management of commercial banks

8/11/2019 Management of Commercial Banks

1/29

MOCB REPORT

BUSINESS PLAN FOR

SETTING UP OF

COMMERCIAL BANK

SUBMITTED TO: PROF. V.K. DUTTA

SUBMITTED BY: GROUP 5, MOCB-2

ABHISHEK JAIN 221175

HIMANSHU SANGAR 221174


2/29

2

NUPUR BAGDI 221178

VIPUL SACHDEVA 22117

VINEET KUMAR SINGH 221169


3/29

3

S. No. Table of Contents Page No.

Executive Summary 3

1 1.1 Bank Description 5

1.2 Background of Bank promoters 5

1.3 Board of Directors 8

1.4 Location selection 3

1.5 Organization Structure 4

1.6 Committees of Bank 5-8

1.7 Manpower Plan 5

1.8 Marketing Plan 5

1.8.1 Marketing Objectives 5

1.8.2 Marketing Strategy 6

1.8.3 Product Portfolio 6

1.9 Balance Sheet and P&L for three years 8

2 References 9-14


4/29

4

Executive Summary

The purpose of this business plan is to obtain banking license from the Reserve Bank of India to

set up a commercial bank while showcasing the expected financials and operations over the next

three years.

My Bank will be operating under commercial banking license and following all the regulatory

and compliance requirements constructed for such entities as per the RBI.

The main objectives of this are to add one million new customers to the bank in the next 3 years

while attracting good quality depositors and loaners.

The target segment of My Bank will be Middle Income Group, Small and medium sized

companies in the nearby commercial spaces and Corporate Houses in the adjoining areas. The

main aim would be attracting good quality depositors on account of current account and savings

account (CASA), which are low cost funds for the bank.

The banking products and services offered vary for target segment. For example customers from

the household sector would be offered with following products and services from the bank

portfolio: deposits, loans, services. And for customers from Small and medium companies sector

would be offered with following products and service: deposits, loans, services

The USP of My Bank i.e. our customers will prefer our services because it provides one with

world class banking solutions with the central theme ofI Bank My Way.


5/29

5

1.1 Bank description:

My bank is a bank established to provide you with world class banking solutions with the

central theme of I Bank My Way. The board members are Anand Sinha, Usha Thorat,

Pratip Chaudhuri, Chandrasekhar Bhaskar Bhave , Dr. Kamalesh Chandra Chakrabarty or K.C.

Chakrabarty. The promoters of the bank are: LIC and Bajaj Finance.

1.2 Background of Bank Promoters

A promotor is a person who enanged in his formation of company. Promoter can also be defined

as a person who solicits people to invest money into a corporation, usually when it is being

formed

1)Bajaj Finserv

Introduction: Bajaj Finance is the financial services company of the Bajaj Group. Its current

business lines include Protection through Bajaj Allianz Life Insurance and Bajaj Allianz General

Insurance, Lending and Wealth through Bajaj Finance Limited

Portfolio of businesses:Here is a quick overview of their portfolio of businesses:

1) Consumer Finance

2) Durables Finance

3) Lifestyle Finance

4) Extended Warranty

Highlights in past few years:

1) 20112013:

They created the first EMI (Existing Member Identification) Card and they created Flexi

saver in 2012.


6/29

6

They reduced the approval time for Durable and Lifestyle Financing from their own

benchmarked time of 15 minutes to 5 seconds flat by 2011.

In the last two years they have delivered delight to consumers and partners through their

Customer Portal and Galaxie, their feature loaded digital apps.

In FY 2013-14, they set to breach the Rs .20, 000 Crore mark for our Assets under Management.

2) 2000 - 2010

They expanded their expertise to finance dreams beyond Two & Three wheelers and

Durables to Business and Property and a whole host of other personal needs.

They tied up with the best companies to create robust back ends to manage processes. As

their footprint expanded and as they financed more and more Indian dreams, they

expanded their means to generate the funds.

