COMPARATIVE STUDY ON HOME LOAN

a. STATEMENT OF THE PROBLEM

b. OBJECTIVE OF THE STUDY . c. METHODOLOGY Secondary data collection: The study is purely theoretical; no primary data collection was required for the project. All the data collected for the study was based on different sources, like company reports, websites, details provided by the guide, case studies related to financial inclusion, RBI guidelines, Canara bank reports and initiatives etc d. LIMITATIONS OF THE STUDY

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PART A

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1. INDUSTRY PROFILE
Banking Industry in India The world economy today is driven by the way the banks in the world perform. The economical position of the country is also driven by the performance of banks. Banks, by extending their services to areas hitherto untouched and making themselves accessible to the common man, have become a part of our lives. The banking institutions in the past performed very limited functions such as receiving deposits against bank notes and then issuing notes in the country, as the time advanced and with the progress of commerce and industry, the scope of banking also expanded .Modern banking institution is a large corporate giant with large resources and a vast field of activity. Since the nationalization of some big commercial banks in India in the year 1969, there has been a great surge of banking industry throughout the world with the growing number of banking offices. The banking business today has become highly critical and competitive between various classes of banks in offering a greater variety of services nationally and internationally. With globalization setting in, banks are also modernizing operations with a view to satisfying modern customers with an aim to improve bank operations with a view to maintain high standard banking system that involves applications of better management techniques. In India, class banking has given way to mass banking, bringing in its fold very large number of customers. Banks are now looked upon as development agents instead of purveyors of credit to the large industries and big business companies. Apart from providing credit to trade, industry and agriculture it is also involved in offering pension for retired employees, government servants and collection of utility bills. The Indian banking system can be classified into nationalized, private and specialized banking institutions. The industry is highly fragmented with 30 banking units contributing to almost 50%of deposits and 60% of advances. The Reserve Bank of India is the foremost monitoring body in the Indian Financial sector. It is a centralized body that monitors discrepancies and shortcomings in the system .Industry estimates indicate that out of 274 commercial banks operating in the country, 223 banks are in the public sector and 51 are in the private sector. These private sector banks include 24 foreign banks that have begun their operations here.

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COMPARATIVE STUDY ON HOME LOAN The Indian banking system is financially stable and resilient to the shocks that may arise due to higher non-performing assets (NPAs) and the global economic crisis, according to a stress test done by the Reserve Bank of India (RBI). Significantly, the RBI has the tenth largest gold reserves in the world after spending US$ 6.7 billion for the purchase of 200 metric tonnes of gold from the International Monetary Fund (IMF). The purchase has increased RBI is share of gold holdings from approximately 4% to 6%. In the annual international ranking conducted by UK- based Brand Finance Plc, 20 Indian banks have been included in the Brand Finance Global Banking 500. The State Bank of India has become the first Indian bank to be ranked among the Top 50 banks in the world, capturing the 36th rank, as per the Brand Finance study. The brand value of SBI increased from US$ 1.5 billion in 2009 to US$ 4.6 billion in 2010.ICICI Bank also made it to the Top 100 list with a brand value of US$ 2.2 billion. The total brand value of the 20 Indian banks featured in the list stood at US$ 13 billion.

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COMPARATIVE STUDY ON HOME LOAN Following the recent financial crisis, new deposits have gravitated towards the public sector banks. According to RBI's' Quarterly Statistics on Deposits and Credits of Scheduled Commercial Banks: December 2009', nationalized banks, as a group, accounted for 50.9% of the aggregate deposits, while State Bank of India and its associates accounted for 23.4%. The share of other scheduled commercial banks, foreign banks and regional rural banks in aggregate deposits were 17.1%, 5.5% and 3% respectively. With respect to gross bank credit, nationalized banks hold the highest share of 50.6% in the total bank credit, with SBI and its associates at23.8% and other scheduled commercial banks at 17.8%. Foreign banks and regional rural banks had a share of 5.3% and 2.5% respectively in the total bank credit. The confidence of non-resident Indians (NRIs) in the Indian economy is reviving again. NRI deposits have increased by nearly US$ 47.8 billion on March 2010, as per the RBI is June 2010 bulletin. Most of this has come through Foreign Currency Non-resident (FCNR) accounts and Nonresident External Rupee Accounts. Foreign exchange reserves were up by US$ 1.69 billion to US$ 272.8 trillion, for the week ending June 11, on account of revaluation gains. June 21,2010.

