Report on CANARA BANK

Banking Assignment

Submitted to: Prof. Rajlakshmi Submitted by: Vishal Nihalani

Date: 03rd October 2010 Roll no.: 28
 Index

Topic No. Subject Page No.

1 Banking Sector in India 3

2 Public Sector Banks/Private Sector Banks 3-4

3 CANARA Bank - Origin 4

4 Vision & Mission 5

5 Banks Profile 5-6

6 Awards & Accolades 6

7 Subsidiaries and Offices Abroad 7

8 Products and Services 8

9 Branch Network 11

10 InfoTech Progress 11-12

11 Key Financial ratios 13

Banking Sector in India

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 The banking industry in India started in 1786 with the establishment of the Bank of
Bengal in Calcutta. The Indian Government at the time established three Presidency
banks, viz., the Bank of Bengal (established in 1809), the Bank of Bombay (established
in 1840) and the Bank of Madras (established in 1843). In 1921, the three Presidency
banks were amalgamated to form the Imperial Bank of India, which took up the role of a
commercial bank, a bankers' bank and a banker to the Government. The Imperial Bank of
India was established with mainly European shareholders. It was only with the
establishment of Reserve Bank of India (RBI) as the central bank of the country in 1935,
that the quasi-central banking role of the Imperial Bank of India came to an end.

After independence, the Government of India started taking steps to encourage the
spread of banking in India. Accordingly, State Bank of India (SBI) was constituted in
1955. Subsequently in 1959, the State Bank of India (subsidiary bank) Act was passed,
enabling the SBI to take over eight former state-associate banks as its subsidiaries. To
better align the banking system to the needs of planning and economic policy, it was
considered necessary to have social control over banks. In 1969, 14 of the major private
sector banks were nationalized. This was an important milestone in the history of Indian
banking. This was followed by the nationalisation of another six private banks in 1980.
With the nationalization of these banks, the major segment of the banking sector came
under the control of the Government.

To create a strong and competitive banking system, a number of reform measures

were initiated in early 1990s. The thrust of the reforms was on increasing operational
efficiency, strengthening supervision over banks, creating competitive conditions and
developing technological and institutional infrastructure. Commercial banks in India have
traditionally focused on meeting the short-term financial needs of Industry, trade and
agriculture. However, given the increasing sophistication and diversification of the Indian
economy, the range of services extended by commercial banks has increased
significantly, leading to an overlap with the functions performed by other financial
institutions.

Public Sector Banks

Public sector banks are those in which the majority stake is held by the Government
of India (GoI). Public sector banks together make up the largest category in the Indian
banking system. There are currently 27 public sector banks in India. They include the SBI
and its 6 associate banks (such as State Bank of Indore, State Bank of Bikaner and Jaipur
etc), 19 nationalised banks (such as Allahabad Bank, Canara Bank etc) and IDBI Bank
Ltd.

Public sector banks have taken the lead role in branch expansion, particularly in the
rural areas. Public sector banks account for bulk of the branches in India (88 percent in
2009). In the rural areas, the presence of the public sector banks is overwhelming; in
2009, 96 percent of the rural bank branches belonged to the public sector. The private
sector banks and foreign banks have limited presence in the rural areas.
Private Sector Banks

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 In Private Sector Banks, the majority of share capital is held by private individuals
and corporates. Not all private sector banks were nationalized in in 1969, and 1980. The
private banks which were not nationalized are collectively known as the old private
sector banks and include banks such as The Jammu and Kashmir Bank Ltd., Lord
Krishna Bank Ltd etc. In July 1993, as part of the banking reform process and as a
measure to induce competition in the banking sector, RBI permitted the private sector to
enter into the banking system. This resulted in the creation of a new set of private sector
banks, which are collectively known as the new private sector banks (HDFC Bank, ICICI
Bank). As at end March, 2009 there were 7 new private sector banks and 15 old private
sector banks operating in India.

CANARA BANK

Origin of the Bank

Late Sri Ammembal Subbarao Pai   Our Beloved Founder Founded

as 'Canara Bank Hindu Permanent Fund' in 1906, by late
Sri.Ammembal Subba Rao Pai, a philanthropist, this small seed
blossomed into a limited company as 'Canara Bank Ltd.' in 1910 and
became Canara Bank in 1969 after nationalization.