They averaged technology to crunch time to approval for consumers across our

businesses.

Awards and Recognitions:

Ranked amongst the Top 3 Financial Services Companies to work for in India

Won the CIO 100 Innovation award for two of our innovations - EMI Card and

Flexisaver\

2) LIC (LIFE INSURANCE CORPORATION OF INDIA)

Introduction: Life Insurance Corporation of India is an Indian state-owned insurance group and

investment company headquartered in Mumbai. It is the largest insurance company in India with

an estimated asset value of 1560481.84 crore

Highlights from past few years:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil

started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company

started its business.


7/29

7

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate

the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the

central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,

1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the

Triton Insurance Company Ltd., the first general insurance company established in the

year 1850 in Calcutta by the British.

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a

code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the

general insurance business in India with effect from 1st January 1973.

Awards and Recognitions:

The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Most Trusted

Service Brand of India.

From the year 2006, LIC has been continuously winning the Readers' Digest Trusted

brand award

1.3 Board of Directors


8/29

8

A board of directors is a body of elected or appointed members who jointly oversee the activities

of a company or organization.

1. Anand Sinha

He was RBI's alternate representative in theBasel Committee on Banking

Supervision (BCBS),Bank for International Settlements,Basel. He represented India on three

sub-committees the BCBS, namely,Policy Development Group(PDG),Macro Prudential

Supervision Group(MPG) andMacro Variable Task Force (MVTF). He also represented RBI

on the Committee on Global Financial Systems (CGFS), BIS since December 2005.

Shri Sinha served as Director of Export Credit Guarantee Corporation of India Limited since

February 27, 2006. He served as the Reserve Bank's Nominee director on the boards of Dena

Bank, Allahabad Bank, Bank of Baroda, Indian Overseas Bank, Deposit Insurance and Credit

Guarantee Corporation and Export Credit and Guarantee Corporation at different phases of his

career.

On 19 January 2011, Anand Sinha was appointed as Deputy Governor of RBI for a period of two

years.

2.Usha Thorat

She served as Deputy Governor of theReserve Bank of India (RBI) from November 10, 2005 to

November 8, 2010. Prior to this she was the executive Director of the RBI. Usha Thorat has been

the Reserve Bank of India nominee on the boards ofBank of Baroda,Indian Overseas Bank and

the Securities Trading Corporation of India.

She has been Executive Director of RBI since April 2004. As Deputy Governor she was

responsible for the Department of Currency Management, Deposit Insurance and Credit

Guarantee Corporation, Inspection Department, Premises Department, Rural Planning and Credit

Department and Urban Banks Department.

3. Pratip Chaudhuri

A 1974 batch alumnus ofUniversity Business School - Chandigarh, is former chairman of

the State Bank of India.

Prior to that he was the Deputy Managing Director (DMD) of the International Division of SBI.
http://en.wikipedia.org/wiki/Basel_Committee_on_Banking_Supervisionhttp://en.wikipedia.org/wiki/Basel_Committee_on_Banking_Supervisionhttp://en.wikipedia.org/wiki/Bank_for_International_Settlementshttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Indian_Overseas_Bankhttp://en.wikipedia.org/wiki/University_Business_School_-_Chandigarhhttp://en.wikipedia.org/wiki/University_Business_School_-_Chandigarhhttp://en.wikipedia.org/wiki/Indian_Overseas_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_for_International_Settlementshttp://en.wikipedia.org/wiki/Basel_Committee_on_Banking_Supervisionhttp://en.wikipedia.org/wiki/Basel_Committee_on_Banking_Supervision


9/29

9

He joined theState Bank of India 38 years back as a probationary officer in 1974.

He has held several important positions in SBI including Chief General Manager

of Chennai Circle. He is also credited with the merger ofState Bank of Saurashtra in 2008,

where he was a director.