Banking Structure

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1) Scheduled commercial Banks:

"Scheduled banks in India" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank".

a. Nationalized Bank:
Nationalized banks have always contributed to boost up the economy of India and available in a large number. The nationalized banks were established with great purpose to make wide reach of banking function even in the rural area and offers great benefit for those who actually get deprived from such service. many banks got the certification of nationalized bank. Some of these are Canara bank , State Bank of India, and more. Nationalized banks in India have its own reputation and operated with approximate 53,000 branches and 17,000 ATMs. By the coming of ATMs you can withdraw your money instantly and this service is available for 24 hours. b. Private Banks: Private banks in India have a great history and started their service way back. In 1920s, imperial bank of India formed by the great cooperation by Bank of Madras, Bank of Bengal and Bank of Bombay. After that Reserve Bank of India came into existence in 1935 and got authority to look after the other banks. It became centre body and got power to introduce making policy and several new schemes . Today India is a swamped with many private banks such as International Bank, ING Vyasya Bank, Kotak Mahindra Bank, SBI Commercial Bank, Karnataka Bank, Kashmir Bank, ICICI Bank and more. Private Banks in India achieved a milestone for serving people and showed its great commitment.

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c. Regional Rural Banks:

The Government of India set up Regional Rural Banks (RRBs) on October 2, 1975.Initially, five RRBs were set up on October 2, 1975 which were sponsored by Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of India. Capital share being 50% by the central government, 15% by the state government and 35% by the scheduled bank. 2) Scheduled Co-Operative Bank: Co-operative Banks are organized and managed on the principal of co-operation, selfhelp, and mutual help. They function with the rule of "one member, one vote". function on "no profit, no loss" basis. Co-operative banks, as a principle, do not pursue the goal of profit maximization. Co-operative bank performs all the main banking functions of deposit mobilization, supply of credit and provision of remittance facilities . a. National Federation Co-Operative Bank Limited: NAFCUB is committed to work towards building a strong and viable urban co-operative banking and credit system across the Country, to strive for level playing field for the institutions, to be an effective voice of the sector, to work towards eliminating visible weaknesses and infirmities, to provide the training and other support and to knit the institutions into a cohesive unit for them to benefit from strength of being in cooperative system." i. Rural Co-Operative credit Institution: Rural credit cooperatives in India were originally envisaged as a mechanism for pooling the resources of people with small means and providing them with access to different financial services. Democratic in features, the movement was also an effective instrument for development of degraded waste lands, increasing productivity, providing food security, generating employment opportunities in rural areas and ensuring social and economic justice to the poor and vulnerable.

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COMPARATIVE STUDY ON HOME LOAN y Short Term Structure:  State Cooperative Banks.  District Central Cooperative Banks.  Primary Agriculture Credit Societies.

Long Term Structure:  State Cooperative agricultural and Rural Development Banks.  Primary cooperative Agricultural Rural Development Banks.

ii.

Urban Cooperative Banks: The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today. These banks were traditionally centred around communities, localities work place groups. They essentially lent to small borrowers and businesses.

3. All India Financial Institution:

All India Financial Institutions (AIFIs) - comprises Development Finance Institutions (DFIs) and Investment Institutions, and they play a pivotal role in the financial market. Also known as the financial instruments, the financial institutions assists in the proper allocation of resources by distributing them from those who have a surplus to those who have fewer resources available. It also assists with ensuring the proper circulation of money in the economy. The financial institutions act as the intermediary between the borrowers and the final lenders. They provide safety and liquidity, and ensures earning on the investments and savings. Post-independence in India, people were encouraged to save more, which in turn provided the funds for investment to the Indian government. But there was a huge gap between the supply of savings and demand for the investment in the country

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COMPARATIVE STUDY ON HOME LOAN a. NABARD: NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). b. SIDBI: Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises in India. Set up on April 2, 1990 through an act of parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India. Current shareholding is widely spread among various state-owned banks, insurance companies and financial institutions. c. EXIM: Export-Import Bank of India is the premier export finance institution of the country, set up in 1982 under the Export-Import Bank of India Act 1981. Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the country s foreign trade and investment with the overall economic growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. d. IDBI: 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.

