-Karnataka area of

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Karnataka and Marathwada of Maharashtra to manage its currency ‘Osmania Sikka’

and public debt apart from the functions of commercial banking. The first branch of

the Bank was opened at Gun foundry, Hyderabad on 5th April, 1942. In 1953, the

bank took over the assets and liabilities of the Hyderabad Mercantile Bank Ltd. In the

same year, the bank started conducting Government and treasury business as agent of

Reserve Bank of India.

In 1956 the bank was taken over by Reserve Bank of India as its first

subsidiary and its name was changed from Hyderabad State Bank to State Bank of

Hyderabad. The bank became a subsidiary of the State Bank of India on 1st October

1959 and is now the largest associate bank of State Bank of India.

The Bank has 1576 offices with staff strength of 15,090 as on 31st March 2013

(Table. 3.7) The number of offices have been increased from 1062 to 1576, the

number of employees also have been increased from 12,577 to 15,090 from 2008-09

to 2012-13. The business per employee has been increased from 83.98 to 138.79

Million Rupees. The profit per employee has been increased from 0.49 to 0.83 Million

Rupees from 2008-09 to 2012-13.

It has four branches in Bellary, which are located at Moti circle, Gandhi nagar,

Sanjay Gandhi nagar and Satyanarayana Pet, Bellary.

VISION

"To be the most preferred and trusted Bank".

MISSION

"To achieve value based operational excellence providing customer delight resulting

in consistent superior financial performance".

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VALUES

Transparency and ethics in all dealings.

Respect and empathy for customers.

Competence and dedication in all that we do.

Nurturing a culture of learning and technological excellence.

Commitment to national and social objectives.


employee of State Bank of Hyderabad

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 1062 1215 1339 1499 1576

No. of Employees 12577 13597 14778 15043 15090


83.98 75.56 103.77 116.87 138.79


0.49 0.56 0.79 0.86 0.83

3.9.4 CANARA BANK

Canara Bank was founded by Sri Ammembal Subba Rao Pai, a great visionary

and philanthropist, in July 1906, at Mangalore of Karnataka as ‘Canara Bank Hindu

Permanent Fund’. It then blossomed into a limited company as “Canara Bank Ltd” in

1910 and became ‘Canara Bank’ in 1969 after nationalization. It had more than 1000

branches in 1976 and the first overseas branch at London was inaugurated in

1983.The Lakshmi Commercial bank was merged with Canara Bank in 1984. In 1985,

Indo Hong Kong International Finance limited was commissioned. Can-fin Homes

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and Can-Bank Mutual Funds were launched in 1987 and Can-Bank Venture Capital

Fund was started in 1989.

Canara bank became the first bank to be conferred with ISO 9002 certification

for one of its branches at Bangalore. It opened a ‘Mahila Banking Branch’, first of its

kind at Bangalore. In 2006-07, it signed Memorandum of Understanding for

commissioning two joint ventures in insurance and asset management with HSBC and

Holding and Robeco Group.

The Bank has 3837 offices with staff strength of 42693 as on 31st March 2013

(Table. 3.8) The number of offices have been increased from 2850 to 3837, the

number of employees also have been increased from 44090 to 42693 from 2008-09 to

2012-13. The business per employee has been increased from 78.02 to 142.02 Million

Rupees. The profit per employee has been increased from 0.50 to 0.70 Million Rupees

from 2008-09 to 2012-13.

It has two branches in Bellary, which are located at Car Street, Bellary and

Infantry road, Bellary.

VISION

"To emerge as a ‘Preferred Bank’ by pursuing global benchmarks in profitability,

operational efficiency, asset quality, risk management and expanding the global

reach".

MISSION

"To provide quality banking services with good customer care, create value for all

stakeholders and continue as a responsive corporate social citizen".

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employee of Canara Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 2850 3155 3365 3707 3837

No. of Employees 44090 43380 43397 42272 42693


78.02 98.26 119.91 137.44 142.02


0.50 0.74 0.98 0.82 0.70

3.9.5 SYNDICATE BANK

Syndicate Bank was established in 1925 in Udupi of Karnataka with a capital

Rs 8000 by three visionaries Sri Upendra Anantha Pai, a businessman, Sri Vaman

Kudwa, an engineer and Dr. T. M. A. Pai, a physician, with a primary objective of

extending financial assistance to the local weavers. The bank collected as low as two

‘Annas’ daily at the doorsteps of the depositors through its agents under its pigmy

deposit scheme started in 1928. The pigmy scheme is the bank’s brand equity today

and the bank collects more than 2 Crore per day under the scheme.

