A

CPP REPORT

TITLED

‘IDBI BANK’

For Fulfilling the requirement of the award of degree of BBA

SUBJECT: CPP (IMS-306)

UNDER THE SUPERVISION OF

Mrs. Sangeeta

Submitted to Submitted by

The Director Mansi Gupta

MBA-5Year (3rd Sem)

Roll No. - 03

Registration No. – 14-UIM-22

Batch – 2014-19

Institute of Management Studies

Kurukshetra University, Kurukshetra

(September 2015)

Executive Summary

According to evolutionary theories introduced by Charles Darwin and Jean Baptiste Lamarck,

survival in a permanently modified environment takes place through adaptation.

The same is true today in the private banking industry. Whether it is through circumstantial

mutation, embodied by young start-ups, or through the transformation of existing institutions,

only the ones who are willing to accept change and adapt shall prosper. This fundamental law

of nature is more relevant than ever for the financial services industry, and particularly for

private banking. The private bank of the future will have to pick a side. Either it attempts to

resist change to protect its assets over the short term or it embraces change to develop a

sustainable model for profitability. The second alternative is the only viable option. Banks

must rethink their vision and the way they operate. Existing models have been subject to

unbearable levels of stress, putting at risk the very survival of several of these institutions.

India has undergone a radical transformation into one of the world’s most dynamic

economies. The resultant being quantum increases in money available for spending, and the

country’s increased integration with the global economy. Entrepreneurship is clearly the

dominant source of domestic wealth, but fast growing service industries such as technology

and financial services have also captured middle-income group individuals into high net

worth individuals (HNI) bracket. What sets HNIs apart from other classes of individuals in

the country is the sheer value and size of the assets they own. Hence, it has become essential

to understand the regions where the HNI population is on the rise and the specific

characteristics of this segment so that appropriate investment products could be designed to

target them.

DECLARATION

I, MANSI GUPTA hereby declare that I have completed the report entitled

assigned to me by the Institute, to be submitted in the partial fulfillment of the

MBA-5 Year Degree from Kurukshetra University. Further, I declared that this

is original work done by me and the information provided in the study is

authentic to the best of my knowledge and belief.

Signature

(MANSI)

ACKNOWLEDGEMENT

In this project, I have made an honest and dedicated attempt to make the Project

Report so easy to understand for a person who is willing to get knowledge about

the IDBI BANK. I am deeply indebted to my esteemed teacher & our Director

Sir because he gave me opportunity of making project report. I am also thankful

to my lecturer as well as my supervisor (Guide) Mrs. Sangeeta for their kind

support & suggestion for making project report.

Signature

MANSI GUPTA

MBA 5yrs. 3rdsem.

Roll no. 03

CONTENTS

CHAPTER

NO

TITLE OF CHAPTER PAGE NUMBER

1 Profile of IDBI Bank

2 Hierarchy of Strategic Intent

2.1) Corporate Level -

2.1.1) Vision -

2.1.2) Mission

2.2) Business Level

2.2.1) Business Definition

a) Abells Dimensions for defining a business

2.2.2) Business Model

2.3) Goals & Objectives

2.3.1) Goals

2.3.2) Objectives

3 Objects Setting

3.1) How are Objectives Formulated

3.2) Balanced Score Card Approach to Objectives

Setting

3.3) Critical Success Factors’ Approach to Objective

Setting

3.4) Key Performance Indicators

4 Environmental Appraisal

4.1) Concept of Environment

4.2) SWOT Analysis – Steps

5 Porter’s Diamond of Competitive

Advantage of nations

6 6.1) Income Statement of IDBI Bank

6.2) Balance Sheet of IDBI Bank

6.3) Cash Flow Statement of IDBI Bank

6.4) Profit & Loss A/c of IDBI Bank

6.5) Financial Ratios of IDBI Bank

7 Latest News on IDBI Bank

8

CHAPTER 1

IDBI Bank Ltd. is a Universal Bank with its operations driven by a cutting

edge core Banking IT platform. The Bank offers personalized banking and financial solutions

to its clients in the retail and corporate banking arena through its large network of Branches

and ATMs, spread across length and breadth of India. It has also set up an overseas branch at

Dubai and have plans to open representative offices in various other parts of the Globe, for

encashing emerging global opportunities. Their experience of financial markets will help

them to effectively cope with challenges and capitalize on the emerging opportunities by

participating effectively in their country’s growth process.

As a Universal Bank, IDBI Bank, besides its core banking and project finance

domain, has an established presence in associated financial sector businesses like Capital

Market, Investment Banking and Mutual Fund Business. Going forward, IDBI Bank is

strongly committed to work towards emerging as the 'Bank of choice' and 'the most valued

financial conglomerate', besides generating wealth and value to all its stakeholders. 

IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40

years, IDBI Bank has essayed a key nation-building role, first as the apex Development

Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and

thereafter as a full-service commercial Bank (October 1, 2004 onwards). As a DFI, the

erstwhile IDBI stretched its canvas beyond mere project financing to cover an array of

services that contributed towards balanced geographical spread of industries, development of

identified backward areas, emergence of a new spirit of enterprise and evolution of a deep

and vibrant capital market. On October 1, 2004, the erstwhile IDBI Bank converted into a

Banking company (as Industrial Development Bank of India Limited) to undertake the entire

gamut of Banking activities while continuing to play its secular DFI role. Post the mergers of

the erstwhile IDBI Bank with its parent company (IDBI Ltd.) on April 2, 2005 (appointed

date: October 1, 2004) and the subsequent merger of the erstwhile United Western Bank Ltd.

Profile

of

IDBI

with IDBI Bank on October 3, 2006, the tech-savvy, new generation Bank with majority

Government shareholding today touches the lives of millions of Indians through an array of

corporate, retail, SME and Agri products and services. 

Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, a

highly competent and dedicated workforce and a state-of-the-art information technology

platform, to structure and deliver personalised and innovative Banking services and

customised financial solutions to its clients across various delivery channels. 

Products and Services

The products and services of IDBI Bank are offered under five different heads – Personal,

Corporate, MSME, Agri and NRI banking. 

IDBI Personal Banking

In the Personal Banking segment, IDBI offers the following products and services:

Preferred Banking

Loans

Savings Account

Cards

Flexi Current Account

24-Hour Banking

Corporate Payroll Account

Trusteeship through ITSL

Fixed Deposit and Lockers

IDBI Corporate Banking

In the Corporate Banking segment, IDBI offers the following products and services:

Fund based Assistance

Trade Finance

Non-Fund based Assistance

Government Business

Cash Management Services

Foreign Currency

Treasury

IDBI MSME Banking

In the MSME Banking segment, IDBI offers the following products and services:

MSME Finance

Vendor Finance Program

Restructuring/Rehabilitation Policy

Laghu Udhyami Credit Card

Finance to Medical Practitioners

Loans to Professionals and Self-Employed

Property Power (Loan against Property)

SME Smart Line of Credit

Loans to Small Road and Water Transport Operators

Funding under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

(Collateral Free Loans)

Sulabh Vyapar Business Solutions

General Credit Card Loan (GCC)

IDBI Agriculture Banking

In the Agriculture Banking segment, IDBI offers the following products and services:

Agriculture Finance (Short-Term Loans)

Allied Activities

Agriculture Finance (Term Loans)

Indirect Finance to Agriculture

IDBI NRI Banking

In the NRI Banking segment, IDBI offers the following products and services:

Accounts

Remitting Funds

Preferred Banking

Rupee Yield Enhancer

2013-14 Financial Performance IDBI Bank had Rs. 3,28,997 crore in its balance sheet

as of 31 March 2014. Its business size – taking into accounts the advances and

deposits – runs up to Rs. 4,33,460 crore.

CHAPTER: 2

Hierarchy of Strategic Intent

2.1 Corporate Level – Vision & Mission

Vision and Mission of the IDBI

The vision and mission statements of IDBI are as follows:

2.1.1 Vision – A dream – Forward Looking

1. To be the most preferred and trusted Bank enhancing value for all stakeholders.

2. The want to capture a 90 % customers in their bank.

Corporate Level - vision and mission

Business Level - business definition and model

Goals and Objectives

a) Charter of core values

Money control is the most important core value of it.

b) Principles of IDBI

IDBI Ltd. believes in the principle of keeping tech-team trim and utilize their services

optimally to their customers.

c) Ultimate Source of Priorities

i) Best Mutual Funds-Mutual Funds is made up of pools of funds collected from many

investors for the purpose of investing insecurities such as stocks, bonds, money

market etc. for capital gain.

ii) Asset Quality Improvement.

d) A puller in to the future not pusher

i) Innovative products with differentiated focus has allowed the banks to improve its

savings account share.

ii) High interest rates on savings account is in itself a big puller in to the future.

iii) Consumers give more preference to factors such as convenience and services.

e) A determination of what makes it unique

i) IDBI Bank presenting, Sabka Basic Savings Account (complete Know Your

Customer)-It is a Saving Bank product that doesn’t require a minimum balance and

Charter of core values

Principles of IDBI

Ultimate Source of Priorities

A puller in to the future not pusher

A declaration of what makes it independent

A Determination of what makes it unique

through which IDBI Bank intends to extend its services to a vast section of

population for financial inclusion.

ii) No charges for Electronic Fund Transfer.

iii) Services like phone banking, SMS banking, Internet banking will allow us to

access our account from anywhere, anytime.

iv) Free International debit cum ATM Card SMS and Email Alerts for any transaction

in our account.

v) This bank offers an additional mark up for senior citizen interest rates i.e. 0.50%

for deposits from 6 months 2 days & above.

f) A declaration of what makes it independent

i) Corporate Social Responsibility – IDBI bank ltd. shall continue to be committed to

be a good corporate citizen not only in compliance with all relevant regulating laws

and regulations but also by actively assisting in the improvement of the quality of the

life of the people in the communities in which it operates with the objectives of

making them self-reliant.

ii) Health, Safety and Environment – It provides a safe and healthy working

Environment at its work place.