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2. COMPANY PROFILE
Canara Bank : A good bank is not only the financial heart of the community, but also one with an obligation of helping in every possible manner to improve the economic conditions of the common people .

a) Background & Inception of the Company

Canara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a small port in Karnataka. It was started as' Canara Bank Hindu Permanent Fund' in 1906. This small seed blossomed into a limited company as' Canara Bank Ltd.' in 1910 with its head office in Bangalore. The Bank has gone through the various phases of its growth trajectory over the hundred years of its existence.In1958, the Reserve Bank of India (RBI) ordered Canara Bank to acquire G. Raghu mathmul Bank,in Hyderabad. This bank had been established in 1870, and had converted to a limited company in 1925. At the time of the acquisition the bank had five branches. The growth of Canara Bank was phenomenal, especially after nationalization by the Government of India along with 13 other major banks in the country in the year 1969. It has attained the status of a national level player in terms of geographical reach and clientele segments .In 1976, Canara Bank inaugurated its 1000th branch. Eighties was characterized by business diversification for the Bank. In the year 1985 Canara Bank opened its first overseas office in London and also established a subsidiary in Hong Kong, Indo Hong Kong International Finance Ltd and opened its third foreign branch, this one in Shanghai. It has established in the areas of mutual funds, venture capital and factoring. It is the First Bank to be conferred with ISO 9002 certification for one of its branches in Bangalore and is the maiden bank to start Initial Public Offering (IPO). It has launched internet and mobile banking services. In June 2006, the Bank completed a century of operation in the Indian banking industry. This eventful journey of the Bank has been characterized by several memorable milestones. Today, Canara Bank occupies a premier position in the comity of Indian banks. With an unbroken record of profits since its inception, Canara Bank has several firsts to its credit.
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COMPARATIVE STUDY ON HOME LOAN These include:  Launching of Inter-City ATM Network  Obtaining ISO Certification for a Branch  Articulation of Good Banking Bank is Citizen Charter  Commissioning of Exclusive Mahila Banking Branch  Launching of Exclusive Subsidiary for IT Consultancy  Issuing credit card for farmers  Providing Agricultural Consultancy Services Over the years, the Bank has been scaling up its market position to emerge as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad.  Canfin Homes Limited  Canbank Factors Limited  Canbank Venture Capital Fund Limited  Canbank Computer Services Limited  Gilt Securities Trading Limited  Canara Robeco Asset Management Company Limited  Canbank Financial Services Limited  Canara HSBC Oriental Life Insurance Company Limited As at March 2011, the Bank has further expanded its domestic presence, with 3564 branches spread across all geographical segments. Keeping customer convenience at the forefront, the Bank provides a wide array of alternative delivery channels that include over 2000 ATMs- one of the highest among nationalized banks- covering 728 centers, 1959 branches providing Internet and Mobile Banking (IMB) services and 2091 branches offering 'Anywhere Banking' services. Canara bank made a partnership with UNEP to initiate a successful solar loan programme. It was a four-year $7.6 million effort, launched in April 2003 to help accelerate the market for financing solar home systems in southern India. Canara Bank had a major IT initiative to network all branches and move them to a single software platform. Canara Bank chose Flex cube from I-flex solutions as the application.
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b) Nature of the business carried

Canara Bank is a Public Sector Company undertaking which is running under the Administrative Control of Govt of India. The total share capital is Rs 410 crores of which government capital is300 crores, others Rs 110 crores and, the total business of the Bank reached 403,986 crore. Canara Bank was ranked at 1299 in the Forbes Global 2000 list. Canara bank offers its services to the industry, NRI is and all the classes of people such as Personal Banking, Corporate Banking, NRI banking, Priority credit and other services etc. It has come to the forefront of the commercial and financial services and established a leadership in the financial services. The Bank has also carved a distinctive mark, in various corporate social responsibilities, namely, serving national priorities, promoting rural development, enhancing rural self-employment through several training institutes and spearheading financial inclusion objective

c) Vision, Mission & Quality Policy Vision

To emerge as a Best Practices Bank by pursuing global benchmarks in profitability, operational efficiency, asset quality, risk management and expanding the global reach.

Mission
To provide quality banking services with enhanced customer orientation ,higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking

Quality policy
 To remove Superstition and ignorance.  To spread education among all to sub-serve the first principle.  To inculcate the habit of thrift and savings.  To transform the financial institution not only as the financial heart of the community but the social heart as well.  To assist the needy.  To work with sense of service and dedication.
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d) Products and Services

Personal Banking Corporate Banking NRI Banking Priority and SME Credit Schemes

Savings &Deposits Loan Products Technology Products Mutual Funds Insurance Business International Services Card Services Consultancy Service Depository services

Account and Deposits Cash Management Services Loans & Advances Syndication Services IPO Monitoring Activity Merchant Banking Services TUF Schemes Canara e-Tax

Deposit Products

Loans and Advances SME Business Remittance Facilities Consultancy Services Other Services RRB Divison Agri-Marketing Agri-Consultancy Rural Development Social Banking CED for Women One time settlement for M& SE