The business of the bank commenced in Udupi with the name “Canara

Industrial and banking Syndicate Ltd.,” a joint stock company in 1925. In 1935, the

bank became a member of the clearing house for the first time at Bombay. In 1946,

the bank opened 29 branches in rural areas. During 1953-1964, 20 banks merged with

the bank. In 1963, the name of the bank was changed to “Syndicate Bank Limited”.

The bank was nationalised in 1969. The Syndicate Bank had 306 branches at the time

of nationalisation of which 66 percent were in rural areas. Its first overseas branch

was opened at London in 1976.

151


(Table 3.9) The number of offices have been increased from 2343 to 3041, the

number of employees also have been increased from 25068 to 26606 from 2008-09 to

2012-13. The business per employee has been increased from 75.07 to 125.70 Million

Rupees. The profit per employee has been increased from 0.36 to 0.81 Million Rupees

from 2008-09 to 2012-13.

It has two branches in Bellary, which are located at Agadi Building, Bellary

and Royal Circle, Bellary.

VISION

"To be as Bank of choice of every Indian and A preferred Banking partner globally"

MISSION

To achieve consistent growth in business.

To endeavour for inclusive development and ensure service excellence

through effective harnessing of human capital and technology.


employee of Syndicate Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 2343 2429 2623 2828 3041

No. of Employees 25068 25569 28509 26904 26606


75.07 74.68 87.54 107.41 125.70


0.36 0.32 0.40 0.53 0.81

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3.9.6 ING VYSYA BANK LTD.

A team of visionaries came together to form Vysya Bank in 1930, at

Bangalore with the objective of extending helping hands to those who were not

privileged enough to enjoy banking services. The bank made rapid strides to reach the

coveted position of being the number one private sector bank. In 1948, it became

scheduled bank. In 1987, the Vysya Bank Leasing Ltd. Commenced and promoted

Vysya bank Housing finance Ltd in 1990. The ING Vysya Bank is an entity formed

with the coming together of erstwhile, Vysya Bank Ltd., ING of Dutch origin in 2002

and later it commenced life insurance business.


(Table. 3.10) The number of offices have been increased from 474 to 562, the number

of employees also have been increased from 6086 to 9381 from 2008-09 to 2012-13.

The business per employee has been increased from 60.64 to 64.43 Million Rupees.

The profit per employee has been increased from 0.30 to 0.63 Million Rupees from

2008-09 to 2012-13.

ING Vysya Bank won the Best Private Sector Bank award "Polaris Banking

Awards 2013" in Asset Quality category. The bank has also won the Safest Banker

award "FINWIZ 2012" presented by the New Indian Express.

It has two branches in Bellary, which are located at District Court, Bellary and

Shastri Nagar, Bellary.

MISSION:

"To be a leading, global, client-focused, innovative and low-cost provider of financial

services through the distribution channels of the client’s preference in markets where

ING can create value".

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Table 3.10: Table showing No. of Offices, No. of Employees, Business & Profit

per employee of ING Vysya Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 474 497 527 547 562

No. of Employees 6086 6113 6909 9642 9381


60.64 62.38 67.48 55.98 64.43


0.30 0.39 0.45 0.46 0.63

3.9.7 AXIS BANK

Axis Bank was formed as UTI Bank when it was incorporated in 1994 after

Government of India allowed private parties in the banking sector. The bank was

sponsored by the administrators of the specified undertaking of the Unit Trust of India

(UTI), Life Insurance Corporation of India (LIC), General Insurance Corporation ltd.

(GIC) and its subsidiaries. The UTI Bank was named as Axis Bank in 2007. The bank

was set up with a capital of Rs, 115 Crore, with UTI contributing Rs. 100 Crore, LIC

Rs. 7.5 Crore and rest by GIC and its subsidiaries. The Axis Bank is committed to

adopting the best industry practices internationally in order to achieve excellence.

Axis Bank Foundation (ABF) was setup as a public trust in 2006 to carry out

the social responsibility initiatives of Axis Bank. Since 2006, ABF has supported 74

NGOs located in 15 states of India. ABFs initiatives in education have been able to

directly impact 88,000 individuals impacting lives of 4.5 lakh families.