2.1.2 Mission

IDBI mission is to satisfied the customer needs and giving them good services.

a) What it is

Delighting customers with their excellent service and comprehensive suite of

best-in- class financial solutions;

Touching more people’s lives with expanding retail footprint while

maintaining the excellence in corporate and infrastructure financing;

b) What it should be

Continuing to act in an ethical, transparent and responsible manner;

Becoming the role model for corporate governance;

Deploying world class technology, systems and processes to improve business

efficiency and exceed customers' expectations;

What it is ?

What it should

be ?

What it will be ?

Encouraging a positive, dynamic and performance-driven work culture to

nurture employees, grow them and build a passionate and committed work

force;

Expanding their global presence;

c) What it will be

Sooner becoming a greener bank;

IDBI Bank are pushing forward green initiatives to spread awareness about environmental

sustainability and help policymakers combat climate change. IDBI Bank is relentlessly

pursuing a ‘green mandate’ in banking operations in line with the Government of India’s

(GOI) policies, initiatives and targets for sustainable economic development and environment

protection.

2.2 Business Level – Business Definition & Model

2.2.1 IDBI Banking Definition

TAGLINE - Bank Aisa, Dost Jaisa

Introduction

Industrial Development Bank of India Ltd. (since renamed as IDBI Bank Ltd.)  was

incorporated under Companies Act 1956, as a Limited Company, registered with the

Registrar of Companies, Maharashtra, Mumbai vide Certificate of incorporation dated 27th

September, 2004. In terms of the Articles of Association of the IDBI Bank Ltd., the Central

Government being a shareholder of the company shall, at all times, maintain not less than

51% of the Issued Capital of the company. Considering the shareholding pattern, IDBI Ltd.

has been categorized under a New Sub-Group "Other Public Sector Banks". Reserve Bank

of India has, vide its letter no DBOD. BP. 1630/21.04.152/2004-05   dated April 15, 2005

confirmed that IDBI Ltd. (since renamed as IDBI Bank Ltd.) may be considered as

Government-owned bank.

Vision & Mission Use the Ideas Through the process of Understanding a IDBI Bank

i) They look to induct talent from various reputed business schools/educational institute

across the country. Enthusiastic and talented youth form the backbone of their

banking operations and will become their future leaders.

ii) Continue to be committed in all its actions to benefit the economic development of the

nation and shall not engage in any activity that would adversely affect such objective. 

a) ABELL’S DIMENSIONS

Customers Functions –

i) To provide financial assistance to industrial enterprises.

ii) To promote institutions engaged in industrial development.

iii) To provide technical and administrative assistance for promotion

management or expansion of industry.

iv) To undertake market and investment research and surveys in connection

with development of industry.

Alternative Technologies –

It has set up an alternate and Direct distribution channel to further diversify its

business base.

Customer Groups –

IDBI Bank is a pioneer Institution in Nation building. To cater to its ever-

expanding needs, IDBI Bank has formed subsidiaries and joint ventures across

diverse areas of Banking and Financial System for all customers.

2.2.2 IDBI Business Model

i) IDBI Intech, the information technology arm of IDBI Bank, is reworking its business

model to increase product development and expand its services business in the

financial sector. This would reduce the dependence on business accruing from acting

as a direct sales agent for parent IDBI Bank and other financial sector players.

ii) IDBI Intech also plans to start a portal for education loans. This would act as an

interface between students, banks and educational institutions.

iii) IDBI Intech also developed an automated data flow software product, which would be

launched by December.

“How Does an IDBI Make Money”

a) By Internet Banking at www.idbi.com.

a) Pending Bills-Bills of presentment billers are presented under this

option.

b) Past Payment-Payment history of bills paid for presentment and

non-presentment billers can be viewed.

b) By their branches for transferring money or funds across the country.

a) Self-Account Transfer-Fund transfers within own accounts can be

made. Fund transfers can be either Instant or Scheduled.

b) NEFT Transfer- Fund transfers from other bank account holders

through NEFT.

c) IMPS (Immediate Payment Service)- Fund transfers instantly

through person to person or person to account type of transfers.

iii) It funded largely through internal accruals.

By transferring money or

funds

2.3 GOALS & OBJECTIVES

2.3.1 Goals

To promote fair banking practices by maintaining transparency in various products

and services offered to make banking an enriching experience;

Initiating steps for technological upgradation;

2.3.2 Objectives

Excellence in customer service;

Innovate banking products and financial services to serve all segments of the society;

Contribute towards growth in economy through multifarious activities/services;

Contribute towards social banking.

CHAPTER: 3

3.1 How are objectives formulated?

IDBI objectives are formulated by focussing on some areas-

Their CSR Policy-

CSR has been a way of life at IDBI Bank ingresses into its philosophy and vision.

Accordingly, the revised CSR policy of IDBI Bank has been formulated, in compliance with

the provisions of the Companies Act, 2013 and the rules notified therein by Ministry of

Corporate Affairs(MCA), Government of India in end – Feb 2014, including the activities

and programmes.

IDBI has adopted the following core areas for its CSR initiatives, all of which are called from

the activities spelt out under Schedule VII of the Companies Act, 2013:

Promoting Healthcare (including preventive healthcare and Sanitation and Poverty

Eradication).

Promoting Education (including specialized and employment oriented vocational

skills) and livelihood enhancement projects.

Promoting Gender-Equality & Socio-Economic Empowerment.

Rural Development Projecting.

Contribution to Central Government relief & Welfare Funds.

Promotion of Sports activities.

Protecting and preserving National Heritage, Culture & Art.

Ensuring Environmental Sustainability.

1) The forces in the environment – Stakeholders

CSR Policies shall be to ensure that CSR activities are not performed in silos and it be

skilfully & inextricably woven into the fabric of bank business strategy for overall

OBJECTIVES SETTING

HOW ARE OBJECTIVES

FORMUILATED?

BALANCE SCORD CARD APPROACH

CRITICAL SUCESS FACTORS

KEY PERFORMANCE

INDICATORS

value creation for all stakeholders. IDBI Bank believes that of profitability must be

complemented by a sense of responsibility towards all stakeholders with a view to

make material, visible & lasting difference to the lines of disadvantages sections of

the people, preferably in the immediate vicinity of the bank branches/offices but at the

same time ensure widespread spatial distribution of its CSR activities Pan-India

befitting its status as a conscientious corporate citizen.

2) Realities of Enterprise Resources & Internal Power Relationships

The information needs of an enterprise are determined primarily by:

a) Their activities.

b) The process of managerial decision making followed by the managers.

Profitability Analysis not only forms the basis of the plan for allocation of funds

for various activities but also guides the Finance Manager in taking decisions like

‘continue or quit’ & pricing.

3) The value System of Top Executive

Kishor Piraji Kharat takes charge as MD & CEO of IDBI Bank. All its external

communication would be only by officials/directors authorised for the purpose. The

information for the public constituents & stakeholders, duly approved by the

compliance officer or other authorised official. A Director/officer must not deprive

IDBI Bank Ltd. of an opportunity that belongs to IDBI Bank Ltd. for his/her

own/other’s advantage.

4) Awareness by the Management

IDBI was established on 1 July 1964 under an act of Parliament as a wholly

owned subsidiary of the Reserve Bank of India.

In 16 Feb 1976, the ownership of the IDBI was transferred to the Government

of India.

IDBI was made the principal financial institution for coordinating the

activities of institutions engaged in financing, promoting and developing

industry in the country.

Headquarters of IDBI is at Mumbai, India.

IDBI is the 4th largest bank in India in overall rating.

In 2006, IDBI acquired United Western Bank in a rescue.

In March 2006, IDBI Bank entered into a joint venture with Federal Bank and

Fortis Insurance International to form IDBI Fortis Life Insurance.

IDBI Fortis Life Insurance is renamed to Federal Life Insurance Company

Ltd.

3.2 BALANCED SCORE CARD APPROACH TO OBJECTIVE SETTING

Purpose of Balanced Scorecard:

A method of implementing a business strategy by translating it into a set of performance

measures derived from strategic goals that allocate rewards to executives and managers based

on their success at meeting or exceeding the performance measures.