"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. Subba
Rao Pai.

Founding Principles

1. To remove Superstition and ignorance.

2. To spread education among all to sub-serve the first principle.
3. To inculcate the habit of thrift and savings.
4. To transform the financial institution not only as the financial heart of the
community but the social heart as well.
5. To assist the needy.
6. To work with sense of service and dedication.
7. To develop a concern for fellow human being and sensitivity to the surroundings
with a view to make changes/remove hardships and sufferings.

Sound founding principles, enlightened leadership, unique work culture and

remarkable adaptability to changing banking environment have enabled Canara Bank to
be a frontline banking institution of global standards.

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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

Bank’s Profile
Widely known for customer centricity, 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. The Bank has gone through the various phases of its growth
trajectory over hundred years of its existence. Growth of Canara Bank was phenomenal,
especially after nationalization in the year 1969, attaining the status of a national level
player in terms of geographical reach and clientele segments. Eighties was characterized
by business diversification for the Bank. In June 2006, the Bank completed a century of
operation in the Indian banking industry. The 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. These include:

 Launching of Inter-City ATM Network

 Obtaining ISO Certification for a Branch

 Articulation of ‘Good Banking’ – Bank’s 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.  As at June 2010, the Bank has further expanded its
domestic presence, with 3057 branches spread across all geographical segments.
Keeping customer convenience at the forefront, the Bank provides a wide array of

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alternative delivery channels that include over 2000 ATMs- one of the highest among
nationalized banks- covering 732 centres, 2681 branches providing Internet and Mobile
Banking (IMB) services and 2091 branches offering 'Anywhere Banking' services.
Under advanced payment and settlement system, all branches of the Bank have been
enabled to offer Real Time Gross Settlement (RTGS) and National Electronic Funds
Transfer (NEFT) facilities.

Not just in commercial banking, 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. Promoting an inclusive growth strategy,
which has been formed as the basic plank of national policy agenda today, is in fact
deeply rooted in the Bank's founding principles. The growth story of Canara Bank in its
first century was due, among others, to the continued patronage of its valued customers,
stakeholders, committed staff and uncanny leadership ability demonstrated by its leaders
at the helm of affairs. We strongly believe that the next century is going to be equally
rewarding and eventful not only in service of the nation but also in helping the Bank
emerge as a "Global Bank with Best Practices". This justifiable belief is founded on
strong fundamentals, customer centricity, enlightened leadership and a family like work
culture.

Awards/Accolades

Received during 2008-09

 Conferred '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 2007-08, 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.

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Received during 2009-10

 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.

BRANCHES AND OFFICES ABROAD

Canara Bank established its International Division in 1976, to supervise the

functioning of its various foreign departments, to give required thrust to foreign exchange
business, particularly exports and to meet the requirements of NRIs.

Though small in size, the Bank's presence abroad has brought in considerable foreign
business, particularly NRI deposits.

 Canara Bank, London Branch

 Canara Bank, Leicester Branch,
 Canara Bank Hong Kong Branch
 Canara Bank Shanghai Branch
 Canara Bank Sharjah Representative Office, UAE
 Commercial Bank Of India LLC(A Joint Venture With State Bank Of India),
Moscow
 Al Razouki International Exchange Co (Secondment Agreement And DD
Drawing Facility On Canara Bank Branches), UAE
 Eastern Exchange Establishment, Doha, Qatar

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Products and Services

Savings & Deposits

 Savings Bank Account
 SB Gold Scheme
 Canara Champ Deposit Scheme
 Canara saral savings account
 Current account
 Canara premium current account
 Fixed deposit
 Kamadhenu deposit (re-investment plan)
 Canara tax saver scheme
 Recurring deposits
 Special recurring deposit scheme
 Ashraya deposit scheme (for senior citizens)
 Canara auto renewal deposit (card)
 Canara super savings salary account scheme

Loans

Housing Loan Doctors Choice

Home Improvement Loan Canara Rent
Canara Cash (shares) Canara Mortgage
Canara Mobile (Vehicle) Gold Loan
Canara Site Loan Canara Guide
Canara Budget (For Canara Jeevan
Employed/Business)
Canara Pension Online Education Loan

Foreign exchange and international banking services

 Canara Bank entered Forex arena in 1953 with the opening of its first Foreign
Exchange Department in Mumbai.
 The Bank finances exports at pre-shipment stage as well as post shipment stage,
which can be availed either in foreign currency or Indian Rupees.
 Canara Bank is pioneer in financing of LC based International Trade transactions in
India.
 The Bank has an excellent worldwide correspondent relationship and has the
capability to handle any export, import, remittance and related transactions anywhere
in the world and in any currency.