Ancillary service

Personal Banking
Savings and Deposits Current account Loan Products Credit services Cash credit for Working capital Bill Discounting Consultancy Card service Service Tax Assistance service Trustee services private and charitable Canara visa classic Canara Global Gold Card Mutual fund Canara Robeco MF Products HDFC MF products Ancillary Other Service service Safe Deposit Lockers Safe Custody Services Insurance (Life and General) Technology Products (ATMs)

Housing Loan

Fixed Deposits

Home improvement loan

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Recurring Deposits Canara Cash(Shares) Bank Guarantee Debenture Trusteeship Canara Corporate card 7 day Depository Banking Services

Kamdhenu Canara Loan Deposits Mobile(Vehicle) SME s Savings Bank Account Saving Gold Scheme Canara Champ Deposit Scheme Canara Saral Savings Account Canara Tax Saver Scheme Ashraya Deposit scheme Canara Auto Renewal Deposit Canara Super Savings Salary Account Scheme Canara loan

for

Security Trusteeship Attorney ship

DD Shoppe

Extended Banking hrs

Site Finance to SSI s Agricultural loans

Teacher s loan

Estate & Will Service

Canara Budget

Canara Pension

Canara Rent

Canara Jeevan

Canara Mortgage

Doctors Choice

Education loan Swarna Loan

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Corporate Banking
Accounts & Deposits
Current deposits Fixed Deposits Kamdhenu Deposits Recurring Deposits

Cash Management Services

Super Fast Service Bulk Collection Service Fast Track Service

Loans & Advances

Other services

Term loans Gold Card Scheme for Exporters Infrastructural financing Working capital Finance Export Finance Syndication Services

Canara e-Tax TUF Scheme Merchant Banking services IPO Monitoring Activity Syndication Services

NRI Service
Deposit s Products
NRE(Non Resident External Rupee) NRO(Non Resident Ordinary) Accounts FCNR (Foreign Currency Non Resident) Accounts

Loans and Advances

Account Housing Loan

Remittance Facilities
Canbank Remit money scheme

Consultancy services
NRI Consultancy

Other services

Safe custody

Home Improvement loan

Bank Western Union Remittance scheme Swift

Safe Deposit Locker

Can Jewel

Nomination Facility

Can Cash(Shares) Can Mortgage Can Mobile(Vehicle) Can Site

Rupee Drawing Arrangement

Investments

Attorney ship services NR I Service Centre Facilities For Returning

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Indians Loan Against Deposits

Priority Credit finance

Agriculture & Rural Credit Scheme
Kisan Credit Card

Education loan &other Priority sector loan

Loan For Students Laghu Udyami Credit Card Scheme Loan for Retail Traders Loan for solar Water Heating System Direct Financing to SHGs Lending To MCGs

RRB Divison

Rural Development schemes

Others

Pragiti Grameen bank South Malabar Gramin Bank Shreyas Gramin Bank

Rural Clinic service Rural Service Volunteer scheme Jalyoga Scheme Harikalyana Yojna

Loan for Agri-Clinics

Govt. sponsered Scheme(SJSRY & SGSY) Lead Bank Initiative 26dist SME Business Unit SME Marketing Unit Agri-Business Marketing unit Agri Consultancy services

Minor Irrigation Loan Farm Development loan Gold Loan For Agricultural Purpose Kisan Tatkal

Rural Resource Development Mobile Sales Van(for helping Women entrepreneur in marketing.)

Krishi Mitra Card Scheme

Finance to NGO/MFI for on-Lending to SHG

CED for Women

General Credit Card

Social Banking

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e) Area of Operation
Over the years, Canara Bank has a reputation as a top quality service provider to its customers and it believes in the centricity of its customers. Canara Bank of India has a network of 3046 branches, spread over 25 States/4 Union Territories of the country. It has its Head office in Bangalore along with 34 circle offices and 1 international division. The bank also has international presence in several centers, including London, Hong Kong, Moscow, Shanghai, Doha, and Dubai. In terms of business it is one of the largest nationalized commercial banks in India. Canara Bank has international division which supervises the functioning of its various foreign departments to give the required thrust to foreign exchange business especially exports and to meet the requirements of NRIs

f) Ownership Pattern
The board consists of a whole time Chairman and Managing Director and two executives director and one director representing Govt. of India and one representing Reserve bank of India and four part times Non-official Director. Canara bank is a public sector undertaking (PSU),73.17% of its share his held by Govt. of India and mutual fund/other institutions 5.75% private corporate bodies 3.33% and public ownership is 17.75%. The bank is listed NSE, BSE and Bangalore Stock Exchange

