A PROJECT REPORT ON

BANKING SECTORBANKING SECTOR

“SARASWAT CO-OPERATIVE BANK”“SARASWAT CO-OPERATIVE BANK”

For the event

‘ABHIVYAKTI’

By

A3 Group

INDIRA INSTITUTE OF MANAGEMENT

PUNE

(2010-11)

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ACKNOWLEDGEMENT

We solemnly acknowledge a sense of deep gratitude towards our faculty mentor

Prof. Waghmare for his guidance and valuable suggestions. We consider it to be our

greatest fortune and honor to have been given an opportunity to work under him.

We are extremely thankful to our Student mentor Ms. Mashrita for her guidance,

valuable advice and timely help.

Finally, we want to say a word of thanks to all those who have contributed their

sincere efforts and timely co-operation to help in the preparation of this project. Without

their efforts the project would not have been possible.

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CONTENTS

Sector Name I

Group Name and Grades II

Acknowledgement III

Index IV

Macro analysis

1) History of banking sector 6

2) Current trends and technologies 9

2.1) Internet banking 10

2.2)Phone banking 10

2.3)Mobile banking 10

3) Market structure 11

3.1) Globalization 11

3.2) Indian banking market 12

4) Banking Terminology 14

4.1) Bank Rate 15

4.2) Repo Rate 15

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4.3) Reverse Repo Rate 15

4.4)Cash Reserve Ratio 16

4.5) Statutory Liquidity Ratio 16

5) Government Policy 18

6) Top 10 banking companies in world 20

7) Top 5 banking companies in India 21

MICRO ANALYSIS

8) About Saraswat Bank 22

9) Current Position 24

9.1)Graph : Total Business 24

9.2)Graph : Working Funds 24

9.3)Graph : Deposits 24

9.4 ) Graph :Advances 24

10) Financial Analysis 27

10.1)Maximizing CASA deposits 31

10.2) Reduction in NPA 32

10.3)Marketing 32

11) SWOT analysis 33

12) Services and products offered by the 35

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bank

13) 7 P’s of marketing 38

13.1) Product 38

13.2) Price 39

13.3 ) Promotion 39

13.4) Place 39

13.5) People 40

13.6) Process 40

13.7) Physical evidence 41

14) HR Policy and organizational structure 42

15) CSR (Corporate Social Responsibility) 44

16) Awards and recognition 45

17) Conclusion 46

18) Bibliography and references 48

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MACRO ANALYSIS

1) HISTORY OF BANKING SECTOR

The first bank in India, though conservative, was established in 1786. From 1786 till today,

the journey of Indian Banking System can be segregated into three distinct phases. They

are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.

New phase of Indian Banking System with the advent of Indian Financial & Banking

Sector Reforms after 1991.

Banking in India originated in the last decades of the 18th century. The first banks were

The General Bank of India which started in 1786, and the Bank of Hindustan, both of

which are now defunct. The oldest bank in existence in India is the State Bank of India,

which originated in the Bank of Calcutta in June 1806, which almost immediately became

the Bank of Bengal. This was one of the three presidency banks, the other two being

the Bank of Bombay and the Bank of Madras, all three of which were established under

charters from the British East India Company. For many years the Presidency banks acted

as quasi-central banks, as did their successors. The three banks merged in 1921 to form

the Imperial Bank of India, which, upon India's independence, became the State Bank of

India.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and

1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,

and Bank of Mysore were set up. Reserve Bank of India came in 1935. Reserve Bank of

India was vested with extensive powers for the supervision of banking in India as the

Central Banking Authority.

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The following are the steps taken in chronological order by the Government of India to

Regulate Banking Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalization of seven banks with deposits over 200 crore.

The nationalization of banks in India were initiated in 1969 by Mrs. Indira Gandhi, the then

prime minister. After the nationalization of banks, the branches of the public sector bank

India rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

In 1991, under the chairmanship of M. Narasimham, a committee was set up by his name

which worked for the liberalization of banking practice. The country was flooded with

foreign banks and their ATM stations. Efforts were being put to give a satisfactory service

to customers. Phone banking and net banking were introduced. The entire system became

more convenient and swift. Time is now given more importance than money.

The commercial banking structure in India consists of:

Scheduled Commercial Banks in India

Unscheduled Banks in India

Scheduled Banks in India constitute those banks which have been included in the Second

Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks

in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India having a total network of

64,918 branches. The scheduled commercial banks in India comprise of State bank of India

and its associates (8), nationalized banks (19), foreign banks (45), private sector banks

(32), co-operative banks and regional rural banks. "Scheduled banks in India" means the

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State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a

subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of

1959), a corresponding new bank constituted under section 3 of the Banking Companies

(Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or

any other bank being a bank included in the Second Schedule to the Reserve Bank of India

Act, 1934 (2 of 1934), but does not include a co-operative bank". "Non-scheduled bank in

India" means a banking company as defined in clause (c) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949), which is not a scheduled bank". 

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2) CURRENT TRENDS AND TECHNOLOGIES

Technology plays a very important role in bank’s internal control mechanisms as well as

services offered by them. It has in fact given new dimensions to the banks as well as

services that they cater to and the banks are enthusiastically adopting new technological

innovations for devising new products and services.

The latest developments in terms of technology in computer and telecommunication have

encouraged the bankers to change the concept of branch banking to anywhere banking. Use

of ATMs and Internet banking has allowed ‘anytime, anywhere banking’ facilities.

Automatic voice recorders now answer simple queries; currency accounting machines

make the jobs easier for the employees and ensure faster service to the customers. Credit

card facility has encouraged an era of cashless society. Today MasterCard and Visa card

are the two most popular cards used world over.

The banks have now started issuing smartcards or debit cards to be used for making

payments. These are also known as electronic purses. With increasing popularity of tele-

banking and e-banking, banking has become a 24*7 activity. And a system like Electronic

Clearing Service has made receiving dividends and interest easier and safer by making

bulk transfers from one account to many accounts (or vice-versa) possible. Mobile banking

too is growing rapidly and banks are using SMS as major tool of promotion, giving great

utility to their customers.

With such changes in technology, banks today have left behind their traditional role of

accepting deposits and lending money and focus on providing premium services to their

customers to retain their brand name and reputation in the market.

Internet Banking

Phone Banking/Tele-Banking

Mobile Banking

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2.1) Internet banking : Internet banking: Also referred to as E-banking, internet banking

is changing the banking industry and is having the major effects on banking relationships.