[4]

He has one daughter and one son Pankaj studying in IIT KGP

4. Chandrasekhar Bhaskar Bhave

He is an Indian financial regulator. He was appointed as Chairman of theSecurities and

Exchange Board of India (SEBI) in February 2008 for a period of three years. He was SEBI's

senior executive director from 1992 - 1996. After that he became Chairman and Managing

Director of the then newly createdNational Securities Depository Limited (NSDL). He is

also member of the governments technology advisory group,TAGUP.

Many prominent personalities includingJaswant Singh(FormerFinance Minister), Vinod Rai

(Former Comptroller and Auditor General),Deepak Parekh (Chairman,Housing Development

Finance Corporation),Jairam Ramesh (Rural Development Minister)have described Bhave as an

"outstanding, honest and upright" officer.

5. Dr. Kamalesh Chandra Chakrabarty or K.C. Chakrabarty

He is an Indian Banker who served as one of the four Deputy Governors of the Reserve Bank of

India from 15 June 2009 to 20 March 2014. His current portfolio comprises Secretary's

Department, Department of Banking Supervision, Financial Stability Unit, Human Resource

Management Department, Rajbhasha Department, Department of Currency Management,

Deposit Insurance and Credit Guarantee Corporation, Customer Service Department and the

Rural Planning and Credit Department.

Dr. Chakrabarty has outstanding academic credentials. He is a second rank holder in his

bachelors degree in science, firstrank holder gold medalist in M.Sc statistics and has a doctorate

in statistics from theBanaras Hindu University.He started his career in teaching and research at

the same University he worked for 26 years in theBank of Baroda and went on to become

Chairman of theIndian Bank and thenPunjab National Bankbefore being appointed as Deputy

Governor.
http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/Pratip_Chaudhuri#cite_note-4http://en.wikipedia.org/wiki/Pratip_Chaudhuri#cite_note-4http://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_Indiahttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_Indiahttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/TAGUPhttp://en.wikipedia.org/wiki/Jaswant_Singhhttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/Vinod_Raihttp://en.wikipedia.org/wiki/Comptroller_and_Auditor_General_of_Indiahttp://en.wikipedia.org/wiki/Deepak_Parekhhttp://en.wikipedia.org/wiki/Housing_Development_Finance_Corporationhttp://en.wikipedia.org/wiki/Housing_Development_Finance_Corporationhttp://en.wikipedia.org/wiki/Jairam_Rameshhttp://en.wikipedia.org/wiki/Ministry_of_Rural_Development_(India)http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Banaras_Hindu_Universityhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Banaras_Hindu_Universityhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Ministry_of_Rural_Development_(India)http://en.wikipedia.org/wiki/Jairam_Rameshhttp://en.wikipedia.org/wiki/Housing_Development_Finance_Corporationhttp://en.wikipedia.org/wiki/Housing_Development_Finance_Corporationhttp://en.wikipedia.org/wiki/Deepak_Parekhhttp://en.wikipedia.org/wiki/Comptroller_and_Auditor_General_of_Indiahttp://en.wikipedia.org/wiki/Vinod_Raihttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/Jaswant_Singhhttp://en.wikipedia.org/wiki/TAGUPhttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_Indiahttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_Indiahttp://en.wikipedia.org/wiki/Pratip_Chaudhuri#cite_note-4http://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/State_Bank_of_India


10/29

10

1.3 Location selection

Location selection has a strategic importance for many companies. The general procedure formaking location decisions usually consists of the following steps:

Decide on the criteria that will be used to evaluate location alternatives;

Select the criteria that are important;

Develop location alternatives and select the alternatives evaluated.

Selecting a location is very important decision for firms because they are costly and difficult to

reverse. A poor choice of location might result in excessive transportation costs, lost of qualified

labor, competitive advantage or some similar condition that would be detrimental to operations.

Each organization should consider meaningful criteria for location selection suitable to its

mission and strategy in order to make an efficient and effective strategic decision.