Reasons for the Need of a Balanced Scorecard:

1. Focus on traditional financial accounting measures such as ROA, ROE, EPS gives

misleading signals to executives with regards to quality and innovation. It is important to

look at the means used to achieve outcomes such as ROA, not just focus on the outcomes

themselves.

2. Executive performance needs to be judged on success at meeting a mix of both financial

and non-financial measures to effectively operate a business.

3. Some non-financial measures are drivers of financial outcome measures which give

managers more control to take corrective actions quickly.

4. Too many measures, such as hundreds of possible cost accounting index measures, can

confuse and distract an executive from focusing on important strategic priorities. The

balanced scorecard disciplines an executive to focus on several important measures that drive

the strategy.

Balanced scorecard at IDBI Bank

• Re-defined and expanded financial perspective.

– Growth, market share, profitability and credit costs.

• Introduced customer perspective: concept of service levels as an area of performance

evaluation.

– Customer satisfaction scores.

• Introduced process perspective: focus on building a process orientation in the

organisation.

• Specific measures of performance introduced.

– Branch service quality scores.

– Turnaround time (TAT) benchmarks.

– Good order index for client bankers.

– 5S achievement.

– Focused measures served as enablers for meeting financial goals.

• Learning and development perspective: focus on re-skilling for existing employees and

speed-to-job for new recruits.

– So far focused primarily on business skills.

– Commenced activity on building leadership pool.

• Reducing the number of scorecard templates

– Already reduced from 750 to 230 in two years.

– Planned reduction to about 150.

Lessons from IDBI Bank experience

• Performance measures should be output rather than input based.

– People should be assessed on goals not on transactions.

– Removes ambiguity from performance management.

• Scorecard need not be balanced for individuals but for business unit as a whole.

– All perspectives may not apply to all people.

• Need for scorecard templates.

– Ensures consistency.

– Number of templates should be rationalised based on number of different job

descriptions.

• Banks, like other business organisations, are operating in an increasingly complex

environment.

• In this competitive paradigm, optimally directing all resources towards organisational goals

in a focused manner is the key to access.

– Having a strategy is not good enough.

– The strategy must be.

• The balanced scorecard is a tool that helps communicate strategy and goals across the

organisation.

• The balanced scorecard at IDBI Bank has helped achieve:

– Rapid business growth.

– Strategic consistency despite growing scale and diversity.

– Systematic and objective performance evaluation.

• The balanced scorecard can help to build a platform for sustained future growth and value

creation.

3.3 CSF Approach to Objective Setting

1) Key Factors for Success of an IDBI Bank

Improves the utilisation of its existing branch network.

Leverages its technology base.

The speed at which IDBI grows its branch network.

Growth Plans & limited Flexibility to raise additional capital.

Smarter Objectives can be used in a wide range of setting Including-

Performance management, Project management, Program management,

appraisals, management by objectives, Personal Development Plans, Personal

learning logs and a wide range of other applications. SMART usually stands

for Specific, Measureable, Achievable, Realistic and Timely.

Understand the difference between objectives and aims, goals or targets.

These are the key success factors to fully reap the benefits of the commercial banks.

2) While Setting Objectives CSF’s can be considered?

We cannot ignore the fact that the process of setting the objectives enables an CSF

(Critical Success Factors) for IDBI.

3.4 KEY PERFORMANCE INDICATORS OF IDBI BANK

CHAPTER: 4

ENVIRONMENTAL AAPRAISAL

4.1 CONCEPT OF ENVIRONMENT

1. Aggregate of all conditions, events, and influences that surrounds

and affect IDBI Bank-

IDBI Bank has assisted a large number of companies in India, both in infrastructure as

well as in non-infrastructure space. IDBI has made a significant contribution to the

growth of several companies in Power / Energy, Roads, Ports, Airports, Urban

Infrastructure, Chemicals, Fertilisers, Pharmaceuticals, Steel, Paper, Cement, Textiles,

Sugar and other sectors. Under Corporate Banking portfolio IDBI Bank provides

specialized advisory services to the corporate in the infrastructure and allied sectors.

2. Environment is complex, dynamic, multifaceted and a far reaching impact-

IDBI Bank has undertaken the pioneering role in the Indian banking sector in the area

of environmental banking and has been active in this field for over 20 years.

3. Internal – strengths

IDBI Bank has created an exclusive group working on climate change and

more specifically on carbon credits advisory services to the clients to deal with

Clean Development Mechanism (CDM) / Carbon Credits of Kyoto Protocol

and Voluntary Emission Reductions (VERs) authorities.

IDBI Bank is presently implementing Ozone Depleting Substances (ODS)

phase-out projects and the India Chiller Energy Efficiency Project (ICEEP) in

association with World Bank and Govt. of India. The carbon credit group is

closely associated with the World Bank in providing a solution for the chiller

users of India in switching over from high carbon chillers to energy efficient

low carbon chillers.

The objectives of the CEEP are two-fold, viz. to reduce greenhouse gas

(GHG) emissions and to support the phase-out of use of Chlorofluoro Carbon

(CFC), an Ozone Depleting Substance, under the Montreal Protocol. The

project provides financial incentives from grant funds provided by the World

Bank through the Global Environment Facility (GEF) and Ozone Trust Fund

(OTF) to India for encouraging all chiller owners to overcome barriers such as

up-front capital costs and perceived technology risks for accelerated

replacement of existing CFC based energy inefficient chillers.

4. External – opportunities

The strong domain knowledge in infrastructure and allied sectors has provided

IDBI Bank a niche in offering the advisory services for the corporate in the

infrastructure sector. The range of advisory services offered by IDBI Bank

include merchant appraisal of projects, acquisition / sale of assets, business

valuation and pre bid advisory for PPP projects in Road sector.

IDBI Bank has been permitted by SEBI to act as the agent for the IPO

monitoring of corporate which come out with public issue of equity shares of

issue size higher than Rs. 500 crores.

4.2 SWOT ANALYSIS OF IDBI BANK

Identifying its swot-

STRENGHTS WEAKNESSES

OPPORTUNITIES THREATS

SWOT ANALYSIS OF IDBI BANK

• Strengths of IDBI Bank

• The banks major strength is it involves latest cutting edge technologies to support its core

• Strengths of IDBI Bank

• The banks major strength is it involves latest cutting edge technologies to support its core

• Weaknesses of IDBI bank

• IDBI has less penetration into the rural market.

• IDBI has very less number of branches and ATM network compared to other major players.

• Weaknesses of IDBI bank

• IDBI has less penetration into the rural market.

• IDBI has very less number of branches and ATM network compared to other major players.

• Opportunities for IDBI bank

• Scope for bagging government schemes are high as IDBI belongs to public sector.

• Global opportunities for IDBI are the rise as the management is keenly focusing on global expansion in next few years.

• They have a good number of financial expertise to face the emerging industrial and economic growth in India.

• It is the only bank in public sector which has enabled social media plug-in in its website. This has increased the brand awareness and better reach to its customers.

• The bank has good opportunities in semi-urban and Tire II cities areas as the industrial growth is taking very rapidly.

• Threats for IDBI Bank

• IDBI faces tough competition in terms of new market development due to competition from both government and private banks.

• FDI in Indian banking has been opened up to 74% by the

How do IDBI maximise their strengths?

a) By Expertise and In-depth knowledge of Industry.

b) By their quality of services.

c) By Quick Processing.

d) By maximise their tax benefits.

e) By Transparency.

f) Loan from anywhere to purchase home anywhere in India.

How do IDBI minimise their weaknesses?

a) Bring down its stake to 49% without having an approach to parliament.

b) Interest charged under home loan is on reducing balance.

c) IDBI Bank has to take a major step in attracting the customers of rural areas by

expanding their branches, ATM’s.

d) It has to concentrate more on individual banking.

e) It has to improve its customer helpdesk so that it can handle customer complaints

efficiently.

• Threats for IDBI Bank

• IDBI faces tough competition in terms of new market development due to competition from both government and private banks.

• FDI in Indian banking has been opened up to 74% by the

f) It has to reduce its servicing charges for customers.

g) The bank has to focus on improving the customer satisfaction in order to sustain the

loyal customers.

How do IDBI capitalize on the opportunities?

Their experience of financial markets will help them to effectively cope with challenges

& capitalise on the emerging opportunities by participating effectively in country’s

growth process.

How do IDBI protects from threats?

a) IDBI Bank considers DDOs attacks to be the most dangerous threat for the sectors. The

bank is closely working with regulators and government agencies like Certain & IDRBT

to identify such attacks & thwart them in time.

b) Bank has to be implemented DLP (Data loss prevention) tool to send alerts in case of

any leakage of information.

c) Bank seeks to protects its computer systems.