Almost every bank has a website today and provides for delivery of its products & services

electronically. In true Internet banking, any inquiry or transaction is processed online

without any reference to the branch at any time. Providing Internet banking is increasingly

becoming a "need to have" than a "nice to have" service, and it is soon to become a norm

from an exception due to the fact that it is the cheapest way of providing banking services.

Using e-banking a customer can view account balances & statements, transfer funds

between accounts, create FDs Online, request a DD, pay bills, order a cheque book,

request stop payment on a cheque, apply for and access credit cards, apply for loans and

most importantly gets easy access to complete information about various products and

offers.

2.2) Phone Banking : It use an automated phone answering system with phone keypad

response or voice recognition capability. This feature is known as Interactive Voice

Response System (IVR). With the obvious exception of cash withdrawals and deposits, it

offers virtually all the features of an automated teller machine: account balance

information and list of latest transactions, electronic bill payments, funds transfers between

a customer's accounts, etc. Some banks engage call centres to provide 24*7 services to

their customers, via toll-free numbers. Others connect their customers to phone bankers,

but in this case, the service is only available for particular hours for which phone bankers

are available. Some make use of both i.e. toll-free numbers for some services, and phone

bankers for the ones that require professional assistance. Telephone banking

representatives are usually trained to do what was traditionally available only at the branch:

loan applications, investment purchases and redemptions, cheque book orders, debit card

replacements, change of address, etc.

2.3) Mobile Banking: ICICI was the first bank in India to introduce complete mobile

banking services in the year 2007. Since then, conducting banking operations using the

mobile phone has been fast catching up in the country. It works through a set of text

messages (SMS). With SMS a customer can perform a wide range of query-based

transactions from his/her mobile phone, like funds transfer (within and outside the bank),

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enquiry services (Balance enquiry/ Mini statement), request services (cheque book

request), bill payment (utility bills, credit cards),

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3) MARKET STRUCTURE 3.1) GLOBALIZATION

Strengthening financial systems has been one of the central issues facing emerging

markets and developing economies. This is because sound financial systems serve as an

Important channel for achieving economic growth through the mobilization of financial

savings, putting them to productive use and transforming various risks.

Many countries adopted a series of financial sector liberalization measures in the late

1980s and early 1990s that included interest rate liberalization, entry deregulations,

reduction of reserve requirements and removal of credit allocation. In many cases, the

timing of financial sector liberalization coincided with that of capital account

liberalization. Domestic banks were given access to cheap loans from abroad and allocated

those resources to domestic production sectors.

The Man banking sector can be divided into five distinct sub-sectors:

1. Clearing

2. Private

3. Off- Retail

4. Savings

5. Trust

• Over the past 15 years the sector has grown by between 3% and 9% pa but has been in

decline since 2002 and faces a further sharp reduction.

• Banking facilities on the range from basic current and deposit account facilities to

complex wealth management structures. However, there is no genuinely uniqueness in

Man banking products.

• In a global context, the Man banking sector offers a mainly retail, mass-affluent

proposition targeting UK expatriates. Its chief revenue stream is derived from international

personal client business referred from UK and International Group offices.

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3.2) INDIAN BANKING MARKET

Indian banks have compared favorably on growth, asset quality and profitability with other

regional banks over the last few years. The banking index has grown at a compounded

annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the

market index for the same period. Policy makers have made some notable changes in

policy and regulation to help strengthen the sector. These changes include strengthening

prudential norms, enhancing the payments system and integrating regulations between

commercial and co-operative banks. However, the cost of intermediation remains high and

bank penetration is limited to only a few customer segments and geographies. While bank

lending has been a significant driver of GDP growth and employment, periodic instances

of threatened the stability of the system Structural weaknesses such as fragmented industry

structure, restrictions on capital availability and deployment, lack of institutional support

infrastructure, restrictive labour laws, weak corporate governance and ineffective

regulations beyond Scheduled Commercial Banks (SCBs), unless addressed, could

seriously weaken the health of the sector. Further, the inability of bank managements(with

some notable exceptions) to improve capital allocation, increase the productivity of their

service platforms and improve the performance ethic in their organisations could seriously

affect future performance.

The second unique feature of India’s banking sector is that the Reserve Bank of

India has permitted commercial banks to engage in diverse activities such as securities

related

transactions, foreign exchange transactions and leasing activities.

EFFECT OF GLOBAL CRISIS ON INDIAN BANKING SECTOR:

India escaped a major and fatal injury to its economy even in the context of a full-blown

global economic crisis. This happened mainly owing to:

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

our lesser dependence on the external sector

sustained and strong domestic demand particularly in India’s semi-urban

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and rural sector,

strong regulatory oversight and a well-calibrated monetary policy

our sumptuous foreign exchange reserves

a gradual and lower convertibility on capital account

Despite the strong prevalence of domestic sources of growth, the global financial crisis

interrupted the growth momentum in India. There was clear moderation in growth by the

third quarter of 2008-09. This is evident from the fact that the second-half GDP growth

was only 5.8%, down from 7.8% for the first half of the year and 9.0% for the previous

financial year 2007-08.

MERGERS AND ACQUISITIONS:

A large number of international and domestic banks all over the world are engaged in merger and

acquisition activities. One of the principal objectives behind the mergers and acquisitions in the

banking sector is to reap the benefits of economies of scale. With the help of mergers and

acquisitions in the banking sector, the banks can achieve significant growth in their operations

and minimize their expenses to a considerable extent. Another important advantage behind this

kind of merger is that in this process, competition is reduced because merger eliminates

competitors from the banking industry. Through mergers and acquisitions in the banking sector,

the banks look for strategic benefits in the banking sector. They also try to enhance their

customer base. The mergers and acquisitions in the banking sector of India are overseen by the

Reserve Bank of India (RBI).

Following are some of the major mergers and acquisitions in the global and domestic

banking sector:

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

the new company formed as a result of the merger is J.P. Morgan Chase & Company.

The merger of Firstar Corporation with U.S. Bancorp. The name of the resultant entity is

U.S. Bancorp.

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

formed company is Citigroup Inc

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1.

The merger of FleetBoston Financial Corporation with Bank of America Corporation.

The newly formed entity is Bank of America Corporation.

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

IDBI Bank. The deal was worth $ 174.6 million (Rs. 7.6 billion in Indian currency).

Centurion Bank and Bank of Punjab. Worth $82.1 million (Rs. 3.6 billion in Indian

currency), this merger led to the creation of the Centurion Bank of Punjab with 235

branches in different regions of India. 