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COMPARATIVE STUDY ON HOME LOAN Share holding pattern as on: Face value 10.00 No. Of Shares % Holding 10.00 No. Of Shares % Holding 10.00 No. Of Shares % Holding 30/09/2011 30/06/2011 31/03/2011

Promoter's holding Indian Promoters Sub total 300000000 300000000 67.72 67.72 300000000 300000000 67.72 67.72 300000000 300000000 67.72 67.72

Non promoter's holding Institutional investors Banks Fin. Inst. and Insurance FII's Sub total

42967856 64418232 112889733

9.70 14.54 25.48

41855468 68654960 114314720 Other investors

9.45 15.50 25.80

45931757 66120225 116955725

10.37 14.93 26.40

Private Corporate 7732632 Bodies NRI's/OCB's/Foreign 421704 Others Others 723437 Sub total General public Grand total 8877773 21232494 443000000

1.75 0.10 0.16 2.00 4.79 100.00

7201842 369020 298296 7869158 20816122

1.63 0.08 0.07 1.78 4.70

4101867 339316 1175750 5616933 20427342

0.93 0.08 0.27 1.27 4.61

443000000 100.00

443000000 100.00

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g) Competitors Information
Canara Bank being a nationalized bank and a public sector bank is facing a stiff competition from public sector banks, foreign banks and nationalized banks. The major competitors of the Canara bank are as follows :i. ii. iii. iv. Bank of India State Bank of India Bank of Baroda ICICI Bank.

h) Infrastructural Facilities
 Canara bank is located in the centre of the city where the bank has multi-floor building where it has separate partition for all the departments.  The bank is fully computerized and well furnished with air condition facility to the employees  The bank provides medical facilities to its employees  It also provides educational facility to the employees and their children.  The bank also provides vehicle faculty or traveling allowances to their employees.  The bank also has provided with quarters facilities to its employees (officers).  The bank has established its own training centre to develop the employees knowledge, skill & attitude i) Achievements/Awards  'Golden Peacock Award for Corporate Social Responsibility for the year 2007. Canara Bank is the first PSB to receive the award since its institution in the year 1991  Golden Peacock National Training Award-2007, instituted by the Institute of Directors, New Delhi, a pioneer in Quality Revolution.  Conferred the Business Super brands Status for 2008.  'The Organization of the Year Award- for PR Excellence', instituted by Public Relations Council of India.
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COMPARATIVE STUDY ON HOME LOAN  Received during 2008-09Conferred 'First Rank ' in India's Best Banks awards under the category' Strength and Soundness' for 2006-07 by a survey conducted by Ernst & Young.  Best Performing Bank under Rural Employment Generation Programme, (REGP) of Khadi and Village Industries Commission (KVIC), in South Zone for the year 200708,instituted by the Ministry of MSME, Government of India.  Golden Peacock National Training Award 2008 for excellence in training.  Global HR excellence in Training, an award conferred by the Asia Pacific HR Congress ,the largest rendezvous of HR Professionals, at its Employer Branding Talent Management Congress held on 22nd and 23rd August 2008, Delhi.  Best Corporate Social Responsibility Practice Award, instituted by BSE, NASSCOM and Times Foundation  The Bank won two Silver Corporate Collateral Awards for Best Corporate Ad in the Print Media and Best Corporate Film on Corporate Social Responsibility at the Public Relations Council of India Awards 2009.  Best Bank in South Zone Award for the year 2008-09 in respect of lending under KVIC and PMEGP Schemes. The award was handed over by Dr.Manmohan Singh, Hon ble Prime Minister of India.  The Bank received the Credit Guarantee Approval Certificate issued by CGTMSE from Shri Pranab Mukherjee, Hon ble Finance Minister of India. Received during 2011-12
y

The Bank was conferred with National Award - 2011 for excellence in the field of Khadi and Village Industries - Best Bank, South Zone for PMEGP. Corporate Social Responsibility Award-2011 to CANARA BANK

