BANKING BUSINESS STRATEGY

BANKING BUSINESS STRATEGY

BRANCH LEVEL BUSINESS STRATEGY CASA STRATEGY _ To undertake massive CASA Campaign across the country to mobilize new accounts _ Focus on relationship building and posting of relationship officer/manager at least at district level & relationship manager of Scale IV/V at state level to have good liaison with government departments/corporate. _ To have School/College teachers account to boost our retail liability/retail asset products portfolio. _ Allocation of Publicity budget to identified block level branches for increasing visibility. Conduct of Regular CASA Campaigns during each quarter with specific emphasis on CASA Accounts mobilization from HNI / Payroll accounts, Government Departments ( Panchayat, Block level, District level and state level accounts, RUSA,Govt. school & Colleges, MP/MLA accounts/ TASC account _ Revival of Inoperative / Dormant accounts _ Focus on New Branches for exponential growth in CASA of new branches _ Organizing HNI / NRI Meets at frequent intervals at all major centers. _ Transformation of additional Shikhar branches with a view to enhance customer service resulting in higher CASA growth. ( we have seen 20% CASA growth in these branches) COMPETITION WITH PAYMENT BANK _ New banks will offer interest higher than PSBs hence retail depositors will move to payment bank, have impact on CASA of banks, tighten NIM of banks, _ Customer will open account with payment banks for small ticket payments _ Customer will get newest / easy technology for their payments _ If will have less impact if they offer easy payment options for their small tickets payment by offering new tech based App _ Step to minimize impact on PSBs: _ New technology for payments need of customers, provide better platform for mobile payments, _ improve customer service, Banks need to understand their customers, in order to understand the current market trends and predict the future trends, segmentation of customers and specific / appealing products for a particular segment, rewards/points for making payments, privacy and security _ collaborate with them to create a partnership model CUSTOMER SERVICE _ In order to achieve the set goals, Customer Service needs to be given adequate attention. Following customer centric initiatives undertaken to reduce customer complaints and enhance business:- _ Counter service to be improved. _ Rude behavior of staff to be eliminated and Zero tolerance level for rude behavior. During FY15-16, 131 cases of rude behavior were reported. _ Timely and Speedy redressal of customer complaints. _ Providing priority services to the Senior Citizens and Pensioners. _ Motivating customers as well as staff for usage of Tech products. _ Popularizing Missed Call Facility, Internet and Mobile Banking, Canara e-info book, Canara Easy Cash etc. _ Sensitization of staff to improve our position in BCSBI rating amongst all Banks. _ Steps initiated towards Information dissemination, Transparency, Customer Centricity, Grievance Redressal, Customer feedback etc. LOSS MAKING TURNAROUND _ Stress on improving net interest income _ Increasing the CD ratio _ Reduction in cost of deposits by increasing CASA ratio and reducing Bulk deposit _ Reducing / eliminating NPA _ Containing the operating expenses

RETAIL LENDING _ Retail Lending by every branch and aim to achieve NIL lending branches. _ Task force to be made in each Circle for branches having CD Ratio less than 50% in order to improve the CD Ratio to minimum 70%. _ Marketing of Online Instant In-principle Sanction for Housing Loan and Car Loan on digital platform throughout the year. _ Wide publicity of Housing Loan and Car Loan products especially during festival time to increase the visibility. _ Focus on reduction in turnaround time at RAH from 9 days to 7 days. _ Tie up with premier education institutions Viz. IIMs, IITs, NITs & other Premier institutes _ Extending the services of Direct Selling Agents to all the Circles. _ Chalking out quarterly schedule of Campaigns targeting different segments viz. Housing, Vehicle coinciding with festival season and Education coinciding with Admission period. MSME _ Each ELB/ VLB to identify and finance at least one Small & Medium Enterprises Unit every month. _ All branches to source and refer minimum one Credit proposal per quarter to their respective SME Sulabh for sanction. _ Focus on “PRODUCT SPECIFIC MONITORING”. _ MSME CONNECT- Mega Credit camps will be continued in each quarter of 2016-17 at all Circles on a single day to create and sustain awareness and pool sources for increased flow to MSME sector. _ Regular Camps & Cluster meets for sourcing the proposals will be conducted at Sulabhs and cluster of branches. _ START UP SUMMIT – Summits will be arranged at all centres for Start up Entrepreneurs inviting _ Distinguished guests from Government departments and local industrial bodies/organizations for necessary inputs and guidance for successful entrepreneurship. BANKING BUSINESS STRATEGY STRATEGY TO REDUCE NPA / STRESS ASSETS ACTION PLAN: Before formulating the strategy for reducing NPA's, a diagnostic study must be conducted to ascertain the reasons for high percentage of non-performing advances (NPAs). Thereafter, ABC analysis should be undertaken to identify the critical areas, which should focus the activities to be monitored by the Branch Head and those activities which can be delegated to the Asst Manager and Loans Officers. Positive Intentions (+ive), Negative Intentions (-lye) The information collected in the above formats will be converted into intelligence for drawing out the strategies and the action plan. TWO PRONGED STRATEGY: a) Increasing fresh advances and ensuring that they remain performing advances i.e. checking the slippage into nonperformance category. b) Recovery and adjustment of non-performing advances. A) INCREASING FRESH ADVANCES: SWOT analysis will be undertaken to aSsess the potential of credit off-take and also identify the industries / business ventures on the basis of products and services and also the changing environment. The survey done by Development Financial Institutions will be consulted as these provide adequate information. STEPWISE ACTION PLAN a) Scanning the area and preparing the profile of existing units / potential - sunrise areas in agriculture, industry, infrastructure, housing, retail.lending. b) Identifying Govt. agencies where there can be bulk credit off-take i.e., Indirect financing through corporations, boards and other agencies. c) Credit off-take through automobile financing and financing to consumers for white good durables d)Lending to stock brokers / investors against shares of blue chip companies in demat form. e) All existing A - Category ( high value standard category) borrowers will be contacted and motivated for introducing new borrowers / facilitating switch over to our banks. f) Quantitative targets will be fixed and progress reviewed on monthly basis. B) RECOVERY AND ADJUSTMENT OF NON - PERFORMING ADVANCES:

Since Head Office has fixed the targets for reducing the NPA percentage, as such the strategy at the branch level should clearly spell out the time frame. The target will be bifurcated on monthly basis so that corrective steps can be taken if the degree of variation in actual results and targets fixed is large. STEP - I : SEGMENTATION OF BORROWAL ACCOUNTS a) Experience indicates that the number of accounts in the category of Rs.50 lac and above is very small but percentage of amount involved in this category is very high. As such, this category of accounts will be monitored at personal level on daily / weekly basis. Accounts in the category of below Rs. 50 lac but up to Rs. 10 lac are small but amount involved will be high Accounts in the category of below Rs. 10 lac will be very large but percentage of amount involved will be less. As such, loan officer will be assigned the task for recovery and overall review will be undertaken by the manager and senior manager on personally level on monthly basis. The.theme behind the above strategy /classification is that, even if by monitoring and follow up, few very large accounts are shifted into performing category, the percentage of NPA's will reduce substantially. STEP - II: CLASSIFICATION OF ACCOUNTS ON THE BASIS OF VIABILITY AND INTENTION OF THE BORROWER The underlying idea is to develop structured action approach so that broad guidelines are provided to the manager and the loan officer for monitoring and follow-up. For this purpose the NPA accounts will be classified into four heads: a) NPA accounts which are viable and intention of the borrower is positive. b) NPA accounts which are non-viable and intention of the borrower is positive c) NPA accounts which are viable but intention of the borrower is negative. d) NPA accounts which are non-viable but intention of the borrower is negative. STEP - III: STRUCTURED ACTION APPROACH A) NPA ACCOUNTS WHICH ARE VIABLE AND INTENTIONS ARE POSITIVE. a) Reschedulement / restructuring and where enhancement of limit is required, the same will be done on priority basis. b) Need - based enhancement be done by taking adequate collaterals / third party guarantee. B) NPA ACCOUNTS WHICH ARE NON-VIABLE AND INTENTIONS ARE POSITIVE Borrowers will be encouraged for compromise / one time settlement (OTS). C) NPA ACCOUNTS WHICH ARE VIABLE BUT INTENTIONS ARE NEGATIVE Efforts will be made through guarantors / other influential person for regularisation of the account and thereafter adjustment of the accounts. 13) NPA ACCOUNTS WHICH ARE NON-VIABLE BUT INTENTIONS ARE NEGATIVE Here bank has no options but to go in for recovery through following actions: a) Criminal Action - Where security has been sold / misappropriated. b) Civil Suit / Debt Recovery Tribunal / Actions under SARFAESI Act for possession of the securities and thereby liquidation of outstandings. HOW TO INCREASE PROFITABILITY With the entry of Foreign / Private sector banks, competition in the banking sector has intensified putting a severe pressure on profitability. The 'Spread' or NIM (Net interest margin) is shrinking. As such, it has become necessary to focus on profit as a key to survival in the competitive environment. Profitability = 'SPREAD' + Other Income - Other Expenses,Where Spread = Interest Charged - Interest Paid Any exercise on increasing profitability has essentially to concentrate on following critical areas: a) Increasing Interest charged. b) Reducing Interest paid. c) Increasing Other Income / fee based income. d) Reducing or rationalisation of expenditure. STRATEGIES FOR INCREASING INTEREST CHARGED: a) Change in Advances - Mix: Lending to those sectors / segments where bank can charge higher rate of interest. b) Reducing NPA and recovery of Bad debts. c) Compromise / One Time Settlement (OTS) for recovery of non-viable cases. d) Plugging of revenue leakages. STRATEGIES FOR REDUCING INTEREST PAID: a) Change in Deposit-Mix (Increasing low cost deposits i. e, saving and current deposit)

b) Increasing float / pipe line deposits (as remittance etc.) STRATEGIES FOR INCREASING OTHER INCOME: a) Increasing non-fund based / fee based business. b) Cross-Selling of the products. c) Effective Cash management d) Investment in high-yielding securities. e) Handling of Merchant Banking business with focus on Issue Management / float funds and fee based income. STRATEGIES FOR REDUCING OR RATIONALISATION OF EXPENDITURE: Rationalizing of expenses such as telephone, electricity, stationery etc. CUSTOMER RELATIONSHIP MANAGEMENT ACTION PLAN : Customer Relationship Management (CRM) is a customer driven business strategy designed to optimize profitability,revenue and customer satisfaction. CRM is also a paradigm shift from "product centric and mass marketing" to "customer centric" way of business. CRM involves relationship marketing, which is to establish, maintain, enhance (long term) the relationship with the customers and other partners so that the objectives of the parties involved are met. This is achieved by mutual exchange and fulfilment of promises. CRM is based on the short-term orientation of the management with focus on achieving the following objectives: a) Attract new Customers. b) Increase Sales per customer. c) Reduce Costs through optimization of business process. d) Improve Customer relationship/increase loyalty. CRM has a number of positive effects on the running of a bank. It provides management with a clear picture of the business, facilitating decision-making. Using a common architecture and data mode, customer information can be shared faultlessly between front-end staff facing the customers to deliver services and the back-office staff who structure the deals. Front-end staff of a bank can profile a customer, create and maintain a customer account with contacts, manage activities, and explore business development possibilities. Similarly, a call center agent can maintain client data / information, produce call notes, replies to customer inquiries, and address and track customer service requests. In a nutshell, implementation of the CRM concept in banks can result in the following advantages: a) Speed and accuracy in information analysis. b) Foundation for organization-wide data and information. c) Understanding customer behaviour. d) Facilitating Business process re-engineering. e) Multiple products — credit deposits, investment, insurance etc. f) Multiple distribution channels — branch, Internet, call center, field sales etc. g) Multiple customers group — customers, small business, corporation etc. IMPLEMENTATION STRATEGY: a) Motivation for Bank staff The first step in implementation of CRM in banks is to motivate and train the staff to do so. The motivation must come from the side of the management in the form of regular training in behavioural and functional aspect of banking. b) Change of Mind-set and Customer Classification Change of mind-set of staff members is very important. It should be realized that all customers are not equal. Customer profitability varies from person to person/context to context and not all customers are evenly desirable for the banks. Banks must differentiate their customers based on the 'value criteria' i.e. how valuable the customer is? Value is nothing but the profit the customer adds to the bank's account. Put simply, a more profitable customer is a 'high value' customer and a less profitable customer is a 'low value' customer. A bank's CRM system must also capture customers' taste, preference, behaviour, living style, age, education, cultural background, and physical and psychological characteristics, sensitivity etc., while differentiating them by the value criteria into low 'and high value customers. By combining the profitability potential of a given customer and his/her personality profile including their expectations, customers can be grouped into four categories as follows: 1) Low value / less profitable customer desiring high-grade service. 2) Low value / less profitable customer with potential to become high value in incoming days. 3) High value ! more profitable customer desiring high-grade service.