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4) RELATED TERMS TO THE SECTORS

There are several terminologies being used in day-to-day banking process. Following

are the important terms used in BANKING SECTOR:

BANK RATE

REPO RATE

REVERSE REPO RATE

CASH RESERVE RATIO

STATUTORY LIQUIDITY RATIO

4.1) BANK RATE- Bank Rate is the oldest instrument of monetary policy. It is the rate at

which RBI lends money to other banks or financial institutions or commercial banks. In

other words it is the rate of interest which is charged by RBI on its advances to commercial

banks. If bank rate is increased by RBI, then all banks will also hike their own lending

rates such as deposit rates and prime lending rates etc. The bank rate policy seeks to affect

both the cost and availability of credit.

Bank Rate is the rate at which central bank of the country (in India it is RBI) allows

finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term

purposes. Any upward revision in Bank Rate by central bank is an indication that banks

should also increase deposit rates as well as Prime Lending Rate. This any revision in the

Bank rate indicates could mean more or less interest on your deposits and also an increase

or decrease in your EMI

4.2) REPO RATE- Repo rate is the rate at which our banks borrow rupees from RBI.

Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction

in the repo rate will help banks to get money at a cheaper rate. When the repo rate

increases, borrowing from RBI becomes more expensive. Under repo transaction the

borrower places with the lender certain acceptable securities against funds received and

agree to reverse this transaction on a predetermined future date at agreed interest cost. It is

known as repurchase rate.

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Therefore, we can say that in case, RBI wants to make it more expensive for the banks to

borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks

to borrow money, it reduces the repo rate. If increases the repo rate it will increase general

interest rates throughout the economy. If the repo rate for commercial banks increases they

will pass this onto their own consumers. Higher interest rates have the effect of reducing

spending, investment and economic growth. This will reduce inflationary pressures in the

economy.

4.3 ) REVERSE REPO RATE - This is the reverse of repo rate. It is the rate at which

RBI borrows money from banks. When liquidity or cash floating is excess in banks, RBI

sucks it out by reverse repo by lending securities and taking out money from banks. RBI

uses this tool when it feels there is too much money floating in the banking system.

Banks are always happy to lend money to RBI since their money is in safe hands with a

good interest. An increase in Reverse repo rate can cause the banks to transfer more funds

to RBI due to this attractive interest rates.

4.4) CASH RESERVE RATIO - CRR means Cash Reserve Ratio.  Banks in India are

required to hold a certain proportion of their deposits in the form of cash.  However,

actually Banks don’t hold these as cash with themselves, but deposit such cash with

Reserve Bank of India (RBI), which is considered as equivalent to holding cash with them.

This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by

the RBI and is known as the CRR or Cash Reserve Ratio. 

Suppose a bank has total deposits of Rs.100 Bn and is required to maintain a CRR of say

5%. This means that the bank should maintain in current accounts with the central bank or

any other approved bank balances, not less than Rs. 5 Bn. This much amount is impounded

and kept in the free form. And the bank cannot lend this money. This acts as a buffer to the

bank.

RBI uses CRR either to drain excess liquidity or to release funds needed for the economy

from time to time. Increase in CRR means that banks have fewer funds available and

money is sucked out of circulation. Thus we can say that this serves duel purposes i.e. it

not only ensures that a portion of bank deposits is totally risk-free, but also enables RBI to  

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control liquidity in the system, and thereby, inflation by tying the  hands of the banks

in lending money. The RBI is empowered to vary CRR between 3% and 20% respectively.

4.5) STATUTORY LIQUIDITY RATIO - It is the amount a commercial bank needs to

maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing

credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank

of India) in order to control the expansion of bank credit. Every bank is required to

maintain at the close of business every day, a minimum proportion of their net demand and

time liabilities as liquid assets in the form of cash, gold or approved securities. This

percentage is fixed by RBI. The maximum and minimum limits for the SLR are 40% and

25% respectively.

In the above example, suppose the bank is supposed to maintain SLR of 25%, this means

that over and above CRR the bank is expected to keep aside an amount of Rs. 25 Bn. This

will be kept in easy-to encash securities like, treasury bills of the government and any other

approved securities. This again acts as buffer to the bank and prevents the bank from

lending the entire amounts of deposits kept with it by various customers.

TERMINOLOGY RATE W.E.F.

Bank Rate 6.00% 29/04/2003

Repo Rate 5.75% 27/07/2010

Reverse Repo Rate 4.50% 27/07/2010

Cash Reserve Ratio

(CRR)

6.00% 24/04/2010

Statutory Liquidity

Ratio

25% 07/11/2009

5) GOVERNMENT POLICIES:

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In order to address the severe liquidity crunch, the Reserve Bank of India introduced a slew

of measures since mid-September 2008, viz. reduction in CRR from 9% to 5%, SLR from

25% to 24%, buyback of MSS securities, opening of new refinancing windows, increase in

ceilings on non-resident deposits and easing of restrictions on external commercial

borrowings and on short-term trade credits. Policy rates were also cut – repo by 400 bps

from 9% to 5% and reverse repo by 250 bps from 6% to 3.50%. The fiscal and monetary

stimulus measures initiated during FY 2008-09 coupled with lower crude and metal prices

somewhat cushioned the down-turn in growth momentum in FY 2009-10. While the

domestic financial situation is improving, external financial environment will remain tight.

Therefore, investment demand will be at a lower ebb. On balance, with the assumption of a

normal monsoon, the GDP growth for FY 2009-10 is expected to be around 7% to 7.5%,

going forward.

Following are few guidelines directed by the RBI for the UCB sector:

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

statement on a daily basis.

RBI has notified that approvals for branch expansion including off-site ATMs in respect

of UCBs will henceforth be considered based on their Annual Business Plans, subject to

certain criteria.

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

ATMs without prior approval of the RBI.

RBI has instructed large-sized and systemically important UCBs to apply capital charge

for market risk with effect from 1st April, 2010.

Basal Norms:

In July 1988, the Basel Committee came out with a set of recommendations aimed at

introducing minimum levels of capital for internationally active banks. This first series of

recommendations by Basel Committee are popularly known as Basel I norms. These norms

required the banks to maintain capital of at least 8 per cent of their risk-weighted loan

exposures. Different risk weights were specified by the committee for different categories

of exposure. For instance, government bonds carried risk-weight of 0 per cent, while the

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corporate loans had a risk-weight of 100 per cent. The Basel Committee also laid down

standard definitions for different types of capital. Capital was categorized as Tier I and Tier

II capital. Tier I capital is mainly the permanent capital like equity. Tier II capital is the

supplementary capital like subordinate debt. The norms were successful in improving the

capitalization ratios of the banks worldwide. In India, the banks were required by the

Reserve Bank of India to maintain a higher capital-to-risk-weighted-assets ratio (CRAR) of

9 per cent. 