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COMPARATIVE STUDY ON HOME LOAN Received during 2010-11 Awards/Accolades  Canara Utsav & SLBC Kerala-Declaration of total banking coverage  Canara Bank bags Indira Gandhi Rajbhasha shield 2009-10  The Bank has been conferred with the Second Best Bank Award under National Awards for Excellence in lending to Micro Enterprises for the year 2009-10, by the Ministry of MSME and Outstanding Performer at National level for implementation of Interest Subsidy Eligibility Scheme (ISEC) of KVIC in the country for 2009-10.  The Bank was conferred 4 awards by the Public Relations Council of India (PRCI), in the following categories     Silver Award for Corporate Film ( TV Commercial ) English Bronze Award for House Journal/Magazine Languages Bronze Award for Table Calendar Bronze Award for Corporate Advertisement Single - English

Specific achievements pertaining to recovery wing are as follows: Cash recovery of rs.750 crore achieved during June 2011 quarter which is all time high for any particular quarter. On line auction of secured assets introduced and implemented under sarfaesi.

y y

Achievement of inspection wing: Total No. of Branches / Units risk rated : 3378 No. of LOW Risk branches: 2009 % of LOW Risk branches : 59.47 % No. of HIGH Risk branches : 1 Audit / Inspection conducted as per the audit plan and there is no backlog. The concurrent audit of 494 branches cover 79 % of advances and 53 % of deposits of the Bank.

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COMPARATIVE STUDY ON HOME LOAN Priority Sector Performance A. Priority Sector Advances : Performance as at March 2011 B. Highlights of Priority Sector Performance in last 3 years. Bank has achieved hat-trick by crossing all mandated, SoI and Internal Targets in Priority Credit. y Bank has doubled the growth under Agriculture in 2009-10 compared to 2008-09. y The Agriculture disbursement in FY 07-08 was Rs.11443 crore while in it in FY 10-11 Rs. 22374Crores, which is almost doubled in a period of 3 years. y Education loan stood at Rs.3503 crore, compared to O/s level of Rs.1737 crore for Mar 08 more than doubled in 3 years. y Weaker Sections, SC/ST and Minority advances also more than doubled in 3 years. C. Priority Sector Lending in last 4 years y

j) Workflow Model a) General Manager b) Deputy General Manager c) Assistant General Manager d) Chief Manager e) Senior Manager f) Managers and officers g) Single Window Operators (Clerks)

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Board of Directors
SL NO 1 Shri. S RAMAN Chairman & Managing Director NAMES DESIGNATION

Smt. ARCHANA S. BHARGAVA

Executive Director

Shri. ASHOK KUMAR GUPTA

Executive Director

Dr. THOMAS MATHEW

Director representing Government of India

Smt. MEENA HEMACHANDRA

Director representing Reserve Bank of India

Shri. G.V. SAMBASIVA RAO

Workmen Employee Director

Shri. G.V. MANIMARAN

Officer Employee Director

Shri. KHALID LUQMAN BILGRAMI

Part-time Non-Official Director

Shri. PANKAJ GOPALJI THACKER

Part-time Non-Official Director

10

Shri. SUTANU SINHA

Part-time Non-Official Director

11

Shri. P. V. MAIYA

Director Representing Shareholders

12

Shri. SUNIL GUPTA

Shareholder Director

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k)

Future Growth & Prospects

 The Bank aims to reach an aggregate business figure of Rs.5 lakh crore, comprising total deposits of Rs.285000 crore and advances of Rs.215000 crore.  The Bank will continue to focus on core business, with the objective of augmenting profits and profitability.  Expanding global footprints, the Bank is likely to open a Representative Office at Sharjah shortly in addition to RBI approval already obtained in 9 international centres.  Targets to achieve 100% CBS coverage by June 2011.  The Bank has plans to open over 200 new branches during FY2011

Sound performance, better prospects Canara Bank recorded a 15% yoy growth in operating profit for Q1 09, but net profit declined 49% due to marked-to-market (MTM) losses. The Bank s total income reached Rs. 41 bn, driven by a 14.5% growth in income from advances. This impacted the net interest margin (NIM) favourably. We maintain a buy rating on account of the following reasons: a) Growth in NII and NIM: The Bank has recorded a 14% yoy growth in the net interest income (NII). This was probably on account of 14.5% growth in income from advances. This growth in NII was a major driver of the 15% growth in the operating profit this quarter Alongside, the surge in the NII has also improved the NIM from 2.42% to 2.57% qoq. b) Improvement in asset quality: The Bank s asset quality also improved during the quarter. While the gross NPA ratio came down from 1.55% (as on June 2007) to 1.31% (as on June 2008), the net NPA ratio declined from 0.89% to 0.85%. c) Cost of deposits: A high cost of deposits is a cause for concern as we believe that the tightening of the mary policy this quarter has led to a rise in the cost of deposits. At the same time, the impact of the Bank s attempt to shed the high cost preferential deposits will be reflected in the following quarters.