CHAPTER: 5

PORTER’S DIAMOND OF COMPETITIVE ADVANTAGE OF

NATIONS OF IDBI BANK

Government

o The Indian economy is on a recovery path. Despite persistent inflation, GDP

grew at 5.7% in the first quarter of FY 2014-15 (CRISIL Research –

September 2014). The recent developmental steps by the Government like

increase in FDI limit in certain sectors accelerate the movement in

infrastructure projects and have been greeted by investors with optimism.

Stock markets are making their forward journey. Mutual Funds are also

witnessing a surge in equity investments.

o The government actions like a marginal increase in the Minimum Support

Prices, open market sales of buffer stocks and RBI continuing monetary policy

measures to combat inflation would yield results in the coming months.

Taking comfort in these measures IDBI Bank expect yields to come down by

about 30-35 basis points in the next 3 to 4 months.

o The Nifty and Sensex ended the month of August with gains of 3.0% & 2.9%

respectively. The market continued the euphoria that it had entered into post

the election of a stable and strong government at the centre.

GovernmentFirm strategy,

structure, rivalry

Demand conditions

Factor conditions

Relating and Supporting industries

Serendipity

Firm strategy, structure

Structure

Demand conditions

In the event of breach of any of these Terms and Conditions by any Card Member;

(i) notwithstanding any other provision of these Terms and Conditions the Card Member

will remain liable for any loss directly or indirectly resulting from such a breach.

(ii) The Card Member will be liable to pay IDBI Bank, upon demand, all amounts

outstanding from the Card Member to IDBI Bank, whether due and payable to IDBI Bank

at the date of such demand or not.

Factor conditions

LOST, STOLEN OR MISUSED CREDIT CARDS

o If a Card is lost or stolen, it must be reported immediately to the IDBI Bank

24- Hour Customer Care Centre.

o In case of loss of Card due to theft, the Card Member must also file

immediately a report with the local police station and should be able to

produce a copy of the same upon request by IDBI Bank. IDBI Bank will, upon

adequate verification, suspend the Card Account and terminate all facilities in

relation thereto and will not be liable for any inconvenience caused to the Card

Member.

o Card Members shall take cognizance of the fact that once a Card is reported

lost, stolen or damaged, the Card cannot be used again, even if found

subsequently. The Card Member declares that if a Card is reported lost,

damaged or stolen, it shall not be used again, even if found or said to be in a

non-damaged condition subsequently. In such cases, the Card Member shall

promptly cut the Card into 4 pieces and return the same to IDBI Bank for

cancellation. The Card Member is responsible for the security of the Card and

shall take all steps to ensure that the Card is not misused.

Relating and Supporting industries

In 1976, the ownership of IDBI was transferred to the Government of India and it was

made the principal financial institution for coordinating the activities of institutions

engaged in financing, promoting and developing industry in India. IDBI provided

financial assistance, both in rupee and foreign currencies, for green-field projects as also

for expansion, modernization and diversification purposes. In the wake of financial sector

reforms unveiled by the government since 1992, IDBI also provided indirect financial

assistance by way of refinancing of loans extended by State-level financial institutions

and banks and by way of rediscounting of bills of exchange arising out of sale of

indigenous machinery on deferred payment terms.

After the public issue of IDBI in July 1995, the Government shareholding in the Bank

came down from 100% to 75%.

IDBI played a pioneering role, particularly in the pre-reform era (1964–91), in catalysing

broad based industrial development in India in keeping with its Government-ordained

‘development banking’ charter.

Some of the institutions built with the support of IDBI are the Securities and Exchange

Board of India(SEBI), National Stock Exchange of India(NSE), the National Securities

Depository Limited(NSDL), the Stock Holding Corporation of India Limited(SHCIL), the

Credit Analysis & Research Ltd, the Exim Bank (India), the Small Industries

Development Bank of India(SIDBI) and the Entrepreneurship Development Institute of

India.

Serendipity

Mumbai, September 15, 2015: IDBI Bank Ltd. has been awarded second prize in

linguistic region `B’ of nationalised banks and financial institutions category of

Rajbhasha Kirti Puraskar for the year 2014-15 for its outstanding performance in

the use of Hindi. The award was presented by Honourable President of India Shri

Pranab Mukherjee to Shri Kishor Kharat, Managing Director and Chief Executive

officer of IDBI Bank at a function held at Vigyan Bhavan, New Delhi on

September 14, 2015. The function was presided over by Honourable Minister of

Home Affairs Shri Rajnath Singh. Shri B. K. Batra, Deputy Managing Director

and Dr. Sunil Kumar Lahoti, General Manager, Rajbhasha of IDBI Bank Ltd.

were also present on the occasion.

Shri Kishor Kharat, MD & CEO, IDBI Bank receiving Rajbhasha Kirti Puraskar

from Hon`ble President of India Shri Pranab Mukherjee on 14th September 2015.

Rolled out 108 new Sub-members in the Centralized and Decentralized Payment

System.

Introduction of Suraksha Plus Savings Account in Nov 2014.

Introduction of Cash Current Account in Feb 2015.

Tie-up with Global IME Bank for Nepal Remittance Arrangement.

MoU with Indian Army and Indian Navy for Salary Account sourcing.

CHAPTER: 6

6.1) INCOME STATEMENT OF IDBI BANK

Period Ending 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012

Total Revenue 50,619,000   45,540,000   51,183,000   47,243,000  

Cost of Revenue -   -   -   -  

Gross Profit 50,619,000   45,540,000   51,183,000   47,243,000  

Operating Expenses

Total Operating Expenses 41,046,000   33,878,000   32,120,000   27,112,000  

Operating Income or Loss 9,573,000   11,662,000   19,063,000   20,131,000  

Income from Continuing Operations

Minority Interest (155,000) (145,000) (129,000) (106,000)

Net Income From Continuing Ops 9,573,000   11,662,000   19,018,000   20,131,000  

Net Income 9,418,000   11,517,000   18,889,000   20,025,000  

6.2) Balance Sheet of IDBI Bank ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 1,603.96 1,603.94 1,332.75 1,278.38 984.57

Equity Share Capital 1,603.96 1,603.94 1,332.75 1,278.38 984.57

Share Application Money 0.19 0.45 0.77 0.85 0.99

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 21,050.11 20,322.08 18,139.73 16,294.75 11,686.25

Net Worth 22,654.26 21,926.47 19,473.25 17,573.98 12,671.81

Deposits259,835.97

235,773.63 227,116.47 210,492.56 180,485.79

Borrowings 61,832.98 60,146.29 65,808.87 53,477.64 51,569.65

Total Debt321,668.95

295,919.92 292,925.34 263,970.20 232,055.44

Other Liabilities & Provisions 10,044.51 9,437.40 8,607.14 6,918.22 6,753.77

Total Liabilities354,367.72

327,283.79 321,005.73 288,462.40 251,481.02

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Assets

Cash & Balances with RBI 13,035.77 12,711.11 10,543.95 15,090.21 19,559.05

Balance with Banks, Money at Call 1,489.99 4,106.80 7,380.57 2,967.44 1,207.03

Advances208,376.87

197,686.00 196,306.45 180,572.30 157,098.07

Investments120,963.21

103,773.50 98,800.93 83,175.36 68,269.18

Gross Block 3,011.30 2,963.06 2,908.56 2,994.31 2,969.28

Revaluation Reserves 1,662.85 1,712.84 1,762.78 1,853.93 1,895.77

Accumulated Depreciation 0.00 0.00 0.00 0.00 0.00

Net Block 1,348.45 1,250.22 1,145.78 1,140.38 1,073.51

Capital Work In Progress 49.20 20.14 16.72 24.50 68.06

Other Assets 9,104.24 7,736.01 6,811.32 5,492.21 4,206.13

Total Assets354,367.73

327,283.78 321,005.72 288,462.40 251,481.03

Contingent Liabilities246,073.24

196,540.68 187,819.01 154,197.43 138,274.78

Bills for collection 0.00 0.00 0.00 0.00 0.00

Book Value (Rs) 141.24 136.70 146.11 137.46 128.69

6.3) Cash Flow of IDBI Bank ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 1287.33 1741.14 2621.78 2629.70 2280.98

Net Cash From Operating Activities -1976.97 -2005.99 -346.03 -3109.60 3515.88

Net Cash (used in)/fromInvesting Activities

-264.18 -222.93 -122.16 -159.17 -203.22

Net Cash (used in)/from Financing Activities -51.00 1122.30 335.05 560.35 2870.58

Net (decrease)/increase In Cash and Cash Equivalents

-2292.16 -1106.61 -133.13 -2708.42 6183.24

Opening Cash & Cash Equivalents 16817.91 17924.52 18057.65 20766.07 14582.84

Closing Cash & Cash Equivalents 14525.75 16817.91 17924.52 18057.65 20766.07

6.4) Profit & Loss account of IDBI Bank ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Interest Earned 28,153.99 26,597.51 25,064.30 23,369.93 18,541.24