Basel II is an international business standard that requires financial institutions to maintain

enough cash reserves to cover risks incurred by operations. The Basel accords are a series

of recommendations on banking laws and regulations issued by the Basel Committee on

Banking Supervision (BSBS). Basel II also requires companies to publish both the details

of risky investments and risk management practices. The full title of the accord is Basel II:

The International Convergence of Capital Measurement and Capital Standards - A Revised

Framework.

The three essential requirements of Basel II are:

1) Mandating that capital allocations by institutional managers are more risk sensitive.

2) Separating credit risks from operational risks and quantifying both.

3) Reducing the scope or possibility of regulatory arbitrage by attempting to align the real

or economic risk precisely with regulatory assessment.

Basel II has resulted in the evolution of a number of strategies to allow banks to make risky

investments, such as the subprime mortgage market. Higher risks assets are moved to

unregulated parts of holding companies. Alternatively, the risk can be transferred directly

to investors by securitization, the process of taking a non-liquid asset or groups of assets

and transforming them into a security that can be traded on open markets.

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6) TOP FIVE BANKS IN WORLD

1. J.P. MORGAN CHASE AND CO

The company with its head office in New York has been to make out a huge profit of $ 2.1

billion, in the first quarter of the year 2009.It has branches in 50 countries , including

India.This has good experience in off-shore banking and financing in stock markets.

2 CREDIT SUISSE

This 150 years old organization has its head office in Zurich, Switzerland. This is now the

world Bank In the first Quarter of the year 2009, it got the profit of 200 crores Swiss

Francs.

3. GOLDMAN SCATCHS

This institution with its head office in New York, has made a profit of $3.23 per share in

the first quarter of this year. This was established in 1869 And now it has branches in

many important countries in the world, including India.

4. BLACK STONE

This American Company provides services in managing properties and finances.

Established in 1985, this company had suffered a huge loss of $82.7 crores in the last

quarter of 2008. But it recovered so intelligently that in the first quarter of 2009. the loss

came down to only $ 9.3 . It is sure that in later quarters of 2009, the insttuition has

definitely made profits.

5 BANCO SYANTENDER

This bank with its head office in Syantender in Spain, is one of the oldest banks in the

world. Established in 1857

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7) TOP TEN BANKS IN INDIA

The Businessworld magazine in India published an India’s Best Banks of 2009. The factors

used to select these banks are growth, size, sustainability and some risk parameters-

1. State Bank of India

2. HDFC Bank

3. Axis Bank

4. Bank of India

5. Punjab National Bank

6. Bank of Baroda

7. ICICI Bank

8. Union Bank of India

9. Citibank

10. Canara Bank

 The Top 10 Banks in India based on Assets-

1. Punjab National Bank

2. Bank of India

3. Bank of Baroda

4. HDFC Bank

5. Citibank 

6. Power Finance Corporation Limited

7. Canara Bank

8. Standard Chartered Bank

9. State bank of India

10. ICICI banks

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MICRO-ANALYSIS

SARASWAT CO-OPERATIVE BANK Ltd.

The symbol takes off from our earlier logo and visualizes a hexagon. It is an attempt to

appeal to younger and new customers without alienating the existing ones. The logo

represents two caring hands in the shape of a hexagon. The upper hand is of golden yellow

colour. Yellow is the colour of warmth, sunshine, cheer and happiness. Gold of wealth,

prosperity and ever increasing value. They are the colours of the Sun and symbolize life,

youth and harmony. The lower hand is burgundy red, the colour of excitement, strength

and passion. It symbolizes aggressiveness and in the Indian context, Soubhagya.

8) COMPANY HISTORY:

"The Saraswat Co-operative Banking Society" was founded on 14th September 1918. Mr.

J.K. Parulkar became its first Chairman, Mr. N.B. Thakur, the first Vice-Chairman, Mr.

P.N. Warde, the first Secretary and Mr. Shivram Gopal Rajadhyaksha, the first Treasurer.

These were the people with deep and abiding ideals, faith, vision, optimism and

entrepreneurial skills.

The Society was initially set up to help families in distress. Its primary objective was to

provide temporary accommodation to its members in eventualities such as weddings of

dependent members of the family, repayment of debt and expenses of medical treatment

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etc. The Society was converted into a full-fledged Urban Co-operative Bank in the year

1933. The Bank, which was originally founded in 1918, i.e. close on the heels of the

Russian Revolution, also witnessed as a Society and as Bank-the First World War, the

Second World War, India's freedom Movement and the glorious chapter of post-

independence India. During this cataclysmic cavalcade of history, the Bank as a financial

institution and its members could not of course remain unaffected by the economic

consequences of the major events. The Founder Members and the later-day management's

of the Bank continued to demonstrate their unwavering faith in the destiny of the common

man and the co-operative movement. By 1942, the Bank was fulfilling all the banking

needs of its customers. The Bank had established five branches within the city of Mumbai

and one each at Pune and Belgaum. The Bank has grown in stature, progressed in its social

and economic objectives and produced an image of what an ideal bank should be.

Resultantly, in the year 1977-78, the Bank's gross income crossed the Rs.3.00 Crore mark

for the first time.

Last two decades the Bank has witnessed a steady growth in the business. The bank has a

network of 200 fully computerised branches covering six states viz. Maharashtra, Gujrat,

Madhya Pradesh, Karnataka, Goa and Delhi. The Bank is also providing 24- hour service

through ATM at 84 locations.

In 1988 the bank was conferred with "Scheduled" status by Reserve Bank of India. The

Bank is the first co-operative bank to provide Merchant Banking services. It got a

permanent license to deal in foreign exchange in 1978. Presently the Bank is having

correspondent relationship in 45 countries. The Beginning of the 21st Century has been a

giant leap forward for the Bank. Bank chose a path of organic/inorganic growth and pace

of growth accelerated .Bank's total business which was around Rs 4000 Crore in 2000

which almost tripled to Rs 15295 Crore in 2007. The Business of the Bank as on 31st

March 2009 had crossed Rs 21000 Crores.