4) High value more profitable customer requiring low-grade service. Once the banks differentiate their customers vis-a-vis the profitability and their other traits, it becomes easy for banks to customize their services and offerings to maximize the overall value of their customer portfolio. c) Ambiance for Banking The customers are comfortable going to banks that have a customer friendly environment. It may be due to the vast expansion of the premises, personal cubicles created, plush interiors, soft furniture, etc. Some banks go to the extent of playing soft music, setting up coffee shops, display work of art, etc., to create the right ambiance for a perfect CRM. d) Customer Retention Retention of old customers is more profitable than acquiring new ones. Happy and satisfied old customer brings in many other new customers. It has been realised that it pays more to keep your existing customer content, which results in cross selling and purchase of products. SUGGESTIONS: a) The banks can be made more customers friendly. b) Top management and senior executives must be committed and dedicated so that the lower employees are adequately motivated to implement better CRM. c) More funds to be allotted for implementation of IT, which not only speeds up transactions for customers but also avoids unnecessary friction between employees and customers. d) It pays to appoint well-educated, young, smart, highly trained and motivated relationship managers. e) The bank employees must be informed about new products and services at regular intervals. The communication channel needs to be more efficient between the management and employees. Handbooks can be printed and circulated for this purpose. f) The preparation of customers profile is very necessary to have a customer data base. g) Data mining needs to be dope at regular intervals for effective cross selling of products. h) Bank employees of all cadres need to be trained in effective implementation of CRM. i) The net banking concept needs to be tapped fully by banks. Computerisation needs to be done in more and more branches and they also should be connected through computer network, e-mail, etc. j) The belief that banks have poor customer relationship needs to be shattered by improving their image, wide publicity and campaigning by the media which will help to a great extent. k) The efficient employees who have effectively implemented CRM need to be rewarded within the limits of the management. It has been revealed that untimely transfers and lack of rewards are the main factor that discourages practicing better CRM by employees. The management can work up schemes to award cash prizes or give additional points for promotion to those employees maintaining good relations with customers. I) New products are to be lalinched keeping in view the services offered by foreign banks. m) Unlike the traditional approach where customers are acquired through mass media advertising, CRM normally gets its customers through referrals. CREDIT OFF – TAKE AT BRANCH LEVEL BACKGROUND : Budget is not just allocation or fixing targets. It is consultative and participative exercise done by the Head Office and concerned Branch Managers in an open atmosphere. Lot of home -work goes into the whole exercise. Branch Head, is supposed to have good idea of business environment and potential of his target area. Apart from this, past performance is also available in the form of statements. Historical data on recovery, quality, NPAs, court cases, compromises etc. is also available. The most important information that is crucial in business performance is the quality of staff and management of personnel, which depend to a large extent, on the attitude of Branch Head, Zonal Head, and other officers as well as the status of industrial relations at the branch. OBJECTIVES: To ensure credit off-take to the targeted level, the principle underlined is that the Decision should transcend: a) The Safety and Security of advances. b) Profitability aspect of advances. c) Spread of risk branch wise, product wise, area wise and customer wise for reducing concentration of risk exposure. HOME WORK BEFORE TAMING BECOSION : The ABC analysis will be undertaken with the focus on the past data of the existing branches regarding both quantity and quality of advances and also the potential available, product-wise and customer-wise and area-wise.