Other Income 4,007.63 2,978.75 3,219.51 2,112.18 2,143.23

Total Income 32,161.62 29,576.26 28,283.81 25,482.11 20,684.47

Expenditure

Interest expended 22,406.10 20,576.04 19,691.19 18,825.08 14,271.93

Employee Cost 1,926.36 1,491.61 1,538.50 1,160.44 1,026.50

Selling, Admin & Misc. Expenses 6,818.83 6,274.05 5,047.92 3,348.91 3,608.69

Depreciation 136.95 113.17 124.12 116.06 127.04

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Operating Expenses 4,027.42 3,318.84 3,134.37 2,607.44 2,254.70

Provisions & Contingencies 4,854.72 4,559.99 3,576.17 2,017.97 2,507.53

Total Expenses 31,288.24 28,454.87 26,401.73 23,450.49 19,034.16

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit for the Year 873.39 1,121.40 1,882.08 2,031.61 1,650.32

Extraordinary Items 0.00 0.00 0.00 0.00 0.00

Profit brought forward 896.77 903.86 672.65 615.02 479.12

Total 1,770.16 2,025.26 2,554.73 2,646.63 2,129.44

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 120.30 160.41 466.47 388.70 344.60

Corporate Dividend Tax 25.25 27.77 71.75 60.33 55.27

Per share data (annualised)

Earning Per Share (Rs) 5.45 6.99 14.12 15.89 16.76

Equity Dividend (%) 7.50 10.00 35.00 35.00 35.00

Book Value (Rs) 141.24 136.70 146.11 137.46 128.69

Appropriations

Transfer to Statutory Reserves 647.41 540.32 962.65 774.95 514.55

Transfer to Other Reserves 65.01 399.99 150.00 750.00 600.00

Proposed Dividend/Transfer to Govt 145.55 188.18 538.22 449.03 399.87

Balance c/f to Balance Sheet 912.19 896.77 903.86 672.65 615.02

Total 1,770.16 2,025.26 2,554.73 2,646.63 2,129.44

6.5) Key Financial Ratios of IDBI Bank

Mar '15

Mar '14 Mar '13 Mar '12 Mar '11

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 0.75 1.00 3.50 3.50 3.50

Operating Profit Per Share (Rs) 11.58 17.56 17.73 16.06 21.75

Net Operating Profit Per Share (Rs) 175.53 165.83 188.06 182.81 188.32

Bonus in Equity Capital 15.26 15.26 18.36 19.15 24.86

Profitability Ratios

Interest Spread 6.55 6.50 6.04 5.81 5.65

Adjusted Cash Margin(%) 3.14 4.17 7.09 8.42 8.59

Net Profit Margin 3.10 4.21 7.50 8.69 8.90

Return on Long Term Fund(%) 104.58 101.78 114.58 122.08 130.63

Return on Net Worth(%) 3.85 5.11 9.66 11.56 13.02

Adjusted Return on Net Worth(%) 3.85 5.11 9.66 11.56 13.02

Return on Assets Excluding Revaluations 141.24 136.70 146.11 137.46 128.69

Return on Assets Including Revaluations 151.61 147.38 159.33 151.97 147.95

Management Efficiency Ratios

Interest Income / Total Funds 8.26 8.21 8.23 8.66 7.68

Net Interest Income / Total Funds 1.69 1.86 1.76 1.68 1.77

Non-Interest Income / Total Funds 1.18 0.92 1.06 0.78 0.89

Interest Expended / Total Funds 6.57 6.35 6.46 6.97 5.91

Operating Expense / Total Funds 1.14 0.99 0.99 0.92 0.88

Profit Before Provisions / Total Funds 1.68 1.75 1.79 1.50 1.72

Net Profit / Total Funds 0.26 0.35 0.62 0.75 0.68

Loans Turnover 0.14 0.14 0.13 0.14 0.13

Total Income / Capital Employed(%) 9.44 9.12 9.28 9.44 8.56

Interest Expended / Capital Employed(%) 6.57 6.35 6.46 6.97 5.91

Total Assets Turnover Ratios 0.08 0.08 0.08 0.09 0.08

Asset Turnover Ratio 0.08 0.08 0.08 0.09 0.08

Profit And Loss Account Ratios

Interest Expended / Interest Earned 79.58 77.36 78.56 80.55 76.97

Other Income / Total Income 12.46 10.07 11.38 8.29 10.36

Operating Expense / Total Income 12.10 10.84 10.64 9.78 10.29

Balance Sheet Ratios

Capital Adequacy Ratio 11.76 11.68 13.13 14.58 13.64

Advances / Loans Funds(%) 67.48 67.14 70.50 72.81 70.22

Debt Coverage Ratios

Credit Deposit Ratio 81.93 85.12 86.12 86.37 84.82

Investment Deposit Ratio 45.35 43.76 41.58 38.73 40.68

Cash Deposit Ratio 5.20 5.02 5.86 8.86 9.61

Total Debt to Owners Fund 11.47 10.75 11.66 11.98 14.24

Financial Charges Coverage Ratio 0.26 0.28 0.28 0.22 0.30

Financial Charges Coverage Ratio Post Tax 1.05 1.06 1.10 1.11 1.12

Leverage Ratios

Current Ratio 0.03 0.03 0.03 0.03 0.02

Quick Ratio 22.95 23.11 24.82 29.08 26.78

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 13.77 14.30 24.78 19.13 20.88

Dividend Payout Ratio Cash Profit 11.90 12.99 23.25 18.09 19.38

Earning Retention Ratio 86.23 85.70 75.22 80.87 79.12

Cash Earning Retention Ratio 88.10 87.01 76.75 81.91 80.62

Adjusted Cash Flow Times 257.18 190.98 113.21 98.01 101.55

Mar '15

Mar '14 Mar '13 Mar '12 Mar '11

Earnings Per Share 5.45 6.99 14.12 15.89 16.76

Book Value 141.24 136.70 146.11 137.46 128.69

CHAPTER: 7

LATEST NEWS ON IDBI BANK

The repeal of IDBI Act and corporatisation of the erstwhile development financier

provide an opportunity to gradually privatise the bank

 New Delhi: The government has the opportunity to "transform" IDBI Bank on the lines of

Axis Bank, Minister of State for Finance Jayant Sinha said on Friday sparking speculation of

gradual privatisation of the state-owned lender. Unlike the restriction of the minimum

government holding of 51 per cent in most PSU banks as mandated in the Banking

Regulation Act, the government is not bound to retain a majority stake in IDBI Bank.

 "We have an opportunity to transform IDBI Bank like Axis bank," Sinha said at the Global

Business Forum at Goa. The government now holds 76.5 per cent in IDBI Bank.

 The present IDBI Bank is a combined entity of erstwhile long-term financial institution

Industrial Development Bank of India and its private lending arm Idbi Bank. IDBI promoted

Idbi Bank after the Reserve Bank of India granted the first batch of licences to private lenders

in 1993.

 While state-owned IDBI got into a financial crisis following a pile of bad loans and had to be

bailed out by the government in early 2000, Idbi Bank excelled as a private retail lender.

 In 2003, IDBI was corporatized with the repeal of the IDBI Act. Two years later, the

government merged IDBI with Idbi Bank to create IDBI Bank in a 1:1.42 share swap deal--

100 shares of Idbi Bank were exchanged for 142 shares of IDBI.

IDBI Bank: Too early to rejoice

The IDBI Bank scrip has rallied a huge 28 per cent in the past four trading sessions to close at

Rs 73 on Wednesday. This rally was triggered by Finance Minister Arun Jaitley's statement

that public sector banks such as IDBI Bank should be given more operative freedom, possibly

with a structure on the lines of Axis Bank (where government indirectly holds a large stake),

and gradually reduce the government's stake from the 76 per cent prevailing.

Additionally, the Street believes that as there will be resolution to the financial problems of

state electricity boards (SEBs), power generating companies would benefit leading to easing

asset quality pressure for players like IDBI Bank. However, as these are easier said than

done, this rally could soon fizzle, believe analysts. Asset quality is a key concern, which

could also prove a major hurdle for any stake sale.

Suresh Ganapathy, financial analyst at Macquarie Capital, says, "Given the presence of many

murky assets in the books, we believe there might not be many buyers in the system for the

IDBI scrip. The government will find it difficult to reduce its stake in the bank." At the end of

the June quarter, IDBI Bank's stressed loans (gross non-performing assets, along with

restructured assets) formed 16.8 per cent of its overall loans, and were at the higher end

compared to peers.

1. Analysis and Discussions

A. Operational Analysis

a. Routine Operations of Bank

Branch Banking is still an integral part of Indian banking system as most Indians still believe

in cash transactions and prefer to visit banks in person for routine banking operations. Bank

branches are the face of the banks where customers can visit and talk to the officials for

getting better insights into new policies, investment schemes, other banking services etc. On

top of it, the personal touch in every service leaves a great impact on the minds of customers.

However, banking in India has changed its facets and ways of doing business over the years

especially after the onslaught of technology and its manifestations. People have started to

drift towards latest modes of banking like e-banking, mobile-banking etc. but the acceptance

percentage is low as compared to other countries. These innovations hold promising future

and branches have to continually evolve to remain relevant in coming times. 