There are various factors which could affect the decision of selecting a location. Alternatives

could be evaluated on the following factors:

a) Demographics (total population, urbanization rate etc,)

b)

Socioeconomic ( literacy rate, population with higher education, employee rate)

c) Sectoral Employment (agricultural employment rate, manufacturing employment rate,

service employment rate)

d) Banking (no of existing banks and branches)

e) Trade Potential ( no of firms )

We are a new bank, so our main customers will be the middle-income group. The higher income

group has high expectations from a bank, being a new bank it becomes difficult for us to fulfill

all of them. The lower income group has very less to save/store and also have trust issues with a

new bank, so they cannot become a major part of our target segment. So, we will target the

middle income group which can actually consider our bank with less trust issues. It has been

described in three phases as shown below


11/29

11

Phase 1:

In this phase we are basically establishing two branches in tier-1 cities and at least one

branch in tier-2 and tier-3 cities, reason being the major chunk of the business comes

from tier-1 cities, since they are industrial hubs. Once, we have a established a relation

with the corporate employees then we can have a trickle-down effect in terms of their

employees accounts, which will be long lasting. This is also done keeping in mind the

size of these cities, so initiating with just single branches will not be of much use.

Classification of City Name of City No. of Branches

Tier-1 Delhi 2

Tier-1 Mumbai 2

Tier-1 Chennai 2

Tier-1 Kolkata 2

Tier-2 Chandigarh 1

Tier-2 Ahmedabad 1

Tier-2 Indore 1

Tier-2 Pune 1

Tier-2 Ludhiana 1Tier-2 Surat 1

Tier-2 Kochi 1

Tier-3 Ramsar( Ajmer) 1

Tier-3 Tinchuley (Darjiling) 1

Tier-3 Kotla (Firozabad) 1

Tier-3 Datta (Hisar) 1

Tier-3Dholi (Muzaffarpur)

1

Phase 2 (Expansion:

In this phase additional cities and branches will be covered and 25 new branches will be

there. Basically, we plan on increasing our presence in the tier-2 cities where our major


12/29

12

customer segment resides. This will help us in building trust, enhancing their branch

experience and increasing customer involvement. Breakup is as follows:

Tier 1: 2 cities::10 Branches: Bangalore, Hyderabad

Tier 2: 9 cities::10 Branches: Guwahati, Jammu, Nagpur, Merrut, Kanpur,

Dehradun, Ranchi, Gwalior

Tier 3: 5 Cities::5 Branches: Bhidi (Wardha), Sunray (Vishakhapatnam),

Bharatpur (Ujjain), Perur (Tirupati), Janki (Siliguri)


Tier-1 Delhi 2Tier-1 Mumbai 2

Tier-1 Chennai 2

Tier-1 Kolkata 1

Tier-1 Bangalore 2

Tier-1 Hyderabad 1

Tier-2 Guwahati 1

Tier-2 Jammu 1

Tier-2 Nagpur 1

Tier-2 Jaipur 1

Tier-2 Meerut 1

Tier-2 Kanpur 1

Tier-2 Dehradun 1

Tier-2 Chandigarh 1

Tier-3Bhidi (Wardha)

1

Tier-3 Sunray(Vishakhapatnam) 1

Tier-3 Bharatpur(Ujjain ) 1

Tier-3 Perur (Tirupati) 1

Tier-3 Janki (Siliguri) 1


13/29

13

Phase 3 (Penetration):