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9) CURRENT POSITION OF THE COMPANY:

Fig.: Growth of the bank at a glance

Total business of the Bank (i.e. deposits plus advances) crossed the Rs. 21,000 crore

mark for the first time to stand at Rs. 21,029.26 crore as on 31st March 2009 (from Rs.

18,879.13 crore as on 31st March 2008) i.e. a growth of Rs. 2,150.13 crore in absolute

terms and of 11.39% in percentage terms, on a y-o-y basis. The deposits of your Bank

increased from Rs. 11,430.82 crore as on 31st March 2008 to Rs. 12,918.85 crore, while

advances rose from Rs. 7,448.31 crore to Rs. 8,110.41 crore in FY 2008-09.

The profit of the Bank (before tax and exceptional items) has increased from Rs. 231.84

crore to Rs. 315.61 crore i.e. a rise of 36.13%. The net profit after tax, which stood at Rs.

202.26 crore in FY 2007-08, rose to Rs. 241.29 crore after tax and before exceptional items

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

percentage terms.

26

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

to Rs. 65.09 crore in FY 2008-09.

This bank succeeded in maintaining zero net NPA status for the fifth consecutive year.

The number of branches of your bank, grew to 175. While the merger of erstwhile SICBL

added ten branches, the merger of the erstwhile KMCBL resulted in an addition of fifteen

branches. Your Bank opened seven new branches, one each at 1) New Delhi, 2)Tilak

Nagar, Mumbai 3) Lokhandwala Complex, Mumbai, 4) Udupi, 5) Alibaug, 6)Kudal and 7)

Sawantwadi.

The first state-of-the-art SME focussed Branch of your Bank was opened at Vikhroli

(West), Mumbai, on 27th April 2009. The second SME focussed branch was opened at

Panjim, Goa on 9th May 2009. Both the branches are specifically meant to cater to Small

and Medium Enterprises.

Capital to Risk Asset Ratio (CRAR), which is known as capital adequacy ratio, improved

from 10.85% for FY 2007-08 to 10.92% for FY 2008-09 even after absorbing losses of the

two merged banks.

Net profit per employee increased from Rs. 7.14 lakhs for FY 2007-08 to Rs. 7.26 lakhs

for FY 2008-09. The productivity per employee also improved from Rs. 6.66 crore to Rs.

7.24 crore during the year 2008-2009

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

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

Peer level NET level comparison:

The following table gives the net profit earned by some select schedule commercial banks

in the private sector and also in the public sector. It clearly shows that the Bank’s profit

stands out in as much as the total business (Deposits plus Advances) of all the other banks.

Name of the Bank Total Business

(Rs in Crore)

Net Profit

(Rs in crore)

Indusind Bank 37,880 148.34

ING Vysa Bank 41,341 188.80

South Indian Bank 32,143 194.75

Saraswat Bank 21,029 210.79

27

Name of the Bank Total Business

(Rs in Crore)

Net Profit

(Rs in crore)

Vijaya Bank 54,535 262.48

Karnataka Bank 32,143 266.70

Kotak Mahindra Bank 32,270 276.09

State Bank Of Indore 50,579 278.92

Yes Bank 28,572 303.84

State Bank Of Mysore 55,268 336.91

Bank of Maharashtra 87,072 375.24

28

10) FINANCIAL ANALYSIS AND STRATEGIES:

Financial Accounting is a process of systematic recording of business transactions in the

various books accounts maintained by organization with the ultimate intention of preparing

financial statements there from. Financial accounting ultimately aims at preparing financial

statements which are basically in two forms:

Profit and loss statement is a period statement and related to curtained period, usually one

year. This tells about the results of operations, either profit or loss, arising out of the

conduct of business operations during that period

Balance sheet which is a potion statement and relates to a particular point of time. This

tells about the various properties held by the business (termed as Assets) and obligations

accepted by the business (termed as Liabilities) as on particular date.

Balance Sheet:

The purpose of preparing the balance sheet is to disclose financial status of an organization

in the form of assets and liabilities at a given point of time.

Liabilities: Credits balances in all the personal and real accounts appear on liabilities side.

The following items may appear on the liabilities side:

Capital: Capital Indicates the amount of funds contributes by the owner of business to

requirement of fund of business. Similarly, any amount of profit earned in past which is not

distributed to the owner also belongs to owner and become a part of the business.

Long term liabilities: This indicates the liabilities which are to be paid off over long

period of span of time say 5 to 10 years. In practical circumstances, it may consists of long-

term loan borrowed from a bank and financial institutes.

Currents liabilities: This indicates the liabilities which are suppose to be paid off which

a very short span of time say one year. In practical circumstances, it consist Sundry

creditors, Advances received from customer, Outstanding expenses, Income received in

advanced, Liability taxes etc.

Capital & Liabilities Sub liabilities Rs. In Crores

29

Capital Authorized Capital

Individual & Societies

7.12

Reserve Funds & Other

Reserves

Building Funds

Investment

General Reserve

Special Reserve

101.707

Bank Deposits Central Co-op Banks

Saving Banks

Current Deposits

1143.08

Borrowing Foreign currency

Overdraft From Bank

Investment

Interest on Loans &

Advances

93.92

Other liabilities Branch Adjustment

Bills Receivable

Interest Payable

Bills Payable

Sundries

210.72

Profit Earned Past i.e.

In 2007.

20.35

TOTAL 1576.897

Assets:

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

may appear on assets side:

30

Fixed assets: Fixed assets indicate the value of infrastructure properties acquired by the

business where the benefit received over long period of time. Fixed assets are land,

building, machinery, furniture vehicles, and computer.

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

business.

Current assets: Current assets are the assets which are likely to be converted in the form

of cash of likely to be consumed during the normal operating cycle of a business within a

very short span time say one year. Current assets are stocks, sundry debtors, cash & bank

balances, prepaid expenses.

Balance Sheet As At 31st March, 2008

Properties & Assets Sub Assets Rs. In Crores

Properties Land

Building

Work-in-Progress

Plant & Machinery

Computers

Furniture & Fixture

13.707

Capital Cash

Balances with Banks

155.44

Investment Shares investment

Mutual Funds

Govt. Securities

Members Welfare Funds

435

Advances Short Term Advances

Medium Term Advances

Long Term Advances

744.83

Other Assets Interest Receivable

Computer Software

Losses

227.9

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Properties & Assets Sub Assets Rs. In Crores

Non Banking Assets

Bills Receivable

TOTAL 1576.88

Profit and Loss accounts:

A profit and Loss account is prepared to disclose the results of operation of the business

transaction during certain duration of time. Accounts may have following four

components:

Manufacturing accounts: This part of profit and loss accounts discloses the results of

manufacturing operations carried out by the organization. The final results in terms of

manufacturing accounts is a cost of production incurred by the organization.