Definition of Branch Banking- Branch Banking has been defined under the provisions of

Section 23 of the Banking Regulation Act, 1949 that banks can either open new branches or

shift the location of existing branches. The banks have to seek a prior approval of RBI to

open a new branch in India or abroad or in the same city or village where a branch already

operates. RBI will grant such permission after it is satisfied about the financial condition of

the demanding bank, robustness of its management, capital structure and general public

interest behind such a move. The Banking Regulations Act,  1949, defines a ‘branch’ or

‘branch office’ of a banking company as a place where bank deposits are received, cheques

cashed, money lent, any or all banking services are carried out. These exclude the bank call

centres as they are typically calling facilities which do not have any customer interaction. A

branch will include a full-fledged specialised branch, a satellite or mobile office, an extension

counter, administrative office, control office, service branch, credit card centre etc.

Relevance of Branch Banking Branch banking has a lot of importance in India as it makes

banking possible for people living in rural and remote areas. This is a true source of inclusive

growth. The success of Pradhan Mantri Jan Dhan Yojana has been possible due to extensive

branch networks of various banks. Branch banking makes management more responsive and

efficient over centralised banking operations. Also, the risk is well spread across the branches

and no single office has to suffer.  This helps banks to offer more securities and investment

options to its customers. Also, due to the wide geographic spread, a broader customer base,

deposits used in one branch can be used profitably used as loans or investments in other

branches. This type of banking system can easily reach people in backward areas.  There are

some negative points too which branch system faces like delays in decision-making due to

limited powers of branches, influenced by local political leaders or administration etc.

Difference between Branch Banking and Unit Banking

The key difference between branch banking and unit banking is that while branch bank

operates through branches; unit Bank is generally a single branch small bank, which provides

financial services to the local community.  In Branch Banking, the Branches in India are set

up under Section 23 of Banking Regulations Act, 1949. A branch should cater to all banking

services and include a specialised branch,  a satellite office, an extension counter, an ATM,

administrative office, service branch and a credit card centre for the purpose of branch

authorisation policy. It helps in better management, more inclusion and risk diversification.

On the other hand, Unit banking is a limited way of banking where banks operate only from a

single branch (or a few branches in the same area) taking care of local community.  Unit

system of banking originated in the united States. In Unit system, the size of banks is small as

compared to branch banking. Due to small scale of operations and quick decisions, the work

is more efficient. These banks are involved in developmental works in the areas of

operations. The management enjoys more autonomy and thus more discretionary powers.

However, due to single units, the risk is not distributed or diversified. It may however

encourage outside local influences. The following table differentiates between Branch and

Unit Banking. Branch Banking Unit Banking Bank operates through branches connected to

each other. Each branch provides usual banking services but the control is done by the head

office or central office. Unit Bank is generally a single branch small bank, which provides

financial services to the local community in which it operates. There are no branches or small

branches in a limited locality only. Branch Banking is more stable and resilient to ups and

downs in the local economy because of backing by other branches and head office. Unit

banks are vulnerable to failure and are subject to heavy risk in case of failure of local

economy. Branch Banking has less operational freedom. Unit Banking has more operational

freedom. Branch banking has more financial resources at its disposal. The financial resources

in unit banking are concentrated only in one unit. Since decision making is controlled by the

head office, the process is slow in branch banking. Further, Branch banking involves higher

costs of supervision. Decision making is fast due to all decision to be made in one unit. Unit

banking involves lower cost of supervision. Branch banking goes hand in hand with the

division of labour. Some branches may offer specialized services. Since there is one unit,

there is no division of labour and no specialization in service.

b. Other operations

A) Acceptance of deposits

• Fixed deposit account

• Saving bank account

• Current account

B ) Advancing of loan

• Cash credit

• Call loans

• Over draft

• Bills discounting

C) Agency function

• Collecting receipts

• Making payments

• Buy and sell securities

• Trustee and executor

D) General utility function

• Issuing letters of credit, travelers cheque

• Underwriting share and debentures

• Safe custody of valuables

• Providing ATM and credit card facilities

• Providing credit information

B. Financial Analysis

a. Profit/Loss Analysis

. INCOMEInterest Earned 28,153.99Other Income 4,007.63Total Income 32,161.63II. EXPENDITURE 22,406.10

4,027.425,728.11

Interest Expended

PBIDTProvisions and Contingencies 4,440.77Profit Before Tax 1,287.34Taxes 413.95Total 31,288.24III. Profit & LossPAT 873.39Extraordinary Items 0.00Profit brought forward 896.77Adjusted Net Profit 0.00Total Profit & Loss 873.39Appropriations 1,770.16Equity Dividend (%) 7.50Earnings Per Share (in )₹ 5.45Book Value (in )₹ 141.24

Source:ndtv.com

Interest Expended / Interest Earned 79.58

Other Income / Total Income 12.46

Operating Expense / Total Income 12.10

b. Investment Analysis

Dividend Per Share 0.75Operating Profit Per Share (Rs)

11.58

Net Operating Profit Per Share (Rs)

175.53

Free Reserves Per Share (Rs) --Bonus in Equity Capital 15.26

c. Balance Sheet Analysis

d. Debt

Coverage

Ratio

An

aly

sis

e. Leverage Ratio

Current Ratio 0.03

Quick Ratio 22.95

f. Cash Flow Indicator Ratio

Net Profit Before Taxes

Share CapitalShare warrants & Outstandings 0.19Total Reserve 22,712.96Shareholder's Funds 24,317.10Deposits 2,59,835.97Borrowings 61,832.98Other Liabilities & Provisions 10,044.51TOTAL LIABILITIES 3,56,030.57APPLICATION OF FUNDS:Cash and balance with Reserve Bank of India 13,035.77Balances with banks and money at call and short notice

1,489.99

Investments 1,20,963.21Advances 2,08,376.87Gross Block 5,055.59Less : Accumulated Depreciation 2,042.53Less : Impairment of Assets 0.00Net Block 3,013.06Lease Adjustment -1.77Capital Work in Progress 49.20Other Assets 9,104.24TOTAL ASSETS 3,56,030.57Contingent Liability 2,31,608.74Bills for collection 14,464.50

Balance Sheet RatiosCapital Adequacy Ratio 11.76Advances / Loans Funds(%) 67.48

Investment Deposit Ratio 45.35Cash Deposit Ratio 5.20Total Debt to Owners Fund

11.47

Financial Charges Coverage Ratio

0.26

Financial Charges Coverage Ratio Post Tax

Adjustments for Expenses & Provisions 4,632.15Adjustments for Liabilities & Assets -6,142.36Cash Flow from operating activities -1,976.97Cash Flow from investing activities -264.18Cash Flow from financing activities -51.00Effect of exchange fluctuation on translation reserve 0.00Net increase/(decrease) in cash and cash equivalents -2,292.16Opening Cash & Cash Equivalents 16,817.91Cash & Cash Equivalent on Amalgamation / Take over / Merger

0.00

Cash & Cash Equivalent of Subsidiaries under liquidations

0.00

Translation adjustment on reserves / op cash balalces frgn subsidiaries 0.00Effect of Foreign Exchange Fluctuations 0.00Closing Cash & Cash Equivalent 14,525.75

Dividend Payout Ratio Net Profit 13.77

Dividend Payout Ratio Cash Profit 11.90

Earning Retention Ratio 86.23

Cash Earning Retention Ratio 88.10

Adjusted Cash Flow Times 257.18

g. Liquidity Ratio

   Loans / Deposits(%)   Total Debt / Equity(%) 0.05   Current Ratio(%) 0.47   Quick Ratio(%) 23.80   Total Debt / Mcap(%) 0.00   Net NPA in Rs. Million 0.00

A. Important Achievements

The following table presents a list of awards that the IDBI Bank has won in the last few

years: -

Award Year Awarding Caremony

SKOCH Order of Merit for

CSR

2014 Skoch Financial Inclusion

& Deepening Award

Best Corporate Social

Responsibility Practices in

Banking Category in

2014 Lokmat Banking, Financial

Services & Insurance

Banking Sector (BFSI) Awards

Award for Best Corporate

Social Responsibility

Practices in Banking

Category

2014 Responsible Business

Awards

Golden Peacock Award for

Corporate Social

Responsibility in the

Banking (PSU) Category

2013

Third Annual Greentech

CSR Award in Platinum

Category

2013

Best Corporate Social

Responsibility Practices in

Banking Category

2014 ABP Banking, Financial

Services & Insurance

(BFSI) Awards

Silver Award for

documentary named ‘Taru

Zameen Par’

2014 PRCI Corporate Collateral

Awards

ADFIAP Awards 2014

Second Annual Greentech

CSR Award in Silver

Category

2013

B. Portfolio management

A portfolio refers to a collection of investment tools such as stocks, shares, mutual fund,

bonds, and cash and so on depending on the investors’ income, budget and convenient time

frame. The art of seeking the right investment policy for the individuals in term of minimum

risk and maximum return is called as portfolio management. Portfolio management refers to

managing an individual’s investments in the form of bonds, shares, cash, mutual funds etc. so

that he earns the maximum profits within the stipulated time frame.