In this phase we plan to increase maximum branches in tier-2 cities specifically. Tier-3

are basically considered due to RBI specifications. Now, this is for the overall expansion

and presence of the bank in most of the parts of the country.We termed it as penetration

phase


Tier-1 Delhi 2

Tier-1 Mumbai 2

Tier-1 Chennai 2

Tier-1 Kolkata 2

Tier-1 Bangalore 2Tier-2 Chandigarh 2

Tier-2 Ahmedabad 2

Tier-2 Ludhiana 2

Tier-2 Surat 2

Tier-2 Indore 1

Tier-2 Pune 1

Tier-2 Kochi 1

Tier-2 Guwahati 1

Tier-2 Jammu 1

Tier-2 Ranchi 1

Tier-2 Gwalior 1

Tier-2 Nagpur 1

Tier-2 Jaipur 1

Tier-2 Meerut 1

Tier-2 Kanpur 1

Tier-2 Dehradun 1

Tier-3 Wardha 1

Tier-3 Vishakhapatnam 1

Tier-3 Ujjain 1


14/29

14

Tier-3 Tirupati 1

Tier-3 Siliguri 1

Tier-3 Ajmer 1

Tier-3 Darjiling 1

Tier-3 Firozabad 1

Tier-3 Hisar 1

Tier-3 Muzaffarpur 1


15/29

15

1.4 Organization Structure

Chairman

& M.D

Executive

Director

National

Head

Regional

Head

Banking

General

Manager

Branch

Manager

PersonalBankers

Support

Staff

Sales

General

Manager

Area Sales

Manager

Dept. SalesManager

Team

Leader


16/29

16

1.5 Committees of Bank:

The Central Board has constituted eight Board Level Committees:

1. Audit Committee: The Audit Committee of the Board of Directors functions with the

following main objectives:

To provide direction and to oversee the operation of the audit function.

To review the internal audit system with special emphasis on its quality and

effectiveness.

To discuss matters related to frauds.

ACB reviews the Banks financial, Risk Management, IS Audit Policies and Accounting

Policies/Systems of the Bank to ensure greater transparency To review, with the management, the quarterly financial statements before submission to

the Board for its approval

To look into the reasons for substantial defaults in the payment to the depositors,

debenture holders, shareholders (in case of non-payment of declared dividends) and

creditors.

2. Risk Management Committee:The Risk Management Committee of the Board of Directors

functions with the following main objectives:

To perform the role of Risk Management in pursuance of the Risk Management

Guidelines issued periodically by RBI and Board.

To advise the Board on all high level risk matters.

To review the Asset Liability Management (ALM) of the Bank on a regular basis.

To consider any major regulatory issues that may have bearing on the risks and risk

appetite of the Bank

To provide to the Board with such additional assurance as it may require regarding the

quality of risk information submitted to it.

3. Shareholders/Investors Grievance Committee: The primary objective of the

Shareholders/Investors Grievance Committee is to look into redressal of shareholders and


17/29

17

investors grievances relating to non-receipt of dividend, refund orders, shares sent for transfer,

non-receipt of Annual Report and other similar grievances.

4. Customer Service Committee:The Customer Service Committee of the Board of Directors

functions with the following main objectives:

Overseeing the functioning of the Banks internal committee set-up for customer service.

To review the level of customer service in the Bank including customer complaints and

the nature of their resolution.

Provide guidance in improving the customer service level.

5. IT Strategy Committee: The IT Strategy Committee functions with the following main

objectives:

Approving IT strategy and policies.

Ensuring that the IT organizational structure serves business requirements and direction.

Assessing if IT architecture has been designed to derive maximum business value.

Reviewing IT performance measurement and contribution to businesses;

6. HR & Remuneration Committee: The HR and Remuneration Committee of the Board of

Directors functions with the following main objectives:

To review and recommend for the approval of the Board, the total increase in manpower

cost budget of the Bank at an aggregate level, for the next year.

To review organization health through feedback from employee surveys conducted on a

regular basis.

To review the Code of Conduct and HR strategy, policy and performance appraisal

process within the Bank, as well as any fundamental changes in organization structure

which could have wide ranging or high risk implications.

To review the performance of the MD & CEO and other Whole Time Directors at the end

of each year.

To recommend to the Board the compensation payable to the Chairman of the Bank.