Axis bank uses a 'Finacle' core banking software for its Banking operations

which is developed by Infosys Ltd. India. With this, it operates a network more than

154

4055 ATM's providing 24 hrs a day banking convenience to its customers. This is one

of the largest ATM networks in the country.

The Bank has 2019 offices with staff strength of 37,901 as on 31st March 2013

(Table. 3.11). The number of offices have been increased from 831 to 2019, the


to 2012-13. The business per employee has been increased from 106 to 121.50


Rupees from 2008-09 to 2012-13.

Axis bank won the ‘Best Bank Award 2009’ presented by the financial express

newspaper. It also has won the runner up award ‘Banking Technology Award 2007’

for the best use of information technology in Retail banking.

It has only one branch in Bellary, which is located near Durgamma Temple.

VISION

"To be the preferred financial solution provider excelling in customer delivery

through in sight, empowered employees and smart use of technology".

VALUES

Customer centricity.

Ethics.

Team work and Transparency.

3.9.8 ICICI BANK LTD

ICICI Bank was started as a wholly owned subsidiary of ICICI Ltd, a financial

institution in 1994. In 2000, ICICI Bank offered equity in the form of ADRs on the

155

New York Stock Exchange (NYSE) and became the first Indian financial institution

to be listed on NYSE. In 2001 it acquired the Bank of Madura Limited. In the same

year, ICICI Personal Financial Services Limited and ICICI Capital Services Limited

are amalgamated with ICICI Bank. ICICI Bank is India’s largest bank with total

assets of Rs. 47,365 Crore as on March 2012.


per employee of AXIS Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 831 1035 1466 1701 2019

No. of Employees 20624 21640 26341 31738 37901


106 111.10 136.60 127.60 121.50


1.00 1.20 1.40 1.40 1.50

The Bank has a network of 2,766 branches and has subsidiaries in the United

Kingdom, Russia and Canada. It has branches in United States, Singapore, Bahrain,

Hong Kong, Sri Lanka, Qatar, and Dubai. ICICI Bank’s Social Initiative Group (SIG),

a non-profit set up within ICICI bank in 2000. ICICI Group strives to make a

difference to its customers, to the society and to the nation’s development directly

through its products and services, as well as through development initiatives and

community outreach. The vision of ICICI Bank is a world free of poverty in which

every individual has the freedom and power to create and sustain a just society in

which to live.

156

It was the first bank in India to offer internet banking with Finacle's E Banking

solution and established itself as a leader in the internet and e-commerce space. The

bank followed it up with offering several e-commerce services like Bill payments,

Fund transfers and Corporate banking over the net. The internet is a critical element

of ICICI banks award winning multi-channel strategy that is one of the main engines

of the growth for the bank. Currently, only 25% of all transactions take place through

branches and 75% through other delivery channels.

The Bank has 3,134 offices with staff strength of 62,065 as on 31st March

2013 (Table. 3.12) The number of offices have been increased from 1434 to 3134, the


to 2012-13. The business per employee has been decreased from 115.40 to 73.50


Rupees from 2008-09 to 2012-13.

The bank has received 2010 World Finance UK award for: Excellence in

Remittance Business, Worldwide excellence in NRI services, Worldwide excellence

in Private banking business. The bank also has won the second prize in the Six Sigma

Excellence Awards, conducted by Indian Statistical Institute, Bangalore for

"Improving sales for TV banking business".

It has only one branch in Bellary, which is located at S P Circle, Bellary.

VISION

"To be the leading provider of financial services in India and a major global bank".

MISSION

The bank will leverage the people, technology, speed and financial capital to:

157

Be the banker of first choice for customers by delivering high quality, world-

class products and services.

Expand the frontiers of business globally.

Play a proactive role in the full realisation of India's potential.

Maintain a healthy financial profile and diversify earnings across business and

geographies.

Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which the bank

operates.

Create value for the stakeholders.


per employee of ICICI Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 1434 1721 2565 2786 3134

No. of Employees 51835 41068 56969 58276 62065


115.40 76.50 73.50 70.80 73.50


1.10 0.90 1.00 1.10 1.40

3.9.9 KARNATAKA BANK

Karnataka Bank Limited is a scheduled commercial bank in India and was

incorporated in 1924 at Mangalore of coastal Karnataka. It took shape in the aftermath

of patriotic zeal that engulfed the nation during the freedom movement. It has merged

with other banks like Sringeri Sharada Bank Ltd, Chitradurga Bank and bank of

Karnataka etc., during its process of expansion. Karnataka Bank has emerged as one

158

of the top financial institution with over 90 years of experience. It has over 500

branches spread across 20 states.