The first step in the analysis of data will be to identify top hundred borrowers who are in the Standard category. They can be classified into manufacturers, exporters, wholesalers, retailers and others. A meeting/calls will be conducted / made, with these 100 borrowers with the purpose of assessing their future business requirements i.e. the enhancement of limits required by them. Even top 100 depositors will be identified and honored. Their business requirements will be assessed. The services of these 100 top borrowers will be utilized in identifying a chain. of new trade borrowers who have good reputation in the market and are also availing huge limits from other banks. The existing borrowers will also be used to persuade / motivate the new chain of borrowers to switch over to our bank. Different trade associations dealing in different products will be contacted through the top 100 trade borrowers and potential borrowers having huge borrowings with other bank will be identified for take-over. Identification of potential traders / dealers, through professionals such as Chartered Accountants, Cost Accountants, Tax Consultants etc., who are not dealing with our bank. The capacity, expertise and experience of. the staff dealing in advances will be assessed. If need be, a workshop for reinforcement of advances skills will be organized for the dealing staff. FIXATION OF TARGETS: The allocation of the targets will be done on the basis of mix of Customer-wise, Product-wise, Area-wise and Branch-Wise to ensure spread of risk. CUSTOMER WISE: Customer specific targets can be set on the basis of the homework undertaken. While allocating targets, it will be broadly kept in mind that 60% of the targets should be earmarked for the existing top good borrowers and 40% for new borrower identified through existing top borrowers, trade associations and by the branch managers. PRODUCT WISE: While allocating the targets, the nature of the product will be kept in view on the basis of characteristics such as perishability, price fluctuation, and demand forecasts. Further, a balance will be maintained so as to ensure against overexposure in a particular product segment. It has to be ensured that adequate collaterals/third party guarantees are taken invariably. In exceptional cases, the specific clearance will be necessary from the region. AREA WISE: There are some trading activities confined to some areas. For example, apple, potato, kinnow, vegetables like tomato, cauliflower, onion, garlic, ginger etc., such areas may have a number of wholesale dealers, commission agents, arhtias. The budget can be conveniently allocated to the branches in those areas. Past experience, NPAs and other qualitative aspects would of course be kept in view. BRANCH - WISE: There may be branches where specific products are traded like steel, furniture, construction material, timber, horticulture products and cash crops. Products specific budgets can be considered if past data about quality and recovery etc. is available. Some branches have predominance of wholesale traders, being historically established at the towns/ cities to serve as the source of supply to the remote places. These branches are having potential provided the past experience of trade advances has been satisfactory. While selected branches, specific areas and specific products would always be in sharp focus, no branch would be allowed to feel neglected and, similarly, no branch having no potential would be unnecessarily burdened. So, while all the above three considerations will be kept in mind, selectivity will guide the exercise. MARKETING OF RETAIL BANKING PRODUCTS Retail Banking is a composite activity encompassing the banking products and services specially designed for meeting the ongoing requirements of 'individual' customer. An individual customer develops banking habit mainly for three purposes,namely: a.For making Investments, b. For raising loans, and For availing any of the subsidiary services. Retail banking, therefore, becomes complete only when all these financial needs of an individual customer are met to his utmost satisfaction under one roof. Retail Banking is being increasingly focused in Indian. Banking industry today mainly due to high margin and low risk nature of the business coupled with the, increasing pace of consumerism in India. Other factors, such as, increased' economic activity, increase in purchasing power of the consumers, especially that of the younger generation, a huge middle class population, innovations in technology and low interest rate regime have contributed to growth of retail financing. With increasing competition, 'spread' in the Indian banking industry is under strain. As such, banks need to shift their

focus to innovative products and services, which are profitable. If banks intend to prosper, profitability of products and customer should become buzz word for them. MARKETING STRATEGIES 'Marketing' is a composite activity, which includes market study, designing of products, delivering and ensuring proper after sales services. In a 'race' it is the 'pace' that counts and for attaining a 'winning pace', marketing strategies have to be designed. Latest technology can be used by banks to target products to the right potential customers, by maintaining a database of customer profiles and their likely financial needs. Data mining has to be strengthened, as it will help banks in formulating products for specific set of customers. The first step in designing the strategy is to identify the target customers and target products for which market segmentation exercise has to be undertaken. a) Market Segmentation: Segmentation of existing as well as potential retail clientele into housewives, professionals, salaried personnel, workers, company executives, businessmen, farmers be done to identify the needs of the target group and facilitate structuring financial products I services to match their needs. Further, the same data can be utilized for evolving different techniques of marketing depending on the target groups. b) Central Data Base: Bank should build up a central database to contain the profile of all high value retail clientele. Communication (either as seasonal greetings or for highlighting the significant measures for improved services, new products) through 'e' mail / postal mode should be sent at regular intervals from the corporate office itself directly to those high value customers identified by the marketing team stationed at all key delivery units. c) Financial Super Market: In view of the exposure of Indian customers to global products and services they have become more demanding, and they want fast, convenient and hassle-free services from banks in India. The traditional loyalty and inertia associated with the Indian consumer is changing very fast. As such the success of retail marketing largely depend on how banks understand its customers and the market. Development of skills for managing customers has become of crucial importance,if banks of today have to survive. Bank should become a 'one stop shop' for all the banking needs and services. For the retailers investing in low cost deposit schemes, add-on benefits like demand drafts, funds transfer facility, Anywhere Banking, ATM cards, name printed cheque books, monthly statement of accounts (direct to residence / office), Customer terminal (installed at their. premises),concessional collection charges, Mobile Banking, Internet Banking, Depository services, Portfolio Management Service,standing instructions, Insurance products should be extended either at concessional or nil cost. A cost study should be conducted to introduce a business linked tariff structure for all these services. All these services with technology should instill in the customer a sense of pride in banking with us. d) Retail Financing as Core Activity: Banks should prepare a list of preferred areas of retail finance town-wise, keeping the potential in view. SWOT analysis will help in identifying high profile towns from retail lending point of view. This will help in making focussed attention on retail financing by banks in specific potential areas. Ground work required for retail financing will involve: • Operational Manuals: To ensure uniformity and facilitate faster appraisal and decision making, operational manual has to be developed by banks. With this staff members at the grass roots level will not violate norms and by pass systems and procedures. • Credit Scoring & Loan Pricing model: To enable the frontline staff to take quick credit decisions, an efficient credit scoring and loan pricing system has to be designed. This will strengthen credit appraisal and post- sanction monitoring systems. • Centralised Processing: To have a competitive edge and gain the critical mass in the high volume game, the processing activity can be centralized. Processing excellence is crucial to sales and service quality. e) Portfolio Management Services: A retail investor still prefers 'safety' to 'returns' and hence Banks are the ultimate choice. Series of failures elsewhere have already made the investors lean towards the Banks. Bank can have portfolio management services for the retail investors so that they can have all investment options under one roof. • Target Approach: Targets can be fixed for all the units & teams dispensing retail banking products. • Well-Trained Marketing Teams: A product can be got sold in this highly competitive environment only through committed well-trained marketing teams. Exclusive marketing teams specially trained for this purpose should be stationed in all key places to ensure market presence and penetration. In all other places, the people at the delivery unit themselves should form the marketing team. • Brand Equity: Customer preference, under the present environment, is towards branded items. Brand equity should be created for all retail banking products and services through regular road shows, seminars, advertisements, exhibitions, market penetration.