Trading accounts: This part of profit and loss accounts discloses the results of trading

operations carried by organization. The final results in terms of Gross Profit earned by the

organization.

Profit and Loss accounts: This part of profit and loss accounts discloses the final results

of business transactions of the organization. The final results in terms of Net profit earned

by organization.

Profit and Loss appropriation accounts: This part of profit and loss accounts which

mainly applicable to company form of organization, discloses the manner in which the net

profit earned by the organization is appropriated. The amounts of profit not appropriated or

retained transferred to reserves and surplus in balances sheet.

PERFORMANCE HIGHLIGHTS FOR THE YEAR ENDED March, 2009(RS. IN CRORES)

Particulars Year ended 31.03.2008

audited

Year ended 31.03.2009

audited

Total Income 1177.59 1499.2

32

Particulars Year ended 31.03.2008

audited

Year ended 31.03.2009

audited

Total Expenditure 930.81 1174.56

Gross profit 246.78 325.36

Provisions 14.94 9.75

Operating profit before

tax

231.84 315.61

Income Taxes 29.58 74.32

Net Profit 202.26 241.29

10.1) Maximizing CASA deposits:

A sharp focus on reduction in costs has become priority No. 1 for the Bank. On the liability

side, the cost advantage will be available to the Bank, only if the Bank makes rapid strides

in mobilization of Current Accounts and Savings Accounts (CASA). Major banks in the

country have around 35% to 45% CASA deposits, while this bank has been hitting only the

22% to 30% range in CASA deposits. As CASA deposits carry an average low level of

interest, the average cost of funds (i.e. CASA Deposits + Term Deposits) comes down. We

have repeatedly impressed on our staff the need to mobilize CASA deposits aggressively.

10.2) Reduction in NPA:

To bring down the Gross NPA level as also to ensure that substantial new NPAs are not

added, branches were asked to speed up efforts for recovery in respect of overdue accounts

with them. The drive for reduction in NPAs has been hugely successful under the

leadership of Shri P. G. Kamath, Chief General Manager.

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10.3) Marketing:

Business Process Reengineering (BPR) initiative primary objective of this initiative is to

convert the branches into sales and service outfits. India is a huge banking market but the

penetration of Indian Banking is thus one of the lowest in the world. Also a large number

of our branches are functional in Maharashtra State, which has a huge banking business

market of around Rs. 17,00,000/- crore (with aggregate bank deposits of Rs. 8,57,771 crore

and gross credit of Rs. 8,34,701 crore in September 2008). Of these Rs. 17,00,000 crore,

we at Saraswat Bank have a business stake of only Rs. 20,000 crore, which is a miniscule

of merely 1.2% share in the total banking business in the State of Maharashtra. This

provides a huge opportunity to banks including your Bank. In fact, it is on the basis of

these statistics that the bank has planned to do a business of Rs.1,00,000 crore by 2021

under Dr. Adarkar Mission IV of the Bank. All the employees in the branches are being

trained, equipped and instructed to take extra efforts for marketing all the products and

services of the Bank.

34

11) SWOT ANALYSIS:

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a project or in a business venture. It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieve that objective. The technique

is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s

and 1970s using data from Fortune 500 companies.

STRENGTH:

It specifies the attributes of the person or company that are helpful to achieve the

objective(s).

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

Sector in India with over 90 years of cumulative banking experience.

High standard regulatory environment.

Flexible work permit system and good quality staff offering personal client service.

Bank has implemented Core Banking Solution (CBS) in the Bank. This solution

primarily aims at having a unified customer approach.

Bank is a member of the Credit Information Bureau India Ltd. (CIBIL). CIBIL is India’s

first credit information bureau and is a repository of factual information on the credit

history and repayment records of millions of commercial and individual borrowers.

WEAKNESS:

Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in

PSU banks below 51% thus choking the headroom available to these banks for raining

equity capital.

Lack of competitive differential with other offshore centres

Rigid legislation that inhibits business development

35

OPPORTUNITY:

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

Maharashtra State has a huge banking business market of around Rs. 17,00,000/- crore.

Of these Rs. 17,00,000 crore, Saraswat Bank has a business stake of only Rs. 20,000 crore,

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

Maharashtra. This provides a huge opportunity to the bank.

Saraswat Bank does 0.3% to 0.4% of the nation’s banking business. In India today, 60%

of the population do not have access to a banking product; 80% of the population do not

have access to an insurance product and 98% of the population do not have access to a

stock market product. Thus, there is tremendous untapped growth potential in the Indian

subcontinent.

THREATS:

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

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

private players.

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

products and new markets.

Downsizing and reduction in banking operations in favour of rival jurisdictions.

Outsourcing to cheaper jurisdictions

Subsequent impact on rest of finance sector ecosystem

36

12) SERVICES AND PRODUCT OFFERED BY SARASWAT BANK

It is our earnest Endeavour to offer suite of new and competitive financial products and

services. We have for this purpose tied up with various insurance companies. The details

of tie-up and products offered are given below:

LIFE INSURANCE :

We are the Corporate Agents for the distribution of Life Insurance products, of M/S HDFC

Standard Life Insurance Co Ltd. Under this tieup arrangement, we offer following life

insurance products:

Protection Plans

Protection Plans help to shield your family from uncertainties in life due to financial losses

in terms of loss of income that may dawn upon them incase of your untimely demise or

critical illness. Protection Plans go a long way in ensuring your family’s financial

independence in the event of your unfortunate demise or critical illness. They are all the

more important if you are the chief wage earner in your family. No matter how much you

have saved or invested over the years, sudden eventualities, such as death or critical

illness, always tend to affect your family financially apart from the huge emotional loss.

Children’s Plan

Children’s Plans help to save, so that you can fulfill your child’s dreams and aspirations.

These plans go a long way in securing your child’s future by financing the key milestones

in their lives even if you are no longer around to oversee them. Children’s Plans help you

save steadily over the long term so that you can secure your child’s future needs, be it

higher education, marriage or anything else. A small sum invested by you regularly can

help you build a decent corpus over a period of time and go a long way in providing your

child a secured financial future alongwith.