With over 85 years of experience at the fore front of providing professional

banking services and quality customer service, the bank has a national presence of the

bank with a network of 464 Branches, 171 ATM outlets, 8 Regional offices, 1

International division, 1 Data centre and 1 Customer centre. Over the years,

Karnataka bank has focused on one task, one mission - to give you the best in services

and in products. Among the other banks it was Karnataka bank which first realised the

importance of having a centralized banking system and was among the first to deploy

the core banking system in the year 2000. This system enabled the bank to store and

process all customers' accounts from one single place - the data centre at Bangalore.

To ensure that customers have the best, the bank has deployed the state of the art

technology from the best players in the industry like Infosys, Sun and Wipro. These

systems provide the highest reliability thus enabling the bank to offer to the customers

nonstop services of the highest order. Bank has taken a lead and implemented a

disaster recovery centre this will be the backup for the ATM machines.


(Table. 3.13) The number of offices have been increased from 469 to 574, the number

of employees also have been increased from 4947 to 6339 from 2008-09 to 2012-13.

The business per employee has been increased from 64.90 to 96.60 Million Rupees.

The profit per employee has been decreased from 0.50 to 0.30 Million Rupees for the

year 2008-09 to 2009-10 and thereafter increased from 0.30 to 0.50 Million Rupees

from 2010-11 to 2012-13.

159

The bank has won the prestigious Sun and NDTV Green IT award 2009

instituted by Sun Microsystems and NDTV, recognizing organizations which have

pledged their positive commitment to the planet and engage in eco-efficient green

technologies to run their business.

It has only one branch in Bellary, which is located at Meenakshi Building,

Bellary.

MISSION

"Our mission is to be a technology savvy, customer centric progressive bank with a

national presence, driven by the highest standards of corporate governance and guided

by sound ethical values".


per employee of Karnataka Bank

Items 2008-09 2009-10 2010-11 2011-12 2012-13

No. of Offices 469 486 501 527 574

No. of Employees 4947 5244 5795 6087 6339


64.90 72.70 77.10 85.90 96.60


0.50 0.30 0.40 0.40 0.50

3.9.10 SUCO BANK

SUCO Sauhardra Shaakari Bank (SUCO BANK) came into existence in

1995 at Sindanur, Karnataka with an objective of providing banking services to the

rural customers, artisans and formers. Over a period of 19 years bank has grown

160

significantly. At present it has nine branches, two at Bellary, one each at Sindanur,

Gangavathi, Raichur, Koppal, Hospet, Hubli and Siruguppa.

To cater the needs of its customers the bank works in two shifts and its

business hours are from 10.30 AM to 07.30 PM. It has a total of 98 employees and

more than 90,000 customers. The two branches at Bellary have more than 18,000

customers.

The bank has made an agreement with C-Edge (SBI-TCS Enterprise) to

provide core banking services to its customers. The bank has RTGS (Real Time Gross

Settlement) and mobile banking facility. It is a first co-operative bank in India to

obtain ISO 9002 certificate.

In a span of four years its business has grown from 60 crores to 300 crores.

The bank had a record business of 320 crore and an record profit of 3.15 Crore for

the financial year 2012-13. Its business per employee is 381 Lakhs and Profit per

employee is 1.91 lakh for 2012-13.

3.10 CONCLUDING REMARKS

The socio economic profile of the study area and the profile of the select banks

are given in the preceding sections. There are sixty three branches of nationalised

banks, twenty six branches of regional rural banks and twenty three branches of

private sector banks in Bellary Taluk. In study area in which the research is taken, the

number of branches of the private sector banks is less compared to the branches of

public sector banks. The profile of the select banks reveals the number of branches,

number of employees, business per employee and the profit per employee. All the

select banks have made significant improvement in business per employee. Except the

State Bank of Mysore, the profit per employee of the remaining nine banks has also

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increased. All the banks selected for the study have the mission statements. The

SUCO bank has obtained ISO-9002 certificate.

chapter 3 profile of the study area and the select...

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