• Pricing of Products and Services: For retail lending schemes, it is always the "cost" and 'care' that counts and these two aspects haunt the minds of retail borrowers. Rate of interest for the loans under retail lending should be rather based on the risk profile and where the credit risk is low or nil, the rate of interest should be the lowest and for others uniform guidelines for graded interest rates be introduced. • Feedback: A system for regular interaction and feedback from the retail 'customers be evolved to facilitate constant review and fine-tuning of strategies. • Non-Cash Incentives: Norms for non-cash incentives be evolved for the teams doing excellent business in retail banking. • Frill Benefits / Add-ons: All schemes under 'Retail lending" be insurance linked and procedural formalities to be reduced. Norms for 'Back ended interest rebate' for prompt repayments be also evolved to make the schemes still more attractive and customer friendly. TURN AROUND OF A BRANCH MIND SET – UP : The first step is to undertake the diagnostic study of the reasons the branch is running into loss. This will include scanning of the environment identifying the business potential and drawing up a strategy for turn-around of the branch.The ABC analysis both for deposits and advances will be undertaken. The target area will be scanned and all business potential entities I groups will be identified and quantified. Different associations / agencies will be used as a business promotion vehicle. Micro-analysis will be undertaken on a time frame 'basis. Target will be fixed and efforts made to achieve the same in the time schedule. STEP - WISE ANALYSIS WILL FOCUS ON: a) Scanning the area and preparing the profile of existing units / potential - sunrise areas in agriculture, industry,infrastructure, housing, retail lending. b) Identifying Govt. agencies where they can be bulk credit off-take i.e., Indirect Financing through corporations, boards and other agencies. c) Credit off-take through automobile financing and financing to consumers for white good durables, Lending to Stock Brokers / investors against shares of blue chip companies in demat form. d) All existing 'A' — Category (standard category) borrowers will be contacted and motivated for introducing new borrowers /facilitating switch over to our banks. e) Quantitative targets will be fixed and progress reviewed on monthly basis. The profitability could be achieved in two ways. Firstly, by earning more income, and secondly, by reducing or rationalizing expenditure. We can work on the following lines, keeping in mind our location. A) Income Oriented Activities; B) Expenditure Saving Activities;, C) Generation of Income through competitive services; D) Recovery Aspect. A) INCOME ORIENTED ACTIVITIES: The first step is to short list income generating sectors. The target area will be scanned and business potential activities such as schools, colleges, universities, .trade associations, industries, business ventures etc., will be listed. The activities should be focused keeping in mind following features: (a) Identification of existing SMALL/Medium Industrial Unit Situated in the Area. We should identify the SSI and other medium industries, which are working successfully in the area and are having their accounts with other banks. The details can be obtained from District Industries Centre. A list of successful small and medium industries working in the area could be obtained. The existing 'A category borrowers be pursued to introduce new good borrowers so that bank can facilitate them to switch over to your bank. (b) Facilities to Road Transport Operators: In the similar way, automobile dealers of buses; trucks and auto rickshaws could be contacted. If possible, a small advertisement display of the bank could be placed near their showrooms, with their consent. Assistance could be given to such road transport operators of the area. The well-established schools and colleges working in the area could also be contacted. Such institutions require vehicles for transporting their students. (c) Assistance to Distributors and Wholesale Traders Bank can approach various authorized dealers, distributors and other wholesale traders who have well-established business. They

could be requested to switch over to our bank. Their proposal could be got sanctioned frOm the higher authorities, if not within the vested powers of the branch manager. Such finance carry higher rate of interest and is collaterally well secured. The traders are financially sound and the possibility of the accounts becoming sticky, is very less because they have a wide spread network of retail outlets for their sales. (d) Assistance for Housing Housing loan is yet another important segment. It is a long-term income-yielding sector. Well reputed contractors; builders and architects could be contacted to know about the prospective customers. Municipal authorities could also be helpful in this purpose. Subsequently, the parties could be contacted to avail housing finance from our branches. B) EXPENDITURE SAVING ASPECTS: it is very common phrase that penny saved is the penny earned. We may have to put some extra efforts for earning extra income: But we can save a lot with a bit of care and proper management. The things, which appear very minor and petty in nature, go a long way in lot of savings. These even, are capable to turn loss-bearing units into profit earning units. Some of the important aspects where wastage could be avoided are as follows: a) Over staffing could be avoided. b) Staff should be properly utilized. c) Switches of fans and tubes should be at the nearest point to the working officer so that lights could be switched off as soon as the staff leaves. d) Misuse of Bank's vehicles should be checked. e) Proper log registers should be maintained and checked immediately on the return of the concerned employees. Vehicles should be properly got serviced at regular intervals so that wear and tear is reduced and fuel consumption is optimum. f) The articles, which are not in use, should be disposed-off with the prior sanction of the higher authorities. These should not be dumped unnecessarily. g) Record keepers and other subordinate staff members should be advised to maintain stationery properly. h) The sub standard article should not be purchased because they require regular repairing, and ultimately result into loss and inconvenience. i) The expenditure bearing articles should be replaced with new economical gadgets and articles. C) COMPETITIVENESS IN BANK'S SERVICES: Within the prescribed limit, branch can bring competitiveness in some of the services. For example, with prior permission, bank draft charges, lockers charges etc. could be conveniently re-fixed which may yield more income but do not effect service. If the charges levied by the bank are on higher side with comparison to other banks operating in the area, the case could be taken up with the higher authorities for the reduction of the same. D) RECOVERY ASPECT: Recovery of sticky and overdue loan accounts should be given top priority. Such accounts affect adversely the working of the branch in two ways. Such accounts should be short listed and field staff be given necessary instructions to maintain a regular and constant touch with the defaulters. Legal aspects should also not be delayed. Efforts should be made to get the recoveries through compromise. Such proposals should be forwarded to the higher authorities at priority level HOW TO IMPROVE INSPECTION / AUDIT GRADATION OF YOUR BRANCH The first step to handle the audit / inspection report is to prioritise the irregularities / discrepancy. Irregularities 1 discrepancies which are of serious and very sensitive nature and can cause financial loss to the bank, has to be given the top most priority and efforts will be made to rectify the same instantly. The monitoring and follow - up of irregularities has to be done on daily basis by the branch head himself. The irregularities be classified as follows: a) Section wise listing of irregularities: First of all the irregularities should be sorted out section wise. The departments, like deposits and advances, which are looked after by more than one officer, the lists of the irregularities should be made as per sub sections or as per work handled by the different officers. This would make it convenient to refer to the records, recording the irregularities removed and in some other aspects as well. b) Picking up the Experienced Staff for Removal of Irregularities: Well -experienced staff members should be listed, sector or business wise for removal of the irregularities. Technical officers or field staff could be taken up for irregularities related to the field job where we have to approach the customers.
c) Prioritizing the Irregularities: All the irregularities should be separately listed according to the gravity or the seriousness. Top priority irregularities pertaining to limitation, wrong documentation, stock