18/29

18

To review appointments, promotions and exits of senior managers one level below the

MD & CEO.

1.6 Manpower Plan

This helps in determining number of employees required in each phase and in each tier for the

functioning of bank.

Phase 1:

Calculation part:

1) No of employees in T1:

No of employees in one branch - 15

Number of branches = 8

Thus Total :: 15*8= 120




Classification of City No. of Employees

Tier-1 120

Tier-2 175

Tier-3 50

TOTAL 345


19/29

19

Thus Total :: 25*7= 175




Thus Total :: 10*5= 50

Similarly for phase 2 and phase, calculations are carried out.

Phase 2:


Tier-1 150

Tier-2 250

Tier-3 50

TOTAL 450

Phase 3:


Tier-1 150

Tier-2 500

Tier-3 100

TOTAL 750


20/29

20

1.7 Marketing plan

We will be intending to maintain an extensive marketing campaign that will ensure maximum

visibility for the business in its targeted market. Below is an overview of the marketing strategies

and objectives of the Commercial Bank.

1.7.1 Marketing Objectives

To open and establish a new bank named MyBank in different cities so as to add one

million new customers to the bank in the next 3 years while attracting good quality

depositors and loaners.

To open 85 branches and 300 ATMs in the location selected by 2017.

In order to assess the economic and commercial viability of the proposed bank, it isimperative to analyze the following factors:

1) MARKET OVERVIEW: -

Target Customers:The main target customers for the proposed branch of the bank would be:

a) Middle Income Group

b) Small and medium sized companies in the nearby commercial spaces

c) Corporate Houses in the adjoining areas

The main target would be attracting good quality depositors on account of current

account and savings account (CASA), which are low cost funds for the bank. Big

corporate houses in the vicinity would also hold huge potential.

2) COMPETITION

Competitiors: are ICICI Bank, AXIS Bank, Yes Bank etc.

These are well-established banks with strong customer base, and hence would provide stiff

competition. Therefore, providing differentiated customized products on competitive rates would

be imperative. For example:


21/29

21

Step up loans for customers (mainly students or executives) who are at the verge of

beginning their careers wherein differential EMI structure is enabled, such that, the

borrower would pay lower EMIs in the early years of the term loan, and higher EMIs

in the later stages of the term loan.

Step down loans for customers who are middle aged or reaching retirement in the

near future wherein the borrower is liable to pay higher EMIs in the early years of the

term loan and lower in the subsequent following years, providing additional benefit of

managing funds as per an individuals career phase and requirements

SWOT ANALYSIS

STRENGTHS

Valuable contributor to

GDP

Regulatory environment

Government Support

WEAKNESSES

Low penetration

Lack of product

differentiation

Increasing NPA

OPPORTUNITIES

Globalization

Untapped Rural Market

Modern Technology

THREATS

Unorganized money

lending market

Customer dissatisfaction

Rise of monopolistic

structures


22/29

22

3) PRODUCTS AND SERVICES

The product and services to be offered needs to be differentiated and competitive and must cater

to the needs and requirement of each target segment:

1) Middle Income Group: Customers of middle income group would be offered with following

products and services from the bank portfolio:

PAYMENT SERVICESCredit cards, debit cards, Online money transfer

DEPOSITS - term deposits and recurring deposits, Accepting deposits from customers &

lending these funds to borrowers.

LOANSHousing loans, car loans, educational loans, gold loans, personal loans.

SERVICESNet banking, mobile banking, phone banking, ATMs.

2) Small and medium companies: Customers from this sector would be offered with following

products and services from the bank portfolio:

DEPOSITSSalary accounts, fixed deposits, demat account, recurring account.

LOANS Professional loans- term loans or overdrafts with maximum amount of

finance of less than 3 Crores.

SERVICES Insurance covers, investment advisory services, net banking, mobile

banking, phone banking, ATMs.