Portfolio management refers to managing money of an individual under the expert guidance

of portfolio managers. Portfolio management refers to the management or administration of a

portfolio of securities to protect and enhance the value of the underlying investment. It is the

management of various securities (shares, bonds etc.) and other assets (e.g. Real estates), to

meet specified investment goals for the benefit of the investors. It helps to reduce risk without

sacrificing returns. It involves a proper investment decision with regards to what to buy and

sell. It involves proper money management. It is also known as investment management.

2.1 Need of portfolio and portfolio management

The portfolio is needed for the selections of optimal, portfolio by rational risk adverse

investors i.e. by investors who attempt to maximize their expected return consistent with

individually acceptable portfolio risk. The portfolio is essential for portfolio construction. The

portfolio construction refers to the allocation of funds among a variety of financial assets

open for investments. Portfolio concerns itself with the principles governing such allocation.

The objective of the portfolio theory is to elaborate the principles in which the risk can be

minimized, subject to the desired level of return on the portfolio or maximize the return,

subject to the desired level of return on the portfolio or maximize the return, subject to the

constraints of a tolerable level of risks.

The need for portfolio management arises due to the objectives of the investors. The emphasis

of portfolio management varies from investors to investors. Some want income, some capital

gains and some combination of both. However, the portfolio analysis enables the investors to

identify the potential securities, which will maximize the following objectives:

1. Securities of principal

2. Stability of income

3. Capital growth

4. Marketability

5. Liquidity

6. Diversification.

Thus the basic need of portfolio is maximize yield and minimize yield and minimize the risk.

The other ancillary needs are as follows:

1. Providing regular or stable income.

2. Creating safety of investments and capital appreciation.

3. Providing marketability and liquidity.

4. Minimizing the tax liability

2.2 Objectives of Portfolio Management

The objective of portfolio management is to maximise the return and minimise the risk. These

objectives are-

1. Basic objectives

2. Subsidiary Objectives

1. Basic Objectives

The basic objectives of a portfolio management are further divided into two kind’s i.e.

(a) Maximize yield

(b) Minimise risk

The aim of the portfolio management is to enhance the return for the level of risk to the

portfolio owner. A desired return for a given risk level is being started. The level of risk of a

portfolio depends upon many factors.

The investor, who invests the savings in the financial assets, requires a regular return and

capital appreciation.

2. Subsidiary Objectives

The subsidiary objectives of a portfolio management are expecting a reasonable income,

appreciation of capital at the time of disposal, safety of the investment and liquidity etc. The

objective of investor is to get a reasonable return on his investment without any risk. An

investor desires regularity of income at a consistent rate. However, it may not always be

possible to get such income. Every investor has to dispose his holding after a stipulated

period of time for a capital appreciation. Capital appreciation of a financial asset is highly

influence by a strong brand image, market leadership, guarantee sales, financial strength, and

large pool of reverses, retained earnings and accumulated profits of the company. The idea of

growth stocks is the right issue in the right industry, bought at the right time. A portfolio

management desires the safety of the investment. The portfolio objective is to take the

precautionary measures about the safety of the principal even by the diversification process.

The safety of the investment calls for careful review of economic and industry trends.

Liquidity of the investment is most important, which may not be neglected by any

investor/portfolio manager.

An investment is to be liquid, it must has “termination and marketable” facility any time.

3. Wealth Management

Wealth is basically a person’s net worth. Wealth can be explained as assets minus liabilities.

Wealth Management is a discipline that incorporates financial planning, Investment portfolio

management and a number of financial services. It is a professional service it can also

encompass all parts of a person’s financial life. Investors must have already accumulated a

proper amount of wealth for wealth management strategies to be efficient and effective. Is can

be provided by large company entities, independent financial advisers or multi-licensed

portfolio managers. Their services are designed to focus on high-net worth customers. Wealth

Managers use their experience is estate planning, financial planning, retirement, Estate

planning, tax planning, debt management and cash flow. It is based on the long term

relationship with the customer. It results in deeper customer relationship which leads to

increased profitability and more client referrals. Wealth management offers wealth managers

the opportunity to cross-sell a huge range of services and products to each customer as

appropriate. Wealth management is an emerging sector.

3.1. Features of Wealth Management

Allows customer to review risk profiles.

Track holdings against model portfolios from returns.

Captures Customer’s details and risk profile.

On approval by client they execute financial plans.

Based on the advanced algorithms they provide tax coverage, education and insurance.

Interfaces with banks, portfolio management system, price vendors and other agencies.

Provides dynamic search.

Document Management.

Dynamic user access control.

3.2. Process of Wealth Management

Step 1: Finding Facts

Step 2: Investment Strategies

Step 3: Allocation of Assets

Step 4: Structuring Accounts

Step 5: Structuring Implementations

Step 6: Communications

Step 7: Annual review & Monitoring

Step 8: Refine Strategy

First step to be considered is to create a profile of customer in which personal details, current

financial situation and family circumstances. In personal details they involve income, savings,

investments, retirement, tax status, family. In the second step investment objectives and risk

tolerance is to be undertaken. Then assets are allocated and it’s all about getting the balance

right. After this the wealth management needs to consider the account structure that best suits

the client. To be highly communicative is quiet necessary because it is an important aspect of

client-wealth manager relationship. They organize regular face-to-face meetings. Then after

monitoring, it is essential to refine the strategies.

4. India and Wealth Management

Key Facts

High Gross Domestic

Savings

India’s gross domestic savings (GDS) as a per cent og GDP has

remained above 30 per cent since 2004 and stood at 30.8 per cent in

FY12. RBI estimates domestic savings to reach 39 per cent of the

GDP at the end of 12th Five Year loan(FY13-FY17)

India’s HNWI

population to double by

2020

HNWI population in India is expected to double and total holdings by

HNWI is estimated to reach USD3 trillion in 2020 which presents

considerable growth opportunities for wealth management

Phenomenal Growth in

NBFC Finance

NBFCs managed credit grew at a CAGR of 35 per cent over FY07-

FY12. Retail credit registered 36 per cent growth in FY12

Robust Mutual Fund

Growth

Mutual Fund industry AUM recorded a CAGR of 16.8 per cent over

FY07-FY13. India is considered one of the preferred investment

destinations globally.

4.1 Position of India in Wealth Management

The phenomenal growth in the number of the super-rich has laid the foundation for an

unprecedented expansion of the wealth management industry in India. Inevitably, it is also

driving the entry and growth of luxury brands that cater exclusively to the tastes of the ultra-

high net worth individuals (UHNIs).

For both wealth managers and luxury brand companies, one major hurdle to their effective

functioning and growth is the almost remarkable dearth of information on the earning,

spending and investing trends of the ultra-wealthy.

In this report, by Kotak and CRISIL the first of what will be an annual edition, they have

laid the broad framework and detailed the methodology to define who an ultra HNI is.

Considering the attention that they have been getting in recent times, it was also quite

tempting to focus on what their numbers are and who has how much wealth.

Instead, the spotlight in this inaugural year is on behavioural aspects, such as what drives

these individuals, what their priorities or motives are when it comes to spending or investing,

and whether there is any homogeneity in their actions as a class.

The conclusions are extremely revealing, and a lot of meaningful insights, some even

positively surprising, have emerged from the analysis. We believe that the takeaways gleaned

from this report will be invaluable for people who manage the wealth of the ultra-rich, and

will help niche companies operating in the segment to come up with more innovative

marketing or distribution strategies for their products.

The report was based on two main strands of research.

1) A series of interviews were conducted with senior personnel at major global luxury

brands, art gallery owners, product dealers and industry body representatives.

2) They commissioned a market survey of 150+ ultra HNIs, with conversations lasting up to

one hour. The respondents were spread across the three major metros, namely Mumbai, Delhi

and Bengaluru, as well as Hyderabad, Ahmedabad, Chennai, Pune, and Kolkata (referred to

as other cities in this report). A majority of the respondents (77 per cent) were from the three

major metros. The survey took place between December 2010 and February 2011.

4.2 Seeds of Luxury Revolution

In slightly under two decades, India has undergone a radical transformation from being a

largely agrarian economy with a modest growth rate into one of the world’s most dynamic

economies. Its GDP has grown at an average of over 8 per cent per annum over the past three

years and is estimated to have grown by 8.6 per cent in the most recent fiscal year, making the

country the second-fastest-growing economy in the world, next only to China.

Propelled by this economic boom, there has been an unprecedented level of wealth creation.

Average income levels have raised manifold and many individuals have suddenly become

millionaires. The resultant quantum increase in money available for spending, and the

country’s increased integration with the global economy have widened the population’s

exposure to major global luxury brands and triggered a luxury revolution.

Entrepreneurship is clearly the dominant source of domestic wealth, but fast-growing service

industries such as technology and financial services have also catapulted many hitherto

middle-income group individuals into the ultra-high net worth individual (ultra HNI) bracket.