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COMPARATIVE STUDY ON HOME LOAN 3. McKinsey s 7-S Framework The McKinsey 7S model was named after a consulting company, McKinsey and Company, which has conducted applied research in business and industry. The McKinsey 7S Framework was created as a recognizable and easily remembered model in business. The seven variables, which the authors term "levers", all begin with the letter "S". These seven variables include structure, strategy, systems, skills, style, staff and shared values.

i.

Structure
Structure refers to the way in which an organization s business units relate to each other. For example, a company may use a centralized system where all key decisions are made at the head office. Like General Manager to the Deputy General Manager and to Assistant General Manager to the Chief Manager and to Senior Manager to the

Managers and officers and finally to the Single Window Operators (Clerks) ii.

Skills
The important software for the success any organization is the skills of the employees & of the management. The Canara bank is having highly skilled employees. The skills of the organization are:

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COMPARATIVE STUDY ON HOME LOAN Credit Skills: They face the challenges in improving the asset quality suitable training programs for upgrading the appraisal & credit monitoring skills, pre-sanction & post-sanction supervision, including monitoring of stocks, financial statements, etc., will be provided. The rigor of NPA discipline & provisioning will only increase in the days to come & they have to equip themselves for this task. Technology Skills: Canara bank is having a very good brand equity & loyalty of customers. Bank has already introduced product like, Tele-Banking, credit cards, ATMs etc., cross selling of other financial services like insurance, mutual funds, government securities. Increasing nonfund income, personal segment advances & trades finance in order to improve the profitability & to make growth in business volumes more sustainable Importance has also been given to areas like low cost deposits, NPAs/AUCs recovery & reduction in operating expenses to improve efficiency of their operations. Operating Skills: Bank has to increasing non-fund income, personal segment advances & trades finance in order to improve the profitability & to make growth in business volumes more sustainable. Importance has also been given to area like low cost deposits, reduction in operating expenses taken sufficient measures to identify measure, monitor & manage various risks associated with the Banking business in the areas of credit, interest rate & liquidity.

iii.

Style
The style of an organization according to the Mckinsey framework becomes evident through the pattern of actions taken by members of top management team over a period of time. Leadership Style in Canara Bank It has been observed in the Canara bank that the behavior of superior towards the subordinate is pleasant. They motivate fresher who are working under them. The superior tells subordinates what exactly he has to do. The object of the work is clearly defined to them. Otherwise the superior councils the subordinate, superiors who act as leaders conduct meetings, discussions, presentation etc, on regular basis and take suggestions and ideas given by subordinates.
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iv.

Strategy
Strategy indicates a specific program of action for achieving the organization objectives by efficiently employing the firms resources. It involves preparing oneself for meeting unforeseen factors. It is also concerned with meeting the challenges posed by the policies and actions of other competitors in the market.

v.

Systems
Training System : The Bank under various categories were imparted training in diverse functional areas such as assets liability management, consumer credit, housing finance, retail finance Recovery, trade finance. The Bank adopts its own training system with the help of their training centers. Training mainly helps with updating skills, knowledge improvement etc. Technology System: The bank has initiated business process re-engineering with an effort to stay at the top in the competition. It has enabled Core-Banking Service, has its own Cheque Processing unit, and has initiated installation of ATMs in all the areas .The Bank has taken necessary steps to implement structured financial messaging system(SFMS) a modularized software solution for financial message communication in a highly secured environment. Recruitment & Selection System: The sources of recruitment at the organization in the form of both external & internal. The Bank follows the recruitment & selection processes that are commonly followed by public sector Banks. Systems and Procedures: Many systems and procedures in the Bank were received re-oriented and simplified during the year without diluting any controls. Noteworthy among the initiatives were revision/updating of all ten credit manuals, rationalization of entire applications in retail lending schemes, simplification of documentation against valuable securities, rationalization of printing supply and usage of forms, pilot implementation of single window system at select branches revision of DD payment procedures & streamlining .
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vi.

Staff
The bank is motivated to harness the unique assets of the human resources for growth of the institution and to imbibe team spirit for self and mutual development among bank s staff. The bank has made inroads towards establishment of quality circle concept among its employees. Training & Development Canara bank has been a fore runner in establishment of its own training college at Bangalore, supported by 13 regional training centers spread over length & breadth of the country. These centers take care of knowledge, skill & attitudinal development of the employees.

vii.
y y y y

Shared values
Improve market share on rural & semi-urban markets. Increase number of performing branches and eliminate below performing branches. To develop competent and vibrant human work force. To develop the competencies and skills of the employees through training (Internal &external) and other HRD measures. y To improve the work environment in the bank through welfare measures and healthy Industrial relations. y To encourage employees to share knowledge and information about the various activities in the bank through the House Magazine and other publications. y y To encourage employees for implementation of office language in their day to day work. The wing will continually improve all the processes involved during the performance of the above functions for Total satisfaction of customer (Internal) by implementing quality management system requirements of all personal of the Bank as per IS/ISO9001:2000.