3) Big corporate houses: Customers from this sector would be employees of these companies,

and can be offered with following products and services from the bank portfolio:

DEPOSITSSalary accounts, fixed deposits, demat accounts, recurring account.

LOANSPersonal loans, housing loans etc.

SERVICESInsurance covers, investment advisory services, net banking, mobile

banking, phone banking, ATMs


23/29

23

Add-on benefits

Currency exchange transactions

Safe keeping of valuables

Insurance services

Retirement plans

Zero balance accounts

Competitive deposit and loan rates

Multi-city cheque facility

Unlimited withdrawal from the ATM of any bank without any charges on transaction

cost.

1.7.2 Marketing Strategies

Number of marketing strategies is used to generate depositors and borrowers for MyBank. We

will intend to use following tactics which will further increase visibility of our Bank.

Events and experiences:Events should be organized to create awareness about our bank

and to educate customers about the financial services offered by our bank.

Advertising: Advertising can be done by using TV & Radio to aware customers and

also using posters & signs at different locations.

Personal Selling:A group of sales team would be trained to interact with the prospectivecustomers face-to-face to handle the doubts about the banks & also about the products &

services offered by the bank.


24/29

24

1.7.3 PRODUCT PORTFOLIO - DEPOSITS

1.Savings accounts:

Accounts maintained by retail banks that payinterestbut cannot be used directly as money (for

example, by writing a cheque). Although not as convenient to use as checking accounts, these

accounts let customers keep liquid assets while still earning a monetary return.

Generally returns are around 6%. So, we have kept it as per the market trends.

2. Current accounts:

A deposit account held at a bank or other financial institution, for the purpose of securely and

quickly providing frequent access to funds on demand, through a variety of different channels.

Because money is available on demand these accounts are also referred to as demand accounts.

As a competitive advantage, we are giving interest at a rate of 1% to attract more deposits

3.Term deposit:

A money deposit at a banking institution that cannot be withdrawn for a preset fixed 'term' or

period of time. When the term is over it can be withdrawn or it can be rolled over for another

term. Generally speaking, the longer the term, the better the yield on the money.

Interest rates vary as per the RBI policies and the economic condition of the country. We are

providing at 11.9% average rate
http://en.wikipedia.org/wiki/Savings_accountshttp://en.wikipedia.org/wiki/Savings_accountshttp://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Time_deposithttp://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Savings_accounts


25/29

25

1.8 Balance Sheet & P/L for 3 years

AMOUNT(cr.) RATE AVG. SIZE No of Account Holding

SAVINGS A/C 390 6.00% 10000 390cr/10000= 39000 0

CURRENT A/C 90 1% 15000 90cr/15000= 6,000 0

TERM DEPOSITS 120 11.9% 40000 120cr/40000= 30000

LOANS AND ADVANCES

Year End Advances- 475 cr

AMOUNT(cr.) RATE AVG. SIZE(lakh)

Home loan 160 9% 25

Auto loan 90 10% 5

Personal loan 80 11.25% 2

Educational loan 115 10.5% 5

Credit cards 30 17% 1


26/29

26

Our loan portfolio mainly comprises of the housing loans. This is because of the existing

residential area and the new upcoming housing projects in the vicinity of our branch location.

This will help us in developing large customer base.