CRISIL Research has defined an ultra-high net worth household (ultra HNH) as one having a

minimum average net worth of ` 250 million, which, as per our proprietary tool ‘IDeA’

(Income and Demographics Analysis), gets mapped to a minimum income of ` 35-40 million.

The total net worth of Indian ultra HNHs is expected to reach ` 235 trillion in 2015-16 from

an estimated ` 45 trillion in 2010-11.

At present, there are no validated estimates of the number of ultra HNHs in the country.

Kotak Wealth and CRISIL Research estimate that there are around 62,000 ultra HNHs in

India as of 2010-11, with a minimum net worth of ` 250 million. This number represents a

meagre 0.03 per cent of the total households in India, but is poised to more than triple to

219,000 households by 2015-16.

That sets ultra HNIs apart from other classes of individuals in the country is the sheer value

and size of the assets they own. The dramatic increase in personal wealth has also brought

about a change in attitudes towards spending; public displays of opulence, which would have

been unthinkable a few years ago, are now not uncommon.

Although this is creating exciting new opportunities for wealth managers and luxury brands,

their ability to perform effectively is being hindered by the absence of adequate information

on ultra HNIs, in terms of their attitudes to investing and spending.

4.3 Key Trends

They found that today’s ultra HNI is not, in general, a reclusive individual. On the contrary,

he is more likely to be a constant feature on television channels or on Page 3 of newspapers,

and is comfortable in (some might even say seeks) the limelight. They are the cream of

society, know that they are, and seek to maintain a lifestyle in keeping with their social

standing. Consequently, they are highly brand conscious, and in some cases, have strong

brand loyalties. In many cases, therefore, price is not the only consideration guiding a

purchase. In absolute terms, they are very heavy spenders, be it on high quality homes, food,

clothing, or the luxuries of life in entertainment, education, and travel and family vacations.

They are also finding new ways to splurge, such as on buying art and artefacts, yachts, and

islands, or even on underwater weddings, chartering aircraft to go on holidays or watch

sports, entertainment events, and partying.

Contrary to the belief in some quarters that they are highly individualistic, our survey

revealed strong family bonds and dependence, when it comes to decision-making on spending

or investments.

The spending on, and choice of big ticket items such as holiday packages, luxury watches,

diamonds and jewellery, household electronics (which include premium mobiles and high-

end cameras), and home décor is carried out in consultation with the family. The family plays

an important role in, for instance, identifying a holiday location, or choosing a home theatre

brand. Appeal and price are, therefore, important considerations in planned purchases.

It is only on items such as apparel, accessories, or liquor that an ultra HNI’s personal

predilections and impulses come into play. Impulse purchases are usually done at the airport

(duty-free shops) or while travelling, and purchases are made largely on how eye-catching the

product is, in addition to the brand, the newness of the product and exclusivity. The need for

the product is not a factor in impulse purchases; but having cash in hand is.

Likewise, while making investments, ultra HNIs take advice from family, close friends,

trusted advisors and professionals such as chartered accountants and lawyers. Legacy for the

spouse and children, social security and regular income are important factors that guide their

investments. Possibly because of this, they are willing to take far lesser risk on their

investments compared with what they are willing to take in their business.

Most ultra HNIs are distinguished individuals in social networks of power and influence.

Their long-standing network of elite contacts gives them differentiated access to business

opportunities, and they try to put it to good use to further expand their wealth.

Interestingly, today’s ultra HNIs would typically include business people who own

enterprises with a turnover of ` 750 million or above, corporate executives, established

professionals, politicians, traders, builders and agricultural landowners, unlike before

Independence when they were more likely to be the upper classes or the nobility. Based on

the results of the survey, Kotak Wealth and CRISIL Research have classified India’s ultra

HNIs into three groups:

• Inheritors

• Self-made

• Professionals

Inheritors are born with a silver spoon, and have inherited high net worth; Self-made are first

generation entrepreneurs whose success in business turned them wealthy; and Professionals

are qualified, highly skilled professionals who gained wealth because the companies that

employed them grew big. The wealth dynamics and behavioural traits of each of these groups

are unique, and wealth managers and luxury brands will face diverse challenges in their

dealings with them.

Most people agree that barring unforeseen circumstances, the long term India growth story is

intact. As noted earlier, this will result in a significant increase in the number of ultra HNIs in

the country. For wealth managers and luxury brands, this will mean an appreciable increase in

their addressable market. This will necessitate not only an increase in the type and nature of

products that they offer to this segment, but also greater awareness about behavioural trends

with regards to spending and investment by ultra HNIs. This will allow wealth managers and

luxury brands to evolve more innovative marketing strategies and target their products in

better, more effective ways.

It is also evident that the segment of high net worth individuals will spawn the next wave of

ultra HNIs. Wealth managers and luxury brands who are able to engage this segment

productively and establish profitable (in every sense of the term) long-term relationships will

find that they will have a first mover advantage when these people transition from being high

net worth individuals into ultra HNIs. This will entail development of a greater range of

products, consistently high standards of quality of service and, critically, the right pricing.

Here, to avoid familiar pitfalls, some of the new luxury entrants would do well to analyse the

experience of multinational companies in India. Some of the multinational companies that

forayed into India have become successful because they jettisoned pre-conceived notions and

strategies that worked elsewhere and adopted techniques that took into account the local

ethos, culture, and tastes to build lasting brand loyalties.

4.4 What makes the HNI’s a class apart?

5. Indian Banks and Wealth Management Market

While the percentage of wealthy individuals in India is very small compared to developed

markets, forecasted growth figures point toward a very high potential for asset accumulation

over the foreseeable future. India has a large young affluent segment, coupled with the

increase in wealth of global Indians, the Indian government’s push to curb illicit leaks and

more tightly regulate market and an increasing share of the organized market players form

the key ingredients of a high-growth wealth management market.

Overall HNWI liquid assets (when measures as a percentage of Indian GDP) are increasing

at a healthy pace, indicating the expansion of investable wealth in the economy.

Value and size of assets

Social visibility and hierarchy

The power they yield

Networks of influence

Scale and visibility of spends

The outlook looks bright for banks to venture into wealth management business. The wealth

management market in India was earlier dominated by unorganised players, whose share

was 1.5 times that of the organised market (financial institutions, banks, etc.). However, a

structural change is taking place and organized players are drawing clients away from the

unorganised layers.

Wealth management is a way of looking at customers and how you can provide service

to customers. It’s all about approaching it in a holistic manner.

This gives a good opportunity for Indian banks. In fact, some leading public and private

sector banks are already lining up to enter the wealth management market, looking to tap the

huge base of customers (across income groups) that they already have for their banking

operations. However, for all the banks lining up for a pie of the fast growing wealth

management industry in India, it is important for them to understand that the success

mantras required here will be vastly different from what they’ve employed all these years in

their bread-and-butter business of banking.

Wealth management is a knowledge business and deals with customers who have specified

short and long-term investment performance is one of their key expectations. So it is a

critical for banks looking to enter this field to understand not just their clients; risk

disposition, wealth base and funds flow requirements, but also their investment

requirements, and then they arrive at a structured plan tailored to the clients’ needs. Apart

from growing the net worth, banks also need to address unique challenges in dealing with

HNWIs. As established players in the market would vouch for managing an HNWi

relationship requires a different orientation & positioning from standard retail banking. Such

a relationship is primarily driven by personalization, readiness of information, and high

degree of confidentiality, and is based on a long-term relationship with a customer.

Also, each HNWI is unique, and thus requires specialized products, services and treatment.

This would require banks to use tailor-made wealth management solutions, which have

various aspects of the wealth management integrated together

Banking

Brokerage

Financial planning

Estate management

Taxation

Risk management

Reporting

The challenges all institutions will face in developing viable wealth management offerings

can be grouped into three areas, namely-

a) Customer strategy

b) Operational effectiveness

c) Organisational design and technology strategy.

While retail banks will face some of the same core challenges as other players, the following

challenges are particularly pertinent to banks:

Business Customer &

Strategy

Operational Design Operational

Effectiveness

Technology strategy

Identifying attractive

and lucrative

customers from

banking services to

more lucrative wealth

Transition from a

product centric to a

customer centric

organisation

Building or partnering to

offer more complete

assets management,

retirement and estate

planning and protection

capabilities

Improving customer

relationship management

implementation to enable

the identification of

potential wealth

management clients and

provide an integrated

view of customer

information across all

product groups

Overcoming negative

image in advisory

capabilities and ability

to provide best of

breed investment

products

Integrating different

components offering

to provide a single

point

Leveraging physical

footprint

Using technology as a

platform for serving the

main affluent

Assessing the viability Creating an Ensure more rigorous Improving information

of providing a wealth

management offering

to the mass affluent

environment that is

focused on

customer service

adoption of “know your

customer rules”

and data exchange to

share information

Integrating legacy and

new system

The affinities found between the capabilities of each individual company and the needs of

various customer segments suggest one of three strategic alternatives: remaining a

traditional wealth manager provider, becoming an expanded wealth management provider or

refocusing to become a best of breed product manufacturer.