reports, cash department and so on should be given personal attention. A proper follow up should be maintained. d) Issue of Office order for removal of irregularities; A proper office order be issued to get the irregularities removed in a time bound frame. The officer order should also indicate the time for submission of progress made in this effort, i.e. weekly,fortnightly etc. FOLLOW – UP : a) Monitoring: The concerned employees be asked to submit their report to the Assistant Manager, who, in turn will submit the consolidated report to the incumbent incharge. The incumbent incharge may submit the progress report to the controlling officer accordingly. b) Instructions for Future: It is more important that the irregularities are not repeated in future. The staff members working on different seats should be asked in writing to follow the prescribed procedure strictly in letter and spirit. This will reduce the number of irregularities to a considerable low. The checking officials or officers should be asked to do proper checking. c) System of individual diarising the pendencies: A system should be adopted that pendencies pertaining to incomplete work be diarised by the individual Officers seat wise. The officer working on the seat should maintain the dairy on daily basis. The same should be completed at the particular date noted in the diary. Most of the irregularities occur because they slip out of mind. HUMAN RESOURCE MANAGEMENT Human Resource Management (HRM) broadly refers to a positive approach to the management of an organization's people who individually and collectively contribute to the achievement of sustainable competitive advantage. It basically refers to the management and development of the employees, to match with the business strategy of the organization. The FIRM philosophy is based on positive commitment towards the development of employees for ensuring their growth,development and performance to enhance human capital in the bank. The HRM model is composed of policies that promote mutual growth for achieving mutual goals coupled with mutual responsibilities and rewards, which in turn will yield both better economic performance and greater human development. AIMS OF HRM IN CHANGING ENVIRONMENT • HRM is seen as a partner aligned to business strategy, not only participating in setting performance objective of any employee but also creating development opportunity to achieve them. • To enable management to achieve organisational objectives through its workforce. _ To foster commitment in employees which will facilitate to gain competitive advantage. _ To establish an environment in which the latent creativity of the workforce will be unleashed. _ To achieve "strategic fit" between business strategy and HRM so that there is consistency between policy goals of HRM and that of the business. KEY STRATEGIC ISSUES IN HRM From the intervention strategy perspective, HRM must contextually respond to the following issues: ORGANISING PEOPLE TO WORK EFFECTIVELY A key starting point for effective human resource management is to build an organisational structure that is designed specially to carry out the bank's mission and strategy. The first and foremost task of HRM in banks, therefore, would be to organize its people so as to enable them to work effectively. OPTIMIZE THE ORGANISATION STRUCTURE - UP GRADATION OF TECHNOLOGY The technology up-gradation in the wake of competition has the effect of taking banks to become more efficient and capable of responding to the market conditions. The business strategies and technology up-gradation has a direct impact on the organisational structure. HRM must be able to re-design organisational structure as per external changes, business strategies and one step ahead of the competitor. Work process re-engineering to achieve greater efficiency and cost effectiveness must be attempted. BUILD THE RIGHT SKILLS AND WORK CULTURE Banks must have employees who offer the necessary range of job specific skills and whose attitude towards their work and,colleagues enable them to channel their skills and energies into performing productively for bank and its customers. ELIMINATING SKILL GAP Introduction of newer technologies by itself does not improve performance of banks. Introduction of new technologies necessarily involve re-examination of the existing human process so as to deliver better results. New technologies need new skills

but they do not replace human skills. The centralised core banking solution package being introduced in banks would necessitate far reaching changes in managerial practices besides rendering surplus age of employees. RE-LOCATION OF SURPLUS EMPLOYEES Focus of HRM should be to plan for effective relocation and utilisation of displaced employees and effective use of back office data. BUSINESS PROCESS OUTSOURCING Outsourcing, which is quite simply the transfer of operational responsibility of business processes, infrastructure management of an IT application to a third party for a fee, is gaining, acceptance amongst corporates globally so that they can concentrate on their core business i.e. banking. TOTAL ENTERPRISE TRANSFORMATION: Optimal results of technology implementation can be achieved with proper grooming, placements, training, rotation and changing the mind-set of the staff. HR is the key element in implementation of technology since men have to run, manage, operate and command the technology. BENEFITS OF TOTAL ENTERPRISE TRANSFORMATION Public Sector Banks will have the following tangible business benefits by total enterprise transformation. e Enhanced Competitiveness 0 Enhanced Operational Efficiency 0 Enhanced Customer Satisfaction. Enhanced Accountability • Better Financial management 0 Better Risk management MANAGERIAL ROLES Role is a position, which a person occupies in an organization, defined by the expectations of others (significant groups or individuals), and by himself. Role should be properly defined to avoid ambiguity, overlapping, transgression & stress. AS A PLANNER: A manager undertakes planning, which envisages goal setting and resource mobilization, essential for achievement of pre-determined and thoughtfully scheduled organisational goals. Appropriate strategies are worked out with periodical review if and when warranted by environment, particularly competition. AS A PERFORMER: A manager shows commitment and devotion. He sets example by bringing about congruence between personal objectives and organizational goals: He identifies Key Performance Areas (KPAs). His performance is quantifiable and visible. He lays down challenging tasks for himself, aims high, puts in hard work and becomes a trailblazer. AS AN ORGANIZER: A manager is an effective organizer of material and human resources. He ensures to utilize resources economically to give optimum results. He cares for human resources, plans training & development, motivates people,establishes instant and spontaneous rapport with others and creates conducive working climate. He infuses values and reinforces concepts like cost consciousness, total quality management leadership, responsibility to society, loyalty to organization, fellow feeling among the staff, zeal for intrapreneurship and innovation. AS A LEADER: A manager develops team, energizes organization and team members, motivates staff, shares knowledge, acts only after full investigation, invites suggestions, accepts change and enforces change through consultation and persuasion, keen on creativity and encourages creativity in the organisation, skilled in negotiation and communication. He is also self-confident, obeys codes of ethics & morality, shows high maturity, good listener and skilled in resolution of conflicts. He treats colleagues with respect. He acts in the true spirit of friend, philosopher and guide (counselor). AS A MOTIVATOR: A manager knows that people are invaluable resources of the organization. He keeps them motivated to accomplish goals. He knows that motivation is the resultant behaviour propelled by need arousal. People move from lower level (basic) needs to higher level needs (status and social recognition); they desire to reach a level of self-actualization. A manager, therefore, uses tact and philosophy to create a desire in his colleagues to have a vision of attaining higher goals and work for the same with dedication. AS A COMMUNICATOR: Makes clear and understandable communications, down the line. Informs Controller with facts and convincing logic. His communication is effective. He insists on feed-back. He gladly gives clarification, if sought. His communications are polite but firm and specific. He prefers discussing subjects threadbare in meetings. He does not take offence if opposite views are expressed; he removes fear in meetings. AS A MONITOR: He ensures compliance through statements and returns. He insists on feedback. Achievement of budgeted levels is appreciated liberally and negative variance is taken as opportunity to look into the environmental / hindering factors for suitable remedial actions, which he suggests. He offers support, if any, required.