Capital Expenditure

Particulars Quantity Price Total cost

ATM Machine 100 1200000 120000000

Computer 160 40000 6400000

Printer 80 4000 320000

Fax machine 40 8000 320000

Photocopier 80 40000 3200000

Modem 160 5000 800000

Server 80 50000 4000000

Security Camera 200 8000 1600000

Generator 60 40000 2400000

Alarm System 40 40000 1600000

Air Conditioner 120 50000 6000000

Telephone lines 120 3000 360000

Cash counting machine 60 30000 1800000

Coffee Machine 40 10000 400000

Bank vehicle 20 1000000 20000000

Water Cooler 40 50000 2000000

Safe & Lockers 200 150000 30000000

Miscellaneous 4300000

Total 207500000


27/29

27

Financial Estimates

CAPITAL AND LIABILITIES For year 1 For year 2 For year 3

Capital 500 500 500

Reserves and surplus 0 0 0Deposits 600 750 1000

Borrowings 0 0 0

Other Liabilities and Provisions 16.625 21 29.75

Total 1116.625 1271 1529.75

ASSETS

Cash and Balances with reserve Bank Of India 294 337.5 305

Balances with banks and money at call 53.625 35.5 59.75

Investments 270 300 250

Advances 475 570 850

Fixed Assets 20.75 23 50

Other Assets 3.25 5 15

Total 1116.625 1271 1529.75


28/29

28

Income Statement

Particulars Year1 Year2 Year 3

Income

Interest earned 49.875 58.425 87.125

Other Income 14.25 18 25.5

Total 64.125 76.425 112.63

Expenditure

Interest Expended 39 45 62.5

Operating Expenses 12 13.125 12.5

Provisions and Contingent 16.625 19.95 29.75

Miscellaneous 3.56 5 8

Total Expenditure 71.185 83.075 112.75

Profit before tax -7.06 -6.65 -0.125

Income Tax nil nil nil

PAT

P&L Appropriations -7.06 -4.625 -0.125

Statutory Reserve (25%) nil nil nil

Balance in P&L nil nil nil

Total Reserves nil nil nil


29/29

References

1.http://en.wikipedia.org/wiki/Board_of_directors

2.http://www.bajajfinserv.in/our-brand.aspx

3.http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_India

4.http://www.bajajfinserv.in/finance/awards-and-accomplishments.aspx

5.http://en.wikipedia.org/wiki/Anand_Sinha

6.http://en.wikipedia.org/wiki/Usha_Thorat

7.http://en.wikipedia.org/wiki/Pratip_Chaudhuri

8.http://en.wikipedia.org/wiki/C._B._Bhave

9.http://en.wikipedia.org/wiki/Kamalesh_Chandra_Chakrabarty
http://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Board_of_directorshttp://www.bajajfinserv.in/our-brand.aspxhttp://www.bajajfinserv.in/our-brand.aspxhttp://www.bajajfinserv.in/our-brand.aspxhttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://www.bajajfinserv.in/finance/awards-and-accomplishments.aspxhttp://www.bajajfinserv.in/finance/awards-and-accomplishments.aspxhttp://www.bajajfinserv.in/finance/awards-and-accomplishments.aspxhttp://en.wikipedia.org/wiki/Anand_Sinhahttp://en.wikipedia.org/wiki/Anand_Sinhahttp://en.wikipedia.org/wiki/Anand_Sinhahttp://en.wikipedia.org/wiki/Usha_Thorathttp://en.wikipedia.org/wiki/Usha_Thorathttp://en.wikipedia.org/wiki/Usha_Thorathttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/C._B._Bhavehttp://en.wikipedia.org/wiki/C._B._Bhavehttp://en.wikipedia.org/wiki/C._B._Bhavehttp://en.wikipedia.org/wiki/Kamalesh_Chandra_Chakrabartyhttp://en.wikipedia.org/wiki/Kamalesh_Chandra_Chakrabartyhttp://en.wikipedia.org/wiki/Kamalesh_Chandra_Chakrabartyhttp://en.wikipedia.org/wiki/Kamalesh_Chandra_Chakrabartyhttp://en.wikipedia.org/wiki/C._B._Bhavehttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/Usha_Thorathttp://en.wikipedia.org/wiki/Anand_Sinhahttp://www.bajajfinserv.in/finance/awards-and-accomplishments.aspxhttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://www.bajajfinserv.in/our-brand.aspxhttp://en.wikipedia.org/wiki/Board_of_directors

management of commercial banks

Documents