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 Non fund based transactions like adding confirmations to LC, issuing inward and
outward Bid bonds & guarantees, establishing LCs for import into India, arranging
buyer's credit at attractive terms etc. are our forte.
 Canara Bank has branches in London, Hong Kong and Shanghai, China. We have a
joint venture with SBI at Moscow under the name Commercial Bank of India LLC.
The Bank also manages 2 Exchange houses in the Gulf and has arrangement with 20
Exchange Houses and 17 Banks for drawing DDs from Gulf Countries on our select
branches throughout India.
 The Bank has an integrated Treasury with a forex dealing room located in Mumbai in
India. Our London branch has a dealing room of its own. We are active in the Indian
forex market as well as in Overseas forex market. We provide a whole range of
services and products like purchase and sale of 7 world currencies, forward bookings
and other forex hedging instruments like currency swaps.

NRI Banking

The Bank provides a specialized service to help non-resident customers and others
who find it difficult to operate their accounts personally. The bank obtains obtain power
of attorney from the customer in their favor and execute the customer’s instructions
promptly and meticulously. It gives the customer great confidence that his money is safe.
The bank offers attorney ship services like sale and purchase of Investments, payment of
bills, insurance premiums and other payments and collection of incomes.
Apart from these attorneyship services, the following types of NRI accounts are
offered by Canara Bank:
 Non-Resident External Rupee Accounts
 Non-Resident Ordinary Account
 Foreign Currency Non-Resident Account
 Resident Foreign Currency Account

Remittances Facilities to NRI

 “REMITMONEY” - Web Based Remittance Service

 MONEY TRANSFER SERVICE SCHEME (MTSS) - Arrangement with
Western Union Financial Services, USA, for Personal Remittances to
Resident Indians
 Remittance facilities in foreign currency through SWIFT
 Rupee Drawing Arrangement with Exchange Companies

NRI Loans

Canara Bank Offers variety of loans to NRI’s which include Home Loans,
Vehicle Loan, Mortgage Loan against Deposits and Loan for buying Gold
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Agriculture and Rural Credit Schemes
 Kisan Credit Card
 Loans for Agri-Business Centers
 Minor irrigation/Pumpset Loans
 Farm Machinery Loans
 Farm Development Loans
 Vehicle Loan for Agriculturists
 Loan for Plantation crops
 Loan for Marine Fisheries
 Loans for Poultry and Duck rearing
 Loan for Cold Storage and Godown
 Loan for Produce
 Loans For construction of Farms Structures

Corporate Banking
The bank is also actively indulged in providing financial services to the corporates.
Bank Provides Term Loans, Working Capital Finances, Underwriting services, Merchant
Banking services, Corporate Cash Management Services and also tax payment facilities
to the corporates at their convenience.

SME Credit

Canara Bank plays a vital role in development of small scale industries through Term
loans for acquiring fixed assets, soft loans for other projects and Co-financing
arrangement SIDBI and other financing activities.

The bank is also known for its forefront in the service for common man. Its social
banking cell arranges activities like blood donation, health camps, self employment and
career guidance and assisting the NGO’s. The bank also provides specialized services to
women with its 7 ‘Mahila Banking Branches’ all over the country being first of its kind
in the banking industry

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Branch Network

The year was significant for the Bank in expanding domestic operations across the
country. Befitting its 104th year of existence, the Bank on its Founders Day i.e. 19th
November, 2009, opened 104 branches across the country, inaugurated by Honourable
Finance Minister Shri Pranab Mukherjee. The Bank opened 314 branches during the
year, taking the total tally under the branch network to 3046 branches.

Composition of domestic branch network

Category No. of Branches

31.03.2009 31.03.2010

Metropolitan 629 727

Urban 674 744

Semi-urban 691 793

Rural 735 779

Total Branches 2729 3043

The Bank has 118 specialized branches catering to the specific financial needs of
different clientele categories i.e. separate branches for SME’s, NRI’s, Micro Finance
Branches, Agri-Finance, Consumer Finance, Capital Market and Prime Corporate
Branches.