AS A CHANGE AGENT & CATALYST: Changes take place regularly, sometimes abruptly, both internally and externally. He explains changes and their consequences; invites reactions, allays fears and persuades to accept changes for better results. Rationale is explained, holistic position described in global context, ensures acceptance of change willingly. AS A VISIONARY: Only a visionary manager thinks of extra-ordinary possibilities, he experiments on new possibilities and allows his subordinates to do likewise. He excuses routine and genuine mistakes. Vision brings about super synergy in the team, which is a force to meet and beat competition and become a winner. Vision infuses confidence and encourages killing instinct, and this is required in today's competitive environment. AS A IMAGE BUILDER: A manager represents an organisation. He builds its image, conducts him self-well, he projects his organization by his good deeds and actions. He has to ensure good working climate,. courtesy on the part of the staff, helpful & supportive attitude of all in the organisation towards the public calling at the premises or contacting on telephone etc., prompt & efficient customer service, zero mistake operations, prompt reply to communications, tailor-making schemes for certain target groups and sense of discipline on the part of all. He ensures that visit to the organisation is a delight indeed. AS A COORDINATOR: It is the responsibility of the manager to coordinate different aspects of an organisation. It is necessary to create the harmony between manpower, available resources and decides targets for effectiveness, efficiency and growth. All these roles culminate into the role of developer and this role can be achieved only by having the concept of 'leading by example'. WHAT MAKES A GOOD MANAGER PROBLEM SOLUTION (CONFLICT RESOLUTION) • JUDGEMENT SKILL — Distinguishes between what's important or controllable, and between what is not important or uncontrollable. Identifies who is skilled enough to handle an issue or reconcile a conflict situation. Ensures and priorities within time-frame work. • ANALYTICAL SKILL & INTEGRATIVE ABILITY— Identifies inconsistency in message contents and subtle relationships in information. Identifies facts from various and unconnected sources, and relates them to arrive at conclusions. Familiarizes with concepts. • DECISION MAKING AS CORE ACTIVITY— Considers the relevant facts for developing and evaluating all possible alternatives for solving a problem, habitually draws upon colleagues for suggestions, affords opportunity to the subordinates to develop. Realistic, practical constraints are considered and helping factors identified. • ADAPTABILITY — According to Charles Darwin, "it is not the strongest nor the ablest who survive, but it is the one who adapt to change that survive". A manager performs under less than optimum conditions e.g. unstructured problems, too little time and/or resources, insufficient information, mismatch between individual's skills and job requirements. • PERSONAL IMPACT— Affects others, convinces those holding opposing or neutral positions, push through interest or ideas despite opposition due to personal influence, style, endeavour, and ability to carry along colleagues. Takes charge of situation quickly, decides. INTER-PERSONAL SKILLS • COMMUNICATION: Communication instructions and proposals with facts and in clear and understandable language, avoids ambiguity, ensures feedback, listens patiently and carefully, holds meeting in cordial and encouraging manner and invites suggestions. • MANAGING INDIVIDUALS — Understands management principles and concepts, assists subordinates and peers involving management experts, to achieve their business and career objectives. Listens to others, acknowledges their strengths, and volunteers to remove their weaknesses. Ensures support and guidance, and understands individual differences. • PLANNING AND MANAGING GROUP PERFORMANCE — Formulates participative plans to achieve job objectives as part of organisational objectives, undertakes mid-term review of business plan, if found unrealistic or unreasonable due to environmental changes, sensitive to group co-operation, productivity and profitability. Sets up quality•circles and pushes forward through team spirit towards zero defect operations. • CONFLICT MANAGEMENT — Objectivity despite stress. Addresses conflict directly and tactually. • DIPLOMACY — Negotiates with win-win situation. Tailors approach to take into account the perceptions, needs or motivation of others, giving reasons and explanations for requests. PERSONAL ATTRIBUTES • COMMUNICATION — Speaks and writes well. Adapts communication style to suit the audience. Is easily understood. Ensures two-way communication. Gives clarification, if wanted.