37

Retirement Plans

Retirement Plans provide you with financial security so that when your professional

income starts to ebb, you can still live with pride without compromising on your living

standards. By providing you a tool to accumulate and invest your savings, these plans give

you a lump sum on retirement, which is then used to get regular income through an

annuity plan. Given the high cost of living and rising inflation, employer pensions alone

are not sufficient. Pension planning has therefore become critical in today's world.

Savings and Investment Plans

You have always given your family the very best. And there is no reason why they

shouldn’t get the very best in the future too. As a judicious family man, your priority is to

secure the well-being of those who depend on you. Not just for today, but also in the long

term. More importantly, you have to ensure that your family’s future expenses are taken

care, even if something unfortunate were to happen to you. Our Savings & Investment

Plans provide you the assurance of lump sum funds for you and your family’s future

expenses. While providing an excellent savings tool for your short term and long term

financial goals, these plans also assure your family a certain sum by way of an insurance .

Health Plans

Health plans give you the financial security to meet health related contingencies. Due to

changing lifestyles, health issues have acquired completely new dimensions becoming

more complex in nature. It becomes imperative then to have a health plan in place, which

will ensure that no matter how critical your illness is, it does not impact your financial

independence.

EASY PAY:

Here is one more exciting facility the Bank has offered to relieve its customers, our

esteemed client, from spending your valuable time standing in a queue for routine utility

bill payments.

38

All you have to do is to walk into any of our branch and register yourself under : Easy Pay"

scheme for all your recurring utility bill payments such as Telephone, Electricity Bills,

Cellular Phone Bills, Insurance Premium & many more. Once you are registered all your

future bills will be paid automatically through the bank account with us.

39

13) 7 P’s OF MARKETING:

Basically, the concept of Marketing is given by McCarthy who has classified “Marketing

Mix” tools of four broad kinds called 4 P's and they are as follows

Product

Price

Promotion

Place

People

Process

Physical Evidance

These marketing mix tools are used by the marketers to influenc their trade channels and

final consumers.

The Saraswat co-operative banks 4P's criteria is followed below

13.1) Product

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

Banking Sector in India.

The fact remains that we do 0.3% to 0.4% to nation's banking business.

A Sarswat Co-operative Bank has special Product Development Department which is

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

The product Development department has initiated into all these areas

oProducts and their attributes.

oUnique Selling Propositions of our Products.

oMarketing positions of our products.

oPromotional imperatives.

oValue addition ingredients of our products and their enrichment.

This helps the bank to process of redefining and refashioning our existing products and

creating new products.

This helps to maintain realtionships i.e helps to maintain CMR

40

13.2) Place

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

branch outlets

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

expansion purposes.

The bank has adopted the cluster based approach.

Instead of having an isolated branch, they have 4-5 branches in a far off area.

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

Karnataka.

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

March,2011

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

'Ashwamedh'

13.3) Promotion

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

understand each other well.

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

their Brand Ambassador

This has heed the bank to achieve and promote heights of success in their business

To attract the young generation the bank has appointed a junior brand ambassador to Ms.

Shalmali Sukthankar, budding artist.

From last five years the bank has encapsulated and expressed our uniqueness to the

customers that the bank is having the "Ability of the Big and Agility of the Small"

13.4) Pricing

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

organization.

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

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

The bank initiatives are as follows

41

oOptimum utilization of the available resources of he bank.

oStreamlining/Re-engineering various procedures in the bank, thus improving customer

service.

The bank has sustained work of the income and cost council, which helps the bank to

offer services to the customers with lower intermediations costs.

13.5) People

During the FY 2008-09, a total of 2,225 employees, consisting of 1,058 from management

and 1,167 from non-management people working in Saraswat Bank.

Today Saraswat Bank have 250 branches, (i.e. 70 more branches by 31st March, 2011),

13.6) Process

Standardization: Bank has got standardized procedures for typical transactions. This is

because of the rules they are subject to. Besides this, each of the branch has its standard

forms, documentations etc. Standardization saves a lot of time behind individual

transaction.

Customization: There are specialty counters at each branch to deal with customers of a

particular scheme. Besides this the customers can select their deposit period among the

available alternatives.

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

to minimize time taken.

Simplicity: Banks various functions are segregated. Separate counters exist with clear

indication. Thus a customer wanting to deposit money goes to ‘deposits’ counter and does

not mingle elsewhere. This makes procedures not only simple but consume less time.

Besides instruction boards in national boards in national and regional language help the

customers further.

42

13.7) Physical Evidence :

Internet & Web:

Web :www.saraswatbank.com

Email : corporateoffice@saraswatbank.com

BUSINESS CARD :

43

14) HR POLICY AND ORGANIZATIONAL STRUCTURE:

Internal Capability Building Measures (ICBMs):

The bank pursued the recruitment and promotional policy during the year 2008-2009 as per

Internal Capability Building Measures (ICBM).

Promotional Exercise:

The Bank had undertaken promotional exercise in the year 2002 when organizational

restructuring was done as per the recommendations of M/s Seven S Associates. The Bank

has been undertaking expansion of branch network and has been implementing BPR

exercise too, which is resulting in transforming the organization. In order to cater to the

growing expanse of the Bank and the need for managerial positions in the wake of the

same, a promotional exercise to various cadres was conducted. A total of 385 employees

were promoted to various cadres. All promoted personnel have been suitably deployed at

various branches (including the branches of the merged banks) and/or departments.

Training:

During the FY 2008-09, a total of 2,225 employees, consisting of 1,058 from management

and 1,167 from non-management cadre attended 98 training programmes conducted at the

‘Staff Learning Centre’ at Vashi, Navi Mumbai, as well as at various branch locations. A

special emphasis was given on training of new recruits and employees of erstwhile banks

merged with this Bank at their respective locations as well as at the Staff Learning Centre

at Vashi, where the focus was on validation process, know the Bank, the internal software

package OMNI and the retail products of the bank.

Customer Service:

The bank has adopted the following codes based on the Standard codes documented by

Indian Bank’s Association:

Customer Fair Practice Code

Cheque Collection Code

44

Bankers’ Lender Liability Code

Compensation Policy

Saraswat Bank has become a member of the Banking Codes and Standards Board of India.

This board ensures that the Codes so defined by the Bank are implemented in letter and

spirit. For measuring customer satisfaction, a bank- wide Customer Service Audit has been

planned to be commissioned by the Board in the ensuing year.