InfoTech Progress
The Bank took several initiatives in the InfoTech front during the year. As at the end
of March 2010, a number of branches were covered under Core Banking Solution (CBS)
expanded to 809, besides 29 Extension Counters, 92 Currency Chests and 80 Service
Units (Accounts Sections/Clearing Sections/Local Processing Centres/ Foreign
Departments) along with Integrated Voice Recording System (IVRS) and Internet and
Mobile Banking (1MB). Several modules/facilities come along with CBS like SPEED-e-
module for enabling clients to deliver instruction through internet, Funds Transfer
Facility for the purpose of online trading, sales and marketing module for marketing
purposes, Lending Automation Processing System (LAPS) for Retail and Corporate and
Anti-Money Laundering (AML) modules. CBS branches covered 90% of the Banks total
business as at March 2010.

As at March 2010, the Bank had 2017 ATMs spread across 728 centres, including
745 offsite ATMs and 180 ATMs in railway stations. It has also set up 150 e-kiosks for
booking railway tickets. Debit card base of the Bank further increased to about 50 lakhs
as at March 2010.
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 The Bank implemented Centralized Online Tax Accounting System (Government
Business module) in 463 branches and Excise and Service Tax modules in 144 branches,
under CBS setup. Sales Tax module has been implemented in all designated branches of
Delhi and Maharashtra.

Local Processing Centres (LPC) have been established in 25 centres all over India,
covering 542 branches. Centralized Pension Processing cell was introduced and 84
branches of Bangalore Metro Circle Office have been covered. The Bank has a well-
designed and secured Corporate Network, covering all the Branches/Offices for rolling
out network-based delivery channels. All the Circle Offices have been provided with
video conference facility.

InfoTech Progress 31.03.2009 31.03.2010

Core Banking Branches 1053 1809

Anywhere Banking Branches 2062 2091

Internet and Mobile Banking Branches 1362 1959

NEFT and RTGS 2729 3037

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 Progress so far (Amt. in Rs. Crore)

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   2007-08 2008-09 2009-10
Number of Branches 2678 2733 3046
Paid-up Capital 410 410 410
Reserves 10091 11798 14262
Aggregate Deposits 154072 186893 234651
Growth (%) 8.21 21.30 25.55
Non-Resident Deposits 12874 14043 13567
Foreign Business Turnover 136757 142301 127614
Advances (Net) 107238 138219 169335
Growth (%) 8.86 28.89 22.51
Retail Advances 17665 19798 23902
Growth (%) 1.03 12.07 20.73
Priority Sector Advances 43203 48763 59310
Growth (%) 14.16 12.87 21.63
Agriculture 17996 20144 25051
Growth (%) 15.95 11.94 24.36
Agriculture(Disbursal) 11443 14704 18130
Micro, Small and Medium Enterprises 18600 23823 31074
Growth (%) 30.57 28.08 30.44
Advances under DRI Scheme 40 48 50
Advances to SC/ST Clients 2055 2863 3905
Self Help Group (Nos.) 210441 275100 320000
Export Credit 9162 8967 8966
Clientele (In Million) 32.35 34.80 37.34
Total Number of Staff 45260 44090 43380
Total Income 16414 19430 21610
Total Expenditure 13454 15467 16549
Operating Profit 2959 3964 5061
Net Profit 1565 2072 3021
Key Performance Ratios (%)
Capital Adequacy Ratio 13.25 14.10 13.43
Earnings Per Share (Rs.) 38.17 50.55 73.69
Book Value (Rs.) 202.33 244.87 305.83
Business Per Employee (Rs. Crore) 6.10 7.80 9.83
Profit Per Employee (Rs. Lakh) 3.65 4.97 7.36
Return on Average Assets 0.92 1.06 1.30
Cost-Income Ratio 48.54 43.61 40.73
Gross NPA Ratio 1.18 1.56 1.52
Net NPA Ratio 0.84 1.09 1.06
Credit - Deposits Ratio 69.60 73.96 72.16
Priority Credit to Adjusted Net Bank Credit 44.15 46.02 43.92

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Bibliography

www.canarabank.com
www.moneycontrol.com

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