• DECISIVENESS —Firm, chooses among alternatives, confronts higher management decisions. • CREATIVITY — Provides/anticipates new perspectives, approaches, experimentation. ENERGY • ACTIVITY LEVEL — Sustains high level of activity including speed, volume of work accomplished, endurance, balance, composure, civility, and enlightenedleadership. • FLEXIBILITY — Handles challenges. Copes with multiple changing demands and setbacks. STRATEGIC & OPERATIONAL CONTROL • STRATEGIC & ORGANIZATIONAL AWARENESS — Possesses awareness of interests and objectives of the organization, develops own plans and actions as part of overall organisational plan. Coordinates with and provides assistance to other units, keeps updated on changes. • ADMINISTRATIVE CONTROL— Prepares plans & tracks; documents the progress of programmes. Designs control systems. Keeps abreast of the details, which support them. • TECHNICAL MANAGEMENT — Ensures more technical expertise on the job than managerial expertise on the job. Provides current technical skills to subordinates and others to stay competitive in market. COMPETITIVE ANALYSIS & ASSESSMENT: Environment threat and opportunity analysis is required to know the strategy of the competitors and entry of new competitors and comparison of our resources and strategy with their plans. DELIVERING CUSTOMER DELIGHT Human beings are unique and complex entities. Each develops his/her own self-image, likes and dislikes. So is the case with our customers. Each of the customers has different features, characteristics and expectations - unique in one's own way: Global Customers: Often our customers operate in more than one country and their products, services, operations, and their end-users too are spread all over the world. To serve them means, 'thinking global". Technology Oriented Customers: Such customers focus on technology as their change agent which virtually governs the dynamics of their daily drills and they execute their plans with long-term leaps. For serving them we go by the dictum "thinking ahead, thinking competencies". Customers which are Demanding and Competitive:They judge themselves by making comparisons as to, what they can do better than their competitors do. How quickly and smartly they stay. They determine their success by positioning ahead in the market arena. In their case, it means to us "thinking business". Constantly Benchmarking Customers: They believe in setting standards not to stick to them as they consider them minimum, only to be raised consistently and quickly. Reaching global benchmarks is a given thing for them. Measuring quality, finding ways of removing or reducing defects and pursuing excellence constantly are ongoing commitment for them. They make us do "thinking metrics, thinking excellence'. Cost Focussed Customers: Business today is more conscious of pressure on bottom lines. Reducing costs, improving operational efficiencies are the things of the day. For such customers, we commit "thinking cost-effective solutions". HOW TO PROCEED TO SATISFY OUR CUSTOMERS? We must adopt a policy of collaboration / partnership with our customers to deliver the needed and perceived business solutions. The following propellers are indispensable in this regard: a) A matching mindset: We have to develop a mindset that not only brings about understanding of customers' needs and expectations but also dig deep to empathize with the customers' latent expectations needed relevant technologies and business goals. We can then succeed to deliver solutions with genuine passion. b) Honouring Delivery Schedule: Solutions have not only to be need-specific but also time-specific. Looking for ways to deliver solutions not just on time but ahead of time is the core of success in serving customers. c) Reservoir of Competencies to Lead: Highly competent professionals with rich domain competencies to understand the business of customers better must be in position. The technical team has to be supported to develop solutions for the customers, recognizing fully well that customers seek solutions, not technology. d) Cutting down on Cost: Rupee saved is rupee earned. The solutions, processes, and people should all be bottomline-focussed. Twin strategies of cost reduction and cost savings go hand-in-hand. These lead to. a discernible increase in operational efficiencies, resulting in increasing value for the customers' shareholders.

e) Value Addition: Adding value enhances customer delight. Endeavour to add value to every facet of the customer interaction has to be a permanent feature. Think of value addition to customer, relevant existing process, new plan, innovative idea etc. MEASURE AND DELIGHT APPROACH: Quality benchmarking being ongoing process means going beyond global benchmarks such as ISO 9001-2000, SEI-CMM Level 5 and other standard requirements. The goal should be to constantly raise the bar. Measurements monitoring, modifying and excelling help to apply the best quality practices for the customers. PROBLEM SOLVING & DECISION MAKING With the integration of Indian economy with the rest of the world, the pace of changes in the environment has increased, leading to an increase in organization problems. Dynamic management of an organization demands understanding the change, nature of change and the direction of the change. Manager by the process of decision-making undertakes to minimize the impact of changes and increase effectiveness for achieving organizational objectives. Decision-making is the process of selecting a course of action from among several alternatives. It is selection of the best possible alternative for the solution of a given problem. STEPS OF DECISION MAKING a) Problem Identification - Problems arise due to disparity between ' what is' and ' what should be'. The threats of environmental changes also create decision problem. A manager should identify and define the real problem in a straight way. A problem well defined is half solved. The problem should be classified on the following basis: • Nature of the decision, i.e. whether it is strategiINGc or routine. • Impact of the decision on the various functions of the business. • Futurity of the decision. • Periodicity of the decision, and • Limiting or strategic factors relevant to the decision. b) Diagnosing the Problem: Diagnosing the problem is knowing the real cause of the gap between what is and what should be. The problem should be understood in terms of its elements, its magnitude, its urgency, its course, and its relations with other problems. All pertinent facts and information must be collected and analysed to diagnose the problem quickly and correctly. c) Developing Alternatives: A manager, while making decision, should search for various alternatives, which should be identified and analysed. There is a no problem of decision making if there is only one way of solving a problem. A wide range of alternatives increases the freedom of decision maker. However such alternatives should not be considered which are not possible to be accomplished due to a limiting factors. d) Selection of Best Alternative: After evaluation of the various alternatives, the decision maker has to select the best alternative or that alternative which contributes maximum to the given objectives. It should be ensured that the decision taken is practicable, stable and it is not creating another problem. e) Implementation Decision: It implies laying down of derivative plans and their communication to all concerned who are responsible for its implementation within a given timeframe. f) Follow-Up: The implementation of the decision should be constantly monitored. No matter how scientific it is, decisionmaking has no guarantee that it is hundred percent correct. It may be defective and may cause loss to the organization. As such its progress should be watched carefully to minimise the chances of loss. If the decision taken is not yielding the desired results, necessary changes should be made in the decision or its implementation. Thus an effective follow-up may control the major deviation in time. One of the best ways to analyze the decision is to use the most common Decision Trees approach. Decision Trees depict, in the form of a tree, the decision points, chance events, and probability involved in various courses that might be undertaken. This approach makes it possible to see atleast the major alternatives and the fact that subsequent decision may depend upon events in the future.