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4. SWOT ANALYSIS
The bank had envisioned to not only offer financial services but also fulfill social causes such as removal of superstitions and ignorance, promotion of habit of saving, providing assistance to the people in need and develop a sense of humanity among the people. Strengths y y It is the first bank in India to have launched Inter-City ATM network It is the first bank to have been awarded ISO Certification for providing credit card for farmers for the first time in India along with offering Agricultural Consultancy Services y y It has established 3046 branches across the nation as of March of 2010. It has the maximum number of ATM installations among all the nationalized banks summing up to more than 2000 of them at 698 centers y y y 1959 branches of the bank provide Internet and Mobile Banking (IMB) services Anywhere Banking services are being provided at 2091 of its branches All the branches of Canara Bank are enabled with Real Time Gross Settlement (RTGS)and National Electronic Fund Transfer (NEFT) transaction facilities y Bank also offers Personal Banking Services, Corporate Banking Services, NRI Banking Services and Priority & SME Credit Services. Weakness y Still sticks to most of the traditional banking systems y y y y Requires training program due to introduction of many new schemes & technologies Weak research team Staff take time to get adjusted to the new inventions Stands 4th position in the nationalized banks ratings

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COMPARATIVE STUDY ON HOME LOAN Opportunities y y To improvise on mutual funds, to lead the banks into MF transactions To adapt to the new technological inventions, to stay at the top in the competitive market y To provide enough training facilities to the staff, to deliver efficient & effective services y y To provide extra privileges to the customers to maintain & retain customers To attract customers with good loan offers at very impressive rates, against the competitors. y To be aware of the changes in the market, & provide space for instantaneous changes

Threats y y y y y Establishment of private banks, increasing the competition Introduction of new technologies in the new banks with high infrastructure Innovative interest rates & attractive customer care services Adoption of many technologies & banking systems from abroad Very efficient research team, who are always tracking the new inventions in the market y Most of the private banks provide 24hrs facility.

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Balance Sheet of Canara Bank

March 2011 12 Months March 2010 12 Months

..in Rs. Cr

March 2009 12 Months

March 2008 12 Months

March 2007 12 Months

Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 443.00 443.00 0.00 0.00 17,498.46 2,098.36 20,039.82 293,972.65 14,261.65 308,234.30 7,804.64 336,078.76 Mar '11 12Months 22,014.79 8,693.32 212,467.17 83,699.92 4,686.15 1,841.74 2,844.41 0.00 6,359.15 336,078.76 111,805.73 29,041.74 405.00 410.00 410.00 410.00 410.00 0.00 0.00 0.00 0.00 12,129.11 9,629.61 2,132.68 2,168.16 14,671.79 12,207.77 234,651.44 186,892.51 8,440.56 7,056.61 243,092.00 193,949.12 6,977.30 13,488.91 410.00 410.00 0.00 0.00 7,885.63 2,204.86 10,500.49 154,072.42 2,517.23 156,589.65 13,438.55 180,528.69 Mar '08 12Months 13,364.79 4,513.25 107,238.04 49,811.57 4,254.33 1,337.46 2,916.87 0.00 2,684.17 180,528.69 95,710.87 25,299.63 202.33 410.00 410.00 0.00 0.00 7,701.11 2,242.87 10,353.98 142,381.45 1,574.35 143,955.80 11,651.25 165,961.03 Mar '07 12 Months 9,095.19 7,278.74 98,505.69 45,225.54 4,056.39 1,195.04 2,861.35 0.00 2,994.53 165,961.04 52,150.75 15,660.41 197.83

264,741.09 219,645.80 Mar '10 Mar '09 12Months 12Months 15,719.46 3,933.75 10,036.79 6,622.99

Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs)

169,334.63 138,219.40 69,676.95 57,776.90 4,480.37 4,440.07 1,620.99 1,510.61 2,859.38 2,929.46 0.00 0.00 3,216.92 4,060.26 264,741.09 219,645.80 110,627.02 136,851.39 21,206.47 25,757.73 305.83 244.87

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