Industrial Relation:

The Bank’s human resources have been organised under the two representative bodies viz.

the Officers’ Association and the Employees’ Union. The industrial relations with both

these organizations have been very cordial with joint discussions being held with the

Association/the Union for redressing employee issues in an amicable way.

Voluntary Retirement Scheme (VRS):

This year, the Bank launched the VRS for its employees. Around 236 employees from your

Bank (excluding those of merged banks) opted for VRS under the said scheme. Besides, 83

employees of the erstwhile Nasik Peoples Cooperative Bank Ltd., 43 employees of

erstwhile Annasaheb Karale Janata Sahakari Bank Ltd. and at around 100 employees of the

erstwhile Murgharajendra Sahakari Bank Ltd. (i.e. in all 462 employees) opted for VRS

and have been relieved under the Schemes. The Bank acknowledges with gratitude the

sincerity and hard work put in by all these employees during their tenure with the Bank and

wishes the retired employees an eventful and healthy post retirement life.

45

15) CSR (CORPORATE SOCIAL RESPONSIBILITIES):

Corporate Social Responsibility (CSR) is not a new fashion but it is an old creed for this

organization. The founders and their successors understood and underscored the principle

that a cooperative institution must always stay connected with the needs and aspirations of

the society at large and hence CSR constitutes the umbilical cord that connects this bank to

the society.

The laudable gesture of late Wamanrao Varde and his associates on the Board then in

spontaneously responding to the grave scarcity of foodgrains during the Second World

War and in starting on behalf of your Bank a ration shop at Girgaum in Mumbai to make

available foodgrains to all, is a resplendent example of the early awareness of CSR in this

Bank. This was so because all members of the community always understood that a co-

operative institution must always have a social purpose. Bank thereafter also started

scholarships and apprenticeships for deserving students and through that process built the

careers of several young men. The Bank has been providing financial assistance to many

social, educational and medical institutions by way of grants every year from its funds.

From time to time the Board of Directors responded to national and natural calamities like

flood, famine, earthquake etc.

Following are the few initiatives both at macro and micro level, which spell out the bank’s

vision of Corporate Social Responsibility (CSR):

As a macro level expression of CSR, the bank in association with Maharashtra Times

created an intellectual platform entitled "Shikhar Maharashtra" with the objective of

researching into, debating and finding ways and means to deal with the many stubborn

economic and social issues that Maharashtra faces today. The inauguration of this forum of

'Shikhar Maharashtra" will pave the way for bringing to the table the daunting problems

that our State faces today. It is proposed that at an interval of every three months, a major

issue facing Maharashtra such as farmers' suicides, malnutrition, scarcity of drinking water,

famine and hunger, etc. and thereafter recommendations are made to the Government on

the remedies that may ameliorate the situation and pursued thereafter.

46

16) AWARDS AND RECOGNITIONS:

Bank participated in the study conducted jointly by the Great Places to Work Institute India

and the Economic Times, to distinguish a good work place from a great one. Based on the

study of over 373 participants spanning a multitude of sectors, the top 50 best workplaces

were elected. We are happy to announce that your Bank has been adjudged and included in

“India’s Best Companies to work for - Year 2009" and in the banking industry vertical,

your Bank is placed fourth after American Express, Kotak Mahindra Bank and HDFC Ltd.

The citation reads as under: “The Saraswat Co-operative Bank Ltd. Ranked 4th in Banking

& Credit Services for inspiring trust among your people, for instilling pride in them, for

creating an Environment within the workplace that promotes camaraderie and for many

other reasons that makes your organization one of the India’s.”

47

CONCLUSION

The market is seeing discontinuous growth driven by new products and services that

include opportunities in credit cards, consumer finance and wealth management on the

retail side, and in fee-based income and investment banking on the wholesale banking side.

Given the demographic shifts resulting from changes in age profile and household

income, consumers will increasingly demand enhanced institutional capabilities and

service levels from banks.

With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail

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

Reserve Bank of India (RBI) has approved a proposal from the government to

amend the Banking Regulation Act to permit banks to trade in commodities and

commodity derivatives.

SUGGESTIONS

In wake of this, old private sector banks also have the need to fundamentally

strengthen skill levels.

even more imperative is their need to examine their participation in the Indian

banking sector and their ability to remain independent in the light of the

discontinuities in the sector.

Accelerate the creation of world class supporting infrastructure (e.g., payments,

asset reconstruction companies (ARCs), credit bureaus, back-office utilities) to

help the banking sector focus on core activities.

Slower growth in retail credit and narrow spreads spells better fortune for banks

that have higher concentration of corporate assets and low cost deposits along with

good asset quality.

48

Saraswat Bank perfectly fits into this matrix.

Sustenance of a healthy current and savings account mix and little deterioration

in asset quality also reiterates the operating efficiency of the bank.

Being the largest Urban Co-operative bank, Saraswat Bank is also one of the

lead contenders to initiate the process of building up scalability by acquiring

smaller banks in the PSU and private sectors.

Besides offering the opportunity to cater to borrowing needs of some of the

largest corporate in the country, the consolidation process will also bring about

economies of scale for the bank.

The banking today is re-defined and re-engineered with the use of Information

Technology and it is sure that the future of banking will offer more

sophisticated services to the customers with the continuous product and process

innovations.

Thus, there is a paradigm shift from the seller’s market to buyer’s market in the

industry and finally it affected at the bankers level to change their approach

from “conventional banking to convenience banking” and “mass banking to

class banking”. The shift has also increased the degree of accessibility of a

common man to bank for his variety of needs and requirements.

Also, the bank’s healthy ROA (Return of Average Asset) and CRAR (Capital

to Risk Asset Ratio) is a matter of comfort. Having said that, the bank’s

market share of merely 1.2% in the total banking business in the State of

Maharashtra is our lingering concern. We have a positive view on the bank

with respect to its future growth prospects.

49

BIBLIOGRAPHY:

1. History of Banking in India:

http://finance.indiamart.com/investment_in_india/banking_in_india.html

http://www.bseindia.com/downloads/BankingSector.pdf

2. Banking terminology:

http://www.meridianadvantagemember.com/fileuploads/Bank_Terminology.pdf

3. Mergers and Acquisitions:

http://www.economywatch.com/mergers-acquisitions/international/banking-sector.html

http://finance.mapsofworld.com/merger-acquisition/india.html

4. Current position and financial analysis of the bank: Saraswat Bank’s Annual Report for

the year 2008 and 2009

5. History of the banks and Corporate Social Responsibilities:

http://www.saraswatbank.com/

50